02/22/2008, 4:10pm, EST
Friday, February 22nd
iPhone unlocks could cost Apple $1.3B
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.
Filed under: iPhone, Apple, industry
Other story tags: network, market, unlock
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This is not revenue 'lost' IMHO...
I would have never bought one if I couldn't unlock it.
Nyaa!
However, the fact that current sales figures do not support Apple hitting its 10M unit projection even with the high number of unlocked phones is troubling. This suggests that Apple is significantly behind in its unit sales relative to its sales projections in the official markets. The question is whether Apple can enter enough new markets (possibly with a revised phone) to drive additional sales and increase the attach rate to their carrier partners.
It is interesting to note that one of the proposed solutions to drive sales - lowering the price - does nothing to increase the attach rate or compensate for the lower margin. If anything, it makes more sense for Apple to sell an unlocked phone at a premium to capture some of the lost carrier revenue rebate.
One other thing too. As much as the iPhone is supposed to be an iPod replacement too, it is silly not to have a slightly thicker HD model that only runs 10 hrs (anything over about 8 is perfectly acceptable). I've got 50gb of legal CD rips. Yes, I could load up a "selection" of them, but the whole point of ripping all those CDs was to have a virtual jukebox that would surprise me with good stuff I haven't heard in a while on random album shuffle.
Here are a few reasons...
1) For one thing, there is no proof that the people that purchased these phones would have purchased them in the first place had they not been able to be unlocked.
2) It is possible that a large majority of these phones were sold to Canada and other places where there is no "approved" way to get an iPhone in their service area. For example, I saw a news story on one website/company in Canada who apparently sold over 17,000 iPhones to Canadians.
These phones would not have been sold, had there not been a way to get unlocked and get service in Canada.
3) Maybe the article should have been entitled "Apple Sells 1 Million more iPhones than Otherwise Possible, Due to Hackers".
It is partly Apple's fault that people have to resort to things like this to get access to a technology that should have been available in countries like Canada. I would hope they aren't laying blame on hackers for "enabling their lost income" because there is no way to know if they would have lost income, or they are beneficiaries of additional income because of it.
My personal opinion is that they have gained sales because of the unlockers, and the hackers that have enabled it to happen.
Someone is smoking something if they think Apple is losing revenue on the iPhone.
How many first generation products have ever sold this many units???