Apple cell phone is real and ready for production - analyst
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.
"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.
Comments
This would be a real smartphone, if only Apple could figure out the text entry. Is the keyboard the only way?
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.
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.
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.
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.
I'm sure it will be an awesome blend of phone and iPod technology.
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.
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.
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).
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?
"The design will be an iPod nano-like candy bar form factor
Oh, so you've seen it, Wu?
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?
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
Next will be Apple's own line of cars with only 1 foot pedal because Steve says 3 pedals are confusing.
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.