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Days after it startled the market with news that it was cutting the price of its iPhone, Apple (Nasdaq: AAPL) announced that it had sold the one-millionth gadget a few weeks ahead of schedule. In earlier statements, the company promised the market that it expected to sell one million iPhones by the end of September.
The symbolic milestone reassured skittish investors, who had begun to suspect that the iPhone was not doing as well as Apple originally expected.
Apple, however, is choosing to look at the situation differently, comparing the iPhone's progress with the introduction of the iconic market maker, Apple's iPod.
74 Days
"One million iPhones in 74 days -- it took almost two years to achieve this milestone with iPod," CEO Steve Jobs said. "We can't wait to get this revolutionary product into the hands of even more customers this holiday season."
Indeed, increasing market share for the iPhone was the stated rationale for repricing the 8 GB iPhone from US$599 to $399. "iPhone is a breakthrough product, and we have the chance to 'go for it' this holiday season," Jobs explained to his customers in a blog posting.
"iPhone is so far ahead of the competition, and now it will be affordable by even more customers. ... We strongly believe the $399 price will help us do just that this holiday season."
The letter was in response to early adopter customers peeved that their $600 investment had been devalued on the market so quickly.
Fortunate Timing
The news that Apple's sales of the iPhone were doing better than expected could not have been more fortuitously timed if Apple had planned the series of announcements beforehand.
The announced price cut last week raised concerns that the iPhone was not selling as well as previously thought, Fred Ruffy, analyst with the investor education firm Optionetics, told MacNewsWorld.
"Instead, today's news suggests that the iPhone is selling as well as, or better, than expected," he said. "As a result, shares are performing well today, despite another round of selling the broader market. The Dow Jones Industrial Average is down 50 points. Apple shares are up $3.64 to $135.41."
Apple shares fell 5 percent on Sept. 5, the day it announced it was dropping the iPhone's price. The following day, shares fell another 1.3 percent.
In addition, Ruffy continued, news of the one-millionth sale confirms that the company's products continue to attract the interest of consumers. "The customer base is building and that is a positive for Apple's long-term sales and earnings," he said.
