Apple: One in Six iPhones Bought With “Intention to Unlock”
One of the unanswered questions about Apple’s (AAPL) iPhone was answered yesterday by COO Tim Cook during the company’s Q4 earnings call with analysts. Responding to a query from Sanford Berstein’s Toni Sacconaghi about how high iPhone sales jumped after the $200 price cut, Cook disclosed a nugget of market data Sacconaghi hadn’t requested:
Timothy D. Cook
Toni, we were very happy with the elasticity that we saw. It enabled us to far surpass our expectation of hitting around a million units cumulatively by the end of the quarter. Some number of these were sold to people that have an intention to unlock and where we don’t know precisely how many people are doing that, our current guess is there is probably 250,000 of the 1.4 million that we sold where people had bought them with the intention of doing that. Many of those happened after the price cut. (full transcript here)
That’s an astonishing figure — higher than any analyst’s prediction and closer to the estimates of the iPhone Dev Team, which has registered half million downloads of its anySim unlock software. It means that more than 17% of the iPhones sold were at risk of being disabled when Apple released its notorious software update 1.1.1. That’s a ton of bricks.
How did Apple arrive at its estimate? Cook didn’t say, but it could have just subtracted the number of AT&T activations from the number of iPhone sold. Even that figure might be too low; it wouldn’t include iPhones activated with AT&T and subsequently unlocked for use with overseas carriers or with T-Mobile in the U.S.
The market for unlocked phones presumably shrank after the bricking incident and the announcement of deals to sell the iPhone in England, Germany and France. Apple says it plans to begin selling the iPhone in Asia in 2008.
Darn it, I sold some AAPL at $145 then some more at $156 thinking that I would buy them back when it dips after earnings as in the past. Now I only have less than half of AAPL and seems I already missed the train as I don’t see this stock ever going back to $150 range :( a painful lesson learned believing the AAPL FUDsters.
Doesn’t this tell you something about demand for the device? People want it so bad they will pay scalpers to fly to New York and get one for them! Apple is goinng to sell a ton of Iphones when it gets distribution set up. The stock looks cheap today..
But, most of the unlocking programs were sold or downloaded before the price drop on the iPhone. So, it seems that the unlocking software largely went unused. There may be another group that has bought iPhones and is waiting to see what will happen with Apple upgrades and the SDK before using unlocking software. Regardlessly, once legally unlocked iPhones are available anywhere, the market for unlocking software in the United States will be over.
- Analyst: Apple will sell 4.47 million iPhones this quarter
- Best Buy to sell iPhones starting Sept. 7
- Steve Jobs: 60 million iPhone apps downloaded
- iPhone: Trouble in the App Store
- iPhone nano: A rumor before its time
- On the road
- iPhone apps: 1,001 and counting
- Jobs tells Times: No cancer
- Who is to blame for MobileMe?
- Two weeks later, New Yorkers wait 4 1/2 hours for an iPhone
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Silicon Valley veterans like to joke that Steve Jobs must be surrounded by a reality distortion field; if you get too close to him, you start to believe what he's saying. Thanks to the success of the iPod, the launch of the iPhone and the renewed interest in the Mac, Apple has made believers out of millions of customers - and made a lot of investors rich. But Philip Elmer-DeWitt believes that an ounce of skepticism never hurts when writing about the company. He should know. He's been covering Apple - and watching Steve Jobs operate - since 1982, first for Time Magazine, then for Business 2.0, and now for Fortune.
for a company with a progressive image, (keep in mind I love Apple products) they sure do have some shady business practices. We all know the story of the guy who made a film and started the campaign exposing the ipods initial inability to recharge the battery, when he was told he had to buy another one.