iPhone's sanity check

[qi:053] iPhone’s first weekend didn’t turn out to be as hot as Wall Street analysts had predicted. The sales weren’t 700,000 or 500,000. Or 146,000 for that matter, as AT&T’s results might have indicated. The actual number was somewhere in between.

In first 1.25 days Apple sold around 270,000 iPhone, which is pretty impressive for a device that starts at $500. But it might be having an unintended impact on the sales of iPods, especially the more expensive video iPods.
Apple, which announced its fiscal Q3 (ending June 30, 2007) earnings today says that it will shop its millionth iPhone at the end of first full quarter the iPhone has been available – that works out to about 250,000 phones a month or about 5.6 phones a minute. That’s over $400 million in revenues for Apple, assuming an average median retail price of $550-a-device

Nevertheless, it also brings home the fact that Wall Street expected Apple to sprint ahead, even though the phone business is a marathon. And it will take a while before Apple can declare victory. Apart from the iPhone, looks like the iPod sales were down sequentially – something that could be explained by buyer interest in the iPhone.

In fiscal Q2 2007 10.55 million iPods brought in $1.7 billion. In fiscal Q3 2007 9.815 million iPods brought in $1.57 billion. That’s down 7% both in unit and revenue terms. Other music related product sales declined 7% as well during the quarter from the previous quarter. – from $653 million to $608 million.

Update: As some of our readers pointed out in comments, the quarterly decline is seasonal. I went back and checked the sequential quarters Q2 & Q3 2006, and the iPod sales declines were much higher in $ terms. The readers are right and I am wrong. Jobs and all said so in the earnings call, which I did not listen to entirely, and left before the call completed. Thanks for helping me see the error in my ways.

Interestingly, the iPod sales declined by about $130 million. In 30 hours or so, Apple got $148.5 million from 270,000 iPhones (assuming $550 median price.) Could this mean that iPhone is cannibalizing the high-end iPod sales?

MacUser blogged the conference call.


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