Size Does Matter: Apple iPhone Sales 'Shatter' Expectations

Apple today said it has sold 10 million of its new iPhones over the first three days since they arrived in stores and at customers' doorsteps Friday. This exceeds analysts' and the company's forecasts. In the words of CEO Tim Cook, sales of its new iPhone 6 and iPhone 6 Plus models have led to the "best launch ever, shattering all previous sell-through records by a large margin."

Indeed analysts are noting that the figures are impressive, especially considering they haven't yet shipped in China, where there's large demand for the new iPhones. How and if the initial results will embolden the iPhone and iOS, in a market that has lost market leadership share to Android, remains to be seen. But it appears the company's unwillingness to deliver a larger phone earlier clearly must have cost it market share with those with pent up demand for larger smartphones. Most Android phones and Windows Phones are larger than the previous 4-inch iPhone 5s and the majority of devices are even larger than 4.5 inches these days.

The company didn't break out sales of the bigger iPhone 6 versus the even larger 5.5-inch iPhone 6 Plus, but some believe the latter may have had an edge even if they're more scarce. But if the sales Apple reported are primarily from existing iPhone users, that will only stabilize its existing share, not extend it. However, as the market share for Windows Phone declines, demand for the iPhone will grow on the back of features such as Apple Pay and the forthcoming iWatch that saturate the media. This won't help the market for Microsoft-based phones (and could bring back some Android users to Apple).

It doesn't appear the new Amazon Fire phones, technically Android-based devices, are gaining meaningful share. Meanwhile BlackBerry is readying its first new phone since the release of the BlackBerry 10 last year. Despite miniscule market share, BlackBerry CEO John Chen told The Wall Street Journal that the new 4.5-inch display that will come with its new Passport will help to make it an enterprise-grade device that's targeted at productivity. It will also boast a battery that can power the phone for 36 hours and a large antenna designed to provide better reception. In addition to enterprise users, the phone will be targeted at medical professionals.

With the growing move by some to so-called phablets, which the iPhone 6 Plus arguably is (some might say devices that are over 6 inches better fit that description), these larger devices are also expected to cut into sales of 7-inch tablets. In Apple's case, that includes the iPad mini. But given the iPad Mini's price and the fact that not all models have built-in cellular connectivity, the iPhone 6 Plus could bolster Apple more than hurt it.

Despite Microsoft's efforts to talk up improvements to Windows Phone 8.1 and its emphasis on Cortana, it appears the noise from Apple and the coverage surrounding it is all but drowning it out. As the noise from Apple subsides in the coming weeks, Microsoft will need to step up the volume.

Posted by Jeffrey Schwartz on 09/22/2014 at 12:03 PM