June 4th, 2007
iPhone: Are 10 million units in 2008 too optimistic?
The iPhone frenzy has begun, but let’s cut to brass tacks: Can the iPhone really ship 10 million units in 2008?
That 10 million figure is what Apple is tossing out there as expectations for iPhone sales (see conference call transcript confirming the figure). Adrian Kingsley-Hughes notes that the 10 million benchmark is a big hurdle. These expectations present an interesting conundrum since Wall Street expects more than 10 million iPhone units to ship. To Wall Streeters 10 million units would be a failure.
Meanwhile, the expectations for the iPhone are reaching frenzy proportions leading up to the June 29 launch (see Techmeme).
Adrian writes:
It’s usually bad luck to bet against Steve Jobs, but I still find it hard to see how Apple is going to shift 10 million iPhones in 2008.
I agree on both counts. For starters, Adrian is a bit nutty for doubting Jobs. Then again I’m also doubtful of the 10 million unit mark. To be sure, the 1 million unit mark for iPhone is a no-brainer–Apple’s core customers will buy 1 million iPhones easily. In fact that’s part of Apple’s secret sauce. Apple has a core customer base that will buy the first 1 million units of whatever Jobs cooks up. That fact means Apple can move up the learning curve much faster and perfect the device.
Other companies struggle to ship 1 million units. Given Apple’s customer base it gets to 1 million units just by adding water.
But for 10 million iPhone units a lot of things have to go right. Among them:
- Apple needs to ramp up production quickly.
- The iPhone needs a ready supply of parts.
- Apple needs to overcome sticker shock. For Apple’s core users paying $499 to $599 for an iPhone is a given. But other customers are likely to be cost conscious.
- Apple is in bed with only AT&T. If other network providers–Verizon, T-Mobile et al.–I’d be more inclined to buy the idea 10 million units.
Perhaps everything will go right but expectations for the iPhone don’t allow for anything but perfection.
Larry Dignan is Editor in Chief of ZDNet and Editorial Director of ZDNet sister site TechRepublic. See his full profile and disclosure of his industry affiliations.
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