iPhone yearly sales rate should top 45 million by 2009, says firm

[AppleInsider]

While categorizing its prediction is a bold one, research and investment firm PiperJaffray said Thursday it believes Apple can grow its iPhone sales into a 45 million unit per year business by the 2009 calendar year.

In doing so, researchers at the firm say the Cupertino-based consumer electronics maker would need to capture a 7 percent share of the mobile handset market in North America and a 2.8 percent share throughout the rest of the world.

"It is critical to keep in mind that the iPhone will be a combo device (iPod and mobile handset), which will attract more than just a mobile phone customer," analyst Gene Munster wrote in a report on the matter.

In support of his estimates, which factors in cannibalization of standalone iPod models, the analyst pointed to Motorola's widely successful RAZR handset, which reached record sales volumes in a relatively short time following its inception.

"While Motorola has stronger global distribution than Apple and the RAZR retail price fell well below $300 by 2006, this is one example of a successful product selling tens of millions of units in a 12-month period," he explained.

After tapping fellow wireless analyst Mike Walkley for his advice on the matter, Munster said he expects iPhone to have somewhat limited impact on other mobile handset manufacturers. As such, he does not believe the iPhone will compete with the more enterprise-based smartphones, but does see the device scrapping for higher-end consumer dollars.

"The currently declining Motorola market share at AT&T will continue and other higher-end multimedia devices such as Palm and HTC could suffer slowing sales versus his expectations of strong initial iPhone sales," he wrote.

However, the analyst said that BlackBerry, which launched its $199 Curve device this week, could end up competing with the iPhone and may even benefit from increased store traffic from the iPhone launch. He believes consumers walking into AT&T stores to view iPhone could end up walking out with a Curve given its similar features at a substantial discount ($199 versus expectations of $499-plus for the iPhone). Still, he expects "very strong initial sales of the iPhone" due to checks indicating a strong consumer interest and wait lists already at AT&T stores for the product.

Given the enormous global buzz going into the iPhone launch, Munster said its more than likely that rivals are preparing to declare war on Apple and AT&T by launching a series of promotions to prevent users from switching to AT&T.

"The most powerful tactic will likely be deep subsidies on cutting edge music phones," he said. "For example, Verizon has several new music phones launching, including an improved version of its Chocolate phone. In addition, Verizon recently lowered prices on several music phones such as the VX8600 from $130 to $80, and VX8700 from $180 to $150."

Demonstrating the strength of music phone sales, Walkley's May checks indicated the $100 UpStage was the top-selling phone at Sprint, passing the $25 RAZR. Similar to Verizon, Sprint increased its marketing of music phones ahead of the iPhone launch, he said, as the UpStage fell from $150 to $100.

Munster expects those deep subsidies to run indefinitely, which is one of the reasons he is keeping a modest lid on iPhone estimates in 2007 and 2008 (3.2 million and 12.4 million, respectively). While the iPhone will be competing with handsets that are free or near free, he remains confident in the device's success. For example, he pointed to the the history of the MP3 player market as a benchmark, where the iPod grew market share from 31 percent at the end of 2003 to 65 percent at the end of 2004, with an average iPod price of $290, when players like Samsung, Creative, Dell, and Sony had products priced (with less functionality) at less than $150.

"The bottom line: just because something is inexpensive or free doesn't mean people will want it," the analyst wrote.

At the same time, Munster does not believe enterprises will purchase the iPhone due to its touch screen keyboard and multimedia functions, as many businesses do not allow features such as cameras. "Would organizations really purchase products for its employees that provide them more entertainment and perhaps limit productivity?"

The analyst, who maintains an Outperform rating on shares of Apple, raised his price target on shares of the company's stock to $160 from $140.

"We believe investors should own shares of Apple today for the 2009 ramp in iPhones," he wrote.

[ View this article at AppleInsider.com ]

[SpinDrift]

Ooh.. time to speak to my broaker again I think!

[TBaggins]

Not trying to be a downer here, but I have to say that 45 million units a year by 2009 seems overly optimistic. Yeah, the market is huge, but the iPhone's segment of it isn't, so much. They'd likely have to be very aggressive on price to hit those numbers, and that's not Apple's game usually.

I'm getting the odd feeling that the 'fix' is in on Apple stock, and that its being pumped/hyped beyond realistic expectations so that the big boys can ride the roller coaster up, and then dump the stock for a huge profit.

'Buy and hold' investors won't be hurt, but speculators jumping in late will be. Ah well, it was ever thus.

.

[Hattig]

Presumably there will be a downward effect on the sales of iPods as people consolidated the two devices with the iPhone.

45m iPhones, sure. But there's 25 million people there who didn't replace their old iPod and who opted for a 16/32/64GB iPhone instead (in 2009).

[DaveGee]

And in a slightly more forward looking statement Munster is also predicting Apple will own 40% of everything by 2010.

D

[BlackSummerNight]

What is the basis for this number? Look to see what is the best selling phone ever, and see if it's close to 45 million.

[TBaggins]

Originally Posted by BlackSummerNight

What is the basis for this number? Look to see what is the best selling phone ever, and see if it's close to 45 million.

I think the RAZR has sold 100 million units total, but that's since 2004... still not a 45 million-per-year pace.

And of course, price-wise, it has become a mass-market phone in recent years... you can get it almost for free with a 2-yr contract from some carriers. Nor is it available from just one US carrier, the way the iPhone is.

I think there was also a Nokia that sold 200 million units worldwide over its lifetime, but it was an entry-level (read 'cheap') phone.

.

[tundraboy]

Originally Posted by SpinDrift

Ooh.. time to speak to my broaker again I think!

I'm not buying Apple stock at this time. People like me who bought at the 40's will just be making money off people like you who will be buying at the crest of a speculative bout. I think long term Apple stock will be headed way beyond even the 160 target that this analyst is predicting but I fear right now there are quite a few who are getting carried away by the mob's exuberance.

[aegisdesign]

The analysis is more than optimistic.

The Razr is free with a packet of cornflakes. I think you can get them even on pay-as-you-go now for under £50. The iPhone is never going to be that cheap.

45m is more than half the entire smartphone market worldwide in 2006. Either they're expecting Apple to overtake Nokia or the smartphone market to grow ten-fold in 2 years.

[petermac]

Originally Posted by aegisdesign

. Either they're expecting Apple to overtake Nokia or the smartphone market to grow ten-fold in 2 years.

You might be right there.

[DaveGee]

Originally Posted by aegisdesign

....Apple to overtake Nokia or the smartphone market to grow ten-fold in 2 years.

We have a winner...

Lets face it, the phones that had previously made up 'the smart-phone market' were the precise reason why the market was what it was... That is to say, the market was TINY with a capital T mostly due to the complexities (real or perceived) of your average smart-phone. The fact is, if you didn't have geekish tendencies you weren't likely to use a smart-phone. Now that Apple has entered the fray it's a safe bet that most phones that are designed by the rest of the manufacturers will try to become 'smarter' in one way or another and in time it will be odd to see a 'simple phone' being introduced.

This opinion is hinged on Apple/ATT 'doing the iPhone right'.

Something that's still not certain at this point, the real proof will be the rollout and initial reactions. From our experience with the Newton - the initial reaction is **everything**. When first introed the HW recognition was less than stellar (but it was fixed) and the media basically destroyed it (well it destroyed itself really).

Anyway - IMHO, yes Apple will certainly grow the 'smart-phone market' and to a point morf the entire cell phone industry into a 'smarter' phone industry. Lets face it imitation is the sincerest form of flattery and I have a really strong feeling that the iPhone will be flattered up the ass by the rest of the manufacturers.

Dave

[ajhill]

Well, it happened again. Piper Jaffrey raised its price target for AAPL shares from $140/share to $160/share. Okay so maybe the woman at Morgan Stanley wasn't so outrageous with her $225 target for the end of 2008.

And she is also predicting an ultra portable from Apple before the end of the year (Monday, Steve?)

You gotta love analysts who also predict future hardware.

And Still we don't even yet know how much Apple will get from every subscriber, each and every month....

Stay tuned.

[quiksilver180]

Originally Posted by AppleInsider

However, the analyst said that BlackBerry, which launched its $199 Curve device this week, could end up competing with the iPhone and may even benefit from increased store traffic from the iPhone launch.

[ View this article at AppleInsider.com ]

I don't see the BlackBerry Curve being much competition to the iPhone, given the screen, ability to play music and videos, browser, etc. They are completely different from each other. I could see that it may help sales of the Curve with the increased store traffic, but people who are interested in buying an iPhone will either buy an iPhone or not.

[BenRoethig]

I'm thinking they forgot a decimal point somwhere. 4.5 million may be doable. 45 million is is a number that even the most rabid Mac zealot couldn't even think up.

[SpinDrift]

Originally Posted by BenRoethig

I'm thinking they forgot a decimal point somwhere. 4.5 million may be doable. 45 million is is a number that even the most rabid Mac zealot couldn't even think up.

45 million is only about 4% of the total phone market. That's more than realistic if Apple bring out more handsets.

[pmjoe]

Apple can grow its iPhone sales into a 45 million unit per year business by the 2009 calendar year.

ROTFLMAO!

"Can" would be the key word there. I think Apple could pat themselves on the back if they can even get it to 10 million. 45 million a year??? Sure, if Apple could get the iPhone down to $159/$199 by this time next year, maybe, and that'd still be a big maybe (but I doubt we'll see that pricing on the iPhone). Does anyone follow this PiperJaffray's track record? Seems like whenever I see one of their stories on this site, they're either predicting the blatantly obvious or the clearly impossible, never anywhere in between.

[aegisdesign]

Originally Posted by DaveGee

Lets face it, the phones that had previously made up 'the smart-phone market' were the precise reason why the market was what it was... That is to say, the market was TINY with a capital T mostly due to the complexities (real or perceived) of your average smart-phone. The fact is, if you didn't have geekish tendencies you weren't likely to use a smart-phone. Now that Apple has entered the fray it's a safe bet that most phones that are designed by the rest of the manufacturers will try to become 'smarter' in one way or another and in time it will be odd to see a 'simple phone' being introduced.

I partly agree although the worldwide smartphone market is very, very different outside the USA. Over two thirds of the world market for smartphones is dominated by Symbian based phones which aren't very popular at all in the USA. So the World's perception of a smartphone is a lot easier to use and less geeky than the USA's perception of a smartphone.

The Nokia N95 is doing extremely well here in Europe just now and it's as smart a phone as they come and it's not sold to just geeks and businesses. It's a bit of a brick though, even by Nokia standards.

Originally Posted by DaveGee

This opinion is hinged on Apple/ATT 'doing the iPhone right'.

The USA is a tiny market though. If they're going to hit 45m then they have to get it out to Europe where the phone market is richer and more developed.

Originally Posted by DaveGee

Something that's still not certain at this point, the real proof will be the rollout and initial reactions. From our experience with the Newton - the initial reaction is **everything**. When first introed the HW recognition was less than stellar (but it was fixed) and the media basically destroyed it (well it destroyed itself really).

Anyway - IMHO, yes Apple will certainly grow the 'smart-phone market' and to a point morf the entire cell phone industry into a 'smarter' phone industry. Lets face it imitation is the sincerest form of flattery and I have a really strong feeling that the iPhone will be flattered up the ass by the rest of the manufacturers.

Yes, it'll be a good thing for us all that the other players in the market, notably Symbian for us in Europe, will pick up their game. Symbian already rules on features but it's not all about features. Symbian S60/UIQ isn't a bad user interface but it's certainly not as slick as an iPhone, not even close.

But then most people seem to buy phones based on how the hardware looks not the software - case in point being any Motorola phone - funky looks, shite software.

[bryand]

If the iPhone becomes a big seller, and indications are good that it will, then I think that Apple will quickly regret granting a 5 year monopoly to AT&T. As popular as the phone may be, competing cellular providers won't stand by and watch themselves lose market share. They are going to offer up intense competition for those customers, and this could ultimately eat into Apple's market share in the music player market.

[SpamSandwich]

Originally Posted by TBaggins

Not trying to be a downer here, but I have to say that 45 million units a year by 2009 seems overly optimistic. Yeah, the market is huge, but the iPhone's segment of it isn't, so much. They'd likely have to be very aggressive on price to hit those numbers, and that's not Apple's game usually.

I'm getting the odd feeling that the 'fix' is in on Apple stock, and that its being pumped/hyped beyond realistic expectations so that the big boys can ride the roller coaster up, and then dump the stock for a huge profit.

'Buy and hold' investors won't be hurt, but speculators jumping in late will be. Ah well, it was ever thus.

.

Expect the stock to tumble around June 28th. Then, just swoop in and grab another handful.

[SpamSandwich]

Originally Posted by ajhill

Well, it happened again. Piper Jaffrey raised its price target for AAPL shares from $140/share to $160/share. Okay so maybe the woman at Morgan Stanley wasn't so outrageous with her $225 target for the end of 2008.

And she is also predicting an ultra portable from Apple before the end of the year (Monday, Steve?)

You gotta love analysts who also predict future hardware.

And Still we don't even yet know how much Apple will get from every subscriber, each and every month....

Stay tuned.

Ahh... if only these people could be held legally responsible for their 'analysis', the investing world would be a much safer (but far less exciting) place.

[DaveGee]

Originally Posted by bryand

If the iPhone becomes a big seller, and indications are good that it will, then I think that Apple will quickly regret granting a 5 year monopoly to AT&T.

Hold the phone... when and where was it revealed that AT&Ts 'multi-year deal' was in fact a 'five year deal'?

Dave

[SpamSandwich]

Originally Posted by DaveGee

Hold the phone... when and where was it revealed that AT&Ts 'multi-year deal' was in fact a 'five year deal'?

Dave

That's what I keep wondering. Too many unsubstantiated rumors. Last I heard it was 2 years.

[DaveGee]

Originally Posted by aegisdesign

I partly agree although the worldwide smartphone market is very, very different outside the USA. Over two thirds of the world market for smartphones is dominated by Symbian based phones which aren't very popular at all in the USA. So the World's perception of a smartphone is a lot easier to use and less geeky than the USA's perception of a smartphone.

The Nokia N95 is doing extremely well here in Europe just now and it's as smart a phone as they come and it's not sold to just geeks and businesses. It's a bit of a brick though, even by Nokia standards.

Agreed, I was indeed looking at the US market and not the world market but even with Symbian having a big following in the rest of the world its still pretty clear to me that Apple has a real chance of growing and changing the smart-phone market as a whole.

The USA is a tiny market though. If they're going to hit 45m then they have to get it out to Europe where the phone market is richer and more developed.

Totally agree

But then most people seem to buy phones based on how the hardware looks not the software - case in point being any Motorola phone - funky looks, shite software.

This is where Apple will truly out class (many) of current smart-phone mfgs... Apple is famous for its HW designs... Mix that with 'not-shite' software and the rest of the mfgs certainly have something to worry about.

Dave

[DaveGee]

Originally Posted by SpamSandwich

That's what I keep wondering. Too many unsubstantiated rumors. Last I heard it was 2 years.

That's settles it!

From this point forward any rumor posted to these forums must be stantiated!

Dave

[ryukyu]

I have to wonder if one big reason that the smartphone/PDA phone has not been a big growth market in the USA is because of the cost of the plans.
Right now, it's mostly business that uses them.
Not too many individuals are willing to shell out $100 a month for one phone.

[Eric1285]

Wow, that's just ridiculous. If Apple ever does move 45 million units in one year, it'll be because the iPhone totally cannibalizes sales of the iPod, which won't happen.

These "analysts" and "researchers" need to get their heads on straight. They're buying into the hype just like the media is, when they should be the ones who are able to see through the hype.

[Eric1285]

Originally Posted by ryukyu

I have to wonder if one big reason that the smartphone/PDA phone has not been a big growth market in the USA is because of the cost of the plans.
Right now, it's mostly business that uses them.
Not too many individuals are willing to shell out $100 a month for one phone.

Well, you could always sign up for the Sprint SERO plan. I picked up my Motorola Q for $75, and I'm paying $30 a month for 500 minutes, unlimited text messaging, unlimited data, and free nights and weekends starting at 7. By far and away the best plan from any carrier, and having 3G data downloads is sooo nice.

[anantksundaram]

Let's deconstruct his price forecast. For example, if the original "estimate" for 2009 was 15 million phones, but Apple sold 45 million at $400 each, that would be $40 per phone in net income (assuming Apple's current net income margin of about 10%), for 30 million "extra" phones sold -- i.e., $1200 million extra in aggregate net income. This is roughly $1.40 per share in additional EPS (Apple has about 865 million shares outstanding). At a P/E of, say 25 (the forward P/E now is a high 29+, so I am being a bit more conservative), that is worth an incremental $35 in price per share, leading to his share price forecast of $160 (125 + 35).

I think too much hype and expectation might be starting to get built into the share price with fundamentals -- such as sales of 45 million iPhones -- that are way beyond any reasonable reach for Apple (for instance, even if there was demand for 45 million phones in 2009, can Apple produce and distribute that many!?). Also, if Apple is selling that many, the price will have to be lower, implying lower margins and net income, implying lower share price gains.

The problem will be, if Apple comes in with say, "only" 25 million sold in 2009 (which, given original forecasts, would still be HUGE), or, say, sells 45 million phones at $250 per phone, its shares would sink like a stone.

We should be very afraid of forecasts like these.....

[ryukyu]

Originally Posted by Eric1285

Well, you could always sign up for the Sprint SERO plan. I picked up my Motorola Q for $75, and I'm paying $30 a month for 500 minutes, unlimited text messaging, unlimited data, and free nights and weekends starting at 7. By far and away the best plan from any carrier, and having 3G data downloads is sooo nice.

Wow. That's a great deal.
How's your service?
I consistently see Sprint vying for the bottom of the lists when it comes to customer satisfaction.

[SpamSandwich]

Originally Posted by ryukyu

Wow. That's a great deal.
How's your service?
I consistently see Sprint vying for the bottom of the lists when it comes to customer satisfaction.

Personally, I dumped Sprint for T-Mobile and never looked back. Sprint's customer service was atrocious.

[SpamSandwich]

Originally Posted by DaveGee

That's settles it!

From this point forward any rumor posted to these forums must be stantiated!

Dave

Maybe we could enforce a group rating system for the veracity of rumors á la Digg... The lowest ranking rumors would result in a pummeling.

[Ireland]

Originally Posted by TBaggins

Not trying to be a downer here, but I have to say that 45 million units a year by 2009 seems overly optimistic.

Not so sure about that. By 2009 Apple will have iPhone and iPhone nano out, and both items will be cheap in comparison to these launch prices, not to mention storage will be dramatically larger by then, and battery life will also improve. Imagine having a 32GB+ flash iPhone with 6-8 hours of constant use battery life, at a $399 price tag, they'd fly off the shelves.

[Eric1285]

Originally Posted by ryukyu

Wow. That's a great deal.
How's your service?
I consistently see Sprint vying for the bottom of the lists when it comes to customer satisfaction.

I don't bother calling their regular customer service. I speak only to their retentions department.

[aegisdesign]

Originally Posted by Ireland

Not so sure about that. By 2009 Apple will have iPhone and iPhone nano out, and both items will be cheap in comparison to these launch prices, not to mention storage will be dramatically larger by then, and battery life will also improve. Imagine having a 32GB+ flash iPhone with 6-8 hours of constant use battery life, at a $399 price tag, they'd fly off the shelves.

That's not going to happen.

There's no great change in battery technology happening in the next year so battery density isn't going to get any better than Lithium Polymer in 2008/09.

The ARM processor already is pretty efficient although until we see an iPhone taken apart we don't know if they've a single SOC or the more traditional two chip design with a traditional CPU and a secondary radio stack.

32GB of Flash is going to eat more power still than 4/8GB unless there's a serious process change.

And Apple NEVER reduce prices on their products, they upgrade the technology/features to fit the price. Where the price does come down, it's because they've ditched the accessories that used to come free (firewire cables, chargers, remotes etc in the iPod for example). Usually you find adding the accessories back makes it more expensive again.

They may introduce cheaper models but that may not be possible with the iPhone without ditching the multitouch screen which is the limiting factor on size. You can't make it much smaller if you've got to operate it with fat fingers. Cue iPhone Shuffle joke...

The price will change of course, but only because of phone company subsidies getting higher.

[AISI]

Originally Posted by TBaggins

Not trying to be a downer here, but I have to say that 45 million units a year by 2009 seems overly optimistic. Yeah, the market is huge, but the iPhone's segment of it isn't, so much. They'd likely have to be very aggressive on price to hit those numbers, and that's not Apple's game usually.

Agreed. Last year, with 40,000 distribution points, Apple sold 46 million iPods including a buttload of nanos ($149-249) and shuffles ($79). Even with a supposedly cheaper iPhone, in a growing cellphone market, it would be totally amazing. 20 million units in 2009, I could sorta believe that, but first Apple gotta reach the "10 million units in 2008" target.

Originally Posted by pmjoe

Does anyone follow this PiperJaffray's track record? Seems like whenever I see one of their stories on this site, they're either predicting the blatantly obvious or the clearly impossible, never anywhere in between.

Munster also said that Apple could sell nine million Macs in calendar 2007. Apple is on track to sell seven point something million, a 25-30 percent increase compared to calendar 2006.

[anantksundaram]

A truly thoughtful article on Apple's genius at innovation:

http://www.economist.com/opinion/dis...ory_id=9302662

[TBaggins]

Originally Posted by DaveGee

We have a winner...

Lets face it, the phones that had previously made up 'the smart-phone market' were the precise reason why the market was what it was... That is to say, the [smartphone] market was TINY with a capital T mostly due to the complexities (real or perceived) of your average smart-phone.

That's true, but it isn't just that. It's also

1) Price. Many phones are practically given away for free with a contract these days, smartphones usually can't hit those kind of pricepoints.

2) Functionality overkill. As geeks, its hard for us to imagine that there's people who just want to make calls and perhaps text once in awhile, but that describes a lot of people between the coasts and many over the age of 40 (not all of course, so save the "I'm 71 yrs old and a multimedia gangsta!" posts ).

Tragic as it is, much of the whizzy wonderment of the iPhone is lost on a lot of people, when you step back and consider the market as a whole, not just users who are like us.

This is not to say that the iPhone won't expand the smartphone market somewhat- I think it will, simply due to its 'game-changer' aura and marketing, and extreme ease-of-use.

But by the same token, some of the reasons why the smartphone segment of the market is small are pervasive, and not likely to go away anytime soon.

.

[BenRoethig]

Originally Posted by TBaggins

That's true, but it isn't just that. It's also

1) Price. Many phones are practically given away for free with a contract these days, smartphones usually can't hit those kind of pricepoints.

2) Functionality overkill. As geeks, its hard for us to imagine that there's people who just want to make calls and perhaps text once in awhile, but that describes a lot of people between the coasts and many over the age of 40 (not all of course, so save the "I'm 71 yrs old and a multimedia gangsta!" posts ).

Tragic as it is, much of the whizzy wonderment of the iPhone is lost on a lot of people, when you step back and consider the market as a whole, not just users who are like us.

This is not to say that the iPhone won't expand the smartphone market somewhat- I think it will, simply due to its 'game-changer' aura and marketing, and extreme ease-of-use.

But by the same token, some of the reasons why the smartphone segment of the market is small are pervasive, and not likely to go away anytime soon.

.

3), they're typically much larger than a normal cell phone.

[TBaggins]

Originally Posted by BenRoethig

3), they're typically much larger than a normal cell phone.

True dat.

.

[jasondwelsh]

Originally Posted by SpamSandwich

Expect the stock to tumble around June 28th. Then, just swoop in and grab another handful.

Have you been watching Mad Money? Buh buh buh buh BOO YAH!