Thursday, June 17, 2010

How long is Apple an Overall Hit?

AT&T suspended taking new preorders on iPhone as first day orders exceeded an unprecedented amount of 600,000. AT&T commented that their systems are not being able to support these huge numbers and AT&T will postpone new orders till they are able to replenish inventory.
This definitely gets both AT&T and Apple lot more press coverage than anticipated from a product launch. To my mind this begs the immediate reactions
a. Did the sales amount take the companies by surprise? Why were the systems not prepared for the increased demand? After all iPhone 3GS sold 1m phones over the weekend.
b. Most likely the majority of demand for the iPhones is not from new users, but rather than Apple fans. As Apple introduces more product versions with better functionality and features there will be a strong secondary market for the older versions. Ebay and other online markets are going to be soon auctioning off older versions.
To search for these questions, I decided to look at Apple’s Revenue estimates by product and found these estimates on Bloomberg:





Given that most of the growth is coming from the iPhone sales, I am puzzled at the ill preparation by both Apple and AT&T on the launch of their latest gadget. Also what gets my attention is that Music related products and services hasnt really grown at the same CAGR as iPhone sales. They have remained relatively constant over the years from 2007. This category hasn’t really grown with the iPhone ecosystem and once the newer hardware iPhone craze outgrown the Apple fans, is Apple still going to remain a hit?

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