Apple's iPhone 4 launch may have enjoyed early success, with sales of 1.7 million units during its first three days of release, but supply difficulties may have a longer-term impact on the company, according to an analyst from research firm iSuppli. That analyst suggests that consumers frustrated with iPhone 4 shortages could seek out a robust competitor such as the HTC Evo 4G. Nonetheless, iSuppli also predicts marketplace success for the iPhone 4, estimating shipments of 21.7 million in 2010, or 51 percent of total iPhone shipments for the year.
Apple's iPhone 4 launch may have proved to be a marketplace success, with
sales of 1.7 million units in the smartphone's first three days of release, but
analyst firm iSuppli believes that difficulties associated with the rollout
have tarnished Apple's much-vaunted branding.
Specifically, iSuppli cited two incidents-the meltdown of Apple's and
AT&T's ordering systems on the iPhone 4's first day of presales, due to
customer demand, and
then the pushback of the preorder shipment date to July 14-as particularly
harmful to Apple's image.
"While the channel supply issue might not impact total iPhone sales for the
entire year, what is happening now certainly has done some damage to the Apple
brand," Tina Teng, an analyst with iSuppli, wrote in a June 29 research note.
"Consumers, questioning Apple's supply chain management capability, have
started looking for alternative devices. In particular, consumers are not
satisfied with Apple's response to the antenna issue causing poor reception and
Other smartphone competitors, Teng added, are introducing strong products
into the market; specifically, she cites Nokia's upcoming N8 smartphone, along
with the HTC Evo 4G and Samsung Galaxy S, as
devices with features capable of competing against the iPhone 4.
"While North American consumers are grappling with the iPhone 4 shortage,
consumers-especially those in other regions-know they have other smart phone
options," she wrote in her research note. "With threats coming from every
corner of the market, can Apple afford another slip in its supply chain
Nonetheless, iSuppli also predicts success for the iPhone 4, estimating
shipments of 21.7 million in 2010, or 51 percent of total iPhone shipments for
the year. Apple's own top-line forecast predicts overall iPhone shipments of
42.6 million units in 2010, followed by 53.5 million units in 2011, lifting to
62.1 million units in 2012, zooming to 70.3 million units in 2013, and then
77.5 million units in 2014.
On June 24, the iPhone 4's first day of general release, news outlets from
around the world reported epic lines at stores in major cities; Apple channel
partners such as Wal-Mart indicated their stocks of the device were running
terminally low. The iPhone 4 retails with a two-year contract for $199 for the
16GB version, and $299 for the 32GB version. Features include a slimmer body,
larger battery, front-facing camera for video conferencing and an iOS4
operating system that allows for brand-new tricks such as multitasking.
Within hours of the first customers retrieving their devices, however,
reports emerged of a technical issue: Touching the device's metal antenna band,
which runs along the outer rim, seemed to reduce certain users' reception to
zero. Limited in-office tests by eWEEK were able to consistently replicate the
phenomenon. Tech blogs such as Gizmodo quickly began posting video of users
touching the smartphone's rim and making its on-screen reception bars
Apple responded to the complaints in short order.
"Gripping any mobile phone will result in some attenuation of its antenna
performance, with certain places being worse than others depending on the
placement of the antennas," Apple wrote in a widely circulated June 25
statement. "If you ever experience this with your iPhone 4, avoid gripping it
in the lower left corner in a way that covers both sides of the black strip in
the middle band, or simply use one of the many available cases."
It remains to be seen whether or not the antenna issue, and the media
attention focused on it, will eventually have an effect on iPhone 4 sales. In
the meantime, though, there are indications that at least some of Apple's
supply issues are continuing; the company indicated in a recent press release that
production delays will delay the white-bodied iPhone 4's availability until the
second half of July.
Nicholas Kolakowski is a staff editor at eWEEK, covering Microsoft and other companies in the enterprise space, as well as evolving technology such as tablet PCs. His work has appeared in The Washington Post, Playboy, WebMD, AARP the Magazine, AutoWeek, Washington City Paper, Trader Monthly, and Private Air. He lives in Brooklyn, New York.