The iPhone will be launched in the US in June, according to Steve Jobs, and given his bold prediction of selling 10 million iPhones in 2008, its now time to think whether this is achievable.
There’s plenty of opinion on whether Apple will sell 10 million iPhones in 2008. Alex Zaharov-Reutt in Why Apple will sell 10 million iPhones in 2008 thinks so, while Eric Zeman in Can Apple Really Sell 10 Million iPhones?, the Gizmodo article by Matt Buchanan Forbes Analyst: 10 Million iPhones? Good Luck, and Lance Davis in Why Apple won’t sell 10 million iPhones in 2008 doubt it.
The question is, what will it take to sell 10 million iPhones in 2008?
First, let’s look at the likely scenario in the
AT&T has about 65 million subscribers. Let’s say that on average, customers buy a new phone every 2 years (cellular contracts are usually 1 year or 2 years), so every year AT&T will sell about 32 million phones. According to In-Stat “Future Cell Phones: The Big Trends, 2005 -2010” of March 2005 (a bit dated), only 2.3% were interested in spending more than $400 to purchase the next wireless phone. Even at $300+, only 5.1% are interested. At the current iPhones prices of $499 and $599, if each of the 2.3% willing to spend more than $400 buys an iPhone, that’s still 736,000 iPhones over a 12 month period. Of course, not everyone in this category will buy an iPhone.
Then again, because it is such a hip product, one could expect some upshifting, particularly from those who were looking to purchase an iPod. Let’s say an iPod is $200 (at apple.com iPod is $249 and iPod nano is $149), then the incremental cost of an iPhone is $300. Still the numbers aren’t that high.
We could also expect customers to switch from other cellular carriers just to have the iPhone, but they
Other issues that may limit uptake: iPhone is on a new operating system and has yet to form a developer community that can optimize the vast store of games, content and apps for the iPhone. The iPhone’s iTunes software synchs directly with the phone via a USB cable, just like a normal iPod, despite other connectivity features the iPhone sports like Bluetooth, EDGE and Wi-Fi.
Internationally, it is much more feasible. Alex even says that “Far from hindering Apple’s entry into the market, cell phone networks worldwide are likely clamoring the chance to be Apple’s partner in their country or region’s iPhone sales”. Also, Europe and
I have no doubt that iPhone will be a big hit among many customers, but I really doubt that it will have a great impact at $499 and $599.
To sell 10 million iPhones in 2008, Apple had better come up with
- iPhone 2.0 (Cellular Broadband, availability of games, content, and applications)
- More carriers and more distribution channels
- And most importantly, reduced prices.