iPhone Shortage - The CTIA Reaction
SAN FRANCISCO -- Apple's ( AAPL) flagship retail store in downtown San Francisco is usually filled with shoppers trying to get their hands on the company's latest products, including the iPhone. That's a problem now. The best that buyers interested in the iPhone can do is play with the models on the floor. A representative at the San Francisco store said they have run out of iPhones for sale and don't know when the next shipments are coming in. The San Francisco store isn't the only outlet experiencing shortages. Apple's 8GB and 16GB iPhones are reportedly out of stock at most Apple retail stores in the U.S.
Meanwhile, shoppers trying to get their hands on the iPhone at Apple's online store are being told it will take five to seven business days to ship the phones to them. Analysts say that response is equivalent to being out of stock. The phones reportedly are available at Apple stores in the U.K, France and Germany. The sudden lack of availability of iPhones at Apple stores in the U.S. could mean the company is preparing to launch the 3G version of the device, two Wall Street analysts say. The thinking is that Apple could be drawing down upon the current inventory of iPhones in preparation for the launch of a new product in a bid to get its latest models out into the stores and ensure that older phones don't end up cannibalizing sales of a newer version. Shaw Wu, an analyst with American Technology Research, an independent research firm, says the iPhone is likely to undergo a product transition sometime in June and July, about a quarter earlier than expected. Meanwhile, Toni Sacconaghi, an analyst at Bernstein Research, says in a research note that the current inventory shortage at Apple stores seems to be selective. Sacconaghi, whose firm makes a market in Apple shares, says Apple's partners continue to sell the products and the current versions of the iPhone are going strong in in Europe, which is viewed as a bigger market for 3G phones. Sacconaghi says a more likely explanation is that the supply of iPhones to its partner AT&T ( T) could have been slowed or disrupted in recent weeks by production difficulties, resulting from component shortages. Two weeks ago, Sony Ericsson, a joint venture between Sony ( SNE) and Ericsson ( ERIC) reported that a component shortage contributed to its lower-than-expected sales last quarter. Sacconaghi says Apple could be facing similar issues. A prolonged stock-out of the iPhones could hurt Apple badly. Sacconaghi says each week Apple's U.S. stores are out of stock will mean 20,000 to 40,000 units in lost sales. It's a greater problem for Apple in the current quarter. For the March quarter, the average Apple store was out of stock for about a week or less, leading to a loss in sales of up to 20,000 units, he says. Apple shareholders remained unconcerned as analysts debated reports of a widespread shortage in the availability of iPhones at Apple stores.
Shares of Apple were down $1.80, or 1.2%, to $147.75. The iPhone accounts for just 2% to 3% of the company's revenue but it is seen as a major driver for Apple's future. Apple is battling rivals such as BlackBerry maker Research In Motion ( RIMM), and handset makers Nokia ( NOK) and Motorola ( MOT). Wu says Apple may launch its 3G iPhone during CEO Steve Jobs' keynote at the Apple Worldwide Developers Conference in June. The current model then could see a minor change in its hardware casing and a lower price point closer to $299 to $349, compared to the current $399, he says.