Apple's iPhone SE Lead-times Are Still Elongated

I have been tracking Apple’s iPhone SE lead-times since March 30, the day before they became available. While lead-times are not an exact science to determine demand and won’t resolve the difference of opinion on how it is doing, I believe it is worthwhile to see how they change until they get down to one day. The longer lead-times for the iPhone SE and some surveys showing stronger than expected demand for iPhones in general could lead to better than expected guidance. (Note that I own Apple shares).

SE Lead-times have stabilized at 2 to 3 weeks

On March 30 most of the SE models lead-times for AT&T and Verizon models on Apple’s website were at 3 to 5 days with some at 7 to 10 days. On Apple’s China website almost all were at 7 to 10 days and one model was at 5 to 7 days.

On April 9, just over a week after the SE became available,all of the lead-times for AT&T and Verizon models had gone to 7 to 10 days and China’s matched it.

On April 16 all the lead-times for AT&T, Verizon and the China models had lengthened to 2 to 3 weeks and have stayed at 2 to 3 weeks as of Saturday, April 23.

At the 3 week mark post launch the iPhone SE’s 2 to 3 week lead-times in the US and China are the same as the iPhone 5s’. The iPhone 6 was at 7 to 10 business days in the US while the 6 Plus was at 3 to 4 weeks. For the iPhone 6s it was at 3 to 5 business days at 2 weeks with most of the 6s Plus models at 2 to 3 weeks.

One reason for the 2 to 3 week SE lead-times could be that Apple didn’t make enough for the demand. Maybe the demand is very low and Apple even undershot this low number. This would be true if the company had gotten gun shy based on other iPhone launches such as the 5c and to a degree the 6s where Apple has seen its channel inventory grow by 5.2 million units the past two quarters (but some of this was needed to support additional partners and countries).

Since the SE is the same form factor as the iPhone 5, 5c and 5s and technology as the 6s ramping production of the SE should not be a problem. It does feel like there is good demand for the SE.

SE’s usage seems to be growing at a slow and steady pace

Fiksu’s ongoing analysis shows the SE’s uptake (0.4% of active devices using Fiksu client apps) running about one-third of the iPhone 5c (1.1%) and 6 Plus (1.2%) and one-half of the iPhone 6s Plus (0.9%). However, any new iPhone has a headwind from there being a larger install base of iPhones when “success” is based on percentage of usage. When comparing the SE to the iPhone 5c the iPhone install base is probably two times larger if you assume the 896 million cumulative unit sales has the same percentage of active devices vs. the 421 million that had been sold by September 2013. For the 6 Plus the install base is about 60% larger and for the 6s Plus it is 15% larger.

Every 1 million extra iPhone SE’s generates about $450 million in revenue

The base 16GB iPhone SE model costs $399 in the US and based on the iPhone’s average selling price (ASP) about $50 above the entry iPhone price for the iPhone 6 and 6s lets assume the ASP for the SE will be $450. Therefore for every 1 million iPhone SE’s they will generate $450 million in revenue and $0.02 in EPS. If there are 10 million iPhone SE’s sold the $4.5 billion in revenue would generate about $0.17 in EPS. While the SE replaces the iPhone 5s and there will be some cannibalization of iPhone 6′s and 6s’ the SE’s incremental sales could help Apple provide better than expected June quarter guidance.