Through Michael Mace’s ever-entertaining site, I found another blog I’ve been enjoying recently, Open IT Strategies by James West. He recently did a post on marketing guru-type-person Seth Godin’s challenge to pundits and analysts to predict just how well the iPhone’s going to sell. West says 1.5 million in 2007, and I thought it might be interesting to gather some more predictions here, so I’ll do mine, then leave yours in the comments.
Apple’s publicly stated goal is to sell 10 million iPhones before December 2008. I’m not convinced they’re going to make that, and I think sales are going to start very slowly and will see them sell 1 million devices before the end of 2007. Their distribution is going to be constrained thanks to the Cingular exclusive; outside fanboys and early adopters, the number of people willing to drop $500 on a phone is pretty small; and the iPhone is going to have all sorts of Apple version-1 problems. Things like manufacturing defects, complaints about scratches, durability problems and so on. These are going to cause Apple some real problems, because people will already be reluctant to spend the money for the iPhone, and poor early reviews saying stuff like how the screen gets badly scratched in your pocket, or cracks easily (you know, the sort of stuff Apple’s dealt with a lot) will be quite damaging.
So what do you think? Leave your prediction in the comments, or trackback from your own site.
I did an iPhone sales forecast as part of my January predictions and went for less than 100,000 units in 2007, all for the reasons you talk about.
I’ll stick with this for now, though readily admit it might be a bit bearish with hindsight.
Russell
do somebody knows when we get iPhone in europe? What is the basic charges for AT&T per month? Can i buy the iPhone in usa without domicile in America? Thanks for answer. bye
Opening Bell: 5.7.07…
Alcoa Plans to Make $33 Billion Bid for Alcan (Bloomberg) Last year, Alcoa was left with a ring in its hand, as it failed to win over any potential mates. The company is still looking for a deal, and it’s……
Maybe 500,000 because they probably won’t manage to ship it outside the US in 2007 - and then they’ll hit further trouble when the real meaning of “2 year contract” sinks in…
My prediction, they will hit about 10.3 M iPhones shipped by Dec 2008.
I did a very lengthy “handicapping” of the iPhone’s opportunities across the three markets, recognizing the iPhone is only GSM and only on one carrier in America, and with delayed launches in Europe and Asia, mapping out the major challenges of each market region at this blog in January:
http://communities-dominate.blogs.com/brands/2007/01/handicapping_th.html
In it I concluded that I felt it was reasonable for Apple to achieve the 10 million level, but very difficult to go much above that.
I admit to the various concerns expressed here and elsewhere. The iPhone is not “perfect” as a mobile phone. But it does not have to be. It is clearly VERY cool. It is desirable in ways that the average LG, Samsung or Motorola simply is not. It is very much like the iPod was and also like the original Macintosh.
It will allow Apple to command a significant price premium on the traditional “features/benefits - price points” and Apple’s iPhone is by far the preferred next phone for any iPod users, and the smartphone of choice for most Macintosh PC users.
That on the appeal. But the iPhone will seriously disappoint when it launches on various compromises from non-replacable memory to non-replacable battery to modest camera resolution and no flash etc etc etc, not to mention initially no 3G (which likely they will fix before it launches in Europe and Asia). So then, even for many who before touching the phone, simply on the Apple appeal, will prefer the iPhone, will then, when having to make some SERIOUS thinking about the 500 dollar subsidised device (ie 800 dollar unsubsidised price), suddenly the LG Prada or the Nokia N-95 or top of the line SonyEricsson Walkman or Cybershot phone will be very compelling indeed.
So Apple has strengths and weaknesses. But why do I think they will hit the 10 million, and JUST barely over it?
Because Apple are masters at the show of marketing. Steve Jobs committed all of Apple that the iPhone is their most important launch. Remember, he launched the iPhone BEFORE Apple even owned the rights to use the name iPhone. This is the make or break Apple as a company, product. They changed the name of the whole company from Apple computer to Apple.
They have done their math. They have set the high price point. They have given the world a clear - and very aggressive - target. 10 million units.
And then if Apple delivers on it, Apple will be heroes. If they fail, it will be a glaring, spectacular failure. So Apple will do anything to reach this goal.
And they have “tricks” that they can employ - most importantly, obviously, price cuts. If Apple notice that by September 2008 they are 20% below the target, they do a big price drop for the Christmas sales of 2008, to hit their target.
I am confident they will sell just over 10 million, say 10.3 million, but really not more than that 11 million would be a massive surprise.
My two cents and fun prediction here from May 7th in the Year of the Bond, 007
Tomi Ahonen
author, blogger, podcaster
http://www.tomiahonen.com
http://www.communitiesdominate.com
http://www.horizonchannel.com
All deference to the folks that believe in the omniscience of Steve Jobs, but there is almost no way that Apple is going to be able to sell 10 million iPhones in 18 months. Just to show that I’m not a naysayer, I do agree that 1 million iPhones in 2007 is completely reasonable.
Here’s the rationale:
With AT&T/Cingular being the only announced carrier to date, getting to the 10 million number would require 1 out of every 6 CURRENT AT&T/Cingular customers to buy an iPhone. The people that will buy iPhones are the small subset that are currently paying well over $100 per month for wireless service. With AT&T/Cingular’s current ARPU at less that $50, a standard distribution would suggest that substantially less than 1 in 6 are currently paying more than $100/month. Compound that with the fact that many of these people (myself included) have already upgraded to Cingular’s 3G network, and we won’t want to lose all of that network speed just to have a slightly slicker form factor. (Side note: I was going to wait for the iPhone, but ultimately decided that the Blackjack was plenty feature rich and also had 3G, allowing me to watch my slingbox from anywhere - something you just can’t do on the EDGE network that the iPhone will have).
Wait, you say, the iPhone will attract people to leave Verizon and Sprint. I definitely agree with that point, which is why I believe that the iPhone was a huge coup for Cingular. It will attract many of the high ARPU, fashon-savvy customers away from the competitors. But if you’ve noticed, Cingular remains the only carrier in the world that has done a deal with Apple. The reason for that is the eggregious terms that Apple forced on Cingular. Apparently Verizon was going to get the iPhone, but couldn’t stomach the terms. The terms are so difficult that AT&T’s board of directors had to sign off on the deal - something that has never happened before for a single handset deal. Because Apple got AT&T to fold like a lawn chair, they are expecting other carriers to do the same, but the European carriers are not biting.
There have been well over 1 million people that have signed up in Apple stores and online to get an email when the iPhone is generally available. Let’s be generous and say that all those people buy the phone in the first 6 months it is out. That gets you all of the early adopters. Then what? Who buys it next? With $500 price tag, very few people do, unless some kind of payment is offered (which there won’t be for all of the reliability issues highlighted by others on this page).
In all reality, the main reason this is a coup for Cingular is the fact that 1) they will be able to attract the very high end customers from the other carriers, 2) they will be able to retain their own high end customers, and 3) they will drive consumers into their Cingular stores just to look at and play with the iPhone. The reason #3 is so critical is that Cingular has a teriffic selection of phones that have pieces of the iPhone functionality (MP3 player, video, etc) at a fraction of the price. Cingular’s bet is that for every 100 people that come in to look at the iPhone, 1 will buy it, 9 will buy something else, and the other 90 will just leave the store. Hey, that’s 100 people that wouldn’t have walked in the store that day, thus 10 sales that wouldn’t have been made. Smart move if you ask me.
A the end of the day the iPhone will do very well and Jobs will again be touted as a consumer products/marketing demi-god. However, given the current information we have, it will take time for it to get to the 10 million plateau. Unless, of course, Jobs has a couple other carriers up his sleve, in which case my entire analysis is out the window, which (as a shareholder) would be fine by me.
“As an example for an early MID, Kedia pointed to Apple’s iPhone which is rumored to integrate several Intel components.”
http://www.tgdaily.com/content/view/31899/113/1/1/
“900m units” including iPhone as a MID.
http://news.moneycentral.msn.com/provider/providerarticle.aspx?Feed=FT&Date=20070503&ID=6842278
10 Million iPhones?…
All deference to the folks that believe in the omniscience of Steve Jobs, but there is almost no way that Apple is going to be able to sell 10 million iPhones in 18 months. Just to show that I’m not a naysayer, I do agree that 1 million iPhones in 20…
Once the iphones start shipping, it’ll only take a few days for the answers to all these questions. And I bet the apple execs will have an army of PR waiting in the shadows to put out fires before they gain momentum. I think the scratches issue will either be a complete non-issue, or a deal breaker. Somebody has already setup a website dedicated to iphone scratches. Way to jump the gun. He could be a moron, or ahead of the game. I guess we’ll see. It’ll be a fun week for sure when all the nerds get a chance to break these phones.
The iPhone is the PT Cruiser of smartphones. It has a nice interior, some new smartphone functions (voicemail icons), sleek form factor, and the Apple logo. But when you look under the hood, problems appear. A PT Cruiser is just a Neon in a prom dress. The iPhone is similarly lacking.
We are starting to look from 3G to 4G and this comes out with 2G connectivity? Using EDGE-only is a clear sign that this device may be 18-24 months late to market already.
Non-replaceable battery? I can hear the poor Cingular service reps beating their heads on the counters now. Batteries have a high failure rate and generally are useless after 300 or so charges. That means that a heavily used iPhone will be a brick before the Two Year service contract is up. This won’t impact sales now, but it will cost Cingular a ton of money starting next summer.
Is it tough enough? My 3 year old Blackberry has it the asphalt dozen of times. The thing is made to be used as an air hockey puck. With early reports of scratches and frailty will this go-every device end up being treated like a china-cup? People don’t like to buy things that they feel will fall apart or quickly degrade.
User Interface. I have seen the iPhone being used and I think that is is very user friendly and intuitive. I could safely give one to my dad or mother-in-law and be confident that they could operate it. But do you see how people currently use their phones now? Voice calls are a no-brainer. Just about every full-featured mobile phone can get people talking with or without hands. But what about text messaging? You know, what the iPhones target market will send 200 of on an average day. The finger recognition may be fine for a message or two, but avid texters are typing at 10 times the possible speed of the Apple input sensors. And since this is a smartphone with a virtual keyboard, do you think the thumb-typers that have been using Blackberries, Treos or Q/Blackjacks will be patient or comfortable enough using Apple’s interface. I am a Crackberry addict and need a device that I can type quickly on. The iPhone isn’t even close on this.
Cost. Apple is asking their loyal customers to pay a lot of money. And what for? I am going to go out on a limb here and suggest that the target market for this device already have both an IPod and a mobile phone. They are selling a device that is essentially a Nano and a Blackjack merged into one and charging 50% more for it. I think that AT&T will benefit the most since a lot of people will come into their stores to look at it, not be super thrilled with the iPhone, cringe at the price, and buy another one of AT&T’s products. That is all fine and good for AT&T. This is a business decision, but I don’t think the general market as a whole is ready for this type of device at this price.
Exclusive. AT&T service is good, but not the best. Most people buy mobile service based upon the network, service, and plan price/options. What device is cool today may not be cool tomorrow. Buying service that works poorly in your area just because the phone is cool is stupid.