Is Apple's iPhone Failing?

The meme rapidly began to take hold yesterday that Apple's (AAPL) iPhone takeup has been considerably more tepid than many (myself included) expected. The most recent impetus was the 146,000 new-subs number yesterday from AT&T (T), which is lower than most people expected for the first two days of iPhone sales. At the same time, in-store checks by analysts and others (including yours truly) show that iPhone is moving much slower than it was before, and Apple stores have 'em in serious quantity).

So, is iPhone failing? I think not, or at least not yet. First, this subs number is not a units number. Granted, you would expect them to be correlated, but it is a lower bound to the number of iPhone sold. While I'm not suggesting, as some are, that AT&T's activation process held things back by two-thirds, there is also lots of reason to suspect that activations and units were materially different. That won't continue, of course, but it was true on the first weekend.

Second, the in-store frenzy had to abate, so seeing slowing units isn't a surprise at all. iPhone are not impulse buys -- a two-year contract does temper that sort of thing -- so no-one should be entirely surprised.

Am I totally sanguine? No. As I related here earlier, this is more of a consumer product than I expected, and I found the keyboard frustrating to work with, which is a big deal given my messaging dependence. At the same time, it seems increasingly clear that a 3G version of the device will be out by late this year -- analysts are saying the same thing today -- and that suspicion is going to temper sales further in the coming months.

Comments

[mobil dash:]

www.apple.com/iphone/u...

2007 Jul 25 06:19 AM

[Dan Poarch:]

3G, from my experience with AT&T, is a mirage and not worth holding out for. In the Balto/DC area it comes and goes at a whim and just a block two out of the downtown area in Balto and it's gone. Speed-wise it doesn't seem impressive, nice, but still not impressive. Admittedly, it would be good to see the speed put to use on an iPhone and not the crappy phone that I have.

I'm just saying that 3G will not cure the iPhone's woes. Nor should it. I doubt we'll ever get the high-speed via 3G with any smartphone that will satisfy. I truly believe that we'll see a double-down in wifi coverage at shops and hotels before we'll see the cell networks improve substantially.

2007 Jul 25 09:28 AM

[peter:]

Paul, define for me your process of checks and how you correlate your analysis

2007 Jul 25 11:14 AM

[bradah:]

Is the iPhone failing? Fail - "to be unsuccessful at one's goal". Why is such a proposition made based on such limited data?

2007 Jul 25 11:55 AM

[Neil Anderson:]

Is Apple's iPhone failing? Compared to what?

2007 Jul 25 02:48 PM

[seekingalph...:]

3G is most certainly not a mirage. I consistently get around 1 MB/s download onto my HTC Hermes on the Sprint network. For 500 minutes and unlimited data and text messaging for $30/month, that is a big reason for me never being interested in the the Apple/Cingular deal. With that bandwidth, I can stream all my videos, ebooks, and audio from my home network, and download the full resolution YouTube videos. When you have a good 3G, it rules.

2007 Jul 26 06:01 PM