Sales of Apple’s over-hyped iPhone mobile PDA and MP3 player have come in just below the expectations of O2, the network operator with the exclusive deal to sell the phones in the UK.
According to the Financial Times, a source close to the situation said that O2 has shipped 190,000 in the first eight weeks of sales, compared to O2’s expectation of selling 200,000.
The FT reported that some analysts had regarded the 200,000 figure as a conservative estimate, and that some analysts are saying that Apple may have to cut the price of the iPhone in the UK if it wants to maintain sales momentum.
The iPhone costs 269 pounds ($528) but buyers must also buy into an 18-month contract, taking the total investment up to 899 pounds ($1,763) up-front. That’s a hefty sum for a phone that plays music, but Apple is hoping that the iPhone’s revolutionary touch-screen user interface and extensive features list will help to see consumers stumping up the relatively high price.
O2 told the FT that the iPhone has nevertheless been its fastest-selling handset ever by a significant margin.
As well as O2 and Apple, the iPhone is sold by Carphone Warehouse. Apple and Carphone declined to comment on the figures.
We believe 190,000 sold in the first eight weeks against O2’s own target of 200,000 is pretty impressive. Considering that many UK retailers had a terrible Christmas and had to start their sales early amidst consumer concern at the credit crisis affecting banks like Northern Rock, and denting confidence generally, 190,000 is not to be sniffed at.
Especially when one considers that most people who can afford a 269 pound ($528) phone plus a 35 pound ($69)-a-month network contract are likely to already have a phone and an MP3 player. While the iPhone can do more than make calls and play music, it is the combination of an Apple iPod with a phone that is the iPhone’s biggest differentiator.
Some people will delay an iPhone purchase until their phone or MP3 player dies (if they decide to buy one at all) while others may be waiting to see if Apple does reduce the price: Apple has been known to launch a product at one price and then drop it as demand levels off. Indeed it dropped the price of the iPhone in the US from $599 to $399 two months after it went on sale.
After taking that decision Apple CEO Steve Jobs said he had received hundreds of emails from angry iPhone customers who had bought the phone at $599. He wrote an open letter to those customers saying, Being in technology for 30+ years I can attest to the fact that the technology road is bumpy. There is always change and improvement, and there is always someone who bought a product before a particular cutoff date and misses the new price or the new operating system or the new whatever. This is life in the technology lane.
If you always wait for the next price cut or to buy the new improved model, he said, you’ll never buy any technology product because there is always something better and less expensive on the horizon. That’s very true. It’s just that consumers prefer it if it is a rival, and not the company itself, that comes out with a better, cheaper model just weeks after they bought their shiny new gadget.
Perhaps recognizing this too, Apple not long after announced a $100 rebate to those angry customers to spend in an Apple’s Retail Store on in the Apple Online Store.
Anyway, whether Apple drops the price or not, so far the signs are encouraging that Apple has managed to convince a good number of UK consumers that the iPhone really is revolutionary, and not just a big iPod that can make and receive calls.