You probably remember seeing some of the media hype running up to and through the iPhone launch on June 29. You probably heard some of the estimates that the iPhone could, would and had sold 500,000 iPhones the first couple days it was on the market. Well, if those numbers seemed suspicious to you, then give yourself a pat on the back for being able to cut through the spin.
AT&T said it signed up 146,000 iPhone customers, well below analyst estimates, which ran as high as 500,000 units. Shares of Apple were down as much as 5 percent in early trading and about 2.5 percent at midday, trading around $140. AT&T?s shares were down less than 1 percent, at slightly under $40.
AT&T has an exclusive deal with Apple to provide wireless service for the iPhone, the combination digital music player, cellular phone and Internet device. The phone went on sale on June 29, two days before the quarter ended, amid fanfare surpassed only by the release of the final ?Harry Potter? book last week.
AT&T Earnings Up, but iPhone Sales Disappoint - New York Times
Selling a cellphone is for good or bad currently about signing up a subscriber. No subscriber is pretty much no sale. Carriers own the market for good or bad and possibly until Google attempts to ‘open’ the market with their own variety of Information Monopoly. At&t released their 2nd quarter numbers and it shows that the iPhone did not due even half as well as the news media claimed. The iPhone didn’t sell 500k nor 400k nor even 250k. It sold 146k.
So there was a lot of hype in those numbers. Now sure, you could argue that some people bought the iPhone from an Apple store. You could say there were difficulties with people getting signed up with At&t resulting from buying from an Apple store even. But let’s think about that for a second.
1. If you make the argument that the sales came from Apple Stores (say 364,000 units sold), then that would indicate that only Apple can sell the iPhone most of the time and that At&t doesn’t know what they are doing. Now I wouldn’t rule that out, but it doesn’t help Apple be successful setting up partnerships with the cell phone industry let alone At&t who has a 5 year lock on the iPhone
2. It could be argued that the phone subscriber number was low due to the difficulty signing up with At&t. There did seem to be a few anecdotes on the internet, but nothing indicated that 364,000 people were having trouble. That would be proof of a very serious problem for At&t and Apple (ergo don’t buy it at the Apple Store if you want an easy transition onto your At&t plan.)
3. Let’s look at the dark side for a second. In the book publishing world, publishers hire people to go out and buy up their books to create the illusion of a best seller. If 500,000 units were the number of total iPhones sold, and lets say that only 50,000 people experienced a slow sign up(that’s still a huge number of customers treated poorly), then we have to account for the other 294,000 unit sales. Could it be that Apple or At&t or someone else with an iPhone agenda went out and purchased up the other 294,000 units to pump up the numbers? Obviously, Apple would have the most to gain from hype, but it could be that a number of people wanted to see if the iPhone would sell on eBay or ask the question Will it Blend? for their YouTube show.
Now don’t get me wrong, neither Apple nor At&t have the best track records at book keeping. I have no idea what type of financial reporting software either company is using nor how their accountants and auditors de’ jour are applying GAAP principles to their numbers. It could also be possible that neither company knows how to count. Regardless of the scenario and possibilities, stock holders didn’t like the news and peppered their At&t stock on Apple before taking a bite out of Apple’s value.
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We would not have expected them to make rookie mistakes when it came to the design of the MP3 player in the iPhone, the thing that put the ‘i” in the iPhone. Apple apparently forgot to include some of the core functionality that imprinted the Apple signature on the iPod and made it a great device in the first place. (not the only thing but a key thing)
