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7 Real Reasons Why iPhone Is a Smash Hit

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Love it or hate it…there is no denying that Apple’s iPhone is not only a game changer but a certifiable hit. Apple shared some interesting stats about the iPhone today. I culled some of the more interesting facts from the transcript of Apple’s fiscal fourth-quarter (ended September 30) earnings conference call, posted by the Apple 2.0 blog & Seeking Alpha.

  • Since its launch on July 11, Apple sold 6.892 million 3G iPhones in the quarter, bringing the total number of iPhones sold so far to 12.992 million. Many of the new phones were sold to first-time buyers.
  • Apple recognized $806 million in iPhone-related revenues for the quarter.
  • If Apple didn’t defer the iPhone revenue, the iPhone sales would have accounted for about 39 percent of the adjusted total quarterly revenues. Jobs put the number at $4.6 billion.
  • The iPhone will be sold in 70 countries by end of this year. It is currently sold in 51 countries.
  • By revenues, Apple is now the 3rd largest mobile phone maker behind Nokia and Samsung, ahead of Sony & LG Electronics. Samsung had revenues of $5.9 billion and it seems beatable.
  • iPhone is outselling RIM. Jobs kept hammering on that point during the conference call.
  • Apple says that in the 102 days since the iPhone Apps store opened, nearly 200 million iPhone apps have been downloaded. There are about 5500 apps available on the iPhone Apps store. Follow iPhone Apps on our TheAppleBlog. (Related story: What about that iPhone Bump?)

In response to an analyst’s question, Jobs said that while the company has a “miniscule market share of the mobile phone market” and that it “may not appeal to every prospective customer,” but “the percentage of prospective customers we need to attract in order to significantly increase our market share isn’t that many.” Rest of the mobile business, please make a note of that. [digg=]

Apple’s volume-to-revenue ratio should scare its rivals. “The traditional game in the phone market has been to produce a voice phone in a hundred different varieties,” Jobs replied to a question about how he can play in the market with one version of the device. Jobs said that software (and user experience) are Apple’s current and future strategy. “From everything I heard, Babe Ruth had only one home run; he just kept hitting it over and over again.”

Update: I just wanted to point out that we made some observations about iPhone and how it was going to change the wireless business. All those things did indeed happen and the details from Apple’s most recent financial report proves that.

75 Responses to “7 Real Reasons Why iPhone Is a Smash Hit”

  1. John Woods

    I have had my IPhone 3G for a week now. I went from a BlackBerry Curve. My only main concern was I could not tether to my Laptop with the IPhone but let me tell you I absolutely LOVE it. I just cannot get enough of it. No doubt the coolest phone I have EVER had. The battery life is short so make sure you carry a car charger.


  2. Paul, Nokia sold 15m smartphones in that period. They call them their “converged mobile devices” in the accounts, but it basically means the N and E series phones. So 15m phones with nice margins. Almost all of the other phones they sell (the other 90m) are low end models that contribute little to the bottom line.

  3. Meanwhile AT&T missed analysts’ estimates due to iPhone’s heavy subsidy. Mactards are not the only ones screwed by the Apple tax. LOL.

    $4.6 billion in revenue divided by 6.9 million units means $666.67 per iPhone. So, this in turn means AT&T gives Apple ~400$ for each iPhone sold.

    So now that all Apple fanboys have their iPhone, who will Apple sell it to in order to reach 3 times more units shipped and hit the $12 billion in revenue, a number that Nokia hits consistently?

  4. @jaggs, Apple has already beat the 10 million projection, with 2 1/2 months to go in the year.

    Android is not going to be a threat until they can make using them as pleasant as using the iPhone.

    The problem with techies is that they have no sense of ease of use, aesthetics, or grace. I am a techie and I didn’t “get it” about Apple until a few years ago. Features, “openeness,” — no one gives a hoot except you guys. Real people want devices that do their intended function elegantly and well, not devices that satisfy some bullet points.

    Also: people don’t want choice, even though they will always say they do. Put that in your pipe and smoke it.

  5. I love my iPhone. It changed the way I use a mobile device. Before, I had an LG phone that was a phone and txt device (with a crappy camera), and for work I had a Blackberry, which was an e-mail device (with a crappy phone). The Web function on the Blackberry was unusable for regular surfing.

    My iPhone is my phone, my datebook, my stock-checker, my weather guide, my car map, my regular-use Web browser, my e-mail client, my camera and much more. It FREES me from my PC for all purposes except writing papers etc. Sure, not all features are perfect (I’d love a higher res camera), but so many are so damn close that, at least for me, the iPhone changed everything. I could NEVER go back to my old cell phone ever again.

    I also like the fact that the iPhone has spurred a new round of innovation from the rest of the players. I don’tparticularly care if Apple wins or not, but they certainly have awoken a sleeping giant that was almost comatose.

  6. Had an iPhone and it was stolen while on a trip. I spent two hours being angry that someone had stolen something from me and twenty hours laughing because now the piece of crap was someone else’s problem and I could upgrade to a phone that could actually do something besides look at itself in the mirror and say “I’m pretty.”

  7. That’s 10 million people who will look pretty stupid when they see how superior the Android phones are.

    Beating LG in revenues is really not that hard, especially when you see how the iPhone revenues should be considered fraud at over $1500 per phone including the basic 2 year subscription, for a phone that barely costs $150 to manufacture.

    Android is going to take over quickly by a factor of 10 to 1. Cause you are going to be able to buy unsubsidized unlocked Android phones at $150 pretty soon, that also will be data-centric running VOIP and IM on free White Spaces and HSDPA instead of crappy expensive voice and sms plans.

  8. Max – Not sure where your 15 million/quarter figure comes from for Nokia, but they sold 435 million phones last year, more like 35 million per month. Apple still has some catching up to to do.

    BTW – Om, from your headline I expected to read about causes, not symptoms.

  9. Finnsense

    “A propagandist creep from NOKIA, no doubt.”

    I said in an earlier post my next phone might be an iphone. You probably missed it because you were too busy in the bathroom with your macbook. ;)

  10. Seriously you’re gonna have to change the name of this blog to the Apple Suckup Blog. You never post anything critical of Apple and the only time you mention Windows Mobile (ya know, that mobile OS that has more features, more market share and more phones than Apple) is when you lie to make them look bad. It’s not reporting, it’s sucking up.

  11. FINNSENSE wrote: “I agree but it’s worth pointing out that a lot of people who use Apple products act like cult members. They are completely obsessive and impervious to reason. Apple could put out a toilet roll made of sandpaper and they would buy it – because it’s Apple.”

    and: “If Apple devotees ever grow a brain, Apple might be in trouble. Its products are fine but they are closed and they’re over-priced. Apple should be seen more like Microsoft.”

    A propagandist creep from NOKIA, no doubt.

  12. Are you joking…do we really need any confirmation? in just 15 months apple managed to create a Nokia/3 !!! i give Apple 2-3 years to become No.1

    btw – and they only got one model vs 100+ Nokia’s…hilarious:)

  13. Finnsense

    “#1 Apple did a fantastic job marketing their product.”

    I agree but it’s worth pointing out that a lot of people who use Apple products act like cult members. They are completely obsessive and impervious to reason. Apple could put out a toilet roll made of sandpaper and they would buy it – because it’s Apple.

    When you have a zealous following you will always get better marketing because these people will camp outside stores for three days and prosylatize to their friends. That’s newsworthy and creates buzz. That’s the trick.

    If Apple devotees ever grow a brain, Apple might be in trouble. Its products are fine but they are closed and they’re over-priced. Apple should be seen more like Microsoft.

  14. I was expecting to see 7 reasons that might help to explain why apple have been successful rather than 7 points of evidence that clearly demonstrate that they have been.

    So I’ll put in my 2 cents (or two reasons anyway):

    #2 there’s no denying that apple put together a pretty good product but;

    #1 Apple did a fantastic job marketing their product. They timed the launch perfectly to produce a great quarter, and with Christmas on the way ensure a strong follow up quarter.

  15. @gp:
    4 times more expensive!!! slight case of bad maths mate.
    My iPhone ( White one, therefore most expensive ) cost $140 more than a Nokia E65. I buy my mobiles outright and if you call that 4 times more expensive, then I would like some of what your smoking.

  16. Finsense – Nokia sold 15m smartphones in their last quarter. Only 3x the number of iPhones.

    The key stat though is that Nokias net income on devices in the last quarter was $2bn. iPhone net income was $1.3bn. That astonishing.

  17. Apple sucks in asia where people prefer to buy nokia , sony erricsson or RIM , motorola rather iphone as its 4 times more expensive than whats its in US and substandard carrier pricing which is hard to explain ! , Asia is where around 1 billion of active mobile population (and growing) and they are not going use it till apple fixes the problem

  18. Finnsense

    It’s obviously a great piece of kit and is certain to dominate the space it’s in. I wonder how many people with N95s or N82s (like me) would have an iphone if we weren’t tied into 2-year contracts.

    In terms of challenging Nokia we would need to know what percentage of Nokia’s revenues come from the smart phone market. I’ve heard that although it’s a small share of total sales, the margins on smart phones are much larger than the cheaper phones. If that’s the case it could really dent Nokia’s profits. Unless they do something soon my next phone will probably be an iphone – and I live in Helsinki!

    Finland’s startup blog just had a post about Nokia maybe changing direction and abandoning symbian or experimenting with android. That would be interesting.