Report: iPhones piling up at AT&T stores
Is demand for the iPhone in America already starting to wane?
AT&T, the exclusive American carrier of the iPhone, activated just 900,000 iPhones during the fourth quarter, the company revealed during its earnings conference call Thursday. It wrapped up the year with "just at or slightly under 2 million iPhone customers," according to company executives.
Apple announced at Macworld that it has sold 4 million iPhones through the middle of January, and Toni Sacconaghi, a financial analyst with Sanford C. Bernstein, thinks the gap between the figures means that Apple might have a demand problem. He released a research note Thursday after AT&T's earnings saying that the carrier's figures imply that an awful lot of inventory is building up at Apple's channel partners.
Are people getting tired of the iPhone, or just holding out for iPhone 2.0?
(Credit: CNET Networks)"We believe the data points to a significant amount of iPhone channel inventory...This is negative in two ways: (1) it indicates end-user demand for iPhone is lower than many investors may think based on Apple's sales figure; and (2) it points to slower iPhone sales in the current quarter, since much of this inventory is likely to be drawn down," Sacconaghi wrote in his report.
Let's walk through the theory. Apple said on Tuesday that it sold 3.7 million iPhones in 2007. But AT&T said Thursday that it ended 2007 with around 2 million iPhone customers.
One huge difference between the third quarter and the fourth--other than the temperature--was that the iPhone became available for sale in the U.K., Germany, and France through other carriers. But even the most optimistic estimates for iPhone sales in Europe didn't come within shouting distance of 1.7 million units. O2, the exclusive iPhone carrier in the U.K., has said it expects to have sold 200,000 iPhones by around this time, and France's Orange and Germany's T-Mobile were expected to sell about 100,000 units each in 2007.
So that leaves 1.3 million iPhones to find. (Sacconaghi only estimates European sales at 350,000, so he uses 1.4 million.) The first theory would be that iPhone unlocking is rampant.
But how is that possible? The Great iPhone Hack settled into a bit of a stalemate with the release of the 1.1.2 firmware. On the day the iPhone was released in the U.K. and Germany, Apple released the 1.1.2 firmware upgrade for older iPhone users but included an updated version of the iPhone's bootloader--which loads software from storage--on all new iPhones that made unlocking the phone to run on other networks much, much harder and virtually impossible through software.
After venturing a guess in October that as many as 250,000 iPhones had been purchased with the intention of unlocking, Apple Chief Operating Officer Tim Cook declined to make an estimate this time around, saying the company didn't have a reliable way of estimating the total. According to Sacconaghi, even if you assume 20 percent of all iPhones purchased in 2007 were bought with the intention of unlocking--which was Cook's rough estimate in October--that still leaves 670,000 iPhones unaccounted for in 2007. Where are they?
Apparently, they're on a shelf somewhere. "Excluding Apple's own stores, there are about 4,400 total iPhone distribution points worldwide, suggesting each had more than 150 units of channel inventory at the beginning of this year. We believe channel inventory likely built even more in the first few weeks of 2008, given Apple continued to ship iPhones at a high run rate," Sacconaghi wrote.
Apple still expects to sell 10 million iPhones during 2008. It can easily do that with launches in Asia and other European countries, a new 3G model, a price cut, significant new applications delivered in February alongside the release of the software developer's kit, or all of those factors. It's not hard to imagine that a lot of people are waiting for a faster iPhone.
But it is hard to believe the iPhone phenomenon might already be subsiding in the U.S. after just six months, although Wall Street is clearly worried about Apple this week despite soaring Mac shipments and an excellent holiday quarter. Apple's stock has lost 15 percent of its value this week. Granted, it was a bad week for lots of companies, but even in the face of a broader rally Wednesday and Thursday, the stock continued to shed value Thursday.
Tom Krazit writes about the ever-expanding world of Internet search, including Google, Yahoo, online advertising, and portals, as well as the evolution of mobile computing. He has written about traditional PC companies, chip manufacturers, and mobile computers, spending the last three years covering Apple. E-mail Tom. 
phone, but you need a 3G network right now only about 10% of
AT&T's network is 3G. I suspect Apple is waiting for AT&T to expand
their network before offering a 3G iPhone.
The plan for data and and talk minutes at $60 is very comparable
for a phone of this type with the market the phone is intended for.
Your last statement is 100% correct.."HELLO THIS IS A PHONE". You
are right it is a phone. You talk on it. Apple considers this as a iPod
with a phone built in. Not a phone with texting and music capabilities. If you are looking for texting first I would say that the
iPhone, the plan that AT&T has set-up, and even AT&T as a carrier
are the wrong places to look. Texting would be much better on a
Ocean from Helio or LG enV from Verizon. Something with a tactile
keyboard.
The iPhone has a cool interface, but other phones have just about better everything else. Since my phone is based on Symbian, there are thousands of apps out there already.
And the best part...the 2 phones cost less than 1 iPhone.
AAPL's market capitalization is 118 Billion and MSFT's is 311 Billion. That would indicate that AAPL is a bit more than a Third as valuable as MSFT.
UM. Does this mean that you now think Apple's share price is going to go up?
valuations. MS market cap is about $311B now, and Apple's is
about $120B That makes Apple worth about 40% of MS.
S/he doesn't understand the markets that well. MS is a good
company, so is Apple.
I do think Apple's stock is "on sale" right now. Certainly not
worth $200/share, they need an attitude adjustment first. But
worth well more than $150.
to sell high volumes to make large profits. Unlike Dell who actually
has 5 times the market share as Apple and Microsoft products are
by far a majority in the OS and Office software. Apple is a niche
company that makes every dollar add up. I won't say they screw
customers. But they don't sell cheap stuff with low margins ether.
more "mobile savvy" than their American counter-parts. If you take
the basic Nokia phone and compare it side by side with an iPhone,
the iPhone loses in just about every category. If the UI were
stripped away, the iPhone would reveal itself to be a 3 to 4 year old
phone and many to most Europeans know this. Why buy yesterdays
technology? Buy an iPod Touch, BluEye kit, and you have, instant
iPhone.
I'd just as soon switch over to a Helio Ocean or other smart device.
lower their prices. Get this and remember this. APPLE IS NOT YOUR
FRIEND. They are no better than M$ when it comes to money. Did
you already forget the $20 iPod Touch application upgrade. Real
friendly there.
Dude, stop believing the Apple hype and join the real world.
You keep telling yourself that. It might even make reality go away. Maybe in that parallel Universe you inhabit, Windows Mobile is a huge success, too.
ATT cell service and just switched to an iPhone, ergo - that is
where the "other" iPhone sales are.
Very poor reporting by your staff.
Shame on you for trying to "make news" rather than reporting
news!
they would have had me if they bumped it up to 16 to match the
iTouch.
Apple wither back to what it was....irrelevant.
at an AT&T Store compared to an Apple Store.
I am sure people have had bad experiences shopping at an Apple
Store, but it has been my experience that is generally better than
any cell phone store.
she got a 30 minute lecture about why she shouldn't buy one--all
the problems with the phone and apple computers, more
specifically--They were trying to get her to buy any other "smart"
phone. She ended up leaving with no phone at all!!!!
I understand why they are piling up at at&t stores. I am waiting for
iphone 2 and when I get it, it will definitely be at the apple store.
Apple must remember that when you lay down with dogs....
initial customers with high prices and an incomplete feature-set,
only offering a $100 credit to early adopters.
3G is still not out, and Apple keeps shutting out 3rd party apps,
and has no system of their own (due next month). Many of
Apple's programs on iPhone still lack things people expect and
other apps still aren't there, like full push-email functionality,
A2DP, MS Exchange support, computer data-connection
sharing, iChat, MMS, Video Capture, GPS, VoIP, etc.
As good as it is, it still has a long way to go. The worst part is
the ridiculously slow AT&T EDGE network!
Apple should have made the initial iPhone with HSPA/Edge, and
allowed the HSPA features to be turned on at a later time with a
firmware update, instead -- existing customers will be alienated
and have to buy new hardware...
Apple should also make a combo wireless radio that can work
with ANY wireless carrier in the same phone -- that would
greatly help sales...
HSDPA does the same. SImply putting in a 3G radio would have
been the best bet to sort of future proof the iPhone but Jobs and
Co are greedy just like everyone else. My Nokia blows the iPhone
out of the water in terms of specs. If you take away the UI, the
iPhone is a 4 year old phone that people were dying over. Look
at the Europeans. They are buying the iPhone not for the
technological advantage but simply to carry their music and
phone in one platform. They are smart enough to know the
difference.
between my fiance, her sister, and myself.......If it had been with
T-Mobile. Going with a more progressive company like T-Mobile
wold have increased eh amount of phones sold, rather than
going with the biggest and worst, AT&T, in hope to gain market
share.
That was a huge mistake.
So T-Mobile doesn't have a 3G network? So what? it's not like
the iPhone is 3G. Everything is focused on wifi, and the wifi
network they use is T-Mobiles!!!!!!
I am a big apple fan, and am even writing this on a brand new
24" iMac, and will still say, as I said the day it was announced
the partner was AT&T:
That was the biggest mistake ever and will turn around to bite
Apple later.
AT&T stores, based upon the T's advertising lately. T is advertising
their blackberries and everything but iPhones. Likewise, Apple's
advertising is also down lately. Tells me there is no surplus.
between my fiance, her sister, and myself (just as I did with our
Blackberry Pearls).......If it had been with
T-Mobile. Going with a more progressive company like T-Mobile
wold have increased eh amount of phones sold, rather than
going with the biggest and worst, AT&T, in hope to gain market
share.
That was a huge mistake.
So T-Mobile doesn't have a 3G network? So what? it's not like
the iPhone is 3G. Everything is focused on wifi, and the wifi
network they use is T-Mobiles!!!!!!
I am a big apple fan, and am even writing this on a brand new
24" iMac, and will still say, as I said the day it was announced
the partner was AT&T:
That was the biggest mistake ever and will turn around to bite
Apple later.
'iPod'/Walkman functionality - and excellent sound quality too
thanks to the pre-amp Sony built into the stereo bluetooth
thingi.
2. Stereo FM RDS radio with equally impressive quality.
3. Email client
4. Very well conceived address book with various smart features
that SE keep improving
5. 3G for speedy web browsing etc. (And in a way, the way it
renders pages is better than the iPhone because you can read
the text without needing to zoom in. Think about this!)
6. Zillions of apps for downloading.
7. Probably, even today, the best mobile phone camera - with a
very effective flash.
8. Fairly good battery life. (And you can remove the batter too.)
9. Tactile keypad still faster than touch screen for texting.
10. Available on all networks, even almost 2 years since launch
or no cost or about £80 on pay as you go.
I will end this post by saying that I have spent much time playing
with iPhones in the stores and the multi-touch interface is
stunning and brilliantly implemented. However, the phone is so
garden walled it lacks anything to make it a creative tool. (K800i
has various fun apps for making music, editing photos, video
etc.) But the biggest flaws are the lack of a decent camera,
stereo bluetooth, a slide out mechanical keyboard like the
Samsung F700 and of course, 3G. (Battery life excuse is b*ll*cks,
most British 3G phones last just as long as their 2G counterparts
today.) Apple failed to do their market research - as they did
with the sexy but flawed (and possibly doomed) MacBook Air.
This typed on the very well researched and conceived MacBook
(Black) that does lots of things very well.
P.S. iPhone 2.0 will be even more amazing and will make up for
the flaws in 1.0. And I'll buy one if it is available on Vodafone.
phones until the iPhone and my last SE was so pathetic in terms of
build quality and feature set I'd never consider another.
Yes it has a nice radio. It needs it because the MP3 player is so poor, The sound quality is very poor compared to an iPod and the volume is poor. Web browsing is also poor. I use Opera Mini on it and it is a poor browser compared to Safari on the iPhone. Opera Mini works for reading web pages by zooming in. It has to zoom on such a small screen.
Emails? Okay so I can read them, but replies are painful because there is no keyboard. It matters little that the cramped numeric key pad is "tactile".
Battery Life is important when using 3G features, TV can flatten a battery in 30 to 40 minutes.
The list of apps is not zillions, and most of them are very limited or simple. The small screen reduces the useability of things like Google Maps.
Most importantly the software is flakey. Some features work poorly like the voice activated dialling that just turns itself on for no reason every so often. Video calling? Great! if you could ever find someone who also can do video calling which is virtually never. Animated picture messaging? 90% of all phones can't accept the messages. Blog This? Nope, the carriers won't let that feature work.
The long list of features is not so useful as it looks on paper. What is the good of a large set of features if they work poorly? You and I both may have good reasons for sticking with the SE K800i but don't get carried away beleiving that it is better than it really is, or that the iPhone is poor in comparison. It ain't.
From the number of my friends who have purchased iPhones from the US and hacked them to work on local Australian networks I suspect it is likely the hack market figures may easily be too low due to unknown usage outside the USA.
- Apples Hype does not always work
- by jscott418 January 24, 2008 5:35 PM PST
- Sometimes Apple over hypes a product and people buy the product
- Like this Reply to this comment
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- Gales of Derisive Laughter.
- by His SHadow January 25, 2008 12:31 AM PST
- "Plus, the competition has already come out with similar phones, some of which are cheaper and in some ways better."
- Like this
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Showing 1 of 3 pages (108 Comments)just because they thing everyone else is going to buy it. Americans
do this all the time. However, I think Many found the iPhone to be
harder to use or lacked features or simply hated AT&T. Whatever
the case the iPhone has lost the enthusiasm it had when it was
released. Plus, the competition has already come out with similar
phones, some of which are cheaper and in some ways better.
I'll never tire of hearing this. Similar? Yes, similar in that they make phone calls. That's pretty much where it ends. Cheaper? You get what you pay for, and in light of the iPhone, what you get isn't much.