Apple quells new gadget sales fears

Apple quells new gadget sales fears
By Richard Waters in San Francisco
Copyright The Financial Times Limited 2007
Published: September 11 2007 02:03 | Last updated: September 11 2007 02:03


Apple on Monday dispelled some of the concerns that have gathered around sales of the new iPhone as it announced that 1m of the gadgets had been sold by last weekend.

Coming some three weeks before the target date that the technology company had set for hitting the 1m milestone, the news helped to calm fears that had been provoked by a surprisingly big price cut it announced for the handset in the middle of last week.

While that news had wiped more than 5 per cent from Apple’s share price on worries that iPhone sales were slipping, Monday’s announcement prompted a 3.75 per cent rebound.

The iPhone price cut had been a “statistically savvy but tactically maladroit” move by Apple, said Roger Kay of Endpoint Technology Associates.

The company had been right to push for mass adoption of the new touch-screen iPhone interface by also including it on the latest iPods, he said, and that had led it to cut the iPhone price steeply to keep the two products in a closer price range.

However, the cut angered many early adopters of the iPhone, forcing Apple to backtrack and offer them a $100 store credit.

Another side-effect of last week’s price cut was to scare some investors, who were already nervous about early signals of how sales were proceeding. Fewer devices were sold during the iPhone’s first weekend than many Wall Street analysts had forecast. In addition, a report last week by market research firm iSuppli, while concluding that the iPhone had become the most popular smartphone model in the US, suggested that Apple was not on track to hit its 1m target by the end of September.

While the price cut may have prompted some extra sales, the company appeared to have already been far closer to the 1m target than expected, said Mr Kay.

In a press release, Steve Jobs, chief executive, said the iPhone had crossed the 1m barrier after 74 days on the market, compared with the two years it took the iPod to reach the same goal.