1 million+ unlocked iPhones? You betcha!

Apple does not have an overstocked inventory problem. In fact, if they’re not careful, they could have a supply problem. Perhaps in the States it’s hard to imagine so many unlocked iPhones because you hardly ever see any. Outside the US (and UK, Germany, France etc.) unlocked iPhones are all we see - and we see a lot of them!

This recent article by Damon Darlin in the New York Times highlighted just a sample of international sightings pretty well. Where I live, a source told Computerworld that there are currently 3,000 iPhones on Vodafone’s network in New Zealand.

But far from being the concern that Toni Sacconaghi made it out to be, I agree with Fortune’s Philip Elmer-DeWitt - actually Apple now has to carefully manage the gray market dilema. And the dilema is simply this: Keep locking down the phone even tighter = high probability of missing their estimated 10 million unit sales; allow unchecked unlocking to continue = reduced revenue from contracted Telcos (AT&T etc.)

Actually, it was Dan Butterfield who I think really hit the nail on the head - Massive Unlocking is a Sign of Massive Demand. In my opinion, this is exactly right - here’s a quote from one astute user referenced in his article:

“Would you want a hacked, non-warrantied iPhone you couldn’t run a software update on? If the choice was that, or wait a few months (when iPhone officially arrives in your market), I’d choose ‘wait’ easily. I think 97% of folks want to just walk in a store, buy an authorized iPhone and use it normally – warrantied with updates … even if it means switching carriers.

I think we are just getting a tiny percentage of advance sales from tinkerers, hackers etc., and from the folks willing to pay a premium, take risks, and have bragging rights. Guess what, this same demographic will all want the Apple 3G iPhone the second that it’s available as well.”

… “I can’t see this as anything but a good sign about insane demand, worldwide.”

In fact, I have started to wonder if this is the reason why Apple has never officially released a premium-priced (US$700+), fully unlocked iPhone through its existing global channels? If it did, in all likelihood the demand would be through the roof - they just couldn’t make ‘em fast enough. I know lots of people here who would (a) pay the price without thinking and (b) stand in queues for hours if that’s what it took.

So Apple has a pretty difficult challenge of their hands… what to do Mr Jobs? I imagine (for the next few quarters at least) Apple will try to very subtlely allow unlocking to continue - driving additional unit sales to meet the required numbers, but in such a way that they don’t upset the AT&T’s of this world too badly.

Hmmm… Perhaps that was what the recently leaked key was about?

Update (1 Feb 2008): Consumer NZ (an independent, non-profit) recently reviewed ‘Smartphones’ available here. Here was their conclusion about the iPhone:

Best overall performer in our test is the Apple iPhone (NZ$1099). It had the best combination of PDA functionality, smart features and phone performance. But it’s not suitable for serious data entry so won’t satisfy many professionals. It’s also not compatible with 3G.

The biggest downside is that it’s only available in New Zealand through parallel importers and must be hacked to work on the Vodafone network.”

Is it any wonder so many people here want one?