iPhone unlocks harm AAPL

Despite Apple's optimistic target of 10 million iPhones by the end of 2008, some analysts are skeptical, and others say the device may not be as profitable for the company as originally thought. According to MarketWatch, Apple faces an additional challenge in that as many as one million iPhones are unaccounted for on partner networks, and are assumed to be unlocked. These "missing" iPhones could ultimately contribute to almost $1.3 billion in lost subscription revenue over two years, should Apple meet the goal of 10 million sold.

"Apple's goal of selling 10 million iPhones this year is optimistic," said Toni Sacconaghi, analyst for Bernstein Research. "Particularly if Apple insists on carrier revenue sharing without significant price cuts or new model introductions." With this in mind, Sacconaghi predicts Apple should sell approximately 7.9 million iPhones by the end of the year, at an average rate of 180,000 units per week.

While Apple continually expands the iPhone's territory by creating new international partnerships, Sacconaghi says that " overall demand for the handset appears to be falling short of expectations." As demand slows, Apple's stock has slid over 40-percent on the Nasdaq exchange, well beyond the 14-percent average drop the exchange felt during the same period.

by MacNN Staff