iPhone Hackers Lend Apple a Hand

Updated from 7:07 a.m. EDT.

Because Apple (AAPL Quote) has both history and hackers on its side, there's a good chance it's going to surpass its recently reaffirmed iPhone sales target.

CEO Steve Jobs, CFO Peter Oppenheimer and COO Tim Cook have all come out in the last two weeks to reinforce the point that Apple will reach its goal for 1% of overall mobile phone sales, or 10 million units worldwide, by the end of 2008.

But is Apple still playing coy? Could an estimate of 10 million iPhones end up being too low? If the company's trend of underpromising and overdelivering extends to its estimates of iPhone sales, the answer is yes. And the company will undoubtedly get by with a little help from their software hacking friends.

(And to see why Apple hackers are so important, watch my video.)

"The 10 million number is almost like any other number that Apple hands out, which means they'll exceed it easily," said Carl Howe, director of enterprise software research with the Boston-based Yankee Group, an independent technology research company. "Historically, they've been very conservative about numbers because they don't want to disappoint."

At the same time, some analysts have been ratcheting back their estimates for iPhone sales. Both Bank of America and JPMorgan Chase have lowered their expectations for iPhone sales going forward, choosing to thumb their noses at Apple's vow to meet expectations.

Apple is known for offering conservative guidance, only to top Wall Street's estimates when it does report. While that usually applies to Apple's quarterly earnings, some believe that the company is adhering to the same pattern now with the expectations for the iPhone.

"Second-quarter revenue guidance was typically conservative, consistent with the past two years," said RBC Capital Markets analyst Mike Abramsky in a research note. Late last year, Abramsky said that he also expects Apple to blow past targets and report iPhone global sales of about 12.5 million at the end of 2008.

Since Apple offered its mild second-quarter outlook on Jan. 22, shares have fallen more than 20%. After the company hit a 52-week high in late December, Apple's stock has tumbled roughly 40%.

Shaw Wu, senior analyst with American Technology Research, said that he still has a high conviction that Apple will ship 10 million iPhones by the end of 2008, as evidenced by the number of software-unlocked phones that grant owners the ability to use the iPhone on any GSM carrier's network.

"To a degree, what gives us confidence is the large number of hacked phones signaling strong intrinsic demand," Wu said in a research note. "While near-term trends look difficult with a looming recession and a slowdown in consumer spending, we continue to believe Apple is well-positioned to weather the storm better than most with its strong fundamentals."

Apple's Oppenheimer acknowledges that software unlocking is "occurring at a significant rate," but spins the subject as a display of unprecedented demand. "We view this as a positive indicator in future demand and interest in the iPhone," Oppenheimer said during a Morgan Stanley technology conference last week. "This gives us confidence in what we're doing."

Interest about the number of hacked iPhones peaked after Sanford Bernstein analyst Toni Sacconaghi noted the difference in the number of phones Steve Jobs said the company has sold -- 4 million as of his MacWorld 2008 speech in January -- and the number of iPhone activations that exclusive U.S. provider AT&T (T Quote) was reporting -- fewer than 2 million.