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Apple takes flak as AT&T drops iPhone bomb

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AT&T's declaration that only 146,000 Apple iPhones registered on its network in the first two days it was on the market has led to widespread shock at what is now being seen as the device's failure and a down period for Apple shares, sliding 7.5 per cent over a few days last week, a fall of some $10bn in total market capitalisation.

This is one time no one can forgive Apple. In the past it has executed launches so well that it has become metronomic and surprise-free. It might be that this was a result of the problems that people had once they had bought their devices, getting home and finding that it was almost impossible to sign up with AT&T over a clogged network, but it might also be because many of the early devices were bought by people from outside the US, who are fine with paying AT&T for service, but are just going to go home to Europe or Asia Pacific, ignore the loss of voice use, and just use the iPhone as a music and internet gadget. We certainly know some of those, but are there 100,000 of them?

Because that's about the number that everyone agrees Apple missed its numbers by and some analysts had pegged it as high as 400,000 or 500,000, getting carried away on the iPhone euphoria that has been hyped to hell.

An entire month's sign ups, or better still a quarter, will be more indicative, and as word gets out of what it is like to own such a device there may be a snowball effect. We've spoken to people who have one, and they agree that it's even better in real life.

Even so, as many as 25 per cent of the buyers were from people that were previously on other US networks, so even at what is being seen as a low level, this will be taking customers away from AT&T's rivals, and scaling up from just two days of sales it is still likely that Apple will make its first year sales targets.

Copyright © 2007, Faultline

Faultline is published by Rethink Research, a London-based publishing and consulting firm. This weekly newsletter is an assessment of the impact of the week's events in the world of digital media. Faultline is where media meets technology. Subscription details here.

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