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Apple expected to have 100M iPhone subscribers by end of 2011

post #1 of 36
Thread Starter 
With a total user install base of 30 million at the end of 2009, Apple's number of active iPhone subscribers is expected by one prominent analyst to more than triple to 100 million by the end of 2011.

Analyst Katy Huberty with Morgan Stanley issued a note to investors this week citing an AlphaWise survey that suggests more than half of all iPhone users plan to upgrade to Apple's latest handset. Factoring in new purchases as well, she expects Apple to sell at least 42 million iPhones in calendar year 2010, significantly growing the active iPhone subscriber base. Her "bull case" scenario goes even farther, with 48 million sales this year.

"We see the iPhone installed base rising from approximately 30M subscribers at the end of 2009 to over 100M by the end of 2011," she wrote.

Earlier this year, Apple reported having sold more than 85 million total iOS-based devices. However, that total includes the iPod touch, which does not include a subscription, as well as users who upgraded their iPhone to a newer model while deactivating their previous handset. In April, it was suggested that about 30 percent of Apple's first-generation iPhones, released in 2007, remain in use today.

The upgrade rate for iPhone 4 is expected to be significantly higher than previous generations. While the AlphaWise survey found that 58 percent of current iPhone users intend to upgrade this year, that's well above the 18 percent who said they would upgrade in November 2008, and the average 25 percent since the 2007 launch.

Huberty's base case sales of 42 million iPhones in 2010 assumes a 30 percent upgrade rate for existing customers. But that number goes up to 48 million if 50 percent of customers upgrade in 2010.

The analyst said she sees at least 9 million total iPhone upgrades in 2010, increasing to 19 million renewals in 2011. Customers will stick with the iPhone, she said, because redesigned hardware brings new features, software on the App Store creates "stickiness" with consumers, and 57 percent of the U.S. installed base is not fully upgradeable to iOS 4 with multitasking.

Many iPhone 3G customers who signed a contract in 2008 will see their two-year agreements end soon, and those two-year-old handsets are not capable of multitasking with the iOS 4 upgrade. First-generation iPhone owners will not be able to run iOS 4.

Another factor driving upgrades is AT&T's decision to push forward upgrade eligibility by 6 months. Customers who are upgrade eligible for a new iPhone at any point in 2010 may take advantage of the fully subsidized price of iPhone 4 on its June 24 launch. AT&T customers can verify their upgrade eligibility by going to att.com/iphone or dialing *639#.

Huberty has also been a proponent of Apple and carriers offering a lower cost of ownership for the iPhone. AT&T recently instituted tiered data plans, with the high-end offering costing $25 per month -- $5 less than before -- but with a new 2GB monthly data cap. Users can also obtain an entry level 200MB-per-month plan for $15. The analyst noted that AT&T's changes reduce total cost of ownership of the iPhone by about 20 percent.
post #2 of 36
If they answer the phone to take orders. And if AT&T can handle the activations.
post #3 of 36
Katy Huberty? Oh, she's a sharp one.

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post #4 of 36
Katy Huberty? Oh, she's a sharp one.


Probably makes more bank than you.
post #5 of 36
The subscriber base out of China alone will be > 20 million.
post #6 of 36
Articles based on Katy Huberty's predictions really belong on the Backpage Blog, simply due to her horrendous track record on Apple.
post #7 of 36
Heck, that's just 1 in 3 US. Just get Verizon and Tmobile the iPhone and we'll be there.

post #8 of 36
I think 100 million is conservative.

In 2009 there were 30 million iPhones. If they just maintain those sales figures each year that alone is 90 million by 2011. And we all know popularity is only growing. Sales figures prove that. Not to mention the new countries including China who's sales numbers are most likely just getting started.
post #9 of 36
Apple doesn't have ANY subscribers. Article title fail.

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post #10 of 36
I don't think Apple will reach the 100 mil number until they add T-Mobile and Verizon to their U.S. carrier lineup. AT&T can barely handle their existing iPhone user base, let alone tens of millions of new users.

T-Mobile USA is a technological no-brainer. iPhone 4 supports GSM 1900, which T-Mobile USA uses, and if the bozos at AT&T can get Visual Voicemail to work, pretty much anybody else should be able to. I expect Apple to announce a T-Mobile deal about 3 nanoseconds after their 5 years of AT&T exclusivity torture is over. Unless, of course, Apple can somehow buy out of the AT&T contract before 2012.

Not so fast with Verizon. Seriously, does Apple really, truly want to design, prototype, bug-fix, beta-test, then manufacture a CDMA phone? Just for Verizon and a few international carriers who use CDMA? When 4G LTE is just about to be rolled out? Yes, GSM and CDMA will both be obsoleted by 4G in a year or two, but at least Apple's GSM iPhone has already had a 3 year product lifespan.

I wonder if Huberty's numbers include a possible 4G-enabled iPhone next year.

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post #11 of 36
Quote:
Originally Posted by John.B View Post

Apple doesn't have ANY subscribers. Article title fail.

Yeah, hey...does that Apple iPhone service come in white?
post #12 of 36
....as well as users who upgraded their iPhone to a newer model while deactivating their previous handset"

I'm selling my phone to a overseas employee of my company.... So my iPhone 3(no G) will live on on some unnamed phone network.

I figure for every 3G or 3GS upgraded, 45% will go grey market, and 45% will become the 'significant others/childs' phone. As long as the charge holds, these phones are pretty indestructible (he says using his warranty replaced iPhone (bad audio jack sensor).
post #13 of 36
Quote:
Originally Posted by franksmith22 View Post

Katy Huberty? Oh, she's a sharp one.

Probably makes more bank than you.

Speak for yourself, Frank.

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post #14 of 36
Quote:
Originally Posted by SpamSandwich View Post

Katy Huberty? Oh, she's a sharp one.


sweet


As I read the article, I think she missed one fundamental point that when one user upgrade his/her phone to the new version, the number of user will still be the same - only the phone is different. Unless they are capturing new subscribers, the growth won't be that massive.
post #15 of 36
iPhone 4 Confirmed to Have 512MB of RAM (Twice the iPad and 3GS)


NICE!


http://www.macrumors.com/2010/06/17/...-ipad-and-3gs/
post #16 of 36
"Huberty has also been a proponent of Apple and carriers offering a lower cost of ownership for the iPhone. "

Agreed.

This goes against Apple's philosophy of being a niche/high-end product but I think one very important debate they should have at the Cupertino HQ is the following: are they in this fight to win or not? They claim they want to make great product and that they are at the intersection of liberal arts and technology. That is nice and all but what good is it when you pioneer something and have others copy it?

During the PC war, Microsoft was ingenious enough to understand that if they made Windows the default operating system, they would dominate the market and could command a premium price afterward. It was brilliant and it worked.
I really believe Apple should care less about profit margins right now and focus on making sure their devices are more accessible.

Unfortunately, I don't see Apple doing this. They don't seem to want to offer a variety of mobile phones or partner up with more carriers. It's a shame, they could really crush Android and Nokia right at this moment.
post #17 of 36
Quote:
Originally Posted by SockRolid View Post

T-Mobile USA is a technological no-brainer. iPhone 4 supports GSM 1900, which T-Mobile USA uses

Actually T-Mobile uses 1700 and 2100 Mhz. So it wouldn't be compatible with the iPhone at all for 3G at this time. The T-Mobile supports 1900 Mhz for 2G service only, so you're stuck there until Apple does a complete revamp of the hardware. Still, it's nothing short of a few drivers and a chip that can support 1700/2100 Mhz. It's not like jumping from GSM to CDMA.
post #18 of 36
Quote:
Originally Posted by replicant View Post

... They claim they want to make great product and that they are at the intersection of liberal arts and technology. That is nice and all but what good is it when you pioneer something and have others copy it?

During the PC war, Microsoft was ingenious enough to understand that if they made Windows the default operating system, they would dominate the market and could command a premium price afterward. It was brilliant and it worked.
I really believe Apple should care less about profit margins right now and focus on making sure their devices are more accessible.

Unfortunately, I don't see Apple doing this. They don't seem to want to offer a variety of mobile phones or partner up with more carriers. It's a shame, they could really crush Android and Nokia right at this moment.

Well, contrary to popular belief, and unlike Google, and Microsoft before them, I don't think Apple is necessarily interested in World Domination.

Perhaps more importantly, analogies with Mac OS vs. Windows (often made from a flawed perspective to begin with) don't really carry over to the current market, which doesn't resemble the market you allude to in your analogy (and your analogy doesn't accurately describe what happened in that market anyway). No one was giving away a "free" OS back then that was worth anything, so the current dynamic vs. your analogy is entirely different. Even Microsoft will have difficulty pushing WP7 against free Android, so the idea that Apple should license iOS doesn't make any sense. I also don't think it makes any sense for them to make a bunch of different models themselves -- one phone to rule them all is their best strategy.

(And Microsoft did not become the dominant OS vendor in the PC market in the way you describe. The IBM PC and clones became the dominant platform by virtue of IBM's reputation at that time in the business world, and Microsoft was lucky enough to be invited along for a free ride. Microsoft then leveraged that advantage on DOS in the transition to Windows to hold onto and extend their market dominance.)

I do, however, think it would be worth creating a CDMA phone and expand onto more carriers in the US (and elsewhere), but only if they can do so without being forced to dumb down the phone due to carrier demands or technology limitations.
post #19 of 36
Quote:
Originally Posted by replicant View Post

"Huberty has also been a proponent of Apple and carriers offering a lower cost of ownership for the iPhone. "

Agreed.

This goes against Apple's philosophy of being a niche/high-end product but I think one very important debate they should have at the Cupertino HQ is the following: are they in this fight to win or not? They claim they want to make great product and that they are at the intersection of liberal arts and technology. That is nice and all but what good is it when you pioneer something and have others copy it?

During the PC war, Microsoft was ingenious enough to understand that if they made Windows the default operating system, they would dominate the market and could command a premium price afterward. It was brilliant and it worked.
I really believe Apple should care less about profit margins right now and focus on making sure their devices are more accessible.

Unfortunately, I don't see Apple doing this. They don't seem to want to offer a variety of mobile phones or partner up with more carriers. It's a shame, they could really crush Android and Nokia right at this moment.

I don't get it. Apple doesn't set rates, AT&T does. Apple can affect TCO only marginally. AT&T's lowering of the data rates is going to pull a lot of new people into the market, much more than anything Apple could do.

Further, Microsoft was not ingenious and hardly brilliant. The PC hardware market was not created by them, and they were never in that market from day one. They were merely in a fortunate position to exploit it. They played the high cards they were dealt. The only "ingenious" thing Microsoft did was use illegal means to force what few competitors they had out of the PC OS market.

None of this replicable. Not sure what you are suggesting for Apple.
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post #20 of 36
Quote:
Originally Posted by Splash-reverse View Post

sweet


As I read the article, I think she missed one fundamental point that when one user upgrade his/her phone to the new version, the number of user will still be the same - only the phone is different. Unless they are capturing new subscribers, the growth won't be that massive.

They have a growth plan for 100 Apple stores in China and the rest of Asia.

The number is not far fetched.
post #21 of 36
I would imagine that there are a lot of 1st-gen iPhones floating about all over the world. I believe China had 4 million genuine iPhones before they became officially available there. And there must be a lot of people like me who jailbreak and use another network's SIM in their iPhone. We still have two 1st-gen iPhones in our family (1 x 8GB & 1 x 16GB) and are being used as handset of choice, because the users don't want/need data plans on these handsets (a bit like a smaller iPad+WiFi but with phone capability).

With the cost of some products, like the original iPhone, I'm surprised people have them de-activated. We simply jailbreak/activate them and pass them down the line. If and when the battery dies, we'll replace them ourselves and keep using them or send them off to some 3rd world country where they will be used until they break.

We still have a 10GB iPod (the one with the row of buttons above the click wheel) and a iPod mini (which has had it's 4GB HD replaced with 8GB flash card) and both of these work just fine in docks, both at home and in the car. Why throw away something which still looks and functions as well as it did when it was first bought?

I'm sure that there isn't anyone on this planet who actually has anywhere near an accurate figure of how many iPhones are actually in daily use across the globe.
post #22 of 36
100 Million? There are over 4 Billion cell phones in use in the world.

Kind of puts it into perspective.
post #23 of 36
Quote:
Originally Posted by anonymouse View Post

Well, contrary to popular belief, and unlike Google, and Microsoft before them, I don't think Apple is necessarily interested in World Domination.

Perhaps more importantly, analogies with Mac OS vs. Windows (often made from a flawed perspective to begin with) don't really carry over to the current market

the idea that Apple should license iOS doesn't make any sense. I also don't think it makes any sense for them to make a bunch of different models themselves -- one phone to rule them all is their best strategy.

I was not thinking about world domination. I agree with the analyst that Apple should lower the cost of ownership. And they should do it by every means including the option of having a CDMA version for Verizon. Apple can grab a bigger market share if they reduced their margins and try to be more flexible with carriers.

As for the analogy, it holds if you think about the developer ecosystem. The day the number of Android handsets is greater than iOs devices than it will spell the decline of Apple. Developers will migrate to the dominant platform.

No I don't believe they have to license iOs but they could offer more models the same way you have different models of the iPod. Not everyone likes a virtual keyboard and for some, it's a deal breaker.
post #24 of 36
Quote:
Originally Posted by Dr Millmoss View Post

I don't get it. Apple doesn't set rates, AT&T does. Apple can affect TCO only marginally. AT&T's lowering of the data rates is going to pull a lot of new people into the market, much more than anything Apple could do.

Further, Microsoft was not ingenious and hardly brilliant. The PC hardware market was not created by them, and they were never in that market from day one. They were merely in a fortunate position to exploit it. They played the high cards they were dealt. The only "ingenious" thing Microsoft did was use illegal means to force what few competitors they had out of the PC OS market.

None of this replicable. Not sure what you are suggesting for Apple.

I agree that Apple does not set rates but they can have an indirect impact on this. They can definitely stimulate some competition among carriers by not giving AT&T the exclusivity.

Smartphones are computers. There is an operating system on which apps run on. Very simply put, the company with the most vibrant and dominant software ecosystem will prevail.
post #25 of 36
Quote:
Originally Posted by replicant View Post

I was not thinking about world domination. I agree with the analyst that Apple should lower the cost of ownership. And they should do it by every means including the option of having a CDMA version for Verizon. Apple can grab a bigger market share if they reduced their margins and try to be more flexible with carriers.

As for the analogy, it holds if you think about the developer ecosystem. The day the number of Android handsets is greater than iOs devices than it will spell the decline of Apple. Developers will migrate to the dominant platform.

No I don't believe they have to license iOs but they could offer more models the same way you have different models of the iPod. Not everyone likes a virtual keyboard and for some, it's a deal breaker.

The cost of the iPhone, at $99 for a 3GS, is already minimal compared to the overall cost of owning one. I don't think it would benefit Apple at all to offer an iPhone at, say, $49 or offering BOGO deals. People want the iPhone and are willing to pay the current prices, and the current prices are not, I believe, an actual barrier to ownership.

As for mechanical keyboards on phones, that's the past, and Apple's not going there, there's no reason to, and the number of people not buying iPhones for that reason is insignificant.

I also don't think it's essential for Apple to maintain simple numerical dominance in handsets to continue to attract developers or customers. After all, developers clamored for, and flocked to, the App store while other phones (think RIM) had, and still have, numerical dominance. The entire equation is extremely complex, but the bottom line is that as long as it's profitable the ecosystem will hold up and developers will remain. And, it's also not a foregone conclusion that Android will ever gain any significant dominance in numbers.
post #26 of 36
Quote:
Originally Posted by replicant View Post

I agree that Apple does not set rates but they can have an indirect impact on this. They can definitely stimulate some competition among carriers by not giving AT&T the exclusivity.

Smartphones are computers. There is an operating system on which apps run on. Very simply put, the company with the most vibrant and dominant software ecosystem will prevail.

Very indirect. Nobody likes the AT&T exclusivity, but no doubt there are good business reasons behind it, or at least there were in the beginning and Apple seems to be stuck with it for the time being. You are assuming that ending carrier exclusivity would lower the cost of ownership significantly. Where is the evidence for this? Is the TCO for the iPhone substantially higher than other smart phones? I think not. More carriers might mean more sales, but not because TCO decreases substantially.

Yes, smart phones are computers. What of it? Apple already has the most vibrant and dominant software ecosystem. They have blended the iPhone software market with a broader mobile computing device market, something none of their competitors are equipped to duplicate (Microsoft, perhaps, but they don't seem to have a clue about how).

Finally, nobody has to "prevail" in the market. If you're looking for a repeat of the PC market to happen here, then I think you are looking for something that will not happen. As I pointed out before, Microsoft's domination of that market was a quirk of history. It's not going to happen again, and we as consumers should be grateful for that. Instead we will have a vibrant and competitive market with several strong players and nobody making up the rules for everyone else.
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post #27 of 36
Quote:
Originally Posted by anonymouse View Post

I also don't think it's essential for Apple to maintain simple numerical dominance in handsets to continue to attract developers or customers.

I guess this is where our views differ. Market share is a critical indicator otherwise I don't think Apple would be pressed to show statistics about this at every WWDC.
post #28 of 36
Quote:
Originally Posted by Dr Millmoss View Post

You are assuming that ending carrier exclusivity would lower the cost of ownership significantly. Where is the evidence for this?.

Finally, nobody has to "prevail" in the market. If you're looking for a repeat of the PC market to happen here, then I think you are looking for something that will not happen.

I believe it will happen, it's just business. The smartphone market is still immature and there's a lot of fragmentation at the moment. Like any market that matures, there is going to be a dominant player.
post #29 of 36
Quote:
Originally Posted by replicant View Post

I believe it will happen, it's just business. The smartphone market is still immature and there's a lot of fragmentation at the moment. Like any market that matures, there is going to be a dominant player.

Just like the ____ market?

Please don't fill in the blank with the PC, which was a freak of nature. It is not the normal order of things. Every indication is that the mobile electronics market will develop as a normal, healthy markets do -- fully competitive, with a variety of products, and no dominant player.
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post #30 of 36
Quote:
Originally Posted by replicant View Post

I guess this is where our views differ. Market share is a critical indicator otherwise I don't think Apple would be pressed to show statistics about this at every WWDC.

I don't think they are "pressed". BTW, that part of the WWDC is called a pep rally.
post #31 of 36
Quote:
Originally Posted by replicant View Post

Like any market that matures, there is going to be a dominant player.

In the sense that there will always be a player in any market that has the greatest marketshare, yes, but that's not exactly a very insightful analysis applied to this market.
post #32 of 36
Quote:
Originally Posted by Dr Millmoss View Post

Just like the ____ market?

Please don't fill in the blank with the PC, which was a freak of nature. It is not the normal order of things. Every indication is that the mobile electronics market will develop as a normal, healthy markets do -- fully competitive, with a variety of products, and no dominant player.

Really? Please name a mature market and you will find a player with a dominant player. And yes, by dominant player I meant to say a company with the majority of the market share. I thought it was obvious. If you take a look at the banking industry, the oil industry or even just the Processor industry.

But this is besides the point a I wanted to make. I simply agree with the analyst. I share in her view that lowering the TCO for the iPhone would be really good for Apple. And I think we can agree on that
post #33 of 36
Quote:
Originally Posted by anonymouse View Post

In the sense that there will always be a player in any market that has the greatest marketshare, yes, but that's not exactly a very insightful analysis applied to this market.

My point was that the smartphone business is still young and as it evolves Apple has a unique chance to shape it by gaining market share as quickly as possible. Developer adoption is key and market share is important for a developer. Perhaps I am wrong but the trend seems to indicate that Android has the strongest momentum at the moment. Android devices are available on every carrier and offer the widest selection of models.

My initial point was that Apple should do whatever it can to lower the TCO for the iPhone. How can we not agree on this?
post #34 of 36
Quote:
Originally Posted by replicant View Post

Really? Please name a mature market and you will find a player with a dominant player. And yes, by dominant player I meant to say a company with the majority of the market share. I thought it was obvious. If you take a look at the banking industry, the oil industry or even just the Processor industry.

But this is besides the point a I wanted to make. I simply agree with the analyst. I share in her view that lowering the TCO for the iPhone would be really good for Apple. And I think we can agree on that

The PC microprocessor industry (Intel) is probably your only workable example, and it was part of the duopoly which was spawned by the same historical accident which created Microsoft's unnatural dominance. Still, beyond the specific market for PC processors, I think you will find that nobody has that kind of dominance in the semiconductor industry as a whole. The oil industry is one of the most concentrated in the world, but I think you will find that no one company has a majority market share of production, refining or distribution. And that's an industry where supply is heavily controlled by an international cartel. Even with all the bank mergers, no player has a majority market share.

Yes, we agree that lowering TCO is a good thing for Apple (assuming they can keep up with the hardware demand, which is proving to be a challenge). My point is, I think that AT&T has done more for them on that front by tiering the data plans than Apple could do themselves. Also, I don't think Apple has to worry very much about one company becoming the big fish in this pond. I see many strong players providing a variety of products to a growing and evolving market. This is so different than what we witnessed in the '80s and '90s PC market.
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post #35 of 36
Quote:
Originally Posted by replicant View Post

Perhaps I am wrong but the trend seems to indicate that Android has the strongest momentum at the moment. Android devices are available on every carrier and offer the widest selection of models.

We had this discussion in another thread, and, worldwide, I forget the exact numbers but, iPhone is on more carriers than Android. The numbers also don't show Android with more momentum (only the bogus increase in market share against itself shows that, but it's, well, bogus). As I've stated before, I don't think the number of models is of any importance.
post #36 of 36
Quote:
Originally Posted by AppleInsider View Post

With a total user install base of 30 million at the end of 2009, Apple's number of active iPhone subscribers is expected by one prominent analyst to more than triple to 100 million by the end of 2011.

I didn't know Apple had any subscribers...
Quote:
"We see the iPhone installed base rising from approximately 30M subscribers at the end of 2009 to over 100M by the end of 2011," she wrote.

But those would be AT&T subscribers using Apple hardware. They are not "Apple subscribers".
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