Number of iPhones to be Sold in 2008 will shatter 10 million
On May 29, 2008, GettingRicher posted the following:
Number of iPhones to be Sold in 2008
I have read many analysts reports about how many of the iPhones will or will not sell and their thoughts as to why Apple will break the magic 10 million sold mark and found the analysts just do not get Apple or the iPhone sales. I thought I would pass on a collective of what I know as to why the iPhone will shatter the 10 million mark this year.
- Number of countries to sell the iPhone for the initial release was 1. I believe Apple sold 700k of the iPhones the first weekend it was on sale. Number of countries to sell the iPhone this year so far is 69. Apple should see a sales boost by adding carriers in 68 countries selling the iPhone.
- Many people have been waiting some as long as a year to buy the iPhone because they read in the news it was slow on the Edge network and are still waiting for a 3G iPhone to buy.
- Apple has most likely sold over 6 million iPhones have been sold to date. Many of those people will buy the new faster 3G iPhone to replace the Edge iPhone.
- Quarterly sales for the first quarter was 1.7 million iPhones in 5 countries. What will quarterly sales be in 14 times that many countries for say the 3rd quarter.
- Supplies of the iPhone have dwindled to the point it is sold out in various outlets causing Apple to have to resupply all the outlets in the 5 countries it is currently sold in with the new models.
- With 64 new countries to sell the iPhone Apple will also have to sell iPhones to all the carriers and outlets that will be selling the iPhone. The numbers just to supply them with iPhones to sell is huge as it was reported that 250,000 outlets in India alone may need iPhones supplied to them for sale. Even if Apple supplied each of those outlets with 5 each of two versions of iPhones that is 2.5 million iPhones leaving Apple with another 68 countries to supply. If, as some rumors report, 3 versions of the iPhone are released the number is even higher.
- 2.0 software. Many people have been trained not to purchase 1.0 anything because of problems they experienced in the past so they have been waiting, some for as long as a year, for the 2.0 iPhone to come out to make their purchase. This will only add to the sales.
- 2.0 software again. Corporate America has shown an interest in the iPhone. According to Apple the software developers kit for the iPhone has been downloaded by 1/3 rd of the fortune 500 companies so they can design applications for the iPhone. These same companies will also need to purchase iPhones for the employees so they can use those applications. Reports of 3rd party companies are being released where they are building custom iPhone applications specifically for business customers who will need to purchase iPhones for the employees to run that software on. Many businesses who said they could not use the iPhone yet because they wanted increased security and push e-mail will find the 2.0 software is designed to provide the security and functionality they need to switch.
- 2.0 software yet again. From cool games, home security, social networking apps, to applications many people have not even thought about are being created to run on the iPhone. These new applications will boost demand for the iPhone further as some will want to play the cool games on them, some will feel they need the iPhone because of specific job related applications, and some will just buy the iPhone to use the home security features or the social networking features, etc.
- Sales boost by discounting. In the UK they discounted the 8 gig iPhone and sold out in a few days showing demand is very high for a discounted iPhone. Rumors are floating around AT&T will discount the iPhone when purchased under contract. This will spike the sales of the iPhone even higher when carriers around the world discount the iPhone like they do with other cell phones when purchased under contract.
- Growing number of countries to sell the iPhone. The list is still growing as more countries were added today. Apple most likely will add carriers in more countries to the list in upcoming days or weeks that will be selling the iPhone.
Apple is not done with the design of the different iPhone models either as it is rumored another new version of the iPhone may be coming out later in the year with even more hardware updates.
No analyst I am aware of has even mentioned the halo effect this is going to cause. Apple had a fantastic halo effect in sales of other Apple products, from people who purchased an iPhone who went on to purchase other Apple products like MacBooks, iMacs, Macs, etc. after they found out how great the iPhone was. This halo effect will now be spread across 69 countries and the list is still growing. This will have a big impact on Apple revenues and profits over the next year.
These are just some thoughts I had as to why Apple should hit the 10 million sold mark before the end of the third quarter leaving the best sales season of the year for Apple (Christmas quarter) for a bit of a bonus for this years iPhone sales numbers.
I am sure I left one or more of the reasons out but this information is far more complete than I have seen from any source so I thought I would pass it on to those who may want see a more complete picture of the full impact of iPhone sales that is coming.
techstock2000 @ May 29, 2008
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Several of your points are based on the “number of countries” where iPhones are/will be sold. Said number is approaching 70.
I suspect that this is not an especially valid metric. To illustrate, let me use an extreme example.
Country Population Potential iPhone Users
USA 304,000,000 200,000,000 (Guessing 66% can afford, would use)
Cameroon 18,549,000 4,000,000 (Guessing 25% can afford, would use)
Dominican Republic 9,760,000 2,500,000 (Guessing 25% can afford, would use)
Estonia 1,340,000 670,000 (Guessing 50% can afford, would use)
Seventy countries the size of Estonia — even assuming that 66% of the population could afford and would use the iPhone — would only provide an additional 61.9 potential subscribers.
The problem I see with ‘country counting’ is that we are not allowing for 1) total population, 2) relative standard of living, and 3) local importance of mobile communication. I think that a more accurate metric would be the potential number of users/subscribers per country.
Please note that I am not implying that wider dissemination of the iPhone is unimportant, because I think that it is extremely important. I just wish to point out that 68 more countries (besides the US) does not yield a simple multiplier effect.
I would suggest a more complex valuation method to estimate potential increased sales, based on:
Country; population; current number of mobile phone users; percentage likely to switch to iPhone, percentage of non-users likely to purchase an iPhone.
In any case it will be an estimate, but I would rather base it on the total number of established cell phone users to which an expanding market will make the iPhone available. Because of the variances in population, life styles, and standards of living, I consider the number of countries where the iPhone is available to be an interesting, but not particularly accurate metric.
Re: Number of iPhones to be Sold in 2008
I think you may be underestimating cell-phone usage in every part of the world except the US. I’m not saying they’re all iPhone purchasers, but there may be more of them than you realize. For example, when we went to Northern Thailand and visited the Kareni Village (very ethnic, old-style) they ALL had cell phones and a hook-up for a computer. I actually think they’d be thrilled witless to have a phone with email access. Absolutely everyone has a cell-phone in most countries. I see the iPhone being bigger overseas than it is in the US.
Add this to huge sales vector:
The iPhone is, in fact, NOT A CELL PHONE, for the predominant characteristic of a cell phone is that it is NOT YOU FRIEND.
The simplicity and ease of the iPhone has people relating to it as a friend.
And you know what? I have one and my wife doesn’t. She hates phones ’cause SHE CAN’T FIGURE THEM OUT. I’m giving her mine when I upgrade to the new one.
What do you think she’ll say to her phona-phobic friends after she’s introduced to her new friend, the iPhone?
Can you spell astronomical sales? Bingo!
Re: Number of iPhones to be Sold in 2008
great points Centex.
What I am very curious to see (as we all are) is the reaction the global community will give to this new product that has more features than they’ll likely grasp at first introduction.
Here in Mexico…I’d have to guess that about 90% of adults own a cell phone. That might be ambitiously high but most people have cell phones and it isn’t a rich/poor kind of thing. Most teenagers I see here have them as well as adults and I don’t have upper class connections. I work with lower middle class primarily. Sometimes just getting a landline is so difficult that cell phones are the only way to go and the poorer folks can’t afford a monthly payment for a phone. Pre-paid is the only way for them. Now that’s an idea that I haven’t seen bandied about…some sort of pre-paid iPhone. Don’t know that could work or would be a good idea or not but I have no real opinion about it other than if it were to be the phone of the masses…pre-paid would be a necessary option.
What really intrigues me is that this is becoming more and more of a computer in your pocket kind of device. There are many people here who go to Internet cafes and pay a buck an hour a couple times a week b/c they can’t afford a computer and all that goes with it. This phone effectively puts the majority of Internet/computer related usage into one small and fairly inexpensive package. The effect of this aspect is what I want to see develop. I know that the lower middle class in Mexico would not buy a $200-$400 phone but if it was a $200-400 phone and computer with at the ready Internet connection…well the value, if understood, would be hugely in favor of a LOT of Mexicans buying this product. It really creates a whole new way of looking at computers, the Internet and telco/celco communications for people who already use all of those elements in one way or another. The main thing is helping the masses understand what this product is and does, how effectively it does it and how economically it does it in comparison to their current approach to communications.
It may be a slow process at the beginning but given time and exposure I expect the iPhone sales in Mexico to swell and give us a tsunami-like effect over the next 5 years. It will just take some time for people to see it and realize how great a device it is…not as a toy but as a useful tool…and apparently a nice little toy as well! Mexico will easily sell 10 million of these phones here in the next 5 years imo.
In response to msg by alsi
Re: Number of iPhones to be Sold in 2008
“Don’t know that could work or would be a good idea or not but I have no real opinion about it other than if it were to be the phone of the masses…pre-paid would be a necessary option. ”
Well all carriers are going to be somewhat different I am sure. AT&T because of the need for a credit check for the two year plan and many who can not pass that check has a pay as you go plan. I read an article that was posted here about a person who purchased a 100 dollar calling card from AT&T and activated one months of internet access for his iPhone for the 20 dollars.
Carriers really want the additional revenues so they usually have plans that meet as many peoples needs as they can.
In response to msg by GettingRicher
Re: Number of iPhones to be Sold in 2008
There are a lot of ways around it, I think. Some people may choose to share a sim card. Others may unlock the phone. The rest of the world is very used to pre-paid sim cards.
In response to msg by centex
Re: Number of iPhones to be Sold in 2008
In any case it will be an estimate, but I would rather base it on the total number of established cell phone users to which an expanding market will make the iPhone available. Because of the variances in population, life styles, and standards of living, I consider the number of countries where the iPhone is available to be an interesting, but not particularly accurate metric.
I have to agree it is more of a subscriber count than a country count. One country like India with 350 million in the middle class that is larger than the entire population of the US with all its classes poor, middle and rich can make a huge difference in the metrics when compared to a smaller country like Estonia.
It would be better for a number cruncher to add up the subscribers in all the countries that can purchase the iPhone to provide a better number. I did not have that true subscriber number for the 69 countries so I used what I did have which is the country count. Even then it would be better to have the subscriber numbers of those who could switch included also as AT&T found half of the people that purchased the iPhones switched from another carrier.
In response to msg by intuitive_investor
Re: Number of iPhones to be Sold in 2008
I’m a little nervous about Latin American iPhone sales…Carlos Slim controls almost the entire group of countries…that’s a huge influence. His Telcel here in Mexico isn’t my favorite that’s for sure. However, I’ve seen his Telmex landline monopoly improve pricing in the face of some competition. Axtel is a rapidly growing company here that basically creates landlines via some sort of wireless system. They entered my town of about 500K people (factory town) and it appears to me that people flocked to their service in order to get away from Telcel’s high pricing or to finally get a landline that they were unable to get otherwise. BTW…not being able to get a landline in Mexico has little to nothing to do with ability to pay. I have co-workers here who can’t get a landline but obviously have no problem with being able to pay. It’s a monopolistic system that results in amazing inefficiencies at times. On the flip side…the technology at Telcel is fairly good imo. ANYWAY…at least the cell phone industry has been loosened from Telcel’s monopoly (part of America Movil Latin America group) a few years ago and so there is some competition. Apparently, the competition won’t have the iPhone though nor is there anything really like it other than unlocked Blackberries…which isn’t really like it.
I think the bottom-line is that Slim knows how to make money. That’s why he’s the richest person in the world monetarily-speaking. He’d rather make money as a monopoly…who wouldn’t? He tried operating in the U.S. but just couldn’t figure out how to compete and pulled out as I recall. He will figure out how to maximize iPhone sales if that is what will make him the most money…and I think it will…so I’m optimistic that he’ll put some investment into advertising and making the iPhone a big-seller here in Mexico and in his Latin America telco/celco empire. Just my 2c…I’m not an expert on Slim or on Latin America/Mexico communications. jmho’s
In response to msg by intuitive_investor
Re: Number of iPhones to be Sold in 2008
“There are a lot of ways around it, I think. Some people may choose to share a sim card. Others may unlock the phone. The rest of the world is very used to pre-paid sim cards.”
This is exactly right. In fact, this makes me think we’ll not see a lag of iPhone sales due to people waiting to finish out a contract period like we saw/see in the U.S. People who use pre-paid and unlocked phones will simply run out their prepaid minutes and make the switch. No need to wait for months or over a year for the remainder of a 2-year contract to expire before moving on to the iPhone. This could result in a quicker adoption of the iPhone in the 2nd and 3rd world than we’ve seen in Europe and the U.S. just a thought
... MORE ... May 30th at 9am and is being … Boy Genius Report - http://www.boygeniusreport.com Number of iPhones to be Sold in 2008 will shatter 10 million By techstock2000 Even if Apple supplied each of those outlets with 5 each of two versions of ... MORE ...
This is going to create a bonanza for companies who are flocking the to create apps and games for the iPhone. Few of the noted ones being Robosoft Technologies http://www.robosoftin.com/iphone, Freeverse etc…