Will Apple/iPhone meet their 2008 sales target?

[rittchard]

Stated goals I've seen are 10 million by the end of 2008. Still a long time from now but even then I'm wondering if they can make it. Sure, there are plenty of early adopters like myself that love our iPhones, but to hit the millions target they will need a lot more than us.

They are being fairly tight-lipped about future plans, but I'm starting to wonder what (and who) their target audience truly is, and will be down the road. Business users? iPod/entertainment users? Anyone who uses a phone? It seems to me they are going to need to focus their marketing and sales efforts, as well as application and software updates, to make a strong push into the market. Or perhaps they can find a way to take advantage of the unique interface to do things other devices simply can't. Otherwise they may have to settle for being nothing more than a niche product. I realize it's only been a month and early in the game, but still it would be nice to get an idea of what the game plan is. Word of mouth from we early adopters may be a critical element for ongoing success, so it seems to me Apple would be smart to make sure we continue to sing their praises and show our phones off at every opportunity.

The major roadblocks for the masses presently are of course the entry price and the single carrier (i.e. forcing people to cancel present service and take the penalty). I'm guessing they'll lower the price maybe $100 by next year. They can probably do some significant holiday sales with a lower price and counting on a lot of people's contracts having run out. $300 and no penalty is much easier to swallow than $499+$175, especially when compared to a high end iPod or nano. Even with that, 10 million could be tough to do.

The rumored "nano-iphone" might be the bridge to achieve the numbers. I could definitely see a $100 phone+iPod combo being a huge seller. But of course that wouldn't be the "real" complete iPhone.

 

[Alexander]

Stated goals I've seen are 10 million by the end of 2008. Still a long time from now but even then I'm wondering if they can make it. Sure, there are plenty of early adopters like myself that love our iPhones, but to hit the millions target they will need a lot more than us.

They are being fairly tight-lipped about future plans, but I'm starting to wonder what (and who) their target audience truly is, and will be down the road. Business users? iPod/entertainment users? Anyone who uses a phone? It seems to me they are going to need to focus their marketing and sales efforts, as well as application and software updates, to make a strong push into the market. Or perhaps they can find a way to take advantage of the unique interface to do things other devices simply can't. Otherwise they may have to settle for being nothing more than a niche product. I realize it's only been a month and early in the game, but still it would be nice to get an idea of what the game plan is. Word of mouth from we early adopters may be a critical element for ongoing success, so it seems to me Apple would be smart to make sure we continue to sing their praises and show our phones off at every opportunity.

The major roadblocks for the masses presently are of course the entry price and the single carrier (i.e. forcing people to cancel present service and take the penalty). I'm guessing they'll lower the price maybe $100 by next year. They can probably do some significant holiday sales with a lower price and counting on a lot of people's contracts having run out. $300 and no penalty is much easier to swallow than $499+$175, especially when compared to a high end iPod or nano. Even with that, 10 million could be tough to do.

The rumored "nano-iphone" might be the bridge to achieve the numbers. I could definitely see a $100 phone+iPod combo being a huge seller. But of course that wouldn't be the "real" complete iPhone.

A $100+ dollar "iPhone" reminds me of the ROKR or the SLVR. I can't see one priced so low, as it would manifest sales of the low-end iPod nanos and Shuffles.

 

[nyc_rock]

The early results are not impressive. Apple shipped 270,000 iPhones in the first couple of days of sales. Since then, Verizon is reporting that their lost customer rate is now back to normal. I think Apple over reached on their projections. At&t simply blows as a carrier. Heck, they don't even have SERVICE an hour out of NYC. In the long run the iPhone will get its share of the market, but 10 million units by the end of 08? Doubtfull.

 

[Martlet]

You'll see 2 sales numbers coming in.

The peaks of 270,000 cash sales on opening weekend should be repeatable as additional countries are added over the 2 year goal period since announced in January. Also peaks around prime buying times for new users (christmas, back to school, etc).

You'll also see a steady stream of purchase spread over the 2 years of the goal from Jan 2007-Dec 2008, since the goal is conveniently the same as the max length of a 2 year contract. People who are only waiting so they don't have to break their contract will be buying as their contracts end over that 2 year period.

The opening weekend numbers seem to be fairly good to get them to goal (2.7% of goal in the USA in the first few hours of a 2 year goal? Duh!). Open in enough new countries over the next 18 months, plus a steady stream of late adopters and contract expirations from rival carriers, and there shouldn't be any problem.

And Apple has several avenues to explore to increase interest.

1) They can release new features via software updates at any time to boost interest and sales.

2) They can tap into the "businesss accounts" market which a large number of people stick with. (These aren't businessses buying phones for employees, these are the deals businessses have with carriers for their employees personal phones... if you work for company X, carrier Y offers a discount to you).

3) They can tap into corporate sales by offering something like Enterprise Server push mail support, or the ability to remotely erase the data on the phone.

All of these just widen their sales.

A price drop would also entice customers, but Apple tends to keep the same price points, and just improve the model at each price point generation over generation. More likely is a lesser model at a lower price point when sales of the high end model start to stabilize. Any phone would technically count as towards the goal, just as the large shuffle and nano sales count toward total iPod sales, not just the lesser sales of video iPods.

With such a good start (2.7% of goal in 0.37% of the timeframe), the upcoming repeat performances in additional countries, and many potential early adopters not included in these numbers either due to them buying online or waiting for a contract to run out, several peak buying seasons yet to come, and several avenues to explore to drive up additional demand... I don't see any reason so far to doubt that they are correct in repeating that they remain on target to reach their goal by the end of 2008.

It will be interesting to see what the numbers look like after the first month of sales, as that should give a better look at the next 17 months baseline sales figure for the goal period where contract expiration dates are relevant. It will also be interesting to see what Apple plans for post goal, when contracts have all expired, and the early adopters have saturated and Apple gets down to really competing in the same level as other manufacturers.

 

[Tinman]

The early results are not impressive. Apple shipped 270,000 iPhones in the first couple of days of sales.

270,000 is impressive (though that number is the number shipped anytime prior to July 1--could be up to a week or two before, I would imagine). The only ones saying it isn't are analysts who came up with wild projections. No surprises there, really. I don't believe Apple or AT&T made opening weekend projections.

I think they can meet the 10 million goal. There will be iPhone's released outside the USA, and perhaps another model in the USA (or maybe just an increase in memory, say a 16 GB iPhone).

HOWEVER, they need to get out an update, if just to show updates really will be forthcoming. Moreover, if the updates do add new features, it could very well trigger another sales surge. This might be true for potential buyers who have read, repeatedly, "Great product, but don't buy the first version!" An update may be all they need to convince them to take the plunge.


--
Mike

 

[Sleeper]

They should meet the 10 million goal as that's a tiny percentage of the global market - there are estimated to be between two and three billion cellphones in use at the moment.

The device has enough cache to make it's mark, whether or not it can convince the market that Apple are here to stay remains to be seen.

 

[rittchard]

HOWEVER, they need to get out an update, if just to show updates really will be forthcoming. Moreover, if the updates do add new features, it could very well trigger another sales surge. This might be true for potential buyers who have read, repeatedly, "Great product, but don't buy the first version!" An update may be all they need to convince them to take the plunge.
--
Mike

This is definitely one of the points I was trying to get across. Like any new tech product, there will be a group of early adopters who will try the product without worry. Then another subset of people completely uninterested. Then in the middle a huge range of people on the fence, interested but leery or just needing an extra push. Presently there are enough reasons for people on the fence to hold off. The question is whether they will still be interested if these reasons persist for months.

A lot of people need strong convincing to spend this kind of money and effort, and any bad press or notion of "missing features" will immediately turn them off. I've had a number of people flat out tell me "wow that's really cool but I would never buy one until it has xxx" To which I have no response - this is one of Apple's present failings, keeping its most loyal fans informed so that they in turn can continue to provide free press and word of mouth. And as mentioned in another thread, after one month I've seen only one other person using an iPhone. Given that I live and work in Los Angeles in an upper middle class beach area, I'd say it's nowhere near a widespread phenomena. (Contrast with iPods which I see everywhere every day.)

I did forget about the worldwide number, I was thinking U.S. only. Worldwide I'd be a little more optimistic. Still, I think in spite of introducing a superior product, it will be a tough battle for Apple, unless they have a number of tricks (and price cuts) up their sleeves. Will definitely be interesting to see where they go from here.

 

[MacManiac102]

They should meet the 10 million goal as that's a tiny percentage of the global market - there are estimated to be between two and three billion cellphones in use at the moment.

The device has enough cache to make it's mark, whether or not it can convince the market that Apple are here to stay remains to be seen.

I think it depends on when/if the price goes down. Since the fantasy of them joining up with Verizon by then is out of the picture I don't see much over 5 million being sold.

But I hope I am wrong.

 

[Peregrine]

I think it depends on when/if the price goes down. Since the fantasy of them joining up with Verizon by then is out of the picture I don't see much over 5 million being sold.

But I hope I am wrong.

Agree. I think that is the biggest thing holding them back. Even at $250 for an iPhone, they would have easily sold out opening weekend. That's the #1 complaint I hear from people.... a lot of people. Being a guy "in the field" everyone wants my opinion...

"$499? For the small one! No way...."

Although I do like what Jobs said at the Keynote announcement "I would love to sell them for $100, but we can't".... or something like that.

 

[lilo]

Tough Task

The peaks of 270,000 cash sales on opening weekend should be repeatable as additional countries are added over the 2 year goal period since announced in January.

That might not be the case as the Mac fans virtually do not exist outside USA. People did learn about Apple lately thanks to iPods though.

They can tap into corporate sales by offering something like Enterprise Server push mail support, or the ability to remotely erase the data on the phone.

Given Apple's lack of success in courting entrprise users in the past and the time frame (1 year) this is simply impossible.

They should meet the 10 million goal as that's a tiny percentage of the global market - there are estimated to be between two and three billion cellphones in use at the moment.

Two mistakes here:

• The billions that you mention are already in use. When talking percentages the right approach would be to quote the annual number of cell phone sales.
• In reality, one should only consider the phones in the $400-$600 price range. I am not sure there are 10 millon of such phones in use in the whole world . It remains to be seen if Apple will be able to convince people to spend that much for a phone.

 

[Sleeper]

Two mistakes here:

• The billions that you mention are already in use. When talking percentages the right approach would be to quote the annual number of cell phone sales.
• In reality, one should only consider the phones in the $400-$600 price range. I am not sure there are 10 millon of such phones in use in the whole world . It remains to be seen if Apple will be able to convince people to spend that much for a phone.

Err... no.

1) Since Apple's sales target is for year end 2008 which is actually 18 months and since the product life cycle of a cellphone is about the same - 18 months to two years - then we need to consider the global market. For example, 2006 shipments were estimated at one billion units. Global sales for 2007 are projected to be about 1.2 billion.

2) Apple's target is for the total market - 10 million units is estimated at a bit less than 1% of the global market which would put the global market at about 1 billion units. In addition there are estimated to be about 100 million smartphones in operation.

 

[ahduke99]

you've gotta consider this phone as a christmas present and who'll get it when their contract runs out with another carrier. only diehard people will buy themselves out of a contract to get a phone. some people will wait. also, if Apple releases an update with added things that people point out as weakness, like no MMS, IM, custom ringtones, sound issues, no BB style push mail, the interest will jump. there are some glaring issues that will keep curtain people on the sidelines until they are fixed. will they meet estimates? its a tough call. it depends on what Apple does. as it stands, i doubt they meet their estimate. all the diehards who wanted one have gotten one. now we wait and see how many of those who become eligible for an upgrade chose to buy the iPhone.

 

[erroneous]

http://www.wcbs880.com/topic/play_window.php?audioType=Episode&audioId=897349

Only 145,000 iPhones are really activated according to the CBS Radio report URL posted above.

145,000 people out of a country of nearly 3 Million seems
like a blip on a screen magnified.

Is there a particular reason why anyone would be posting a question about the number of sales of the iPhone here?

I'm having nothing but fun using my iPhone, and could care less
whether sales figures hit certain objectives.

I guess among the 145,000... we're "IT!"

Or, am I missing something here?

John

 

[Sleeper]

Activations are not the same as sales of which there were 270,000 confirmed in two days. Even given the inevitable peak demand in early days this is on track with analysts estimates.

Of course, the really interesting figures will be the Q4 results and next year's Q1 which will include Christmas.

 

[erroneous]

Sales, are not the same as “activations”.

In order for the product to be productive, it has to be Activated.

I could have bought an iPhone, and merely put it
away as a collector’s item. It’s not really doing anything
accept in the mind of the collector.

Activations are the Key.

Kind of like subscriptions, prescriptions, frequency,
and any other activity of continued behavior on the part
of human beings.

I understand how it works, and have a hunch most of the
crowd here understands it as well.



Always enjoying this place,

John

 

[rittchard]

http://www.wcbs880.com/topic/play_window.php?audioType=Episode&audioId=897349

Only 145,000 iPhones are really activated according to the CBS Radio report URL posted above.

145,000 people out of a country of nearly 3 Million seems
like a blip on a screen magnified.

Is there a particular reason why anyone would be posting a question about the number of sales of the iPhone here?

I'm having nothing but fun using my iPhone, and could care less
whether sales figures hit certain objectives.

I guess among the 145,000... we're "IT!"

Or, am I missing something here?

John

LOL true!

I don't necessarily care about the objectives and whether they are met in the numbers sense. I do think it's an interesting topic for discussion, and that the numbers may ultimately reflect what may or may not change for us in the future.

I've been an "early adopter" on a lot of electronics over the years, some of which failed and became useless (Beta, Apple Newton, Laserdisc, various PDAs and mobile computers), some still TBD (PS3/Blu-Ray, HD-DVD) and others which did very well (iPod, DVD). I'd really like to see iPhone continue to do well and evolve, and I'm very curious how Apple plans to make that happen.

 

[Sleeper]

Sales, are not the same as “activations”.

In order for the product to be productive, it has to be Activated.

And your point as to how this affects unit sales is?

I could have bought an iPhone, and merely put it
away as a collector’s item. It’s not really doing anything
accept in the mind of the collector.

I see. So obviously you didn't have to buy the unit as you're not going to use it then?

Oh wait.

Activations are the Key.

No, sales are the key. The market doesn't give a toss what you do with the unit after the till has rung. The only things the activations effect are AT&T's revenue stream and thereforee share price.

Kind of like subscriptions, prescriptions, frequency,
and any other activity of continued behavior on the part
of human beings.

I see. So you're saying that 100,000 people bought the phones in the first two days merely to put away and that instead their phones weren't activated because of something like - oh heck, I don't know, activation problems?

Hmm...

I understand how it works, and have a hunch most of the
crowd here understands it as well.

No you don't. Seriously.

Your assumption is that because AT&T only managed to activate 146,000 of the units sold in a 30 hour window that this means we can only use this figure as an indicator despite the fact that AT&T admitted problems with activation that inevitably led to a reduced count.

You may want to look up the words 'pipeline', 'lag' and 'backlog'.

 

[joe]

Good points by all. Great discussion.

"Country of 3 mill"? Not sure which country you mean or if I missed your point. Nevertheless, the idea that 175K to 300K is a blip is a good thing in my opinion. There are so many sales opportunities remaining.

Here's something to consider: everyone that I show my iPhone to is impressive and walks away saying, "I want one." This is *the* hot music/internet/phone item to get. Coupled with a probable price drop, continued exposure, and improvements through updates, you'll see sales continue to climb like they did with the iPod.

10M sales over 18m is 556K per month. As mentioned here, Apple is clearly targeting world market through '08. That's a long time away and by the time 12/08 comes they may be hitting that number each week. Projections cannot be based on one weekend, one week, or one month's total sales, but on the sales trends.

I do not believe for a second that sales are slowing or stagnant. You can't go based on stock levels. That just means they are meeting demand which is a great thing. My biggest fear was that they would not have enough at launch to meet demand. I think they hit their target perfectly over launch weekend. They sold out of some stores and had a bit left over in others. That sounds even, and that's a huge win for a launch of a brand new product.

Apple knows what they are doing and I think they are playing it cool by saying just 1M in sales in the first Q. They'll beat that estimate, striking another stock win. They need about 1.6M per Q to hit 10M by end of 08 so beating 1M in the first Q is going to be a great head start on that 10M number.

Things are looking good for Apple!

 

[drconehead2000]

http://www.wcbs880.com/topic/play_window.php?audioType=Episode&audioId=897349

Only 145,000 iPhones are really activated according to the CBS Radio report URL posted above.

145,000 people out of a country of nearly 3 Million seems
like a blip on a screen magnified.

Is there a particular reason why anyone would be posting a question about the number of sales of the iPhone here?

I'm having nothing but fun using my iPhone, and could care less
whether sales figures hit certain objectives.

I guess among the 145,000... we're "IT!"

Or, am I missing something here?

John

I like your name....erroneous....especially since the United States has a population of 302,479,524 at this point in time.....maybe you are talking about Armenia (population 3,002,000)...didn't know they had released the iPhone there....lol

 

[erroneous]

Ya, isn't it always a dreaded reality when you realize
you left out a "hundred" in trying to be authentic?

Thanks for the Typo Police, and all the continued comments here.
There's a great group of people here feeling strongly about what's
on their mind, and I'm always having fun contributing to the mess,
and reading what they have to "say".

300, 000,000 is a rough number.
I had Three in my mind, and that's what got printed (Posted).

At least, I'm public enough, to just say, "oooppps".

John