A new iPhone this year?

Everybody's freaking out about Apple's iPhone sales, but look closely enough and you'll find good news

Apple Inc. reported record sales, record profits and record revenue Tuesday. The company sold 2.3 million computers, 22.1 million iPods, and 2.3 million iPhones in the fourth quarter of 2007.

Unfortunately, shares immediately "tumbled" because the company's outlook for the second quarter "fell short of Wall Street's expectations," according to Forbes.com.

Apple reported last week that since its launch June 29 and up to mid-January, it had sold 4 million iPhones, but most analysts were expecting a number more like 5 million.

The most conservative estimate of iPhone sales would make it easily the most successful cell phone launch in history. In its first try, Apple gained 20% of all smart phone sales and clobbered everyone except, of course, Research in Motion, which sold nearly double that percentage.

So why are Apple fans so defensive and investors so disappointed? And where do analysts get these inaccurate expectations?

How to 'disappoint' Wall Street

I wrote a column a year ago in which I criticized Jobs for both the timing and substance of his iPhone announcement. In that column, I said that "Jobs raised Wall Street expectations too high" and "made the mistake of specifying Apple's target of selling 10 million iPhones by the end of 2008."

Apple fans slammed my column in the form of thousands of e-mails, blog posts and columns questioning my mental health, IQ or ethics. One of the more polite critics, MacDailyNews, said that "If anything, Wall Street has so far greatly underestimated iPhone's impact."

The iPhone has been far more successful than anyone should have -- or would have -- expected.

Whether Apple reaches, almost reaches or doesn't get anywhere near reaching its 10 million-unit target is irrelevant. Announcing that target set up Apple to disappoint and robbed the company of a chance to beat expectations all around, which it certainly would have done.

In reality, the iPhone has been far more successful than anyone should have -- or would have -- expected. We're talking about a 1.0 product in a market entirely new to Apple. To have sold 4 million phones in just over six months in a mature market and competing against the likes of RIM, Nokia Corp. and others is, or should be, astonishing and impressive.

Instead, everyone is gnashing their teeth and either lamenting or explaining away what is generally perceived to be a "failure." And that's the trouble with Steve Jobs' "reality distortion field." It doesn't actually distort reality, just the perception of reality by those infected.

So let me say an obvious truth that I haven't heard anyone else say: All this "disappointment" and nervous chatter about Apple's iPhone numbers is the fault of Steve Jobs. He gets the credit for delivering such exciting keynotes, and he deserves the blame when those keynotes raise expectations too high.

1.3 million iPhones 'missing'?

As of mid-January, Apple said it has sold about 4 million iPhones. But carriers report fewer than 3 million iPhone customers. In all, it appears that at least 1.3 million iPhones are "missing."

After some quick-and-dirty math, the site iLounge concluded that about 35% of all iPhones sold in 2007 are unlocked.

But I don't believe that. Using an unlocked phone is niche-market behavior and definitely not for the masses.

A recently published report by financial analyst Toni Sacconaghi at investment research firm Sanford C. Bernstein and Co. Inc. said that "the data points to a significant amount of iPhone channel inventory." That makes a lot more sense. It's very likely that nearly all these "missing" iPhones are sitting on store shelves gathering dust.

Join the PC World newsletter!

Error: Please check your email address.

Our Back to Business guide highlights the best products for you to boost your productivity at home, on the road, at the office, or in the classroom.

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Mike Elgan

Computerworld
Show Comments

Essentials

Lexar® JumpDrive® S57 USB 3.0 flash drive

Learn more >

Microsoft L5V-00027 Sculpt Ergonomic Keyboard Desktop

Learn more >

Mobile

Lexar® JumpDrive® S45 USB 3.0 flash drive 

Learn more >

Exec

Lexar® Professional 1800x microSDHC™/microSDXC™ UHS-II cards 

Learn more >

Audio-Technica ATH-ANC70 Noise Cancelling Headphones

Learn more >

Lexar® JumpDrive® C20c USB Type-C flash drive 

Learn more >

HD Pan/Tilt Wi-Fi Camera with Night Vision NC450

Learn more >

Budget

Back To Business Guide

Click for more ›

Most Popular Reviews

Latest News Articles

Resources

PCW Evaluation Team

Michael Hargreaves

Windows 10 for Business / Dell XPS 13

I’d happily recommend this touchscreen laptop and Windows 10 as a great way to get serious work done at a desk or on the road.

Aysha Strobbe

Windows 10 / HP Spectre x360

Ultimately, I think the Windows 10 environment is excellent for me as it caters for so many different uses. The inclusion of the Xbox app is also great for when you need some downtime too!

Mark Escubio

Windows 10 / Lenovo Yoga 910

For me, the Xbox Play Anywhere is a great new feature as it allows you to play your current Xbox games with higher resolutions and better graphics without forking out extra cash for another copy. Although available titles are still scarce, but I’m sure it will grow in time.

Kathy Cassidy

STYLISTIC Q702

First impression on unpacking the Q702 test unit was the solid feel and clean, minimalist styling.

Anthony Grifoni

STYLISTIC Q572

For work use, Microsoft Word and Excel programs pre-installed on the device are adequate for preparing short documents.

Featured Content

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?