[Tom @ Jul 2nd 2007 7:02AM]

Hmmm.... iPhone sells 500k in one day, and still has what, 2.5mil unsold inventory? Wii sold 600k first day and is STILL sold out in many places almost EIGHT MONTHS after it's release. Yet, the iPhone was more over-hyped, and even deemed more revolutionary (Nintendo even changed the name of their product to lessen the revolution claim).

Either the hype-machine lost control (a lot of people can't stand anything that even starts with an i even more...), or the targeted customer base was just too small ($600?).

[JTW5 @ Jul 2nd 2007 7:24AM]

Someone doesn't quite understand supply and demand. You make the most money when supply meets demand. Every minute the Wii is sold out is a loss in profit for Nintendo. Please think before posting.

[Deepthroat @ Jul 2nd 2007 7:40AM]

wrong wii sold 600k in the first WEEK. so it seems like apple is doing better than expected. But why be sour about it? if you don't like the iPhone is ok no one is going to force u to use it, if becomes wildly accepted. No need for the fox-like spin there

[cduran01 @ Jul 2nd 2007 8:08AM]

Though I'm not too fond of the iPhone right now, I still have to say that you cant compare the Wii to the iPhone. Heck, you shouldnt even compare it to the PS3 or Xbox 360. The Wii is a TOY, with no other features other than playing games and maybe some video clips and music that costs $250.

As I remember, Tickle Me Elmo sold much more than the Wii and was extremely difficult to find for months. Does that mean that Tickle Me Elmo is a better product? No...its just a cheaper product with mass apeal,

[Tom @ Jul 2nd 2007 8:36AM]

Meh - I like my "Fox-like spin". It makes me feel good about myself. Besides, people expected the iPhone to sell out. If it doesn't sell out, people stop and think "hey, wait - wasn't the iPhone supposed to sell out because, you know, everyone in the world wanted one?". It drops the hype they brought. Hyped products are supposed to sell out on day one - followed by 2 or 3 weeks of shortages, then everyone knows that they want one, because everyone else obviously wants one. The Wii is not suffering "loss of profit" - it's doing amazingly well right now. AND YES - I can compare the iPhone to the Wii or the PS3 or whatever - they are all over-hyped products, although the iPhone seems to be on its' own playing field in terms of hype.

Also - the Wii is just as much a toy as the iPhone is. You can go online, IM your friends, play some games, listen to music, watch a movie.... Only the iPhone also does the same thing that a $25 pay-as-you-go phone can do.

[John Galt @ Jul 2nd 2007 9:15AM]

Tom,

I'm sorry, you still seem to be missing supply and demand. It IS lost profit for Nintendo if they could be selling more than they have in stock.

The formula of the argument is simple and familiar: to dispose of a problem all that is necessary is to deny that it exists.

[Warhorse @ Jul 2nd 2007 9:40AM]

Very true Tom, the comparison here is Hyped/overhyped products, not funcionality.

[Tom @ Jul 2nd 2007 10:16AM]

John - unsold stock = loss of profit. Apple loses money every time they DON'T sell something that they spent money making. Nintendo has had zero loss of profit, because they sold everything that they made - no left over stock equals maximum profit for their supply chain. Why do stores sell unsold stock at discount? Because they want to cut their losses while they can - even if it means just "breaking even" on their inventory. If I sell 500k products, but made 3 million - that is a HUGE loss. Especially knowing that most people looking buy my product have already bought it. That means that even if I sell them at 100% profit, I still lost money overall. Granted, Apple will likely sell all of their units, but there's no telling how long that will take. The Wii gained a return on day one - the iPhone did not. Simple.

[MC1171611 @ Jul 2nd 2007 11:34AM]

Ever heard the phrase "full of crap," Tom? That's you in a nutshell. :)

iPhone is a PHONE, not a GAME CONSOLE. It targets a completely different user base, a different market, and boasts totally different features. To compare the iPhone to the Wii (which is doing well), PS3 (good product, lousy company) or the 360 (same as the PS3) is like comparing apples to mattress springs. There is NO comparison.

[LaZer @ Jul 2nd 2007 11:54AM]

Ok...let's stop and use our brains here...do you think for 1 second that Job's would stand for seeing his iPhone on eBay for a rediculously inflated price? Of course not! That is why at launch he made sure there was enough product on hand, something that game counsel makers don't seem to know how to do. Haveing a shortage serves no one except the eBay skanks who make money by leaching off of others products.

[Tom @ Jul 2nd 2007 1:37PM]

MC1171611:

Wow, can you read? I was comparing hype:delivery. Which the Wii beat the crap out of the iPhone on. I'm NOT COMPARING THEM DIRECTLY AS PRODUCTS - I'm comparing them in terms of public hype and how well it did. Simple. And, if you MUST compare them as products, you can. As explained earlier. They both function in similar ways minus the one point of the iPhone being a phone - which, in its' marketing at least, wasn't even a major pivot for the product.

My point is that at the end of the day, the Wii made money for Nintendo. If the iPhone didn't sell the majority of its' stock, then at the end of the day the iPhone LOST money, because significantly more units were produced than were purchased. If I make 10 million guitars and 30k sell on day one, that's a great SELL (as far as the guitar industry's concerned) - but compare that to how many units I produced I did poorly, because I lost so much money making all those units yet only sold a small fraction of them.

Most of the people out there saying "I want to buy an iPhone" already went out on day one to buy it. So, if the majority of 1st gen adopters already have their product, and they only sold 1/6th of their inventory, wtf are they going to do with the remaining 5/6ths of their stock that will only dwindle in sales? I don't think anybody is getting my point here - and if they get it but don't agree, they're certainly not explaining their side correctly or at all.

[Tom @ Jul 2nd 2007 2:02PM]

How's this: RAZR sold 50 million phones in two years - with its' initial release price that of Apple's iPhone ($600 with contract). Come back to me in a year, and tell me if you think the revolutionary iPhone had revolutionary sales numbers. (I'm guessing it won't be nearing the 25mil mark)

[ATAdam @ Jul 2nd 2007 2:21PM]

Tom,

by your reasoning every product available for purchase is a failure. b/c that's excess inventory. Toyota is a failure b/c they have cars on their lots.

Nintendo absolutely and utterly FAILED by not keeping up with demand. The hype has passed. It's not like people will be drooling over the WII this holiday season as they did last.

e.g. I thought about buying a WII. There were none. ergo, they lost my business, i.e. potential profit.

Nintendo is not a lemonade stand. they want to exist in 2008 as well as 2007.

so the iPhone was 100x more successful than the WII b/c it generated hype (we agree on that) and it maintened the hype through reviews and 1st weekend sales AND MOST IMPORTANTLY...they will keep momentum going by having inventory available. Don't discount good will.

btw, i bet Apple would be *thrilled* if they sold out of iPod Nanos. Then people would come into the store wanting a Nano but there wouldn't be any left but people would be like "I wanted that product but I'm actually happier that I couldn't get it b/c it must be wicked cool. I'm going to buy that Nano on eBay for $900!!!"

[Tom @ Jul 2nd 2007 2:40PM]

Ugh, you still don't understand. They only sold a small fraction of what they produced - therefore they LOST MONEY. They put more money into the product than they got back from sales. I'm not saying it should be a goal to sell out of stock - I'm saying that minimally you should sell a good portion of what you have in inventory. Selling 1/6th of total stock to what's mostly everyone who decided that they wanted one, is not successful. If they sold 2/3rds or 5/6ths of what they produced, THAT would be extremely successful. But, alas, they sold 1/6th of what they produced. And given that most people who told themselves that they were going to buy an iPhone *already have one*, I view that as a huge letdown. I expected a lot more out of the release sales, and I think Apple did too.

And yes, Nintendo lost your sale. Boo hoo - they made back every penny that they ever spent on production of that console. Every single day it was on sale, they posted profit. On Apple's release day, they posted a loss. I expect to see this continuing, given the release day numbers. They (Nintendo) might not be maximizing their profit to the fullest, but they are making a maximum profit in relation to their production numbers - 100%. Can't argue that success.

[Tom @ Jul 2nd 2007 3:02PM]

Here... let's look at it this way. Apple makes 3 million phones at $250 cost per piece. That's $750 million. They sell 500k phones at $600 a piece. That's $300 million in profit margin for the sold iphones. But, er... they're currently in the hole approximately $450 million. $450 million is a huge amount of money to overshoot production by, regardless of the size of the company. If they don't sell it, they're not faring too well. But, time will tell. Maybe they'll sell it all very soon and prove me wrong.

What if problems start popping up and they have to fix or replace the phones that consumers bought via a recall? It's one thing to fix 500k phones that people bought, but to fix or throw away $450 million in unsold inventory? That's just not practical.

[Sanctus Messor @ Jul 3rd 2007 3:00PM]

@ Tom

They lost money cause they have more in stock than sold?! Think about it numb nuts, they have more than sold and are making alot of profit BECAUSE it does NOT cost $600 to manufacture the phone, only a fraction of that. They have probably covered their costs and all the phones left are generating pure revenue. However, you have not taken this into consideration and are FIXED on your own view. Please think before you speak.

[I.M. Yerpappy @ Jul 3rd 2007 6:54PM]

Sheee-it. You sure are good at using hindsight. The Wii is a game machine used by snotnose little kids, acned teenagers and adults that can't seem to figure how to grow up. What does that have to do with iPhone sales. You don't play games on the iPhone and you don't make telephone calls on the Wii. BTW, how many Wii game consoles have been sold? I have no idea.

You cannot tell exactly how many iPhones will sell in a set period of time. No one can. Why? Because most humans cannot see into the future. Some effin big pop star might decide to get an iPhone and all of their effin fans might decide to get one. Maybe Tom Cruise or some big dick movie star might use it in a movie and everyone who sees the movie might decide to buy one. You never effin know what makes people motivated. So throw your past performance bullcrap out the window.

You and this over-hyped product crap. I'd love to see you run your own company saying "Yeh, my product sucks and it's probably of not much use, but please try it anyway." You'd be effin bankrupt in no time flat. I could imagine you when the first Ford Mustang was introduced, with much hype if I recall correctly, to the public (you probably weren't born at the time). You'd be yellin' that the car was crap and no better than any other car with four wheels, so don't buy it. You'd probably be right, but that is not how most Americans perceive things. The Mustang just looked right and it's time had come. And that's why the Ford Mustang went into the history books as one of the greatest selling cars of all time. You just don't understand what hooks humans into buying things aren't all that great. I'm darn sure not comparing the iPhone to the Mustang because only time can tell that ending. Yes, you may draw all the conclusions you want, but that doesn't make them correct.

[Tom @ Jul 3rd 2007 8:56PM]

You know, I would love a civil conversation with facts, but everybody just insults each other and doesn't relate their arguments to the previous statements. My reason for arguing things isn't necessarily because I agree with what I say - I see something wrong, and I want to see what other people think. But then everybody who replied here got into a shit-throwing contest.

My argument: Apple sells 1/6th of their stock (500k units) on opening day, after months of hype. Still today, we are working on that original shipment of units. The Wii, although it sold less on opening day (AND YES I can relate the Wii to the iPhone - they were both over-hyped and both perform MANY of the same functions!) continues to be out of stock in many locations more than 8 months after it's release.

The RAZR phone was released with the price of $600 subsidized, $800 unsubsidized. It became a hit, then the subsidized price dropped - within two years it sold 50 million units. Hell, a day after I wrote about THAT little tidbit of information, someone got paid to write about it over at Gizmodo.

Based on production costs per phone, sales prices, and total units produced, the iPhone still posted a negative net gain on opening day, because stock wasn't sold out. I'm willing to bet (speculate, whatever, I'm entitled to it - 90% of the iPhone posts everybody jumped on were speculation) that the iPhone is still posting a total negative gain. On opening day, the iPhone production costs were only offset by $350 million dollars of incoming money above production costs - leaving a $450 loss in production costs. Wii, Mustang, RAZR, all posted a positive monetary gain on day one. ON THIS fact, I'm saying that Apple over-produced for release day. Everybody says that they just wanted to make sure stock didn't run out, but we've all experienced 1st gen products get recalled. How much would that set Apple back if their 2.5 million unsold units were suddenly recalled, in addition to the 500k units purchased? I'm not saying it will happen, but it would have been in Apple's best and most secure interest to produce a significantly lower number of units and have a consistent shipping line off of the production line - that way no out-of-stock stores, and no extreme excess of stock sitting around being a liability. Not only that, but if they over-estimated their release popularity, then producing that many units might net them a total net loss over production costs through the product's entire lifespan. Again, I doubt this will happen, but it COULD. The iPhone COULD be a flop, and they might only sell 1.5 million phones - which at best would help them break even on production costs. It could happen - probably won't, but could.


And the reason why I rip SO MUCH on the iPhone is because of it's "revolutionary" status. Jobs put this product up on a lofty, lofty pedestal. When you put something up so high and tout it as the end-all-be-all solution to mobile EVERYTHING, people are critical of it. I am a PC user, but I recommend Macbooks to people. I own an iPod, and look forward to owning the next gen with the largest capacity. I use OS X every day at my photo lab. I am not an Apple hater, but if somebody says that a phone will change my life and massage my feet after a day's work, I will examine it with a microscope. One of my examinations is seeing what other people think of it - i.e. starting discussions about things like this. However, I might come off as an argumentative person - so let me just say this: I want rebuttals. Not people telling me I'm an idiot or that my ideas on economics are bullshit - tell me WHY my ideas are stupid. Tell me WHY I'm an idiot. I'm not stubborn to changing my opinion on something if somebody gives me a reason to. Now, if somebody can prove me wrong on ONE account, prove it. I'm all ears. Or, well... eyes.

[Tom @ Jul 3rd 2007 9:04PM]

Oh, Yerpappy - I forgot. The Wii has sold more than 8 million units since launch. That's a million units a month, minimum. If that's not success, I don't know what is. Even if "running out of stock" is an economically crappy move, that's still a major accomplishment. Once again, my argument regarding the Wii is that it is an entertainment device. The iPhone is an entertainment device. They perform many of the same functions. I'm sorry if my comparison doesn't please you - but I did make a comparison to the RAZR. Or, if you want more staggering numbers, look at the StarTac. That moved 75 million units in it's lifetime, if I recall correctly. I don't believe for a minute that making phone calls on the device was a major selling point, because I can do that for $25 and a pay as you go phone, so I still believe that my Wii argument was valid.