RBC says sub-$100 "iPod phone" market open for Apple's taking

[AppleInsider]

Apple could announce sales of more than 4 million 3G iPhones at its media event next week, according to investment bank RBC Capital Markets, which also suggests the company may be looking into a low cost "iPod phone" to build on its momentum.

Analyst Mike Abramsky made the comments in a research note Wednesday, saying "resilient post-launch" sell-through has paced the company ahead of Wall Street's expectations and on target with his forecast of 5.1 million 3G units in the September quarter and 14 million total iPhone units for the calendar year.

Apple plans to hold a media event next Tuesday to usher in a refreshed line of iPod digital music players and unveil new iTunes services, but may also use the forum to provide an update on iPhone 3G sales, Abramsky said. He added that the Cupertino-based company has also promised by September a new version of iPhone Software (v2.1) with system-wide push notification support and improved GPS tracking, which may also make an appearance.

The analyst also used his report to toss around the prospect of a completely new device that could be brewing at Apple, but one that he does not expect at Tuesday's event. Though unsupported by any hard evidence, Abramsky said he has reason to believe the electronics maker is exploring the possibility of an "entry level, low cost (less than $99 subsidized) prepaid iPod/phone" that would be restricted to music playback and voice calls.

Such a device would allow the company to "capture an untapped global opportunity," he said. Marketing the pre-paid handset through retail outlets worldwide would provide a residual effect that would both "boost iPhone's momentum by 50 to 100 percent" while establishing future iPhone upgrades and enhanced global Mac sales.

As is the case for the iPhone 3G, the current quarter is proving to be yet another breakout period for Mac sales. Abramsky, who previously published the most bullish known estimates for Mac sales at 3.04 million units, said he stands by that forecast, which continues to see support from his firm's proprietary data.

He sees refreshed MacBooks and MacBook Pros with "aluminum enclosures, larger multi-touch trackpads, and updated specs" arriving sometime after next week's iPod event. He also expects Apple's global PC market share to rise to 4.2 percent by next year, up from 2.9 percent in 2007.

Abramsky maintains an Outperform rating on Apple shares.

[ View this article at AppleInsider.com ]

[studiomusic]

An analyst that is actually sees the great future for AAPL??? And doesn't promote FUD???
He must have bought all he can of aapl and is long (as I am)!

[Alonso Perez]

A $99 iPhone with no browsing or App Store capability makes little sense to me, on at least two counts. First, it weakens the App Store. It would be like coming out with an iPod that did not connect to iTunes. Second, Apple is never a bottom feeder. Higher cost is part of the brand.

I am not saying a lower cost model is unthinkable, but I would guess a $149 price point with full App Store and browsing access. They could drop the 3G and GPS at that price, and have 4GB. But dropping the App Store makes no sense, and therefore WiFi cannot be dropped either, so therefore a browser would also be included. I would imagine basically a plastic first generation iPhone, not a nano-with-phone.

[walshbj]

no way.

[wbrasington]

Originally Posted by AppleInsider

...according to investment bank RBC Capital Markets, which also suggests the company may be looking into a low cost "iPod phone" to build on its momentum.
Though unsupported by any hard evidence, Abramsky said he has reason to believe the electronics maker is exploring the possibility of an "entry level, low cost

Idiot alert, look away quickly.

The guy has no reason to believe this.
It's a dumb idea.
There is a 100% chance that Apple will say nothing about an iPod phone, a nano-phone, or anything else that resembles shooting themselves in the foot.

This guy is just saying this to get some views on his otherwise view-challenged opinion.

Idiot alert.
Nothing to see here, move along.

[dizzy13]

I don't think apple is ready for another phone. I mean iPods are like what 10 years old now, I think at some point we will see various types of iPhones, but not yet and not until they work out all the kinks thats for sure!

[paxman]

Originally Posted by Alonso Perez

A $99 iPhone with no browsing or App Store capability makes little sense to me, on at least two counts. First, it weakens the App Store. It would be like coming out with an iPod that did not connect to iTunes. Second, Apple is never a bottom feeder. Higher cost is part of the brand.

I am not saying a lower cost model is unthinkable, but I would guess a $149 price point with full App Store and browsing access. They could drop the 3G and GPS at that price, and have 4GB. But dropping the App Store makes no sense, and therefore WiFi cannot be dropped either, so therefore a browser would also be included. I would imagine basically a plastic first generation iPhone, not a nano-with-phone.

I don't know... I can see a $99 iPhone Nano. Just an iPod and a phone. That makes sense. All the other stuff is undoubtedly cool but riding on the crest of the iPhone media wave Apple might sell a ton of smaller devices. The issue may be more the iPod than the iPhone here. I think there is a very large number of people out there who carry a basic phone and an iPod and who either don't want the added services, or can't afford the very high cost of ownership.

Many of these people may be future iPhone users so giving them a taste of the experience makes sense (to me).

[charlituna]

Originally Posted by Alonso Perez

A $99 iPhone with no browsing or App Store capability makes little sense to me, on at least two counts.

agreed. part of the point of the iphone is that it is 3 devices in one.

1. an ipod
2. a phone
3. an internet device.

if you take out #3, you have anyone of a dozen or more music playing cell phones. big deal.

I think that this guy is dropping the ball on that prediction. I don't see it happening.

now what I can see is that in a year or so when the cost of the components comes down, the 8Gig phone could do down another $50-100 in price, along with the introduction of a 32Gig model. but I don't see anything of this nature coming up this month, even as an announcement

[Cory Bauer]

Originally Posted by paxman

I don't know... I can see a $99 iPhone Nano. Just an iPod and a phone. That makes sense.

It does make sense in that there's a ton of people who would love to have a phone that doesn't suck, but don't want or need a $30/mo data plan (a mandate for all current iPhone owners). Plus, in light of recent news, AT&T's 3G networks probably couldn't support the influx of new users a $99 iPhone would bring. That said, I don't see an iPhone Nano breaking compatibility or usability with current iPhone apps; for example, it couldn't have a smaller, lower resolution screen.

[charlituna]

Originally Posted by dizzy13

I don't think apple is ready for another phone. I mean iPods are like what 10 years old now, I think at some point we will see various types of iPhones, but not yet and not until they work out all the kinks thats for sure!

i agree with your basic point, even if you are off about the age of the ipod (they were introduced in Oct 2001).

I suspect in fact that getting the kinks out is part of the reason for restricting service to one network. the other reason being money (seems that ATT footed part of the development deal in exchange for their exclusivity).

[iVlad]

I do agree that another Apple Phone will be here soon, but its not gonna be next week. Apple makes very small yet smart transitions. After first iPod, it took Apple three years to introduce iPod Mini. Since the game is much more harsh now and faster, I think new iPhone Mini, Nano, Small or (Insert New Apple Brand Name Here) is due pretty soon.

Apple needs to establish iPhone to be very stable and very popular first.
Its getting there.

[Mr Underhill]

If it was just an iphone/ipod then it would rely on a phone contract or PAYG to use it. So for it to do well it would need to be free with cheaper tariffs.

In the UK i can't see how a smaller, less featured Nano Phone for free would entice many buyers. At £99/£30 per month its bigger brother is already value enough. I can't see Apple mudying the water at this early stage.

[Takeo]

I don't know what you're all talking about... I'd buy such a phone on pay-go in a heartbeat. I don't need or want a phone that can do everything but the dishes.

[aaarrrgggh]

Curious how Apple could add value to that market space. Sure, the brand would sell, but I can't think of much they could do in a "visionary" way with a iPod phone.

You could do something with easy music capability, better camera, and an easy-to-use phone, but I have trouble it could be more appealing to "those masses" than the RAZR-- it's people that don't understand the importance of the software, and just count features.

I do still wish Apple went the MVNO route though rather than making deals with AT&T.

[emulator]

They will have to move in the prepaid segment someday and a $400-500 phone would do nothing there.

[solipsism]

Originally Posted by paxman

I don't know... I can see a $99 iPhone Nano. Just an iPod and a phone. That makes sense. All the other stuff is undoubtedly cool but riding on the crest of the iPhone media wave Apple might sell a ton of smaller devices. The issue may be more the iPod than the iPhone here. I think there is a very large number of people out there who carry a basic phone and an iPod and who either don't want the added services, or can't afford the very high cost of ownership.

Many of these people may be future iPhone users so giving them a taste of the experience makes sense (to me).

On many counts I wouldn't I wouldn't have agreed until thinking about a little more.

First ,it occurred to me that using the iPod's menu for making a call would from the address book would be very easy to use, except for the off times that I need to dial the number directly. A clickwheel would be cumbersome for finding numbers and putting in text for SMS.

Then I wondered how an iPod Nano-like phone could make calls. I don't think you can have a proper number pad or a touch screen that forgoes the clickwheel for this type of phone. But then I thought about the 4G Nano needing to have dynamic buttons that visible change when you alter the orientation of the device for playing video.

So that leads me to a possible solution of Apple using a dynamically displayed clickwheel that will register inputs from multiple points. when used as a number/keypad.

I'm not exactly suggesting that Apple follow Nokia's circular number pad route, like in the 3560 (below), but that the the clickwheel could be a rectangle on the iPod instead of a circle, but with the center replaced with the button like all the Nanos and other Pods before it. It doesn't change the usage in your pocket for selecting music as it still has the button to hone in on to find the controls but offers more features.



(This has just been a quick brainstorm as to how I think it could happen based on the info at hand. This in o way implies what I think will happen next Tuesday or in the future. The article is dead on about there being a market segment out there that wants to consolidate their phone and iPod without getting too advanced, having the internet in their pocket or paying the associated data fees for it. If you have a better idea please post it.)

[jfanning]

Originally Posted by emulator

They will have to move in the prepaid segment someday and a $400-500 phone would do nothing there.

Why would it do nothing here?

[awmawm]

Originally Posted by charlituna

agreed. part of the point of the iphone is that it is 3 devices in one.

1. an ipod
2. a phone
3. an internet device.

if you take out #3, you have anyone of a dozen or more music playing cell phones. big deal.

I think that this guy is dropping the ball on that prediction. I don't see it happening.

now what I can see is that in a year or so when the cost of the components comes down, the 8Gig phone could do down another $50-100 in price, along with the introduction of a 32Gig model. but I don't see anything of this nature coming up this month, even as an announcement

No 3 is great to have but strains a family's budget significantly. My daughter has a Samsung a707 that can play music. Synchronizing it is a major pain. Scrolling through music and playlists is a major pain. If there were a phone that had ipod functionality, she would jump on it in a second. As a father, I would approve it because i would not have to pay another $30 for data. She still can synchronize with "ipod phone" at home as she does now with the Samsung but with the ease of itunes. Anyone who currently has an ipod and a separate (basic) phone is a perfect candidate for such a "ipod phone" - and there are millions and millions of people in that category.

[ZagMac]

Originally Posted by Takeo

I don't know what you're all talking about... I'd buy such a phone.

I would, too. My primary phone requirement is size. Can't stand my phone being iPhone size, Blackberry size, Google phone size, etc.

I envision always having a Touch to meet my movie, tv, music, game & email needs (bascially a tiny, lovely tablet) as well as a small mobile. Now if that small mobile happened to be a NanoPhone? Chub-city....

But not holding my breath for this to happen....

[wbrasington]

Originally Posted by solipsism

On many counts I wouldn't I wouldn't have agreed until thinking about a little more.

First ,it occurred to me that using the iPod's menu for making a call would from the address book would be very easy to use, except for the off times that I need to dial the number directly. A clickwheel would be cumbersome for finding numbers and putting in text for SMS.

Then I wondered how an iPod Nano-like phone could make calls. I don't think you can have a proper number pad or a touch screen that forgoes the clickwheel for this type of phone. But then I thought about the 4G Nano needing to have dynamic buttons that visible change when you alter the orientation of the device for playing video.

So that leads me to a possible solution of Apple using a dynamically displayed clickwheel that will register inputs from multiple points. when used as a number/keypad.

I'm not exactly suggesting that Apple follow Nokia's circular number pad route, like in the 3560 (below), but that the the clickwheel could be a rectangle on the iPod instead of a circle, but with the center replaced with the button like all the Nanos and other Pods before it. It doesn't change the usage in your pocket for selecting music as it still has the button to hone in on to find the controls but offers more features.



(This has just been a quick brainstorm as to how I think it could happen based on the info at hand. This in o way implies what I think will happen next Tuesday or in the future. The article is dead on about there being a market segment out there that wants to consolidate their phone and iPod without getting too advanced, having the internet in their pocket or paying the associated data fees for it. If you have a better idea please post it.)

Now that's a gawd-awful lookin phone that SJ could REALLY make fun of......

[wbrasington]

Originally Posted by solipsism

The article is dead on about there being a market segment out there that wants to consolidate their phone and iPod without getting too advanced, having the internet in their pocket or paying the associated data fees for it. If you have a better idea please post it.

While there is a market for that, there are tons of phones on the market already that combine just a simple phone and your music.

Why Apple would bother to go backward and go after that market that has a lot of competition (and basically no prophets) is beyond me.

People who want to combine their music and simple phone that has no data plan already can.
They don't need an Apple branded product with neither a clean touch screen nor a clean click wheel but rather some mish-mash combination.

We will continue to hear about the nano-phone forever.
That's because they aren't going to build one, and that will mean people can keep saying it.

A better idea? There isn't one. Apple has the best on the table and is running with it.

My speculation on what they WILL do is focus on the next higher up market, and make the iPhone as is their low-end product. (people can say it becomes the nano-phone, it's just the classic iPhone to me)

[jfanning]

Originally Posted by awmawm

No 3 is great to have but strains a family's budget significantly. My daughter has a Samsung a707 that can play music. Synchronizing it is a major pain. Scrolling through music and playlists is a major pain. If there were a phone that had ipod functionality, she would jump on it in a second. As a father, I would approve it because i would not have to pay another $30 for data. She still can synchronize with "ipod phone" at home as she does now with the Samsung but with the ease of itunes. Anyone who currently has an ipod and a separate (basic) phone is a perfect candidate for such a "ipod phone" - and there are millions and millions of people in that category.

There are a lot of phones available that do this as well, Nokia have a Multimedia transfer utility available for the Mac that will transfer iTunes playlists (excluding the DRM infected files), and photos to iPhoto

[solipsism]

Originally Posted by wbrasington

While there is a market for that, there are tons of phones on the market already that combine just a simple phone and your music.

Why Apple would bother to go backward and go after that market that has a lot of competition (and basically no prophets) is beyond me.

True and true, but remember that despite more and more phones being able to play music people are still preferring their iPod for this task. Be it style, look, feel, usage, familiarity, it still reigns supreme. As for going backwards, one could say that about the Mini or the Shuffle coming to market. For me personally, the original iPod was too large; the Mini was perfect for my arm for gym use. That is until the Nano came out. That us until the 2G Shuffle came out.

[ncee]

I still say … a phone and nothing but a phone, and at $80.00 price range, and they will not be able to keep up with the demand!

And now, many more folks will have their feet wet, and want to trade-up to the iPhone 3G (or 4G by the time they up-grade).

This will not hurt the sells of the iPhone, and those who are winning to pay $199.00 - $399.00 for a phone that does all that the iPhone does, will still do so.

But man it will KILL the rest of the market … big time!

A iPhone mini

- No Music
- No internet
- No Mail
- No Games
- No downloading
- No anything BUT a phone!

Hell, make it in colors JUST for kids … can you imagine how many MILLIONS will be in Xmas stocking … if kids wait until then to get one.

And there might be a way for apple to sell this via ANY vendor / source i.e., Verizon, ATT, US Cellular, Apple Stores, Apple online …

Skip

[awmawm]

Originally Posted by jfanning

There are a lot of phones available that do this as well, Nokia have a Multimedia transfer utility available for the Mac that will transfer iTunes playlists (excluding the DRM infected files), and photos to iPhoto

You are right, there are utilities that attempt to synchronize phones with itunes. I do not know how well Nokia's transfer utility integrates with itunes but have tried the ones for Sony Ericsson and Samsung phones with varying success. They are not true plug-and-play with itunes and the end result is still having a phone that does not even come close to ipods in terms of ease of use to play music. That's why my daughter continues to carry her ipod next to her Samsung phone even though the Samsung device could play all her songs, too. Among her friends (apart from the ones where the parents gave into the iphone and are willing to fork over $30/month for data), most of them carry a phone and a separate ipod, too (yes, a few of them even carry a Zune! )

[Cubert]

"entry level, low cost (less than $99 subsidized) prepaid iPod/phone that would be restricted to music playback and voice calls."

I doubt it. Apple doesn't release low grade (ie. feature poor) versions of their products. I guess the only exception to this would be the iPod shuffle.

[SpamSandwich]

What makes sense is offering ALL iPods (except for the shuffle) with WiFi.

[Booga]

Originally Posted by Cubert

"entry level, low cost (less than $99 subsidized) prepaid iPod/phone that would be restricted to music playback and voice calls."

I doubt it. Apple doesn't release low grade (ie. feature poor) versions of their products. I guess the only exception to this would be the iPod shuffle.

The iPod Shuffle, the Mac Mini, the MacBook, ... in fact Apple does this all the time.

The thing keeping them from doing this isn't the "low-end" thing, it's the "low-margin" thing. Apple is a value-add company, not a compete-on-price company like Dell. Apple looks for the packages that people are willing to pay extra for and bundle them.

If they did something innovative with your standard address book, calendar, ringtones, and visual voicemail and integrated it with iTunes but left EVERYTHING else off they'd probably still sell an awful lot of them at higher margins than everyone else.

[solipsism]

Originally Posted by Booga

The iPod Shuffle, the Mac Mini, the MacBook, ... in fact Apple does this all the time.

The thing keeping them from doing this isn't the "low-end" thing, it's the "low-margin" thing. Apple is a value-add company, not a compete-on-price company like Dell. Apple looks for the packages that people are willing to pay extra for and bundle them.

If they did something innovative with your standard address book, calendar, ringtones, and visual voicemail and integrated it with iTunes but left EVERYTHING else off they'd probably still sell an awful lot of them at higher margins than everyone else.

Great point!

[Bageljoey]

Originally Posted by ncee

I still say … a phone and nothing but a phone, and at $80.00 price range, and they will not be able to keep up with the demand!

. . .

A iPhone mini

- No Music- No internet
- No Mail
- No Games
- No downloading
- No anything BUT a phone!

I can't for the life of me figure why Aapple would do a phone without music. I just can't.

[nofear1az]

It could happen...sometime down in the future... I think it's too early for Apple to be introducing a another new phone so early. Actually, I think it's too early for AT&T too. anyway, just like before AT&T usually prepares for such a big Apple release like they've done with the iPhone. Vacation freezes for AT&T employees, hiring temps to handle the oncalls, etc, etc.... I didn't hear a peep so I call -F A I L on this analyst.

[Esteban]

I can't imagine a future phone product from Apple that doesn't have app store compatibility. I really don't expect to see it this year, if at all, and remember this whole thread is total speculation:
"Analyst Mike Abramsky made the comments in a research note Wednesday"
This is some guy laying out scenarios for APPL's future stock price, not a tip of a product in development.

What would such a product be called? Certainly not iPhone Nano. The Nano moniker to me means smaller form factor, less storage capacity, but not crippled functionality. Should Apple market such a product, I'm still trying to imagine their upside. Either way, it would cannibalize either iPod or iPhone sales. And why would Apple want to cut off its' own revenue stream from the app store? Seems silly.

I've run through several different scenarios myself, and I keep coming to a dead end. The only thing I can come up with that makes remotely any (business) sense is a smaller version of the iPod Touch, with added phone capabilities, and maybe a horizontally sliding qwerty keyboard. Basically a smallish iPhone with no data plan. Does that sound like something Apple would do?

Makes no sense to me. but what makes even less sense to me is "nothing but a phone". That is the antithesis of what Apple is, and even the lowest end free phones these days have cameras, bluetooth, organizer, etc. Why Apple would want to enter that market is inconceivable. and yes, I know what inconceivable means.

[Ireland]

Originally Posted by ncee

A iPhone mini

- No Music
- No internet
- No Mail
- No Games
- No downloading
- No anything BUT a phone!

No music?

What are you smoking?

Here:



Although I don't expect way cheaper than $199. It'll probably be $199 with no contract, when it gets released.

[adamroth]

It's not that Apple needs to make an iPhone nano. They need to make an iPhone "tween."

I was at a park with my 18-month old the other day, and all the 12-14 year olds had cell phones. It seems to be their life. They text, they talk, and when they're home they facebook and myspace or whatever.

Now the iPhone would be perfect for them except one thing: There's no way mom and dad will shell out $35 a month for data and SMS.

So the real trick is to make an iPhone with *limited* (but still robust) data services. Texting-check. Photos-check. Music-check. Wi-Fi, yes, but unlimited cell-data, no way. Keep the monthly cost for the data plan under $10 and mom and dad will say yes.

There's no need to change the form factor. In fact, having access to the app-store and the social networking that makes possible will be essential.

There's not millions, but 100s of millions of people for whom this would be attractive, and I bet Apple knows it.

[melgross]

Originally Posted by solipsism

Man, that is one ugly phone. No wonder Nokia can't sell here.

[solipsism]

Originally Posted by melgross

Man, that is one ugly phone. No wonder Nokia can't sell here.

I think they had a bunch of these around 2003 that they tried to push. I recall at least one other model with triangular, jagged numbers. They looked so unintuitive.

Besides being a phone it also disperses pills and tells you when your cycle is due.

[melgross]

Originally Posted by wbrasington

While there is a market for that, there are tons of phones on the market already that combine just a simple phone and your music.

Why Apple would bother to go backward and go after that market that has a lot of competition (and basically no prophets) is beyond me.

People who want to combine their music and simple phone that has no data plan already can.
They don't need an Apple branded product with neither a clean touch screen nor a clean click wheel but rather some mish-mash combination.

We will continue to hear about the nano-phone forever.
That's because they aren't going to build one, and that will mean people can keep saying it.

A better idea? There isn't one. Apple has the best on the table and is running with it.

My speculation on what they WILL do is focus on the next higher up market, and make the iPhone as is their low-end product. (people can say it becomes the nano-phone, it's just the classic iPhone to me)

I'm not saying that they will come out with one, or that they won't. But there is a large market out there for Apple products these days, which is growing. I can see this selling well. Esp. to kids who want an iPod and a phone, and don't want, or can't afford (and yes, that means their parents as well) to buy both.

If predictions are true, and music players will eventually merge with phones all around, and I agree that they will, as Jobs has said about the original iPhone, Apple would prefer that they cannibalize their own product lines, rather than allowing others to do so.

[melgross]

Originally Posted by Cubert

"entry level, low cost (less than $99 subsidized) prepaid iPod/phone that would be restricted to music playback and voice calls."

I doubt it. Apple doesn't release low grade (ie. feature poor) versions of their products. I guess the only exception to this would be the iPod shuffle.

So I guess the Mac Mini, and iPod Shuffle don't really exist.

[solipsism]

Here we go...






(I like Nokia 7900, the third one)

[Constable Odo]

Are you people trying to turn Apple into a cellphone company or what? Let Apple build a Pro (heavy duty) version iPhone for the enterprise and forget about building these $100 cellphones. You say this area is for the taking, but there's seems to be an awful lot of competition in that price range. Apple has many other areas they can profit from. A tablet computer or improve upon AppleTV. A stripped-down cellphone seems downright ridiculous for Apple to produce.