Report: As many as 1.5 million iPhones were hacked
Want to watch an Apple analyst change his tune?
Shaw Wu of American Technology Research was an early skeptic of efforts to unlock iPhones to run in other countries and on networks other than AT&Ts. Last October, when some analysts were putting the number of hacked iPhones as high as 100,000, he insisted that the real number was so small as to be “immaterial.”
Today he’s saying something quite different. In a report issued to subscribers, he’s come out with the highest estimate of unlocked iPhones we’ve seen to date. He writes:
We believe the hacked iPhone market is much larger than expected. Our sources indicate that iPhone is being used in 35-40 countries vs. the 4 authorized countries. Out of the 4 million iPhones shipped, we estimate at least 1 million, and perhaps as high as 1.5 million may be hacked.
Although Wu concludes that Apple’s (AAPL) fundamentals are strong and that the company is better positioned than most to weather a looming recession and a slow-down in consumer spending, the rest of his report makes for sobering reading.
- MacBook Air sales look “somewhat underwhelming,” although the new machine is helping drive traffic to the Apple Stores, where other Macs are showing “continued momentum.”
- iPods appear to be tracking 9.5 to 10 million units for the quarter, below the most bullish estimates of 11-12 million units. “We do not think the overly optimistic have factored enough of a seasonal decline and overestimated low-end shuffle demand,” he writes.
- iPhone shipments “appear weak” and AT&T subscriptions are “looking light,” with the above caveat about how many iPhones are being hacked.
In the end, Wu believes that the number of unlocked iPhones won’t matter as much to Apple as it might to AT&T. “While hacked iPhones have some impact to deferred revenue,” he writes, “we are not overly concerned as iPhone is only a 3% contributor to reported revenue. Even if we model zero iPhones for the March quarter, it would only have a $0.03 impact to EPS.
For more on where those unlocked iPhones are going, see The iPhones of Equatorial Guinea.
Mike, if you really don’t care whether I like my Mac, why did you waste so much breath complaining? Move on yourself, dude.
Hey Dave, tx, why don’t you just be silent? I have read several of your apple-hugging jabber-gripes in this article and quite frankly i’m sickened by it.
Get a clue Dave. Apple is an overpriced, overfancied rip off of everything already out there. We had MP3 players, then apple came around and slapped a color screen and a fancy circle pad - and a $400 price sticker. We had computers and laptops. Apple rolled out their “light, portable, and wireless(WOW NEW CONCEPT), that come in all colors” laptops, and their price? Twice that of PC laptops. Newsflash Dave!!!! Read the stories!!! Apple didn’t even redeem itself in the computer market until it made Windows available on them!!!! Sure they are faster. I’ll put my win 2003 server against any apple computer, and bet anything my computer can do way more. Macs are faster because they are USELESS!!!!!
Ok, fine, I shouldn’t say that because there are people who can argue that. Fine. I am a web designer, programmer, system administrator, web administrator, and analyst. I work on both windows and linux. Mac? If its really light I may use it as a tree ornament for christmas.
The iPhone is no different. RIM came out with the first of those. Apple slapped a touchscreen and a hefty price tag on it. And to make it worst, a hard wired battery?!?!?!
If any of you ever wonder why Apple will never master any of its competitors, read my words above. And if you feel compelled at all to make a rebuttal, please do so with REAL FACTS, not your opinions. I don’t care if you like your mac, your problem. I don’t care if your an apple insider, again your problem. And I don’t care if you sleep with Big Guy Jobs either, again your problem.
And for crying out loud, leave the writer of the article alone. He’s doing his job. Maddog is right - iTards….
Hey Maddog,
Chill. apple is going higher and phil does write negative about Apple all the time. Its a fact and its pretty simple my friend.
hey dave in tx,,,
quit being an iTard and quit bashing the writer…he’s bringing you the information…
he doesn’t make you read it or act a fool after you do.
i agree with pushkin…WHAT INFORMATION DO YOU HAVE TO KNOW APPLE IS GOING HIGHER???
lmao….none and i guarantee it…else you would post your info.
bottom line, you are simply a hope-n-pray investor that is seriously pissed off because of your huge apple losses.
don’t blame anybody but yourself for your hope-nj-pray investing tactics.
Where can I get the “board meeting minutes” that Pushkin referred to? I’ve listened to the conference calls and read the SEC filings, but I want to see those “minutes”!
http://www.4-get-comparison-shopping.com sells unlocked iphones. I bought one and got it shipped to the UK in 4 days! Really friendly people too
Pushkin,
Get a grip and get a clue. Apple’s p/e without cash is 20. I repeat 20! They are the best technology company to own in 2008. They have a growth rate of 25-35% and have sold off about 40% from their high. They are 60% off of the average analyst target and will blow the doors off this qtr. Oh, don ‘t forget their deferred revenue piling up. Thats money in the bank! So, while I’m up on my Apple metrics why don’t you go to Barnes and Noble and read up on some investment tips! perhaps you and Wu can have coffee while your reading investments 101!
this is probably true. I personally hacked about thirty of them. It really isn’t that hard
Dave X, give me a break. What exactly do you know about Apple? Do you go to their website when they release new product and check out all the “cool” things that they have? Is that your knowledge? Give me a break. Maybe you should go on EDGAR at http://www.sec.gov and actually start reading their annual reports, listen in on their quarterly meetings or actually pay attention to board meeting minutes - then you might actually learn something.
Apple products are luxury goods, they are kind of like Coach bags - recession is coming, their P/E ratings unsustainable, I don’t see how your blanket statements about the stock flying high will work here. Go read a book by Benjamin Graham about sound investing if you want to learn anything.
Apple is growing at around 45% per annum.
Whats not to like?
Ipods were at 90%+ in dollar value market share last quarter.
Also, it needs to be said that the MP3 market is growing about 15% a year - thats ok, its a mature-ish market. Whats wrong with that?
The iPhone is huge success - but ist not really a phone, is it?
Internet, iPod, phone, email, movies etc. etc all in ONE device.
The story is strong - Apple’s machines can run OSX or Windows and that is the real underlying message - why suffer with Windows when you can reduce your suffering to a minimum by using OSX and Windows when you really have to.
The future is NOT the same as the past - and now its time for a close look of the overpriced RIMM, isnt it?
Here is yet more educational material to all the analysts and wannabe ‘experts”. if you have worked in large corporations since before the WWW, you will recall the shift to having big servers in the IT room while engineers get their “workstation” in the office. The IT servers contain the bulk of information, do the heavy lifting, the workstation are just little portals into this mountain of information. Think of the Air as a pro-consumer grade workstation. Apple’s Leopard has made it easy to have our own IT desktops and servers in our homes while we bring along the Air. In 5 to 7 years, computing will evolve so that machines like Air focus only on very robust human interface, allowing me to do what I need to do to access and process the information that is stored securely elsewhere. While other companies just sell PC boxes, Apple is out to push a whole new computing environment. The Air is not just there to win the “thinnest” contest or just for “beauty” or for “show”. There is a specific long-term purpose to its existence. What happen to all you so-called “experts”? You cannot even see that far beyond your nose? If Apple is able to continue to grow and survive into the next 10 years, mark my writing :-), all this shall also come to past. Again, I am *not* an Apple Insider though I would love to be. I ain’t responsible for you buying more Apple shares for the next 10 years.
Apple will announce blockbuster news in 24 hrs!!!!
Even the cheapy under 25 dollar phone now has music and email…..why pay more!!!!!!!!!! Most people just need to text their buds……what gives!!!!!! And who needs all these over priced Apple products when something a fraction of the price will do just fine????????
I have read a lot of misguided ignorant posts about the MacBook Air, so I will share a little secret with all the analysts and wannabe “nerds” who fail to understand the future. When I want to rush around from client meetings to design sessions to having a quiet lunch to read some confidential specifications in a coffee shop, I have to lug around a MacBook Pro. For people who do a few documents, that is good. They have a self-contained machine. For people like me, who actually needs a lot of information very quickly and cannot possibly anticipate everything I will need before leaving the office, what I want is a seamlessly integrated “desktop” in a WiFi or DSL environment. That means I only need something like a MacBook Air but with practically limitless access to all information I want. So my Air can connect via WiFi back to my office, get onto my Mac servers, mount my hard drives, and I am now working in a coffee shop with engineers while pulling down documents real-time from my office. The Air becomes just another “BOOK” but a powerful notebook because it has gone beyond its physical boundary. When our infrastructure and Telecom business model evolve to allow such free flow access to information, the Air will have established a strong beachhead. Apple’s strategy is to push the entire market in that direction. If you cannot see this, you are not yet in the forefront of 21st century computing, nor will you be able to understand what the WWW will look like in 7 to 10 years. I am *not* an Apple Insider. All the views stated here are mine. I am not responsible for you believing my writing and start buying Apple shares.
How do unlocked iPhones hurt Apple? Apple loses out on the estimated $18 per month per phone from AT&T, that’s how. So much for the vaunted “deferred revenue bomb” due to explode in the next 18 months. More like a deferred revenue firecracker if the unlocked phone estimates are even close to being accurate. Of course the fanboys will attack the numbers as meaningless - all projections will be spun to the most optimistic degree regardless of reality. AAPL is about to learn that most consumers don’t want a $500 cellphone - expect to see those wild 10 million iPhone sales projections adjusted downward sooner or later - either that or the price will be be dropped or subsidized to hit the target. I’m sure the fanboys will find a way to spin either of those developments as a positive as well.
Pushkin,
Up 4 from when I wrote my note. Thats why I’m good and your probably short and losing money. We see 135 by Friday my friend. Get on board!
I think Steve is stupid that he doesn’t want to release iphone to other countries. No wonder lots of people hacked the phones. You can’t blame people to want your product. You should feel honored and WU, who do you think yuhuuu?? to write such things about hacked phone. You should write to Steve about why he doesn’t release iphone all over the world. It would certainly add Apple sales.
Phones that are hacked to run on networks other than AT&T actually do hurt Apple’s revenues. Apple has an exclusive deal with AT&T so that it gets a cut of each phone sold by AT&T PLUS Apple gets a cut of each users monthly fees for a 24 month period. Thus, if a phone is not registered on the AT&T network, Apple does not get a cut of the monthly fees. However, the more phones that Apple sells, the more revenue it generates AND the wider exposure that iPhone gets, thus generating a larger audience for iPhone.
The ONLY way that Apple will ever be able to control the “hacked” phone syndrome is to make people unlock the iPhone when they purchase it (either at an AT&T store or at an Apple store). If the customer doesn’t want to register the phone at the time of purchase, then Apple (or AT&T) would sell the phone for a higher price (register now and get a lower price or pay a higher price and unlock it with some other carrier). The question is whether Apple wants to force people to register with AT&T by forcing them to register the phone at the time of purchase.
I suspect that once the 3G iPhone is released and people can run the phone on a faster network, hacked phones may be less of a problem However, there will always be people who will hack the iPhone so they can run it where AT&T networks are not available.
This entire issue of locked and unlocked phones is ridiculous. It’s like buying a Chevy and learning that it will only run on Shell gas and Fords will only run on Fina gas. Apple is in the business of selling iPhones and should not be in the business of forcing people to use one network over another. When you buy an Apple computer, you are not forced to register with a certain internet supplier, so you shouldn’t be forced to register your iPhone with AT&T. I’m an Apple fan, but I resent that they want to limit my choices of carriers so they can make more $$.
You have to understand Apple’s strategy yourself, not be hooked by the words of analysts and become emotional. MacBook Air is not meant to replace the MacBook’s. It targets specific group of people who want its lightweight portability. It is a hole in the product line Apple wants to fill. While other companies fill it with cheapo $400 unit, Apple sells a well designed unit with a strong OS and supporting cast (WiFi, Airport, etc). It is not just hardware, it is also the software and integrated operating environment. As for iPod, Apple clearly stated a shift in strategy to “mobile computing desktop”. iTouch is the first model. Yes, the iPod dedicated music player market is becoming saturated but the mobile computing device market has just begun. For the iPhone, it is more of the same in terms of mobile computing with cell capability. Our infrastructure limitation is forcing iPhone to be what it is today. Once infrastructure and speed concerns are addressed, once content availability and access issues are addressed, future versions of iTouch and iPhone will morph into something totally different. So do your own research about the market, the trends, about consumer interests and how Apple, or any other companies, are positioned. Then make your decision on when to invest or NOT to invest. Just reacting to the wording of an analyst’s report and jump one way or another is bad investment practices. Good luck and wish you all a happy and prosperous year of the rat!
Pushkin,
I know alot more about Apple than you do. You and Wu belong together. Now Phillip, go write about some other company and get off Apple. Rimm can use your assistance bringing it down.
I agree that it is not the volume that will be driving Apple products, but the revenue. Personally I would really like to have an iPod touch, yeah baby lol! Its pretty much an iPhone without the phone(well seems like it, correct me if Im wrong). The shuffle is there just for people who dont have much to spend, but still want something that has an Apple logo on it. While I am a fan of the iPhone, I am not of ATT, but its not like they are any or that much worse than anyone else.
It’s to everyone’s advantage, including Apple, that there are lots of unlocked phones out there. The big move is actually to IP, rather than from one metered cell phone carrier to another.
Well, maybe not to everyone’s advantage. Cell phone providers are gripped in a storm.
KeM from Washington’s desire to be correct as eloquent as it is penned is trumped only by the facts.
http://marketshare.hitslink.com/report.aspx?qprid=9&qpcustom=iPhone
I hope the concept of trending is understood and appreciated. Why use facts when uninformed opinion will suffice, right?
Actually it does hurt Apple. Remember that they are to receive a fee for each Iphone subscriber from AT&T. So they loose out on the revenue that has no cost associated with it and therefore would have gone straight to their bottom line.
I strongly agreed with Dave, TX. Wu has no clue when it comes to Apple. I was amazed that such “research” even got published! I looove my iPhone and my iMacbook! I believe there are thousands loral Apple customers would agree. Wu, please shut up.
Wow KeM, you got things exactly backward. Apple is well on its way to doubling its market share in computer sales. “Continue to see shrinking numbers”? What the hell are you talking about? They are seeing regular seasonally reduced sales coming off the Christmas quarter. Jeez. This is the same lame old argument about apple and you are missing the growth story here and the impact their digital home network is going to have ongoing. Netflix, blockbuster, sony et al see what Apple is up to. Not to hard to figure out. Just go try out the iphone or ATV and you will begin to appreciate the difference in quality and intuition. In two or three years this company will be twice its current size; most of these analysts and reporters covering Apple have shown astonishing nearsightedness.
How many times can you rewrite the same story? Does your boss still give you credit for a full article when you keep regurgitating the same story over and over again? I could care less how many iPhone’s every anylist thinks were hacked. There are about 500,000 experts with an opinion out there so I suppose you have an endless supply of articles about “How many iPhone’s are hacked”.
Zzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzz.
The hacked phones don’t hurt Apple’s bottom line. Apple is selling phones. AT&T loses business, not Apple.
My personal belief is that Apple my soon suffer from overexposure to its own loyal clientele. I think Apple will continue to see shrinking numbers because demand for its products are slowly declining - those that must have Apple this and Apple that are becoming fulfilled and simply can’t afford to keep dishing out money for new products. There is a vocal group of Apple loyalists who won’t buy into anything not stamped with the Apple logo. But there is a larger (albeit non-vocal) group that refuses to buy into Apple and its often over-hyped and over-priced products. Perhaps we are seeing this in play now.
Not exactly sure why the iPhone unlocked is a tragedy - the other way to look at it is it’s $600 MILLION free to Apple - no support necessary and in countries where they don’t even sell the iPhone …
wu.. who?? thank god there are people like him makes for
an amusing report
Dave,
sorry to say it, but you don’t really know much either. What are you an Apple insider? Do you actually know anything about what is going on in their sales? Do you actually pay attention to what happens in the boardroom or your “information” is all collected from blogs and insider-scoops websites. What makes you think Apple is heading my higher? You remember what happened when in one day apple went from 50 to 25. I didn’t think so. Why don’t you learn how to shut up yourself, and move on
if apple considers this such big problem (which i’m not sure they do)why doesn’t apple/at&t offer a rebate once you activate the iphone with at&t or raise the cost of the phone and then issue a refund once you activate the phone with at&t
Wu is clueless when it comes to Apple. He hasn’t been right yet. oh, whats his PT. 210. Wow, he must be expecting good things wouldn’t you say. As far as IPOD demand, Wu, along with the other joker analyst, haven’t figured out yet thats its not a volume story anymore. It’s a revenue story with the new high end IPOD and guess what, they had the highest revenue mix for IPODS last qtr. Wow, you think the shuffle demand is low. I wish I got paid as much as these clowns when it comes to research. My 6th grader could have done better. Apple is heading much higher so get on board or shut up!
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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.
Apparently there is someone here who has a comprehension problem. Allow me to explain.
The purpose of my comment was to blast an apple-nut for dissing on the author of this clip. The additional information provided is just extra padding on my reasoning.
Again, I dont care if you like your mac, thats your problem.
Allow me to amend the last part of my original comment. Don’t reply unless you can read and understand what Im saying. Its not fun if I have to dumb down my language.