Technology

iPhone by the Numbers


AT&T activated more of the music-playing phones in 30 hours than the average number of iPods sold in each of its first seven quarters

There was ample time for a reality check on iPhone sales long before July 24, when AT&T gave the world its first official inkling of how well the music-playing phone performed just after introduction.

I could tell something was amiss as I waited outside the Apple Store on Fifth Avenue in Manhattan on June 29, the day the iPhone went on sale. Sure, a crowd had formed, but it wasn't nearly as large as I had come to expect from watching TV footage of lines outside stores. And when I finally made my way into the building, I noticed a lengthy checkout line, but it was hardly the madhouse that weeks of unceasing media coverage, following strategically timed teasers and ads from Apple (AAPL), had led the world to expect.

On Track

Expectations had grown impossibly high for this product. Financial analysts and others paid to prognosticate about such things suggested Apple would sell hundreds of thousands of iPhones the first weekend alone. One estimate reached as high as 700,000, and I even heard crazy-pants whispers that Apple might sell a million iPhones in the first week.

So almost a month later, when AT&T (T) said that it had activated only 146,000 iPhones that first crucial weekend, the market panicked. Apple's stock price was spanked, wiping $7.6 billion from its market capitalization. Many investors apparently chose to flip out, rather than pay close heed to what AT&T did—and didn't—say. The phone activations occurred through the end of the second quarter, which ended on Saturday. That left uncounted a full day's worth of weekend sales and activations at Apple and AT&T stores, not to mention the number of phones sold by Apple in the period.

Apple's turn came July 25, when it reported quarterly earnings and said it sold 270,000 iPhones on June 30. Apple and AT&T combined sold iPhones at a rate of 9,000 units per hour, making my guess for total weekend sales 325,000, assuming a slowdown on Sunday.

The most informed player, Apple itself, says it is on track to move a million iPhones by Sept. 30, when the current fiscal quarter closes. That would work out to a pace of more than 10,600 units per day. And given that Apple has a long history of forecasting low and then surprising Wall Street with numbers that come in substantially higher, my bet is that Apple will sell its millionth iPhone well before Sept. 30.

iPod Standard

I've sliced and diced these numbers for a reason. While the market was fretting in the hours after the AT&T disclosure, very few people, it seemed, bothered to compare early iPhone sales to early sales of its cousin, the iPod. From the day it was first released in October, 2001, it took Apple seven fiscal quarters to break the one-million unit mark.

Much of that had to do with the fact that the first iPods only worked with the Macintosh and not with PCs running Microsoft (MSFT) Windows. But when you average out a million iPods over seven quarters, you get a per-quarter number—142,857— that is smaller than the 146,000 iPhones activated in just over a day by AT&T.

In all of its 2002 fiscal year, Apple sold 372,000 iPods. I'm guessing Apple sold more iPhones than that in a matter of days. Moreover, Apple is predicting that it will break the 10 million-unit mark by the end of fiscal 2008, which is 14 months away. And you can bet new iterations of the iPhone are on the way. It took three fiscal years for the iPod to reach that level.

Make no mistake. The iPod is and remains a big deal for Apple: It has sold 108 million units over nearly six years (including 9.8 million in the most recent quarter), and iPod sales have contributed more than $20 billion in revenue for Apple, not counting sales of music, videos, and iPod accessories.

But unless something goes terribly wrong, the early data suggest that the iPhone will eclipse those figures, too. The iPhone looks to be the most successful Apple product ever. How's that for a reality check?

Hesseldahl is a senior writer for BusinessWeek.com and his Byte of the Apple column, covering all things Apple, appears biweekly at http://www.businessweek.com/technology/.

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