Why Apple's iPhone sales aren't really that RIMarkable
By Julian Prokaza on Wed 22 October 2008
10 Comments
For anyone who's followed Apple's fortunes over the years, the transformation of the company has been remarkable. And that's not just a statement about its finances – it long ago shook off the "beleaguered" tag of the late 90's – but also describes the core of the company's business.
Ten years ago, it made computers. Now it's the iPod company, and with the incredible results it posted this week, it's probably fairer to call it "the iPhone company". In a year, phones have gone from almost nothing to providing 39% of its revenues. No one else has managed to make this transformation from computer company to consumer electronics business so successfully. But not quite so successful as some web sites would have you believe...
To get an idea of just how big the iPhone 3G launch was it's worth comparing this quarter with the previous one. In the quarter which ran from April to June, Apple sold only 717,000 iPhones, as demand dwindled in anticipation of the 3G model and as it ran its own stocks down. This quarter, the company came close to trebling its previous record for iPhone sales, when in the three months leading up to Christmas 2007 it sold an impressive-sounding 2.3 million phones.
By any standards, this is massive growth. But if you take a look at the circumstances which surround it, it's perhaps not as surprising as it appears at first.
The first thing to consider is coverage. Officially, the first-generation iPhone was available in only a handful of countries, primarily the US, UK, France and Germany. Apple launched the 3G model in 22 countries on the same day, and is expanding this to over 70. This means that the number of people who could potentially buy an iPhone has jumped from around 500 million to something in the region of 2.5 billion. With a jump in availability that high, you're always going to get a big increase in sales.
Secondly, in the markets that the iPhone was already covering, there was significant pent-up demand. The iPhone 3G was announced at the beginning of June, which almost certainly means that sales dried up to nothing for a month while consumers waited for the new model. Effectively, this means Apple has managed to squeeze four months of sales into a single quarter's results - a neat trick, but one which it can't do in every quarter.
This goes part of the way to explaining one of the points brought up by Steve Jobs on the conference call it held to announce its results. According to Jobs, iPhones outsold Blackberry by quite a significant number over the quarter. Here's what Steve Jobs said, in full:
In their most recent quarter, Research in Motion, or RIM, reported selling 6.1 million BlackBerry devices. Compared to our most recent quarter sales of 6.9 million iPhones, Apple outsold RIM last quarter and this is a milestone for us. RIM is a good company that makes good products and so it is surprising that after only 15 months in the market, we could outsell them in any quarter.
There are a couple of points which are worth making. As Joe Wilcox first pointed out, RIM's quarter and Apple's quarter don't cover the same period – Apple's ends 27th September, RIM's 30th August – which means that you can't really make a like-with-like comparison here.
But even if you could, it's worth bearing in mind how circumstances surrounding the quarters have differed for each company. While Apple had the massive launch of the iPhone 3G to promote, RIM, on the other hand, effectively had no major launches in its quarter – the BlackBerry Bold has trickled out across a few markets, but is still not available in the US. Given its lack of new launches, a 6.1 million sales figure looks pretty credible.
That's not to say that Apple isn't outselling RIM, or that the iPhone isn't a big success. They probably are, and it is. But judging the relative strengths and weaknesses of the two companies and their products on the basis of a single quarter's results is impossible.
We'll get a far better picture of how Apple is doing in its rivalry with RIM over the next two quarters, as the BlackBerry Bold is launched into more markets, and the BlackBerry Storm makes its debut. Whether Apple overtaking RIM is a one-off or a sign of a real change in the market remains to be seen.
Comments
I see. So because the quarters are shifted by 27 days, that means that Apples' results, nearly 5 billion in iPhone sales, aren't that great.
What IS great, is the creativity of Apple haters and Microsoft propagandists. There isn't anything from Apple they can't find some way to $h*t on.
You neglect to consider some of the issues that point to more blockbuster iPhone quarters ahead for Apple.
Blackberries are available through over 320 different carriers in over a hundred countries worldwide while the iPhone started this quarter with mostly single carriers in only 27 countries and has only now reached 57 countries at this point with another 23 coming soon: http://www.apple.com/iphone/countries/
The huge Russian market was only just added in the last few weeks and China is still yet to be signed up.
Add to that the fact that many customers in all of these countries are waiting for their old contracts to finish and you have a recipe for a great deal more expansion ahead for Apple.
As far as RIM
(looks like this form does not like apostrophes. Here we go again)
Over five thousand apps in just 3 months now available in the iPhone App store and RIMs third party app market is looking distinctly under-performing.
No, I think the chances are that this is not the end of the iPhones escalation.
It is a juggernaut no matter which way you look at it. Looks like the dominance of the the iPod was no fluke.
-Mart
For the past 3-4 years Apple has sold over 2x the number of iPods in the quarter leading up to Christmas as the quarter before.
Last year, this same phenomenon happened to the original iPhone. The odds are very good that this will happen for the current iPhone 3G as well so we could be looking at a doubling of iPhone 3G sales this quarter.
http://daringfireball.net/2008/10/the_phone_company
Of course Blackberry, being foremost a business phone does not see this same Christmas surge so on yet another count it looks like Apple will continue to outstrip RIM heading into the future.
Very impressive.
-Mart
Ian, you should know better than to quote somebody out of context - especially when a full transcript is readily available:
[url]http://www.123jump.com/market-update/Apple-Q4-Earnings-Call-Transcript/29865/21[/url]
Steve said what you quoted, and then went on to say:
"Now, both of these things, beating RIM in units and becoming the third largest mobile supplier in revenues are amazing feats but part of this was the result of expanding into over 50 countries and there
Zato, read what I wrote: Apple's results are incredible. They are the only company that has managed to make the transformation from computers to consumer electronics successfully. Does that sound like "Apple hating" to you?
Those are good points, Martin, and you're probably right. I suspect that for the next couple of years, the market will be Nokia at number one (it has a lot of impetus) with RIM and Apple jousting for number two spot.
And Christmas will be a big one: if Apple maintains this level of sales in this quarter, they'll really have proved that the iPhone 3G's success wasn't just due to short-term factors.
That's quite correct, Dave, and I don't think Jobs was trying to mislead when he highlighted the results (he'd be in trouble if he had, given the context of the call).
But read the coverage that the iPhone's sales have got elsewhere, and you don't see much of Jobs' caveat either. What you do see is a lot of flag-waving about how Apple is beating RIM, and that's more than a little unfair to RIM.
you people only talk about USA..there are more country in the world, ans this mean more Millions of people, that use phones..millions in Australia ,China , Japan, england , france, germany..russia..etc etc..and there the Iphone is not a big thing !! heyy im not apple hater...just telling the world is not only USA ,,,you should the waht happen in the rest of world about "sales".
Innovation.
The iphone is the epidemy of innovation. It's the first of its kind. That's not saying that RIM won't be successful with the Storm...but you gotta give credit to apple for resetting consumer expectation...and that's why the iphone is a huge success...not just because of the sales.
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