Look for iPhone Prices to Drop Like a Hot Rock

I predicted a bubble boom in sales for the iPhone at its launch and then a tapering off over time. I never had high hopes for this phone. But even I did not expect to see the relatively low sales numbers we're seeing. Now the Apple cult nuts will say that 146,000 activations are nothing to sneeze at. And I'll say back: "WHAT? YOU WERE TELLING US THIS PHONE WAS GOING TO REVOLUTIONIZE THE MOBILE BUSINESS."

Apple's stock is dropping. iPhone sales are below expectations. And this is all happening NOW, just days after the launch. Can you imagine what things will be like in the months ahead if they aren't selling that well now? And AT&T believe they are going to sell an iPhone to one out of every four of their customers? HAHAHA.

I only have one thing to say: "I TOLD YOU SO!"

From The Boy Genius Report ... original article here -- AT&T claims 146,000 iPhone activations on launch weekend | The Boy Genius Report

Just how many activations transpired during that first monumental weekend of iPhone sales? 500,000? 1 million? Nay, only 146,000 activations in those record-setting two days where finding an iPhone was comparable to last year’s Christmas rush and the Nintendo Wii. Sure, those numbers are nothing to bat your eyelashes at; on the contrary, they are QUITE impressive. Did the iPhone really bomb, however, or were the predictions by supposed industry experts completely out of line?

For our purposes, let’s be generous and give AT&T retail stores roughly 50 units a store at launch? Mind you most stores received additional shipments the following day, but let’s look at the first day, in which every AT&T store depleted their stock. It’s been reported that AT&T operates "more than 1,800 retail store locations," so that will put us at 90,000 iPhones sold in these locations. Click on for the rest of our sales predictions!


Again, for our purposes, let’s estimate stock at the 164 Apple stores nationwide in the neighborhood of 2,000. We know first day sales estimates at the Fifth Avenue (New York) and Lenox Square (Atlanta) stores were in the neighborhood of $2 million and $600K, respectively, so that would give us rough estimations of 3,000 and 900 units sold in either store. For that launch weekend, we’ll use 2,000 as the base sales estimate for each Apple store, placing us at roughly 328,000 units sold.

This would bring our very rough estimate to 418,000 iPhones sold on launch weekend. In hindsight, perhaps Apple and AT&T’s greatest success for both customers and sales personnel on launch weekend - the convenience of purchasing the device at a retail store and activating it at home - may have been their greatest disaster. At a ratio of one-in-three devices activated, one would have to wonder what that number would look like if they forced activations upon purchase rather than shooting for customer convenience and record-setting sales number. These impressive numbers may not necessarily hurt Apple’s iPocketBook, but they would represent a disaster for AT&T. Perhaps 146,000 activations, or roughly $11 million in monthly revenue, is not that bad of a number, but it fails in comparison to industry estimates for sales and expected revenue based on these sales numbers.

Apple’s stock tumbled $8.81 per share on NASDAQ.

Even our resident BlackBerry expert Jibi is wondering how these numbers are a bad thing for Apple. For a hardware manufacturer, what do activations have to do with total unit sales numbers? Apple sold 400-500,000 devices in two days. AT&T only activated a third of these, which is a direct impact on monthly service plan revenue and perhaps that impacts the unique revenue and profit sharing between the two companies, but how does this really impact Apple’s bottom line for the sales figures for this device? What do you guys think?

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Great write up! I agree 100% with everything that you said.

Edit: There is some interesting discussion on digg about this, check it out: Digg - Look for iPhone Prices to Drop Like a Hot Rock

I played with the iPhone and it is an over-priced toy but is impractical. The small LCD screen is cute but could never replace a full-sized PC. The EDGE network is slow. The AT&T service is very expensive. Had this phone been produced 5 years ago it would be selling better. Most people already have cellphones and having another one would be an added burden and expense. Except for the touchscreen feature there is no advantage in having it. I also hate that batteries can't be changed and that memory is not expandable.

I think nothing will ever replace an actual PC, except a pocketsize portable laptop. The N95 is my opinion, is the closest to an PC and is still my favorite.

I will tell you the primary feature, or lack, that killed the iPhone's future... over the air music downloads.

When you buy a music phone for it's music capabilities, you expect to be able to get music on demand, don't you? Every music phone you get from Verizon Wireless is capable of OTA music downloads. Even Sprint and AT&T/Cingular offer this type of service. So, why doesn't AT&T/Cingular let you download music OTA from the iPhone? Because Apple won't let them, it's part of their contract. And, it is the main reason Verizon turned down Apple's exclusive offer initially.