Apple to Exceed 500,000 iPhone Sales This Weekend?

iDay has come and gone, yet the buzz surrounding Apple's (AAPL) iPhone keeps building. As we went into the weekend, there were more than 15,000 stories, many of them covering the launch events at Apple and AT&T (T) stores Thursday night.

Reviews of the phone have been overwhelming positive. I was surprised to see that even the Boston Globe, a newspaper with no great love for Apple products or enthusiasts, had a rather glowing "first-touch" review:

After the relentless buildup of the past six months, the temptation to trash Apple Inc.'s new iPhone is pretty much irresistible.

If only I could.

That pretty much says it all.

Sales of the iPhone, though, I would have to classify as surprisingly smooth. AT&T's activation system appears to be the big bottleneck at this point; it was down several times in the last 12 hours and is at best sluggish during peak loads. Waits in AT&T stores have also been long due to poor computer support. One fan waiting in line at the AT&T store in Manhattan, left the line, walked to the Apple Store on Fifth Avenue, bought an iPhone, walked back to AT&T, and the line hadn't moved from where he was in it. Ouch.

On the other hand, Apple's decision to decouple phone activation from sales was a strategic move that, in hindsight, now appears to be genius incarnate. We clocked people walking out of Apple stores with new iPhones at rates of one to three a minute, which means anywhere from 50 to 200 phones are walking out of each of Apple's 162 stores each hour. Said another way, based upon what limited data we've been able to observe and get from others, we're looking at peak physical sales in Apple Stores on the order of 30,000 an hour. But even more surprising is the fact that Apple iPhone stocks seem to be holding up well. People reported last night that they could walk into Apple Stores at 9 pm and buy an iPhone with no line or wait whatsoever. It appears that Apple bet big on manufacturing lots of phones.

Online Apple sales have suffered somewhat from overloaded servers; in fact both the online Apple Store and iTunes were down after 9 pm EDT as customers rushed to make purchases. Even so, we've heard data saying that online sales rates were also in the tens of thousands of sales per hour during the first few hours. Delivery times have been consistently reported at 2-4 weeks from the online store; that has not changed as of 9:45 am Sat. morning, but may change today as stocks become depleted over the weekend.

The bottom line: some analysts claimed that the iPhone launch would be a failure if Apple failed to sell 100,000 iPhones during the first weekend. Based upon the limited data we have, we believe that number was exceeded in just the first two to three hours. Our prediction, based upon limited sales rates reported, is that Apple will have sold 500,000 iPhones this weekend. The only question is whether the demand and iPhone supply is great enough that they might push past the million unit mark this weekend.

In other iPhone news, PC World has been brave and done several abuse and drop tests with the new iPhone. The good news: not only is the device extremely rugged and survived all the abuse they threw at it, but it's been surprising hard to mar the case or make it look anything other than brand new. No one is saying it's as rugged as the iPod nano yet, but that's because no one's been able to pull their attention away from their iPhone long enough to run it over with their car yet.

Comments

[rlh:]

What remains to be seen is how the market will react to this amazing launch. Most analysts are saying to sell the news (an old adage that I don't believe will work this time around) and buy the stock at lower prices this summer. I think they are in front of a freight train and will see AAPL stock climb this wall of worry.

2007 Jul 01 10:22 AM

[samij:]

How exactly did you end up with that number? If 30,000/h were sold during the peak, the peak would have had to last for almost 17 hours to move 500,000 phones.

However, other sources report that by 8 pm on Friday the Apple stores were calm. I'd say that this points to less than 50,000 phones sold during the initial rush on Friday. According to those reports, there was no rush on Saturday either. Apparently, the ATT stores received about 50,000 phones as well, most all of which were sold during the weekend. In addition some were sold though Apple's online store, though the estimated delivery lag of 2-4 weeks probably reduced the number of consumers willing to shop in that channel.

That would make a total of about 100,000-150,000 phones sold during the weekend. Not bad, but nowhere near 500,000.

2007 Jul 01 01:56 PM

[jonreagan:]

Not to speak for Mr. Howe--who obviously does a great job of writing on consumer electronics on his own--it's fairly straightforward to see how he came up with the estimate.

The 30,000/h number he cites is only for one channel of distribution--the Apple stores. Layer on top of that the online sales, plus units sold in AT&T stores, and you come up with a much larger forecast. Moreover, for better or worse, most retail business is done on the weekend; as most retailers will attest, the "weekend sale" mentality means that the volume is going to come Friday through Sunday. So yes, most of the time since the launch Friday evening does represent prime time, or peak selling hours.

Having said all of this, most reports at this point are anecdotal, but extremely positive. The actual number will be interesting, and generate a whole new round of debate. Interesting though, how many folks in the mainstream and business media are desperately hunting for flaws or "glitches" in the iphone....

2007 Jul 01 03:25 PM

[MHATTER:]

Add my anecdote to the pile:

I bought my iPhone today (Sunday) at noon at an Apple retail store. The place was packed, even though it is in an out-of-the-way suburban mall in Michigan. There were clearly still significant numbers of iPhones available, and there was no "waiting line" or any such thing anymore, but they were moving very steadily at several check-out counters. The rest of the mall was totally dead...

The weekend number sold will be closer to 500,000 than 100,000, I'm sure. Steve Ballmer must be bracing for a very ugly Monday...

2007 Jul 01 03:36 PM

[Wise Owl:]

I was at an Apple Store in Houston. I likeed the iphone as well as other people were so engrossed in using it, they were oblivious to other users.

Apple support was good, but I did not see much buying. But, there was a steady line of purchasers.

I was impressed that the response was good as well as the camera was good.

I think, the internet surfing would be too slow on ATT edge network. But, one can get on other netowrks like tmobile hot spots in Starbucks...

2007 Jul 01 06:45 PM

[jmmx:]

UPI

Apple all but sold out this weekend...

www.upi.com/NewsTrack/.../

2007 Jul 03 11:45 AM

[paul:]

Congratulations! Apple. You are off to a very good start. Couldn't help but notice that the iPhone also requires the unit be sent to Apple to install a new battery. For a mere $80.00 you get a new $20 battery installed for you - just like the ipod! They do know how to make money.

2007 Jul 05 06:47 PM