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Investors along with everyone else was surprised to learn yesterday that AT&T reported activating 146,000 iPhones during the first two days it was on sale. This number might seem like a large number, but analysts were predicting over 200,000 with some estimating being as high as 500,000.
“We have noticed decent inventories [of the iPhone] at stores, and thin demand at best,” analyst Ittai Kidron of CIBC World Markets wrote in a report Tuesday. “In fact, most Apple store visitors were not looking at the device and only a very small subset bought it.”
Kidron also noted a recent survey of buyers of the device found that its key drawback is “poor data connectivity” that affects how quickly users can access and use the Internet over the device. The iPhone works over AT&T’s EDGE network for data, which is slower than other so-called 3G networks that are coming online in markets around the world. Yet another very good reason why you need serious therapy to sign a two year contract with AT&T.
The iPhone is barely out of its box and the news is already cautious at best, disappointing at worst. Here’s my thoughts on what is going to happen next. We will start reading and hearing complaints from users either because of AT&T’s lousy customer service or their incredibly slow data network. People will start to become unhappy and definitely regret signing a two year contract with AT&T. Apple being incredibly smart will follow up with a 3G version of the iPhone where they will work with networks like Verizon and all the people who ran out on day one and signed a contract with AT&T will all want to kill themselves. 
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That number of 146,000 iPhones is for how many iPhones were activated by AT&T in the first couple of days, NOT how many iPhones were actually sold (at AT&T stores, Apple Stores, and on Apple’s Web site) during that period.
You will likely have to eat crow when the TRUE number of iPhones sold is revealed later today.
(Tip: Buy AAPL now while the price is low.)
Buyers of the iPhone have reported high degrees of liking the product. Climb aboard, this train is just leaving the station.
Ummm Harvey,
If you read the second line in my post it said, “AT&T reported activating 146,000 iPhones during the first two days it was on sale”.
More importantly, I will be eating nothing as I am reporting exactly what was said.
Oh by the way, thanks for the tip.
I hope you finished polishing that picture of Steve Jobs above your bed.
Neil,
Thanks for the comment… I am not for or against the iPhone, just waiting to see if the hype lives up to reality.
That’s a splash of cold water, and some of the reasons you cite here are why I won’t even consider the iPhone until G2 or G3.
However, I must say that those who own one are quite happy with it. The interface is actually very elegant and much easier to use than I initially thought it would be. Very learnable.
Cam,
Unbelievably enough, I have yet to see or touch an iPhone in person, but coming from Apple, I never had a doubt that the interface would be amazing. I am actually excited to try someone’s out and give it a test drive.
Thanks for the comments Cam. I am a big fan of your blog!
“Ummm” Cord,
You did write:
“This number might seem like a large number, but analysts were predicting over 200,000 with some estimating being as high as 500,000.”
Those numbers (200,000 & 500,000) were estimates for units sold, NOT for units that would be activated by AT&T in the first 2 days!
Your comments are naive at best, and misleading at worst.
Here’s a plate of crow for you:
http://www.marketwatch.com/news/story/
apple-profit-surges-73-strong/story.aspx?
guid=%7BEA0D7CFE%2D7A9E%2D495E%2DBE13%2DF319EEB580E4%7D&
Harvey
By the way,
The “200,000″ was an estimate for the first month of sales. This was later revised to 500,000 after the first day of sales.
In other words, Apple beat the 200,000 first month estimate by 70,000 in the first 1-1/2 days of sales.
Now that’s what I call failure… NOT!
Harvey, You really got me. See Cord will all kinds of crow on his face while Harvey drives away with a smile and his “I Love My Mac” bumper sticker.
You’re right Harvey, the iPhone is the greatest invention since what, electricity? Maybe the cure for polio?
Rest easy tonight my friend in your “I Wish I was Steve Jobs” pajamas knowing you have once again defended Apple’s honor.
We salute you Harvey!
I think it is a bit premature to talk about an iPhone bubble. Give it about six months and see how it is doing.
I didn’t think I’d do it but I got an iPhone about ten days after they came out. I really like it and find it really useful. I use everything except the text messaging. My point is that once you get past all the shouting (pro and con) it is a solid, useful device. I think it will continue to sell. Also, this is just version 1. Let’s see what the first couple of software upgrades bring.
The upfront cost is a little high but over the life of the contract it is not expensive. Some free or near free phones cost more over the life of the contract.
What puts it into perspective better is that Nokia sells more than four times more mobiles per day than Apple managed on their opening weekend.
And you’ve got to believe they’re never going to hit those numbers again.