Apple Sells a Record 600,000 New iPhones: How?

Features, upgrade incentives and loyalty matter

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Despite a wave of technical glitches that bedeviled the iPhone 4 pre-ordering process, Apple has sold a whopping 600,000 units. That is a big showing, even by Apple standards. In a statement the company said "It was the largest number of preorders Apple has ever taken in a single day."  Why have so many folks shelled out for a new iPhone now? Here's what expert business analysts think:


  • New Features Are a Major Factor, say Mark Moskowitz and Anthony Luscri at J.P. Morgan: "We think the initial pre-order rush indicates that customers value this new smartphone above the expanding pack of competitive offerings. We believe the response is more than just prerelease hype. In our view, the incremental features of multi-tasking, Facetime video, and 40% more battery life augment the iPhone’s attractiveness."
  • Don't Forget About a Better Antenna, writes Ian Sherr at The Wall Street Journal: "Apple Inc.'s new iPhone might perform a simple task much better than its predecessors: hold a call. Among the most dramatic design changes in the latest iteration of Apple's smartphone, the iPhone 4, is a stainless-steel antenna that wraps around its sides. The new antenna design constitutes a radical departure from previous iPhone models, which buried the antenna under the phone's shell."
  • It's Because iPhone Owners Can Now Get an Upgrade, says Gene Munster and Michael Olson at Piper Jaffray: "All early iPhone 3GS buyers will be eligible for upgrade pricing on the iPhone 4, but last year early iPhone buyers were not eligible for the iPhone 3GS upgrade pricing. Specifically, we believe that the 8.4m iPhone users activated at AT&T between the Sept-08 and Jun-09 quarters will be eligible for upgrade pricing."
  • Here Are the 5 Main Reasons, says Katy Huberty at Morgan Stanley. She talks a lot about Apple's "installed base," i.e., its customer base.:"We believe there are several key drivers of iPhone upgrades":
-Redesigned hardware with many new important features
-"Stickiness" of the installed base due to App store and iTunes
-57% of U.S. installed base is not fully upgradeable to iOS4 (i.e. no multitasking)
-Early upgrade incentives from AT&T
-Maturation of the installed base.
  • Yawn—This Was Expected, writes Rob Pegoraro at The Washington Post: "While the numbers might be unprecedented, the phenomenon isn't. Shoppers faced unmanageable crowds and waits for AT&T to activate their new iPhones at the launch of the first model in 2007, the debut of the iPhone 3G in 2008 and the arrival of the iPhone 3GS last year. AT&T even had problems coping last summer when owners of existing iPhones installed Apple's iPhone OS 3.0 upgrade, which required reactivating their devices on its network. This has become as predictable as Apple's occasional excesses of App Store control-freakery and subsequent reversals."
This article is from the archive of our partner The Wire.