Apple Sells Record 10 Million IPhones in Debut Weekend

 By Tim Higgins

Apple Inc. (AAPL) sold a record of more than 10 million iPhones the first weekend two new versions hit stores, helping Chief Executive Officer Tim Cook in a push to narrow Samsung Electronics Co.'s lead in bigger-screen smartphones.

Sales surpassed last year's 9 million units when the iPhone 5s and 5c were introduced, the Cupertino, California-based company said in a statement today. The devices went on sale on Sept. 19 in the same countries as the 2013 rollout, with the exception of mainland China, which had sparked concern this year's debut might fall short of the record.

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"While our team managed the manufacturing ramp better than ever before, we could have sold many more iPhones with greater supply and we are working hard to fill orders as quickly as possible," Cook said in the statement.

Cook is using the iPhone 6, which has a 4.7-inch (11.9-centimeter) display, and iPhone 6 Plus with a 5.5-inch screen to push into the turf of Samsung, HTC Corp. and other manufacturers of jumbo smartphones. The rollout of the new iPhones, which account for more than half of Apple's $171 billion in annual revenue, will be followed by the anticipated debut of new iPad models next month as the company revamps its product lineup ahead of the holiday shopping season.

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View galleryA customer holds an iPhone 6  and iPhone 6 Plus after …
A customer holds an iPhone 6 (R) and iPhone 6 Plus at the Apple store on Fifth Avenue after the phon …
"The biggest benefit is the bigger screen," said Chris Caso, an analyst at Susquehanna International Group in New York, who has a positive rating on Apple's stock. "There was a lot of pent-up demand for that. By having a larger screen size it's giving people a reason to upgrade their phone."

Estimates Varied
Apple shares rose less than 1 percent to $101.06 at the close in New York. The stock has gained 26 percent this year.

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The new iPhones arrived in Apple stores in the U.S., Australia, Canada, France, Germany, Hong Kong, Japan, Puerto Rico, Singapore and the U.K.

Analysts' estimates had varied widely, with one projecting sales as high as 15 million units, while others said that the results could miss last year's initial shipments of the iPhone 5s and 5c because of production constraints and the lack of immediate availability in China.

"The phone is going to launch in China, and when it does, it's going to have strong demand," Caso said.

View galleryFILE - In this Sept. 19, 2014 file photo, an Apple …
FILE - In this Sept. 19, 2014 file photo, an Apple store employee arranges a stack of pre-ordered iP …
Robust Demand
Demand was robust even before the devices arrived. Pre-orders of the latest models topped 4 million units in the first 24 hours. A third of the users of phones based on Google Inc.'s rival Android software polled by Boston-based Gazelle Inc. said they're likely to upgrade to the iPhone 6, up from a 10th a year ago when the iPhone 5s and 5c went on sale, according to Chris Sullivan, Gazelle's CEO.

The results of Apple's opening weekend indicate the larger iPhones are helping convert Android users, Timothy Arcuri, an analyst at Cowen & Co., said today in an interview.

"With its larger display and longer battery life, people are beginning to switch back from their Android phones," he said.

While Apple didn't break out unit sales for each of the two new phones, about 60 percent of the initial buyers during opening weekend bought the 6 Plus, according to an estimate from Gene Munster, an analyst at Piper Jaffray Cos. in Minneapolis.

"Typically, the people who are the first to upgrade have the most money and it costs more," he said in an interview. "It will probably drift more toward 60-40 favoring the 6 over the next few months."

Inventory Concerns
Chitika Inc., an online-advertising network, used iPhone-based ad impressions generated from Sept. 19 to Sept. 21 to estimate adoption. North American iPhone 6 users generated a greater percentage of total U.S. and Canadian iPhone-based Web traffic during that period than iPhone 6 Plus, based on Chitika's measurements.

From the beginning there have been concerns that Apple would run out of inventory. Manufacturing the 5.5-inch model is more complicated than the smaller version, resulting in lower output, a person familiar with the process has said. Some stores in the U.S. on the first day didn't have any of the largest iPhones left.

Carl Howe, an analyst at 451 Research LLC, had estimated that Apple would sell 12 million to 15 million new devices during the first weekend, while Toni Sacconaghi, an analyst at Sanford C. Bernstein & Co., projected sales of 7 million to 8 million because of supply limitations and China not being one of the first countries selling the devices.

The next wave of sales starts Sept. 26 in Austria, Belgium, Denmark, Finland, Ireland, Isle of Man, Italy, Liechtenstein, Luxembourg, Netherlands, New Zealand, Norway, Portugal, Qatar, Russia, Saudi Arabia, Spain, Sweden, Switzerland, Taiwan, Turkey and United Arab Emirates, according to Apple. Eventually, the new handsets will be available in 115 countries by year's end, according to the company.

To contact the reporter on this story: Tim Higgins in San Francisco at thiggins21@bloomberg.net

To contact the editors responsible for this story: Pui-Wing Tam at ptam13@bloomberg.net Jillian Ward, Reed Stevenson