That's why these uninformed sources can't be trusted. This Cold Christmas stuff is being made up by people that are just guessing their way through life. The next thing you'll be hearing about is that there isn't going to be a 3G phone for a while. Apple never made any statements about releasing any 3G phone at all. Meaning these sources read some rumor there was going to be a 3G phone and it's like Apple changed it's mind or something. These people know nothing. They're total idiots trying to get attention and confusing investors in the process.
Other than Roger Entner, Moritz's sources are all anonymous cowards (or just imaginary). And over at RoughlyDrafted, Daniel Eran Dilger has already exposed Entner's connections to Apple and AT&T competitors. So we know Entner's motives, but other than for stock price manipulation, I keep wondering what Scott Moritz gains so as to be so willing to completely destroy his credibility.
Keep up the good work exposing these guys as frauds. The Internet needs it.
Blackfriar estimated 500,000 iPhones for the first weekend when iPhone was first released. It probably took almost all of July even to get to 500,000. So I think many overestimated iPhones sales.
Does iPhone make an appropriate gift though? So you expect the person that receives the gift to go out and buy a hefty 2 year AT&T contract? I think it is only appropriate as a gift for someone you know that has AT&T already.
Giving an iPhone is a booby gift. It's the gift that keeps on taking.
A good gift to give somebody that you hate is a free iPhone and a $600 flight to Europe. After they pay a two year contract of $1900 and then have to pay for roaming charges of about $2000 in Europe, you'll definitely get your revenge.
I read [at Paul Thurrott's internet nexus] that if you input a fake Social Security number when activating, you will be allowed to get a month by month contract. I switched from Verizon to ATT1.5 years ago and get equal service but get rollover minutes [keep unused minutes] and great customer service. They replaced faulty RAZR 10 months after I bought it at Best Buy [and switched to Cingular], then replace my 11.75 month old Treo that I got for free at TDAmeritrade. and gave me 90 more days warranty [that was to expire in 2 weeks]. For some reason, the Treo was covered by ATT the instant that it was activated. I am a happy customer. Verizon wanted twicw as much for my RAZR and would give the $100 upgrade coupon to me, but not my wife who was on the family plan with me. So much for "new [phone] every two [years]". With that service, they mean "new company every two [years]".
Also, we do not know how many phones were sold the first week accept that 270,000 were on the first 2 days. They could have gotten close to a half mil, but why speculate since we will never know. Hopefully, that 16GB 3G phone in November is not a hoax, and will be sold in USA at the same time. Maybe it was the real reason for the price drop. The price drop could not have sold millions of phones in 4 days, but again who knows?
Is the iPhone an appropriate gift? It's a stunning gift... to someone who has said they want one. Just not an appropriate secret santa choice.
Carl... I NEVER get tired of re-reading that Business Week article. It is just such an excellent lesson in vision, great execution, and the value of customer experience. And it is amusing reading the figures for store leases... practically petty cash for a company that would go on to net a billion dollars after taxes in a single (holiday) quarter.
Plus a reminder what upside there is for Apple in expanding its retail model to the rest of the world.
I am confused. It seems obvious to me that the price drop is in anticipation of a 16Gig Iphone, once they can get enough of these chips. The Itouch 16Gig isn't even available until the end of the month, thus I assume they will not announce a 16gig Ihone until they can make enough, hopefully in October. I, and MANY of my friends, are waiting for this version, and WILL BUY it as soon as it becomes available.
Am I alone here? Or am I wrong to assume that this phone will be coming?
Overall, I agree with your post.
I do disagree with your 3rd factor - iPhones became freely available after this 21 day period. If someone wanted to buy an iPhone then they just had to wait a few days (weeks). The (delayed) sales still are accounted for in the 74 day sales period.
I think the biggest thing missing from these discussions is talk about the iPhone itself. If the iPhone were merely a mediocre prodcut, then Steve's fabled RDF would have caused the iSheep to buy their iPhone but sales would slowly sink to unimpressive levels. The truth of the matter is that the iPhone is a fantastic, game changing product which will lead to increased demand. Tie that in with the $200 price drop and Bam! lots of iPhones sell.
It's worth repeating - people like to buy products that are great.
Apple has shown (via $200 price drop) that they are serious about selling lots of iPhones. I think Apple will continue to improve, enhance & innovate the iPhone.
You forgot one reason why his straight line extrapolation was silly: the iPhone price is now $399! That will induce a deep inflection point in the sales curve.
I'll echo Mitch's comments.
In addition, iPhone is somewhat unique in the cell phone business in that free software updates are going to substantially improve the feature set (cfr. the new iTunes WiFi Store). (It's not _quite_ unique, but the ease with which this is accomplished really sets it apart.) That has two effects: (1) Future buyers will perceive more value, and (2) earlier buyers may buy with that expectation in mind when deciding whether iPhone meets their value requirements.
Wrt. iPhone as a gift, I'd expect that by far most gifts in that price range are between household or family members, and the issue of subscription costs are typically worked out ahead of time in those circumstances (and often silently borne by the household budget).
That said, reaching 10 million unit sales by the end of 2008 is not a done deal IMO. It certainly seems possible, but I wouldn't place bets (wither way) myself.
The critics of the iPhone also seem to forget that the 1 million iPhones sold were only sold in the US. What kind of sense does it make to assume the Apple will be "selling [iPhone's] at a consistent rate" ???
Are they assuming that International sales will = 0? There are more people living 'outside' of the US you know? Maybe we should send these critics some maps from http://mapsforus.org/.
I don't think iPhones were that hard to find for the first few weeks. I bought 2 on day 1, 2 more the next day and they were available all week after that. Maybe the stores sold out by the end of business, but there were trucks rolling in every day. I wonder though, how many people settled for 4Gb when they were looking for 8Gb but they'd sold out...
Maybe the availability was good in NE, I can't really tell from your movie if it was the same across the country.
Carl wrote:
"iPhones were very hard (at Apple stores)to find for nearly 21 days of that selling period"
Fair point, but online ordering was always available with two week shipping. There was no reason to wait in line on the first day. I think 24 hour shipping was available by the end of July.
Why is everyone forgetting that the iPhone is going to be released in Europe and Asia? 10 million units while considering 18 month availability in USA, 12-15 months in Europe, and 6 months in Asia is very doable!
The idea that a company must be selling little of something because it is not available is flawed. In reality, the fact that something is not available usually means that a company is selling a lot, see Wii. Nintendo is shipping over a million Wiis a month, yet they are often gone from the stores within minutes. of their arrival. Just because you can't find something in a store does not mean that a company is not selling it. Just the opposite. In other words, the fact that iPhones were hard to find during the first weeks does not mean that Apple didn't sell a lot of them during the first week.
> Why is everyone forgetting that the iPhone is going to be released in Europe and Asia? 10 million units while considering 18 month availability in USA, 12-15 months in Europe, and 6 months in Asia is very doable!
Everyone repeats the same wrong numbers and the the same wrong international mantra. Steve was explicitly talking about 1% market share in 2008. That is 10-12 million phones sold in 2008 alone. Phones sold right now, do not count into the numbers.
Considering this, Apple will have to sell 800'000 - 1 mio phones per month next year. This is not in any way given and the numbers as of now do not prove that they will manage to do so.
Selling phones in Asia (I assume the markets will be Japan and Korea) is a whole new ball game. The iPhone will need a serious upgrade to work in such an environment. Most probably it will have to offer certain services which are not even available in US or Europe. Furthermore the input of japanese and korean signs will be essential for success in these markets. Can Apple get that done? Sure. Will they get it done? We will see.
The same counts for Europe. There is a number of factors which are more relevant in Europe than in the US. UMTS density is a lot higher here. But maybe even more importantly, many people refrain from buying SIM locked phones. Europe has many small countries. That means that you travel out of your own country more often. When you do so, you want the option of using a local SIM card.
Is 1 mio a good or a bad number? Well it is a great number if you take it as such. But it is an ambivalent number when trying to find out if Apple will succeed to get 1% market share in 2008.
I think there is something that I do not hear much talk about that will certainly boost iPhone sales too. That is, the number of us loyal Mac fans and investors that are simply waiting for the second generation to be available.
When that is, I do not know, but I am sure Steve Jobs has built that into his projections. There are many sitting on the sidelines waiting, not for bugs to be fixed (those are easy enough through updates and patches), but for some other critical features.
The fact is, while it is far more advanced than any other phone on the software side, iPhone cannot replace my Treo 650 as a PDA just yet. I'm sure they aim to do that. For example, tasks in iCal will not sync to iPhone, nor will notes. There are no MS Word, Adobe, or Pages readers available yet. I suspect some of these issues will be resolved when Tiger is released in October, making me much more likely to go in then. I am ready to ditch the cumbersome Treo as soon as possible. I am not alone.
From a hardware side, I think too, that if the 2nd generation iPhone will work on 3G here in the states, you will see even more people buying it. Add a GPS and perhaps a little larger memory and there would be nothing really missing from the hardware side and it could carry a user well into the 4th generation phone someday. I think at that point, they would own the market and 10 million sales in 18 months becomes a very conservative estimate.
No one can doubt the impact the iPhone has had on all the other phone companies; many rushed to get something out there with similar features as soon as possible after Apple announced the iPhone at its conference. Apple is, and has been for many years, a trendsetter...they are very good at what they do. We should not ever underestimate them.
Waiting patiently to see what Tiger does to the iPhone, and hoping I do not have to wait until the 2nd generation to get my full PDA functionality.
I find your iPhone comments very insightful. I would like to refer you to a cell phone commentator with a different take on the iPhone price cut. Check out:
http://mobileopportunity.blogspo...-and-
apple.html
He postulates that the price cut was in part a preemptive strike against potential competitors, particularly Nokia, as well as better positioning the EU version of the iPhone., Your comments would be appreciated,
V.M.
Thanks Vic,
I viewed the sight and agree with most of his comments...
Personally, I agree and believe Apple had to make the price cuts to be competitive, both here and Europe. I think it puts the phone in line with those who can afford larger iPods too. Why buy an iPod when you can get an iPhone...further, why buy the iPod touch, when you can get the iPhone...perhaps it is a product leader for the iPhone?
I take a slightly different view on the threat of Nokia though, especially in the US. Great phones, great technology, but Apple wins hands down in usability, interface, and certainly the "coolness" factor. I think that anyone who currently owns an iPod and a cellular phone, will eventually replace them both with an iPhone. As the number one mp3 player out there, and the coolest looking/operating phone out there, that is a huge market to tap without really having to convert anyone to buy an Apple product.
Clearly, iTunes is one of the major players in the market...yes, I believe they should loosen their restrictions a bit, and believe they will eventually have to in order to keep their prized status. But, I cannot see Nokia being a serious competitor anytime in the near future in the music business. Mac has been at it too long and does it too well...there is also a large brand name loyalty when dealing with Apple...I don't think many will just go shopping for another music provider. The battlefield will surely be for new customers, and personally, I still think Apple will win in the US.
I have owned a number of Nokia phones before, but getting them to sync, especially with the mac interface, is less than desirable as compared to how an iPhone syncs with a Mac or PC. Don't get me wrong, it works well, but the interface is just so complicated to rely on those phones as PDA's, and often all information will not sync because they are limited by the phone's software. Of course, I have not seen the new phones that the writer on that blog refers.
I also think, that as mac takes more of the computer market, and they are certainly doing so, while Vista continues to struggle, it is only natural to prefer a device that is made by the same manufacturer. As one who has owned two macs, three ipods, and a dozen cell phones from other manufacturers, the thought of having a phone that eliminates my ipod, and eliminates me having to pull out my laptop on the road to get online, allows me to keep my camera at home because it has a real camera in it, and uses the same interface and software as my computer (especially with regard to media) is like a dream come true. I have to carry less around, I trust syncing perfectly, and I look very cool...we cannot underestimate the coolness factor which Nokia just does not have.
We should also note that in July, iPhone outsold all other smartphones...mostly first wave Apple loyalists and by people who want to be cool with the latest gadget, I believe. I am not sure how many people went o
part 2
We should also note that in July, iPhone outsold all other smartphones...mostly first wave Apple loyalists and by people who want to be cool with the latest gadget, I believe. I am not sure how many people went out and bought the iPhone because they needed a phone...this is a revolutionary product to which I think no one will be able to catch up. As other people need phones and mp3 players, more iPhones will surely sell.
So, in the end, I still think Jobs will meet his sales projections and am anticipating improvements on the OS side with release of Tiger and other updates, but I still cannot buy one until the remaining PDA functions are established, which surely must be in the making. There is a huge portion of the market waiting for full PDA functionality, and at that, Palm/Treo is in big trouble too.
If I were a prophet, as a trend-setter, I would think Apple will enter the video game business at some point. They are already doing games for the iPod and iPhone (as announced in last weeks conference)...with iTV's functionality, I see a great opportunity for them here...imagine playing the same video game (downloaded from iTunes, no doubt): on your tv, your computer, online, and on your iphone...now you are shutting down XBox, PSP, and Game Boy with one fell swoop. You only have to buy one game, and your progress could sync across your devices. If I were Jobs, I would work at this next.
iPhone is here to stay, and will continue to revolutionize not only the phone industry, but music, computer, and I think, eventually video gaming industry. I'm very glad to own apple stock...I sold my MSFT and my Nokia a long time ago.
...just my humble opinion though. Hope this helps.
Thanks for the comments. It could also be that Jobs is now seeking market share and economies of scale as opposed to maximizing ROI. If so, Apple can reduce cost of goods, where Nokia I am sure has advantages, as well as soaking-up flash memory. Rumors of a V2, 3G enabled phone for the EU is intriguing. Jobs must already have V3 or V4 cooking in the back room.
Any idea hoe AAPL is accounting for the $100 store certificate? Prorating revenues over 24 months was brilliant.
"I have owned a number of Nokia phones before, but getting them to sync,"
That's what killed the Palm Pilot. I was an early adopter; I thought they were kind of cool. But, they never got the syncing to a point even CLOSE to easy and reliable; you'd have thought that would have been a top priority!
"while Vista continues to struggle"
Vista hasn't even made the jump to UNIX; it's AT LEAST 15 years behind OS X, technologically. And Windows' development tools are also quite primitive compared to X-Code.
".... I would think Apple will enter the video game business at some point."
I think Apple is already benefiting from the fact that many gamers use consoles now instead of desktop computers to play games. It blunts the impact of the fact that there are somewhat fewer Mac games than PC. I think in 5 years, game consoles will be passe. A Mac Mini or the like with a juiced up garphics card will prove cost-competitive and more versatile. PC's and consoles are converging in price; thus, consoles are living on borrowed time.
Vic,
Yes, I think Jobs is seeking market share over ROI in the short run; but I feel pretty sure they will still be making money from iPhone now, and going forward, they will make all the more for it.
I for one, have never thought that Jobs was scared in reducing the price, but that he is being quite aggressive. They did manage to sell a million phones at the high price, but to be competitive in the cell phone market, they had to come down. Might also be a cold-war strategy, pricing near other smartphones who can't keep up with them.
As for the $100 credit, that does not translate to a $100 loss. INHO, it is also good business. Apple groupies are like family and you want to treat them right...highest customer service rating of any computer company too, I might add.
Some other iPhone thoughts...
With as much as the iphone discussion boards on the mac website are all clustered with requests to sync tasks, notes and have some kind of reader/office ap, I cannot help but believe they will institute these things with the release of Tiger or in 2nd generation. In Tiger, events and to-do's are linked in under the mail program, so there are some changes coming that might explain their failure to do it on this application version of iPhone, but easily changed/added by an after- Tiger update, I would think. There is still a lot of blank space on the home screen for a few more icons. Besides, what is reasonably
left for the 2nd generation to do besides these things and perhaps a gps and a 32GB memory?
Some would say that iPhone is not trying to enter the smartphone/PDA market. I disagree. As for PDA functionality, just adding those few things, that frankly should have been there to begin with, will make it a fully functional PDA. It will have the largest screen out there, and coupled with all the other benefits of media and web, it should take over the PDA/ smartphone market too. Why wouldn't they want to do that? They are the only things keeping it from being the phone of choice in the business world (save the walkie-talkie phones). Why wouldn't anyone who has a PDA/smartphone want to replace it with an iPhone? I know Palm/Treo is running scared from other posts and news commentary, and if Apple will add those few simple features, which would not take much to do IMHO, Treo is done for and I cannot imagine Nokia ever being as cool or functional.
Let's also remember that the iPhone outsold other smartphones in July. I'm sure everyone who bought them would like to have those
features. I am even willing to forgo the reader right now, just give me syncing with my tasks and notes, and I'm sold as I think a good
many of that 10,000,000 projection would be too.
Surely these things will happen soon, and so will more sales.
Here's one way to think about Apple as it converages media (content), Internet, computing, mobile, and retail. Think: 1) Devices, 2) Content, 3) Device Sales Channels, and 4) Content Sales Channels. Apple is continually leveraging its success in one area to allow it to strengthen and expand into another area.
Devices includes mobile (iPod, iPhone), Macs, and Home (AppleTV).
Content includes music, audiobooks, music videos, TV shows, movies plus free content like podcasts.
Device Sales Channel includes the Apple Stores, Other retailers, and Apple Online Store.
Content Sales Channel includes the iTunes Store, iTunes Wifi Store (which is really hotspots), and maybe someday the iTunes 3G Store.
How does it work? Similar to how Sony is using PS3s to aid establishing its Blu-Ray drive (which helps its movie studio), and also to sell TVs. But Apple's is much deeper and more intricate woven.
Generically, Devices sold and in use allows Apple to get Content from creators for sale in its Content Store on good terms. The relatively large amount of Content in its Content Store increases demand for its Devices. The high demand for Devices allows Apple to sign up more Device Outlets (retail stores) to sell its Devices on good terms. The large number of Device Outlets leads to sales of Devices (and related enhanced Devices) and more Devices in use.
Additionally, high demand for Devices allows Apple to vary and still sell Devices that allow it to enter related content or channel markets, like video, and now wifi and cellular.
More concretely, beginning in 2001, the first loop was Apple's own retail/Internet stores and Mac fanbase, leveraged to sell audio iPods, leveraged for music and audiobook iTunes Store content in 2003, leveraged for iPod and iPod mini demand in 2004, leveraged for more iPod sales outlets, yielding more iPods and iPod minis sold. That was leveraged again for the iPod shuffle in 2005. Then it was leveraged again, this time with music video and TV show content in 2005, iPod w/video demand, and more sales outlets. Then it was leveraged again in 2007, this time for movie content and the Apple TV. (This loop is incomplete and I think the iPod nano with video priced at a low price of 149 is Apple's key driver to bring more and higher resolution movie content to the store.) While that loop is continuing, the latest loop is to leverage its iTunes content for the iPhone, allowing entry into the cellular market, and now coupled with the iPod touch, has already allowed for an iTunes wifi content sales channel and the signing up of Starbucks hotspots (with maybe more to come). Maybe when 3G arrives and more iPhones are sold, Apple will add an iTunes 3G cell content sales channel for the iPhone, which will bring even more content to its iTunes store. And Apple could soon leverage having so many video-capable devices, to allow it to go into movie rental on good terms.
The constant leveraging is like a torna
Continued:
I think the aggressive pricing of the nano to increase video-capable player sales partially caused the low prices of iPod touch and iPhone, because it will help to establish AppleTV. The aggressive pricing on iPod touch and iPhone is also to establish the iTunes wifi store and gain more hotspots, which Apple will then leverage to sell other things as well.
The constant leveraging is like a tornado, as it sucks in more devices, more content, more device sales channels, and more content sales channels. Apple's strategy is pretty incredible and deserves a much more rigorous analysis.
Carl, if you agree that this is happening, maybe you can be the one to put together this analysis.
Seems to me that the $100 certificates probably represent a contingent liability until used. My question is how this Apple will handle the accounting.
Otherwise it is fascinating watching Jobs spin his web. Apple case studies be fodder for MBA students for years to come.
V.M.
"Apple case studies be fodder for MBA students for years to come."
yea, but at the end of the day, they'll still be MBA students. I am amazed at how many business execs and analysts totally fail to understand what's going on. MSFT became a HUGE company leveraging far,far less than Apple controls right now (They had a half-baked OS and an Office suite, that is; nothing else makes money for them. Contrast to Apple: iWork,iPod,iTunes,OS X, stores, Macs,FCP,Filemaker-- all make money, and iLife feeds into Mac sales.)
The future is H.264. Between AppleTV, Starbucks, the iPhone, Youtube-- it all comes together. Content EVERYWHERE.
I need to make two corrections...its what I get for responding in a rush.
1. I referenced that Tiger was the new OS coming out in October, of course, I meant to say Leopard.
2. It came to my attention late last night, that Apple has added a PDF, Word and Excel reader. It is hard to find any info on this, but it does appear on their new iPhone demo video. It is not editable, as in Documents to Go or a Windows Mobile version, and, for many, it does not include a PowerPoint/Keynote viewer. Perhaps in v.2.
I still maintain that when Leopard comes out in October, expecting a few missing apps to be added, and a few limitation to be resolved, more sales will ensue.
I also expect the bulk of the 10,000,000 projection to be fulfilled with v.2, correcting a few hardware issues that are made known in v.1, and hopefully 3G (perhaps v.2 is the European version to be simultaneously released in the US). As trendy as Europe is too, they will surely count for a lot of those sales as well.
Sorry for the inadvertent errors on my part.
Well NYC had plenty of iPhones despite everyone saying they were sold out in the Big Apple after the first few days. This was simply not true. It makes no real difference but Apple has gone from the firm everyone hated to the company that can hype its way out of any reality zone.
Fact it sold 1 million, how it got there is not represented well. And if a 3G iPhone is announced soon it could have drastic financial impact on Apple as AT&T allows 30 days returns and all those who bought recently can return. Also why not wait till Xmas anyway?
Jobs will get his millions but not in the gravity defying way that is often described.
Accepting a $400 iPhone to trade up to a $600 iPhone would not be too painful for ATT. Apple can then refurbish and sell the returned iPhones for $300 and have another customer generating monthly revenues from the ATT service contract.
Early adopters always have Ebay to recapture a good part of their initial cost if the want to trade-up. Note that the $300 4GB referbs sold out in less than a week.
Don't sleep on apple,
My take.
V.M.
Just checked the Apple store. 8GB Apple Certified iPhones are available at $349. Another base covered. Don't see millions of dollers of exposure if and when the V2 arrives..
V.M.
>Well NYC had plenty of iPhones despite
>everyone saying they were sold out in
>the Big Apple after the first few days.
Everyone is saying that they sold out because it's true. Apple had a store selector showing where the iPhone was still in stock, and after the first day, it was out of stock pretty much everywhere. Afterwards, most shops sold stock as quickly as they got it for a few day, so the list was pretty much flickering shops in and out as restocks came and were sold out again.
The iPhone as a gift? I'd be ecstatic! 
Commenting by HaloScan
