A billion-dollar weekend for Apple
Posted
Jul 08 2008, 07:11 AM
by
Kim Peterson
Rating:
Apple's new 3G iPhones go on sale Friday, which means that after months of little to no revenue from phone sales, Apple will finally be milking the iPhone cash cow once again. We could be seeing a billion-dollar weekend for the company. Still, while Apple is primed for a massive launch day -- 22 countries will participate -- I expect a bit of chaos will reign, at least in the U.S.
The problem is that iPhone buyers will have to buy and activate their phones in either an Apple or an AT&T retail store (AT&T is the iPhone's exclusive carrier partner in the U.S.). That's a strategy intended to prevent people from unlocking the phones and reselling them. If you've activated a cell phone in a store recently, you know it can be a huge pain. It takes 10 minutes at least to get through the paperwork, the credit check and the back-and-forth yadda yadda before you walk out the door. Even if AT&T makes the iPhone activations as pain-free as possible, I foresee lines of disgruntled shoppers who are tired of waiting.
Meeting initial iPhone demand could also be a challenge for Apple. An iSuppli analyst predicts the company needs to have between 1 million and 2 million units ready on launch day. Apple isn't saying how many phones it has in stock, but that amount will go a long way to meeting the company's goal of selling 10 million iPhones by the end of this year.
News.com has a nice post answering many iPhone launch questions. The new phones will cost $200 or $300, depending on how much storage space you want. If you don't want to be strong-armed into a two-year service contract with AT&T, you can pay $600 or $700 for the phones on a commitment-free basis.
One analyst thinks Apple brings in between $350 to $700 for each 3G phone sold, with the carriers passing a subsidy down to the buyer. Another analyst averages Apple's revenue at $466 per unit. If that's the case, Apple could get close to $1 billion in revenue over the weekend if it sells 2 million units. And that's not counting any revenue the company brings in from sales at its online "App Store."
I suspect Apple is leaning heavily on carriers to make the weekend go as smoothly as possible.
Related reading:
Answering your iPhone questions
Apple's big iPhone news
Comparing the iPhone's "true" price
iPhone subsidy ripples across industry
