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AmTech: iPhone to become fastest selling Apple product in history

While acknowledging that Apple Inc.'s iPhone is not without its assortment of initial flaws, analysts for American Technology Research say the multi-function handset is likely to become the fastest selling product in Apple's history, trumping even the iconic iPod nano.

"Our sources indicate that iPhone will likely become the fastest selling product in Apple's history and not to mention likely among the fastest (if not the fastest) in consumer electronics," analyst Shaw Wu informed clients in a research report published Monday. "We estimate sales of about 250,000 units in two days (up from our previous view of 50,000). The previous fastest seller was iPod nano, which sold about 1 million units in about 17 days meaning, about 59,000 units per day."

From a "big picture" standpoint, Wu said iPhone represents the start of a potential revolution in both PC and mobile electronics industries, given his view that the device is not just a classic old school product in that "it is landscape changing, being the first true convergence device that combines the best media player (widescreen video iPod), a near full-function web browser (Safari), e-mail/contacts/calendar, and a cellular phone."

Over the next 2-3 years, the analyst believes Apple has the potential to become a top selling "smart" phone vendor, which could leverage the mobile category into the mainstream just as the company did with the iPod and portable media players.

During Wu's tests, he was most impressed with the user interface (UI), Safari web browser (particularly on Wi-Fi), and widescreen video Pod. He advised clients that the handset "offers by far the best internet experience on a smart phone (where we find [it] most unusable) and the closest thing to surfing on a PC."

"For the UI, we find the 'pinch in' and 'pinch out' to zoom in and out particularly innovative and we also like the simplicity of a single 'home' button to press in case one gets lost," he wrote. "And finally, we agree with Apple that it is the best iPod ever, but we believe the relatively small 4 GB and 8 GB storage capacities and shorter mixed usage battery life will limit cannibalization of stand-alone iPods."

While the AmTech analyst remains upbeat on iPhone and its prospects, he admits the product isn't without flaws. In particular, he found the virtual keyboard somewhat difficult to use and likely to require some practice. Additionally, he said, the battery life could be better.

"In our extreme testing conditions (in which we were literally using the product non-stop given our excitement), we get battery life closer to 3 1/2 hours," Wu wrote. "We noticed web surfing uses up the most battery life. When we get to more normal use patterns, we envision charging the iPhone every 1-2 days, similar to other smart phones."

The analyst also found iPhone's $499 and $599 price points to be "somewhat steep" and suggests that Apple round out the handset line similar to what has been done with iPod and Macs — with high-end, mid-range, and low-end offerings.

Wu was unsurprised with the mixed reactions thus far surrounding the iPhone's virtual keyboard. "As we have mentioned in previous notes, there is a learning curve," he explained. "We find the multi-touch interface radical and revolutionary, which reminds us of the original Apple mouse in 1984. Back then, the feedback was that it was a toy and why would anyone want to use a mouse and icons when text and a keyboard were better."

"We all know what happened to mice and icons since then," Wu added.

Given his analysis of current and future iPhone sales, the analyst on Monday raised his unit, average-selling-price, and margin assumptions regarding the device due to a favorable sales mix towards 8GB models. "We are now modeling 250,000 units for the June quarter (up from 50,000) meaning we estimate Apple sold 125,000 iPhones per day, the fastest selling product in Apple's history, beating the previous best of about 59,000 iPod nanos per day," he told clients.

For the 2007 calendar year, Wu is now modeling Apple to sell 2 million iPhones (up from 1 million) and for 2008, 7 million (up from 5 million). In addition, he believes the company's gross margin is benefiting from a favorable component environment and MacBook pro refresh.

For fiscal 2007, the analyst's model calls for $23.5 billion in revenue and $3.50 in earnings-per-share (from $23.3 billion and $3.45) and for fiscal 2008, $30.2 billion and $4.10 (from $30 billion and $4.00).

"For the June quarter, we are now modeling $5.3 billion in revenue and $0.73 in earnings-per-share (from $5.22 billion and $0.70)," he wrote.

Don't forget to check out AppleInsider's own in-depth iPhone review.