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Apple dealt 270,000 iPhones in debut; reports best quarter ever

Activation problems may have affected almost half of early iPhone buyers

July 26, 2007 12:00 PM ET

Computerworld - Apple Inc. on Wednesday announced that it had sold and shipped 270,000 iPhones in the first two days of the device's debut weekend, nearly double the number its wireless partner claimed had been activated in that same stretch.

But during a late afternoon conference call on results for the third quarter -- which ended June 30, a day after the iPhone went on sale nationally -- Apple executives kept mum on most other iPhone news.

Peter Oppenheimer, chief financial officer, and Tim Cook, chief operating officer, repeated the same scripted answers to most questions from analysts who hoped to dig deeper into the iPhone's performance. Among the few nuggets that Oppenheimer and Cook provided: Some of the 270,000 weren't actually sold but were in AT&T Inc.'s inventory or on the way to the carrier's stores.

Neither offered a direct explanation of the disparity between Apple's and AT&T's numbers. Oppenheimer came closest when he acknowledged the activation delays that plagued many of the first buyers. "AT&T did have some activation problems," he said. "We would like to apologize to those customers who had a less than a perfect activation experience."

At the time, Apple spokespeople maintained that the delays affected only a small percentage of buyers. If, however, the 124,000-iPhone difference between the two figures is attributable to users not being able to activate, the problem may have hit up to 46% of those who purchased an iPhone on June 29 or June 30.

Apple's numbers were substantially lower than the often wildly inflated estimates of financial analysts. Weeks before the launch, Piper Jaffray & Co. analyst Gene Munster had pegged his forecast as 200,000 iPhones for the three-day weekend. Postlaunch, however, Munster bumped up his estimate to 500,000 units, based on exit polls at three Apple retail stores. Others had raised their estimates to as high as 700,000.

For their part, Oppenheimer and Cook seemed perfectly happy with the iPhone's stated sales. "AT&T said more iPhones were sold in the first weekend than they had sold in the first month of any other wireless device in their entire history," said Cook.

Oppenheimer stressed that iPhone sales are on track to meet CEO Steve Jobs' goal of 10 million by the end of 2008 and that the company is confident it would sell its one-millionth iPhone before the current quarter ends on Sept. 30. He also hammered on Apple's long-range mind-set. "We got off to a great start," he said. "But our focus is not on initial sales. It won't be done overnight. Our perspective is in years, not months."



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