Before the Mac World convention started there were many rumors flying past regarding the sales figures of the iPhone. Some punters even suggested a five million mark with Europe contributing almost one million to the figure. The convention happened and Apple announced at Macworld that it has sold 4 million iPhones. Apparently AT&T activated just 900,000 iPhones during the fourth quarter. Toni Sacconaghi, a financial analyst with Sanford C. Bernstein, feels there is a dip in the demand for the iPhone and AT&T is piling up the stocks. The analysis indicates that the demand for iPhone is lower than what many investors think and also that the sales have slackened. If you take account of the gray market (unlocked iPhones) then according to Sacconaghi, even if you presume 20 percent of all iPhones purchased in 2007 were bought with the intention of unlockingthat still leaves 670,000 iPhones unaccounted for in 2007. "Excluding Apple's own stores, there are about 4,400 total iPhone distribution points worldwide, suggesting each had more than 150 units of channel inventory at the beginning of this year. We believe channel inventory likely built even more in the first few weeks of 2008, given Apple continued to ship iPhones at a high run rate," Sacconaghi says.

Apple said on Tuesday that it sold 3.7 million iPhones in 2007. But AT&T said Thursday that it ended 2007 with around 2 million iPhone customers. The difference between the third quarter and the fourth sales can be accounted towards the fact that the iPhone became available for sale in the U.K., Germany, and France through other carriers. On the day the iPhone was released in the U.K. and Germany, Apple released the 1.1.2 firmware upgrade for older iPhone users but included an updated version of the iPhone's bootloader (which loads software from storage) on all new iPhones that made unlocking the phone to run on other networks much, much harder and virtually impossible through software. Apple still expects to sell 10 million iPhones during 2008.