Apple explains iPhone shortage

2008-04-24 07:22

San Francisco - Apple Inc on Wednesday offered its most in-depth explanation yet for the current shortage of iPhones for sale, which it blamed on buyers' desire for unlocked iPhones and on the company's underestimating demand for the device after January.

According to Apple Chief Financial Officer Peter Oppenheimer, Apple had expected a sharper seasonal decline in iPhone sales, especially in the US. But demand, especially in the US, was much more intense than Apple expected.

One particular reason for the shortage was the continued rush to buy iPhones in order to unlock them through third-party software so they would work on any cellphone network, Oppenheimer said. When sold, iPhones are locked to a single operator's network, which in the US is AT&T Inc.

Apple's retail stores are favourite spots for customers who buy multiple iPhones, then unlock them and ship them overseas or offer them for sale online.

According to Oppenheimer, a "significant" number of iPhones that have been sold have since been unlocked, but he declined to be more specific. To date, Apple has sold about five million iPhones, according to various estimates.

The current iPhone shortages, called "stock-outs" by Apple, point out Apple's relative inexperience in the cellphone business. Apple introduced the iPhone, its first cellphone product, less than a year ago.

"This is our first-ever first quarter in the cellphone business, so we learned something," Oppenheimer added. He also reiterated the company expects to sell 10 million iPhones this year.

Investors watch iPhone developments carefully, given the importance of the device to Apple's future. It is among Apple's fastest-selling products ever, and is seen as Apple's foot in the door to corporate sales, traditionally a weak spot for Apple.

- Dow Jones