Monday, June 22, 2009

iPhone 3.0 wows true believers

The iPhone 3.0 seems to be a success so far:

CUPERTINO, California—June 22, 2009—Apple® today announced that it has sold over one million iPhone™ 3GS models through Sunday, June 21, the third day after its launch. In addition, six million customers have downloaded the new iPhone 3.0 software in the first five days since its release.

“Customers are voting and the iPhone is winning,” said Steve Jobs, Apple’s CEO. “With over 50,000 applications available from Apple’s revolutionary App Store, iPhone momentum is stronger than ever.”
As the AP reported:
The iPhone 3G S went on sale Friday in the U.S. and seven other countries.

When Apple Inc. launched the previous model last year, it also sold one million units in the first three days, but that model launched simultaneously in 22 countries.

Piper Jaffray analyst Gene Munster had expected the Cupertino, Calif., company to sell half a million 3G S in the first three days.
AP makes it clear that Apple was very clever in organizing pre-orders from existing and new customers:
Apple did not break down where the million units were sold. Dallas-based AT&T Inc. is the iPhone's exclusive carrier in the United States and has said it sold hundreds of thousands of phones via pre-order.
Personally, I thought the most interesting 3.0 features were in the software and ecosystem, not requiring a hardware upgrade. Are these existing customers who really want a compass? Broke their screen? Are tired of slow performance? Or are they new customers who held off on buying an iPhone to wait for the new model?

I was not the only one who was pessimistic, as with this Barron’s report last week
June 18, 2009, 2:15 pm
Apple: 1st Weekend iPhone Sales Likely Below Last Time (Updated)
Posted by Eric Savitz

So will there be another frenzy? The first two times Apple (AAPL) started selling new iPhones - the original version and then the follow-up 3G version - Apple and AT&T (T) stores were jammed with customers eager to buy. Tomorrow is round three: the company debuts new models (and new price points) for the iPhone.

Pricing for qualified customers is $299 for the new 32 GB iPhone 3G S, $199 for the 16 GB version and $99 for the old 8 GB version. The really interesting question is whether the new low priced model will drive a jump in market share, as many analysts believe. And as I noted yesterday, there’s also some question about whether for many existing customers, the iPhone OS software upgrade that rolled out yesterday will be a big enough improvement that they will hold off on a hardware upgrade.

RBC Capital analyst Mike Abramsky expects the company to sell between 500,000 and 700,000 units in the first weekend, down from 1 million on the opening weekend for the iPhone 3G. He expects 18 million overall iPhone units in the September 2009 fiscal year, with 28 million in FY 2010, boosting the company’s global market share in handsets to 2.4%.

Piper Jaffray analyst Gene Munster sees opening weekend sales of 500,000, or half the number sold when the iPhone 3G launched, but well above the 270,000 sold in the first weekend for the original iPhone. He notes that the phones this time are launching in just 8 countries, compared with 21 last time. (The rest will catch up later in the summer.) Munster writes that he increasingly comfortable with his June quarter estimate that the company will sell 5 million units.
How many of those 5 million phones be the new discounted iPhone 3G rather than the updated 3G S? Given that the AT&T bill will run over $1900 over a two year period, I can’t see why anyone buying a new phone would try to cut $100 off the purchase price for a phone with half the memory and an inferior camera.

Finally, the Apple press release is interesting in that it includes a quote is from Steve Jobs, who has not made an official public appearance since going on leave five months ago and whose health has been the subject of considerable (and recent) speculation, including renewed discussions about Apple’s lack of transparency.