Apple Outdoes Itself with iPhone 4

Apple Inc. (Nasdaq: AAPL) sold 1.5 million iPhone 4s yesterday, one and a half as many iPhones as it sold in the first three days of the iPhone 3G and iPhone 3G.

This is the initial estimate from Oppenheimer & Co. Inc. analyst Yair Reiner, who admits that it's still just a guessing game until we hear it from the Cupertino, Calif., powerhouse itself. But, here's how Fortune breaks down Reiner's math:

  • There were 600,000 iPhones pre-ordered from both Apple and AT&T Inc. (NYSE: T) in the US.
  • At an average of 500 per store, there were 100,000 non-reserved units sold day of at Apple stores.
  • Best Buy chipped in another 50,000 iPhone 4s, according to Oppenheimer's checks.
  • To account for the rest of world, multiple it by two, Reiner says.

In terms of where users came from, Reiner says 76 percent were upgraders already with AT&T and 21 percent were new to AT&T with 41 percent of those coming from T-Mobile US Inc. and 28 percent from Verizon Wireless .

Piper Jaffray & Co. researchers added some color to Apple's launch-day numbers, noting that 77 percent of iPhone 4 purchases were upgrading, a full 38 percent more than did for last year's 3G S model. In 2009, 56 percent of iPhone 3GS buyers were upgrading on launch day and, in 2008, 38 percent did so, Jaffray says.

For those who weren't existing AT&T iPhone users, Jaffray says 6 percent switched over from BlackBerry, 3 percent from Android, and 2 percent from Nokia Corp. (NYSE: NOK).

Apple's chart-topping sales day suggests what consumers have already confirmed: Apple has an unmatched brand cache that even AT&T can't muddy. Less consumers may be jumping ship from other carriers and devices to get the iPhone 4, but those who have Apple products remain loyal.

"Apple has in three years built brand loyalty in the phone market that compels users to upgrade to the latest version and wait in line for one to six hours to pick up their iPhone," Piper Jaffray analyst Gene Munster said in a note to clients. "While we think Apple will sell between 1.0 million to 1.5 million iPhones in the first three days (including preorders), the actual number is largely irrelevant. Apple is tapping into the global consumer spending sweet spot, mobile, and as a result iPhone numbers are going higher in the coming years."

See more of our iPhone 4 coverage below: — Sarah Reedy, Senior Reporter, Light Reading Mobile

sarahthomas1011 12/5/2012 | 4:31:21 PM
re: Apple Outdoes Itself with iPhone 4

Hi mendyk,

In terms of market share, the Apple brand makes about 28 percent of the market (Nielsen), depending on whom you ask. Even without the ines, the numbers are significant in that they top Apple's own best numbers ever, along with any launch day numbers for the industry. Its notable that its brand loyalty is so strong, even if it doesn't provide a huge boost to its market share. Is there any other company that could do this?


shygye75 12/5/2012 | 4:31:21 PM
re: Apple Outdoes Itself with iPhone 4

Sarah -- It's clear that iJustAboutAnything will be greeted by long first-day lines. But exactly how big is the Apple brand in the context of the total mobile market? One point that you bring out is that the vast majority of first-day buyers are upgraders. Forgive an obvious observation here, but if Apple weren't the brand here, and if it couldn't create the visual cue of, well, customer queues, would this story be treated differently?

joset01 12/5/2012 | 4:31:21 PM
re: Apple Outdoes Itself with iPhone 4

But not surprising, it felt like a massive launch.

Honestly 12/5/2012 | 4:31:20 PM
re: Apple Outdoes Itself with iPhone 4

An early TechCrunch poll says that 70% of iPhone 4 users are having issues from reception to the screen going yellow to the camera not engaging.  Others are now complaining about battery degradation as a result of multi tasking. 

Jobs suggestion that you buy a bumper cover for the phone to solve the reception issue is funny.  At $29.95 he kills on margin for the bumper.  Great for you Steve, not for your customer.

I am a big AAPL fan, but for phones the iPhone is a beautiful toy that is now more about glam than practical use. (great marketing) There are also very few users leaving other carriers to go to At&t to buy the iPhone.  After the fork lift to iPhone 4 has run its course the glam will fade.  Android and hopefully soon the Palm/HP Pre2 will even the playing field with more usable phones.


After you download your videos and music on iPhone4 to show off to your friends don't depend on your iPhone for actual calls.  Between the antenna issue and At&t you are hosed.


Wall St analysts are Lemmings too.  I don't think Jobs expected as many complaints as he is seeing.  Sounds like Microsoft.  Heaven forbit.  

shygye75 12/5/2012 | 4:31:20 PM
re: Apple Outdoes Itself with iPhone 4

I'd suggest that for its most basic application -- making voice calls -- Apple's product is not nearly far superior in quality (it does have the word "phone" in its name, after all). And while AT&T has borne the overwhelming brunt of the service bashing, it was Apple after all that decided to do the exclusivity deal with AT&T. I've not heard that any horses' heads were involved in those negotiations.

sarahthomas1011 12/5/2012 | 4:31:20 PM
re: Apple Outdoes Itself with iPhone 4

I see your point, but don't entirely agree -- at the risk of sounding like a blind brand loyalist. The original iPhone and those after are far superior in quality and especially innovation than others that have followed them. Maybe not on certain features, but certainly overall. That's not speaking to Apple's proprietary nature, but the phone itself (obviously not the network) along with the brand loyalty supports the perception Apple is encouraging.

shygye75 12/5/2012 | 4:31:20 PM
re: Apple Outdoes Itself with iPhone 4

Perception is a primary factor here. Apple is no better -- or no worse, if it comes to that -- than most other companies regarding product quality, value for price, and unmatchable innovation. But it continues to drive the perception that it is miles above the competition on at least two of these counts. That it has been able to pull this off with one of the most proprietary strategies formulated in the past 30 years is a compelling testament to the power of blind brand loyalty -- foremost among its customers, but also among those who track its exploits.

DCITDave 12/5/2012 | 4:31:17 PM
re: Apple Outdoes Itself with iPhone 4

1. Apple is worth watching here because they've created this market demand for (what some say) is an average device in just a couple of years. For new market entrants in the handset space this has to be encouraging and it's reasonable to assume that the same thing could happen, to another company, when LTE is established. You don't have to be Nokia to take a huge percentage of the smartphone market if you focus on ease-of-use and providing a compelling app store.

2. Apple is worth watching here because it has made two key smartphone applications -- video chat and HD movie sharing -- seem easy. You could get email, browse the Web, and buy apps BEFORE the iPhone, but the iPhone made it easy. These network hogging apps are going to matter, even if Apple doesn't increase its share at all and ONLY sells new phones to old iPhone customers.

Anyway, thought I'd toss that out in case you felt we were paying too much attention to a mediocre device. Along with all the hype and silliness comes two relevant trends that are worth watching especially for those of us who care about what's going on in the network infrastructure.

Honestly 12/5/2012 | 4:31:11 PM
re: Apple Outdoes Itself with iPhone 4

I have a Palm Pre and have never had antenna problems.

Review the cause of the iPhone 4 problem below, them comment again.

So we need to spend even more money on a case/bumper for iPhone?.  There is a clear hardware/design problem here, eventually it will get fixed.  AAPL might have thought about antenna location and grip first.  For Jobs to tell us we are holding the phone wrong is a bad joke.  

iPhone 4's antennas for phone and data connectivity are integrated into the steel band encircling the device. The phone antenna appears to be located right where you would normally place your palm. So instead of improving signal strength--as the new steel band is meant to do--your hand ends up interfering with reception resulting in dropped calls and generally poor phone reception. 

holyc2a 12/5/2012 | 4:31:11 PM
re: Apple Outdoes Itself with iPhone 4

Yes but the antenna problem is also applicable to many other smart phones, including the Palm Pre, blackberries and others.

It has to do with the FCC's new guidelines on where antennas can be put to meet with some new regulations.  So any cell phone made in the last year or two generally has this problem, because phone designers are now limited to where they can put the antennas.

But its easy to overcome use a protective cover and I would say that almost 90% of people who use these devices tend to use them.  Some use holsters and use the phone without a cover when in use and these folks will have this problem.


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