The Street - Apple has a hard road to 10 million iPhones

Financial journalists/analysts are never ones to let facts get in the way of a good headline. At least, that’s the only logical explanation for this article.

Priya Ganapati, Apple will not have to avg 2.5 million phones a quarter to reach their goals. Their goal wasn’t 10 million phones sold in 2008 - it was 10 million phones sold by the end 2008. They have already sold 4 million. That leaves 6 millionlion more to reach the goal, with a year. That is 1.5 million per quarter, not 2.5 million.

Additionally, Apple makes such good money on the contract, that they can afford to (if needed) drop the price $50 or $100 on the phone to increase sales. I’m sure they will probably do that anyway once the 3G version intros later this year.

Jeesh. These people deal with numbers all day. You think they could get something as simple as this right.

Update: Priya writes back:

Ted,

Thanks for the note. In its F1Q07 earnings call, Apple made it clear
that Steve Jobs was referring to calendar year 2008 for the 10 million
target.

Here’s the relevant extract from the conference call and below is the
link to the entire transcript.

—-
Operator

We’ll go now to Gene Munster with Piper Jaffray.

Gene Munster - Piper Jaffray

Good afternoon. First in terms of the iPhone, Steve Jobs talked about 10
million units. Is that for fiscal ‘08 or calendar ‘08? Where did that
number come from? Maybe just a little bit of logic behind that number.

Tim Cook

Gene, calendar year ‘08 is what Steve referenced in his keynote. The
point that he made was that the worldwide market for total cell phones
is somewhere around 1 billion and our objective of getting 1% of it
would yield 10 million units across the calendar year.

——–

That’s what I get for missing the conference call. Still, Jobs did state at the MWSF 2007 keynote that the 10 million figure was for 2007-2008 sales. Why Apple went forth and changed that to 2008 sales only is beyond me. Obviously they feel they can make that target. I still think it’s doable. With new markets such as Japan, China, Latin America, Ireland and other parts of Europe yet to come online, the sales rate is only going to increase. Sure, a sluggish US economy can stall the projection a bit. But new models and price reductions (which are probably planned regardless of any downturn in sales) will help to reach the goal.

Posted: January 30, 2008 / Category: News