Report: 10 percent of September iPhones sold to unlocking teams
Analysts for investment bank Piper Jaffray recently spent more time tracking unit sales at Apple Inc.'s retail stores and reported Thursday that their observations indicate that as many as 10 percent of the iPhones sold by the stores during the month of September were being purchased with the intention to be resold unlocked.
"In late September we spent 12 hours counting iPhone, iPod and Mac sales in Apple stores across the country," analyst Gene Munster wrote in a research note to clients. "During our store checks we noticed many people buying iPhones in the maximum 5 per customer allotments, which we believe were being purchased to be unlocked and operated on carriers other than AT&T."
The analyst said this trend was especially noticeable in the New York City stores, where one Apple employee acknowledged that customers were buying five iPhones per store visit in order to turn around and resell them unlocked.
"At one point during the visit, the store sold out of iPhones," he added. "Judging from our checks, as much as 10 percent of the iPhones sold in September were purchased with the intention to be resold unlocked."
Munster went on to note that on September 27th Apple released iPhone software version 1.1.1, which rendered most of the unlocked phones inoperable and in doing so effectively minimized the market for unlocked iPhones. Just prior to this move, however, he said that iPhone sales at Apple retail stores had stabilized at an approximate 56 percent increase to the rates witnessed just prior to the handset's significant $200 price cut on September 5th.
Meanwhile, the analyst and his team were also tracking unit sales of Macs and iPods at the company-owned stores.
Since his last round of checks in the July and August timeframe, Mac momentum appeared to have slowed some 39 percent. But this "makes sense," he said, given the passing of the strong education-related shopping season in August. He continues to expect Apple to report September quarter Mac sales of approximately 2.0 million to 2.1 million versus the Street's consensus of 1.95 million.
While Munster did not have data from August with which to compare his September iPod checks, he was able to provide some observations on the breakdown models.
"Of the iPods we counted, 39 percent were nanos, 36 percent touches, 16 percent shuffles, and 9 percent classics," he wrote. "We continue to believe iPods are tracking to the Street consensus in September of 10.6 million [units]."
The Piper Jaffray analyst maintained his "Outperform" rating and $211 price target on shares of Apple.
"In late September we spent 12 hours counting iPhone, iPod and Mac sales in Apple stores across the country," analyst Gene Munster wrote in a research note to clients. "During our store checks we noticed many people buying iPhones in the maximum 5 per customer allotments, which we believe were being purchased to be unlocked and operated on carriers other than AT&T."
The analyst said this trend was especially noticeable in the New York City stores, where one Apple employee acknowledged that customers were buying five iPhones per store visit in order to turn around and resell them unlocked.
"At one point during the visit, the store sold out of iPhones," he added. "Judging from our checks, as much as 10 percent of the iPhones sold in September were purchased with the intention to be resold unlocked."
Munster went on to note that on September 27th Apple released iPhone software version 1.1.1, which rendered most of the unlocked phones inoperable and in doing so effectively minimized the market for unlocked iPhones. Just prior to this move, however, he said that iPhone sales at Apple retail stores had stabilized at an approximate 56 percent increase to the rates witnessed just prior to the handset's significant $200 price cut on September 5th.
Meanwhile, the analyst and his team were also tracking unit sales of Macs and iPods at the company-owned stores.
Since his last round of checks in the July and August timeframe, Mac momentum appeared to have slowed some 39 percent. But this "makes sense," he said, given the passing of the strong education-related shopping season in August. He continues to expect Apple to report September quarter Mac sales of approximately 2.0 million to 2.1 million versus the Street's consensus of 1.95 million.
While Munster did not have data from August with which to compare his September iPod checks, he was able to provide some observations on the breakdown models.
"Of the iPods we counted, 39 percent were nanos, 36 percent touches, 16 percent shuffles, and 9 percent classics," he wrote. "We continue to believe iPods are tracking to the Street consensus in September of 10.6 million [units]."
The Piper Jaffray analyst maintained his "Outperform" rating and $211 price target on shares of Apple.
Comments
Since his last round of checks in the July and August timeframe, Mac momentum appeared to have slowed some 39 percent. But this "makes sense," he said, given the passing of the strong education-related shopping season in August. He continues to expect Apple to report September quarter Mac sales of approximately 2.0 million to 2.1 million versus the Street's consensus of 1.95 million.
Umm... could this be because people are waiting for Leopard also?!?!
"In late September we spent 12 hours counting iPhone, iPod and Mac sales in Apple stores across the country," analyst Gene Munster wrote in a research note to clients. "During our store checks we noticed many people buying iPhones in the maximum 5 per customer allotments, which we believe were being purchased to be unlocked and operated on carriers other than AT&T."
12 hours is hardly a representative sample for statistics - isn't it ?
Holy crap, there's a market for unlocked iPhones!
I hope Apple eventually realizes this and starts giving us a choice. If they make it unlocked, most people will probably still go with AT&T, since it's so convenient to sign up through iTunes and all. But when they travel, they'll have the convenience of using other sim cards.
There's also those people who are already on another US GSM carrier and don't want to switch. There's yet another sale for Apple. So what if they don't get the revenue from AT&T for that phone? An iPhone sale + no additional revenue is still more money than no iPhone sale.
There's also those people who are already on another US GSM carrier and don't want to switch. There's yet another sale for Apple. So what if they don't get the revenue from AT&T for that phone? An iPhone sale + no additional revenue is still more money than no iPhone sale.
There's only one other major GSM carrier in the US. I would expect that most unlocked phones are going to people in other countries.
12 hours is hardly a representative sample for statistics - isn't it ?
Maybe not good enough for really accurate statistics, but when you see the same phenomena at "stores across the country" (however many that might be) I think it's fair to say that "a lot" of this must being going on.
The incentive for re-cracking the latest iPhone software must be pretty high.
The fact that so many iPhones were being bought just to be unlocked shows that...
Holy crap, there's a market for unlocked iPhones!
I hope Apple eventually realizes this and starts giving us a choice. If they make it unlocked, most people will probably still go with AT&T, since it's so convenient to sign up through iTunes and all. But when they travel, they'll have the convenience of using other sim cards.
There's also those people who are already on another US GSM carrier and don't want to switch. There's yet another sale for Apple. So what if they don't get the revenue from AT&T for that phone? An iPhone sale + no additional revenue is still more money than no iPhone sale.
So how do you propose Apple get around its FIVE year, EXCLUSIVE agreement with at&t? Hmmmm? Just ignore it? Claim they never meant to sign that agreement? Tell at&t "tuff shit"? What does "exclusive" mean to you? What would at&t do if Apple started selling unlocked phones? Would they just sit back and do nothing to enforce their exclusive CONTRACT?
Why can't you unlock-a-holics use your brains and think before you post such drivel? Do you really think Apple has the money and lawyers to go head-to-head with the biggest, wealthiest, corporation on God's green earth in a breach of contract lawsuit? Hmmmmm?
I really would like a coherent answer from you people.
So how do you propose Apple get around its FIVE year, EXCLUSIVE agreement with at&t? Hmmmm? Just ignore it? Claim they never meant to sign that agreement? Tell at&t "tuff shit"? What does "exclusive" mean to you? What would at&t do if Apple started selling unlocked phones? Would they just sit back and do nothing to enforce their exclusive CONTRACT?
Why can't you unlock-a-holics use your brains and think before you post such drivel? Do you really think Apple has the money and lawyers to go head-to-head with the biggest, wealthiest, corporation on God's green earth in a breach of contract lawsuit? Hmmmmm?
I really would like a coherent answer from you people.
There's this wonderful concept known as "renegotiating a contract". AT&T is benefiting greatly from iPhone sales right now. They'd probably lose a lot more than they'd have to gain in a lawsuit if Apple decided to tell them to go f**k themselves.
Both sides benefit from this contract. Contracts can be renegotiated. Just because it's a certain way now doesn't mean it can't be changed.
So how do you propose Apple get around its FIVE year, EXCLUSIVE agreement with at&t? Hmmmm? Just ignore it? Claim they never meant to sign that agreement? Tell at&t "tuff shit"? What does "exclusive" mean to you?
I fully expect that Apple has to keep trying to undo any hacks that unlock iPhones. I just don't wish them the greatest luck at it, and I would be quite happy if Apple expends the absolute minimum of effort to be in compliance with whatever the fine details of their contract with AT&T require.
I say this as someone who has an iPhone and no current desire to switch to a carrier other than AT&T. The only "unlocking" I'm really interested in is the kind that will allow me to add desirable third-party features to the phone.
I cheer on the hackers because I want big corporations like AT&T, and Apple too, to feel a clear sense of futility when they try to limit what we can do with their products with artificially imposed restrictions.
Do you really think Apple has the money and lawyers to go head-to-head with the biggest, wealthiest, corporation on God's green earth in a breach of contract lawsuit? Hmmmmm?
I really would like a coherent answer from you people.
What does Exxon have against Apple?
I really don't understand why Apple ever thought that exclusive agreements with carriers was a good thing. Clearly Apple could have sold millions of iPhones by now if they were available worldwide and unlocked. Carriers could have then battled for customers by offering addiditonal features like visual voice mail.
Apple taking a percentage from the carriers is certainly an interesting development, but consumers would be better served if all cell phones were unlocked and carriers had to battle each other constantly.
I really don't understand why Apple ever thought that exclusive agreements with carriers was a good thing.
I suppose having an established carrier as a distributer and supporter of their technology was considered a plus.
Also, for Apple to get their version of random-access voice mail to work -- which I consider a huge improvement over standard touch-tone menu interfaces -- they needed to enlist a carrier to implement the necessary protocols to support that feature.
Whether or not those reasons together, plus whatever else I might not be thinking of right now, add up to good enough a reason to sign an exclusive deal with AT&T I can't say for sure. Certainly a five year exclusive agreement seems excessive. That's an eternity when it comes to a product like the iPhone.
The iPhone is "cool" and everyone is talking about it. News sites (and analysts) should take some responsibility and not parrot speculation as fact. Even though it gets them higher click counts and advertising revenue. While the bullshit quotient of "news" is high in this day and age, the iPhone seems to have taken it to a new level.
The fact that so many iPhones were being bought just to be unlocked shows that...
Holy crap, there's a market for unlocked iPhones!
Well, no, it shows that there are people who THINK there is a market for unlocked, unsupported iPhones. These aren't people interested in HAVING unlocked phones, but people interested in making a buck selling them. Buyer beware.
And of course there IS a market, especially for export to Canada etc.--especially if the seller isn't honest about the drawbacks. Is the market AS big as these 5-at-a-time buyers think? We will see. They can always stop buying them if demand is slow.
I really don't understand why Apple ever thought that exclusive agreements with carriers was a good thing.
They never thought that. An exclusive was, however a NECESSARY thing. We don't know how many carriers Apple approached and was turned down, but we know that in order to make the iPhone everything it is, Apple needed to ask a LOT from carriers. They asked for things carriers have never given anyone before. And so the carriers (AT&T) could demand something in return. An exclusive. Carriers have arranged exclusives for a lot less reason with many different phones. But this time the reasons are bigger. In addition to whatever financial kickbacks Apple may have arranged--maybe unusually high?--Apple is asking them to:
* Build and support the new visual voicemail system (which only works on AT&T because only AT&T--with Apple--created it)
* Abandon the long-dominant U.S. subsidy model that devalues phones but draws mobile customers with the false lure of cheap gadgets
* Totally change their activation procedure, and create a new, easier system for online activation integrated with iTunes
* Give up all kinds of control--from pricing to marketing--to Apple. A brand that has thrown its weight around in the music industry enough to scare other industries (like the movie industry and mobile carrier industry).
Apple couldn't get those things without agreeing to an exclusive for a time. Just like Apple could never have gotten the recording industry to allow iTunes to exist without agreeing to use DRM.
Apple doesn't like carrier lock-in OR DRM. Neither one helps Apple. But they help companies that Apple CANNOT conduct business without.
This isn't an arrangement Apple can turn around and change overnight.
90% of the iPhones sold as AT&T plans.
Hmm...these must be the 10% of the iPhone "users" who are whining or suing Apple for lowering the price and/or locking the phones. It's tough when a guy can't even make a decent profit these days, right guys?
So how do you propose Apple get around its FIVE year, EXCLUSIVE agreement with at&t? Hmmmm?
Actually, it's pretty simple... just sell them unlocked in markets outside where you plan to negotiate exclusive deals. This eliminates 90% of the people trying to unlock the units. Negotiate better data plans with the companies you negotiate exclusivity with. Right now, higher data prioritization would be enough to make a pretty big difference.
So how do you propose Apple get around its FIVE year, EXCLUSIVE agreement with at&t? Hmmmm? I really would like a coherent answer from you people.
Business Law 101: any contract can be renegotiated at any time by the parties. If at&t gives Apple too much crap about it, Apple could probably make a new (better) model using different technology (Intel chips? maybe the new iNewton?) and sign up with someone else.
Or drop the whole thing like Moto did Meridian, and watch at&t support existing users for 2 years or more with no hope of getting any new ones though Apple.
(oh, wait, I forgot Apple's five year, 3-city Starbucks "buy a song" program, or is that for the Touch only?