Apple iPhone Sales Fail to Meet Expectations, Stock Drops
July 24, 2007 by Susan Gunelius
Filed under Marketing
In a crushing blow, Apple’s (NASDAQ: AAPL) stock price dropped by $5.70 after AT&T (NYSE: T), the exclusive iPhone wireless carrier, announced iPhone activations totaled just 146,000 subscribers during the first two days the product was available. That number was significantly lower than the 400,000 to 500,000 subscribers analysts anticipated.
All is not lost for Apple and AT&T. Activation problems and eBay sales could mean many activations were delayed beyond the first two days the product was on the market. Still, I can’t say I’m surprised by the low numbers. With a price tag of $500, the iPhone isn’t going to fit in the budgets of the masses. It’s a cool toy but hardly essential. Also, consumers are educated about electronics these days. They know if they wait a little longer, the prices will drop. There is little need to rush into laying out $500 when that price will plummet not too far into the future. And of course, there is always the question of how AT&T is negatively impacting sales. Their wireless services are not known for top-notch coverage or customer service.
It remains to be seen how iPhone sales will turn out in the long term, but initial negative reports such as these very low early activation numbers do not look good for the Apple brand. Again, I think most people thought the hype was more than the product could actually produce in terms of sales, but it seems analysts felt differently. Sometimes, common sense goes a long way. Afterall, great PR and marketing can only go so far if the price is too high.
What do you think? Why do you think iPhone activations haven’t hit the goals that were set? Are you surprised by this report?
Read more about the Apple iPhone on Brandcurve:
Apple iPhone: The Surveys Are In
Apple and AT&T Launch New iPhone Commercials
I think the 1st Gen iPhone is really cool, but for the price tag and the Service charges (over $3,000 to get the full iPhone experience) is way to high.
When the Second Gen iPhone comes out and they work all the bugs out of it and get the phone on different carriers it will be well worth buying.
As usual, a new electronic device comes out and it is assumed that all will want it so they can say they have it; but, people see the price and decide to wait until it comes down. People are getting sick and tried of being taken in the the companies and will wait for the price to come down.
IMHO, the iPhone is going to hurt Apple’s brand as being based on simple products that work well and are of stout engineering/design. When I looked at the CNET reviews (or perhaps another site?) after 500+ had been posted, the iPhone only had a 6.something out of 10 average rating. It’s hardly surprising then that it’s not flying off the shelves. If Bill Gates is watching, he should take note for the future development of MSN products (which, come to think of it, could be powered by VOIP, since his company is already in the online space…).
By the way, I wanted to thank you for the kind words you posted on my summary of blog search. Come back anytime!
The iPhone definitely appears to be a situation where the brand will be hurt in the short term. Hopefully, for Apple, the second generation will work better and be cheaper. It all goes back to common sense. The analysts must have gotten taken in by the hype behind the iPhone, because common sense said it wouldn’t bring in the numbers people were speculating.