The New iPhone Wows True Believers

The iPhone 3.0 seems to be a success so far:

CUPERTINO, California—June 22, 2009—Apple (AAPL) today announced that it has sold over one million iPhone™ 3GS models through Sunday, June 21, the third day after its launch. In addition, six million customers have downloaded the new iPhone 3.0 software in the first five days since its release.

“Customers are voting and the iPhone is winning,” said Steve Jobs, Apple’s CEO. “With over 50,000 applications available from Apple’s revolutionary App Store, iPhone momentum is stronger than ever.”

As the AP reported:

The iPhone 3G S went on sale Friday in the U.S. and seven other countries.

When Apple Inc. launched the previous model last year, it also sold one million units in the first three days, but that model launched simultaneously in 22 countries.

Piper Jaffray analyst Gene Munster had expected the Cupertino, Calif., company to sell half a million 3G S in the first three days.

AP makes it clear that Apple was very clever in organizing pre-orders from existing and new customers:

Apple did not break down where the million units were sold. Dallas-based AT&T Inc. (T) is the iPhone's exclusive carrier in the United States and has said it sold hundreds of thousands of phones via pre-order.

Personally, I thought the most interesting 3.0 features were in the software and ecosystem, not requiring a hardware upgrade. Are these existing customers who really want a compass? Broke their screen? Are tired of slow performance? Or are they new customers who held off on buying an iPhone to wait for the new model?

I was not the only one who was pessimistic, as with this Barron’s report last week

June 18, 2009, 2:15 pm
Apple: 1st Weekend iPhone Sales Likely Below Last Time (Updated)
Posted by Eric Savitz

So will there be another frenzy? The first two times Apple (AAPL) started selling new iPhones - the original version and then the follow-up 3G version - Apple and AT&T (T) stores were jammed with customers eager to buy. Tomorrow is round three: the company debuts new models (and new price points) for the iPhone.

Pricing for qualified customers is $299 for the new 32 GB iPhone 3G S, $199 for the 16 GB version and $99 for the old 8 GB version. The really interesting question is whether the new low priced model will drive a jump in market share, as many analysts believe. And as I noted yesterday, there’s also some question about whether for many existing customers, the iPhone OS software upgrade that rolled out yesterday will be a big enough improvement that they will hold off on a hardware upgrade..

How many of those 5 million phones will be the new discounted iPhone 3G rather than the updated 3G S? Given that the AT&T bill will run over $1900 over a two year period, I can’t see why anyone buying a new phone would try to cut $100 off the purchase price for a phone with half the memory and an inferior camera.

Finally, the Apple press release is interesting in that it includes a quote from Steve Jobs, who has not made an official public appearance since going on leave five months ago and whose health has been the subject of considerable (and recent) speculation, including renewed discussions about Apple’s lack of transparency.

Comments

[Frank Castle:]

And you likely won't see the breakdown as Apple wants to desperately show that iPhone is a hot seller. Sales include weeks of pre-order and likely anything they sold into the channel - not what actually sold.

What is the new sub rate? What is the upgrade rate? Were users that upgrading selling or adding another plan to their account for the old iPhone?

It's all churn and in a month iPhone sales will be flat just like every other launch. Huge rush from the "faithful" then a flat line until the next OS "upgrade".

Jun 23 06:20 AM

[Frank Castle:]

Am I not entitled to my opinion? The Apple spin is often not a accurate picture so I add what I can to the discussion.

I'm a IT Professional overseeing 4,000 mobile devices so my interest in the market be it RIM, Palm or Apple is about the technology.

Believe what you want and I'll keep calling a survey crap if it's crap. Likely it was taken against people WAITING to buy the 3GS .. wow that won't be slanted at all right?

Jun 23 09:04 AM

[Economyst:]

I think you need to factor in the delayed sales from weeks prior to the launch of the iPhone. People interested in the iPhone would have put off their purchases if their contracts were up for renewal anytime April onwards.

Apple first quarter of sales of its new phone is always strong but looking back at the Iphone 3G sales quarter by quarter

6.89m, 4.36m, 3.79m, ??? would obviously be lower as people would delay their purchase.

Jun 23 09:11 AM

[vassar:]

I got a new iPhone on Saturday. Had to wait in line for 45 minutes. Activation went smoothly and the 3GS is a very nice step up from the 3G (and a big improvement over the original model). I did look at the Pre beforehand and found the screen and keyboard way to small for me (I can beat most BB users on my iPhone).

Jun 23 09:21 AM

[Frank Castle:]

Guess I missed the "Apple fans Only" sign.

Whatever.

Jun 23 11:30 AM

[another.ana...:]

"Guess I missed the "Apple fans Only" sign.

Whatever."

You sure didn't miss the Bullshitters & "Professional" blowhards Welcome sign.

Ayuh

Jun 23 05:13 PM