On Friday, Apple released the iPhone 5 in China. In just three days, over 2 million iPhone 5s had been sold, which is record breaking for Apple. CEO Tim Cook commented on the successful weekend by saying “Customer response to iPhone 5 in China has been incredible, setting a new record with the best first weekend sales ever in China. China is a very important market for us and customers there cannot wait to get their hands on Apple products.”
Despite these strong sales numbers, Apple stock took a bit of a hit as analysts downgraded it to a neutral stock instead of a buy and have lowered expectations. The reasoning behind comes partially from supply chain order cuts, which brings into question just how dominant the iPhone 5 and Apple’s other products really are. The other reasoning behind it is somewhat ironic. While the iPad has maintained dominance in the tablet market, it has started to slip in terms of sales due to the introduction of an “iPad killer”. It just so happens that the feared iPad killer is the iPad Mini.
So what’s the big deal if iPad sales decrease in favor of the iPad Mini if both are Apple products? Wouldn’t that just be a wash? Well as it turns out, the profit margins on an iPad Mini are less than that of the iPad. This in turn would lead to fewer profits, and fewer profits is a term many investors don’t want to hear. However, with the holiday season still in swing, the iPhone 5 and other Apple gear will likely be filling a lot of stockings once again. And by the end of the month Apple will have launched the iPhone 5 in plenty of other countries. Once the sales numbers come out, investors can get a more accurate picture of the company’s position.