Revisiting the iPhone Index
According the The Street, Apple's goal is to sell 10 million of them this year.
Since the iPhone's launch in June, Apple has
sold about 4 million devices, including 2.3 million during the
important holiday season.
To reach the 10 million mark, it needs to average 2.5 million
phones in sales a quarter over the next four quarters — or 200,000
more than what it sold during the big holiday season.
The Street found an expert to say that Apple will likely reach the goal, to which I can say only: Good luck with that. Even a rumored $50 price drop by mid-year will still mean plunking down $350 for a cellphone, and tying yourself to a two-year contract that costs a minimum $60 a month before taxes, fees, and all the other assorted garbage that jacks up almost any advertised cellphone plan by a good 20%. Meanwhile, the only authorized iPhone carrier, AT&T, is blitzing TV screens with ads for $99 Blackberries. Yeah, I know, they're not really comparable devices, but try telling that to the budget-conscious smartphone buyer.
In this economy, the iPhone is, and will remain, a niche device. Evidence for this is buried within The Street's story — which to my eyes, screams out as what should have been the lead.
There's also the problem of some 1.7 million
"missing" phones — the difference between phones that were sold by
Apple and those that were activated by AT&T.
Activiation of the phones is crucial to Apple's bottom line
because it gets a 10 percent of the cut in monthly fees charged by
Some of that discrepancy can be attributed to excess inventory (which is itself a problem), but the article goes on to say that about 25% of iPhones sold in the U.S. are of the "unlocked" variety customers have hacked so they can work with carriers other than AT&T. I'm no expert, but my impression is it takes a certain amount of effort to unlock an iPhone, even if the software can be readily downloaded from pirate websites. So fully a quarter of the iPhones out there are owned by geeks who really want the device and really don't want to be tied down to AT&T. That's about as niche a market as a consumer electronic device can get. And again, it illustrates the struggle Apple will have making the iPhone a mass-market product in a struggling economy.
Bottom line: The iPhone Index continues trending downward.