Apple Shares Plummet On News Of Disappointing iPhone Sales

Analysts had estimated that AT&T and Apple would sell and activate 500,000 iPhones before AT&T’s earnings report was released yesterday.

AT&T says they only activated 146,000—and Apple is expected to release their sales numbers today. Could they be as high as 300,000? Did half of their customers buy a phone that they didn’t activate? Seems unlikely.

Too bad for Apple… Their shares are down 6%.

From the Chicago Tribune:

CIBC World Markets said that demand for the iPhone has had a “significant decline” in the past 10 days and that Apple and AT&T might try to boost demand by increasing their marketing efforts. Apple introduced the iPhone in the U.S. on June 29.

“We have noticed decent inventories at stores and thin demand at best,” CIBC analyst Ittai Kidron wrote in a note. “Among the stores we visited, most visitors were not looking at the device, and only a very small subset bought it.”

We’re less than shocked that a phone that costs $2,000 (all told) didn’t sell 500,000 units. Those numbers were just silly. It’s simply too expensive. 146,000 seems like a great success from where we’re standing. As an analyst told USA Today: “We became victims of our own hype.”

Shares fall on soft demand for iPhone [Chicago Tribune]
(Photo:hanapbuhay)

Comments

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  1. Wormfather says:

    Seriously, apple was silly to give exclusivity (sp) to one provider.

    They were also silly not to give the phone a proper beta testing and even more silly for launching it in the summer as opposed to late fall.

    And I’m silly because I still want one.

  2. Ray Wert Jr says:

    Bah Bah Mac Sheep, have you any Bull?

  3. Greeper says:

    I don’t get it. 10:32 am, AAPL is up 2%.

  4. Dickdogfood says:

    I have completely bought the hype — it seems like a nice young gadget that will indeed make my life cuter ‘n’ more special — but don’t plan to buy one ’til it goes into its second or third iteration and decent cell phone contracts are available…whenever that happens. I suspect I’m not alone.

  5. supra606 says:

    Good! Maybe this is a sign that the average person is more intelligent than they seem – at least intelligent enough to see through the ridiculous hype the iPhone got.

  6. Thrust says:

    Lets see here…

    -The phone costs a f*cking absurd price
    -You are limited to using it with one specific service provider
    -That damnable provider is AT&T (Annoyance Tricks & Trouble)
    -You MUST sign a contract, even though you fully pay for the phone
    -It’s really just a Trendwhore device, nothing special about it
    -Apple. (Not a big deal to some, but many people like me HATE apple)
    -Reports of problems less than a week after launch (Thank you consumerist for keeping us informed)


    Oh yes, I want one OH so much. About as much as I want bestbuy to repair my PC, oras much as I want some intestines-filled KFC.

  7. Ben Popken says:

    Sounds like a time to buy some Apple shares.

  8. Amelie says:

    The NYTimes article made no mention of the number of people who would love to buy the phone, but would rather use two tin cans and a string than sign up with AT&T.

  9. Falconfire says:

    @Wormfather: Well to be fair they where not intending to release to only one carrier, only one carrier would have them, the one they had a business relationship with going in.

    Verizon turned down Apple when offered because of the time and money involved in redesigning their internal systems, as well as the fact that Verizon still thinks their idiotic system Vcast crap they have now will actually make them money.

    As for proper Beta testing, thats a silly statement, as we dont actually know how long it was beta tested for. We know its been in development for more than 2 years… I have a feeling it was in beta since the announcement, maybe even longer. That right there is a decent amount of time if your simply testing the PHONE and not all the loopholes people are hunting for. Many of the issues with the phone are due to people physically trying to break into it, or because AT&Ts network sucks, not because the phone doesnt work

  10. markwm says:

    Heh, since I sing the praises of HTC’s WM-based phones, I find this amusing. However, in fairness, I think the “phone that costs $2,000 (all told)” talking point is silly. No matter which phone you use, if you have service, it’s going to cost you, so that really shouldn’t be applied toward the cost of the phone. If you’re (generic you not Consumerist you, since it was a quote) going to do that, then point out that the ‘free’ or ‘$99′ phone is going to cost ~$1500.

  11. alk509 says:

    @Ben Popken: Waaay ahead of you! ;-)

  12. Ray Wert Jr says:

    @Ben Popken: Not if iPhone is the next Newton.

  13. elduque says:

    5% drop since Monday – wah.

    It’s only up 52% year-to-date and 73% in 12 months. It’s also back up today.

  14. maevro says:

    @markwm:
    I sing praise to HTC too.

    I have no problem spending $600 on a phone, as I did with my HTC Trinity and I will do again when the HTC Polaris is released later this year. To me it is worth it for the needs and wants that I have plus I can afford it. HTC provides me phones that I can customize, can get insane HSDPA speeds and aren’t all hype.

  15. dach2k3 says:

    The high price tag is just pure greed. Apple’s margins are sick, and ATT not subsidising despite forcing a contract is just trying to grab windfall profits off a fad type item.

    If apple sold it for $400 (which they easily could and retain a great margin) and if ATT subsidized it the normal amount for 1 or 2 year contracts, a lot more people would buy it.

  16. Slusy says:

    They only activated 146,000 because the online orders didn’t get to customers until after the weekend, which was also after the close of AT&T’s quarter. 146K units sold in two days, especially at the iPhone’s astronomical price is pretty good. The PlayStation 3 only sold 197 units in its first month (and that was before people realized that there were no games for it and were willing to pay for it).

  17. nequam says:

    @Ben Popken: I agree.

    150,000 is still pretty good. This seems more a problem of unrealistic analyst expectations. And a price tag that few people can justify. Adjustments can be made.

    AppleInsider is reporting that new iterations are due out by year’s end, with lower prices. They sound really scaled-down, though, and may be little more than iPod phones. I have no idea what sort of market there is for such things. The nickname is iPhone Nano, so that may give some idea what to expect.

  18. markwm says:

    @maevro:
    Yeah, the thing that really gets me is how few people really know about HTC. I guess it comes from most of their phones being branded and lacking the HTC name. But that’s starting to change (the Sprint Mogul actually has HTC emblazoned fairly prominently on it). At CTIA, I got to see 2 of their laptop replacement units and I fell even deeper in love with their products.

  19. Dibbler says:

    Reporters LOVE to use the word “plunge” whenever they talk about stock. Note to journalists: 50% is a plunge, 6% is a slight drop.

  20. Mojosan says:

    Having “Hype” as the title of this thread is accurate.

    The stock has gone from $60 to $136 in a year. But “ZOMG!!! It plummeted $6 because not everyone activated their phone over the weekend!!!”

    My partner picked up iPhones for us on the first Friday evening and neither of us activated them until we got to the office on Monday.

    The “everything I can’t afford is teh suxor” is strong on this blog.

  21. limey20 says:

    Only 146,000 activated…

    In 30 hours, that’s 4866 per hour, or 81 per minute, or 1.35 per second.

    AT&T were woefully unprepared for those numbers (from many reports of unsuccessful or really slow activations.)

    Initial estimates of iPhone sales were 150-200,000, it was only the so-called “analysts” who upped that figure into the stratosphere, “We became victims of our own hype.”

    Finally, yesterday also saw a big sell-off due to disappointing profits and forecasts from some other high-profile companies (eg. Countrywide Financial.)

    Wait for today’s Apple’s Q3 – 2007 financial results conference call for more realistic “Sales” figures, though they are not guaranteed to be released, but based on what happened yesterday I kinda expect them to.

  22. Morton Fox says:

    A 6% drop, which only takes the stock back to where it was earlier this month. Big deal. If AAPL got cut in half, that would be a plummet.

  23. LatherRinseRepeat says:

    I wonder how many of the 146,000 activations later resulted in de-activations after some people realized the iPhone wasn’t worth the money and decided to return it.


    I still think iPhone was a poorly launched product. As a phone, it lacks a lot of features that are pretty standard all phones these days. And as an MP3 player, it doesn’t offer much except a touchscreen and a high price tag.


    It would’ve been nice if Apple had just developed two separate products; A touch screen iPod and a next generation Newton. I really don’t know why they’re trying to be a cell phone manufacturer.

  24. umbriago says:

    I must read the Internet too much (in fact there’s no doubt), because before it came out, I would have sworn the entire country was going to be walking around with iPhones the Saturday morning after their release. Every tech website (especially ones like Digg) had users who were touting it as a life-altering event. Newspapers staked out reporters at Apple Stores to take pictures and interview bearded customers, and issued glowing reviews pronouncing the arrival of the iPhone as the second coming of Christ.

    And that’s all? Maybe 200,000 customers, tops? Less than one percent of the American population? Heck – less than ONE TENTH of one percent?

    Apple makes fine products but they certainly generated a dizzying amount of free publicity for themselves. Or, if they paid off a lot of people to generate buzz, they didn’t get their money’s worth.

  25. Ray Wert Jr says:

    @Mojosan: And the “I need to defend teh Applez from teh baddies” is strong in the comments.

    @umbriago: Digg isn’t a tech site, it’s a news filter.

  26. RonDiaz says:

    That $2,000 number is just silly, why journalists keep insisting on using it I just don’t know. My “Free phone” cost $1500 then using the same math. No one has ever compared the cost of a cell phone over the course of two years before the iPhone, why do it now. And in actuality it’s unlikely that someone who has a cell phone will ever go without one for the rest of their life so you should say the cost is $30,000 then….

  27. Gari N. Corp says:

    Um, methinks you should be reading your sister site, Dudez…

    [gizmodo.com]

    Rather a pity that the gadget industry seems to have the same weakness for meaningless opening weekend figures as Hollywood

  28. Mojosan says:

    @Ray Wert Jr:

    I’m not defending Apple from the baddies. I’m pointing out the asshattery of saying “And that’s all? Maybe 200,000 customers, tops?” for 2 days of business.”

    Gee, only $110 million dollars worth of phones sold in 2 days. (and, since we apparently now count the cost of 2 years of service in as part of the price of the phone we really should add another $400 million so to that number as well.)

    Only a half billion dollars in 2 days. Yeah, Apple is the suxor. They don’t know what they are doing. Umbragio is the guy who knows how to run a business.

  29. silenuswise says:

    @Mojosan: Is there any particular reason why you tend to repeat the same thing, post after post? When I read your comments it’s like deja vu–here’s a sample:

    But “ZOMG!!! It plummeted $6 because not everyone activated their phone over the weekend!!!”

    “OMGZ! iPh0ne is for teh stoopid! I have the Nokia F300GXturbo and it roCkzr all oVer the iTraSh!”

    The “everything I can’t afford is teh suxor” is strong on this blog.

    Yikes. This forum has a bad case of the “everything I won’t buy is teh suxor!”

    I’m sure they show the same snide adolescent attitude of “LOLz, you shoud have paid teh attenshunz!!!”

    Folks saying “They R teh stoopid!”


    So is this pathological behavior, or just laziness? Whatever it is, the end result is repetitive and boring.

  30. roche says:

    @Slusy: Wow….. You lie and you don’t even try to make it believable. Do you honestly expect anyone to believe the PlayStation 3 only sold 197 units in its first month?

  31. nidolke says:

    You mean, the hip young demographic they were aiming for can’t afford a $9387534 phone & contract? Blasphemous!

  32. banned says:

    @roche:
    I’m sure it meant to read 197k

  33. Chicago7 says:

    Can you buy this phone and not use it as a phone? Just use in wi-fi areas?

    /that may be the answer. Nobody is activating the AT&T.

  34. Nemesis_Enforcer says:

    My boss bought 18 Iphones on the day they came out(before you ask he has connections and $)for select customers as a gift and a few for him and the big cheezes at work. I think there are 3 still being used. The others were returned to him..yeah hes a little PO’d but what can you do.

  35. GrumpyMD says:

    The phone also went on sale at 6 pm, meaning that about 1/2 the day of sales was lost on the first day, and therefore only 1 full day of sales (the next day) was available for AT&T’s accounting. Then, as has been pointed out, the activations were also delayed. So the activation numbers were probably higher than what AT&T stated. How much higher? *shrugs*

  36. Craig says:

    “Among the stores we visited, most visitors were not looking at the device, and only a very small subset bought it.”

    Hmmm, they must have been visiting AT&T stores. At the Apple stores I’ve been too lately the areas with iPhones are always crowded and there’s always at least one iPhone sale being rung up when I’m near the register.

    As for 146,000 phones in two days…given that some customers were experiencing delays of up to 48 hours to get their phones activated I’d expect to see the actual sales numbers closer to 250K-300K. Obviously not up to the hype but still impressive.

    Of course, nothing’s ever going to be good enough for the haters.

  37. oldcootinnyc says:

    As an owner of a hacktivated 8G iPhone you should go with sales figures and not activations.

    Hackint0sh FTW!

  38. viviennet says:

    the two year contract was a really bad idea. No self respecting gadget whore would keep a mobile phone for much longer than a year…

    and the initial price of the phone isn’t necessarily something to balk at. Where I come from (Hong Kong) $500/$600 is a pretty standard sum to pay for a brand new top of the line phone. Plus, most people upgrade within the year!

    Additionally, apple would have done much better with an international launch. seriously Mac nerds… the Asian market is ready and crying for the thing… they have the disposable incomes to afford them too!!!

  39. Lula Mae Broadway says:

    @Ben Popken: Bingo.

  40. royal72 says:

    sensationalist garbage.

  41. pete says:

    Buy, buy, buy.
    Just wait until the 6G iPod drops later this year.
    Apple over 200 by Jan 08.
    Mark my words.

  42. bedofnails says:

    What’s being missed in all of this, is that approx. 40% of those 146K were new AT&T subscribers, signing on for the long haul. The irony, the more Apple continues to push, and market the phone – while offering exclusivity to AT&T, the more AT&T will benefit.

    That is, until everyone realizes they are retarded for buying a $600 device that does each of it’s tasks poorly.

  43. jeblis says:

    Umm more marketing isn’t going to help. Everyone who is interested already knows about it. There not buying because of some combination of the following:

    price, feature set (3g, gps, software), apple haters, stuck in a contract, waiting to see how it does, at&t haters.

  44. ribex says:

    This article immediately brought to mind an opinion piece in the latest (Aug 7) issue of PC Magazine, entitled “iPhone to Flop…Then Fly” by Lance Ulanoff. The main criticisms he identifies (but refutes, mostly): “It was too expensive. Apple shouldn’t have gone with just one carrier. Eight gigabytes is not enough storage. It needs buttons!”

    I have no vested interest in the sales performance of the iPhone – I have no plans to buy one and especially not to switch carriers, but whether Ulanoff’s piece is right or wrong, I’m going to hang on to it and see if his predictions pan out, or not. His final thoughts: “By this time next year, the iPhone will be a blockbuster success. I guarantee it.” Or maybe this guy’s just got Apple stock buyer’s remorse, lol…

  45. adamwade says:

    Well, I’m not Apple’s target audience I guess (those with considerable disposable income to spend on their toys as the re-re-revise them over and over). I still haven’t bought an Ipod. I only listen to music in my car, and I have a CD Mp3 player there. I can get 6-10 hours of music on a CD, that’s enough for me. I’ve been waiting for Ipod’s to break the 200GB mark so I can fit my whole library on one, the only reason to get one for me.

    I’d kind of like an I-phone, but I’m not changing my provider and I am not tripling my bill every month on top of buying one. Like most American cell phone users, the idea of paying for a phone at all is odd to me, and it would have to have WAY more storage for me to consider it.

    It’s also first generation…has Apple not taught us well that in a few months a new, better one will be available? Apple, like a lot of tech companies, underestimates the “I can wait” crowd. Have their ads made me want one? Sure. But it’s not something I need “right now”, and to be honest I’m actively watching for 3rd party phones to have similar features. I only store my music on mp3, so Apple’s proprietary format holds no appeal for me.

  46. Wormfather says:

    @Falconfire:

    Well said.

  47. Antiwarhero says:

    Not only that but AT&T is the governments lapdog and will send all your info to the NSA. Good times there.

  48. First: Please quit with the “phone that costs 2000$!!!!” crap, or at least explain that it means “500$ for a phone + 1500$ in 2 years worth of service which you would be paying a large fraction of anyway.” I don’t have a smartphone and I pay about 750$ annually in phone bills.

    Yes, AT&T sucks, and yes, the iphone is mad overpriced. We get it. But at least be intellectually honest when bashing them. While their service and ethics are shit, they do still give you SOMETHING for your 60$ a month.

    Second: A 7 dollar slide is not a plummet, the price was overinflated and it’s better described as a correction.

    Third: Apple has not issued their own earnings statement and are expected to today. After announcing what will likely be better than expected margins on ipods and mac sales, watch the price bounce back up.

  49. FreakyStyley says:

    @bedofnails: “That is, until everyone realizes they are retarded for buying a $600 device that does each of it’s tasks poorly.”

    Hardly. The iPod is good, Safari is good, and the phone works as a phone should.

  50. iSleipnir says:

    This is ridiculous. Apple has generated so much hype for a product that less than .05% of the US population actually bought? Why the hell was I flipping past spotlights on the iPhone in the news for like a week then??

  51. iSleipnir says:

    @freakystyley

    actually the iPhone was recently hacked through the safari browser giving complete access to the phone and it’s contents, including all personal data. I’m sure it’ll be fixed but just saying…

  52. NickRB says:

    The official numbers were released by Apple today. They sold 270,000 phones in the first two days. Now that’s not 48 hours, that’s in the first 30 hours it was on sale. They sold 2 phones every second for the first 30 hours. That is PHENOMENAL. They expect to hit the 1 million mark by the end of 4th fiscal quarter, which of Apple is on September 30. That would make it the fastest selling phone of all time. I think that is quite a success story.

  53. PandemicSoul says:

    Marketing is not the issue — it’s the foolish total cost of owning the phone and AT&T’s piss-poor service.

  54. Charles Duffy says:

    @markwm: I can buy an unlocked (older) Blackberry for $90 online. No contract attached, hence no sky-high TCO for the phone. If I want to operate it, obviously, I’ll be paying some money — but because the service contract isn’t bundled, I don’t need to pay it as part of the phone. (Also, being able to use any provider who will give me a SIM means I can get much cheaper service than the cheaper plan available for an iPhone). (Also, I’d be much more inclined to pay for the phone if I could take it with me to a smaller telco like Cricket — but they’re CDMA, so not much chance of that; maybe in five years, if Google’s lobbying efforts are successful).

    Me, I want an iPhone — but the 2-year contract makes it just too expensive. (With my wife getting ready to go back to school, the $600 hurts too).

  55. veggiespam says:

    People keep saying that iPhones “really” cost over $2000. So, I wonder what a non-iPhone “really” costs.

    Verizonwireless.com offers a basic data plan for $79.99 month. A “nice” phone, the Motorola Q, is sold for $180 after rebate. Thus, a “real” cost of $180+24*80 = $2100 ($87/mo)

    The iPhone is $499 for the low end model plus basic data plan at $59.99. So, $500+60*24 = $1940 ($80/mo)

    Is it me, or is the iPhone cheaper than the competitor’s phone that actually has less memory and a smaller feature set? More megapixels on the camera, more pixels on the screen, finer dot pitch, longer battery, 4.0000GB vs 0.0625GB, etc.

    I’m glad I bought lots of AAPL after the whole “only 150,000 registrations” and the big “panic.” It was on the market for 30 hours and people were expecting half a million? After hours, AAPL is up over 15; giving me enough money to pay for two iPhones (including the above “real cost”).

  56. FLConsumer says:

    Anyone know how much Apple blew on marketing this thing? I know it has to be up there.

  57. markwm says:

    @Charles Duffy:

    Yes, _you_ could do that. However, the average phone user would not do that. The typical phone user wants a brand new phone as cheaply as possible, and is willing to sign a two year contract. The person who is happy with an older Blackberry is not Apple’s target market. Their target market is the person who wants to be on the bleeding edge of technology and is willing to spend the money for it. This is the person generally unconcerned with signing a contract, so the TOC becomes a moot point, and to continue mentioning it is disingenuous.
    Add to that that the rate plan for the iPhone, including the data connection, is actually cheaper than most data rate plans out there for comparable devices.
    And remember, this is coming from an Apple hater.

  58. Mojosan says:

    Apple stock rose today more than it “plummeted” yesterday.

    Will we see a “Apple stock skyrockets” post today?

  59. Soultrance says:

    AAPL up 5.4% on the day. I’d say they’re doing fairly well.

    2 biggest issues with the iPhone are obvious.

    1 – High Price
    2 – Forced to use and sign a contract with AT&T

    I still think the amount they did manage to sell and activate is quite impressive.

  60. m4nea says:

    i could be misaken, but i actually read that apple’s stock went UP…
    …due to excellent sales overall…

    :)