All deference to the folks that believe in the omniscience of Steve Jobs, but there is almost no way that Apple is going to be able to sell 10 million iPhones in 18 months. Just to show that I’m not a naysayer, I do agree that 1 million iPhones in 2007 is completely reasonable.            

Here’s the rationale:

With AT&T/Cingular being the only announced carrier to date, getting to the 10 million number would require 1 out of every 6 CURRENT AT&T/Cingular customers to buy an iPhone. The people that will buy iPhones are the small subset that are currently paying well over $100 per month for wireless service. With AT&T/Cingular’s current ARPU at less that $50, a standard distribution would suggest that substantially less than 1 in 6 are currently paying more than $100/month. Compound that with the fact that many of these people (myself included) have already upgraded to Cingular’s 3G network, and we won’t want to lose all of that network speed just to have a slightly slicker form factor. (Side note: I was going to wait for the iPhone, but ultimately decided that the Blackjack was plenty feature rich and also had 3G, allowing me to watch my slingbox from anywhere - something you just can’t do on the EDGE network that the iPhone will have).

Wait, you say, the iPhone will attract people to leave Verizon and Sprint. I definitely agree with that point, which is why I believe that the iPhone was a huge coup for Cingular. It will attract many of the high ARPU, fashon-savvy customers away from the competitors. But if you’ve noticed, Cingular remains the only carrier in the world that has done a deal with Apple. The reason for that is the eggregious terms that Apple forced on Cingular. Apparently Verizon was going to get the iPhone, but couldn’t stomach the terms. The terms are so difficult that AT&T’s board of directors had to sign off on the deal - something that has never happened before for a single handset deal. Because Apple got AT&T to fold like a lawn chair, they are expecting other carriers to do the same, but the European carriers are not biting.

There have been well over 1 million people that have signed up in Apple stores and online to get an email when the iPhone is generally available. Let’s be generous and say that all those people buy the phone in the first 6 months it is out. That gets you all of the early adopters. Then what? Who buys it next? With a $500 price tag, very few people will be able to unless some kind of payment plan is offered (which there won’t be for all of the reliability issues highlighted by others).

In all reality, the main reason this is a coup for Cingular is the fact that 1) they will be able to attract the very high end customers from the other carriers, 2) they will be able to retain their own high end customers, and 3) they will drive consumers into their Cingular stores just to look at and play with the iPhone. The reason #3 is so critical is that Cingular has a teriffic selection of phones that have pieces of the iPhone functionality (MP3 player, video, etc) at a fraction of the price. Cingular’s bet is that for every 100 people that come in to look at the iPhone, 1 will buy it, 9 will buy something else, and the other 90 will just leave the store. Hey, that’s 100 people that wouldn’t have walked in the store that day, thus 10 sales that wouldn’t have been made. Smart move if you ask me.

A the end of the day the iPhone will do very well and Jobs will again be touted as a consumer products/marketing demi-god. However, given the current information we have, it will take time for it to get to the 10 million plateau. Unless, of course, Jobs has a couple other carriers up his sleve, in which case my entire analysis is out the window, which (as a shareholder) would be fine by me.