By Carl Howe
Josh Martin beat me to the punch with his post on the Apple press release this morning (curse you!), but I thought I'd add a bit more context to the story.
Those one million iPhone 3Gs sold this weekend provide a pretty good clue for why Apple (AAPL) and AT&T's (T) activation servers are slammed and barely able to keep up. This was a big deal. Why? Because not only was it about 4 times more phones than Apple had to deal with last year at this time, but because it is probably the largest consumer electronics launch in history.
I noted when I was analyzing Apple at my prior company, the original 2007 iPhone launch was the largest first weekend consumer electronics launch in history as measured in inflation-adjusted dollars, garnering somewhere around $150 million in its first weekend on sale. That eclipsed the Microsoft XBox 360 ($128 million in the first weekend), Microsoft Windows 95 ($122 million in the first four days), and the Sony Betamax (not even close at $58 million in the first 7 months). But Apple just broke its own record. Assuming an average price after carrier subsidy of $433 (2/3 8 GByte models, 1/3 16 GByte models), Apple just posted approximately $433 million in first weekend iPhone sales. Said another way, if this had been a movie, it would have broken all box office records for a first weekend opening -- by a factor of nearly 3.
And the AppStore? That's harder to get a handle on. My estimate is that most of those downloads were free programs, and that Apple pulled in somewhere around $3.5 million in AppStore revenue, of which it got to keep just about $1 million (the other $2.5 million went to the pay application developers). But again, for a first weekend launch, that isn't too shabby -- it took the original iTunes store a week to reach the $1 million mark in revenue in 2003.
Now some will ask why we're gushing about the iPhone -- after all, it's just a phone. But from my personal point of view, it's important for a very specific reason: it's an Anywhere phone. What's an Anywhere phone? One that provides first-class, two-way, broadband access to both the world-wide voice and Internet networks. Most phones have been first class phones and second-class Internet devices; the iPhone has changed that, and done it in such a way that even my technology-phobic mother could use one. We shouldn't be surprised when good technology gets a good reception.
Yes, there were a lot of server and activation problems this weekend, and both Apple and its carrier partners should get their acts together. But making history is never easy or smooth. And Apple's competitors should be happy about the problems they had. Imagine how many iPhone 3Gs Apple would have sold if the launch had been problem-free.