“Shares of Apple Inc. took a hit Tuesday morning after wireless carrier AT&T issued disappointing activation numbers for the iPhone for the last two days of the second quarter, when the device first went on sale,” Dan Gallagher reports for MarketWatch.
“In addition, a telecommunications analyst issued a report before the opening bell that said demand for the device at retail outlets has seen a ‘significant decline’ in recent days,” Gallagher reports.
“The iPhone went on sale at retail outlets operated by Apple and AT&T on June 29, leaving less than two full days before the end of the second quarter,” Gallagher reports.
“AT&T said it activated about 146,000 customers who bought the iPhone during those two days,” Gallagher reports. “Before Tuesday, analysts had been projecting opening-weekend sales for the iPhone of between 200,000 and 400,000 units. A few projections reached as high as 500,000 units…”
“‘We have noticed decent inventories [of the iPhone] at stores, and thin demand at best,’ analyst Ittai Kidron of CIBC World Markets wrote in a report Tuesday. ‘In fact, most Apple store visitors were not looking at the device and only a very small subset bought it,'” Gallagher reports.
“Investors will likely get a fuller picture of actual iPhone sales when Apple posts its own results for the June quarter on Wednesday,” Gallagher reports.
Full article here.
Now, after the typical hysterical Wall St. reaction, let’s apply some logic to the information.
AT&T’s quarter ended June 30, 2007. Apple’s iPhone went on sale in the U.S. on Friday, June 29th at 6pm local time. So, the totals are for about a day and a half, not two days, as widely reported. And when did AT&T actually stop their iPhone activation count exactly?
[UPDATE: 1:29pm EDT: An AT&T internal newsletter states, “Although it went on sale just 30 hours before the quarter ended, we had 146,000 activations in that period.” So, 30 hours, not 48. – Thanks, Robert.]
In addition, AT&T’s numbers measure only iPhone activations through June 30th, not sales. Some number of iPhone users experienced activation delays that may have delayed activation until after the June 30th end of AT&T’s quarter.
How many? We don’t know.
What of the iPhones that were sold online that weren’t activated by June 30th?
How many? We don’t know.
In the initial lines were many enthusiastic iPhone buyers. Reports from MacDailyNews readers (and also witnessed by MDN staff) show that many of these early iPhone buyers purchased two phones (Apple’s limit at Apple Retail Stores). When we asked fellow iPhone-waiters what they would be doing with their iPhones, many who were buying two stated that the other phone was intended as a gift. These iPhone gifts may not have been given to their recipients and activated by June 30th; therefore, they wouldn’t appear in AT&T’s provided count.
How many? We don’t know.
It should be obvious that iPhone sales would see “significant decline in recent days” as the initial frenzy of camping out and long waiting lines had set the bar at its highest point. Decline is a given after the long lines are served and the stanchions are removed.
Describing inventories as “decent” is a meaningless measure as Apple has never reported how many iPhones were manufactured and shipped for the initial supply. Based on reports and Apple’s own online resource for iPhone availability, Apple seems to have done a good job of keeping supplies of iPhones flowing and Apple retail stores, at least, resupplied on a regular basis. We don’t know how many iPhone units Apple supplied, so saying inventory is “decent” tells us absolutely nothing about the product’s actual unit sales.
And just how extensive were CIBC’s “checks?” They certainly don’t match our experiences of iPhone interest at Apple Retail Stores (and “on the street” with our iPhones) in recent weeks.
The analysts’ projections (200,0000 – 500,000) are for the entire weekend of iPhone sales, not the first 30 hours of activations.
Need more input, Stephanie.
As Gallagher mentioned in his report, we hope to get better idea of initial iPhone numbers when Apple reports their Q3 07 results (ended June 30, 2007) after market close tomorrow.