Wall Street Noticing That The Math On iPhones Doesn't Add Up

from the 2-+-2-only-equals-3? dept

Thu, Jan 24th 2008 9:09pm — Mike Masnick

While Wall Street has had something of a love affair with Apple's stock until very recently, it appears that they're finally catching on that not everything may be as rosy as stated. With Apple and AT&T announcing numbers on iPhone sales and iPhone activations, respectively, there's a 1.7 million phone gap between those numbers. Taking into account the recent launches of iPhones in other countries (estimated at 350,000 to 400,000 iPhones so far) and a 20% estimate on people buying iPhones solely for unlocking, there are still nearly 700,000 iPhones unaccounted for... suggesting that they're sitting on store shelves, piling up as unsold inventory. That number suggests at least some gap between perceived demand and actual demand -- while also raising questions about how much effort it will take to eat through that inventory.

Thank you for reading this Techdirt post. With so many things competing for everyone’s attention these days, we really appreciate you giving us your time. We work hard every day to put quality content out there for our community.

Techdirt is one of the few remaining truly independent media outlets. We do not have a giant corporation behind us, and we rely heavily on our community to support us, in an age when advertisers are increasingly uninterested in sponsoring small, independent sites — especially a site like ours that is unwilling to pull punches in its reporting and analysis.

While other websites have resorted to paywalls, registration requirements, and increasingly annoying/intrusive advertising, we have always kept Techdirt open and available to anyone. But in order to continue doing so, we need your support. We offer a variety of ways for our readers to support us, from direct donations to special subscriptions and cool merchandise — and every little bit helps. Thank you.

–The Techdirt Team

Filed Under: inventory, iphones, wall street
Companies: apple

42 Comments

If you liked this post, you may also be interested in...

Reader Comments

Subscribe: RSS

View by: Time | Thread

The Swiss Cheese Monster, 24 Jan 2008 @ 10:05pm

Does anybody smell a price drop or some kind of wicked ass rebate around the corner?
[ link to this | view in thread ]
GeneralEmergency (profile), 24 Jan 2008 @ 10:13pm

I am 3 of those 1.7 million.
I have no visibility on how many boxed phones are still in the channel but 700K of them sounds excessive.

Personally, I account for 3 of those missed AT&T activations. I won't do business with AT&T. I hate cell companies as it is. My parents taught me that "contracts are for suckers". So T-Mobile and I have an understanding. They keep their network up, and I'll keep buying pre-paid time.

When the iPhone came out I was thrilled with the software inside. For once, it wasn't a sensless, scatterbrained collection of endless drill downs slathered with teeny-twit color candy.

As soon as the JailBreak and Unlock was announced, I bought one for me, my wife and daughter.

As happy as I am, I'm still not satisfied as a customer. I want the AT&T lock removed from the phone. I want to write my own applications for the phone. Why?? BECAUSE IT IS NOT A DAMN PHONE!!! It is a quarter-tablet personal computer with a cell phone modem in it.

I am no different than millions of others. Why can't some company give me what I want? Why do they keep walking away from my money???
[ link to this | view in thread ]
SeaSnake, 24 Jan 2008 @ 10:50pm

I think I see the real problem. The 20% estimate for unlocked buyers is low. All the Wall Street whizzes had to do is check out the stores in India, China, Singapore, Malaysia and Thailand. Lots of jailbroken iPhones for sale alongside all the top brand phones. Have had them almost as soon as they launched in the US.

I've seen people walking around with them for many months.
[ link to this | view in thread ]
illegalprelude, 24 Jan 2008 @ 10:59pm

lol where did this come from? A random rip on Apple. First of all, their price drop for the stocks has nothing to do with the sales of the iPhone. You have not heard Mike but in the last month, the stock market has gone to the shitter. IT might still be news to others.

Also, for anybody who actually follows Wallstreet, you would know that stock prices dont always reflect whats actually going on with a company. There are companies with ridiculously high stock prices that preform shitty and vise versa. Wallstreet is almost as much as emotion and a popularity contest as to anything else.

So this brings it to the idea of how a company actually preforms dosent have much to do with a stock price and just because the stock has been batteretly lately has nothing to do with the performance of Apple. It might have to do with the Mortgage and Financial crises and the slowdown of the economy.

Other wise, with the recent earnings call, $9.6 Billion in revenue and another $1.6 Billion in profit. Plus the fact that in the first 90 days (we are not on day 209 of the iPhone being on sale) the iPhone matched the market share of all other competitor and was only behind RIM. Imagine, thats first 90 days so you do the math, but that seems like the iPhone is doing fine. Now, as for the missing numbers, it could also account to a much higher unlocked units. I can tell you from personal fact that it had to be higher then that. I wont get into details of how i know this.
[ link to this | view in thread ]
Mitch the Bitch, 24 Jan 2008 @ 11:28pm

While not as elegant I've been doing what the iPhone does for years and much much more. The 3rd party app support while non-existent on the iPhone is fantastic on a Windows Mobile device.

Just as AlGoracle invented the Internet SteveJobs invented a "Revolutionary" Cell Phone.... Not!

Apple Hype just like the Democratic pary is truly disgusting to behold in a nekid state....
[ link to this | view in thread ]
Michael Long, 25 Jan 2008 @ 12:29am

Elsewhere
When I was standing in line back in June I know of at least a dozen people who bought two, with the intention of selling them on ebay. Now, while most of those have undoubtedly be sold and activated by now, it leads to the question as to who else may have been buying phones, and where they might have been shipped.

Do you think that the well-off in China or some other country are simply waiting for Apple to finally set up shop? That the entrepreneurial types aren't buying them up and sending them off? Remember, til recently Apple even had limits on the number of phones an individual could buy.
[ link to this | view in thread ]
Julian Fifield, 25 Jan 2008 @ 12:46am

Apple iphone
easy stuff for us eurozone bods..

too expensive, restricted networks,closed loop for add-ons,

solve these- got the numbers you want..minds you iPhone sales are still very good despite the problems..
[ link to this | view in thread ]
His Shadow, 25 Jan 2008 @ 1:15am

Third Wheel
The 3rd party app support while non-existent on the iPhone is fantastic on a Windows Mobile device.
What a complete load of crap. Windows Mobile needs third party apps just to get the damn thing to do anything useful, just like the it's hobbled cousin, Palm. Third party apps aren't that big a deal when your device functions exceptionally well out of the box. Just the browsing capability alone leaves every other cell phone on the planet behind. And what, pray tell, will you have when the newly sanctioned third party apps DO make it to the iPhone courtesy of the SDK? You will have Windows Mobile even further behind.
[ link to this | view in thread ]
I like oranges but not Apples., 25 Jan 2008 @ 4:32am

Apple makes products for artistic types. We know artists are not usually good at math. Maybe Apple thought nobody would notice. Damn those artistically challenged Wall Street people and their calculators. Did you ever wonder why Apple doesn't make calculators?
[ link to this | view in thread ]
Pope Ratzo, 25 Jan 2008 @ 4:38am

Re: Apple Stock goes waaay South
illegalprelude, it's not just that Apple stock went down a bit, but the company lost 40% of it's value! From over $200 to $120? That's not a sell-off it's a runaway-as-fast-as-you-can-off.

What happened was the fairy dust finally wore off as Wall Street realized just how big of a premium they were paying for underpowered, overpriced, slick design and hype-hype-hype.

Quote illegalprelude: "I wont get into details of how i know this."

Of course you won't, because you are an Apple flack.
[ link to this | view in thread ]
Cixelsid, 25 Jan 2008 @ 5:02am

Re: I am 3 of those 1.7 million.
Get yourself an N95-8GB

No smudgy prints on your phone and there's lots software support for symbian.

As well as SDKs for various PL's. Woot.

I wish I had a life.
[ link to this | view in thread ]
Anonymous Coward, 25 Jan 2008 @ 5:04am

Re: Re: Apple Stock goes waaay South
You are an I D ten T
Silly little child you need to pay attention to the news. all the news not just what comes up on a 20 second blurb.
[ link to this | view in thread ]
4-80-sicks, 25 Jan 2008 @ 6:16am

Re:
$9.6 Billion in revenue and another $1.6 Billion in profit.
Profit isn't added to revenue, it's part of it.
[ link to this | view in thread ]
Anonymous Coward, 25 Jan 2008 @ 6:20am

If Wall Street math were actually that good, we wouldn't have a subprime mess that we do.

I love how our Euro friends steal away our IPO's because of our "hate business" regulations like SOX. $7.1 billion in rogue trades? Yeah, we need to lighten up here.
[ link to this | view in thread ]
Thom, 25 Jan 2008 @ 6:29am

My nephew just bricked his with the official updat
Even though he hadn't used any of the unofficial ones my nephew's attempt to update the phone resulted in a bricked device. After a couple hours of time with support and two callbacks they finally sent him a temporary replacement and a box to return his for repair.

His mom took the phone, in its generic packing box with no mention of apple or iphone anywhere including the address, to FedEx to send it back. As soon as she walked in the door the man behind the counter said "another bricked iphone going back."

That's where the other phones are - bought by Apple's own support division.
[ link to this | view in thread ]
Anonymous Coward, 25 Jan 2008 @ 6:45am

You can buy an unlocked iPhone in a store on 7th Ave. in NYC. I know this because they have a sign in their window.

Unlocked iPhones are not hard to find.
[ link to this | view in thread ]
Juan, 25 Jan 2008 @ 6:47am

iPod in the rest of the world
Here in argentina there are lots (thousands) of ipones being sold with cracked roms so people can use them, there is even a chip that you sold to your gsm chip that blocks iphone from dialing home, and this is a third world country, i cannot imagine how widespread is this around the world...
[ link to this | view in thread ]
Anonymous Coward, 25 Jan 2008 @ 7:10am

Re:
Dear Mitch the Bitch,

For clarity's sake, please consider next time holding your crayon in your hand rather than your nose. I'm certain your point might be made better if you were more literate and less... a scholar of the forcibly inserted cranial-Proctology persuasion.

Sincerely,
Anyone bothering to read your immature and insignificant little rants
[ link to this | view in thread ]
brianm0122, 25 Jan 2008 @ 7:11am

R U missing the point?
AT&T gave up alot to apple to get "Exclusive" rights to the iphone in the U.S.. Apple is also supposed to be getting a cut from the AT&T subscriber bill every month. Because it ain't happening, both companies are hurt.

Whether the phone is unlocked and being used on T-mobiles network, (I refer to GeneralEmergecny's comments above), or sold in another country, those projected numbers aren't being met.

And if 700K are sitting on shelves in stores, well, that isn't good news either. Maybe it's because AT&T isn't pushing the iphone as much as other phones (why should they split the profits with apple?).
[ link to this | view in thread ]
Overcast, 25 Jan 2008 @ 7:43am

As long as AT&T is the sole carrier - they can keep sitting there.

You know I never really had anything against AT&T - up until this point. This whole iPhone mess has made me REALLY sway far away from both Apple and AT&T.

Any company that decides - on a pure 'screw the consumer' basis to restrict a device that otherwise, doesn't need a restriction like this (I could see it if there was a *technical* reason) can take their product and stick it.

I can't see any reason for Apple and AT&T to make the deal - other than the customer getting shafted somehow. And a quick Google of 'iPhone plans' shows this to be very much so the case... $119.00 for 2000 Minutes? - I pay half as much for practically unlimited.
[ link to this | view in thread ]
4-80-sicks, 25 Jan 2008 @ 8:00am

Re:
I can't see any reason for Apple and AT&T to make the deal
Very simple. On Apple's side, they needed carriers. Everybody they talked to knew the device would explode and demanded exclusivity, and AT&T offered the best deal.
I don't really blame Apple, because how else could they get this thing to market? I blame AT&T only slightly more--of course they want an exclusive. But it really comes down to the regulations in the industry that allow this behavior. Why are cell phone companies allowed to only support certain devices?
[ link to this | view in thread ]
Dean, 25 Jan 2008 @ 8:14am

Re: I am 3 of those 1.7 million.
"I am no different than millions of others. Why can't some company give me what I want? Why do they keep walking away from my money???"

Ahh, but alas- Apple did not obviously walk away from your money. Like the Apple Drone you are- you bought a phone that you aren't even using fully. And since so many of you "gotta have it" gadget dweebs decided to buy it regardless of the limitations, Apple has learned nothing from the experience.
[ link to this | view in thread ]
Chuck Norris' Enemy (deceased), 25 Jan 2008 @ 8:24am

Tax rebates
I'm gonna take my $600 federal tax rebate and buy an iPhone to help Apple's stock and boost the economy! {=]
[ link to this | view in thread ]
Chuck Norris' Enemy (deceased), 25 Jan 2008 @ 8:40am

Re: Re:
As a matter of significance, at least he mentioned Apple...which you failed to do.

Is it really mature to call people names even if you use some skillful writing?

On topic, Jobs is a good salesman and had Wall Street fooled. The economy sucks, the price is high, and most don't like the locked in features of the iPhone. More became wary of even buying to unlock the phone after the bricking fiasco. Wall Street thought it would be the iPod of the cell phone industry. Well, it wasn't.
[ link to this | view in thread ]
n/a, 25 Jan 2008 @ 12:27pm

As someone from Canada who has flown to Boston on work and bought six phones solely to give to friends/family to be unlocked here, I'm sure I've helped keep the numbers off. iPhones sell like crazy here, too, and Apple should (yet again) realise that just because they don't want to give us movie downloads, or iTunes plus, not much will stop us from getting a physical product when the only thing stopping you from release is an agreement with another company.

When you waste time, like an old man walking slowly down a hallway, the public, very eager to get to where they want, will go around you.

We just got television show downloads through iTunes /last month/, and at that, there's fewer than a dozen shows we can buy.
[ link to this | view in thread ]
Billy, 25 Jan 2008 @ 12:32pm

IMHO, Far too much bandwidth is spent on why people don't like Apple, the iPhone, or the variety of carriers that provide service. If you don't like the company, the phone, the features, or the carrier THEN DON'T BUY ONE. Better yet, don't even talk about why you won't buy one since it really doesn't matter now, does it?

I have one, I like Apple, I like AT&T, I like the iPhone and its features, and I got it for the same price as a less-capable BBerry with a plan that is $40 less expensive a month.
[ link to this | view in thread ]
John, 25 Jan 2008 @ 12:52pm

Re:
You're clearly not in touch, so I'll educate you briefly.

First, I'm sure all your windows mobile apps are just great. I've been developing mobile apps in Java, and they really stink. The whole platform really, really stinks.

Secondly, jailbroken iPhones run several apps. And, for some reason, the 1.1.3 iPhone firmware update has magically restored SIM-unlocked iPhones bricked by the 1.1.2 update... not sure how relevant that, but that might speak a little to the folks complaining about Apple's little "conspiracy" to brick iPhones. Looks like they fixed something.

Finally, official 3rd party app for iPhone is on the way. When it arrives, be *sure* the number of available *native* apps will quickly surpass what's available on Windows Mobile. Granted, this last point is forward-looking, rather than based on review of the past... but I figure I'm allowed at least one extrapolation. ;-)

And, finally, your political analogs are not only meaningless, they're boring. "Ooooh, look at me, I have opinions... of ALL sorts... and I'll tell you all about them."

You're simply an inflammatory troll.
[ link to this | view in thread ]
John, 25 Jan 2008 @ 12:58pm

Re: Re: Re:
First, your nickname totally rules.

Second, perhaps you're right, but it's not like Mitch didn't deserve it.

And, I think the iPhone really *is* the iPod of the cell phone industry, with one key difference: they'll need more iterations before they can hope to gain the same level of success as the iPod because this time around, they've got a TON of existing competitors.

The endeavor Apple took on with the iPhone is similar to the one Microsoft undertook with the Zune. The key difference in outcomes being blatantly obvious... no matter how the 700,000 units ultimately wind up being accounted for (or not).
[ link to this | view in thread ]
GeneralEmergency (profile), 25 Jan 2008 @ 1:13pm

Re: Re: I am 3 of those 1.7 million.
Ahhh... But I am in no way an "Apple FanBoy". These were the first Apple products I have ever purchased.

Why?

Because I was sick and damned tired of shitty software in cell phones. The stuff was making me furious to the point of being routinely livid. I am a software engineer and I know how EASY it is to do this RIGHT. But RIGHT was clearly not what any of the US cell companies were interested in. The iPhone software just works and does not insult my intelligence, nor waste my time, nor attempts to distract me with mindless teenager targeted eye candy nonsense. It respects me.

Am I completely satisfied? No. But I went from 2% satisfied to 95% satisfied in $400. Not bad, actually.

And even though Apple may have not learned from this experience, I'm fairly sure companies like FIC ARE, and are positioning themselves to take that 1.7 million unit market and grow that into a 25 million unit market with an open source iPhone clone.

Alan
[ link to this | view in thread ]
Steve, 25 Jan 2008 @ 1:34pm

Re: Re: I am 3 of those 1.7 million.
"No smudgy prints on your phone and there's lots software support for symbian."

Right, and wiping greasy earprints off my phone with my smudgy fingers is any better. This smudgy cellphone touch screen stuff is getting real old. Look at the ear/face crud on your phone right now. Thanks, now shut up.
[ link to this | view in thread ]
steve o, 25 Jan 2008 @ 1:37pm

Re: I am 3 of those 1.7 million.
way to show your defiance by buying 3. if everybody did what you did, and thinks the way you do, there would be no real reason to change the way companies do what they do. nice move.
[ link to this | view in thread ]
Anonymous Coward, 25 Jan 2008 @ 2:23pm

Re: I am 3 of those 1.7 million.
they didn't. you bought three. they will keep fucking you as long as you keep paying them to.
[ link to this | view in thread ]
Cnet Sucks, 25 Jan 2008 @ 3:08pm

Channel problem? This is a stupid story done by Cnet and some analyst who has his head up his ass. Apple sold the phones. AT&T didn't get 100% activation. It means people found a way around the crappy AT&T network. A lot of people, and Apple knows it, but there is no way in hell they would publicly admit it due to their contract with ATT.
[ link to this | view in thread ]
Anonymous Coward, 25 Jan 2008 @ 3:28pm

Re:
the decision IS technical; technically, apple has an exclusive contract with ATT. this was the only way they could get ATT to make the technical modifications and concessions necessary to make the iphone a reality.

i also feel obliged to point out that nobody's getting screwed over; if you don't think their product is worth the money, don't buy it.
[ link to this | view in thread ]
TSO, 25 Jan 2008 @ 5:01pm

It feels nice and warm to think that my 3 iPhones are among the aforementioned "missing". Now they're cracked unlocked and serve their new owners somewhere in Russia, and I'm $600 more wealthy. Thank you Apple!
[ link to this | view in thread ]
Vim, 25 Jan 2008 @ 6:05pm

Re: Troll or shill?
Off topic... the story's not about the iPhone's features, it's about it's sales figures.

I have mobile Linux devices that do much more than is available on any Windows Mobile device. It just depends on your use. Most people use a mobile phone/mp3 player/web device for just that, so the features aren't lacking for the masses. The revolution with the iPhone was always the interface.

Also, to dispel the FUD. Most 3rd party apps (not free) on Win mobile devices are nothing to write home about. Plus Apple announced last year that they were releasing the iPhone SDK this February. I've seen quite a few good 3rd party devs running on unlocked iPhones (including hi-def DV recording), so once the SDK is released we should see some interesting ideas.
[ link to this | view in thread ]
Vim, 25 Jan 2008 @ 6:15pm

Re: My nephew just bricked his with the official u
That's unfortunate. I know a few people who bought them and haven't had any problems.

Still, I guess the moral of the tale is that Apple's support isn't anywhere near as bad as a lot of trolls make out ;)
[ link to this | view in thread ]
VV, 26 Jan 2008 @ 3:33am

true....
still nothing gives you nightmares like a nakid republican.
[ link to this | view in thread ]
Walter Dufresne, 26 Jan 2008 @ 9:47am

Re:
Thank you for repeating a lie, Mitch. It is always helpful for repeaters of lies to so quickly identify themselves. I'm grateful for your clarity as you repeat that lie.

http://en.wikipedia.org/wiki/Al_Gore#Internet_and_technology
[ link to this | view in thread ]
nick, 26 Jan 2008 @ 3:30pm

Re:
"I have one, I like Apple, I like AT&T, I like the iPhone and its features, and I got it for the same price as a less-capable BBerry with a plan that is $40 less expensive a month."

You are obviously in denial. Maybe I can help you wake up… Since you like AT&T I will outline the comparison you pose against BlackBerry.

-iPhone $400, 2yr -BB Curve $200 or less, 2yr (same price?)

-$20 for data -$30 for data (a $40 difference???? Good math)

-Safari Browser -Basic Web Browser (no uTube)
-Multi touch screen -no touch screen
-Two handed device -One handed device
-Battery is so -Removable battery
-a few 3 party programs -A long list of 3 party programs
-requires itunes -does not need itunes to work
-No mms -MMS
-web email - Push email
-no GPS -GPS in the 8310 curve
-WiFi -no Wifi

We all know you did not buy the iPhone for the price reason, and if you still believe you bought it for features. Seek help
[ link to this | view in thread ]
Cixelsid, 30 Jan 2008 @ 9:09am

Re: Re: Re: I am 3 of those 1.7 million.
You should try washing your ears every now and again. Or how about not smashing the phone into your cheek when you get that once a month call from your mom.

No need to thank me, jackass.
[ link to this | view in thread ]
Loweded Wookie, 30 Jan 2008 @ 9:33pm

Re: I am 3 of those 1.7 million.
Actually prepaid is the one for suckers. The total cost if used regularly means you pay more than you do over a fixed period, at least that is the case with Vodafone here in New Zealand and apparently they're (or more than likely their parent company) are the cheapest plans in the OECD.

I admit I don't use mine overly regularly so I will be dropping my plan to a lower ranked plan but I worked it out over the period of the contract it works out far cheaper than prepaid when used.

You're also wrong about the iPhone being a tablet with a cell modem in it, it was designed first and foremost as a phone THEN an iPod then everything else, as such locking down the phone until they can produce a reliable means of distributing applications that won't kill either the phone or the network makes sense. If you want an unlocked phone buy one from France for full price.
[ link to this | view in thread ]