MacBook Air Sales, Decoded: “Successful,” Not “Thrilling,” Means…

Those accustomed to hearing Apple executives discuss sales performance of new products are familiar with certain restrictions: the company rarely breaks out model-by-model sales for individual new releases, instead issuing only broad sales figures for categories such as “Mac desktops,” “Mac portables,” “iPods,” and “iPhones.” Then, in quarterly conference calls with financial analysts, its executives talk about the figures with enthusiastic code phrases that might sound “smug” to casual listeners, but sometimes subtly signal how well the products are actually performing in the marketplace. Apple’s sale of 1.1 million iPhones during its first full quarter on the market? The company was “thrilled,” according to CFO Peter Oppenheimer. Apple’s opinion on the beginning of the iTunes Wi-Fi Music Store and then-new relationship with Starbucks? “Very pleased,” said Oppenheimer, in a phrase that is used with great frequency. Underperforming products? They tend not to get mentioned at all.

So where does the MacBook Air sit on this spectrum? It was “successful,” Oppenheimer said yesterday, and “customers have responded very well.” That sounds more like the light, standard enthusiasm Apple exhibited for the Starbucks deal than the “boom!” enthusiasm for the iPhone, right? Further quantification came around the 26:40 mark in the call, when an analyst from Goldman Sachs asked about potential revenue shortfalls for the next quarter.

“Our Mac channel inventory this past quarter did increase by about 60,000 in the March quarter,” revealed Oppenheimer, “as the result of the MacBook Air launch and accelerated sales velocity.” This is quite telling. Because of both the MacBook Air’s launch, and the growth of Mac sales in general, Apple—now increasingly good at conservatively managing its Mac inventory to respond to projected demand—has added 60,000 machines that are just waiting to be sold. Since Apple aims for approximately 4 weeks of channel inventory for Macs (3-4 weeks or 4-5 weeks is typical), if the MacBook Air alone had added 60,000 projected Mac sales in 4 weeks, that would suggest that Apple’s prepared to sell around 180,000 Airs per quarter.

However, that number is probably too high. Oppenheimer mentioned that the 60,000 unit bump also includes “accelerated sales velocity” for additional other Macs, both desktop and portable. Notably, though Mac sales grew both seasonally and from the year ago quarter, they were almost flat from Q1 2008 to Q2 2008 – 2.319 Million Macs versus 2.289 Million, or -1% growth from the prior quarter. In other words, total Macs manufactured and shipped into the channel were pretty close to the same from the prior quarter, even taking the launch of MacBook Air into account. We could guesstimate that 50,000 of Apple’s 60,000 increase came from MacBook Airs being added, which would put the Air at 150,000 per quarter. That’s probably still a little high, but maybe not, if the 60,000 number was closer to 3 weeks of channel inventory than 4.

Since Apple sold 1.433 million portable Macs during the quarter, and had MacBook Air on the market for only two of the three months in the quarter, 50,000 units per month would put estimated sales in the 100,000 range, with 60,000 units per month in the 120,000 range. That’s 7% to 8.4% of total portable Mac sales. For obvious reasons, such numbers would be “successful,” but not “thrilling.” Estimates of the size of the ultra-portable computer market peg it at around 10% or less of the total portable market, putting Air in line with expectations, not above it, with future growth expected to come from small, cheap machines like the Asus EEEPC.

There are two other related things worth noting. First, Apple’s television advertising campaign for the Air was extremely vigorous during the past quarter, with commercials airing multiple times during individual American Idol episodes, as well as across many other popular (and ad-expensive) shows. We’ve been wondering: how much could Apple have shaved off the price of each Air sold if it wasn’t advertising so aggressively, and would a lower price have alone triggered more sales?

Finally, we found it interesting that the iPod touch was described in the same terms as MacBook Air. Oppenheimer described the touch as a “success” and said that Apple is “very pleased,” without going into much greater detail about the flatness in iPod unit sales during a time when Apple has said that it’s shipping its best iPod lineup ever. Ten million more iPods in the quarter is fantastic by our yardstick, but we’re still crossing our fingers for “thrilling” new products in the near future.

Your thoughts, readers?

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