Apple: 10 Million Phone "During" 2008

There's been a lot of back and forth whether Apple claimed they would sell 10 million iPhones by the end of 2008 (including those ~4 million sold last year), or 10 million during 2008 alone. Both Silicon Alley Insider and Piper Jaffray got the same official word from Apple:

"We spent a lot of time parsing his comments and those of other Apple (AAPL) officials, then figured out an easier way to solve the mystery: Ask Apple directly. Their answer: Apple plans to sell 10 million iPhones during calendar 2008 -- not including last year's sales. And if you don't trust us, check with Piper Jaffray analyst Gene Munster, who says in a note today that he asked Apple the same question, and got the same answer."

Rehashing Last Quarter's iPhone Sales

Maybe because iPhone news is thin these days, Roughly Drafted is revisiting iPhone sales numbers from last quarter. Roughly Drafted's Daniel Dilger points out that of over 4 million smartphones sold in the previous quarter, iPhone sales represented over a million of those, giving the iPhone around 27% smartphone market share. He also points out that the overall smartphone market increased 180% from the previous quarter. From the article:

"A large chunk of the new growth in smartphones can be attributed to Apple. It’s hard to say whether that’s because the iPhone attracted a new audience to the smartphone market by offering an approachable product, or if Apple simply gobbled up a large portion of the existing demand that would otherwise have resorted to smartphones using software from Palm, Symbian, RIM, or Microsoft."

Using a percentage of the smartphone market share is totally useless because there isn't even a consistent definition of what a smartphone is. In a couple years, what now constitutes a smartphone will simply be known as a cell phone. Using the percentage of overall cell phone market share is much more telling.

"Overall, NPD counted 38 million mobiles sold in the US in the same quarter, which gave Apple almost 3% of all of the nation’s new phone sales in its first full quarter of sales. Incidentally, in just a day and a half of sales in June, Apple sold over 1% of the phones in the previous quarter."

As I've stated before, Apple's eventual matured share of the cell phone market will be determined by the direction they take with future versions of the iPhone. A $400 cell phone is not an affordable choice to most people and can't capture as large a portion of the market as the iPod has. Choice is an important word here because buyers can choose from a huge market of free cell phones. Choice, cost, and the cell phone industry's current business model are what really differentiates this market from the mp3 market, rendering iPod comparisons almost useless. Although it is important to note that the current cellular business model is likely to change dramatically if the open network model of the 700 mhz is successful.

This revisiting of past sales for future speculation is like estimating the iPod market's share based on the sales of the first version. But I, of all people, appreciate the need to give people something, anything, to read about the iPhone. Besides, Roughly Drafted is just a great site.

Roughly Drafted on iPhone Sales

A great read from RoughlyDrafted.com concerning the latest noise/link baiting concerning whether 1 million iPhones sold is good or bad for Apple's projected 10 million by 2008. From the article:

"Frommer's idea ignores that same reality by imagining that iPhone sales will schlep along at a linear pace. Had Frommer tried to calculate an "annual run rate" for the iPod based on a portion of third quarter sales at any point over the last half decade, he would never have been close to accurate. That’s because Apple’s iPod sales roughly triple every winter quarter.

1. In 2002, it sold nearly as many iPods in its winter quarter as it did the first three quarters combined: 219,000
   

2. In 2003, it actually sold more iPods in its winter quarter than in the first three combined: 733,000
   

3. In 2004, it again sold more iPods in its winter quarter than in the first three: 4,580,000
   

4. In 2005, it sold more than 4 million units every quarter, but still sold nearly three times as many in the winter: 14,480,000.
   

5. In 2006, it sold more than 8 million units every quarter, and then sold over 21 million in the winter quarter.
   

6. In 2007, it has maintained quarterly sales between 10.5 and 9.8 million per quarter."

John Gruber on the iPhone's Pricing

If you haven't added Daring Fireball to your RSS reader yet, you need to. There's an excellent post (accessible in the site's archives) on the iPhone's pricing.

"There are millions of people who have already spent $399–599 on an iPod within the last few years. With the exception of storage capacity, the iPhone does everything these iPods do, and, well, a whole lot fucking more. Why wouldn’t these same people think about spending $499 or more on an iPhone?"

Whenever someone asks me how I like my iPhone, I rave about it, but I always end by saying, "But it's too expensive to be really popular." I still think I'm right; yes, this current version of the iPhone will sell millions (does that make it popular?), just like the expensive models of the iPod have sold millions. But also like the less expensive iPods, the iPhone won't sell tens of millions until there's a Nano equivalent.

iPhones Still In Stock Saturday Afternoon in Chicago

At 12:30 pm on Saturday, the Chicago, Michigan Avenue Apple store had iPhones in stock.

I was planning to sit out the initial iPhone mayhem. For the Friday launch, I enjoyed the launch at my computer, reading online coverage. Saturday morning, I woke to reports that at the end of the Friday, most major markets still had iPhones in stock. So Saturday morning, I went down the the Chicago Apple store on Michigan Avenue (The Magnificent Mile) to, if not purchase a iPhone, lay my hands upon one. The store was packed, with most people milling around the dozen or so floor-model iPhones. I waited behind a man for five minutes for him to release his grubby hands from the sexy device, but I grew bored and casually asked a passing Apple employee if there were any phones left in stock. Yes, there were. So, I purchased an 8 gb iPhone.

If iPhones are still available, this begs the question, are they just not selling? They are selling. There was a line of ten people in front of me who all were purchasing iPhones. There has not been any let up on sales as of Saturday afternoon in Chicago. It seems Apple is following through with their plan to send larger shipments to markets where the iPod is saturated, namely big cities. It's likely this is both a marketing and sales strategy. From a marketing perspective, someone carrying an iPhone on a train in a big city will likely draw the eyes and interest of fellow passengers, which is, essentially, free advertising. From a sales perspective, there is bigger interest for the device in cities with mass transportation systems, as people who drive cars are not as likely to need the use of the video and internet features during travel.