Apple to Exceed 500,000 iPhone Sales This Weekend?

Jul. 1.07 | About: Apple Inc. (AAPL)

By Carl Howe

iDay has come and gone, yet the buzz surrounding Apple's (NASDAQ: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 (NYSE: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.