Apple Sells One Millionth iPhone
Apple Inc. sold its millionth iPhone over the weekend, days after it slashed the price by a third to spur sales.
The milestone was reached weeks earlier than expected and sent shares of Apple up $4.94, or 3.8 percent, to $136.71. The stock regained some of the ground it lost after the price cut spooked investors as a sign of weak demand and slimmer margins.
It took just 74 days for the combination cell phone-iPod to hit the 1 million mark, which Apple had said it would achieve by the end of September. By comparison, it took two years for the company to sell 1 million iPods, Apple CEO Steve Jobs noted in a statement.
Meanwhile, Apple Inc. may bid for the rights to a wireless spectrum auctioned by the Federal Communications Commission, a risky but intriguing move that would help carry the consumer electronics company into the telecommunications realm.
Citing unnamed sources, a BusinessWeek article on Monday said Apple CEO Steve Jobs has "studied the implications" of bidding on the spectrum, which analog TV broadcasters will return to the government in 2009 as they switch to digital television. Analysts have speculated wildly on other possible bidders, including Silicon Valley neighbors Google Inc. and eBay Inc.
An Apple spokeswoman declined to comment.
The auction - which the FCC says will take place in January and could raise as much as $15 billion - will determine rights to a 700-megahertz wireless network with faster Internet access than cellular or Wi-Fi networks offer.
Last week, Apple knocked $200 off the price of the 8-gigabyte iPhone, bringing its price to $399, and discontinued the 4-gigabyte version. Apple spokeswoman Natalie Kerris declined to comment on whether the price cut helped spur sales.
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The price cut may have helped a bit, but Apple clearly was on track already to exceed its own expectations, analysts say.
"I'd argue that sales have been fairly strong, and this alleviates concerns that sales were weak," said Shaw Wu, analyst at American Technology Research.
The swift price cut - not surprising in the cell phone industry but rare behavior for Apple - angered hundreds of early buyers who bought the touch-screen gadget for top dollar. In response to all the negative reaction, Jobs issued an apology the next day and offered customers $100 credits.
"Many loyal Apple customers who paid nearly $600 felt that that they had been punished for being an early adopter," said CBS News technology analyst Larry Magid. "By giving them $100 store credit, Jobs not only hopes to make them less angry, but Apple gets another benefit. It brings them back into an Apple store where perhaps they'll spend more than $100."
The move, which many analysts had predicted - but not quite so quickly - adds pressure to Apple's rivals, but it also was possibly part of a broader strategy for its entire product lineup.
On the same day Apple slashed the iPhone price to $399, it unveiled a new iPod, also for $399. The iPod Touch is basically the same as the iPhone but without the cell phone capability.
Apple cut the price of the hybrid iPod-cell phone to prevent an onslaught of consumers from abandoning it in favor of the Touch, Tim Bajarin, analyst with Creative Strategies, speculated. "They solved the cannibalization problem with this," he said.