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Apple: 1 million iPhones sold

It seems like only yesterday that Apple had sold its first 270,000 iPhones--not a bad tally for just a little bit more than the first day on the market.

Monday morning, a little more than two months after the the much-lusted-after gadget went on sale, Apple said in a brief press release that it had sold its 1 millionth iPhone.

"One million iPhones in 74 days," Apple CEO Steve Jobs exulted in a press release. "It took almost two years to achieve this milestone with iPod."

Last week, Jobs unveiled the new iPod Touch, which mimics the look and behavior of the iPhone. He also ran into a buzzsaw of criticism by cutting the price of the iPhone by $200 so soon after long lines of early adopters plopped down a big chunk of change to be the first on the block with the gadget.

The price cut--the 8GB model now costs $399--is intended to boost sales of the iPhone during the upcoming holiday sales season. Two days after announcing the new pricing, Jobs offered an apology to the first wave of buyers, along with a $100 store credit.

"We can't wait to get this revolutionary product into the hands of even more customers this holiday season," Jobs said in Monday's press release.

Just how many hands the iPhone actually is in at this point is a little unclear, Apple's ballyhooing of 1 million sold notwithstanding. If Apple sold 270,000 or so in the waning hours of June, as it claimed, and then 220,000 in July, as market research iSuppli reported last week, that's 490,000 units. Which means the company would have needed a sales surge of more than a half-million iPhones in the six weeks or so since August 1.

Thursday, September 6, 2007

Apple Price Cut On New iPhone Shakes Investors

SAN FRANCISCO -- Apple Inc.'s move to lop $200 off the price of the iPhone, unveiled as part of a revamp of the features, design and pricing of its family of portable gadgets, spooked investors and sent shares tumbling.

The top price of the iPhone, a device introduced with much fanfare in June, will fall to $399 from $599, Apple said. Chief Executive Steve Jobs, at a company event here yesterday, said Apple remained "on track" to meet its previous goal of shipping one million iPhones by the end of this month.

Apple updated its line of iPods with new models, including the iPod Touch (left), which borrows many of the features of the iPhone.

Still, Apple's shares shed $7.40 on the news, falling to $136.76 in 4 p.m. trading Wednesday on the Nasdaq Stock Market, and shares continued lower Thursday.

The price cut was unexpected. Toni Sacconaghi, an analyst at Sanford Bernstein, said he wasn't aware of Apple previously cutting prices so quickly after the introduction of one of its new products, and questioned whether Apple could meet its goal in the absence of a price cut. "It can't be a bullish signal about iPhone volumes," he said.

In an interview, Mr. Jobs said Apple "absolutely" could meet its iPhone shipment goal this month without cutting prices. He said the cut in part reflects Apple's ability to reduce production costs, as well as a desire to price the product attractively during the holiday season. "It's time to be as aggressive as we can be," Mr. Jobs said. "If we're not, then we have to wait another year for the next holiday season."

Apple previously said it sold 270,000 iPhones during the product's first 30 hours on sale, but it hasn't provided more specific sales figures since then.

As part of its changes, Apple said it will stop selling a $499 low-end model of the iPhone that came with 4 gigabytes of storage because most of its customers were buying the higher-end model with twice the capacity.

A spokesman for AT&T, Apple's exclusive wireless partner for the iPhone in the U.S., said the company has been happy with the product's sales thus far and welcomed Apple's decision to lower the price. "With the new pricing, we think even more people will adopt it," said AT&T's Michael Coe.

For Apple, the iPhone stakes are potentially huge. Partly on investor enthusiasm about the prospects for the product, Apple's shares are up 61% on the year. The phone gives Apple a shot at tapping into an enormous, multibillion-dollar market that dwarfs the market for just digital music players.

At the same time, however, Apple faces an onslaught of cellphones from other handset makers featuring steadily improving iPod-like entertainment functions -- often at a cheaper price per unit. Apple has said it hopes to sell 10 million iPhones by the end of next year, giving it a 1% share of the global cellular handset market.

Gene Munster, an analyst with Piper Jaffray, believes Apple cut the iPhone's price because it wants to step up its ambitions in the cellular market. "The bottom line: Apple is investing iPhone profit dollars over the next few quarters in order to be a legitimate player in the phone market," Mr. Munster wrote in a report. "We think this is the right strategy."

Also yesterday, Apple introduced a new iPod that will let users for the first time directly purchase songs wirelessly over the Internet, making a computer unnecessary. The product builds on iPhone technology to make the music player more closely resemble a computer.
New products are part of an Apple ritual in recent years to introduce a wave of new gadgets in time for the holiday shopping season. The company dominates the market for portable digital music and movie players, and analysts say the new products should set Apple up to outsell its competition again at the holidays.

The most eagerly anticipated of Apple's new products is the iPod touch. In appearance, it resembles the sleek, wide-screen design and features of the iPhone, minus the calling and email functions of the Apple cellphone. The product has the same touch-sensing screen technology, which allows users to scroll through song, photo and movie libraries.

The product also can connect to the Internet over Wi-Fi wireless technology. The iPod touch isn't the first to include Wi-Fi capabilities in a portable music player, but Apple has a long history of taking technologies that others invented and bringing them to a mass market.
Mr. Jobs said a key reason other wireless music players haven't done well is that they often are unable to connect to Wi-Fi networks outside the home. Many public "hotspots," as public areas such as hotels and airports with Wi-Fi are called, require users to log in through a Web browser, which most portable music players lack. The iPod touch, on the other hand, has a full-blown Web browser, just like the iPhone.

"Some others have done this, and it has failed," Mr. Jobs said. "We took a long look at this, and we think we understand why it's failed and what we can do to make it successful."
The iPod touch will start at $299 for a model with 8 gigabytes of storage capacity and rise to $399 for one with 16 gigabytes when it goes on sale later this month.

Some analysts said the iPod touch could damp iPhone sales by providing an alternative for consumers who want the iPhone's multimedia features without a two-year commitment to cellphone service through AT&T. AT&T's Mr. Coe said the new device's release won't affect what the company expects to be strong demand for the price-reduced iPhone.

In tandem with the new product, Apple said it agreed with Starbucks Corp. to let users buy music from the iTunes Store on free wireless connections in Starbucks cafes. Users won't have to pay a wireless connection fee to shop in the iTunes store, which they currently must do when accessing iTunes from a Starbucks. The deal also applies to Mac, iPhone and personal-computer users.

When customers log on to the Apple music site inside a Starbucks, iTunes automatically will tell them the name of the music currently playing at the cafe they are in. The companies declined to discuss the financial terms of their deal. "I've said for years that an unexploited asset was this wireless network," Starbucks Chairman Howard Schultz said in an interview. "The big payoff is the sense of discovery that will exist."

Starbucks plans to begin the service in October at 600 cafes in New York and Seattle, adding service gradually in other locations throughout next year.
The relationship with Starbucks exploits what Apple is calling the iTunes Wi-Fi Music Store, a variant of its popular service that also lets iPhone and iPod touch users browse and buy music from their home wireless networks without a computer. Once they connect those devices to a Mac or PC, the downloaded music is added to their iTunes library.
Apple also shook up its existing iPod family, adding video playback capabilities to its most popular music product, the iPod nano. The redesigned iPod nano has a larger screen and costs $149 for a four-gigabyte model or $199 for an eight-gigabyte model -- $50 less each than prior models with the same amount of storage.

Apple expanded the storage capacity of the high-end iPod classic -- a model previously known simply as the iPod -- to a whopping 160 gigabytes, enough room for 40,000 songs or as much as 200 hours of video. Sales of the iPod brought in about a third of Apple's $5.41 billion in revenue during its most recent quarter.

Apple has a history of pricing new, redesigned versions of its iPods at about the same price as their predecessors, or a bit less. In early 2005, for example, Apple introduced a lighter-size $99 version of the iPod shuffle with 512 megabytes of storage. Last fall, it introduced a much smaller, redesigned shuffle with 1 gigabyte of storage for $79. That strategy exploits the tendency of component costs for storage to decline steadily over time.


Apple Unveils Wi-Fi iPod, Wi-Fi iTunes, Wi-Fi Starbucks Collaboration

...but does it make phone calls?
Owners of the new wi-fi-enabled iPod touch will be able to buy songs on the spin at Starbucks - while the songs are playing.

Both products — the wi-fi iPod touch, and the Starbucks liaison — were unveiled yesterday in an anticipated news event.
The new iPod boasts touch-screen capabilities, wireless functionalities and a Safari browser. Many Apple fans were able to predict its iPhone-esque appearance and functionalities in advance of the announcement.
The Starbucks relationship enables users to access — and instantly purchase — music played in Starbucks stores, as well as the last 10 tracks, and special Starbucks music collections. This capability will be available in participating stores as soon as October, and across the States by the end of 2008.
Users with a wi-fi-ready iPod, an iPhone, or a computer with the most current version of iTunes will also receive free wi-fi access to iTunes, including Starbucks' Now Playing content, within Starbucks stores.
The cost of the iPhone was also dropped. An eight-gigabyte is now US$ 399, while the four-gigabyte will be phased out. This should encourage still stronger adoption of the unit, which notably competes with both smart phones and feature phones.

Tuesday, September 4, 2007

The iPod is growing up

If the rumors are true, and Apple releases an iPod with Mac OS, it will have developed an interesting little computer--not just a video player.
By Tom Krazit Staff Writer, CNET

If Apple really is putting a version of Mac OS X in a new iPod, presumably it has more in mind than showing high-quality reruns of The Hills.

Any talk these days of Apple and the future of mobile computing quickly turns to the iPhone. The company is on its way to selling a million iPhones in the first three months of what Apple says is a multiyear strategy to enter the mobile phone market.

But Apple makes another mobile device. It's called the iPod. And if the persistent rumors are fulfilled Wednesday during the latest episode of The Steve Jobs Show (a product presentation at San Francisco's Moscone Center), the iPod is about to get a whole lot more powerful.
A wide-screen iPod that looks an awful lot like an iPhone seems like the most likely bet for the sixth generation of Apple's ubiquitous music and video player line. It also seems very likely that those new iPods will run the same stripped-down version of Mac OS X found on the iPhone, something even Jobs himself hinted at during a meeting with Apple employees on the eve of the iPhone launch.

You don't need a sophisticated operating system to play songs and TV shows, so at that point, the iPod stops being just a gadget. So, then, what exactly is it? Like the iPhone, it becomes something in between a gadget and a PC, which has been treacherous ground for the PC industry.

The tech industry appears to be at another one of those pesky crossroads. The PC is, well, dated. We all need one, and we all use one, but we just don't get excited about buying a new one anymore.

As a result, the PC industry has been scrambling to find the next big thing. Tablet PCs? Nope. Home media centers? Maybe, but not yet. Digital televisions? Still the domain of the consumer electronics industry.

An iPod with a more powerful operating system and a touch screen could suddenly become an intriguing little device for those who like the iPhone, but don't want to spend 600 bucks or hook up with AT&T.

Apple found its next big thing six years ago when it released the iPod. It wasn't the first company to figure out that people wanted to carry all those Napsterized songs in their pocket, but it has certainly made the most of it. More than 70 percent of people in the U.S. who want a portable digital music player buy an iPod.

But the iPod really does just one thing. It does it well--and yes, you can also store contacts, appointments and play games that would have looked lame 10 years ago--but nobody buys an iPod to make sure they remember that doctor's appointment.

After Wednesday, that might be different. An iPod with a more powerful operating system and a touch screen could suddenly become an intriguing little device for those who like the iPhone, but don't want to spend 600 bucks or hook up with AT&T.

It wouldn't be hard to imagine some of those people put off by the iPhone's price and wireless carrier would shell out $349--the current price for the 80GB iPod--for an iPod that can do far more than just play videos or music.

That is, assuming Apple doesn't overlook what's really needed in a mobile computer. There's no point in putting a sophisticated operating system in an iPod if you wall that device off from the Internet. Apple has resisted adding Wi-Fi to the iPod thus far, but it broke that barrier with the iPhone and perhaps it has figured out a way to add Wi-Fi without killing battery life.

And it would really need to be a phone-less iPhone, with applications like Safari, YouTube and Google Maps. Ideally, it needs third-party applications, such as games or GPS navigation. But it might take Apple awhile to admit that, given that its approach to application development on the iPhone was to limit developers to Web-based applications.

The entire combination could make the $349 iPod more attractive. Apple's revenue growth from iPods has stalled, even though the unit growth is still above 20 percent year over year. That implies that iPod buyers are opting for the less expensive $199 4GB Nano or the $249 30GB iPod.

It would also finally give Apple the real wide-screen video player that iPod fans have been clamoring for since just before last year's "showtime" event. And, after all, that's still the iPod's sweet spot: mobile entertainment.

It's quite possible that Apple doesn't want to make that dramatic a leap just yet. Jobs prizes simplicity and aesthetics, and a large part of the iPod's appeal has been that it does one thing (or a couple), and does it (or them) well.

But a Mac OS X-based iPod could be a compelling device as the industry and its customers try to figure out how mobile computers should evolve. It would avoid the early mistakes of the UMPC, which runs a battery-sapping PC operating system, doesn't fit in a pocket, and at around $1,000, has been met with lukewarm--at best--interest from consumers.

There are other devices out there, like Sony's PSP and video players from Archos, that are trying to do the same thing. But with sales of more than 10 million iPods a quarter--and a whopping 21 million last holiday season--Apple has established the iPod as one of the most widely used handheld gadgets on the planet.

What if it was a computer, too?