The iPhone Launch: How Will Wall St. Measure Success?

The countdown to iDay -- Friday, June 29, the day Apple (Nasdaq: AAPL) will release its eagerly awaited multimode iPhone device -- has begun.

The last time the consumer-tech industry saw anything close to this much frenzy surrounding a product launch was when Microsoft (Nasdaq: MSFT) rolled out Vista earlier this year. However, that auspicious occasion did not awaken the passions of determined and enthusiastic devotees like those waiting to get their hands on one of the new Apple gadgets.

Lines are expected to start forming at the Apple and AT&T (NYSE: T) stores long before the 6 p.m. opening hour. Sales for the first weekend could reach as high as 390,000, according to some predictions.

Given the circus atmosphere, one practical question has not been answered -- or indeed, even posed: What is the minimum number of iPhones that must be sold in order for the launch to be considered a success ?

Or, to put it another way, what benchmark would iPhone's first weekend of sales have to miss to persuade the denizens of Wall Street and Silicon Valley to stop drinking Apple's Kool-Aid?

Stock Market Panic?

"Anything other than selling out at every store location will be looked at as a disappointment," Rob Walch, host of the Today in iPhone podcast, told MacNewsWorld. "Some even speculate the reason for the Friday launch of the iPhone is to minimize stock market panic if the iPhone sales are not stellar."

Apple, needless to say, is likely doing everything it can to keep the markets from losing faith in its product's appeal, including limiting the number of phones it releases on opening day, he added.

Walch is dubious that Apple will actually have 1,000 phones at every store. "Everyone I have talked to [at Apple and AT&T] has said that there will be at most 40 phones per store, with an average of 15 to 20 phones at any one location."

The way he figures it, the rumors that Apple manufactured about 250,000 phones for the launch are accurate. "Probably, what it will do is ship 125,000 units initially with about 40,000 to 50,000 phones going to the AT&T stores and the remainder going to Apple."

The rest, he speculated, will be held in reserve to be shipped out to stores based on sales volume and overall traffic.

"By the end of the weekend, the iPhones will be completely sold out," he predicted.

Then, Apple will announce it doesn't have any more in the pipeline for the foreseeable future, he continued, possibly blaming the shortage on something like a missing component. The point of such an exercise, of course, is to keep demand -- and hype -- for the iPhone high, much like it was when consumers could not get their hands on the Wii when it was released at the end of last year.

Beyond the First Week

The real measure of success, however, will be what happens after the first two weeks of sales -- better yet, after the first quarter, Bryan Chaffin, editor in chief of The Mac Observer and The iPod Observer, told MacNewsWorld.

"I don't know if the industry could write it off as a failure based on numbers from the first weekend." The early sales will be to Mac and Apple fans, he said. "They will carry the weekend."

With analyst estimates of sales ranging from 50,000 phones on the low end in the first 24 hours to 390,000 for the first weekend, the safest route is to pick a middle number as a likely benchmark, he suggested. "I think Wall Street will be OK with 100,000 phones sold. Certainly anything over 50,000 will be considered at least a moderate success."