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Tracking down Apple's missing 1.4m iPhones

Apple says it has shipped four million iPhones since launch. With just short of two million AT&T customers using the device, however, one analyst suggests that a large number of the handsets are mysteriously unaccounted for.

Toni Sacconaghi of Bernstein Research observes in a note to investors that the gap between Apple's shipment claims, AT&T's subscription numbers, and European projections should leave roughly 1.4 million of the devices to be split between unlocked devices and those simply idling on store shelves.

While European sales have not been detailed in full, they're unlikely to have represented the majority of that remaining amount, the researcher says. If claims of 190,000 UK iPhone sales are accurate and are combined with official results of 70,000 French models and a similar number from T-Mobile Germany, Apple will have sold approximately 350,000 devices outside of the US — well short of filling the gap left by AT&T's customer base.

The gray market for unlocked iPhones is also unlikely to explain the difference, Sacconaghi says. For its summer quarter, Apple reported 250,000 likely unlocked iPhones in its sales figures, or about 18 percent of the inventory shipped at the time. Assuming about 20 percent of iPhones were unlocked — a 'generous' amount, the analyst adds — this would only account for about 750,000 of the 1.4 million phones and leave about 670,000 of the phones "missing in action," according to the note.

For Sacconaghi, this points to the potentially worrying prospect that a significant number of iPhones remain in Apple's channel inventory, whether at its warehouses or at retail locations. If all the 670,000 handsets were to land at the carrier-specific distribution points around the world, this would leave as many as 150 iPhones at each store by the start of 2008.

This excess stock may be partly absorbed by Apple's own inventory but could run higher still if the company has successfully reduced the number of iPhone unlocking attempts through successive firmware updates or by controlling the number of phones sold at once. If just 10 percent were sold unlocked in the last quarter, it would leave more than one million iPhones unexplained and as many as 238 iPhones unsold per store.

Ratio of unlocked iPhones to leftover inventory

Apple has not provided an explanation for the apparent shortfall. Regardless, the Bernstein report suggests the possibility of cooling demand for the iPhone that is at least partly masked by official shipment numbers, which only indicate the number of products leaving the company's factories.

"This is negative in two ways," Sacconaghi elaborates. "It indicates end-user demand for iPhone is lower than many investors may think based on Apple's [four million] sales figure... and it points to slower iPhone sales in the current quarter, since much of this inventory is likely to be drawn down."



65 Comments

photomacuser 17 Years · 11 comments

The one bit of information missing from AT&T is if they are only counting new accounts? What about all the people, like my friend who already had AT&T, bought an iPhone from Apple and Activated it on his existing account? Hmmm?!

I dumped my Verizon, paid the $150 termination fee and never looked back. This device it miles ahead in terms of usability and function. AT&T has better service in my area than Verizon does (hard to believe but TRUE).

tbaggins 18 Years · 2304 comments

Ah, so it's 4 million iPhones SHIPPED, not SOLD.

That's an old video game console trick, a la Sony and Microsoft. Shoulda seen that one. .

matthew yohe 19 Years · 298 comments

Quote:
Originally Posted by PhotoMacUser

The one bit of information missing from AT&T is if they are only counting new accounts? What about all the people, like my friend who already had AT&T, bought an iPhone from Apple and Activated it on his existing account? Hmmm?!

Reuters: AT&T Inc, the exclusive U.S. carrier for Apple Inc's iPhone said on Thursday it ended 2007 with "just at or slightly under 2 million iPhone customers."

tbsteph 17 Years · 95 comments

First off, I think this is a tempest in a teapot. VERY unlikely AAPL would mistate iPhone sales results. Second, in addition to unlocked phones sold how about those sold which have not been activated?

SpamSandwich 19 Years · 32917 comments

Quote:
Originally Posted by TBaggins

Ah, so it's 4 million iPhones SHIPPED, not SOLD.

That's an old video game console trick, a la Sony and Microsoft. Shoulda seen that one. .

OMG. Expect AAPL to get pounded again tomorrow. Investors are finally taking full advantage of kicking Apple's butt. Ouch.