Analyst: Most iPhone Buyers Stepping Up To $599 Model

By Joseph Palenchar -- TWICE, 7/3/2007

New York — iPhone buyers overwhelmingly chose the higher-priced $599 8GB version of the iPhone instead of the $499 4GB version and bought scads of accessories in the days following the iPhone launch, Goldman Sachs analysts reported.

They also found that Apple’s 164 stores were “well-stocked” in preparation for the iPhone’s Friday-night launch, with only 24 stores selling out their inventory by Sunday night. Almost all of the 24 were in California, the report said. Information on AT&T’s inventories wasn’t included in the report by analysts David C. Bailey and Laura Conigliaro.

Sales, they noted, “blew through our expectations” and were at least twice that of their previous estimates of 350,000 sales over the weekend. The pair increased their iPhone forecast to 5.25 million for calendar 2007 and 12 million for 2008, up from 4 million and 10.5 million, respectively.

They also said that:

Comments from Apple store personnel “suggest that the overwhelming majority of units sold” were the higher-capacity 8GB $599 model and that “it’s clear that Apple’s own retail outlets had substantially more inventory than their AT&T counterparts;”
Apple’s point-of-sale systems and extra personnel kept wait times “surprisingly short.” From Friday night through Sunday, “our checks suggest that Apple was running through groups of 25 buyers in average increments of 10-15 minutes;”
On Friday, “most people were buying the maximum two phones at Apple stores. AT&T stores limited purchasers to one iPhone each;”
People left the stores “with handfuls of chargers and cases,” so initial and follow-up accessory sales are likely to “far surpass” the analysts’ original “$30 guesstimate”; and
The weak link was the activation process for consumers porting their cellular number from other carriers to AT&T. The analysts’ “checks suggest that some people needed to wait up to 24 hours to be activated as their requests needed to be handled manually. Also, there seems to be a fair amount of confusion on the AT&T side regarding the features/functions of iPhone.”