Apple (NASDAQ:AAPL) said it sold five million iPhone 5s in its first weekend of availability, one million more units than it sold of the iPhone 4S in that device's first weekend last year.
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The sales rush had been expected, given that Apple indicated it had taken two million pre-orders for the iPhone 5 within 24 hours of making the gadget available. Apple indicated it sold out of initial supply of the phone, and according to a report in the Wall Street Journal, Apple's retail sales partners--including Best Buy, RadioShack and Target--did not receive nearly as many units as Apple's own retail stores, leading to shortages.
Apple's decision to launch the device before the end for the third quarter should goose its quarterly sales figures and revenue. Last year Apple waited until October and the fourth quarter to release the iPhone 4S, which led to a weaker third quarter, though Apple followed it by selling a record 37 million iPhones in the fourth quarter of 2011.
Verizon Wireless (NYSE:VZ), AT&T Mobility (NYSE:T) and Sprint Nextel (NYSE:S) are likely to be the biggest beneficiaries in the United States of the first wave of iPhone sales. A number of smaller carriers will start selling the iPhone 5 Sept. 28, including Leap Wireless' (NASDAQ:LEAP) Cricket, C Spire Wireless, Cellcom, Appalachian Wireless, Alaska Communications and GCI of Alaska and nTelos Wireless.
Apple's weekend iPhone 5 sales figure is lower than at least one analyst had hoped for. Piper Jaffray analyst Gene Munster said Apple could have sold as many as 10 million iPhones during its first weekend of sales. However, J.P. Morgan analyst Katy Huberty raised the firm's iPhone 5 sales expectations based on Apple's weekend sales, according to CNET. Huberty now expects Apple to sell 25 million iPhones in the third quarter, slightly above previous expectations.
The iPhone 5 goes for $199 for the 16 GB model, $299 for the 32 GB model and $399 for the 64 GB model, all with a two-year contract. The 16 GB iPhone 4S, introduced in October 2011, dropped to $99 with a two-year contract, in keeping with past Apple practice to lower the price of older models. The 8 GB iPhone 4, introduced in 2010, is free on contract.
Pre-orders for the iPhone 5 started Sept. 14 with the gadget going on sale Sept. 21 in the United States, Canada, the United Kingdom, France, Germany, Australia, Japan, Hong Kong and Singapore. Apple said more countries will follow the week after and that by December the iPhone 5 will be available in 100 countries for 240 carriers.
For carriers, the conventional wisdom has been that they suffer financially when a new iPhone is introduced due to the subsidies they put on the gadget (to be recouped later via monthly service fees). For example, AT&T saw its wireless service margin plunge by a third to 29 percent in the fourth quarter of 2011 after the introduction of the iPhone 4S.
However, that dynamic may be changing, in part because of the changes carriers have made to their handset upgrade policies. Specifically, in April 2011 AT&T increased its smartphone early upgrade fee by $50. Then, in February 2012, AT&T doubled its one-time upgrade fee for customers who were due for an upgrade to $36, following Sprint, which did so in 2011. And in April 2012, Verizon started charging a $30 upgrade fee. Carrier margins are still expected to fall this year, though perhaps by less than they have in the past, according to Reuters, as the operators make up for it with the fees as well as more revenue from data plans.
For more:
- see this release
- see this WSJ article (sub. req.)
- see this Reuters article
- see this CNET article
- see this AllThingsD article
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