iPhone and the analyst delusions

35 Comments

[qi:053] Apple is taking it on the chin, well because AT&T didn’t meet the inflated expectations of analysts. activations. A friend of ours emailed to point out the grand delusion of Wall Street in what has to be the funniest email of the morning:

Analysts are truly a funny breed. They remind me of my wife when she asks a question, answers it on my behalf, and gets mad at the answer. Case in point, our favorite subject iPhone sales, analyst’s euphoria kept them upping each other till they reached 700,000 units sold over the first two days or weekend. Mind you, not single one showed real analysis. When ATT announced the real numbers of 146K activations, they are suddenly unhappy!

Richard Farmer of Merrill Lynch takes the cake, when he stomps his feet and says, “we expected more days of selling in June.” We know Steve is God, but even he can’t add extra days to June.

Not be Apple’s defense team, which product (not particularly a great one) that carries a $2000 price tag (over two years) sold 146,000 units in 1.25 days (mind you Friday sales started at 6 pm) bringing in a total of around$292 million. Over a period of 30 hours (including night time) equates to 4867 iPhone activations per hour or 82 activations per second minute.

35 Comments

hardmanb

The last two times I bought a cellphone, from Cingular and Verizon, I was in the office for more than 30 minutes each time.

For Apple to sell 250,000+ new model cellphones and/or AT&T to activate 147,000 cellphones (including 40% carrier switches)…in 30 hours. I’d like to see any other new phone match that total in 30 hours.

As to projections, Steve Jobs announced Apple’s goals of 200,000 for the first WEEKEND (Sunday sales were not reported in the quarterly report, only the first 30 hours of the weekend); and a goal of 1 million by the end of year (2007) and ten million by the end of 2008. This would amount to about 1% of the US cellphone market for a new phone and manufacturer (6% of the smartphone market).

I suspect that Apple has already sold over 1 million…reaching their end of year goal in less than one month. A record-breaking success story.

Why all the “failure” talk? To me, it’s just hype and FUD.

Matthew Bellows

Even if the iPhone disappoints some, it’s still a watershed event in wireless. At the lowest end of the estimates, 140k sales in two days is by far the best selling phone opening ever. The manufacturer/carrier relationship that Apple struck here is groundbreaking. And the reduction in AT&T churn to a record low 1.6% has to be at least partially attributed to the iPhone.

Jon

Proof, if any were necessary, that stock analysts were put on this earth to make astrologers look good.

reinharden

What I find most amusing is the number of analysts who’ve forgotten that they were all predicting how many iPhones would sell in the first weekend.

AT&T provided the number of phones that were activated between 6 PM Eastern time Friday and midnight Eastern time Saturday. Which means that they’re not reflecting the phones sold on Sunday.

Perhaps after Apple’s earnings announcement, the analysts will remember that Sunday was part of the weekend. ;-)

reinharden

herman manfred

As perhaps too subtly noted by “peter” way up there in the 2nd comment, “activations” is not the same as “sales”, especially with (1) the iPhone that can be and is encouraged to be activated away from the sales location – like at home, and (2) there was a major kludge in the activation process (see that Saturday’s screaming headlines) and (3) there was only 1+ days left in that quarter for numbers to be generated for in the first place. Anything done after “accounting close”, whatever THAT is for AT&T of that weekend (Saturday at 18:00?, midnight? what?), was not counted in the reported quarter. You know, come home from shopping on Saturday, say “I’ll get to it in a bit, time to eat!”, come back late from eating and say “I’ll do it tomorrow” and…tada! Wrong Quarter!

That is to say, the NEXT report ought to be dynamite!

Or Apple’s report tomorrow on actual sales, not activations.

Kevin Tate

Hmm…I wonder if the 146,000 activations understates the actual number of iPhones sold in June – since so many people had activation troubles during those first 48 hours?

Out of four friends who all got iPhones that Friday, I was the only one up and running within 24 hours…(and only 2 of the 4 still have their iPhones, but that’s a different topic…) Would be curious to see what the Retail SKU count is.

James

Just like the Duke debacle, where the iPhone was blamed, when it was the Cisco routers…

A lot of Apple haters will be eating CROW when the actual iPhone sales numbers come out.

Lets not forget that on-line sales could not have been counted, since those phones could not have been activated until the following week. The sales also don’t include Sunday, which is the weekend to me. Also, their were the activation problems that lasted all weekend. Stores running out of phones which delay purchases. Phones as gifts or for other people that were probably not activated until a day or two later. Phones on eBay… shall I continue?

Viswakarma

Wall Street analysts are like rabbits! When the wind rustles the leaves they scatter or freeze!

Anybody who takes notice of these analysts and Wall Street numbers are dumb and crazy!

John

One more point, just one man’s opinion but I think the iPhone will be a hit. I’ve had one for about ten days now and love it. My company gave me a blackberry which I find to be big and awkward to use and hard to understand. The blackberry sits in my computer bag and I check messages once or twice a day. The iPhone is actually useful and usable and I carry that on a belt holder. Having access to Google and Google Maps from almost anywhere has been hugely helpful.

John

None of this is surprising. There is lots of hype in advance of a product expected to have a large financial impact on several major corporations. In lieu of real information various guesses are floated and later found to be wrong when some hard information is released several weeks later.

Peter C

People. Get over yourselves. This is Om Malik’s BLOG, not an independent journal. Take what he says with a grain of salt, not total and complete truth. He took a little journalistic liberty to make his blog entry more entertaining. What is wrong with that?

And let’s not nitpick. His overall point is right now. ANALysts totally overpredicted sales. We’re talking a factor of 2 or 3x. They deserve some mockery.

ckn

the sad bit is that none of this really matters! the real question is how many iphones they will sell over the next 6 months.

My bet is 4 million. that is a lot of money for apple, not just from the device, but also from the att revenue share, which I am sure all analysts underestimate.

c

greendrake

The iphone had zealous fans that led to enormous numbers in the short term, but very little depth. The interest is simply not widespread outside the geeks, hipsters, and sheep.

I think of the iphone as a badge of derision, like The Scarlet Letter.

Om Malik

So Farmer comes up with a 500,000 # or someone with 700,000 # and they are getting away with it.

More days of selling: excuse me, the company announced pretty early when the device was going on sale. there were ads on the television.

no change in forecasts by the said analysts, even though there were 1.25 days available for sale.

oh, this bit “We know Steve is God, but even he can’t add extra days to June.” Clearly, my skills of writing “ironic” stuff aren’t that great. So in the future staying away from it.

Om Malik

jccodez, i am a fanboy? for pointing out that none of these forecasts were made by either att and apple, but instead by analysts. And for the record, I don’t care much for the iPhone.

Om Malik

Here is the snippet from the report.

We suspect Apple sold at least a couple hundred thousand units, though we are less sure of our original 500,000 estimate, which was set earlier in the quarter when we expected more days of selling in June . . . The more important test will be sales in the full quarters of September and December…

Our “buy” call on Apple depends in part on a successful handset ramp, as well as attractive iPhone economics. We continue to be confident in our long-term estimates of earnings power, which at $5.50 in fiscal 2009 is $0.70 above consensus.

Make what you want of it.

maxconfus

$2000 for two years of service is $2.81 per day to own/use the iPhone.

yoshi

So you misquote the analyst and you pull out the bogus “phone costs $2k” argument. I agree that the phone is average but you don’t help your argument by making it up…

jccodez

you know om, you hung your hat on this one from the start…hype was on for you…

OutofContext

The Farmer comment is taken WAY out of context. Here is the real quote:

“We suspect Apple sold at least a couple hundred thousand units at launch,
though we are less sure of our original 500K estimate, which was set earlier in the
quarter when we expected more days of selling in June.”

He had made an estimate before the on-sale date was announced, not imagining Steve added additional days to the month of June.

PXLated

Will be interesting to see what Apple has to tell tomorrow. Till then it’s all just mental masturbation and supposition as it’s well known AT&T couldn’t handle the activation requests.

Mark

@Peter:
Still to meet the numbers commonly quoted Apple/ATT would have to sell nearly 4 phones for every one activated. I thought the limit was 2 per customer.

Francis

Quick correction… 4867/hr is 82 activations per minute, not per second.

peter

146k phones were activated in 1.25 days. Apple hasn’t said how many were sold yet, and one could assume at least a few more were actually sold.

And saying it cost 2000 doesn’t account for what the end user would have spent on a phone and service elsewhere. If that service were a treo with VZ, the monthly cost for the iPhone is lower.

Mark

Finally the true figures emerge. I was so sick of hearing the fan boys at Piper inflating these numbers to help inflate the stock price for day traders.

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