Analysts: Apple’s iPhone ‘firing on all cylinders’

Today's Best Tech Deals

Picked by Macworld's Editors

Top Deals On Great Products

Picked by Techconnect's Editors

When Apple reported its fiscal fourth quarter earnings earlier this week, the company revealed that it had reached its self-imposed goal of selling 10 million iPhones in 2008—with two months to spare. CEO Steve Jobs also noted that the iPhone outsold Research In Motion's (RIM) BlackBerry for the quarter, but analysts said the real test is the upcoming holiday quarter.

Boosted by the release of the iPhone 3G in July, Apple sold 6.8 million iPhones worldwide during the quarter ending September 30 (more units that all other quarters combined). Those sales helped Apple top 10 million iPhones sold by the time Apple announced its earnings on October 21

“These are really good numbers,” said Michael Gartenberg, vice president of market research firm JupiterMedia and editor of the MobileDevicesToday blog. “In general one wants to under promise and over delivery.”

What’s even more interesting about the iPhone numbers is that Apple outpaced smart phone rival RIM’s BlackBerry by 700,000 units in the quarter.

“This is a milestone for us,” said Jobs during the conference call announcing the fourth quarter results. “RIM is a good company that makes good products, and so it is surprising that we could outsell them in any quarter after only 15 months in the market.”

Jobs’ enthusiasm is understandable. The iPhone has faced comparison to the BlackBerry since the Apple first introduced its phone. Of course, those comparisons went even further when Apple released its iPhone 2.0 software and the enterprise-level features that went along with it.

When measured by revenue, Jobs said the $4.6 billion in iPhone revenue Apple saw last quarter has made it “the world’s third-largest mobile phone supplier,” after Nokia ($12.7 billion) and Samsung ($5.9 billion), and ahead of Sony Ericcson ($4.2 billion), LG ($3.4 billion), Motorola ($3.2 billion), and RIM ($2.1 billion).

While analysts are satisfied with the iPhone numbers, they don’t see the last quarter as the most important. They are looking forward to the holiday shopping season as the real test for the iPhone's battle with the BlackBerry.

For one thing, Apple was riding the iPhone 3G introduction wave in the last quarter. Adding to that, RIM’s most sucessful market in the world is the U.S. and some of the company’s recently introduced products have not made it there yet. Finally, Apple and RIM are pushing into the other's territory.

“Where it will be really interesting is in the coming quarter,” said Avi Greengart, research director, Mobile Devices at Current Analysis. “Apple could get a boost, but just as likely, RIM will see an increase [in sales] when the new phones come to its largest market.”

There is no doubt that the BlackBerry is best known as an enterprise device. However, with recent releases, RIM is adding more consumer features such as media players, hoping to attract a new set of customers.

While RIM is moving into the consumer space, Apple is taking a hugely popular consumer design and adding enterprise features, hoping it can break into the enterprise market.

“Apple knows how to sell to poeple very well,” said Gartenberg. “A lot of those users will bring it [the iPhone] into work and say, ‘I want to make it work here.’ It’s not about getting a device for work or home anymore—people want a device for their life.”

However, not everyone sees Apple’s move against RIM into the enterprise as something Apple is likely to win with the current feature set.

“I don’t see the iPhone being truely competitive with IT-provided services,” said Greengart. “Simply providing Exchange and ActiveSync isn’t good enough for that class of customer.”

The holiday shopping season is going to be interesting for Apple, RIM, and the rest of the smart phone market, as everyone waits to see if Apple can repeat its fourth quarter success.

“Apple’s success here is something that Microsoft, RIM, Motorola, and Nokia need to pay attention to,” said Gartenberg. “This is looking like a trend and that’s pretty significant. Apple is firing on all cylinders and that’s very important.”

Note: When you purchase something after clicking links in our articles, we may earn a small commission. Read our affiliate link policy for more details.
Shop Tech Products at Amazon