Mystery of iPhone Shortage May Be Solved

Consumers panicking because New York's Apple stores have sold out of iPhones may have reason for hope: A company that investigates U.S. Customs data has discovered that millions of the newest generation of iPhones may be making their way to America.

Since mid-March, Apple Inc. has imported nearly 200 ocean containers full of what are termed "electronic computers," which experts said is a likely reference to the anticipated 3G iPhone. According to ImportGenius.com, which uncovered the mystery shipments, about 40,000 iPhones could fit into each container, or some 7.5 million phones in all.

The shipments couldn't come at a better time. The current iPhones are out of stock at every Apple store in Manhattan, and a number of AT&T outlets are also reporting a shortage. As of May 12, meanwhile, iPhones were no longer available for order on the company's Web site. This would not be the first time Apple has employed a strategy of allowing old products to be sold off before launching a replacement, analysts said.

"There isn't just a shortage of iPhones in New York, but they are generally not available around the world," an analyst who covers Apple, but does not have clearance to speak for attribution, said. "It is an old trick of analysts to study which products are no longer available, as those are likely the ones that Apple will introduce in some new form."

Apple declined to comment, and AT&T maintained that its stores do have a supply of the phones, although a visit to two stores and calls to a handful of others found none.

The iPhone shortage has only served to create more demand. Anticipation is so high, in fact, that rumors of a new shipment of iPhones sparked a rush last week on Apple's Fifth Avenue outpost, with fans spontaneously lining up in the hopes of being first to buy the item.

Wall Street is widely expecting CEO Steven Jobs to announce the new 3G iPhone at Apple's trade show next month in San Francisco. It would mark the first major upgrade to the iPhone, which was introduced last June.

As for the shipments, "starting March 19, I saw that Apple was shipping 40 containers of these 'electronic computers,' and then gradually every two or three weeks another large shipment would appear," a founder of ImportGenius.com, Ryan Petersen, said. With all of the add-ons expected to come with the new iPhone, dubbing the product an electronic computer is logical, Mr. Petersen said. "Based on expectations that the phones will be announced on June 9, they likely need millions of units in the country to satisfy demand, so it seems they are preparing for this."

Adding to the rumor mill is an internal memo that was handed out to AT&T employees requesting they not take vacation between June 15 and July 12 because of an "exciting summer promotional launch." The company, which has an exclusive agreement with Apple to distribute the iPhone, issued a similar memo last year before the phone's launch.

The new iPhone is expected to feature third generation wireless technology technology, which is about 10 times faster than the current iPhone's network connection. There are also rumors regarding other features, including a switch that would allow the user to turn off the 3G network connection, which is expected to use up large amounts of battery power. It may also be lighter, with plastic replacing the aluminum-magnesium shell to reduce its heft by as much as 2 ounces from its current weight of 4.8 ounces. There is also talk that Apple is negotiating with record labels to allow consumers to download music off the AT&T network rather than just Wi-Fi, and a real GPS system that would be an upgrade from the current software the phone relies on.

Lehman Brothers expects iPhone sales to reach 1.7 million in the third quarter and 2.55 million in the fourth quarter. "To date, we believe it is possible to calculate that Apple's 3G iPhone will be able to serve a market of about 650 million wireless subscribers," a report to clients by Lehman Brothers analyst Ben Reitzes read. "We believe this figure could grow considerably by the fall to even 1 billion, potentially enabling Apple to exceed its goal of selling 10 million iPhones in calendar 2008."

Apple's stock rose 2.9% yesterday, to $186.43.