updated 10:50 am EDT, Wed September 8, 2010
Impact of AT&T exclusivity may be more powerful
Even if the iPhone may be doing well as a rule, flaws in the iPhone 4's antenna design may be having a noticeable effect on sales, suggests Piper Jaffray analyst Gene Munster. The firm recently interviewed 258 people in Minneapolis on the topic, of whom 69 percent were aware of a quality issue. Of that group, 20 percent -- or 35 people -- said the problem swayed their decision on buying an iPhone 4.
While Apple's gaffe may be "removing upside potential" for the iPhone, the real ceiling on sales is the lack of a Verizon option, says Munster. The analyst claims that for every person who was aware of the antenna problem, about three complained about the absence of Verizon. The carrier could potentially gain the iPhone 4 in the next few months.
The potential damage of signal problems is of concern to investors, Munster notes. "In order to quantify a worst-case scenario, we estimate that 40% of all iPhone sales are domestic (was 38% in the June quarter). We are modeling for Apple to sell 11m iPhones in the Sept. quarter, implying about 4.4m domestic sales. If Apple lost 20% of those sales, or 880k units, it would reduce our EPS estimate in the quarter by $0.11, from $3.72 to $3.61."