Analysts Puzzle Over iPhone 3G Shortage Mystery

The summer heat was just one of the obstacles facing consumers who stood in long lines outside New York's Soho Apple Store to lock in their iPhone purchase before stocks ran out. The scene is being repeated at Apple and AT&T (NYSE: T) stores throughout the country, according to media reports, and it may take two to four weeks to replenish supplies.

A Phony iRun on iPhones?

Given the wild popularity of the first-generation iPhone last year, how could Apple underestimate demand for a new product that offers faster data speeds and GPS ? And why would they purposely hold back delivery to create a shortage?

Charles Golvin isn't buying into a phony shortage, the Forrester Research wireless analyst told MacNewsWorld. For Golvin, it's more about the sheer number of countries involved in the 3G launch -- 70 before the end of the year.

"That's a lot of latent demand in countries that have never offered this before," he said. "The demand for this 3G device is going to be higher in markets like Western Europe, where there is much higher value placed on 3G technology. It's more of the norm for the advanced user, the likely first adopter of the iPhone, and the absence of 3G (with the first iPhone) was an inhibitor of growth in Europe," Golvin added.

Competitors Already Moving to Fill the Gaps

"I don't think it's going to harm [Apple] very much," Ezra Gottheil, an analyst at Technology Business Research, told MacNewsWorld. "It will cost some of their provider partners a month on the front end of subscriptions, but in the end, I don't think it will seriously hurt either Apple or the providers."

iPhone touchscreen competitors, particularly Samsung's popular Instinct and Verizon's new LG Dare, may not be able to take advantage of Apple's supply issues, Gottheil commented. "I don't think this delay will really cause that many people to change their mind. If they were that eager to get the iPhone, I hardly see them saying, 'I think I'll get this instead.'"

Management of iPhone Parts Suppliers

Both Golvin and Ken Dulaney, analyst with Gartner (NYSE: IT) , tell MacNewsWorld that they don't believe that there are any issues with the iPhone supply chain.

"I'm sure that Apple probably articulated the supply chain exactly what they wanted to produce," Dulaney said. "Certainly not at the top end of that number. It could be you'll find a component shortage here or there, but Apple's not going to tell you that."

For Dulaney, it's more a case of Apple being pleasantly surprised by the demand. "There are a lot of countries, a lot more operators, a lot more stores to go to. ... It's a very complicated picture to figure out where to put the devices. You don't want to build too many in the first round. Number one, you can't risk overstocking, and two, you want to get a sense of where people are going with this."

Hacking Attempts

Where people are going, it seems, is straight to the end of a long line at their nearest Apple store. Meanwhile, those who do have their iPhone 3Gs are enjoying the company's new App Store for downloading third-party programs.

However, that's not stopping groups like iPhone Dev from attempting to unlock the new product anyway. iPhone Dev recently announced a 3G jailbreak -- a workaround of digital rights management features -- while telling the world it's still hammering away at a complete hack of the phone.

The App Store is supposed to get around the need for unlocked phones, Gottheil noted. However, for some, "there is a market for cracked phones. One aspect is portability -- if you are a traveler and you don't necessarily want to buy a contract in one location."

However, it may also be a case of hacker's bragging rights. "There's absolutely a contest to see how fast it can be done. ... The early stuff is simply showing off," Gottheil added.