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Initial iPhone sales may fall short

updated 12:40 pm EST, Fri March 9, 2007

Initial iPhone sales

Apple's iPhone, which is due to launch in June, could fall short of heightened expectations in the near-term due to its small potential market, according to Forbes.com. The market for the iPhone is, at first glance, quite appealing with worldwide handset sales expected to top more than 1 billion in 2007, but Apple's goal of selling 10 million iPhones by the end of 2008 could prove to be wishful thinking. A closer look at the handset market shows the iPhone's price as too high for many customers, placing it right alongside other smartphones like the BlackBerry that account for just 10 percent of handset sales. Additionally, Apple's choice to offer the iPhone exclusively through Cingular further narrows its potential customer base, enabling only those users whose contracts are near expiration and die-hard fans willing to cancel current contracts for a penalty as likely customers. Nevertheless, Apple could create its own market as it did with the iPod in 2001, or generate enough buzz around the iPhone's features to create a "must have" mentality in the minds of customers who wouldn't have normally spent $499 or even $599 for a smartphone.




by MacNN Staff

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  1. lmhaffner

    Joined: Dec 1969

    0

    Or...

    They may not.

    A closer look at financial experts predictions of Apple's performance shows that they often fall short of investors' expectations.

  1. horvatic

    Joined: Dec 1969

    0

    How can anyone tell?

    I don't see how anyone can make a prediction like this. The product hasn't even been released for sale yet. Stupid article about a prediction based on there own made up FUD!

  1. mjhamson

    Joined: Dec 1969

    0

    narrow minded!

    I wrote up an internal analysis for "the" major software company covering the mobile industry. Why people don't listen.. i have no idea. America is ONLY 5% of the market. WHO CARES ABOUT AMERICA. that is not where the bulk of sales will happen. I have no respect for any report that does not point to the actual facts. - regardless what you think of the iPhone.

  1. Clive

    Joined: Dec 1969

    0

    Kind of nonsense

    The argument that people will be locked into contracts and not able to upgrade is pretty much nonsense - Apple said it would be looking to get 1% (10 million sales) by the end of 2008). By my reckoning that's 18 months after the launch of the iPhone, which should give a window of opportunity to most people on contracts that are longer than one year, and obviously give access to those on yearly contracts, or who are past renewal dates.

    But, having said that, I do think the iPhone is too expensive - can’t see it competing in the UK, where you can get almost any phone for free on a contract.

  1. climacs

    Joined: Dec 1969

    0

    this is what I said

    this is exactly what I have said previously in comments, and I got a lot of disagreement (thanks for not flaming me).

    I still agree with this assessment. The iPhone costs too much for the average buyer. If they are accustomed to getting phones for free or nearly so, if they don't care to spend the extra money for an unlocked phone which would still cost 1/2 of the cheapest iPhone, why would they shell out $500 for a locked phone which requires a 2 year commitment?

    There is lots of INTEREST in the iPhone but that doesn't always result in a lot of purchases. Like the looky-loos who come to your open house but very few are in a position to buy the house let alone interested.

  1. climacs

    Joined: Dec 1969

    0

    here's what WILL happen

    iPhone rolls out. Initially, weak sales (as compared to overblown expectations) due to the exact factors Forbes.com cites.

    Over time, Apple introduces less-expensive iPhones. Either with less features or component prices decline allowing Apple to cut prices on the current two models, or both.

    Additionally, the fence-sitters find out what people who have iPhones are saying about them. If the buzz is positive, as the fence-sitters' contracts expire they start buying the less-expensive iPhones.

    iPhone? Probably disappointing at first in June (though there will probably be an impressive burst of sales the first month, then seriously tailing off). A year from now, it will have strong sales, if not exactly an iPod-like phenomenon.

  1. eldarkus

    Joined: Dec 1969

    0

    well said

    "A year from now, it will have strong sales, if not exactly an iPod-like phenomenon."

    couldnt have said it better myself. :)

  1. l008com

    Joined: Dec 1969

    0

    wrong

    People keep comparing it to smart phones and saying that it will only sell as much as those phones. They keep not getting it, this phone isn't for people who have smart phones, this phone is for "the rest of us". It will sell HUGE, no doubt.

  1. vasic

    Joined: Dec 1969

    -1

    Actually this will happen

    iPhone rolls out. It flies off the shelves. Apple is struggling to meet the demand. They sell their first 10 million before end of March (much less than a year since introduction), and are well on the way to sell another ten million before end of 2008.

    People, it is NOT too expensive! Let me repeat that: it is NOT too expensive!! Ten years ago, Motorola released StarTAC. It was AMPS (analog) and it was extremely successful (that was even before cellphone industry was 10 billion units per year); it was around $500 (in 1996); iPod came out in 2001 at a price of $500 (10GB only!); RAZR came out in 2004 at $500 with 2-year contract ($800 without!!). It became the best selling clamshell (flip) phone. And it offered nothing like the iPhone.

    There is a huge number of people who have $500 in their pockets. After Paris Hilton gets it, millions of others will want it. Such is our consumer. And that's only one reason people will buy it. There are many more better reasons for normal people. I wouldn't worry for Apple and iPhone.

  1. dscottbuch

    Joined: Dec 1969

    0

    Not Cingular

    One problem with these comments is that they tie Cingular to the 10 million iphones. The 10 million is world-wide. Don't think Apple is tied to cingular world wide.

    2nd problem is that they assume there is only 1-2 models for 18 months. This is a ridiculous assumption

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