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O2 has Wigan-sized iPhone problem

Just 26,500 activated, lots of stock

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Exclusive Everyone wants a Wii or an Eee this Christmas. They're the hottest technology items in town, but there's none to be found for love nor money. If you want an iPhone, however, supplies remain plentiful.

Reliable channel sources tell us that Apple's exclusive UK operator has activated just 26,500 iPhones since its launch two weeks ago, below the company's expectations.

This doesn't reflect the true number sold - for reasons we elaborate on below - but the gross is unlikely to be significantly higher. It's far lower than first-weekend sales guesstimates of 100,000, a figure reprinted by tabloid and broadsheet alike. The UK market has around 25m households; 26,500 is around the capacity of Fulham's Craven Cottage, or Wigan's JJB Stadium.

O2 chief Peter Erskine sounded defensive on the Monday following the launch, justifying the company's decision.

"It's the old story in retail, if you can get them in you can sell them something," he told reporters, saying it was "early days" for the iPhone. It still is.

The impetus within O2 to take the exclusive iPhone deal came from Matthew Key - who personally came within range of the Reality Distortion Field.

"I played with it for two minutes and just thought, 'oh my God, this is leagues above anything I've ever seen before'," Key told the Telegraph. Key drove home the deal while other operators balked at Apple's terms.

He wasn't alone. Analysts urged O2 to make emergency investments in its network capacity to cope with anticipated data demand. Broadsheet newspapers and 24 hour news TV filled space by reporting on 'a cultural phenomenon'.

So what are the numbers?

Carphone Warehouse, the main retail outlet for Apple's hot item, had taken stock of 50,000 iPhones, but had only managed to shift around 11,000 in the first weekend. O2 has over 400 stores and Apple just 12 in the UK. Phone industry sources estimated that 25,000 units might have shifted in that first weekend - but that now seems optimistic.

But does the number of activations actually represent the number of iPhones O2 has shipped? That's a hotly disputed issue in the channel this week.

The optimistic argument is that many more thousands of iPhones have been sold, but not yet activated. Some have been bought as Christmas presents, and the number activated represents the proverbial tip of the iceberg. Others have been bought, then "jailbroken" - removing the SIM lock and restrictions on running third-party software - and then immediately sold on for a profit.

Perhaps Jack Duckworth has bought one for Vera as a Christmas present in Corrie - and come December 25, that scene will be being played out across the land.

Or... maybe not. ®

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