Now as you all know that over the last two years we had many challenges with the carriers and our distributors and this is why I named the distributors like, we have a lot of renewed interest and momentum with Ingram and Brightstar.
Things are happening. I’m encouraged that things are happening but I wouldn’t say that all things are well. I mean we still need a lot of work and a lot of attention and working well together and that’s what I’m spending most of my times on.
Mark Sue
And it also shows John you’re open to reengaging with carriers you have not done business with recently?
John Chen
Yes, absolutely, business is business. If they treat us respectfully, I would definitely do anything I can to reciprocate that.
Mark Sue
Thank you. Good luck.
John Chen
Yeah, thanks.
Operator
We’ll go next to Rod Hall with JPMorgan.
John Chen
Good morning Rod.
Rod Hall, Senior Analyst, Data Networking/Wireline/Wireless Equity Research at JP Morgan Chase
Hi guys, thanks for the question.
I just had a couple of things. I wanted to ask you guys about the old inventory unit number or the impact of ASPs, can you give us any idea what the clear out impact on the ASPs was, or what the unit numbers there were?
And then I also wanted to clarify on the gross margin. I think James you said you guys are internally modeling high 40s for the next couple of quarters but then I think it was part of Tim’s question, you said that the new units are going to drive better gross margins. So I’m just trying to figure out what are the puts and takes around the gross margin and why are you modeling high 40s two quarters out if you think the new products are going to drive better gross margins?
And then lastly can you give us any idea where you think channel inventory ends up in Q4? Thanks.
James Yersh
Okay so a lot there Rod. Let me start with the gross margins one.
I think the biggest difference that you have to account for quarter-over-quarter in the next couple is the decline in SAF.
As that happens it will be offset, as John has said, economically by selling these products but again that’s a very high margin, very high cash type of device that I think you need to account for in the model.
So going from 51 down to high 40s, you can almost explain it on the back of that as Passport and Classic continue to ramp.
Now on to the total impact of just the end of life portfolio deals on ASP, I don’t actually have a number to show what the impact was but effectively that’s probably the bulk of the change from where we were last quarter to where we ended up this time.
And in terms of channel inventory, overall with where we ended up, in terms of number of products in the channel from where we’re looking at we’re pretty flat from the quarter. So I think the channel’s pretty healthy to support the new product launches, Rod.
Rod Hall
So James, the absolute level the channel inventory next quarter roughly similar or you think it will be down somewhat?
James Yersh
I think it will be down somewhat as sell-through kind of outpaces, let’s call it the ramp of Classic and another quarter of Passport is the primary things, Rod.
Rod Hall
Do you have like any idea roughly what that might look like? 250,000 units down or more or less? Would you care to tell me what you think?
James Yersh
I think that’s a reasonable number depending on where we have the supply of Classic which is probably the biggest variable Rod. But it’s a reasonable assumption.
Rod Hall
Okay, all right.
John Chen
Yeah the channels are quite… I think right now the channels inventory are quite healthy and I’m comfortable with where we are.
