Apple wont sell 10m units

"Before January, 2007, the last time Steve Jobs made a prediction based on hard numbers was June, 2003. The number then was 3Ghz in a Power Mac G5 within a year, but a year later, Jobs was forced to admit failure. A year after that, he fired IBM as Apple's CPU manufacturer. One wonders who will be fired this time if Apple fails to sell 10 million iPhones in 2008. MarketWatch reports on a conference call with Bernstein Research analyst Toni Sacconaghi, who suggests that Apple may not make its goal.

"Apple's goal of selling 10 million iPhones this year is optimistic, particularly if Apple insists on carrier revenue sharing without significant price cuts or new model introductions," Sacconaghi said.

While there are a lot of 'ifs' in that prediction, there are also some numbers behind it. Sacconaghi asserts that iPhone sales averaged 180,000 per week during the busy holiday quarter. Going by that baseline, he expects Apple to sell just under 8 million iPhones in 2008. If measuring sales of iPhones were a linear process, that might be true, but there are several unknowables to ponder, the most salient being whether iPhone sales are accelerating the way iPod sales once did. iPhone sales more than doubled from the third quarter to the fourth quarter of 2007. Continued growth like that would make 10 million iPhones in 2008 a low-end estimate. However, if iPhone sales spiked like iPod sales do during the holiday quarter, then there might be a problem, as even sales averaging 180,000 per week will fall short of 10 million iPhones in 2008.

Of course, as the chart shows, there are a number of events that might boost sales of iPhones, and there may be one other factor to consider: the ego of Steve Jobs. After all, it's not like he can fire AT&T from the remaining four years of the companies' exclusivity agreement. That leaves new models and/or a price drop as potential boosters of iPhone sales in 2008. With a gross margin as high as 60 percent, there is a lot of room to drop the price. If and when that happens will likely be determined by how well the iPhone does in making the numbers, but you can bet Steve Jobs isn't going to be wrong again. Well, that and the fact that the stock of the company would suffer considerably with the realization that the iPhone was not the Next Great Thing™.