MONTREAL - Sales of the iPhone in Canada are still outpacing supply, but the device's exclusive carrier Rogers Wireless (TMX:RCI.B) says it's getting weekly shipments from manufacturer Apple Inc. to meet the demand.
The much-hyped iPhone went on sale across the country July 11 amid hoopla and buzz similar to the launch of a sought-after video game. Hundreds of Canadians lined up to buy the iPhone at Rogers stores across the country -- albeit a year after the device was available to U.S. consumers.
What consumers waited hours for is a next-generation version of the smartphone that lets users surf the Internet and check their email with the added bonus that it works just like an iPod, storing and playing music and video.
"Sales continue to exceed supply and we continue to receive weekly incoming shipments from Apple thanks to pre-ordered inventory," Rogers Wireless spokeswoman Odette Coleman said Wednesday.
Rogers said the company doesn't release specific sales numbers for competitive reasons, but sales of the iPhone are continuing at an "accelerated pace" and when stores sell out, they continue to receive more of the touch-screen phones, Coleman said.
"We also continue to appreciate our customers' enthusiasm for the device and patience when inventory sells out in specific stores," she said in an email.
PC Magazine's Sascha Segan said there have also been some iPhone shortages in the United States due to demand.
"I think it's something that's common to both Canada and the U.S. right now," said Segan, lead analyst for mobile devices at the technology magazine.
"It's a very popular device and it looks like Apple and their carrier partners might have underestimated the number they would sell, which is quite surprising to me considering that they expected they would sell a lot anyway," Segan said from New York.
Segan said the supply shortage could also be strategic.
"I wouldn't be surprised if it was. Apple are, of course, the masters of hype and this does help keep the hype going. But at the same time you have to wonder at a certain limit are people going to keep putting up with shortages or are they just going to buy something else. Beyond a certain limit, the phones have to become available or people will just buy something else."
Segan said the iPhone's competitors, Samsung's Instinct and LG's Dare, are selling very well but he noted they don't quite have the "elegance" and aren't as fun.
"If you look at the iPhone, the Instinct and the Dare, you would definitely think they were cousins, if not siblings."
The new 3G iPhones cost $199 and $299 and Rogers has the only network in Canada capable of running the high-end touch-screen phones. Some analysts have estimated it will cost consumers $1,200 to $1,400 yearly to operate the iPhone.
Rogers dropped the price of its data plan for Web browsing, video watching and sending emails to $30 a month on a three-year contract for customers who activate their iPhones by Aug. 31. That doesn't include the price of making phone calls or other services.The price change came after consumer criticism and an online petition signed by tens of thousands.
Sales results of the iPhone will be reflected in Rogers' third quarter results expected at the end of October, Coleman said.
Rogers, which has a minimum commitment to $150 million worth of the smartphone, said it expects "significant" costs going forward as it subsidizes retail prices of the $199 and $299 phones, increasing cost of acquisition per subscriber in the second half of 2008.
"However, as it is anticipated that iPhone subscribers will generally subscribe to both voice and data service plans, the average revenue per unit (ARPU) per iPhone 3G subscriber is also expected to be higher than Wireless' average postpaid ARPU that is generated from the majority of its other devices."
In a conference call this week after Rogers' second quarter results, CEO Ted Rogers said he believes his company will "do very, very well" with the iPhone, calling it an "incredible piece of industrial engineering and design" and "a natural product for Rogers."
UBS analyst Jeffrey Fan said the iPhone will bring in thousands of new customers to Rogers.
"We estimate RCI (Rogers) can add 200,000 plus iPhone subscriptions in '08, given the $150 million commitment to Apple," Fan wrote in a research note.
Apple (Nasdaq:APPL) has said its goal is to sell 10 million iPhones this year.
Segan also said Apple is again changing the mobile phone market with its App Store, which offers more than 500 applications for the iPhone, including eBay, mobile game Super Monkey Ball and Loopt, which finds friends on the go.
"That's where this iPhone is shaking up the market," he said. "If people start buying these applications en masse that's going to turn all of the other mobile guys, including the carriers, to say `What is this? Why aren't people buying applications on our phones. What is it that we are doing wrong?' I think that's going to happen."
But Segan said some of the App Store applications are of low quality and "extremely difficult and confusing" to download but he expects Apple to rectify the problem in the coming months.
