The case of the 1.4 million missing iPhones

What missing iPhones??? They are ALL OVER THE WORLD.

The competition’s worst nightmare…the iPhone has gone globally viral.

Drop this subject already! The phones are accounted for. The only crowded store at is Aaple. To own the phone is to love it. Count in the hundreds sold via Ebay!
The earnings were outstanding. Outlook as always, conservative. Jim Cramer says he’s a buyer at $120. Well, he missed the chance last week. Advises not to buy at $130. Lowers my view of his advice. Get a little bullish - it would be more realistic for Aaple, and investors. Imitation is the best form of flattery. Jobs changed the staid, boring cellphone industry.

Its here sold in Asia! Black market or the normal market its here.

So a few iphones are not accounted for with AT&T, so what? Apple is reporting over 4 million iphones sold, do any of you guys have a close idea to how many iphones are unlocked and/or jailbroken?? It looks to me that u dont! And to be honest only 670,000 iphones “unaccounted” for seems a quite reasonable number for unlocked iphones. Actually i am writing this thru an unlocked iphone and many of you guys dont get the idea because you can get the iphone with AT&T. But all the other countries that cant get iphone with AT&T had to get a way to get this excellent piece of technology. Its kinda sad that it had to be piracy but what the heck.

And about APPL stock prices going down, has anyone even looked at the stock market before talking shit?? EVERYONE is loosing stock prices!!! If you think APPL has it bad, u should take a minute and see google or microsoft!! Those guys are getting hit right in the crotch.

Sorry for bad grammar, english is my second lenguage

Before calling Jobs a liar, the author might want to think about the difference between an Iphone that Apple has sold to a retailer and an Iphone the retailer has sold to a consumer that has activated it with Cingular. How upset would the author be if there were no Iphones in INVENTORY at retail locations? What an embarrassment this journalist’s conclusions are to anyone that does not have an agenda to discredit Apple or Jobs.

After waiting after the keynote, we finally bought our iPhones. It was silly of us to wait for iPhone 2 to appear.

I also like to thank Elmer and all the FUDsters for making AAPL affordable, I’m back in at $130 I was kicking myself when AAPL ran up to $200 last December. I sold AAPL for $170 three months ago.

So if they sell 1.5M iPhones in the quarter, then 6 weeks of inventory would be 750,000. (Close to the 670,00 claimed to be missing). Did the reporter ask Apple (or listen to the conference call this week) were apple talked about 4 to 6 weeks inventory levels??

Bad Reporting. They should check their facts before going to press (or the Web)

ex ped: Where exactly in the conference call did they give the iPhone inventory levels?

Maybe the difference can be explained by Jobs’ marketing prowess vs. his penchant for truthfulness (e.g. in timing of options)?

The missing number of iPhones can easily be accounted for by normal retail inventory. Read more about the iPhone at Watching Apple.

Some of us Treo owners are waiting for Apple to open the iPhone to 3rd party apps. I have a mission-critical app (epocrates) that I have to have installed on my PDA. The web-only version is insufficient/unreliable/unavailabe.

I would also like to see the 3G version, as I have heard nothing but complaints about AT&T Edge.

My friend from Thailand asked me if I can send him 50 iPhones. They will wire the money right away. I hear they are really popular over there.

MMorris:

What does a return/swap have to do with an alleged lack of units “sold”.

It is “sold” once…accruing to “revenue”.

Double entry accounting, not double booking.

Mr. DeWitt,

Do you know when AAPL books the revenue for each iPhone? Does it book it on shipment to distributors or when the phone actually is sold to a customer? I seem to recall companies running into trouble a few years when they booked revenue on delivery rather than after the actual sale, so I wuld guess that AAPL is not booking the revenue until after the actual sale of the device. Can you confirm this? If true, then Mr. Sacconaghi’s argument has no validity since Apple can’t have booked revenue on phones “sitting in warehouses.” No Apple officer is going to commit such an obvious fraud as to state that the co. had sold 4 million phones when in fact is hadn’t. The grey market must be much bigger than anyone thinks, in my opinion.

I am in India, there is no AT&T here and I know atleast 10 people who use Apple iPhone with cracked software.

Does that make sense?

-abdul

“If I’m selling a product, I don’t care if the customer uses it as a doorstop. I just care about them buying it.
Posted By Mike, Redondo Beach, CA : January 25, 2008 11:36 am ”

Mike, YOU SHOULD CARE! And so should Apple, considering that the majority of the profit in an iPhone comes from the monthly cut of the service plan w/ AT&T.

Forgive the fanboys. They are all a little cranky with the stock down 30+% this year. They don’t understand that “great products” does not necessarily mean a perpetually rising stock price. Face facts people - this is the definition of a niche products company. Cults don’t attract everyone, just the gullible few.

Has anyone accounted for all the defective stock that is sitting in the service department at Apple? Large numbers of phones have been swapped out with bad batteries and other service related issues.

FYI dumb-witt, China Mobile’s CEO said today in Davos that they’re still open for negotiation on the iPhone launch in China. Consider 375MM subscribers, and up to 6MM more every month. Let’s say that penetration is 10% out of new customers: that’s 1.2MM iPhones. Let’s say that 0.25% of the current customer base changes to the iPhone: theres 937K. That’s 2MM iPhones just in China. Project the Europe numbers annualy and there’s another 3MM at least. That’s 5MM iPhones (halfway there). Take Japan with a 3G iPhone, maybe some 300K or 400K. Open up Latin America, mainly Brazil, Mexico, Argentina and Chile, and you have probably 3MM more. and project the linear demand in the US, and you have some 2MM. There are your 10MM iPhones.

Wow, more FUD from the marginally informed press. If this guy is so good at predicting the stock market, why isn’t he sitting on an island counting his piles of money instead of slaving away at a low-pay magazine gig?

Sit down, sonny. Real investors have money to make.

More FUD from PED. Yeah, where’s all the fuss about the MS player - what’s its name again? The comment regarding iPhones in the Dominican Republic jibes with comments on other forums regarding the near ubiquitousness in South America, specifically Argentina. These phones are sold. Period. Yeah, AT&T will lose some income, as well as Apple on the deal but the phones are sold. Cash in Apple’s hand. PED, why don’t we see anything from you regarding Apple’s increasing market share DESPITE constant FUD-fests from everyone. I guess for every fan boy reporter there’s a more widely read Apple hater that manages to choke the stock.

To John, in Austin Texas:

John, re: Apple should have “cut a deal with Microsoft to have email come through exchange server.” There is a multi-platform enterprise email server package that supports the iPhone (with RIM BES too) and is better than MS Exchange…Kerio! Wake up everybody…choose the red pill!

I agree with a prior poster that said:

In addition, the vast number of iPhones given as gifts over Christmas may not have been activated straight away as people wait for their existing contracts to expire before signing up to the iPhone carrier in their country.

This story is odd. It’s like asking the question: “Gap said they sold 4 million t-shirts but a report shows that only 2.6 million have been seen being worn. Where’s the other 1.4 million shirts?” Who cares? Apple booked the sale. 4 million iPhones are out of their hands. If I’m selling a product, I don’t care if the customer uses it as a doorstop. I just care about them buying it.

Dan, you hit the “nail” right on the head! Elmer strikes again with the word “missing” in another Apple headline. I also call for SEC investigation into Elmer’s relationships with competitors of Apple. The only “problem” with Apple demand is Elmer and his cave of morlock buddies constantly posting wild explanations, interpretations and outright lies about anything Apple does! Elmer, lay off the keyboard and finish your breakfast - sucking the blood out of another third-world child.

2 of 1.6 million: Two of my best friends received the iPhone for Xmas-they have still not activated them.
Reason: “I heard a newer version is on the way”.
Norm Zinker

For me (along with any other phone purchase), it is the 2-year service contract that HAS to be signed in order to get any significant discount on a device. It is amazing and aggravating to me that the 2-year agreement has become an industry standard. Most cell phones are obsolete in 6-months, let alone 2 years. It isn’t even the price of the iPhone as much as the 2-year contract that has kept me from buying one.

“But one thing is certain: having promised and repromised to sell 10 million iPhones in 2008, there will be hell to pay in 2009 if Apple falls even a little bit short.”

Once again it is clear that Steve Jobs and Apple said in 2007 that they hoped to sell 10 million of the little beauties by the end of 2008. Apparently IT types cannot understand that language but those of us with legal training find such statements quite clear. 18 months not 12.

ex ped: This is a popular misconception. What Jobs said was that he hoped to have 1% of the mobile phone market by 2008. To do that he would have to sell 10 million phones in one year.

i always love to read the critics of the iphone. they obviously do not own one, otherwise they would be saying it is one of the greatest gadgets they ever purchased. hands down, i would never use another phone again. so you cant send picture messages as of now, who cares. own one before your so critical.

What an idiot that Toni Sacconaghi is. Do a search on some of his past comments.

As for me, I bought my iPhone and hung onto it for one month before I was able to unlock it. In addition, I know of roughly 25 people in my circle of friends who have unlocked iphones in the Warsaw area.

Why should we have to wait to enjoy intuitive modern tech?

I believe they have sold as many as they say. Only for one reason!
I am from Dominican Republic and everyone has an Iphone back home.
They have it hacked. If there is only 640,000 missing. Then I would say they have probably sold more than what they even told us.
Latin America is full of them!! Att doesn’t activate them local companies do, but you have to unlock them before you go activate them.
640,000 pst!!
I belive they’ve sold that amount!

Philip Elmer-DeWitt and analysts and other blunderloggers are just playing everyone by pushing fear buttons with speculations that can’t be proven or disproven. It is stock manipulation and the SEC should put a STOP to ALL of it. In the meantime the blunderloggers get a lot of reader response. They are playing us.

dream on dude . the iphone is a wonderful machine .movie’s’ home videos’ video pod casts .the best email . real internet .iphoto ‘ imovie ‘itunes etc etc . and it all syncs seamless with mac os

duh ! what other product of any kind comes close ?? except the i touch

did i forget the touch screen ???

its fun . and the whole iphone world has just started ..

oh yes it also makes phone calls .

i will wait for the 60 g model

peace

I was surprised how many iPhones I saw during December in the Philippines. Beside the pool at a swimming pool at a 5 star hotel I counted 3 guests one afternoon using iPhones in separate groups. All were local or Chinese tourists. I assume all were unlocked iPhones.

Your report quotes At&T activations. Most Mac owners activated their phones through ITunes. AT&T may only be counting activations done at their stores.

ex ped: Actually, AT&T was reporting its number of iPhone customers, i.e., the number of iPhones owners with AT&T accounts.

Look, anyone wuth the name “Elmer” has to be an idiot, and why is it hyphenated? That’s the real mystery.

“Time to think outside the box on this one” — Kamal

The fact that you use such a tired cliche suggests that you are squarely “in the box”.

Apple is a great company and I enjoy a few of their products myself — but they really don’t deserve this irrational fanboy zealotry every time someone dares to criticize them. The iphone is an overpriced and underpowered toy at this point. The only thing about it that is revolutionary is the touch interface. Only this month did Apple even release a software update to allow users to send a text to muliple people at once–something my 3 year old cheesy phone has done since I bought it. As soon as Apple puts some decent hardware behind that awesome interface sales will improve.

BIG DEAL!!!!!!!
You ANALists are always finding the glass half full. You must basically do this, or go opposite in opinion, because you would not get any attention. That is how I came onto your story.

In College it was called “poisoning the well”.

Agreed! Useless and dangerously speculative information. Apple reports sell-in numbers and not sell-thru numbers. The actual sold-thru numbers will always be less. Why don’t you analysts just ask AT&T and the EMEA carriers how many iPhones they have in their inventories? Maybe that would give you something more factual to report.

While your at it, you’d better check Apple’s claims for shipping 2.3 mil Mac’s during the quarter. I”m sure there is bigger news to make regarding a mil or so Mac’s “unaccounted for”.

Here’s where the “missing” 1.4 Million iPhones have gone.

Oh woe is upon us! “Where have all our iPhones gone? Think of the children, the children!” This murder mystery comes to you courtesy of yet more time-honoured analysis by favourite AAPL-sceptic du jour, Toni Sacconaghi of research outfit Bernstein & Co.

There are numerous potential explanations for this, most of them completely reasonable. With four countries to keep stocked and about 5000 stores (including Apple’s own outlets), it stands to reason that Apple will have several hundred thousand - I’ve always estimated about 500-600k - in the channel at any one time.

In addition, the vast number of iPhones given as gifts over Christmas may not have been activated straight away as people wait for their existing contracts to expire before signing up to the iPhone carrier in their country.

Sacconaghi is spreading his doubts about Apple, as he always has done. Remember, this is the same guy who said Mac sales growth would flatten, the iPod was doomed, and that Apple would likely never rise over $78 in 2007.

Please people, stop fretting about monsters in the closet. Yes, there could be a problem with excess iPhone inventory, but more likely, this is just the result of far more natural and unimportant dynamics. Keep the possibility of excess inventory in mind if you like, but there is no reason to obsess over it.

If you look at 600K iPhones in the channel (ie both in stores themselves, and also in distribution warehouses which supply those stores) its a pretty reasonable number to assume that around 120 phones would be available to each store at any one time.

Factor in the fact that by Apple’s own account 20% of iPhones are bought to unlock, and of the 4 Million sold to-date, 800k will be “invisible” to AT&T, O2, T-Mobile, and Orange.

800k + 600K = 1.4M iPhones accounted for.

There, mystery solved. Can we get on with our lives now, sans-panic?

With Apple’s return policy, people that received them as an unwanted Christmas present are too late to return them…..They can now sell them on Ebay…

Get off the Bear Bandwaggon….this market is ready to go up finally!

I can tell you where they are exactly, but you’d be best to hang out in front of a major Apple store on the weekend.

In no particular order…. China, Brazil, Israel, UK, France, Germany, Italy, Canada and a hanful of others. They buy them five at a time and figure $399 US converted to Euros or whatever is pretty cheap. Why buy an unlocked 600 Euro iphone in Europe, when you can have 2.5 US phones!

I have no issues with 600K being the unlocked number….

I don’t believe I fall within your geek catagory but I, like many others, are waiting for the Iphone to appear on a Verizon network. I have Verizon and so does everyone that I know. Guess what…we’re all waiting for a Verizon model. Apple limited their exposure by playing on only one network. Once the Iphone is available to the masses they’ll move a lot more than current levels.

Apparently my abillity to research this issue is well above that of the average reporter, as it took me only five minutes to solve the mystery.  I hope Fortune will take th time to follow it up.

http://www.nydailynews.com/news/ny_crime/2008/01/22/2008-01-22_iphone_theft_for_truck_drivers-1.html

Please read the above New York Daily News storya and get an idea of where the “missing” iPhones are.  Please take a minute, as I did, to scan posts on Apple news web sites.   You’ll find people in India, China and Vietnam are reporting that the iPhones are showing up on the street in large numbers.

Conclusion:  The percentage of unlocked iPhones is quite a bit higher than the author assumes, also quite a bit higher than Apple’s telco partners would want advertised, causing Apple to withold the firm numbers that would put this story to rest.

I have a client in Austria. They asked me to buy 4 iPhones for their senior management. iPhones are not available in Austria. They will unlock them after I deliver them next week. I can assure you that the demand outside of the US in Europe and Asia is intense. And none of these phones will show up on the AT&T network.

The only mistake Apple made is to give AT&T a 5 year exclusive. They should have kept it to one year and cut a deal with Microsoft to have email come through exchange server. Then, they would have been killing everyone today at their current price.

The good news is that they will be able to get it right eventually. But 5 years for technology; they should fire the person who gave AT&T a 5 year lock on the iPhones. By the time 5 year’s expires, the iPhone will be totally out of date.

Tom wrote: You’ve got way too much time on your hands.

PED has alot more time than you think. He doesn’t even write these articles, he copies and pastes.

Forget the original iPhone.

I’m awaiting the 2.0 version, preferably unlocked.

I never rush out to buy 1.0 anything anyway.

It is obvious that way more than 20% of all sold were sold to be unlocked. Apple wants to help AT&T by saying just 20% plus it helps them sell their product to overseas telecoms that wouldn’t sign up if the number was higher. Not rocket science everyone knows it. Tony, quit looking at just numbers and try reality a little.

Sacconaghi is useless - he got lucky. Get out and do some channel checks like some of the other analysts who have been more accurate. I talk to so many people who are waiting on the 3G, or like me, purchased or received the phone, and took several weeks to get over to ATT to switch their service. So 750k “missing” phones just after the holidays isn’t a stretch!

Sorry, but the jailbreak released yesterday was for the 1.1.3 version of the firmware. This was the release post MacWorld. There were jailbreaks for 1.1.1 an 1.1.2 in the past so jailbreaks are not new.

The analyst is not accounting for thousands of Iphones bought by costumers from another countries. In Brazil there are at least 50,000 of those that were unlocked on the streets and are being used normally.

Actually I have all 650K iphones in my garage. AT&T said they activated 2 million they only let me activate 3 of the 650K that I bought. There the case is settled, I admit, I am guilty.

come on, tourists buy the Iphone in the us, then takem abck to thier country and crack-activate them there

Also, it was 2 million activated through the end of 2007. There were 3 weeks in January before SteveJ made his 4M announcement at MacWorld.

I really like the look, feel and ,to me, intuituve interface of the I-Phone.

It is what a phone should be.

But, it is just to pricey for me. I have held it and adored it. But I can’t get myself to buy it at the current price.

I am already starting to admire some of the semi-close knock-offs; their pricing is much better.

This concerns me, because I own Apple stock.

January.

The bulk of the 10M will be sold later in the year whaen we have new models and price breaks. Is this not obvious? We’re in the build-a-premium-brand phase that is stock Apple.

It’s as plain as the widget on your gadget.

Cheers

http://www.apple.com/quicktime/qtv/mwsf07/

Here’s the link to the 2007 keynote.

Why is it that nobody ever writes about the millions of Zunes and Xboxes stuffed in the channel?

If you’re so anxious to wave at the failboat, take a closer look at Microsoft’s hardware tactics. Then you won’t have to ignore all the unlocked iPhones floating around Toronto, Shanghai, Rio, Brisbane…

If Apple has made a mistake with the iPhone, it’s their delayed international rollout that’s biting into shareholder profits. Because in Canada, Rogers data rates are atrocious and Apple shareholders aren’t getting their share from all the Canadians using unlocked iPhones on the Rogers network.

Please retract your comments, the goal is 10 million iPhones for both 2007 and 2008. Please double check your facts. You can go to Apple’s website and replay Macworld 2007’s keynote as many times as you want to get the facts straight.

—

ex ped: I’ve seen your version of Apple’s goal repeated many times in reader comments, but having carefully read Tim Cook’s several statements on the subject, most recently in the Q1 conference call, I believe I (and all the Apple analysts I follow) have this right. Apple’s stated goal is to sell 10 million iPhones in 2008, not in 2007 and 2008 combined.

10 million in 2008 also jibes with what Steve Jobs said when he unveiled the iPhone a year ago: that he hoped to capture 1% of the worldwide mobile phone market, which was expected to have grown by then to 1 billion phones. –Philip Elmer-DeWitt

This is hilarious. Obviously Mr Sacconaghi has not traveled outside US recently. There is an industry of buying iPhone in bulk in the US and sell them in a lot of countries in Asia. Unwanted Christmas presents, this is really silly assumption! Have you ever had an unwanted expansive X’mas present? What would you do? You return it ASAP so that you can buy something else.

Jobs promised to sell 1 million iPhones by the end of calendar year ‘07 and 10 million (total) iPhones by the end of ‘08 NOT 10 million iPhones during the ‘08 calendar year. This is how stocks and investors are manipulated with the over abundance of erroneous web news each day. In fact Apple has already met 40% of it’s iPhone guidance for ‘08 sales before the first month of the year. I hardly see how an extra 6 million phones in 11 months will be that much trouble.

Philip Elmer-DeWitt makes some valid points. The iPhone is overpriced and is not necessarily the coolest phone out there. This, coupled with the fact that AT&T forces a two year contract, is expensive, and does not subsidized the phone, makes the package less than desirable. And the iPod feature in the iPhone does not work without the AT&T contract.
I too have turned my back on the iPhone.

I personally know a good number of people that have them here in Moscow and have seen many others. There are at least thousands here that have been unlocked for some time now. If you figure 5,000 phones in every capital or every highly populated urban center, the numbers are quite reasonable.
Are we going to accuse Apple of under-projecting and over-reporting? You can’t have it both ways….

What about the unaccounted iPhone sales in India?

You could probably account for at least 500 000 of the “missing” phones by trolling Craigslist Toronto’s “for sale” section…

All the fanboys would just accept Jobs’ claims at face value. Do you not understand that this is what analysts do? They verify and validate numbers. It’s funny how the tune has changed over the last couple of weeks. Two weeks ago AAPL was headed to $200+ and the critics didn’t understand the company. Today everyone needs to stop bashing AAPL and give it a rest. At least this is a valuable lesson about the stock market, especially for those who forgot about or were too young to remember the tech bubble.

All Apple Fan Boys should sell 3 shares of Apple, and buy the friggin’ iPhone. I’m sure there are enough of us to knock the iPhone sales numbers out of the park.

Mr. De-witt, with all do repect to you, I believe your trying to scare investors. At MacWorld Mr. Jobs stated that we sold 4millioin Iphone in 200 days. Mr. Jobs knows that it would be illegal to pump something that was n’t true. Mr. jobs did not say how meany were aciatived. What more do you need to know. Mr. De- witt stop the bullshit please.

Thomas A. Gaughan

Mr Sacconaghi forgot to include Jan 1 to 15 2008 sales,
at an average 20K a day that only leaves 350′000 “missing”.

Steve Jobs stated that Apple would sell 10 million iPhones BY THE END of 2008 NOT in 2008. This statement came out soon after the launch. So 7 million iPhone sold in 2008 sounds about right.

You’ve ben covering Apple for quite some time now, and you still haven’t learned that Apple said *in June 2007* they are aiming to sell 10m phone by the end of 2008. This includes 200 days of 2007. Apple has never ever aimed at selling 10m in 2008 only.

ex ped: I believe you’re wrong about that. Steve Jobs said a year ago he aimed to capture 1% of the 1 billion global mobile phone market by 2008, which is 10 million phones. Tim Cook has described Apple’s target as selling 10 million iPhones in 2008, which given Jobs’ statement can only be read one way. –Philip Elmer-DeWitt

The sky is falling! The sky is falling! Just another reincarnation of the same old (tired) apple bash. Yet, it is still here and gaining greater market share daily. Grow up already. This is a great company with great products with a very loyal following. I am both a mac and pc owner but I own stock in Apple. And with good reason. Let’s see you review this writing in a year when the numbers are out rather than extrapolatiing on shreds of suspicion.

are you lying or just shorting the stock? come to thailand and see how many people have Iphones. the price for unlocked I phone is 26000 baht, about $700 and it is the Thais that are buying them!!!

Sacconaghi doesn’t know what he is talking about, and he is assuming things he doesn’t know. Why? To talk the share down some more so he can buy them cheap?? To get himself some exposure??

He is just plain dumb. We just don’t know how many unlocked iPhones have been sold. We do know that AT&T and the other providers will have maybe 100,000 in stock, a normal supply for a week or two. We also know Apple sold 300,000 after Jan. 1. Most of those will go to AT&T, but have not been counted yet. There will be customers who have been given iPhones, but don’t want to spend lots of money per month on AT&T. iPhones can be bought in Asia, there must be tens of thousands already in use without a contract. Have you looked on ebay? The German ebay has 2000 iPhones for sale, mostly unlocked or without a contract. eBay USA has 1,600 iPhones for sale at any moment. Anyway, we just don’t know, but if Apple says they sold 4 million, I believe them.

More useless speculation on IPHONE numbers. You guys need to write about something more meaningful and factual. Didn’t Apple just have their Ecall?

What everyone seems to the disregard is the huge demand for iphones outside of the US in countries where the iphone is still not available. A greater number of iphones than that being claimed in this article made its way outside the US.

Time to think outside the box on this one.

You’ve got way too much time on your hands.

They might well made their way to Asia!
I went to Saigon Vietnam last month and saw a lot of iPhones are in use over there!

The writer has no idea about how many Chinese Iphone users there are TODAY even before APPLE launches IPHONE in China.
(To be returned? That is silly silly imagination)

Do you guys not have anything better to do? Climb down off the basher wagon for a bit and give it a rest.