4 Million iPhones - Not Good Enough

Steve Jobs announced today that Apple's (AAPL) iPhone has sold 4 million units in the 200 days since it went on sale. Not good enough.

The stated goal from Jobs, who is famous for his lowball objective that he can then blow away, was 10 million units by the end of 2008*. Currently Apple has averaged 20,000 units a day. This is even worse when you consider about 1,000,000 were sold the first 30 days (estimates vary). That leaves us at 17,600 a day since.

In order for the goal to be reached, Apple must hit a daily average to 18,100. Questionable. Especially when you consider Europe's launch has been tepid at best and plans for China seem to have fallen through at this point. Canada is rumored to launch any day now but how many users will switch from the hometown Research in Motion for Apple?

If the US does indeed head for a recession or dramatic slowing, how many folks will be willing to pay $399 for a phone? The argument is that high end users are buyers of the phone but if results at Tiffany's (TIF) and Coach (COH) are any indication, these folks are cutting back also.

Now, does this mean the phone has been a "flop"? No. It does mean that a $599 phone will not dominate a category. Jobs seemed to have realized this when he lopped $200 off the price 90 days after the launch as sales stalled.

As the details of the phone trickled out in May last year, 2 months before the phone hit the stores, I said the phone would be a flop. I was wrong. I also said "cut the price to $299 and you may have something. A $599 phone will not gain mass acceptance no matter what it does, especially when people can still get it's functionality from their existing devices. Also, the exclusive deal with AT&T was "not a very bright idea".

I would say right on both those accounts. I think Apple really missed the boat with the exclusive AT&T (T) deal. With Research in Motion (RIMM) coming out with a competing product very soon that will be available on most carriers, I think Apple may have missed its chance to dominate the landscape. As things stand now, RIMM has 36% vs 19% to Apple of the "smart phone" market. Let us not forget Google's (GOOG) highly anticipated foray into the market later this year.

The sad thing is that it is a self-inflicted move, as Jobs' history of not playing nice with others may have come back to bite the company. He may have got the "best deal" from AT&T at the expense of much bigger things.

Disclosure: None

*Editor's Note: Correction from original version of article that read: "The stated goal from Jobs, who is famous for his lowball objective that he can then blow away, was 10 million units in the first year."

Comments

[Julian Ivan...:]

Oh Todd, STFU with your AAPL bear BS.. they' sold 4M iPhones.. they have a 20% market share of the smart phone market. They're aiming to sell 10M iPhones by the END of CY2008.

AAPL have blown off the doors with the iPhone. Get a grip mate. No apologies for my rudeness.

2008 Jan 15 04:04 PM

[MB:]

HAHA...This coming from the guy who said IPhone would flop. I am one of the unfortunate Apple stockholders you spoke of in your other article Todd. I really wish I hadn't bought Apple at 30. Thanks Todd, your a genious.

2008 Jan 15 04:04 PM

[Alfa Male:]

Yes... 10m by the end of '08. Check your sources Todd....

2008 Jan 15 04:37 PM

[Molehead:]

Good grief, you'd think this had been discussed to death by now, but for those who need to have their hands held....go back and watch the 2007 Keynote. Steve clearly states that the goal is to sell 10M in 2008, '...our first full year of selling them.'

Given that we are sure to see new models and new countries in 2008, and that we don't yet know how many have sold yet in 2008, it's a tad early to discount 10M, dontcha think?

2008 Jan 15 04:41 PM

[willrob:]

And the 20% of smartphone market share was through September, not till today. I suspect a lot of phones were sold in December and that percentage has increased.

2008 Jan 15 04:46 PM

[Tom B:]

"And the 20% of smartphone market share was through September, not till today."

Whoa! You sure?

2008 Jan 15 04:57 PM

[Yodarick:]

Oh Todd, how do you do it, got to give you credit for one thing you are consistent. The figure was 10 million by the end of 2008 and if I use you figure of 17,600 per day (which is good in anyone's books), now lets see 350 days times 17600 is equal too ............. why that would be 6,160,000 and plus 4,000,000, now lookie here that would be a tad over 10 million. Now isn't that amazing Todd?

Oh Todd, wipe that egg off you face.

2008 Jan 15 05:15 PM

[Mr. Billion...:]

Who is this guy?! Just stop writing, its probably the best advice you can advice us with.

2008 Jan 15 05:45 PM

[Mr. Billion...:]

PS: I think you should wait until next week after AAPL (not Apple) releases the important "news" about Q1 before making such shallow and unprecedented comments about a companies financials.

2008 Jan 15 05:50 PM

[spiff:]

Todd, why write anything if you are not going to be bothered with getting your facts straight? Steve Jobs projected selling 10 million iPhones by the end of 2008. The time period works out to be about 17 months. 4 million phones have been sold in under 6 months. At that rate it seems quite likely that Apple will meet the stated goal of selling 10 million by the end of '08. If sales are accelerating and new models and new software are in the works I think it is more realistic to predict that over 12 million iPhones will have been sold at the end of 2008. And do you really think that gaining 19% of the smart phone market from entrenched companies in less than six months is a poor showing?

I really have to wonder where you get your information...

Maybe from Steve Ballmer...

2008 Jan 15 06:23 PM

[old and in ...:]

20% of the smart phone market on a gen 1 product in a market that has not taken off in the US like in asia and euro countries because of pitiful
US wireless internet carrier network connections. A real disappointment for apple? Maybe apple needs to buy all the wireless carriers and build a real wireless network in the US??

2008 Jan 15 07:05 PM

[NakoQuant:]

...noting that Todd's disclaimer doesn't show a position either way in AAPL...

I need a better bear case on AAPL, ideally by someone who can identify without prodding: 1) RIMM's time to achieve 36% market share 2) AAPL's time to achieve market share equivalent to Palm + all the Windows mobile devices 3) what Android is, and why it means Google is not entering this market at all 4) when CY08 ends.

2008 Jan 16 02:03 AM

[Jon T:]

Todd - you are a flat out numpty.

You know not of what you speak, but the net gives you a platform for the creation of false-knowledge.

Sad.

2008 Jan 16 02:53 AM

[peter02l:]

If you asked Ballmer (someone actually did) he would have said Jobs' goal of selling 10 million in 18 months is a totally unrealistic. The iPhone is outselling all windows mobile smartphones combined!
Now, you admit to predicting the iPhone would be a flop, yet you think 4 million in 200 days is not good enough?
And then you say Jobs is lowballing with the goal of 10 million?
20% market share in six months is not good enough? Reaching 40% of the goal in 35% of the time is not good enough? What would you consider success then?

2008 Jan 16 07:56 AM

[samij:]

It's 10m iphones during Apple's FY08 (check elsewhere this site, there's couple of articles about this). Will they manage to achieve that? If the seasonal sales pattern resembles that of the ipod, no. And not without further price cuts and/or more reasonable plans in the Europe & entering into several more markets (which ones? China's out, European operators are not encouraged by the "tepid" sales in the UK, Germany, France. So Apple'll have to offer way more reasonable terms.).

Iphone managed to grap 20% market share in smartphones, during the launch. In the US. And to put that into context, it's about 3% market share of cell phones sold in the US.

2008 Jan 16 10:34 AM

[Dan Butterf...:]

On Apple F1Q07 (Qtr End 12/30/06) Earnings Call, Tim Cook clarified that the 10 million iPhone sales goal is for "end of calendar year" 2008. My original assumption was that this would be a running total (cumulative) over an 18-month timeline ending 12-31-08.

However, after reviewing the 2007 MacWorld Keynote ... Steve Jobs clearly states the objective is $10 million iPhone sales in 2008 ... "in our first full year in the market ... in [calendar year] 2008"
See image here - thumbsnap.com/v/NJgSKA...

2008 Jan 16 01:23 PM

[Dan Butterf...:]

make that 10 million (no $)

2008 Jan 16 01:25 PM

[jmmx:]

There has always been a bit of uncertainty about the 10 million units figure. I am quite sure that one of the execs did a definitive clarification that the intent was 10 million by the end of 2008.

So - if they have sold 4 million in 6 months then (all things being equal) how much would they sell in the next 12 months? Uhhh - let's see (where is that calculator...) Oh that would be another 8 million. Now let's figure this out ... 4 + 8 = (ohhh this is so difficult!)

I got it 12 million!!!

Is 12 million greater than 10 million?

So the only point of this article is that if the Republican Recession hits hard, then sales might go down. WOW - what a revelation!

2008 Jan 16 01:38 PM

[Governor:]

Todd, you are an idiot...go back to your PC and run scandisk. The iPhone is breaking trends and alliances like no other product in cellphone history. And what if they come out with an iPhone nano?

2008 Jan 18 01:01 PM

[User 141959:]

I work for a major wireless carrier and have been following this industry daily for the past 8 years (I've used at least 80% of the cell phones out there). Anyone who doesn’t consider the iPhone a success will have a new perception within a year. Maybe this guy hasn’t actually picked up an iPhone and pushed some buttons. Apple created the best phone (or handheld computer) on the market with their 1st release. I would have one if it were not for the company I work for being a competitor and them giving me a free phone.

2008 Jan 19 11:23 AM