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.