'Lost' iPhone call revenue is just a phantom

By Stephen Withers
Wednesday, 30 January 2008 00:30

Mobility

A lot of fuss is being made about the 'missing' iPhones - the the number of handsets that have been shipped but not connected to Apple's carrier partners.

Some observers point to the revenue-sharing deal that Apple managed to wring out of the initial carriers, and then assert that the company is losing money as a result.

If you have been partly basing your predictions of Apple's future revenue on the result of multiplying the number of iPhones shipped by your guestimate of the trailing fees from the phone companies, that's your problem, not Apple's.

But blaming a business for failing to meet outsiders' estimates is nothing new. Say a company provides 'guidance' that it expects income of $X and market analysts subsequently predict a larger figure of $Y. If the actual result is somewhere between $X and $Y, the company is held to have 'failed' and is 'punished' with a drop in its share price.

In some ways, this supposed lost revenue is about as real as the music industry's valuation of unauthorised copying. The various organisations representing the industry try to claim that every copy made represents a lost sale, when that is clearly not the case.

So it is with the iPhone. We all know that unlocked iPhones are turning up in countries where Apple does not have a deal with a carrier. Examples include China, Australia and European nations other than the UK, France and Germany.

There's no suggestion that iPhones are in short supply, so you can't argue that each one that moves across the borders denies Apple the revenue it would have received indirectly from a customer in the country where it was originally sold.