Exactly how many iPhones did you really sell, Mr. Jobs?

One of the things I like about the English language is the number of words that have multiple meanings. Take the word hysterical. It can be used to describe someone who is reacting irrationally, with an extreme excess of emotion. As in, for example, all the stock traders who heard that AT&T had activated only 146,000 iPhones in the last two days of its fiscal quarter, concluded that iPhone sales must be far below expectations, and beat Apple's stock down 6% in a single day (link).

Then the next day Apple releases its own quarterly report, and it turns out the company sold 270,000 iPhones in the same period. This is leading to all sorts of convoluted explanations for why the numbers from AT&T and Apple don't match (link).

So now everybody says that it was all a misunderstanding and the iPhone is actually selling great, but there's another aspect to the story. None of the US mobile operators are very good at tracking what has sold through their retail stores. Unlike a consumer electronics chain, they do not keep tight track of their inventory because they care a lot more about selling service plans than they do about selling hardware. So although I'm sure Apple knows exactly how many iPhones it shipped to AT&T, I doubt anyone knows exactly how many actually sold through to users.

Our industry, and those of us who hang out on the web in particular, has a hunger for quick information and snap judgments. Real, high-quality data is slow to gather, and usually too expensive to give away free (link). Often it doesn't exist at all. So we make sweeping conclusions based on anecdotes, and we're far too quick to judge successes and failures.

The bottom line: The iPhone is probably selling well, but lots of phones sell well to enthusiasts in the first month and then fall flat. We won't really know how the iPhone is doing until we have a couple of quarters of sales data to look at. Anyone who tells you otherwise is trying to sell you a stock picking service.

Which brings me to the other definition of hysterical: A situation that is very funny. I think that one applies here as well.


Anonymous said...

just one quick comment: iPhones went on sales in both AT&T retail stores and Apple stores. Then, if you wanted to activate the phone, you had to do it via iTunes.
I'm not sure that, for that second phase, all customers did it all the way: maybe some of them did not want to commit to the dedicated price plans for 24 months ? Maybe many of them just used a prepaid plan ?
My guess is that AT&T is keeping track of the iPhone price plans actually activated (i.e, customers using the full-blown iPhone features), rather than the number of phones sold (i.e, some of them could be using only the iPod functions, and not have a data plan to browse while on the move) ?

mashby said...

As usual Michael, you hit the nail on the head and cut though all the smoke and bs with your fine edged wit. Thank you.

There's a lot of things about the iPhone that remind me of the early days with the Treo and I find it funny how so many pundits, analysts, users and reviewers seem to live in this bubble where no other mobile products have ever existed. Otherwise they wouldn't be so surprised over a missing feature, or a certain user experience, etc.

It feels as if the culture of celebrity has slightly turned its focus toward the iPhone. The media follows Paris' every move and they seem to be doing the same with this. Is the iPhone the Paris Hilton of mobile technology? :-)

Alex Na said...

This page is designed to count all the iPhone sold. The counter quickly grows, so we might see real number soon.


Jerome said...

Hi Alex Na

How is your counter counting?
Beacause 496 iphones sold seems to be low...

Anonymous said...

Would an existing AT&T customer switching over to an iPhone be considered an activation? I also would bet that tons of iPhones are gifts that do not get activated right away. There are likely a lot coming out of AT&T and Apple shops and ending up unopened and unactivated on the shelf of private cell phone shops and flea market cell booths, etc. I have seen them for sale in such locations.