Why the Missing iPhones Really Matter
In the Phone different forums, surur (with the help of marcol) has posted up some fine analysis on the question of all those missing iPhones we mentioned a couple weeks back. The question: whether or not iPhone sales had slumped over the holidays (they didn't), but more importantly, how big is the gap between what Apple says they've sold and what AT&T says they've sold. As you can see in the graph above, it's a big gap that's getting bigger.
I'd previously doubted that a significant part of that gap was unlocked iPhones and unsold inventory. It seemed like the 1.5 million gap had to be some error in reporting or other such strangeness. But based on what analysis is available, it's starting to look like "unlocked and unsold iPhones" are exactly what makes up that gap.
The real question, then, is what the ratio is of unlocked to unsold. Actually, the real question is what does this gap tell us about how Apple is going to be able to talk about the iPhone. Read on for the answers to both questions, after the break!
BusinessWeek has done some analysis. Once you factor out the iPhones sold "legit" via European carriers, the data suggests that as many as 800,000 iPhones have been purchased, unlocked, and shipped overseas (many to China). It also suggests that somewhere around 400,000 iPhones are sitting in inventory somewhere. That's an awfully high number (at least for Apple), but no big deal compared to many other of AT&T's SKUs. It basically works out to around 3 weeks of inventory, which is again slightly high but not at panic levels -- though one wonders how that inventory of 8 gig iPhones will move now that the 16 gig has been released.
I make no claims about the accuracy of the above numbers, but I think they're fairly close. Wouldn't it be nice if I didn't have to make that disclaimer?
The thing that I'd like to see, and that I doubt I'll ever get, is a clear explanation from Apple. The gap seems to have given investors the willies, but it's not exactly going to calm anybody down if Apple talks directly about two things that look bad on their face: unsold inventory and iPhones that aren't bringing in residual income via carrier agreements. Like so many companies who have to sell via carriers, Apple is in the awkward position of not being able to be as transparent as they otherwise might be regarding the financials behind their product.
Again, "not being transparent" is nothing new for Apple. They don't, for example, make a habit of detailing exactly what ratio of the types iPods go into their sales numbers. The iPhone situation feels different, though, because Apple has made a deal with AT&T that may last for as many as 5 years. The confusion here feels, heart-sinkingly, much like the confusion that Palm sometimes is forced into because of their deals with various carriers.
The whole situation solidifies my feeling that Apple missed an opportunity to shake up the wireless industry business-wise in a way that benefits consumers. What's best for consumers is to make carriers into dumb tubes for our data and calls. Though I can't fully fault Apple for not trying to take down that system, I do wish they hadn't introduced another layer of confusion and
payola "synergy" into it.
The counter-argument is that if you have no choice but to make a deal with the Mafia, you might as well get a piece of the action. I have to say it's a compelling argument and I can't pretend I would have done differently in Apple's place. At least we know that Google's demands for openness on the new wireless spectrum auction will have to be met. As soon as their deal with AT&T allows it, Apple needs to jump on the open wireless access bandwagon with Google.