Numbers Question

I’m sure there’s probably some explanation for this involving different end dates for the quarter or something, but at first glance…

AT&T’s second quarter earnings were considered disappointing, in part because:

146,000 iPhone owners activated service in the day and a half between the phone’s debut and the quarter’s end. Given the frenzy around the phone’s introduction, some analysts had predicted that AT&T would report as many as 500,000 to 700,000 activations in that period.

When Apple reported their second quarter earnings (link no longer available), they said they sold 270,000 iPhones. So why the difference in numbers? Did half the buyers of the hardware really not activate them? (I don’t blame them… I’d have bought one by now if you didn’t have to use AT&T Wireless with them.)

Also interesting from that first article is the revelation that the iPod was not considered a success when it was first introduced.

5 Responses to “Numbers Question”

  1. Glaurung Says:

    The Iphone has a lot of uses — play MP3s, play videos, surf the web and check email over a WIFI connection, and I think you can use it as a PDA thing to store contact info and the like. With all that, it hardly needs to be used as a cellphone to be a desireable purchase by those who are into such gadgets.

  2. Ray Cornwall Says:

    “Did half the buyers of the hardware really not activate them?”

    Actually, this does seem to be what happened, at least during the two days that were reported in the quarter. Many users had problems getting their phones activated in the first few days of the rollout. I expect that next quarter’s numbers will show a tighter relationship between the numbers of phones sold and the number of AT&T accounts activated.

    Full disclosure: I’m a contractor for AT&T, although I have nothing to do with the wireless division.

  3. Hal Says:

    I’m just guessing here, not knowing how the activation process worked, but a lot of people may have just used their existing ATT account. If I remember right, the iPhone is GSM, which just uses a chip that you can swap between phones. If so, those users could have just taken their chip and dropped it into the iPhone. They may not have gotten as far in the first day or two to add any additional feature sets to their accounts OR if they already had the internet add-on to their account, that may have covered them on the iPhone.

    But, again, just guessing.

  4. Augie De Blieck Jr. Says:

    Without using a workaround, the iPhone is a brick until you activate it, which is done through iTunes, not even at the store, itself. So you can’t just buy it to use it as a small iPod.

    Yes, the big problem is that some people had big delays in activation time. As many predicted, the weak link in the iPhone roll out was AT&T.

    Others, I imagine, might have bought them for work or for gifts, and so may have activated them at later times.

    And, then, there are the fun stories of the idiots who waited in line to put them on eBay. Since the phone didn’t really sell out that weekend, it wasn’t a collectible at all.

    But, again, because the iPhone was released with only about 32 hours left to go in the quarter, all the numbers will be a touch lower than expected.

  5. Johanna Says:

    I knew my readers would have informative add-ons to that story. Thanks!

    I also found it interesting that, because of the timing against the quarter (as Augie noted), these numbers are mostly first- or second-day purchases. Which gives some indication of how many people just had to have it right then.




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