iPhone update puts kibosh on unlock market

One in 10 iPhones sold in September were bought to unlock and resell, says analyst

Apple's move last week to stop hackers from modifying the iPhone has essentially killed the market for unlocked phones, a financial analyst said Thursday.

In a research note to clients, Piper Jaffray analyst Gene Munster said that during in-store observations last month at Apple retail stores in New York, Chicago and San Francisco, he noticed many customers buying five iPhones -- the maximum number allowed in a single purchase. The purchases, he added, were especially noticeable in the New York City stores.

"We believe they were being purchased to be unlocked and operated on carriers other than AT&T," Munster said in the client note.

Apple salespeople told Munster that customers buying five iPhones per visit were doing so to sell them after unlocking. "Judging from our checks, as much as 10 percent of the iPhones sold in September were purchased with the intention to be resold unlocked."

But when Apple issued iPhone Update 1.1.1, which disabled unlocked phones and returned modified devices to their original factory condition, the company put a stop, if only temporarily, to the resale market.

Based on the same in-store sales tallies, Munster also estimated that Mac retail sales last month were down 39 percent from August. "But keep in mind that the decline is as expected," Munster said in an e-mail this week. Apple closed out this year's back-to-school promotion on Sept. 16 -- rebates of up to US$199 were given toward the purchase of an iPod when bought at the same time as an iMac or MacBook notebook -- so a drop-off was anticipated.

Even with that decline, however, Apple will still beat the consensus estimates of 1.95 million units sold in the quarter that ended Sept. 30. "We believe it is more prudent to expect Mac sales in the 2.0-2.1 million range," Munster said.

His numbers were in line with other analysts who have recently bumped up estimates on Apple hardware sales. Last week, for example, Citigroup analyst Richard Gardner raised his projection from 2 million to 2.17 million.

iPod sales, meanwhile, will finish at the 10.6 million mark that most analysts have predicted, Munster added. But Apple will report more revenue than expected because the mix is weighted with more iPod touch units than projected. His retail count put the blend at 39 percent iPod nano, 36 percent iPod touch, 16 percent iPod shuffle and only 9 percent for the iPod classic.

Munster now has the company's stock at a target price of US$211. As of 2 p.m. Thursday, shares were down US$1.75, or 1.1 percent, to US$156.17.

Apple is slated to reveal its fiscal 2007 fourth-quarter numbers later this month.

Join the PC World newsletter!

Error: Please check your email address.
Rocket to Success - Your 10 Tips for Smarter ERP System Selection
Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Gregg Keizer

Computerworld
Show Comments

Most Popular Reviews

Latest Articles

Resources

PCW Evaluation Team

Matthew Stivala

HP OfficeJet 250 Mobile Printer

The HP OfficeJet 250 Mobile Printer is a great device that fits perfectly into my fast paced and mobile lifestyle. My first impression of the printer itself was how incredibly compact and sleek the device was.

Armand Abogado

HP OfficeJet 250 Mobile Printer

Wireless printing from my iPhone was also a handy feature, the whole experience was quick and seamless with no setup requirements - accessed through the default iOS printing menu options.

Azadeh Williams

HP OfficeJet Pro 8730

A smarter way to print for busy small business owners, combining speedy printing with scanning and copying, making it easier to produce high quality documents and images at a touch of a button.

Andrew Grant

HP OfficeJet Pro 8730

I've had a multifunction printer in the office going on 10 years now. It was a neat bit of kit back in the day -- print, copy, scan, fax -- when printing over WiFi felt a bit like magic. It’s seen better days though and an upgrade’s well overdue. This HP OfficeJet Pro 8730 looks like it ticks all the same boxes: print, copy, scan, and fax. (Really? Does anyone fax anything any more? I guess it's good to know the facility’s there, just in case.) Printing over WiFi is more-or- less standard these days.

Ed Dawson

HP OfficeJet Pro 8730

As a freelance writer who is always on the go, I like my technology to be both efficient and effective so I can do my job well. The HP OfficeJet Pro 8730 Inkjet Printer ticks all the boxes in terms of form factor, performance and user interface.

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.

Featured Content

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?