Are iPhone sales weak, or strong? Many people are looking to analysts for guidance to help digest Apple's latest earnings report, but the skepticism over the iPhone numbers appears to be seriously misplaced.
First, a little background: The experts have been wrong before when it comes to iPhone sales. In January 2007, when the iPhone was introduced, Steve Jobs predicted that Apple would sell 10 million iPhones in calendar year 2008. His prediction was widely derided by analysts and Apple skeptics -- and even some Apple backers. Those who said it was possible or even likely were discounted as fanboys.
Now the results are in. Apple actually sold 13.7 million iPhones in 2008, 37% higher than the goal set two years ago.
What about the skeptics? Here's what some of them had to say in 2007:
Lance Davis, writing at the UK Register, heavily discounted the likelihood of the iPhone reaching such stratospheric heights. He was wrong on every count. "It would be surprising if iPhone accounted for one per cent of sales just within the one network which had been announced -- AT&T." That would be half a million smartphones. Apple sold more than 1.1 million phones in Q3 of 2007, the first full quarter it was available, alone.
Mike Elgan, writing for Computerworld (like The Industry Standard, a publication of IDG) said selling 10 million phones was "probably an unreachable goal... by setting the bar at 10 million iPhones sold by 2008, Jobs unnecessarily risks the erosion of faith in Apple when the company fails to reach that goal."
Quoted in the New York Times, Edward Snyder with Charter Equity Research said Apple would "have a difficult time" selling 10 million iPhones in 2008.
Last May, Charles Jade at Ars Technica wrote "it's a good thing Steve Jobs dropped out of college" since analysts with "advanced degrees in business and economics" doubted Apple's ability to sell 10 million iPhones in 2008. Goldman Sachs, mentioned in that article, estimated that Apple would have a 9 million strong installed base -- suggesting Apple would sell just over 5 million units in 2008 when you include the 3.7 million iPhones sold in 2007.
Now, attention is turning to Apple's quarterly figures. There is a lot of buzz around how Apple didn't live up to analysts' expectations of 5 to 7 million iPhones sold in the fourth quarter. The company shipped just under 4.4 million iPhones.
But to look at the analyst expectations for the just-ended quarter and deduce that iPhone sales were weak is foolish. Analysts and experts have poor track records when it comes to the iPhone. The fact that Apple beat its full-year goal by more than a third, it's evident that Apple didn't "miss" anything -- and that Steve Jobs has a home run on his hands.
Comments
Your whole argument is flawed --- because all the "skeptics" that you mentioned were talking about being skeptical of selling 10 million iphones at the original price ($600).
By that logic, they were talking about the original iPhone not the iPhone 3G. However, Jobs was talking about the iPhone as a product line, not one particular device -- and everyone knew that.
No --- by your logic, Apple sold about 3 million first gen iphone at $400 each and sold about 11 million 2nd gen 3G iphone at $200 each. It is very different from all the "skeptics" that you mentioned --- who wrote in January/May/June 2007 (well before the actual launch and well before the Sept 2007 price cut) and were skeptical of Apple able to sell 10 million iphones at $600 each.
Your whole logic is flawed because you can't retroactively disregard the original intention of what the skeptics meant. Otherwise, you might as well agree with President Bush and retroactively change the reason why the US invaded Iraq in the first place (to find WMD).
While it's great to be upgraded to the status of an analyst—I eagerly await my six-figure paycheck, corner office, and trophy secretary—I'd really appreciate if you read this again.
"Assuming Apple sells 1.3 million iPhones in the second quarter, that would be 3 million for the first half of the year. This means Apple would have to sell 7 million iPhones from July through December to get 10 million in 2008, or more than were sold in the first year of sales. Based on those numbers, one can see why analysts with advanced degrees in business and economics might doubt.
It's a good thing Steve Jobs dropped out of college."
If you weren't a regular reader, you might not be familiar with my acerbic wit, or maybe you are a victim of public education (that would be the wit). However, I think it's pretty clear I was contrasting Steve Jobs' admirable business acumen sans MBA with the aforementioned highly-paid pessimists of which you are writing about, in other words I was doing what you just did way before Apple actually made the iPhone numbers.
Just wanted to clear that up, no apology is necessary, as I'll make fun of you on my blog that no one reads.
Also, by your logic --- Jobs is the only person that truly knows what he meant when he said those things at the keynote. Nobody else in the whole world knew what Jobs really meant to say.
Even Steve Jobs didn't know everything either --- he didn't know that the $600 original price was idiotic (which require a sudden and massive price cut that anger the original purchasers and required sending a "coupon" to appease these people) and he didn't know the carriers around the world said no to revenue sharing.
@Charles Jade,
Steve Jobs didn't know everything either.
The whole point is that the first gen iphone was a failure --- with handset pricing and with insisting carrier share revenue. It was the massive failure that required Apple to change so much in their businss model in order to get the 11 million 3G iphone sold in the second half of 2008.
If Steve Jobs was smart, he would have sold the iphone at $200 from the start with no revenue sharing --- Apple would have sold 50 million iphones already if they did that.
The RAZR was over $500 when it was first introduced, and was exclusive to a single carrier. It is common for the newest high-end phones to sell for a premium initially. No one, including well-informed analysts, should believe that the initial price is the long-term price, or that AT&T would be the sole indefinitely.
Hmmm, "if Steve Jobs was smart" I guess he'd take advice from lonely people posting on the internet in the middle of the night.
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