g r o t t o 1 1

Peeve Farm
Breeding peeves for show, not just to keep as pets
Brian Tiemann
Silicon ValleyNew York-based purveyor of a confusing mixture of Apple punditry and political bile.

btman at grotto11 dot com

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Thursday, April 3, 2008
06:44 - Let the numbers fall where they may
http://finance.yahoo.com/tech-ticker/article/9813/Apple-Confirms-iPhone-Shortage-a-S

(top)
Apparently, if an anonymous commenter at Yahoo Finance with seemingly encyclopedic statistical data at his fingertips is to be believed, the rather subtle, aw-shucks, sidelong-glancey iPhone penetration one might see in a crowd in a US city is as nothing compared to the frenzy with which it's taken hold in emerging markets, where apparently Apple stands to become the immovably entrenched supplier of technology, whether through their intended sales mechanisms or not:

The iPhone is relatively cheap to emerging market customers used to paying $500 for a BlackBerry and a cheap US Dollar makes it an even better deal. For example in Russia, at $499, a16GB iPhone translates to around 12,000 Rubles. An 8GB Nokia N95 costs $815 or 20,000 Rubles. The value-for-money perception with iPhone is absolutely huge.

5. Zero or minimal compatibility issues on GSM Networks. I have used my iPhone with SIM cards from 32 different networks in Europe and developing countries. It works seamlessly. The iPhone is a quad-band GSM phone, meaning that it supports all four major GSM frequency bands, 850 and 1900 MHz bands which are used in the Americas, and 900 / 1800 MHz bands used in most other parts of the world, making it compatible with all major GSM networks worldwide. 2 billion people around the world use GSM phones.

To give you an idea of international demand; There are Nigerians shipping more than 500 phones a week from New York to Lagos and Nigeria is a third world country.... If you define a potential user as someone who can afford (or is used to) paying twice as much for an iPhone and double what an AT&T subscriber pays per month, there are at least 7 million potential iPhone users in Nigeria, 9 Million in South Africa, 80 Million in India, 25 Million in Russia, 25 Million in Brazil, 8 Million in Indonesia and 100 Million in China. Not all of them will be users but just 5% of this number is way more than 10 million. Considering mobile phones are some of the most universally adopted products on the planet, a good GSM phone reaches Iran and Iraq much faster than people on Wall Street can ever imagine. I predict iPhones will be available to elites in Cuba (which has both GSM and TDMA) within the next 30 days.

From research I’m conducting. we have conservative numbers of grey market as follows:
Russia 2000-4000 phones/week
China 4000 -6000 phones/ week

Demand from Western Europe is substantially slower but still significant, averaging anything from 2000 -3000 units/week from New York and other big cities with international airports. Now, not all the phones shipped from New York are bought in NYC but the export pattern is clear and very strong. I have completely ignored the cash-flush Middle East where Dubai has always been a world-leading port in grey market clearing and forwarding for consumer electronics.

Conservatively speaking, something is sucking 15,000-20,000 iPhones/week out of the United States. If this phenomenon is coinciding with steadily growing adoption among US customers, suddenly the slack Apple had is drying up.

And it's not like these are pirated DVDs being sold at roadside stands in China. Apple gets paid for every one of these iPhones.

Many of the millions of visitors coming to the United States every month are going back with a packed iPhone in their luggage. It’s one of the things people are expected to buy when they come.

I think that's funny as hell. Don't bring jeans to sell next time you go to Russia—bring iPhones.

Via Damien Del Russo, who says—and I gotta agree—that this would not be an especially good time to sell off one's AAPL.


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© Brian Tiemann