Caris sees iPhone sales topping 25 million per year by '09

[AppleInsider]

Citing expectations for unusual sequential growth in iPod sales this quarter, Caris & Company on Tuesday increased its price target on shares of Apple, adding that it expects the company to be shipping 25 million iPhones per year by fiscal 2009.

"We are increasing our price objective on Apple from $110 to $115 as our channel checks suggest that iPod shipments (usually down in the June quarter) will grow quarter-over-quarter," analyst Shebly Seyrafi wrote in a research report. "Our checks are on the HDD-side, which is a data point for the video iPod (about a third or a fourth of iPod shipments) and suggest better than seasonal growth in the 1.8-inch drive market (dominated by the iPod)."

Instead of forecasting iPod units to decline quarterly from 10.5 million units during the first quarter of the year to 10.0 million units in the second quarter, the analyst now estimates that units will increase about 13 percent to 11.9 million units. He added in his report that he has heard ample speculation that Apple will replace the 1.8-inch HDDs used in the video iPod with NAND flash later this year, at least for capacities below a certain level.

For iPhone, Seyrafi is modeling Apple to sell around 17 million for fiscal 2008 (12-month period ending Sept. '08) and 25 million in fiscal 2009 (ending Sept. '09) -- well ahead of Apple's own stated estimate of 10 million units in fiscal 2008. Seyrafi even went as far as to predict that there is room for "ample upside" to his already aggressive iPhone targets.

"It is true that smart phones account for less than 10 percent of the 1 billion+ unit worldwide cell phone market, but we believe that Apple can catalyze smartphone penetration into the cell phone market while it gains share in the smartphone market," he explained. "Pessimists (such as Microsoft's Steve Ballmer) say that Apple's high price ($499/$599) will preclude widespread adoption, but we believe that after Apple 'skims' higher-priced customers it will drastically lower prices to around $300."

While acknowledging that competitive offerings -- such as Samsung's Upstage sold through Sprint and Motorola's Q -- offer 3G services, Seyrafi said Apple is still likely to emerge as the "big winner" due to the high publicity surrounding the iPhone and the halo effect from the iPod.

"Plus, we expect a follow-on version with 3G," he added.

In his report Tuesday, the Caris analyst also said he believes Apple can beat its gross margin guidance for the current quarter, which was modeled down from 35 percent last quarter to 32 percent for the quarter ending June.

"Remember that the decline was guided because of a less favorable component cost environment, higher display costs, and lower prices in the educational segment," he wrote.*"However, our pricing research on NAND flash suggests that pricing here has been more aggressive over the past few weeks."

Seyrafi maintained his "Above Average" rating on shares of the Cupertino-based company, but increased his per-share earnings estimate for fiscal years 2007, 2008, 2009 from $3.43, $3.54 ,$4.21 to $3.52, $3.73,$4.42.

"Risks to our price objective include slower than anticipated acceptance of the forthcoming iPhone product, increased competition from Dell in PCs, and cannibalization of the iPod by the iPhone," he wrote.

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[vinney57]

First!

[vinney57]

Originally Posted by AppleInsider

"Risks to our price objective include slower than anticipated acceptance of the forthcoming iPhone product, increased competition from Dell in PCs, and cannibalization of the iPod by the iPhone," he wrote.[c][ View this article at AppleInsider.com ]

Not going to happen, not going to happen and not going to happen.

[MacCentric]

Originally Posted by vinney57

Not going to happen, not going to happen and not going to happen.

Yeah, especially regarding Dell, they have enough to worry about in trying to regain the share that HP has been stealing from them.

[palex9]

i am getting sooooo sick of hearing about the iphone and how great it is and how everybody is going to buy one. this reminds me of movies like snakes on a plane that were incredibly hyped and then turned out to be duds.

[heinzel]

Whith all the anticipation and attention the iPhone is getting in the news, before anybody has even bought and used one, I hope that Apple will be able to deliver the goods, otherwise I foresee a second Newtonian frustration for every Apple geek out there, as well as a lot of Windows Mobile (brrrr...).

[Ireland]

Originally Posted by vinney57

First!

How long are you a member of this forum?

----------------------------

17 million is a possibility, but that would be on the high end I think - although I have been surprised before.
Just those existing models with no subsidies may prove difficult though.

[Phizz]

Originally Posted by AppleInsider

... and cannibalization of the iPod by the iPhone...

I am sick of seeing that. So what if someone buys an iPhone instead of an iPod. Yeah the iPod sales may go down in comparison to what they were, but the total iPhone+iPod sales will still be higher than what the iPod sales alone would be should there be no iPhone.

i.e. Overall, Apple is going to make more total revenue by releasing the iPhone than it would have by not releasing it - so how the heck would such apparent cannibalization be a risk?

[Walter Slocombe]

Speaking about being sick of things, I find myself increasingly sick of hearing people moaning about hearing about or reading about the iPhone. If you dont want to bother about it then just stop reading articals about it, and perhaps dont bother posting that you are sick of hearing about it.

I hope it sells and sells well8,9,10,12 million by 2008, anywhere around those figures and that would be great for Apple.

[Louzer]

Originally Posted by Ireland

How long are you a member of this forum?

----------------------------

Well, according to the name tag, since 2001. So, 6 years or so would be my guess.

[Louzer]

Originally Posted by Phizz

I am sick of seeing that. So what if someone buys an iPhone instead of an iPod. Yeah the iPod sales may go down in comparison to what they were, but the total iPhone+iPod sales will still be higher than what the iPod sales alone would be should there be no iPhone.

i.e. Overall, Apple is going to make more total revenue by releasing the iPhone than it would have by not releasing it - so how the heck would such apparent cannibalization be a risk?

Unless people get all confused about whether they should buy an iphone or an ipod and end up buying a zune instead. Remember, Apple usually has limited product lines (2 laptops, 3 desktops, that's it) because, apparently, their customers get easily confused by having choices. One more choice means more confusion, head explosions, etc.

But if you don't like that, how about on the bottom line. First, you make the assumption that revenues from the iPhone sale would be the same on the iPod. If not, then revenues could be affected. Also, what if people, trying to decide, also decide to wait on buying an iPod because they want to see if the iPhone comes down in price, or a new ipod that's an iphone without the phone comes out.

And third, and most important, keep in mind that Apple has already stated that the iPhone will be treated differently on their income statements (as a subscription, not an asset), and, as such, will count differently. So selling a $400 iPod gets Apple $400 in revenue for the quarter. Selling a $600 iPhone may only get them $150 for the quarter, $150 for the next, etc.

[Porchland]

I'm still hoping for some kind of music/video/iPod announcement before WWDC. Steve Jobs said that non-DRM music would start appearing in the store in May, and there's three more Tuesdays before the end of the month.

Still waiting for: HD content, Beatles catalog, iPod widescreen, nano storage bumps and Nike+ refresh. The iPod widescreen probably won't come until October, but the rest seem overdue already.

[Marvin]

Originally Posted by palex9

i am getting sooooo sick of hearing about the iphone and how great it is and how everybody is going to buy one. this reminds me of movies like snakes on a plane that were incredibly hyped and then turned out to be duds.

Snakes on a plane was awesome. How could you not like that movie?

But yeah, I'm sick of the iphone too and hearing about it. I always hate when releases are such a long time after announcements.

I don't really see these selling that much. It'll be the gadget everyone wants but just to play with for 5 minutes and then give it back because ultimately you have a cheapo phone that you never use anwyay. It's all about network coverage too, that will be the big decider.

[EagerDragon]

Not sure, but these numbers look inflated to me. Europe is not getting it until later, Canada we have not heard yet, so most of the sales would be for USA. I don't beleive they will sell 17 mil of them. 10 to 12 Maybe.

[Ireland]

Originally Posted by Louzer

Well, according to the name tag, since 2001. So, 6 years or so would be my guess.

You did read his quality post right? If you can see when he joined (like I could) why are you guessing?

[TBaggins]

Not be juvenile about it, but to the true-blue iPhone naysayers out there:

1) As much as you've heard about the iPhone so far, expect to hear about 10x more about it over the rest of the year. That's prolly a conservative estimate.

2) It will kick great quantities of ass sales-wise. Square miles of ass, in fact. In fact, Apple will have to import ass in order for the iPhone to have enough ass to kick.

Don't say you weren't warned.



.

[AISI]

Originally Posted by EagerDragon

Not sure, but these numbers look inflated to me. Europe is not getting it until later, Canada we have not heard yet, so most of the sales would be for USA. I don't beleive they will sell 17 mil of them. 10 to 12 Maybe.

The iPhone is due to be launched in Europe in the fourth calendar quarter of 2007. The analyst is forecasting sales of 17 million iPhones for the next fiscal year starting October 1, 2007.

[melgross]

Originally Posted by vinney57

Not going to happen, not going to happen and not going to happen.

There is always cannibalization. The question is, how much?

Will it be 3 million off the top, or will it be 300.

[melgross]

Originally Posted by EagerDragon

Not sure, but these numbers look inflated to me. Europe is not getting it until later, Canada we have not heard yet, so most of the sales would be for USA. I don't beleive they will sell 17 mil of them. 10 to 12 Maybe.

Europe will be getting it this year, so, all of next year they will have it. Asia will be getting it early next year.

There is plenty of time to meet the numbers.

[melgross]

Originally Posted by TBaggins

Not be juvenile about it, but to the true-blue iPhone naysayers out there:

1) As much as you've heard about the iPhone so far, expect to hear about 10x more about it over the rest of the year. That's prolly a conservative estimate.

2) It will kick great quantities of ass sales-wise. Square miles of ass, in fact. In fact, Apple will have to import ass in order for the iPhone to have enough ass to kick.

Don't say you weren't warned.



.

Veerry good.

[JeffDM]

Originally Posted by melgross

There is always cannibalization. The question is, how much?

Will it be 3 million off the top, or will it be 300.

I really don't even think the concern is relevant. Instead of buying a $250 product, they buy a $500 plus a subscription which there is a monthly kick-back. How is that bad from the business perspective? I find it highly unfortunate that a word with negative connotations would be used to describe a positive event within the frame of reference. It sounds like a freaking upsell to me. With that kind of language, it sounds like the kid that complained that he got a dime instead of a nickel.

I don't see why their research wouldn't try to estimate the upsell potential either, which would have been another question or two on a survey if they bothered to do a decent job of it.

[melgross]

Originally Posted by JeffDM

I really don't even think the concern is relevant. Instead of buying a $250 product, they buy a $500 plus a subscription which there is a monthly kick-back. How is that bad from the business perspective? I find it highly unfortunate that a word with negative connotations would be used to describe a positive event within the frame of reference. It sounds like a freaking upsell to me. With that kind of language, it sounds like the kid that complained that he got a dime instead of a nickel.

I don't see why their research wouldn't try to estimate the upsell potential either, which would have been another question or two on a survey if they bothered to do a decent job of it.

They aren't buying a subscription from Apple. Apple is only billing it that way so they can give the improvements without having to go through that embarrasing situation again.

I certainly don't mind Apple selling a $500 or $600 device rather than a $350 one. No matter how it is billed, there is more cash flow, and more profit.

But the point has simply been that the iPhone's sales won't be entirely additive to the sales of the iPod. $1 billion in iPhone sales will result in how much less in iPod sales? Thar's all the argument is about.

[JeffDM]

Originally Posted by melgross

They aren't buying a subscription from Apple. Apple is only billing it that way so they can give the improvements without having to go through that embarrasing situation again.

The rumor was that Apple will get some of that subscription money, much like how part of Blackberry subscriptions go to RIM, a few dollars a month. This rumor came out long before Apple announced the subscription accounting, which does sound like something different.

But the point has simply been that the iPhone's sales won't be entirely additive to the sales of the iPod. $1 billion in iPhone sales will result in how much less in iPod sales? Thar's all the argument is about.

That still seems like a pretty important thing that shouldn't have been left out when trying to make these estimates. If they can't estimate that, then I think I can legitimately question the soundness, or at least completeness / thoughroughness of their iPhone estimates because they left a major factor out.

[TBaggins]

Originally Posted by melgross

Veerry good.

Thanks.

.

[melgross]

Originally Posted by JeffDM

The rumor was that Apple will get some of that subscription money, much like how part of Blackberry subscriptions go to RIM, a few dollars a month. This rumor came out long before Apple announced the subscription accounting, which does sound like something different.

I haven't seen that one. We have heard of the RUMOR that ATT will be kicking back some of the cash from each iPhone sale, but that's just a rumor as well, and I can't imagine why that would happen.

That still seems like a pretty important thing that shouldn't have been left out when trying to make these estimates. If they can't estimate that, then I think I can legitimately question the soundness, or at least completeness / thoughroughness of their iPhone estimates because they left a major factor out.

That is one of the problems. I don't know how thay can estimate it.

For myself, I bought a Palm IIIC here at the first NYC Macworld. It was at a good discount at the time.

I didn't want to bother with a cell back then, and I certainly didn't want a cell AND a Palm on my belt. I'm not THAT much of a nerd.

After 9/11, when we decided to get cells, I waited, for myself, until the Samsung i330 color Palm smartphone came out.

The point to all that was to show that people will want to replace their cell and their iPod with one device, IF that device is as good, or better, than the devices they had before.

Most everyone has a cell, but most people don't have an iPod. When they get a new cell, they may not get a new iPod. But, if it's an iPhone, that's good too.

[JeffDM]

Originally Posted by melgross

That is one of the problems. I don't know how thay can estimate it.

If they didn't do a properly randomized survey, I don't see how they can come up with iPhone sales predictions are anywhere near credible. If they did do a survey, then they can ask these kinds of questions because they are totally relevant to the research at hand. There is always some margin of error but it's better than saying something to the effect of "we have no idea". I don't see how relevant knowing potential iPhone income will be to investors unless they also had an idea of how much it affects related products by the same company.

[melgross]

Originally Posted by JeffDM

If they didn't do a properly randomized survey, I don't see how they can come up with iPhone sales predictions are anywhere near credible. If they did do a survey, then they can ask these kinds of questions because they are totally relevant to the research at hand. There is always some margin of error but it's better than saying something to the effect of "we have no idea". I don't see how relevant knowing potential iPhone income will be to investors unless they also had an idea of how much it affects related products by the same company.

I'm sure they have done at least some of that. But as someone who was involved in writing those surveys when I worked at Mccann Erickson back in the '70s', I can relate my experiences. We were often surprised at just how the public differed from our survey subjects.

It's just like polls at election stations. People say how they voted, but then the results that come in are often different.

People, I have learned, don't always tell the truth in surveys.

It also depends on the wording. I don't want to get political here, but I'm just using this as an example. Please, don't flame me.

Last night on CNN's Lou Dobbs, they were talking, as they often do, about illegal immigration.

Two surveys were mentioned by two different people, both on different sides of the issue.

The first cited a large poll that said that 67% of Americans were in favor of giving "undocumented workers" a chance to get their residency cards, and later, a chance of citizenship.

The other poll said that 75% of Americans were in favor of removing "illegal aliens" from the country, and not giving them any ability to receive residency, or citizenship.

these surveys are not always as useful as you may think.

"Focus groups" aren't any better. My partner somehow got invited to one, to which he went. After that he received two or three a year. Even though the letters always required him to be familiar with the product category, he often wasn't, and would come to me for information. I don't trust those groups either.

I think that Jobs and a very few others at Apple are more responsible for product direction, and sales estimates, than surveys or focus groups.

I think this has been mentioned elsewhere.

[Ireland]

Originally Posted by vinney57

First!

Ooohh.. now I get it.