iPhone Sales: Not Dreadful, Not Spectacular Either

Jeff Matthews is getting a lot of blogosphere linkage for his piece

saying that iPhone sales are much lower than the likes of Gene

Munster would like to think. But here’s how Matthews’ logic works:

The 10,000-a-day consensus among Wall Street’s Finest assumes that iPhone

sales, which averaged 135,000 in the first two days after launch, collapsed

the very next day to 10,000 a day, and stayed there through September


That is, of course, unlikely.

Assuming a more gradual drop-off from the feeding frenzy of the first week’s

activity, iPhone sales could be half that rate or less.

Let’s, for example, assume sales averaged 135,000 for the first three

days, then dropped in half every three days thereafter until settling out

in the middle of July at whatever pace got them to 1 million on September


That would imply a 4,200 a day run-rate, which is less than half the consensus.

The problem is that yes, iPhone sales genuinely did collapse on the

third day the unit was on sale. The iPhone went on sale Friday June 29, on which

day pretty much every AT&T store in the country sold out of its quota, and

a lot of the Apple stores did as well. The next day, Saturday June 30, was the

day that the Apple stores sold out of their inventory. And the one datapoint

which we know for sure is that between Friday and Saturday, 270,000 units were


The third day was Sunday July 1. What are the chances that iPhone sales collapsed

to 10,000 units on that day? Very high! Because everyone was sold out of iPhones

at that point, and, it being a Sunday, no one was making any deliveries either.

Over the course of the following week, iPhone sales will have picked up, as

deliveries started to get made to both AT&T and iPhone stores. And I’m sure

that sales for much of July were volatile, driven as much by supply as by demand.

But the fact is that between July 1 and September 8, Apple managed to sell

730,000 iPhones. What that works out at on a per-day-in-September basis is not

particularly interesting, really.

The key point is that Apple saw what happened to iPod sales when iPods came

down in price. Consumers, it turns out, are reasonably price-sensitive when

it comes to shelling out hundreds of dollars on electronic gizmos. And so Apple

slashed the price of the iPhone in order to drive sales. Remember, too, that

the amount Apple receives per iPhone has not fallen by 33%, since Apple also

gets large payments from AT&T for every iPhone sold.

On the other hand, it’s worth comparing iPhone sales in the US to sales of

Nokia’s ultra-high-end N95 phone, primarily in Europe. According to someone

who knows such things, Nokia sold 1.4 million N95s in the second quarter,

and is likely to sell over 2 million more in the third quarter. The much-vaunted

figure of 1 million iPhones sold might sound impressive on its own, but by cellphone

standards it’s really nothing all that special.

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