“What Apple means when it says it has ‘sold’ a product”

Erica Ogg, GigaOM:

It’s almost gospel in the mobile tech media and among mobile enthusiasts that Apple reports the actual number of iPads, iPhones (and Macs and iPods) it sells directly to consumers during each quarter in its earnings reports. Those numbers are often used disparagingly against other mobile companies when third-party market research firms like IDC report shipment estimates. Still, it’s difficult to get a totally accurate picture of the market; we’ve struggled with it here along with everyone else.

Good interpretation here, and worth really understanding: When Apple says it’s sold something, that may not mean what you think it means. The secret here is not only direct sales to the consumer, but also channel inventory. Click through for details.



  • Domicinator

    Yes, but I don’t think anyone ever doubted what Apple counts as shipped. What people doubt is all the other companies’ shipment numbers, since they are generally pulled out of the asses of analysts. Exhibit A is tablets. All these crazy numbers reported, but how many Galaxy Tabs do you really see out in the world? I could probably count on one hand how many I’ve seen in public in the last 2 years and I live in a major metropolitan area.

    • Buckeyestar

      I know one person with a Kindle Fire, one with a Nexus 7 and one with a Xoom (poor bastard). Everyone else I know that owns a tablet, owns an iPad.

  • http://www.facebook.com/drew.pitchford1 Drew Pitchford

    What should be remembered too is that for newly introduced products, Apple usually is sold out. I.e. will ship in X weeks. So for them, shipment numbers would literally be the number of products sold during those quarters.

  • rattyuk

    My main complaint about the article is that it quotes Toni Sacconaghi. That’s almost as bad as getting reliable information from Enderle.

  • http://newcanuckworkshop.tumblr.com Junesoo Andrew Yang

    Apple has always (at least for the past 4+ years I’ve been listening to the conference calls) quoted: weeks of channel inventory, whether it is below or above normal, and whether it was increased or decreased through the quarter.

  • http://www.johncblandii.com John C. Bland II

    Oops. A lot of fanboy fighters just lost a talking point.

    • Herding_sheep

      Oops, the pretentious troll seems to be bored.

      • http://www.johncblandii.com John C. Bland II

        Awww…how cute you are when you get sensitive.

        I love you too. ;-)

    • http://www.thegraphicmac.com/ JimD

      Not really. Sold is sold. Apple gets their money before the carriers receive the phones. With most other phone makers (including Samsung & Blackberry), the phones are on consignment (for lack of a better way to describe it). If a consumer doesn’t buy it, they buy the units back from the carriers.

      • http://www.johncblandii.com John C. Bland II

        I agree but, as noted in the article, that same concept is held against other companies. I’m just saying the never ending fanboy war just lost a talking point.

        • http://www.thegraphicmac.com/ JimD

          Clearly you don’t understand, because the talking point still stands. Apple uses SOLD, Samsung uses SHIPPED.

  • stsk

    Erica Ogg is one of the reasons I stopped reading Gigaom. She was dim at cnet and hasn’t gotten any brighter. Om’s not an idiot, but that doesn’t stop him from hiring them.

  • DocRoss

    If last quarter’s results showed 4-6 weeks of channel inventory, and this quarter’s results showed 4-6 weeks of channel inventory, and X number of products were sold into the channel, then it stands to reason that the number of products sold through in the channel is very close to X.

    Where Apple is different from Amazon and Samsung is that they publish both the sell-in numbers and the channel inventory numbers. Meaningful extrapolations can be made from that. Amazon and Samsung publish neither, so only guesses, suppositions and ass-pulled-numbers are the only thing possible in those cases.

  • http://twitter.com/Moeskido Moeskido

    As I commented on GigaOM’s:

    “This is certainly disappointing, if true. My question then would be, how do unsold product returns affect the reported sales numbers, and when, if at all?”

    Think I’ll go have a look directly at what Asymco has to say about the subject.

    • lucascott

      Apple doesn’t do unsold product returns. That’s why their requirement that carriers buy X units is so daunting. If they don’t sell it’s a loss to the carrier

  • http://twitter.com/DumaStudetto Duma Studetto

    I don’t really understand any of this. But if Erica is painting Apple in a negative light, she must be wrong – and Om must be wrong for hiring her.

    • kibbles

      why are you here?

  • Solowalker

    I worked for an Apple Specialist for a number of years. There’s also one other bit that may complicate things further for some people that blurs the line between “shipped” and “sold.”

    Depending on your relationship as a reseller to Apple, you can be compensated for your “channel inventory” when Apple releases new products. Basically, Apple will subsidize sales of the older versions to get them out the door and clear the inventory so it can actually be sold.

    For example, Apple releases a new model of MacBook Pro. But you have 2 weeks of inventory of the now “old” one. To help you sell the old ones, Apple essentially refunds you a bit so you can drop the price of the old models which will incentivize people to buy them. The amount varies wildly and can be between $100-$300 for a computer and $25-$75 for an iPod (I wasn’t there long enough to see iPad numbers).

    This helps debunk the notion that Apple doesn’t care about channel inventory once they ship it. I can’t speak for all Apple retailers but they definitely do for the old Apple Specialist class.

    • http://twitter.com/Moeskido Moeskido

      Good to know.

  • lucascott

    Difference is that most other companies don’t have direct channels so its ALL channel sales.

  • Pierre Bourgeois

    From an accounting perspectives, a sale will be recorded when it is made. So for Apple Stores (physical and on-line) it is when the product is shipped to the end user. For other sales (sales to cell phone companies and to re-sellers (like Best Buy for computers and tablets), it is when the product is sold to the re-seller. Provided that the re-seller does not have the right to return or that the experience is that the return level is low based on history, this is essentially the same as a sale to end user. In the case of a company like Blackberry which has no direct sales to end users, the concern is also whether salses to channels are actually selling through. This is historically lell of a concern for a company such as Apple.