iPhones piling up at AT&T stores

[MacNut]

I didn't see this anywhere but is seems like a big enough story to stick here.

Is demand for the iPhone in America already starting to wane?
http://www.news.com/8301-13579_3-9857622-37.html

AT&T, the exclusive American carrier of the iPhone, activated just 900,000 iPhones during the fourth quarter, the company revealed during its earnings conference call Thursday. It wrapped up the year with "just at or slightly under 2 million iPhone customers," according to company executives.

Apple announced at Macworld that it has sold 4 million iPhones through the middle of January, and Toni Sacconaghi, a financial analyst with Sanford C. Bernstein, thinks the gap between the figures means that Apple might have a demand problem. He released a research note Thursday after AT&T's earnings saying that the carrier's figures imply that an awful lot of inventory is building up at Apple's channel partners.

"We believe the data points to a significant amount of iPhone channel inventory...This is negative in two ways: (1) it indicates end-user demand for iPhone is lower than many investors may think based on Apple's sales figure; and (2) it points to slower iPhone sales in the current quarter, since much of this inventory is likely to be drawn down," Sacconaghi wrote in his report.

Let's walk through the theory. Apple said on Tuesday that it sold 3.7 million iPhones in 2007. But AT&T said Thursday that it ended 2007 with around 2 million iPhone customers.

One huge difference between the third quarter and the fourth--other than the temperature--was that the iPhone became available for sale in the U.K., Germany, and France through other carriers. But even the most optimistic estimates for iPhone sales in Europe didn't come within shouting distance of 1.7 million units. O2, the exclusive iPhone carrier in the U.K., has said it expects to have sold 200,000 iPhones by around this time, and France's Orange and Germany's T-Mobile were expected to sell about 100,000 units each in 2007.

So that leaves 1.3 million iPhones to find. (Sacconaghi only estimates European sales at 350,000, so he uses 1.4 million.) The first theory would be that iPhone unlocking is rampant.

 

[Much Ado]

Calm down, dear.

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?

 

[Unspeaked]

Actually, I posted about this here:

LINK

 

[MacNut]

Actually, I posted about this here:

LINK

Stupid search feature....Ok carry on there.