The iPhone Inevitable

Why does it come as a surprise to some that about one million iPhones out of the 3.7 million sold have been unlocked? *Unlocked meaning the phone's settings are disabled to allow the use of any carrier's SIM card.

A new report by Bernstein Research analyst Toni Sacconaghi traces the gaps between Apple's shipments, AT&T iPhone subscribers and European projections to estimate 1.4 million out there which are unlocked and/or still sitting on store shelves still packaged.

He also brings up the point of concern that there is excess stock of Apple's iPhone inventory. He claims that"if 10% were sold unlocked in the last quarter, it would leave more than one million iPhones unexplained and as many as 238 iPhones unsold per store". The Berstein report suggests that the iPhone's demand is waning and "end-user demand for iPhone is lower than many investors may think based on Apple's $4 million sales figure... and it points to slower iPhone sales in the current quarter, since much of this inventory is likely to be drawn down".

According to The Register, "unlocked phones represent a significant drag on the profitablility of the device. With Apple receving $300 to $400 in carrier payments for each iPhone sold, they generate 50% less revenue and up to 75% less profit than normal. The 1 million phones translates into as much as $400 million in lost revenue".

Coming from a consumer's perspective, I've always found a way to buy the latest mobile devices as soon as they come out. When Motorola's original MOTORAZR V3 showed itself for the first time in market in 2004, it was exclusive to Cingular's (now AT&T) network. I already had a T-Mobile contract and didn't want to break it so I went in search of an unlocked V3 on Ebay. In 2 weeks, I had a brand new unlocked RAZR at my door, popped in my SIM chip and escaped the costs and fees of changing carriers.

That was four years ago. You'd think by now the corporations would realize there's a huge demographic out there of tech-rebels like me. Supposedly, Apple has gone to great lengths to make it hard to unlock iPhones where updates to patch security bugs typically re-lock the handsets. However, hackers always prevail and found a work-around. Less than a week after the most recent version of the firmware was released, so-called jailbreaks that unlock the phone were circulating online.

Whether it's due to its retail pricetag, contractual and expensive service plans with AT&T or the disadvantage of being the first generation of its kind, the iPhone doesn't seem to be worth its weight to many consumers. Especially in our recent economic recession, people are planning to spend less in general. This in turn would probably cause Apple to lower the iPhone's selling price. Many are waiting for a more sophisticated and fine-tuned version. The rest are patiently waiting for the iPhone to go the way of the MOTORAZR and become available across all network carriers.

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