Apple cell phone is real and ready for production - analyst

Posted:
in iPod + iTunes + AppleTV edited January 2014
Analysts for American Technology Research on Tuesday encourage investors to get aggressive in purchasing shares of Apple Computer prior to the launch of the company's much rumored iPod cell phone, which it says is likely to revolutionize the handset industry.



"Our research indicates that an Apple-designed smart phone has moved from concept to prototype and recently has progressed to near completion as a production unit," analyst Shaw Wu told clients in a research note on Tuesday. "We believe this smart phone has been in development for over 12 months and has overcome substantial challenges including design, interference, battery life and other technical glitches."



Pointing to the existing smart phone market, Wu noted the challenges companies face when trying to produce a converged product of high quality. However, he said Apple chief executive Steve Jobs "is finally satisfied with the end product Apple engineers have produced in terms of quality and the right blend of cell phone and portable media player."



Given Jobs' previous track record, the analyst said he has the utmost confidence the Apple branded cell phone, which he says will conform to a sleek candy bar form factor, will meet the highest of standards with "no exception."



"Clearly, we would like to share more detail as we have conducted extensive work on the product pipeline, but for now, here is what we will convey," Wu wrote. "The design will be an iPod nano-like candy bar form factor and come in three colors (we are not certain of the exact colors but we suspect black, white and platinum, similar to Apple's current color scheme of iPods and Macs)."



For Apple to enter the cell phone market in the United States, it would first need to gain approval from the FCC. The process would require the traditionally tight-lipped company to disclose both photos and specifications in public filings prior to launch. But Wu says Apple could avoid premature public disclosure by announcing the device in advance with a later ship date. Moreover, he said, it could possibly submit the filing through a OEM manufacturer, similar to the route Microsoft took by gaining FCC approval for its upcoming Zune player through a Toshiba filing.



Still, what is unclear to Wu is Apple's go-to-market strategy for the device, which he believes is an ongoing and serious debate within the Cupertino, Calif.-based company. While it could take the traditional route and partner with existing wireless giants like Cingular and Verizon, it could also adopt the MVNO (mobile virtual network operator) model, where it would rent and then resell space from such carriers under its own brand.



"We believe the go-to-market strategy is likely the gating factor in Apple shipping its cell phone imminently," the analyst wrote. "However, we believe the company's 155 Apple stores will prove to be a boon regardless of the marketing strategy, proving Apple local presence and competitive advantage."



Nevertheless, Wu said, he is "very positive" about Apple's prospect for building a material smart phone business given its strong brand name, loyal customer base, unique user experience, large installed base of 58 million iPods, and what he estimates to be about 300 million iTunes users.



"Should Apple gain 1 percent share in the billion unit [cell phone] market, we believe that could amount to a $2 billion opportunity assuming around 10 million units at a $200 average selling price (similar to its current iPod), but not including potential services and accessories revenue," he wrote.



Wu notes that despite being universally panned by critics, LG's new Chocolate phone is a strong seller for Verizon, accounting for nearly 15 percent of its volume. "We view this as a positive for Apple as this indicates that the US market has some degree of market acceptance of converged cell phone-MP3 player and that a product of mediocre quality like the LG Chocolate phone can still do very well," he wrote.



Given the results of his findings on the Apple cell phone project, Wu is modeling modest contributions (about $100 million) from cell phone sales into his fiscal year 2007 outlook for the company. "We believe our cell phone assumptions are conservative given the high-end user demand for an Apple cell phone and the key point is that this is an incremental new opportunity that could help drive sales of other Apple products," he told clients.



The analyst is now modeling Apple to generate $22.2 billion in revenue and $2.60 in earnings-per-share during fiscal 2007. He also raised his price target on the iPod maker from $75 to $91.



For additional information on the Apple's cell phone initiative, please see a recent AppleInsider piece, which similarly reported that the device is nearing arrival.
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Comments

  • Reply 1 of 160
    One of these days Wu is going to be right.
  • Reply 2 of 160
    hopefully that day is today and we'll find out sept 12. especially because my phone just got waterlogged yesterday when a friend and i threw eachother into a pool (and i'd forgotten my phone was in my pocket). whoops!
  • Reply 3 of 160
    Wither Mobile OS X? Mobile spotlight, mobile Safari, mobile iCal, mobile Mail, mobile iChat?



    This would be a real smartphone, if only Apple could figure out the text entry. Is the keyboard the only way?
  • Reply 4 of 160
    Ijust got a Nokai N73 on a 18mont contract.. so im in no rush
  • Reply 5 of 160
    melgrossmelgross Posts: 29,087member
    Quote:
    Originally Posted by backtomac


    One of these days Wu is going to be right.



    He is, a lot more often he isn't, or than people here ever are.



    But I hope that the idea of it being a smart phone is correct. that's the only way Apple might be able to take my business from my Treo 700p. Which is the best smart phone around right now.
  • Reply 6 of 160


    In the article, it mentions that LG's Chocolate media phone has been panned by critics. I've yet to see these. What are the major complaints on it?



    The TV ads make it look "sweet" but that's expected in a PR spin.
  • Reply 7 of 160
    melgrossmelgross Posts: 29,087member
    Quote:
    Originally Posted by pairof9s




    In the article, it mentions that LG's Chocolate media phone has been panned by critics. I've yet to see these. What are the major complaints on it?



    The TV ads make it look "sweet" but that's expected in a PR spin.



    It's a pretty bad phone.



    For one thing, it's supposed to be a music phone. But, unless you buy the music from them, it might not play at all.
  • Reply 8 of 160
    Quote:
    Originally Posted by melgross


    He is, a lot more often he isn't, or than people here ever are.



    But I hope that the idea of it being a smart phone is correct. that's the only way Apple might be able to take my business from my Treo 700p. Which is the best smart phone around right now.



    Don't get me wrong Mel, I hope he is right and Apple goes with a MVNO model for service. I'll be all over it. It can't be any worse than the phone I have now.
  • Reply 9 of 160
    I hope they release it this year prior to the holiday shopping season. It would generate a lot of buzz as it would be on the wishlist for millions of people.



    I'm sure it will be an awesome blend of phone and iPod technology.
  • Reply 10 of 160
    It's a good time to be an Apple afficionado. Here's to all those who stuck with them through the hard times.
  • Reply 11 of 160
    mr. hmr. h Posts: 4,656member
    Quote:
    Originally Posted by backtomac


    One of these days Wu is going to be right.



    Actually, I'm not sure if he's ever been wrong?



    ?usually by virtue of the fact that he states the bleeding obvious.



    In this case however, he seems to have some insider info. It'll be interesting to see how right/wrong he is.
  • Reply 12 of 160
    melgrossmelgross Posts: 29,087member
    Quote:
    Originally Posted by Mr. H


    Actually, I'm not sure if he's ever been wrong?



    ?usually by virtue of the fact that he states the bleeding obvious.



    In this case however, he seems to have some insider info. It'll be interesting to see how right/wrong he is.



    It's the usual case of something being obvious only AFTER someone else says it.
  • Reply 13 of 160
    Quote:
    Originally Posted by pairof9s




    In the article, it mentions that LG's Chocolate media phone has been panned by critics. I've yet to see these. What are the major complaints on it?



    The TV ads make it look "sweet" but that's expected in a PR spin.





    The phone is really slow, if you are a reasonable fast texter then it will regularly miss characters. When going through menus it presents a loading screen and quit often (with a new phone) there would be nothing in the folder. Had it for a week and got rid of it as it was shockingly bad. Went back to the sony ericssons, best phones out there (as yet).
  • Reply 14 of 160
    I've been using a Nokia for years. Their menu structure is Applesque (ie. just like the iPod, iTunes, finder, etc). Seems to me that Apple has had some problems with patent infringement by using this menu structure (Creative?). I'd be willing to bet that Nokia holds a patent when it comes to such a structure on a cell-phone (but I might be wrong). I certainly know that Motorola and Samsung have terrible UI (comparing my brother's phones to mine), and so I suspect the reason is that they can't use the nice menu that Nokia has for patent reasons. Now, it's one thing for Apple to throw $100M at Creative, but Nokia will not be so easy. (Correct me if I'm wrong about cell-phone UIs.)
  • Reply 15 of 160
    melgrossmelgross Posts: 29,087member
    According to MacDailyNews:



    http://macdailynews.com/index.php/we...omments/10782/



    But it's back now. I'm not sure what changed. I'm not there every day.



    Can anyone tell if anything has been changed?
  • Reply 16 of 160
    chuckerchucker Posts: 5,089member
    Quote:
    Originally Posted by AppleInsider


    "The design will be an iPod nano-like candy bar form factor



    Oh, so you've seen it, Wu?



    Quote:

    and come in three colors (we are not certain of the exact colors but we suspect black, white and platinum, similar to Apple's current color scheme of iPods and Macs)."



    Oh, so you haven't seen it, Wu?
  • Reply 17 of 160
    Quote:
    Originally Posted by xUKHCx


    The phone is really slow, if you are a reasonable fast texter then it will regularly miss characters. When going through menus it presents a loading screen and quit often (with a new phone) there would be nothing in the folder. Had it for a week and got rid of it as it was shockingly bad. Went back to the sony ericssons, best phones out there (as yet).



    Yep - I played around with one at a Best Buy as I'm eligible, today in fact, to upgrade my phone at a discount. It felt cheap and the touch menu navigation SUCKED. After about 30 seconds I simply put it down and walked away, shocked at how bad it was. This is coming from someone who still has and enjoys a 3G iPod... it has its quirks but it's light-years ahead of the Chocolate... funny how it is over 3 years old!



    I'm glad my Verizon contract is up in 2 months... can't wait to see what Apple may have up its sleeve
  • Reply 18 of 160
    Has there been any mention of a camera or video capabilities?
  • Reply 19 of 160
    haggarhaggar Posts: 1,568member
    It will be a 1 button phone because Steve says people find the 10 digit keypad confusing. To operate the phone, you press the button once to dial a 1, double-press to dial 2, triple-press to dial 3, and so on. Other functions can be activated by holding down the button for a certain length of time. Hold for 1 second to access the menu, hold 2 seconds to turn the phone on or off, hold 3 seconds to activate speakerphone, hold 4 seconds to turn vibrator on or off, etc.



    Next will be Apple's own line of cars with only 1 foot pedal because Steve says 3 pedals are confusing.
  • Reply 20 of 160
    Quote:
    Originally Posted by Haggar


    It will be a 1 button phone because Steve says people find the 10 digit keypad confusing. To operate the phone, you press the button once to dial a 1, double-press to dial 2, triple-press to dial 3, and so on. Other functions can be activated by holding down the button for a certain length of time. Hold for 1 second to access the menu, hold 2 seconds to turn the phone on or off, hold 3 seconds to activate speakerphone, hold 4 seconds to turn vibrator on or off, etc.



    Next will be Apple's own line of cars with only 1 foot pedal because Steve says 3 pedals are confusing.



    I think this is a good candidate for the funniest thing I will read/hear today, and it's still not even 9:30 in the morning. I hope Steve someday realizes that people are actuall pretty good with multiple buttons. I think this is one thing that is really holding Apple back. For example, how many people would like a good "off" button on their iPod so they didn't have to sit there waiting, especially since holding play only works about half the time on my wife's Nano.
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