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Toni Sacconaghi Alert: Excessive iPhone Demand Reason to Panic

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Daniel Eran Dilger
Based on a handwringing report issued by Toni Sacconaghi of Bernstein Research, Barron blogger Eric Savitz and Rex Crumb, a colleague of John Dvorak at MarketWatch, are both worried that Apple won’t be able to sell enough iPhones this year, and doubly concerned that a significant chunk of what the company does sell will be used unlocked. In other words, the iPhone faces a possible demand shortage problem that is complicated by excessive worldwide demand in markets where Apple hasn’t yet established an exclusive partner. Oh the humanity.


Crumb seemed oblivious to the contradictions in his punditry as he segued from worrying about “whether demand for the iconic device is sufficient to support that [10 million] target” and “another issue” of widespread unlocked iPhone use worldwide. He also had no problem reporting on Friday that “[the iPhone] could be responsible for as much as 80% of Apple’s future earnings growth” only to write on Monday that the iPhone is ‘no longer a growth driver’ for Apple. Which is it?

Perhaps Crumb doesn’t give the consistency of his repetitive, negative Apple spin much thought, as he was largely just uncritically regurgitating analysts’ reports. Monday’s analyst was Keith Bachman of BMO, who contradicted Sacconaghi’s outlook on the iPhone to the extent that Crumb was forced to only allude to Sacconaghi’s fears in general terms to avoid highlighting the fact that the two analysts’ opinions don’t align, meaning at least one of them has to be wrong.

The Hunt for the Missing iPhones.
And yes, that’s the same Sacconaghi who a month ago invented the idea that around 1.4 million of the iPhones sold were probably sitting in inventory somewhere, or were perhaps being used unlocked. His report set off a gaggle of wags desperate to express their concerns about the “missing iPhones” caught in a Purgatory somewhere between their retail sale and a verifiable service provider activation.

Never before in the history of consumer electronics have analysts worked so hard to contort reality in order to find potential problems with the sales, inventory, and consumer usage patterns of a device, and then extrapolate these into scary reports that suggest the imminent collapse of a highly successful company at the hands of its incompetent rivals.

More recently, Sacconaghi has been warning that Apple is being “optimistic” to think it can sell 10 million iPhones in 2008, and he fears that the company may lose as much as $1.3 billion in revenue on unlocked phones this year. Both ideas skip across the lake of reality like smooth stone projectiles that only occasionally touch the surface, and at every contact risk being overwhelmed by the surface tension of logic and pulled down from their skittering slaps into the placid fluid and quietly dropped to its muddy bottom, only to be certainly followed by another volley of pebbles.

Tom Krazit of CNET and Eric Savitz of Barrons Deny the Jesus Phone

Tom Krazit of CNET and Eric Savitz of Barrons Deny the Jesus Phone

Is Ten Million iPhones a Stretch?
Sacconaghi based his iPhone sales worries on the idea that Apple sold around 180,000 iPhones per week in the winter quarter. Multiply that by 52 weeks and you only get 9.3 million, just short of Apple’s 10 million goal. But it gets worse.

The winter quarter is the busiest quarter of the year for consumer electronics sales, and clearly is the most blockbuster quarter for iPod sales. Apple has consistently sold roughly three times as many iPods in the winter quarter than in the first three calendar quarters of the year. That suggests that the “run rate” during the winter quarter wouldn’t necessarily be replicated throughout the rest of 2008, falling even further short of the 10 million goal.

Of course, in reality, iPhones and other electronics devices don’t have a fixed “run rate.” The iPod didn’t being selling at a somewhat regular pace until it was eight years old. The RIM BlackBerry has been growing at an irregular but rapid pace for years. The Xbox 360 hit up and down cycles its first year and then shipments dramatically fell in 2007. None of the other game consoles follow a regular run rate either. There really aren’t any consumer electronics products that sell at a specific “run rate” over a year long period, so analysts need to stop bringing up this farcical metric to make wild long term predictions.

Video Game Consoles 2007: Wii, PS3 and the Death of Microsoft’s Xbox 360

Why Dan Frommer and Scott Moritz Are Wrong on iPhone Sales
Video Game Consoles 2007: Wii, PS3 and the Death of Microsoft’s Xbox 360

The Seasonal Cycle.
Additionally, the iPhone isn’t an iPod. Apple blows out a spectacular winter quarter in iPod sales because of gift giving, but iPod sales are unique for the company. Apple does not sell three times as many Macs in the winter quarter; in fact, Apple typically sells more Macs in the quarter ending in September due to education sales.

The iPhone doesn’t have the back to school rush of the Mac line, but also doesn’t have as large of a boost from holiday sales as the iPod. It if did, we’d have seen sales go up three fold quarter over quarter in the holiday season.

After iPhone sales ramped up in September, they hit a high point through the winter quarter and appear to have returned to only slightly lower levels month over month in January and February; the iPhone is still selling at rates well above the numbers sold in September following the price cut incentive. This curve matches the increasing demand for Mac desktops, but looks flat when compared to the blowout quarterly iPod sales peak.

iphone ipod and mac monthly sales

Non Seasonal Sales Factors.
Apple has only sold two full quarters of iPhones, so the seasonal factors that will push sales aren’t yet evident. However, Apple’s iPhone sales have been going up due to number of factors that have little to do with seasonality. The price cut at the introduction of the iPod Touch appeared to double sales on a weekly basis. Clearly, price is a major factor in stimulating demand and Apple can use further price cuts to boost sales if it needs to do so. There is no evidence Apple needs to cut its prices to compete, as there is already strong demand.

In addition to price, there are other demand factors related to availability, promotion, and visibiltiy. In the winter quarter, Apple began selling in new markets in Europe. In 2008, Apple will add official markets in Asia and other countries. Within a month, the company is scheduled to release its iPhone SDK, which will greatly expand its utility and features. That SDK also covers the iPod Touch, which is also a hot seller and paving the way toward the iPhone for many users on the fence about changing their mobile service provider.

If Apple had any concerns about meeting its 10 million unit goal for iPhones, it would have to present that in its statements to investors. Instead, the company described confidence in its ability to meet its goal, just as it blew past its original goal of 1 million units several weeks ahead of schedule. Looking at sales in 2007 to predict demand in 2008 simply fails to account for too many factors that will accelerate iPhone sales.

On top of the known factors, there are other unannounced but likely developments that will also affect iPhone sales, including additional price reductions or new feature additions at the same price, such as additional storage or faster mobile network support. Anyone who thinks Apple will have any trouble selling ten million iPhones this year simply hasn’t given the subject much thought.

Is Apple Losing Billions on Unlocked Phones?
The best reason for thinking Apple won’t have too much trouble selling additional iPhones in new markets is the high demand for unlocked phones. If buyers are shelling out a premium for exported, unlocked phones and forgoing the full features of the iPhone in order to use them worldwide–outside of markets Apple has set up in the US, Germany, France, and the UK–that certainly suggests there will be ready demand once the company officially expands.

We know this happening because web traffic statistics indicate iPhones are requesting web pages from nearly every country around the world in volumes that make mobile traffic from other phones look inconsequential. This has been reported everywhere from Net Applications to Google. Worldwide, the iPhone has captured a rapidly increasing percentage of web traffic, doubling over the last three months from .06% to .13% in January. In just the US, the iPhone now requests .20% of all web traffic, even before including traffic from iPod Touch users.

Market share for browsers, operating systems: iPhones Without Borders – Net Applications

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That worldwide demand for Apple’s unique new WiFi mobile platform is creating value in exclusivity for mobile providers, which in turn prompts them to pay Apple a portion of their service fees. Of course, when users unlock the iPhone for use with other carriers, Apple doesn’t get this additional revenue. Sacconaghi worries that the hundreds of thousands of iPhones being sent to China and other markets will “cost” Apple as much as $1.3 billion in unrealized revenue over the next year, based on the idea that 30% of all iPhones are being sold for use unlocked.

This is particularly silly because nearly every other phone headset manufacturer–apart from BlackBerry maker RIM–makes nothing at all from carrier revenue sharing. How much revenue have Nokia, Samsung, Motorola, Sony Ericsson, LG, HTC, Palm, and other phone manufacturers “lost” due to having no way to earn revenue back from the carriers? It must be in the imaginary hundreds of billions!

Conversely, if Apple were set to “lose” $1.3 billion on 30% of the 10 million iPhones it plans to sell in 2008, how much is it uniquely making on the 70% of iPhones that will generate carrier revenue for Apple? According to Sacconaghi’s own math, something like $3 billion. Why is $1.3 billion of fanciful “loss” newsworthy while $3 billion of actual revenues is carefully ignored? How ruthlessly absurd that Sacconaghi blows out this inanity as serious market analysis, and how transparent that so many of these bloggers picked it up and ran with it as if it were non-ridiculous.

Based on unit sales reported by the top five manufacturers in the fourth calendar quarter of 2007, Nokia “lost” $33 billion in carrier revenue shares it never collected, and is set to “lose” another $134 billion next year. Along with Apple, the top five phone hardware makers will “lose” an astounding $304,180,000,000 (below, click graphic to enlarge). Only Apple will actually cover its losses with earned revenue shares of roughly $3,000,000,000.

Sacconaghi’s math might be wrong. Apple could be earning less from carrier revenue shares. That would also mean that it is “losing” less from unlocked use of the iPhone worldwide. However, no matter what Apple makes from its exclusive mobile partners, it’s far more than the big fat nothing that other hardware makers are getting, and any analyst who can find fault with Apple’s business model should be in another line of work.

Nokia losing billions

Nokia Grows Faster Than Other Mobile Phone Makers — InformationWeek

But Wait, There’s More.
What Sacconaghi didn’t really outline clearly was that Apple enjoys special circumstances that enable it to make money from several other parallel, interconnected businesses related to the iPhone in addition to carrier revenue sharing. Other phone manufacturers either don’t make this money at all, or face various limitations that both prevent them from keeping up now and from ever catching up later.

The next segment will look at five ways Apple’s iPhone engine makes money compared to other hardware makers, why they won’t be able match the company’s revenue engines in the near future, and why this makes any difference to end users.

What do you think? I really like to hear from readers. Comment in the Forum or email me with your ideas.

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30 comments

1 danviento { 02.26.08 at 2:35 am }

In terms of not seeing any seasonal trends towards people moving to the iPhone, I’d like to see numbers on people switching networks to AT&T vs. number of new iPhones sales.

If we look at when people normally start up contracts, i bet there would be a fair number out there that don’t want to loose severance fees and are willing to wait in the wings until their contracts are up. Not to mention that waiting sees added functionality to the iPhone, or at least capacity at this point. [Some bias- I'm one of these people, but I do know a fair number of others just like me...]

2 lightstab { 02.26.08 at 2:57 am }

Thanks for this article, Dan.

What I don’t understand about these analysts is why in the hell they think unlocking is a bad thing. For every iPhone unlocked, that’s another phone that ISN’T being bought from Nokia or RIM or all the other phone manufacturers competing with Apple. I say the more the merrier.

Unlocking is GREAT for Apple. The more people using the iPhone platform, the more customers for iTunes. Once Apple releases the SDK, they will be a deluge of new apps, which may or may not work on locked phones. And Apple will waiting in the wings to get a chunk of all those profits. Given people’s love for the device, they may be tempted to go with AT&T or the other providers with contracts with Apple, just to get those features.

So, for me, unlocking is just more Win-Win.

3 sebastianlewis { 02.26.08 at 3:23 am }

Well, let’s see… 5 ways eh? The first is obviously the iTunes WiFi Store (and iTunes in general I suppose), the second is potentially 3rd party apps… though I’m hoping Apple isn’t so restrictive as to block the market for freeware/open source software on the iPhone… I’m at a loss as to what the other 3 might be. The Starbucks deal falls into number 1… halo effect number 3? That would be stretching it. Getting into the corporate world with the iPhone acting as a trojan horse of Open Standards might be number 3 or 4… err… Google Search shared revenue as number 4 or 5? Heh… perhaps. There’s also ringtones which I keep forgetting about, and shared revenue but I think you already said that, pushing .Mac maybe… and possibly shared Click to Call ad revenue with Google in Maps, so let’s see, that leaves us with:

1. Shared Revenue
2. iTunes
3. Ad Revenue
4. Ringtones (I’m not counting this as part of iTunes)

The rest are pretty much indirect though potentially very beneficial in pushing sales in other areas. Maybe I’m not thinking outside the box though, oh well.

Sebastian

4 hodari { 02.26.08 at 3:42 am }

Apple Just unlock the phone and stop wasting our time! I carry the TREO officially purchased as UNLOCKED GSM. In the Middle East and Africa no one gives a damn about contracts! There is no such concepts! It is called a monopoly!.

5 jfatz { 02.26.08 at 7:07 am }

Whatever! Apple is TOTALLY losing shared subscription revenue hand over fist in China due to unlocked phones! Because they won’t agree to sharing subscription revenue with the iPhone! If only Apple would form an agreement with carriers WITHOUT needing to share subscription revenue, they could get on with legally selling iPhones out there and really start bringing in the… uh… shared subscription… revenue?

6 Rich { 02.26.08 at 8:36 am }

Daniel,

How comes you’re using Xbox 360 shipment figures rather than actual units sold?

In previous articles, you quite rightly attacked analysts who concentrate on shipments rather than actual units sold. Using shipped units to judge the popularity of a product is very misleading.

It sounds like you are trying to mislead readers. Based on comments left on previous articles, Xbox 360 *sales* are actually on the rise.

Is there any reason why you chose shipments instead?

Back on topic, it’s obvious that iPhone shipments will easily reach 10 million by the end of 2008. Looking at Nokia’s figures, phone sales are very seasonal but the rate at which the market is expanding often masks this fact. As new markets come online, I’m sure iPhone sales will continue to increase in rate.

7 WholesaleMagic { 02.26.08 at 9:00 am }

Perhaps the five ways tie into other products Apple sells, like the Mac. Like the iPhone? Buy a Mac, you already know how to use one. Buy AppleTV, it already works with iTunes. That kind of thing.

I really don’t know about iPhones. They might (or might not) pick up in sales before the end of the year. I live in Australia, and I know plenty of people (including Windows users) who want one badly.

@danviento: I’m one of those people waiting for their current phone contract to run out. I definitely don’t want to lose five or six hundred dollars on severance fees. I think you’re right, plenty of people are waiting, and this will be one of the things that keeps iPhone sales strong over the next 1-2 years.

8 lmasanti { 02.26.08 at 11:28 am }

New topic for Sacconaghi…

You know, if Apple had delivered the SDK in June 29th, and sell 3rd party apps at $20.- (we have to take the bigger price, the itouch enhancement, not the $5.- iPod’s games price!) then…

Apple fails to earn like mighty billion dollars!

9 limey { 02.26.08 at 11:48 am }

Apple may be “missing-out” on this unlocked carrier revenue, but it certainly isn’t “losing” any since it never had it in the first place!

I’m with lightstab. An iPhone sold is a sale not had by their competition, and, since I’m sure that iPhone’s retail price is profitable, locked iPhones are a $3 billion carrier revenue bonus.

10 gus2000 { 02.26.08 at 1:28 pm }

“…skip across the lake of reality like smooth stone projectiles that only occasionally touch the surface, and at every contact risk being overwhelmed by the surface tension of logic and pulled down from their skittering slaps into the placid fluid and quietly dropped to its muddy bottom…”

Wow, nice prose. (Although, “Surface Tension” sounds like a Microsoft product)

The reason that pundits are hyperventilating over the so-called “lost” revenue is that they don’t think different. They believe that Microsoft is King and everyone must be following their lead. Therefore, Apple must be losing money on each iPhone sold and is planning to make it up by selling services and getting kickbacks. It does not even occur to them that Apple makes money whether the iPhone is activated or not (although they make more on the activated ones). I mean, they would need to sell a loss leader for 4-5 years to get marketshare first, and then make it up later in volume…right? Right? Just like the successful companies?

They’re not hypocritical…they’re naïve.

11 johnnyapple { 02.26.08 at 1:49 pm }

If Apple sold the iPhone for $49.99 and relied entirely on payments from the carriers to make a profit, then they would be losing money on unlocked phones. Apple in fact sells the iPhone at a full retail price, plus collects from the carriers. How is that a bad thing? I’ve said before and continue to believe that the number of unlocked iPhones as a percentage of overall sales will decline significantly as Apple adds partners in more markets. I also believe that a significant number of those unlocked phone buyers will sign up with the official carrier once it’s available. Sacconaghi’s simpleton analysis is silly. (Say that 5 times really fast).

12 Eric the B { 02.26.08 at 3:42 pm }

I think the issue here (slightly playing devil’s advocate) is not that it’s lost revenue that no other carriers get anyway, or a false lost opportunity (like lost CD sales due to music file sharing), but rather lost income that was “expected” during the halcyon days for the stock price of late 2007/early 2008.

If Apple sells 10M iPhones by the end of 2008, I think there was a certain expectation that each sale included recurring revenue-sharing money from the carrier (Munster, et. al. kept trying to estimate what that extra money earned would be). Now, if Apple sells 10M iPhones, but only 6M are with authorized carriers, then there is lost “expected” revenue.

Apple *will* be making less money than they would have otherwise (assuming a set number of 10M sales). The unlocked phones are not gravy if they’re counting towards the 10M. If Apple were “on pace” to sell 16M phones, 5M of which were unlocked, then all would be good. In that case, the unlocked sales would be ones that couldn’t have occurred within the authorized universe, but Apple still got the 10M “with revenue” sales expected.

13 Robb { 02.26.08 at 4:44 pm }

@Eric the B

I was trying to figure how to say the same thing… well done.

14 Gatesbasher { 02.26.08 at 4:47 pm }

I love the moving target on these pundit’s expectations, too. First it was 10 million iPhones by the end of 2008. Then they decided, no, what he really said was “10 million IN calendar 2008.” Now it’s “unlocked iPhones don’t count, it has to be iPhones that are activated with an authorized carrier.” If they sell those many locked iPhones in 2008 anyway, it’ll be “No, the 16GB ones don’t count, it has to be the original models, that’s what the prediction was about!” And of course, if they bring out a 3G iPhone, that won’t count either. There’s no point in arguing with these people any more: it doesn’t matter what Apple does or doesn’t do, it’s never going to be suitable for these clowns. We just have to stop letting it get to us!

15 mrunderhill { 02.26.08 at 5:09 pm }

coming to you from the I’m via iPod touch:-)

Should help with the stats

I must say I’d love an iPhone but the contracts a killer for me so I’ll be content for now with my old nokia and just dream. Even an unlocked version isn’t an option given the vast sums they go for. That alone tells you there’s serious demand when someone will pay in the region of £700 for a product cost a third of that.

16 Jim F. { 02.26.08 at 5:32 pm }

OK… Sacconaghi = WHITE ZOON….
any seconds to the motion on the floor?

17 danieleran { 02.26.08 at 6:06 pm }

@ Rich

I cited ship numbers for the Xbox 360 because it is the least controversial data to consistently use. While I collected NPD sales numbers throughout 2007, I don’t have that data for 2006, and it only reflects US sales. Microsoft reports worldwide shipments consistently in a way that is easy to reference as a fact. This makes using these numbers the most concrete and least slippery. I am certainly not trying to mislead.

I did take issue with Microsoft reporting shipped numbers in advance of the PS3/Wii in order to suggest more sales than actually occurred. This channel stuffing is indeed part of the reason why 360 sales dropped so dramatically in 2007: MS counted its eggs before they hatched, so it looked too good early on and now looks bad in retrospect. I think its fair to point this out.

However, the followup misinformation you reference is the idea that Jan 2007 sales are up compared to last January. That’s correct only if you forget that in Dec 06, the channel was stuffed to the point where MS couldn’t ship any more. So this year, the channel is slightly less stuffed, and MS shipped more. That’s not a symptom of increased demand however.

You have to decide if you want to look at shipments or sales, and do so consistently. You can’t be impressed by shipments and then be doubly impressed when they actually get sold. There is only one sale that happens, MS just drags it out to create the illusion that sales have already happened, while also crediting itself every time a customer buys one.

There is no arguing the fact that 2007 shipments are down dramatically 33% (!) over 2006. No other successful game console falls on its face after a year of sales.

18 danieleran { 02.26.08 at 6:13 pm }

@ Eric the B,

That’s a good point, but remember that Apple deflected any attention away from its revenue sharing. It didn’t count out how much AT&T or other providers are kicking in, and analysts can only guess what Apple is making.

Had Apple sold investors on the idea that revenue shares would hold up a business model that didn’t make sense otherwise, it would make sense to say, “hey, 25-20% of your iPhones appear to be getting sold without the promised revenue.” That didn’t happen though.

Interestingly, nobody takes MS to task for claiming that games are holding up Xbox 360 losses, or writes up a plausible accounting to demonstrate that there is no profit potential in the 360, Zune, Windows Mobile, etc.

And what other company are analysts scrambling to invent bookkeeping detail for in an effort to find potential reasons for worrying? Has anyone ever complained that RIM might not be getting as much revenue as it could? My point was that Apple is collecting billions in gravy on top of its hardware sales, and pundits are enraptured with the idea that there might be units in inventory or not yet activated or even unlikely to ever be activated, and that this constitutes a real problem.

Also, the problem with writers like Crumb jumping from one negative report to the next, and only ever underlining and exaggerating the scary sounding bits, even when the stories don’t even match up.

19 jfatz { 02.26.08 at 7:42 pm }

Indeed, when Apple announced their sales intentions, they were still on an exclusive CINGULAR agreement, and no one knew any of the details therein. Nor did they have any details on what the worldwide rollout might look like. That they could command as much of a revenue-sharing agreement that they did with AT&T came as quite a shock to most people, and certainly wasn’t an expectation. It certainly wasn’t factored-in revenue, as everyone expected that whatever they’d get, they’d get from direct iPhone sales itself (and possibly incentive bonsuses).

Even AFTER the subscription-sharing was known in relation to AT&T, it wasn’t necessarily known or expected that they would be pursuing exclusive carrier relationships and demanding the same terms in every territory they would try to enter, so again… not “expected” revenue to be “lost.” And certainly bearing no relationship to the 10mil sales target.

Meanwhile on 360 sales, MS’s own announcements show the downward trend. ( http://www.gamespot.com/news/6184291.html )

- “17.7 million sold” as of the beginning of 2008.
- “10.4 million sold” at the beginning of 2007, which points to 7.3 million sales in 2007 itself
- “1.5 million sold” during the launch quarter, which points to 8.9 million sold in 2006.

There is some flex between figures, of course, and still questions over what’s “shipped” and what was actual sales (and you can match against NPD figures, though alone they don’t provide for worldwide totals), so while the percentage drop may be under question, the “drop in sales” itself is not–especially for those press who do not even KNOW enough to account for channel stuffing or hunt down more reliable figures. (And if they DO know, why no articles about the channel stuffing itself, though Apple gets immediate attention?)

You’d think there’d be SOME press-worthy “analysis” going on, especially since 2007 was an unbelievably stronger year for the 360 than 2006. (More devices to attach to, adding media rentals and sales through Live, the HD DVD expansion, BioShock, Halo 3, Mass Effect, etc., etc.)

20 Eric the B { 02.26.08 at 8:01 pm }

@ Daniel,

I don’t disagree with your assessment of the way things *should* be or the things that Apple promised. I’m just saying that the market got enamored of the extra AT&T revenues and, like it or not, that became part of the (stock price) story. At least it’s not as dishonest as Scott What’s-his-face from The Street talking about 1M iPhones sold in the first weekend as a “whisper number” and “hey, the iPhone undersold”. With this, I think that talk about the extra revenues was a valid topic; whether the amount estimated was correct or not is a different story, but said revenues were part of the reason the stock soared, as people realized that Apple stood to gain a *lot* of recurring monthly revenue. Which, as you stated, is revenue that no one else, save RIM, receives.

eb

PS Although I enjoy your columns in general, just wanted to point out that my favorite might be the history of the MUNI streetcar system. Whenever my iPhone/NextBus tells me the J is two minutes away and then the Nintendo-looking system on the platform tells me it’s ten minutes away, I curse them all!

Btw, have you noticed that the new Central Subway line crosses Market, but does NOT intersect with Powell station…”hey let’s go from the Castro to Chinatown/North Beach.” “Yeah, let’s jump on the M, take it past Powell station to the CalTrain station, and then take the train back across Market Street.” $1 to 2B for a streetcar extension is a lot, but if it gets used, nobody will remember. But, if only Bayview/Mission Bay people will use it, it’ll flop like the T line has.

21 Eric the B { 02.26.08 at 8:05 pm }

By the way, after the first weekend, when AT&Ts numbers were lowish (about 180k activated for the three days, if I remember), and then the next day Apple came out with a higher figure for units sold (for only two days…end of the quarter), the discrepancy was chalked up to slow activations. Talk of overseas buyers was marginalized, but it seems that perhaps that was the case after all.

22 jfatz { 02.26.08 at 8:34 pm }

Could be, but subscription issues seem like the more likely culprit of the discrepancy, since there were plenty of documented (and expected) issues, while it’s impossible to measure import sales.

23 stuartleitch { 02.26.08 at 11:19 pm }

OK, well , you guys have finally persuaded me to go for it!

I’m going to switch my main environment to Apple.

I have a few residual concerns though:

1. Excel! I’m an excel (extreme)power-user. As a business analyst in Finance companies, I really gain a significant competitive advantage through my expertise with excel. Please tell me that I won’t lose this advantage.

2. Offline folders. I’m planning to buy an Air to replace my Sony Vaio TZ. I need to take my NAS folders with me. How?

3. My wife is going to go nuts when I unveil my new ‘gadget’ only 2 months after shelling out £1%^& on a Sony Vaio. Like a Playboy bunny, it looks great and gets loads of positive comments, but at the end of the day it’s useless and extremely high maintenance.

4. The Air is 2cm too big to fit in the beautiful man-bag my in-laws bought me for Christmas.

I wondered what advice you guys would have, as basically it’s been Daniel’s positive information which has led me to make this decision which I think could kill or save my company!

/S

24 addicted44 { 02.26.08 at 11:50 pm }

I think people are underestimating the overseas demand for unlocked iPhones (in countries where Apple does not sell it yet). I just got back from India, where I met 3 people who owned it, and 0 people who had not heard of it, or would not buy it if it was sold at a reasonable price. Interestingly, it would be easier for Apple to charge a higher amount there, because the phones are bought completely independent of the carrier, and so people are used to paying between 100 – 800 dollars for a phone. The only problem is not many would appreciate being tied to a single carrier, and I am sure a ton of people would just unlock the phone rather than switch carriers (unfortunately, number portability wont exist until after a couple of years, so changing carriers means losing your number).

25 lightstab { 02.27.08 at 12:40 am }

@Eric the B

The shared revenue with AT&T had nothing to do with growth of Apple’s share price. By the time those stories started to appear on Financial sites, Apple’s stock had already doubled in value. Apple’s stock is taking a hit now because there is a natural assumption that consumer won’t spend money on “luxury” products during a recession.

And I would like to remind people, that this isn’t the first time that analysts have panicked about iPod sales. Back in 2006, a few analysis were saying exactly the same thing: namely, that the iPod market was saturated and was dovetailing. Keep in mind, this was right after the Christmas season, so there was obviously a natural decline in sales. Despite this, Apple ended up selling 40 million iPods in 2006.

The only reason the FUD is sticking this time because of this impending recession.

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[...] Toni Sacconaghi Alert: Excessive iPhone Demand Reason to Panic The iPhone Shortage – Bits – Technology – New York Times Blog The Problem With Channel Stuffing. Such a strategy wouldn’t work very long however; Microsoft was only able to successfully stuff the channel with Xbox 360s throughout 2006. After that, the plan backfired, resulting in a huge year over year drop in reported sales of 360 consoles in 2007. Fortunately for Microsoft, the media didn’t care about the discrepancy and has instead focused on the limited growth of iPod sales that appears to exist when sales of iPhones are excluded from the sales figures. [...]

28 Apple presenta sus resultados | Intuición Lógica { 04.24.08 at 7:29 am }

[...] El iPhone sigue siendo una “estrella fugaz” en la matriz BCG, y los próximos meses prometen ser muy interesantes; Tim Cook, COO de Apple, afirmó que esperan vender 10 millones en 2008. En Estados Unidos hay algunos problemas de suministro y en varios paises europeos (entre ellos España) se está retrasando su salida al mercado; en los que ya está disponible (Alemania, Reino Unido, Francia) su demanda está siendo menor de la esperada (al menos su demanda a través de los “canales oficiales”, las operadoras con las que Apple ha llegado a acuerdos): ¿Podría esto tener relación con los rumores sobre la inminente aparición de un iPod 3g? – Quizá no. [...]

29 WWDC 2008: iPhone G3 Revealed — RoughlyDrafted Magazine { 06.10.08 at 11:49 am }

[...] Toni Sacconaghi Alert: Excessive iPhone Demand Reason to Panic [...]

30 The Street: Steve Jobs Health Fears Key to Our Stock Manipulation Game — RoughlyDrafted Magazine { 06.18.08 at 12:22 am }

[...] Toni Sacconaghi Alert: Excessive iPhone Demand Reason to Panic [...]

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