“I’ve been reporting about all the hand-wringing on Wall Street regarding the news that a million or so folks are using unlocked iPhones. The more I think about it, the more I think the hand-wringers have it all wrong,” Peter Burrows reports for BusinessWeek.
Burrows reports, “Here’s why: Their concern is that Apple is losing out on the rivers of pure profit that come from the cut of monthly cellular charges Apple has wrung out of its carrier partners, particularly AT&T. Depending which analyst you talk to, that’s $168 million to $400 million per million iPhones that Apple is missing out on.”
“So how can that be good? Because the vast majority of those one million consumers are in places where Apple hasn’t even set up shop—places with a lot more prospective iPhone customers (China, India, Brazil, Russia, Canada) than there are in the countries where the iPhone is officially on sale (the US, the UK, France and Germany). In other words, there are hundreds of thousands of people—I’d guess 750,000—that are so desperate to buy the product that they’re willing to pay jacked up prices to get a hacked iPhone that comes with no warrantee, so support from Apple and not all of its key features turned on. And these stalwart fans will act as shock troops for Apple’s coming global expansion—providing countless dollars of free marketing as they show off their iPhones to their more mainstream friends,” Burrows reports.
Burrows reports, “Says RBC Capital analyst Mike Abramsky, ‘Despite all the pessimism, it’s hard not to look at this as a leading indicator of great global demand.’ Explain again to me how this is a bad thing?”
Full article here.
[Thanks to MacDailyNews Reader “qka” for the heads up.]
Recipe for success: Cash out at the end of the year with big gains and then get back in at obscenely low prices after scaring away the ignorant. Lather, rinse, repeat. All of the big mutual fund managers must be back in now. So, it’s time to resume telling the truth and let Apple stock roll again.
need iphone in CANADA c’mon apple. hurry hurry.I want to be ligit. imagine if they sold an unlocked version to the world for double the price. that would make up for their loss in subscription profit.
your neighbor, canada
Apple doesn’t see it as a Bad thing at all.
It’s a good problem to have, Thing was the words.
That would be neighoUr.
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Obviously some of this concern comes from the old mindset of cell phones being indelibly linked to providers, but let’s face it, cell phones now, smart or dumb, are being hacked – mostly so that end users can take better advantage of the built-in blue-tooth features that providers like Verizon like to empirically control – The point being that the fact that consumers are hacking these phones does not change the the fact that these phones are being sold in vast quantities. I have to believe that with technically non-subsidized phone sales (at least not directly), that Apple’s overhead per phone is adequate to providing an acceptable profit margin on a per phone basis.
Anyway, if it is really a concern to Apple then it is/will spur them on to making sure that, when their agreement with ATT is finally over that they do what they can to make their product available to a more diverse set of cellular providers. Obviously providers hold all of our balls firmly in their respective grips, consumers and manufacturers, and that includes Apple, but if anyone can open the door to providing their particular product across more providers it would certainly be Apple and uncle Steve.
Two things:
1. These people bought iPhones and NOT some Samsung, Nokia, HT-rip-off.
2. Apple has about $400 Million revenue regardless!
3. iPhone factories get to keep production ramped up at full blast eventually lowering costs.
4. “these stalwart fans will act as shock troops for Apple’s coming global expansion—providing countless dollars of free marketing”
That’s FOUR things. False advertising!
neighbor wrote:
“need iphone in CANADA c’mon apple. hurry hurry.I want to be ligit.”
with this big black market demand here and in many other countries, looks like scammers are fattening their own wallets (beware!)
http://www.canada.com/vancouversun/news/story.html?id=cf51ae03-de31-46fb-a632-725dc8809508&k=53201
http://iphonenow.scamnet.org/
Huge demand in Hong Kong with internet community group supporting iPhone users. I’m seeing people using iPhones about once every 3 days. This is significant. There’s musts be 10s of thousands of unlocked iPhones in Hong Kong. People are waiting for the official launch.
At last an article that does not make me feel like a crook, because I use an iPhone in Mexico!!
4. “these stalwart fans will act as shock troops for Apple’s coming global expansion—providing countless dollars of free marketing”
thanks for the compliment
Still, no-one really knows. The convenient fanboy explanation is that they’re all overseas not stuffed in the channel to boost sales numbers. There’s absolutely no firm basis to substantiate that claim. But in reality it’s probably a bit of both channel stuffing and grey marketing.
As Roughly Drafted points out, Apple simply does not have that many channels to stuff: The AT&T;stores, (like they don’t have a good idea of a realistic phone inventory?) the Apple stores (they are stuffing their own channel?) and… ugh, nothing else.
Also Apple specifically said in their financial conference call, they “sold” four million phones, not “shipped” like MS said with the X-Box. (Securities fraud anyone?)
Finally, Apple insisted that they are selling 20K phones a day, AT A SUSTAINED RATE. That works out to 600K phones in the channel for a 4 week inventory, which is pretty good inventory control.
Oh yea, sorry I lied in the last post. Four things…
One more thing… really.
With the iPhone, Apple is taking market share where it doesn’t even have markets.
Try to copy that Nokia, Samsung, Motorola, MS, et al.
Huh? Apple has less than 1% of the world market sales for mobile phones. How does that translate into significant consumer demand? Considering Motorola’s sales are slipping might there be a glut of mobile phones? Is Apple entering the mobile market poorly timed?
“As Roughly Drafted points out, Apple simply does not have that many channels to stuff: The AT&T;stores, “
Here’s how it works. Steve calls AT&T;’s CEO and says: “We have a problem, I have a million phones sitting here in inventory that I’d really like to show as sales by the year’s end for both our benefits to keep proving that the iPhone is a hit.”
“If you take delivery of them in December, I’ll give you a discount and great terms which mean you only pay for them as you use them and the iPhone juggernaut rolls on another quarter before the true sales numbers get out.”
AT&T;say “Fine, but we can’t fudge our actual activation numbers, if someone finds a discrepancy, you’ll just have to come up with a creative explanation like they’ve all been grey marketed overseas, or are sitting under Christmas trees or something like that”
Steve says “Fine, works for me” and the deal is done.
“they “sold” four million phones”
Technically when they take an order from AT&T;and ship to AT&T;they have sold the phones from Apple’s perspective. It doesn’t matter that AT&T;hasn’t sold the phone on to a customer. Its still a sale.
Note that shipping to Apple stores is ineffective because that’s just moving inventory around within Apple and can’t be counted as a sale. For channel stuffing to show a lift in sales they have to be purchased by an external party in this case AT&T;and other resellers.
Note there’s nothing illegal here. Apple is correctly reporting how many they have sold. AT&T;is correctly reporting how many it has activated.
Are there a bunch of iPhones in use overseas? Sure. Did Apple stuff the channel at quarter end? Most likely.
All that’s left to argue is the percentage of “missing” phones accounted for by each mechanism.
As an I cannot imagine developing for any other phone at this point. This money just isnt anywhere else at this time. Apple has done a great job at motivating developers to create awesome apps for the iPhone.
http://www.PhoneFreelancer.com