Apple is likely to hit its goal of 1% market share in 2008

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There’s a great deal of debate going on this morning about whether Apple will be able to sell 10 million iPhone units in 2008. The New York Times has grossly speculative article that says that it won’t, and Macworld has a grossly speculative article that says it will…both of these articles seem to be missing the point of what Jobs said at the 2007 Macworld Keynote that introduced us to the iPhone.

Before we even get into whether Apple will or will not ship 10 million iPhones in 2008, I think its important to clarify exactly what 10 million units is supposed to mean…and if Apple even intends to sell 10 million units in 2008.

It means 1% of the global cell phone market. Jobs made that clear in his keynote, and it was reiterated by Apple on their last quarter conference call.

Apple also clarified that they mean in the 2008 calendar year. For those of you keeping score, thus far, in the first 3 months of 2008 Apple has sold 1.7 million iPhones. That number, as the New York Times article points out, is pretty darn low for Apple to hope to hit 10 million units by the end of the year. That article claims that iPhone sales have “settled down” – which, according to the Macworld article is completely untrue. This “settled down” claim is where the NYT articles kind of falls apart, due mainly to the fact that it projects an overly negative view of iPhone sales, never acknowledging that the first few month of the year are traditionally the lowest sales wise – and completely ignoring the sales of the iPhone for the previous quarter.

The Macworld article falls apart when they try to claim that iPhone sales are going to have an 18% up swing in the second three months of 2008. That’s overly optimistic, especially with all the buzz about a new iPhone coming so soon. It’s possible, I suppose, but you’re not going to prove a point by giving a company an almost 20% sales boost with no reasoning behind it other than that you’re “being conservative”. If there is a reason behind it, tell the whole class, so we can all understand your line of thinking.

Beyond article criticizing, though, there is a bigger issue here. Everyone is looking at what Jobs said incorrectly. Let’s talk about what Steve Jobs actually said at the Macworld 2007 keynote, and what Apple’s actual number are thus far.

At Macworld 2007, Steve Jobs stated “1% market share equals 10 million units. This is a giant market. If you have just 1% market share, you’re gonna sell 10 million phones, and this is exact what we’re going to try to do in 2008. Our first full year in the market. Is grab 1% market share and go from there.” (source)

Let me translate: Apple’s goal is to have 1% market share by the end of their first full year in the market. That translates to 10 million units sold…and they’re over half way there.

Now you can argue that “Jobs said 10 million units in 2008″ if you want. I’m sure many people will – but read his direct quote – watch the video if you need to. It’s very clear, the man is saying 1% market share after their first full year in the market.

In January 2008, at Macworld, Steve Jobs announced that they had sold 4 Million iPhones. (source). When you add 4 million to the iPhone sales for the first three months of 2008, you’re looking at 5.7 million units sold.

That puts Apple over half way to their goal, with 9 months left to sell the remaining 4.3 million units. Without doctoring numbers, or making wild speculation I think its safe to say that Apple is well on their way to the goal of 1% market share by the end of 2008, and with the addition of so many new countries, and the 3G technology which will certainly boost sales over seas, it seems inevitable that Steve Jobs will hit the Macworld stage in 2009, reporting that Apple has met its initial goals with the iPhone…most likely exceeded them.

Comments

  1. The question is, if he said 10 million in 2008, do you or do you not count the phones sold in 2007? That is where the confusion lies. Did he predict 10 million totalling 2007 and 2008 sales, or was he referring to 2008 sales only, throwing out the 2007 sales? Clear answer, please!

  2. Cook and Oppenheimer have clarified on multiple occasions (including Apple’s 2Q conference call) that the 10M target is for calendar year 2008 sales. So it doesn’t really matter how fuzzy Steve Jobs made it back at the launch. The “first full year” is now understood to be first full calendar year, 2008.

    The upswing in the MW article is assuming that the iPhone is released within days of June 9th. Apple sold 270K in one country over 2.5 days at a high price. In my projections, assuming 2.5 to 3 weeks, and 67+ countries, it’s not unreasonable to assume another 2M in sales of the new iPhone in this quarter. (And you need to add the 2M to a very conservative assumption that Apple sold only 800K of the older iPhone over the first 70 days of the quarter.)

  3. @Jim

    In the 2nd Quarter Conference call they kept saying they were “confident in their goal of 10 million for 2008″ – they never said IN 2008.

    No matter how it ends up – if there is a 10 million total, they’re going to claim it as meeting their goal.

  4. I did some searching and at the Keynote in January 2007, Jobs said they would sell 10 million iPhones by the end of 2008.

  5. I think the “10,000,000 in 2008″ comment is purposely too vague to support any argument to the contrary. While purposely vague enough to support any boasting Apple chooses to do – as they can define “In 2008″ in a myriad of ways. When I originally heard that comment made, I thought Apple / Steve were gunning for 10,000,000 iPhones in the first year – meaning June 2007 – June 2008. Not Calendar Year 2008, not Fiscal Year 2008, but the first year of retail sales ending in June 2008

  6. are you an idiot? of course 1% market share means 1% of phones sold in 2008, not cumulatively to date.
    There are over 1B phones sold every year which is how you get to the 10M unit number (Apple’s goal). If it were cumulative phones out there in use, then 10M is much much less than 1% marketshare, perhaps closer to 0.3% market share. However you slice it, 1% market share means 10M phones in 2008. Anything short of 10M units in 2008 means way less than 1% market share. And 10M units equaling 1% market share is actually not accurate. There should be closer to 1.1B phones sold globally in 2008, which means Apple would need to 11M phones *in* 2008.

  7. It sounds like you’re counting phones sold in 2007 as part of the 10 million, but then also counting all of 2008 based on the “9 months to go”. If they want to hit 1% of the market it has to be a year long period – either 6/29/07 to 6/28/08 or 1/1/08 to 12/31/08.

    Also the market has moved – there were 1.15 billion cell phones sold in 2007, so 1% is actually 11.5 million. We can read the tea leaves of Steve’s comments all we want, but several times it was pointed out that Apple’s current goal is to sell 10 million iPhones in calendar 2008.

    Lastly I think Macworld was optimistic about the rise q/q sales for this quarter because currently a large part of the channel is empty – they have not sold iPhones online or at Apple stores for weeks. My guesstimate is that so far they are well below last quarters performance.

  8. The problem in selling the iphone has got nothing to do with the quality and the features of the iphone – it’s with the networks providing the iphone, the rates being charged and the price of the phone.

    I am impatiently waiting for O2 Ireland to release the 3G iphone before I make a purchase. The price of the phone doesn’t deter me at all, but the difference between O2′s price plans in Ireland and in the UK is incredible.

    In Ireland O2 don’t offer visual voicemail at all (you pay for normal access to voicemail on the iphone – the only phone that a charge for voicemail applies). They have set a cap of 1GB of data per month (10c per Mb over that) and have the gall to charge a whopping €100 per month ($150) to get 700 minutes of talk time and 250 texts (in the UK you get the a better deal for $50 per month.

    outrageous.

    I am currently not with O2 and will probably switch over to them to get the 3G iphone – but with great reluctance at the rates charged. Many of my friends who would LOVE to get the iphone share by sense of being screwed to get it. Irish sales certainly wont help Apple to reach 10 million sales in 2008!

  9. It’s only “settled down” because everyone is clearly waiting for the 3G version.
    http://www.krontzilla.com

  10. “I think the “10,000,000 in 2008″ comment is purposely too vague to support any argument to the contrary. ”

    No. Steve Jobs said that Apple would sell 10 million iPhones by the end of 2008. There was no misunderstanding of what he said, he was clear.

  11. http://youtube.com/watch?v=D-X_nLCz6Hc&feature=related

    Check out Steve’s exact words at the iPhone introduction. His expression comes at about the 3:15 mark.

  12. Apple will hit 10 million iPhones sold no problem.

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