Apple Sells 1.7M iPhones, Struggles With Complaints

Oh, to have Apple's problems. The company said it has sold 1.7 million iPhone 4s within three days of its launch -- a blockbuster debut for any new device.

But Apple (NASDAQ: AAPL) still apologized for not being able to sell more. Company CEO Steve Jobs on Monday proclaimed that the iPhone 4 has been the company's most successful product launch to date, well exceeding the one million units sold of the two previous models-- the 3G in 2008 and the 3GS in 2009 -- during their first three days of sales.

"Even so, we apologize to those customers who were turned away because we did not have enough supply," Jobs said in a statement.

AT&T will begin in-store sales for walk-in customers beginning Tuesday, June 29. After that, though, the wait for a new iPhone 4 could be a while: Apple's own site lists a three-week delay for a new unit. Just last week, the site had been indicating new stock by July 14.

Also, the phone is very hard to get at all at non-Apple or AT&T locations. Best Buy, Wal-Mart and Radio Shack were all slated to carry the phone but got little to no inventory. The Best Buy message boards in particular are rife with accusations that Best Buy inventory was diverted to AT&T stores.

Neither Best Buy nor Apple responded to requests for comment.

The shortage of iPhones seems to be due to the same problem as the iPad, which is sold out at every Apple and Best Buy outlet: display panels. Taiwanese tech publication DigiTimes reports that there is a serious shortage of screens for the iPhone, similarly to woes that impacted the iPad as well.

Gleacher and Company analyst Brian Marshall also said he thinks Apple could have sold a lot more phones if inventory levels hadn't been limited -- three to four million at his best guess. The problem remains with production at both LG Electronics, which makes the glass panel, and Hon Hai, which assembles the actual phone.

"[LG] just can't make those in the quantities Apple wants right now, but they are ramping up production rapidly," Marshall told InternetNews.com. "And there's the bottleneck of ramping it up at Hon Hai. They've never manufactured something like this before. There's a learning curve to making these products, but that's being overcome in hours and days."

Marshall also said the reports of Apple shifting merchandise from Best Buy actually make sense. "I think they are still viewing AT&T as a partner, so Apple took care of their partner first. So next to get supply would be Best Buy, fourth would be Wal-Mart and fifth would be Radio Shack," he said.

iPhone signal complaints

Shortages aside, the iPhone 4's biggest challenge has been surrounding what people jokingly call the "death grip" or "Vulcan death grip." The phone appears to lose signal strength when held in certain ways, particularly with the left hand. Debate has gone back and forth over the issue, as some people have been unable to replicate the problem while others have had it prove very troublesome.

Wall Street Journal tech columnist Walter Mossberg said Apple told him it wasn't a signal problem, but a software bug in how the signal strength is displayed.

Meanwhile, gadget blog Engadget purportedly has a copy of an e-mail in which Jobs -- writing in response to one customer's complaint about how holding their iPhone 4 caused signal issues -- allegedly replied, "Just don't hold it that way." The exchange may have prompted Nokia to have fun at Apple's expense with its own blog post, "How do you hold your Nokia?"

According to Apple fan site MacRumors, Jobs since sent a second, mode diplomatic letter to a customer, denying there are reception issues and that he should "Stay tuned."

Several Apple bloggers have speculated that the company would issue a minor update to iOS 4.0 today to address the issue. Thus far, however, no upgrade to the OS has been reported to be released.

iPhone 4's total build cost: $187.51

In other iPhone news, iSuppli did one of its customary teardowns of the latest from Apple and found the bill of materials (BOM) for the 16GB iPhone amounts to $187.51. That's only a little more than the $170.80 BOM for the 3GS, which was nowhere near as advanced technologically. The most costly piece remains the iPhone 4's screen, at $28.50, followed by the 16GB of memory, at $27.

iSuppli praised Apple's internal design, particularly the integration of the radio modules.

"Out of the nearly 300 cell phones torn down by iSuppli, the iPhone comes the closest to integrating the entire wireless interface -- including all the supporting Radio Frequency (RF) modules -- on a single chip," Kevin Keller, principal analyst for teardown services at iSuppli, said in a statement. "This further enhances the iPhone 4's space efficiency and serves as yet another testament to the advanced state of Apple’s design."

Andy Patrizio is a senior editor at InternetNews.com, the news service of Internet.com, the network for technology professionals.

TAGS:

iPhone, Apple, AT&T, IOS, iSuppli

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