Apple shares dropped six percent yesterday, following AT&T’s announcement that it activated 146,000 iPhone subscribers in its second quarter — a number many believe indicates iPhone sales were below estimates. Michael Gartenberg, analyst for JupiterResearch, believes that number doesn’t matter. “It’s hard for Apple to have missed a target number when they gave none. What folks are talking about are some analysts’ somewhat wild expectations,” Gartenberg said. “The first two days mean nothing in the overall life of the product and the overall success of the iPhone won’t rest on how well this particular model does,” he continued. “The launch of the iPhone was the first move in what is likely to be a long game for Apple, trying to gauge the overall success based on two days of incomplete data is silly.”
RBC Capital has also commented on the situation, claiming that AT&T’s number has little bearing on Apple’s actual sales over the iPhone’s launch weekend. “AT&T reported 146k iPhone activations Q2 (June 29 and 30). However, this may not reflect Apple’s true Q3 sales, as AT&T excludes iPhone buyers who experienced activation delays (up to 40% - 50% of est. buyers), as well as additional units sold but not activated until after the weekend, as well as those purchased for gifts, and non-US buyers. Incorporating these factors suggests Apple may have sold 350-450k iPhones to users the first weekend,” said the firm. Exact iPhone sales figures are expected to be released along with Apple’s third quarter earnings statement at 5:00 pm Eastern time today.
Apple is now offering the previously-announced AppleCare Protection Plan for iPhone. The plan, which extends repair coverage of the iPhone to two years from the original purchase date, must be purchased within the phone’s standard one-year warranty period — the iPhone includes one year of hardware coverage, as well as two years of technical support. The plan covers the iPhone, iPhone Bluetooth Headset, and all included accessories, and guarantees genuine Apple replacement parts. It is not available in Alabama, Connecticut, Nevada, or Wyoming. The AppleCare Protection Plan for iPhone is available now for $69.
AT&T has said that it activated 146,000 iPhone subscribers in its second quarter — June 29 and 30 — and 40 percent of that group were new AT&T Wireless customers, reports The Wall Street Journal. It is unclear whether the subscriber number is a good representation of iPhones sold during that time period, given the fact that so many iPhone purchasers experienced problems during activation and the slightly ambiguous nature of the company’s statement. Overall, the iPhone carrier added 1.5 million subscribers in the second quarter. AT&T also said iPhone sales “continue to be strong in July with store traffic above historical levels.”
A spokeswoman for the German department store chain Karstadt has confirmed that the company will sell the iPhone in Germany. “We will offer the iPhone,” said the spokeswoman, noting that it was too soon to say whether the phones would be sold with or without a contract. She added that Karstadt did hope to have the iPhone in stock in time for the holiday shopping season. Previous reports have suggested that T-Mobile will offer service for the iPhone in Germany.
A new security flaw found in the iPhone’s software could give hackers “complete control” of the device. Researchers from Independent Security Evaluators, a firm that tests its clients’ computer security by attempting to hack into it, said that they were able to get access to the phone through a Wi-Fi connection or by loading a web page containing malicious code. Doing so allowed them to tap into the information contained on the phone, such as SMS text messaging records and contact information. “Once you did manage to find a hole, you were in complete control,” said Charles A. Miller, principal security analyst for ISE. The security firm alerted Apple to the security flaw this week, and shared a recommended patch for the problem. “Apple takes security very seriously and has a great track record of addressing potential vulnerabilities before they can affect users,” said company spokeswoman Lynn Fox. “We’re looking into the report submitted by I.S.E. and always welcome feedback on how to improve our security,” she said.
Discussing the iPhone in a quarterly conference call, Vodafone CEO Arun Sarin said that the company was concerned with the current iPhone’s lack of 3G technology. “It’s clearly a good, software-driven device, but we’re concerned about wideband area coverage so that 3G (third-generation) or HSDPA (upgraded 3G) connectivity with the iPhone is something that we look forward to.” Recent rumors have speculated that the iPhone will be offered through competing carriers in Europe, including Telefonica’s O2 and Deutsche Telekom’s T-Mobile, however, an image of the Vodafone logo has been found in the device’s file system. “Every product, every alternative, every choice here has a price and we just have to be conscious of what it is that we’re doing for our customers and our shareholders,” Sarin stated. He also claimed that virtually every cellular company was having conversations with Apple, but declined further comment.
Handset makers Inventec Appliances and Quanta Computer are competing to become Apple’s second assembly partner for the iPhone, according to a DigiTimes report. Quanta president Michael Wang has set a goal to aggressively strive to become a partner for iPhone production. A recent Goldman Sachs report claims that while Foxconn Electronics remains the exclusive supplier for US-bound iPhones, orders have been split with Quanta for the European version of the phone. The firm also claimed that Foxconn, Quanta, and Inventec are all bidding to become suppliers of the Asian version of the handset. The report notes that it “would be difficult for either Inventec or Quanta to compete with Foxconn to win iPhone orders, given the investment Foxconn has already put into production of the iPhone. However, Apple may still choose to outsource a small portion of iPhone assembly to manufacturers other than Foxconn, in order to lessen its exposure to one partner and lower its market risk.” [via MacWorld UK]
An issue regarding the iPhone’s charging screen has been acknowledged by Apple as a software bug. A few iPhone owners have claimed that the battery icon, which appears on the device’s screen when charging, fails to show a fully charged battery despite hours of charging, reports WirelessInfo. Apple responded to the report by stating, “Your battery is fully charged, but the UI (User Interface) is just not correctly reflecting this. We expect to fix this in a software update.”
According to a survey done by Interpret of Santa Monica, CA, half of iPhone purchasers switched from another carrier, and 35 percent of those paid an average of $167 to break an existing cellular contract. Interpret’s chief strategy officer, Jason Kramer, calls the survey findings to be “pretty much off the charts.” In addition to the carrier numbers, 90 percent of iPhone owners said they were “extremely” or “very” satisfied with their phones, while 85 percent said they were also “extremely” or “very” likely to recommend the device to others. Interestingly, three out of ten iPhone buyers were new to Apple, and for an even more surprising 40 percent, the device represents their first iPod.
A new iPhone print ad has debuted and is featured in the August 2007 issue of Details Magazine. The ad features a right-facing iPhone on a black background, with a hand coming from the right, seemingly lit only by the phone, interacting with it. Below the image is the tagline “Touching is believing.” MacDailyNews has suggested that in light of the “Jesus Phone” or “God Phone” moniker some have applied to the iPhone, the ad may be deliberately referencing Michelangelo’s The Creation of Adam fresco found in the Sistine Chapel. Keep reading to see the ad.
RBC Capital has noted that its checks suggest that Apple may try to produce 8 million iPhones in 2007, which implies 12-14 million unit sales by the end of calendar year 2008, well ahead of Apple’s stated 18-month goal of 10 million units. The firm also claims that Apple’s plans for 07 may include boosting iPhone storage capacity, and an iPod line refresh that they believe includes an updated iPod nano, a new iPod and a new video iPod. In addition, RBC sees a 3G iPhone coming by Spring of 2008, and believes Apple is also planning a higher-resolution display — 480x720 — for future iPhone models. The firm raised its iPhone sales outlook to 13.5 million units by the end of 2008.
Rep. Edward Markey (D-Mass.), chairman of a House subcommittee on telecommunications and the internet, slammed the iPhone’s restrictions this week in Washington. Even though the phones become expensive paperweights if customers quit AT&T’s plan, claims Markey, AT&T still charges a $175 termination fee. Markey went on to say that the phone has “Hotel California service. You can check out any time you like, but you can never leave - you’re stuck with your iPhone and you can’t take it anywhere.” The termination fee Markey mentions is quite common and can be found in virtually all long-term cellular contracts in the United States. While it is true that you can’t use take the iPhone to another service provider, the capabilities it retains after activation — iPod and Wi-Fi — are generally far greater than any other phone after being removed from service.
Synchronica PLC, provider of mobile-synchronization and device-management solutions, has announced that its Mobile Gateway 3.0 software supports over-the-air synchronization between Microsoft Exchange and the iPhone. The software integrates with existing IT infrastructure and doesn’t require the use of IMAP and SMTP on the Exchange server. Mobile Gateway instead uses Microsoft’s secure Outlook Web Access to retrieve email from the server, and then delivers it directly to the built-in email client on iPhone. Carsten Brinkschulte, CEO of Synchronica said, “The iPhone is a very attractive smartphone, appealing to both the consumer and prosumer market. Mobile Gateway already supports synchronization with Microsoft Exchange, but does not require firewall modification or any software to be installed in the corporate network… From a carrier’s perspective, we are significantly expanding the reach of the iPhone into the business user and prosumer segments.” [via MacWorld UK]
Kevin Chang, Taiwan-based analyst for JP Morgan, has issued a report saying that he expects Apple to release a cheaper version of the iPhone in the fourth quarter, a device that a recently unearthed patent application suggests may be based on the iPod nano. Citing the patent application — which describes a multifunctional handheld device, controlled via a Click Wheel — and unnamed supply channel sources, Chang said, “We believe that iPod Nano will be converted into a phone because it’s probably the only way for Apple to launch a lower end phone without severely cannibalizing iPod Nano.” He also noted that the new phone could have “rather limited functionality.”
Update: JP Morgan has now retracted the statement, saying that a near-term release of an “iPhone nano” would be “unusual and highly risky.”
Apple CEO Steve Jobs visited the company’s Regent Street store in London, England yesterday, according to an ifoAppleStore report. Jobs’ appearance has lead to speculation that an announcement concerning the iPhone’s carrier in the UK, and possibly across the rest of Europe, is coming soon. The report also mentions that the Regent Street store’s concierge bar will be closed Monday, July 16, which could allow Jobs to make an announcement about an iPhone deal from inside the store.
An online survey sent out by AT&T to iPhone users hints at a possible iChat application for iPhone. iChat is the messaging application Apple includes with its Mac OS X operating system. One of the slides in the AT&T survey asks users to rate the EDGE network performance when using various applications on the iPhone. iChat is listed along with YouTube, Google Maps, Email, Weather, Stocks, and Search. While it is possible that Apple is working on a version of iChat for the iPhone, it is also possible that the survey meant to reference the iPhone’s SMS text messaging application, which looks and acts quite similar to Apple’s desktop messaging applicaiton.
Apple has begun restocking iPhones at its retail stores nationwide, following yesterday’s near sell-out of the device. Apple’s iPhone availability page showed sell outs at all but two of the company’s 164 retail stores yesterday, but today that figure has rebounded, with 44% of the stores reporting stock. The restocking, however, seems centered more on the East Coast and Midwest — stores on the West Coast remain sold out, from Washington to California. Many stores appear to be releasing their new inventory around noon, as several iLounge editors have succeeded at finding iPhones around noon at stores that were sold out in the morning.
Another iLounge editor had a surprising visit to an AT&T store, which may indicate unfair practices by the cellular giant. Our editor went in to see if they had any iPhones in stock, or had received a new shipment — to which an AT&T sales clerk responded with a resounding “no.” After taking our editor’s number in an effort to “call him when they come in,” the clerk noticed that he was a potential new customer, and proceeded to bring out two new 8GB iPhones, phones that he previously said were unavailable. The clerk then explained that the store was reserving iPhones for new customers only — the store in question had received around 20 units earlier in the day. It is unclear whether this practice is widespread throughout AT&T retail stores.
Logo images for both T-Mobile and Vodafone have been found in the iPhone’s file system. The images, Default_CARRIER_TMOBILE.png and Default_CARRIER_VODAFONE.png, lend credence to the rumors that both T-Mobile and Vodafone will offer the iPhone throughout different parts of Europe. In addition to the images, the device’s ringtones have been found in a dedicated “Ringtones” directory. The iPhone’s ringtones are currently saved in unprotected AAC format with a .m4a extension.
Wall Street Journal columnist Walt Mossberg claims that flash support will be coming to the iPhone in an early software update. In a piece entitled “Questions About Apple’s iPhone,” Mossberg responds to a question regarding the iPhone’s inability to play many internet videos, stating, “Apple says it plans to add [an Adobe Flash] plug-in through an early software update, which I am guessing will occur within the next couple of months.” Lack of Flash support in the iPhone’s Safari browser has been a main issue in early reviews of the device. In addition, Mossberg also references Apple’s iPhone service FAQ, which reveals that should an iPhone need repairs, a loaner iPhone can be rented during the service period for $29.
The Times is reporting that cellular service provider O2 has beaten out Vodafone and others to win exclusive rights to offer the iPhone in the UK. According to the report, negotiations are still ongoing with mobile phone retailers like Carphone Warehouse over an agreement to allow sales of the iPhone in their stores after a period of exclusivity with O2. The agreement between Apple and O2 is thought to include a share of revenues generated by iPhone customers, and O2 is expected to make the necessary network configuration changes to support iPhone’s at-home activation and features such as Visual Voicemail. As previously reported, T-Mobile is expected to offer the iPhone in Germany, while Orange is believed to be the front-runner to carry the phone in France.
Update: Bloomberg reports that O2 parent company Telefonica SA is denying the report. “No deal has been signed with Apple,” O2 spokesman David Nicholas said. “We don’t comment on rumor or speculation.” Alan Hely, London-based spokesman for Apple, said, “We’ll bring the iPhone to Europe in late 2007,” but declined to comment on any possible UK partners.