Report: iPhone world share limited by revenue deals

[AppleInsider]

Opening its coverage of Apple for the first time, Bernstein Research has warned that the company may have to opt for marketshare instead of profit if it wants the iPhone to gain acceptance beyond a handful of countries.

The wealth management firm warned investors that Apple's current revenue sharing agreements with AT&T, O2, and T-Mobile were likely to provide the iPhone maker with substantial profits, but could hurt the company's long-term success in countries where the exclusive deals were with carriers that only hold a small (albeit significant) portion of the market in their respective countries. Many of these countries have alternate carriers which could technically support the iPhone but have been locked out as a result, said Bernstein senior analyst Toni Sacconaghi, Jr.

"This could... limit the iPhone's addressable market, since each of its carrier partners typically have 25-40% share in their respective markets," he said.

Sacconaghi also cautioned his firms client's by noting that these deals, which bind customers to long-term contracts to collect revenue, would not always be effective in certain countries. In Italy and Russia, cellphone customers typically opt for prepaid phones and so would have to pay the full cost of the phone up front. This would negate much of the profit or else increase the initial cost of the phone to maintain the same profit level.

Future introductions are most likely to address key markets where postpaid (contract) customers dominate, according to the report. Issuing a relatively detailed prediction, Sacconaghi said he expected Apple to release its cellphone in Australia, Spain, and Taiwan within half a year and for Japan and Korea sometime later. Apple would have access to as many as 515 million subscribers in these regions if it supported every carrier but would face a much tougher prospect persuading customers outside of these areas to accept similar agreements and pricing.

"If Apple decides to launch the iPhone in additional markets, it will likely have to settle for much lower revenue sharing, or abandon revenue sharing altogether," the analyst reported.

In turn, these choices could ultimately affect Apple's ability to reach its stated goal of 10 million iPhones sold by the end of 2008, he added. Estimates by Bernstein would have Apple selling just 4-5 million iPhones during the 2008 calendar year within the US, making the Cupertino, Calif.-based firm dependent on foreign sales to reach its target.

Within the safety of its confirmed markets, though, Apple was predicted to reap a significant reward. While the iPhone's recent price drop put it at the same price as a typical BlackBerry smartphone in the US, the revenues Apple would collect from AT&T were estimated at $14 -- roughly double what the BlackBerry's creator, Research in Motion, already received from providers for its own phones and mail services. Apple might collect as much as $360 from each iPhone customer in the US over two years; Britain's O2 would supply even more at $500.

Still, Sacconaghi argued that Apple would need to really move units, not just skim from a small user base, to avoid disappointing shareholders in the future. Bernstein raised its share targets to $175 but would start covering Apple only as an average "Market-perform" company, as any perceived shortcoming in sales could damage the company's stock value.

"We believe an investor buying Apple's stock at its current price must believe that the company can sell 10 [million] iPhones in 2008 without sacrificing the high profitability of the business -- a scenario we view as unlikely," the analyst said.

[Dreil]

Well, I think Bernstein Research is just new to the Apple platform.

If Steve says they'll ship x of y, don't they usually do about 3/2 + of x?

And the point of the iPhone (from the mobile operators perspective) is to convince people to jump ship and sign with them, hence the exclusivity.

In countries where this model doesn't fit (illegal to lock, etc) I'm sure Apple has a plan for them.

[shetline]

I'd like to see a whole lot of countries pass laws that say, "If you want your device to use the publicly-owned airwaves, in exchange for that privilege we demand, on behalf of the public, that your device be portable among any and all signal-compatible (all GSM, all CDMA, etc.) carriers."

If consumers had greater sway over politicians than the deep pockets of the carriers and cell phone manufacturers, that's what the laws would say in any reasonably democratic country.

[Ireland]

Everyone knows the iPhone shouldn't have been locked to one carrier per country in the first place, except Apple. They need to get out of this mindset. Let's hope all those European carrier contracts are short ones.

[salmonstk]

I am a bit confused.

Did Steve say 10 mil phones by end of 2008 or 10 million phones in 2008.

[Ireland]

Originally Posted by salmonstk

I am a bit confused.

Did Steve say 10 mil phones by end of 2008 or 10 million phones in 2008.

The latter. He's said it about 5 times now.

[jonessodarally]

random thought: has anyone heard anything about the Cisco end of things recently? Wasn't there some agreement to involve them in stuff when they used the name?

[Kasper]

Originally Posted by Ireland

The latter. He's said it about 5 times now.

Nah, I believe it's the former....

[TenoBell]

Everyone knows the iPhone shouldn't have been locked to one carrier per country in the first place, except Apple.

I don't know much about Europe but in the US there is an over looked advantage to locking the phone to one carrier in the short term.

Apple was able to break the control the carrier had over the phone manufacturer. If Apple had released the phone to all carriers in the US it would not function at all the way it does now. Most of the apps would not be allowed to freely function without additional charge.

In the long term if the iPhone is a hit product Apple is in a better position to negotiate with other carriers for the privilege of using the phone. Or Apple could be in a position to take the phone completely off of the mobile carrier system and use another business model entirely.

[Eriamjh]

Apple sacrifice profit for market share? No effing way.

Apple is doing what it does best: Making great products for a premium market with a decent, although not necessarily huge market share (iPod excepted).

Apple's iPhone may never command a huge percentage of the smart phone market because the market already existed. The iPod was a new market, still small when the iPod took off. It took off because of the iPod.

Jobs has a plan. He's up to something. We're just not sure what it is.

[solipsism]

Originally Posted by Dreil

In countries where this model doesn't fit (illegal to lock, etc) I'm sure Apple has a plan for them.

The plan is to not to go there at all or until the current carrier contracts are up. Hopefully by then Visual Voicemail will be commonplace.

Originally Posted by Ireland

Everyone knows the iPhone shouldn't have been locked to one carrier per country in the first place, except Apple. They need to get out of this mindset. Let's hope all those European carrier contracts are short ones.

I don't know that. I want exclusive carriers. I want Apple to make carriers add feaures they should have added or removed decades ago. Visual Voicemail & $20 unlimited data rates are a good start.

Next I'd like to see them replace the SMS icon with an iChat icon (which can still be used as SMS when a mobile number is used). There are countless other reasons, and while I feel I'm creative enough to find other ways that the carrier can add features to benefit the user I don't have the time to waste and think Apple will do a much better job at making it happen.

Originally Posted by salmonstk

I am a bit confused.
Did Steve say 10 mil phones by end of 2008 or 10 million phones in 2008.

Originally Posted by Ireland

The latter. He's said it about 5 times now.

Nope, the former. 18 months for 10M iPhones from at least 4 countries and probably a few more to be added to that last in 2008. I don't thnk it's a hard goal to reach. I think 3M sold in the US is what we'll here at MWSF08.

Remember, Jobs is an megalomaniac. Everyone told him that Apple has no experience and no chance of making it in the cell phone market. IMO, he will be doing everything in his power to make sure he dominates the high-end phone market. Lowered prices and updated versions will be coming faster than you can say folie de grandeur. He will prove them all wrong no matter what it takes.

[SpamSandwich]

This research firm is saying nothing new, they're just saying it differently.

[Taskiss]

Originally Posted by SpamSandwich

This research firm is saying nothing new, they're just saying it differently.

And there has been credibility gaps in reports from the firm in the past - these are the same folks that claimed the iPhone wouldn't be announced at Macworld.
http://www.applegazette.com/mac/bern...e-at-macworld/

yet...the iPhone had an introduction at the MacWorld Expo Keynote.
http://www.iphonelovers.net/news/mar...d-keynote.html

Not that it's not accurate with this prediction, but there has been flaws in it's crystal ball in the past.

[anantksundaram]

Originally Posted by TenoBell

I don't know much about Europe but in the US there is an over looked advantage to locking the phone to one carrier in the short term.

Apple was able to break the control the carrier had over the phone manufacturer. If Apple had released the phone to all carriers in the US it would not function at all the way it does now. Most of the apps would not be allowed to freely function without additional charge.

In the long term if the iPhone is a hit product Apple is in a better position to negotiate with other carriers for the privilege of using the phone. Or Apple could be in a position to take the phone completely off of the mobile carrier system and use another business model entirely.

This is an outstanding observation. Everyone carping -- developers, analysts, unlockers, consumer-electronics-geeks, etc etc -- has missed this key point.

Let's give this product at least one generation before all the carping?

[Oh Blah Dee Blah Dah]

Toni Sacconaghi Got it WRONG, again! Market share is of secondary importance.

Steve Jobs got it RIGHT! Profitability is of primary importance.

Motorola has approximately 21% of the cell phone market share in 2007 and it's LOSING MONEY. Apple has only approximately 3% of the world computer market, yet Apple has the highest profitability of the major computer manufacturers. Apple stock is among the best performing and Motorola stock is among the worst performing. Profitability is better than market share.

Apple isn't looking to sell a laptop for $100, and it sure is not looking to sell a cell phone for $10 either.

Apple's niche is high quality, high performance, high design, with excellent service. It's not looking to compete at the low end by going for market share. Apple is the BMW or Porsche of the cell phone industry, and they are very profitable with only a small share of the market.

Apple doesn't need to have every cell phone service provider in a country sell its products. It only needs ONE good cell phone company to sell Apple products. THAT is the attraction: the people that want quality and service WILL move to that service provider. That is the whole point. That is why the cell phone companies are competing to be the sole iPhone provider: That provider WILL attract the users who want the iPhone. Toni Sacconaghi may be an analyst, but he sure is NOT a marketeer!

[Ireland]

Originally Posted by solipsism

Nope, the former. 18 months for 10M iPhones from at least 4 countries and probably a few more to be added to that last in 2008. I don't thnk it's a hard goal to reach. I think 3M sold in the US is what we'll here at MWSF08.

People continue to say this, listen. Watch this video and listen to what he says, skip to 2:30, and listen this time. God give me patience.

[rjwill246]

When experts use IF and COULD more than twice, you are dealing with fantasy... nothing of substance... that was this article.

[solipsism]

Originally Posted by Ireland

People continue to say this, listen. Watch this video and listen to what he says, skip to 2:30, and listen this time. God give me patience.

I wasn't satisfied with the YouTube link you supplied as the casual setup could have simply been Jobs misspeaking. So I dug up the MWSF07 Keynote to see what he said then.

Watch iPhone Introduction — 1:16:54 • touché

[joe in miami]

Things to consider about 10M iPhone forecast:

There are only 20M Blackberrys sold since 1999. BBs are sold at over 300 carriers worldwide. 50% of BB sales are at the enterprise level-not retail. There are about 10 different BB models. BBs offer 3G and GPS.
vs.
Apple launches with 2 (now only 1) model which is sold directly to consumers on a slow network and no GPS.

My money has been on Apple. RIMM stock has been doing very well lately but I think its due in large part to speculation that MSFT or NOK will make an offer for them.

former Wall Streeter

[solipsism]

Originally Posted by joe in miami

Things to consider about 10M iPhone forecast:

There are only 20M Blackberrys sold since 1999. BBs are sold at over 300 carriers worldwide. 50% of BB sales are at the enterprise level-not retail. There are about 10 different BB models. BBs offer 3G and GPS.
vs.
Apple launches with 2 (now only 1) model which is sold directly to consumers on a slow network and no GPS.

My money has been on Apple. RIMM stock has been doing very well lately but I think its due in large part to speculation that MSFT or NOK will make an offer for them.

former Wall Streeter

" RIM stated that approximately 1.45 million BlackBerry subscriber accounts were added in [this latest] quarter and that over 3 million devices were shipped."

Now I know shipped doesn't mean sold, but RiM could be selling 10M units a year. With Apple's 24-month accounting method and direct revenue from the carriers Apple looks to be in a very good position for the long term.

The reported $100 per user fee for Exchange PUSH seems to be the real money maker for RiM. Their stock quadrupled last year to Apple's tripling and they seem to be doing even better since the the split.

[Constable Odo]

You can't use Motorola as an example. They never make profit from anything they do. Apparently, they're in the handset business to lose money and alienate current stockholders and potential investors alike.

I never imagined Nokia would try to buy RIM out. At the rate RIM's market cap is growing, they may soon buy out Nokia.

[spaceage]

The thing that is missing from every analysts' opinion I read is that Apple is going to innovate within the iPhone line, just as they have done with iPod. Every "estimate" is based on the assumption that the product isn't going to evolve and that Apple will continue to offer a single $399 product, albeit with some minor feature updates like 3G. Can't these guys see that Apple will do the same thing with the product line as they have with iPod by offering multiple products at multiple price points? Isn't that obvious to everybody who has witnessed the iPod (or any other consumer products company)? I realize that it is difficult to model that exactly, but discussions/questions about whether they can hit 10M subs are ridiculous--the bigger question for investors is: what is the upper limit of subscribers with their strategy in 1 and 2 years from now?

Or, put another way, what does the market look like when we have iPhone Touch, iPhone Nano, iPhone Classic, and iPhone Shuffle, if you get my drift, with price points from $99 to $399? I don't think it is a stretch to see 50M phones a year under this scenario, and that picture will begin to emerge next year and the following. These guys are looking through the wrong end of the telescope--I guess that is why they have the jobs they do: zero imagination. Any twit can sit here today and go "gee, I dunno, with this product only, they _might_ do 10M." Wow, what "insight." I'm glad I'm not paying for this genius.

[aaarrrgggh]

Apple's annual revenues are around $22B if my memory serves me. 10M iPhones in 2008 (no matter what Jobs meant) would be $4B, or pretty darn good revenue growth. I wouldn't complain on that.

So, the question is what is the maximum market penetration percentage Apple could get in the current arrangement with carrier lock-in? Between the US, UK, and Germany, they are at about 165M subscribers on their preferred carriers. They would need 6% market share in those countries to sell 10M phones, or roughly the market share they have in the US for PCs.

From personal experience, I don't think they stand to dominate in the phone world the way they do with computers. Sure, the iPhone is cool like the Mac, but 30-50% of the population thinks that a basic phone that just makes calls is "good enough." They have to reach a critical mass where people can't live without the internet on their phone. Apparently, they have chosen this strategy rather than competing with the Windows Mobile and Blackberry phones... since they don't seem to think things like e-mail, address books, and third-party applications are so important. From where I sit today, I'd be surprised if Apple can sell more than 7-8M units before Dec 08. Maybe 2.0 will be more compelling to a mass-market, or it will be clad in gold and diamonds so they can sell it at a higher margin...

[melgross]

Originally Posted by shetline

I'd like to see a whole lot of countries pass laws that say, "If you want your device to use the publicly-owned airwaves, in exchange for that privilege we demand, on behalf of the public, that your device be portable among any and all signal-compatible (all GSM, all CDMA, etc.) carriers."

If consumers had greater sway over politicians than the deep pockets of the carriers and cell phone manufacturers, that's what the laws would say in any reasonably democratic country.

You are lost here. These are NOT publicly owned airwaves. Each of these companies has paid billions to the various government for their share of the spectrum. This isn't like broadcast Tv and radio. Even that's disappearing. Governments have realized that they can make a lot of money by auctioning off this spectrum. Digital Tv is going this way as well.

Haven't you read any of this over the years?

[melgross]

Originally Posted by Kasper

Nah, I believe it's the former....

Yes. Even if we can't always find the quotes when we need them, "in 2008" doesn't even make sense.

[melgross]

Originally Posted by Eriamjh

Apple sacrifice profit for market share? No effing way.

Apple is doing what it does best: Making great products for a premium market with a decent, although not necessarily huge market share (iPod excepted).

Apple's iPhone may never command a huge percentage of the smart phone market because the market already existed. The iPod was a new market, still small when the iPod took off. It took off because of the iPod.

Jobs has a plan. He's up to something. We're just not sure what it is.

Yeah, Scully had a plan when he didn't sign the contract to license the OS. No one knew what his plan was either.

What he did do was to raise the prices, whatched profits go up, and marketshare go down.

this isn't exactly the same, but Jobs is boxing himself in.

By demanding a share of revenue from those companies where he can, he's limiting what he can do where he can't.

What are the companies who agreed to this going to say if Apple releases the phone in countries where it isn't legal to lock the phone?

This may be a good short time plan, but long term, it stinks, and this is from a stockholder with a fair amount of position in Apple.

[melgross]

Originally Posted by Oh Blah Dee Blah Dah

Toni Sacconaghi Got it WRONG, again! Market share is of secondary importance.

Steve Jobs got it RIGHT! Profitability is of primary importance.

Motorola has approximately 21% of the cell phone market share in 2007 and it's LOSING MONEY. Apple has only approximately 3% of the world computer market, yet Apple has the highest profitability of the major computer manufacturers. Apple stock is among the best performing and Motorola stock is among the worst performing. Profitability is better than market share.

Apple isn't looking to sell a laptop for $100, and it sure is not looking to sell a cell phone for $10 either.

Apple's niche is high quality, high performance, high design, with excellent service. It's not looking to compete at the low end by going for market share. Apple is the BMW or Porsche of the cell phone industry, and they are very profitable with only a small share of the market.

Apple doesn't need to have every cell phone service provider in a country sell its products. It only needs ONE good cell phone company to sell Apple products. THAT is the attraction: the people that want quality and service WILL move to that service provider. That is the whole point. That is why the cell phone companies are competing to be the sole iPhone provider: That provider WILL attract the users who want the iPhone. Toni Sacconaghi may be an analyst, but he sure is NOT a marketeer!

Not entirely. Marketshare is important. At least, in the segment you are selling into. So is total number of sales.

If you don't sell enough, profitability isn't assured, long term.

[melgross]

Originally Posted by solipsism

I wasn't satisfied with the YouTube link you supplied as the casual setup could have simply been Jobs misspeaking. So I dug up the MWSF07 Keynote to see what he said then.

Watch iPhone Introduction — 1:16:54 • touché

Sometimes, jobs refines his astatements later. I've seen him do that a number of times.

I've seen him make a statement that was somewhat general in nature, and then refine it in a later interview so that it was more specific. I believe that happened with this as well.

[aegisdesign]

Originally Posted by TenoBell

Apple was able to break the control the carrier had over the phone manufacturer. If Apple had released the phone to all carriers in the US it would not function at all the way it does now. Most of the apps would not be allowed to freely function without additional charge.

Like not paying for ringtones for example?

Originally Posted by solipsism

I don't know that. I want exclusive carriers. I want Apple to make carriers add feaures they should have added or removed decades ago.

Whereas many of us are just simply waiting for Apple to add features to the iPhone we've already got with $30 phones you can get from a supermarket with cheap or no contracts and the ability to choose our own carrier. Apple's lock on both development and their illegal SIM lock stop that.

Originally Posted by anantksundaram

Let's give this product at least one generation before all the carping?

It's not really the product that is the problem. It's the lock down and exorbitant charges Apple are forcing on carriers and ultimately customers. Even a shiny well marketed turd is still a turd.

Originally Posted by Oh Blah Dee Blah Dah

Steve Jobs got it RIGHT! Profitability is of primary importance.

Which at the moment seems to be at our expense, not of the carrier or Apple. Thanks Steve for really breaking the lock carriers had on our phones.

[Sherzod]

Originally Posted by Oh Blah Dee Blah Dah

Toni Sacconaghi Got it WRONG, again! Market share is of secondary importance.

Steve Jobs got it RIGHT! Profitability is of primary importance.

Motorola has approximately 21% of the cell phone market share in 2007 and it's LOSING MONEY. Apple has only approximately 3% of the world computer market, yet Apple has the highest profitability of the major computer manufacturers. Apple stock is among the best performing and Motorola stock is among the worst performing. Profitability is better than market share.

Apple isn't looking to sell a laptop for $100, and it sure is not looking to sell a cell phone for $10 either.

Apple's niche is high quality, high performance, high design, with excellent service. It's not looking to compete at the low end by going for market share. Apple is the BMW or Porsche of the cell phone industry, and they are very profitable with only a small share of the market.

Apple doesn't need to have every cell phone service provider in a country sell its products. It only needs ONE good cell phone company to sell Apple products. THAT is the attraction: the people that want quality and service WILL move to that service provider. That is the whole point. That is why the cell phone companies are competing to be the sole iPhone provider: That provider WILL attract the users who want the iPhone. Toni Sacconaghi may be an analyst, but he sure is NOT a marketeer!

Well said! I totally agree with you! That's why we love Apple.

[irnchriz]

Originally Posted by aaarrrgggh

Apple's annual revenues are around $22B if my memory serves me. 10M iPhones in 2008 (no matter what Jobs meant) would be $4B, or pretty darn good revenue growth. I wouldn't complain on that.

So, the question is what is the maximum market penetration percentage Apple could get in the current arrangement with carrier lock-in? Between the US, UK, and Germany, they are at about 165M subscribers on their preferred carriers. They would need 6% market share in those countries to sell 10M phones, or roughly the market share they have in the US for PCs.

From personal experience, I don't think they stand to dominate in the phone world the way they do with computers. Sure, the iPhone is cool like the Mac, but 30-50% of the population thinks that a basic phone that just makes calls is "good enough." They have to reach a critical mass where people can't live without the internet on their phone. Apparently, they have chosen this strategy rather than competing with the Windows Mobile and Blackberry phones... since they don't seem to think things like e-mail, address books, and third-party applications are so important. From where I sit today, I'd be surprised if Apple can sell more than 7-8M units before Dec 08. Maybe 2.0 will be more compelling to a mass-market, or it will be clad in gold and diamonds so they can sell it at a higher margin...

Weird, i didn't think that Apple in any way shape or form "Dominated" the computer market. The MP3 player market, sure, they OWN it.

As for sales, in the USA they shifted 1 mil units in under 80 days, thats PRE-Christmas sales. The iPhone like the iPod before it is arguably not the best in its class, but like the iPod it will sell boatloads. Infact, this holiday their biggest competition is going to be the iPod touch.

My company is an 02 dealer in the UK and we have been taking pre-orders for our business customers, many of whom are canceling business contracts to take out an iPhone contract. This is IMO not financially sound, they are taking a more expensive contract just to get an iPhone. The crazy thing is, they just don't care. £269 for a phone doesn't seem to be an issue. Me personally, I will get one, but with the commission taken off of the handset cost.

[cnocbui]

I agree most of the points made by aegisdesign.

Many of you in the US do not appreciate how crazy Apples apparent strategy for the iPhone in Europe seems to us. Locked in contracts are in a minority and are fading. I would guess that only businesses and the self employed, use contracts. Individuals mostly use prepaid phones.

I think the strategy is to offer the iPhone exclusively to certain carriers to get them to change their current practices and behaviour, with regard to introducing flat data rates and modifying their systems for visual voicemail.

The flat rate data charge is the biggie. It is one area where the US consumer is far better off than the European. Data charges over here are monstrous, which is why the 3G networks are sitting idle mostly. What differentiates the iPhone operationally over most other products are those features which are bandwidth intensive.

So by insisting it's European partners introduce flat rate data charges they are forcing a new paradigm into the European market, and there is no going back. Once consumers over here get the idea of flat rate data there will be no going back, it will become an 'expectation' - a genie released from it's bottle.

So Apple will get the network providers to modify their systems and practices and the Apple friendly genie will have been released. For a short while the Carriers will get exclusivity but maybe they only get that for the current iPhone and the first of the 3G versions. 69% of all new phone subscriptions in Europe are prepaid. I don't think Apple can ignore that reality. In some countries like Italy and Russia, nearly the whole market is prepaid. So I think Apple will shortly address these markets simply by making the 3G version available as a straight purchase.

Then, consumers in the countries where there are exclusive arrangements will be free to buy their phones from the countries where the iPhone is freely available. The Carriers might scream but Apple will just shrug it's shoulders and point out that it is supposed to be a single market and they can't be held accountable for that, besides, they will say, You have the visual voicemail ace so if you market that intelligently these people who are importing their phones might want to use them on your network.

But the other networks, seeing what is happening, and if they know what is good for them, will equip their back ends for visual voice mail and introduce flat rate data rates to stay competitive and voila, Apple has changed the market to be more friendly to it's products.

But this is just the start, there is a bigger plan afoot - omnipresent Net access and mobile computing. I think an Apple tablet and other mobile products are a certainty, but they rely on WiFi hotspots, which are not as widespread as I am sure Apple would like. But 3G network coverage is a lot more widely available. Flat rate data charging introduced for phones will morph the Carriers into providers of more general wide area data services for all sorts of uses beyond just phones. This is where Apple wants to be, but it needs the Carriers to change and provide the infrastructure it's products will need to function at costs consumers can stomach.

The iPhone is the first move on this chessboard.

[Esteban]

Originally Posted by anantksundaram

This is an outstanding observation. Everyone carping -- developers, analysts, unlockers, consumer-electronics-geeks, etc etc -- has missed this key point.

Let's give this product at least one generation before all the carping?

I would agree that the original hype/launch allowed Apple some latitude, but now that the wheel has been reinvented, any smart carrier would want to be able to support those features. Overseas, TMobile will be an iPhone carrier. would it really be a stretch for them to be able to support visual voicemail and the aforementioned apps on their network here? In fact, I think that would be an extremely savvy move for them, if not a coup- allowing full functionality for unlocked iPhones in the US.

[chabig]

Originally Posted by aegisdesign

It's not really the product that is the problem. It's the lock down and exorbitant charges Apple are forcing on carriers and ultimately customers.

What exhorbitant charges? iPhones and their plans cost less than comparable plans at most other carriers.

[lfmorrison]

Originally Posted by chabig

What exhorbitant charges? iPhones and their plans cost less than comparable plans at most other carriers.

Except you're ignoring users who would, by virtue of external factors, be perfectly capable of enjoying everything the iPhone has to offer exclusively using WiFi, without ever accessing the EDGE service.

Those people are paying for more of AT&T's services than they are using. They'd pay less on a different carrier. Heck, they'd pay less on AT&T if they could separate out and remove the data portion of the fees.

If AT&T has officially adopted a position of allowing people to activate the iPhone on non-data plans (and if the rumours are false of people who claim that they've already convinced AT&T to allow this on individual cases, installed AT&T-branded SIMs that were already activated on different service plans, never hacked their iPhone's firmware, but still ended up with warranty-voided, bricked iPhones courtesy of Apple), then I'll concede this point.

[Maestro64]

Originally Posted by Oh Blah Dee Blah Dah

Toni Sacconaghi Got it WRONG, again! Market share is of secondary importance.

Steve Jobs got it RIGHT! Profitability is of primary importance.

Motorola has approximately 21% of the cell phone market share in 2007 and it's LOSING MONEY. Apple has only approximately 3% of the world computer market, yet Apple has the highest profitability of the major computer manufacturers. Apple stock is among the best performing and Motorola stock is among the worst performing. Profitability is better than market share.

Apple isn't looking to sell a laptop for $100, and it sure is not looking to sell a cell phone for $10 either.

Apple's niche is high quality, high performance, high design, with excellent service. It's not looking to compete at the low end by going for market share. Apple is the BMW or Porsche of the cell phone industry, and they are very profitable with only a small share of the market.

Apple doesn't need to have every cell phone service provider in a country sell its products. It only needs ONE good cell phone company to sell Apple products. THAT is the attraction: the people that want quality and service WILL move to that service provider. That is the whole point. That is why the cell phone companies are competing to be the sole iPhone provider: That provider WILL attract the users who want the iPhone. Toni Sacconaghi may be an analyst, but he sure is NOT a marketeer!

Gee you beat me to it, well said!!!

These analysis do not get nor understand Apple's business model. Apple never said they were trying to sell the iphone to the mass market, they are going after a very select group of people who understand value. Not the people who are looking from something for free or do not have enough money to buy a phone on their own.

I suspect that this guy's motives is to create doubt there by driving the value does so they can buy up shares at a lower value so they can again ride up to where the stock will eventually get to. This happen in the past where some analysis put out FUD and the shoke dropped back and if you looked at the volume it went up just as that happen.

[NOFEER]

lets see SJ is pretty smart and understands adding consumer value

change the telecom industry toward more consumer control

make boatloads of dollar to expand other products massive halo effect

os x everywhere...work to dominate os in the most growing markets.

[solipsism]

Originally Posted by aaarrrgggh

They have to reach a critical mass where people can't live without the internet on their phone. Apparently, they have chosen this strategy rather than competing with the Windows Mobile and Blackberry phones... since they don't seem to think things like e-mail, address books, and third-party applications are so important.

Apple isn't looking for a ritical mass. They are looking for 1% of a billion phone industry. Don't look at things are they are now. Apple has sold 1.25-2M iPhones in the US with one carrier. UK and Germany have yet to launch, but seem to be getting massive pre-orders, other countries are up for the iPhone later in the year or the next and I suspect 2.0 with 16GB NAND and 3G will be announced at the MWSF08 or as close to the Asian market release as possible while still giving the FCC time to get things together.
You have a point with the 3rd-[party apps and there are valid points on both fronts of this argument, your statement about the iPhone not thinking email and an address books is important is just asinine FUD.

Originally Posted by melgross

Sometimes, jobs refines his astatements later. I've seen him do that a number of times.

I pulled that from the original MWSF07 iPhone announcement. He apparently didn't say "through 2008", unless he's gotten more cocky and had the audio edited to say "in 2008". Ireland scores a Century on this one.

Originally Posted by chabig

What exhorbitant charges? iPhones and their plans cost less than comparable plans at most other carriers.

If you change "charges" to "changes" his post makes more sense. During the MWSF07 keynote Jobs clearly stated--I listened to it just yesterday--that the joint effort with the carriers was purposefully done to allow for integration and less stagnation due to separation between the carrier and manufacture (my words) and that Visual Voicemail is just the first of these efforts.

Beyond 3G data speeds, the entire cell industry is completely defunct. There is so much more that can be offered by joint efforts between carrier and manufacturer. I really hope Apple gets it's own spectrum in the coming years. Then we'll see some real changes.

[melgross]

Originally Posted by solipsism

I pulled that from the original MWSF07 iPhone announcement. He apparently didn't say "through 2008", unless he's gotten more cocky and had the audio edited to say "in 2008". Ireland scores a Century on this one.

Yes, I saw what he said there. But, he modified that statement later. He often does that, as I said. He did several interviews after Macworld, I don't know which one, but he did refine his original statement in answering a question about sales.

[Taskiss]

Originally Posted by solipsism

I really hope Apple gets it's own spectrum in the coming years. Then we'll see some real changes.

That would rock in the beginning and devolve into a legal quagmire. I'd rather the phone manufacturer and the service provider stay separate.