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Monday, October 22, 2007, 04:00 pm PT (07:00 pm ET)

Apple won't pursue Circuit City; 250,000 iPhones sold to unlockers

During a conference call marred by technical glitches Monday evening, Apple did manage a handful of interesting revelations, mainly that it will not pursue a relationship with Circuit City for Mac sales and that an estimated 250,000 iPhones were sold to buyers who intended to unlock them.

The focus is Best Buy

Apple, which last year initiated a pilot program to test Mac sales at a handful of Circuit City stores in the eastern U.S., said Monday that it has decided not to continue the program with the electronics retailer at this time.

Instead, the Mac maker said it will focus the majority of its energies towards its growing relationship with Best Buy — the nation's No. 1 electronics specialty retailer and Circuit City rival.

Apple said it ended the September quarter with store-within-a-store boutiques at 230 Best Buy locations and that it plans to expanded that number to 270 locations by the end of the calendar year.

In recent months, the company has begun fitting some of its higher profile Best Buy locations with radically improved Apple store-within-a-store concepts. These isolated Apple display areas sit ahead of the retailer's computing department and feature mini theaters that pack stereo speakers and an embedded LCD display flanked by two glowing Apple logos.

Apple began its Best Buy pilot about three months ahead of its Circuit City effort in June of last year.

A quarter million unlockers

If you thought Piper Jaffray analyst Gene Munster was overdoing it when he estimated that 10 percent of iPhones sold by Apple retail stores in September were destined to be unlocked, then you may have to pick your jaw off the floor when you hear Apple's own guesstimate.

The company said Monday it believes that 250,000 — or more than 17 percent — of the 1.4 million iPhones sold thus far were bought by customers who intended to unlock them. The vast majority of these purchases came following September's massive price cut on the touch-screen handsets, the company added.

Apple's multi-year exclusive agreement with AT&T includes a revenue share agreement on the data and service fees AT&T charges iPhone customers. Obviously, Apple would not receive its portion of the proceeds under this agreement from unlocked versions of the iPhone, as those handsets would not be operating on AT&T's network.

More details from Apple's Q4 conference call have been compiled in a separate report.