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Bear Stearns ups Apple target to $125, says Palm at risk to iPhone

post #1 of 35
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Apple's new iPhone presents a serious risk to PDA-maker Palm, according to Bear Stears, who on Wednesday raised estimates and increased its price objective on Apple.

"With over 1 billion unit shipments expected to ship in 2007, mobile phones represent a significant growth opportunity for Apple, coupled with video which is also in its early stages and could evolve into a multi-year story," analyst Andy Neff told clients in a research note to clients on Wednesday.

He said Apple is likely to face number of challenges in its new phone initiative -- such as entrenched competitors with significant scale and wireless expertise and establishing/maintaining carrier relationships -- but believes the device could potentially revolutionize the mobile phone industry in very much the same way the iPod forever altered the landscape of music.

Apple, while introducing iPhone on Tuesday, said it will initially shoot for 1 percent of that global handset market -- an approximate 10 million units.

"We believe that iPhone represents a significant risk to Palm given its device-only model with similar average-selling-price to iPhone and its carrier concentration with Cingular," Neff wrote. He also cited Palm's "lack of innovation" as yet another cause for concern.

But contrary to initial market reaction, Blackberry manufacturer Research In Motion Limited (RIMM) may experience minimal impact from Apple's first handset in the near term, the analyst said.

"While iPhone may emerge as a competitive smartphone, we would buy RIMM on weakness given iPhones lack of corporate email, price premium vs. RIMM, and sole availability at Cingular and in US," he explained.

Along similar lines, Neff said iPhone could wind up reflecting positively on Synaptics, whose Onyx touch solution may come under high demand as would-be competitors line up in attempts duplicate the user interface experience of the new Apple handset.

Stacking the iPhone against the competition | Source: Bear Stearns.

The analyst expects Apple will sell around 600,000 units of its initial iPhone handset during the fiscal 2007 year, which ends in September. However, he's modeling for that number to surge to 9.25 million units the following year.

Neff reiterated his Outperform rating on shares of Apple, raising his 12-month price target to $125 from $100.
post #2 of 35
If Apple did sell 10 million of these, what would be its penetration into the smart phone market? Jobs put it up against the entire cell phone market which I don't think is fair.
post #3 of 35
For pure joy, could someone post the quote from the PALM CEO about Apple's entry into the phone market? The guy probably crapped himself a few times when he saw/heard about the iPhone.
post #4 of 35
I doubt touch screen is going to become pervasive in this space, at least in use by other devices... the patents Apple has regarding its screen and uses are profound.
post #5 of 35
Quote:
Originally Posted by DeaPeaJay View Post

If Apple did sell 10 million of these, what would be its penetration into the smart phone market? Jobs put it up against the entire cell phone market which I don't think is fair.

There are estimates that the smartphone market sells maybe 50 million units a year so a fair bit smaller than the 1 billion figure Jobs was using, which represents all the phones. If Apple did sell 10 million units then that equates to a 20% share. I'd say that would be a reasonable assessment weighing up how much more functional it is than other smartphones but also taking into consideration it's carrier limitations and the fact it is a new entrant into the market.
post #6 of 35
Quote:
"We've learned and struggled for a few years here figuring out how to make a decent phone,'' he said. "PC guys are not going to just figure this out. They're not going to just walk in.''

hehehe!
post #7 of 35
Quote:
Originally Posted by crees! View Post

For pure joy, could someone post the quote from the PALM CEO about Apple's entry into the phone market? The guy probably crapped himself a few times when he saw/heard about the iPhone.

"Palm CEO Ed Colligan has revealed disinterest in Apple's forthcoming iPhone cellular handset when questioned about the matter at a breakfast gathering, according to the Mercury News, and laughed at the idea that any company -- including Apple -- could easily draw customers in the difficult smart-phone sector. "We've learned and struggled for a few years here figuring out how to make a decent phone," Colligan said. "PC guys are not going to just figure this out. They're not going to just walk in.""

Yeah, he's definitely in the market for new underwear....
post #8 of 35
I think the difference is, Apple aren't just starting from scratch. They've had experience before with these kind of devices, so they have also learned and struggled over the years. Plus they have total control over their hardware and software, unlike Palm.
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post #9 of 35
Hello namesake Mobius Boston.
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post #10 of 35
Quote:
Originally Posted by crees! View Post

For pure joy, could someone post the quote from the PALM CEO about Apple's entry into the phone market? The guy probably crapped himself a few times when he saw/heard about the iPhone.

"Palm CEO Ed Colligan has revealed disinterest in Apple's forthcoming iPhone cellular handset when questioned about the matter at a breakfast gathering, according to the Mercury News, and laughed at the idea that any company -- including Apple -- could easily draw customers in the difficult smart-phone sector. "We've learned and struggled for a few years here figuring out how to make a decent phone," Colligan said. "PC guys are not going to just figure this out. They're not going to just walk in.""
post #11 of 35
A stock split is on the horizon....damn I wish I bought some.
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post #12 of 35
I didn't realize how asleep the cel phone industry was since the iPhone came out. It makes my Motorola RAZR feel like my brick phone from the early 90's.
post #13 of 35
Quote:
Originally Posted by Mobius View Post

Hello namesake Mobius Boston.

Back 'atcha Mobius.
post #14 of 35
Quote:
Originally Posted by Mobius Boston View Post

"Palm CEO Ed Colligan has revealed disinterest in Apple's forthcoming iPhone cellular handset when questioned about the matter at a breakfast gathering, according to the Mercury News, and laughed at the idea that any company -- including Apple -- could easily draw customers in the difficult smart-phone sector. "We've learned and struggled for a few years here figuring out how to make a decent phone," Colligan said. "PC guys are not going to just figure this out. They're not going to just walk in."

When you have ingenuity, style and common sense, you can buid anything. All the iPhone is is the right technology and common sense.
post #15 of 35
Quote:
Originally Posted by Mobius Boston View Post

"Palm CEO Ed Colligan has revealed disinterest in Apple's forthcoming iPhone cellular handset when questioned about the matter at a breakfast gathering, according to the Mercury News, and laughed at the idea that any company -- including Apple -- could easily draw customers in the difficult smart-phone sector. "We've learned and struggled for a few years here figuring out how to make a decent phone," Colligan said. "PC guys are not going to just figure this out. They're not going to just walk in.""

Yeah, he's definitely in the market for new underwear....

The Palm Developers conference is going to be a ghost town.
The WWDC should be interesting this year.
The iPhone really represents a whole new platform with amazing opportunities.
post #16 of 35
Quote:
Originally Posted by Johnny Mozzarella View Post

The Palm Developers conference is going to be a ghost town.
The WWDC should be interesting this year.
The iPhone really represents a whole new platform with amazing opportunities.

There's still some debate as to whether Apple will open up iPhone to 3rd Party developers yet.

The analyst is slightly wrong here too. iPhone supports IMAP IDLE for push email. So does Microsoft Exchange. He's only slightly wrong though as IMAP access isn't enabled by default in Exchange so it takes a clued up IT manager to open up their Exchange server to non-MS clients. However, it's essentially FREE, unlike RIM's solution.
post #17 of 35
The comparison table is totally flawed. Apparently they don't know what they're talking about. The Treo 680 runs a Microsoft operating system and works with IntelliSync? Bullsh*t.
post #18 of 35
The potential lies not only in the current smartphony market, but in a market that has not yet been fully exploited. If they can figure out a way for us to use internet, messaging, etc. using wi-fi for free, as in when i am at starbucks or wherever there is a signal (from my next door neighbor) without additional contracts, then the potential will be major . If however we will have to pay a massive chunk of change in addition to the basic phone plan that most of us already have, for access to the cool stuff, then the potential will be more limited, but still big.

I always thought that smartphones were for business people, the kind with work that just can't wait sometimes. This iPhone makes me think that a smartphone can also be for the masses, just like a regular cell phone is, or a laptop.
post #19 of 35
When Apple releases a scaled down version for $199 those estimates are going to look to low. The only question is, will they do it this year or next? I think it'll happen by this fall. Remember everyone thought this was iPhone 2.0.
post #20 of 35
Quote:
Originally Posted by AppleInsider View Post

Along similar lines, Neff said iPhone could wind up reflecting positively on Synaptics, whose Onyx touch solution may come under high demand as would-be competitors line up in attempts duplicate the user interface experience of the new Apple handset.

I guess Neff missed the part of the keynote where Jobs said "We have over two hundred inventions and patents on this thig... And we intend to protect it."
post #21 of 35
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Originally Posted by ecking View Post

A stock split is on the horizon....damn I wish I bought some.

I almost bought 100 shares back in July, when it was trading below $55. I knew it was on a BARGAIN sale but I was fresh out of college and had student debts to pay let alone 5 grand to spend on stock.

Needless to say, if I just decided to starve for a couple months and bought the stock, and it does hit $125, I could have knocked a considerable chunk off my student loans.

And if it splits (I think it will once it hits 110-120).....oh man, I am kicking myself in the a** as I type this.
post #22 of 35
Quote:
Originally Posted by bdkennedy1 View Post

I didn't realize how asleep the cel phone industry was since the iPhone came out. It makes my Motorola RAZR feel like my brick phone from the early 90's.

Same. I hate my phone so much now (not that I didn't hate RAZrs before).
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post #23 of 35
"The analyst expects Apple will sell around 600,000 units of its initial iPhone handset during the fiscal 2007 year, which ends in September. However, he's modeling for that number to surge to 9.25 million units the following year."

What planet are these people from?

He expects the best phone ever realed to have those sales. More likely 40 milllion in 2007.
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post #24 of 35
I wonder if this is an added kicker that analysts are not noticing:

Surely, some of the genre-bending innovations in the iPhone will be ones that make their way into all mobile phones in the future? Surely, Apple will make some serious $$ licensing this stuff (assuming their 200 patents include some of the important ones that others will want)?

This was Qualcom's strategy.

Apple had better beef up their legal staff quickly to do global IP-policing !
post #25 of 35
I think, as usual, Apple is being conservative regarding their sales figures. Remember, the Razr was about $400-$500 and people flocked to them . People even switched carriers just so they could have a black one. Come June the new Apple phone will be THE status symbol for the cell phone carrying masses.

Hell, I don't even own a cell phone (I don't want anyone to bug me) and I want one of these things. The problems with these will be the same with most of the newest Apple products: will customers be able to get their hands on one?
post #26 of 35
Quote:
Originally Posted by Ireland View Post

"The analyst expects Apple will sell around 600,000 units of its initial iPhone handset during the fiscal 2007 year, which ends in September. However, he's modeling for that number to surge to 9.25 million units the following year."

What planet are these people from?

He expects the best phone ever revealed to have those sales. More likely 40 million in 2007.

It won't sell 40 million at that price, I doubt. That'd be almost 100% of the smartphone market, which just isn't going to happen. We're going to have to see some "less smart" phones aimed at consumers too before that happens. I'm certain this is something that apple is working on.

I'm also wonder, what will they do with the iPod now? The iPhone really does make the iPod look somewhat dated - can they really release a new iPod before the iPhone is released, i.e. before June in the US, before October/November in Europe? If they did release it before the iPhone, it'd probably loose them some sales of the iPhone... If they go and release a new video ipod that doesn't look as flashy as the iPhone its going to be a bit of a letdown for people...

I wonder what they'll do... I'm hoping for an iPhone without the phone stuff...
post #27 of 35
Quote:
Originally Posted by eAi View Post

It won't sell 40 million at that price, I doubt. That'd be almost 100% of the smartphone market, which just isn't going to happen. We're going to have to see some "less smart" phones aimed at consumers too before that happens. I'm certain this is something that apple is working on.

I'm also wonder, what will they do with the iPod now? The iPhone really does make the iPod look somewhat dated - can they really release a new iPod before the iPhone is released, i.e. before June in the US, before October/November in Europe? If they did release it before the iPhone, it'd probably loose them some sales of the iPhone... If they go and release a new video ipod that doesn't look as flashy as the iPhone its going to be a bit of a letdown for people...

I wonder what they'll do... I'm hoping for an iPhone without the phone stuff...

The thing to remember is that they will have a big impact on broadening the market. Many people didn't want a blackberry form-factor smart phone, and many others were disappointed with Windows Mobile. The key to market expansion for smartphones is finding the right KillerApp. Google Maps goes pretty far, but I am happy just with Google search.

I think the smartphone market in general will grow by about 50% with the help of this device, and Apple will get about 10% of the existing market plus 30-50% of the growth. 20MM units isn't completely out of reach.
post #28 of 35
Palm smartphones may be threatened a bit, but if I were a Blackberry user, I'd rather have the tactile buttons for muscle memory aspect of it.

The main thing is that this is not a pda, it is a communicator that can play music. It communicates via wireless, BT and cellphone frequencies.

The Cingular contract I bet is only 2 years long. The Cingular guy kept saying "multiyear" while Jobs said almost nothing. That means 2-3 years to me. I'm sure in 2009, there will be more choice. However I blame Verizon for not joining Apple as much as I'd blame Apple for not partnering with Verizon. Verizon wants to out-Apple Apple with Chocolate phones and new video downloads as of this last week. I'm afraid we will now be forced to choose sides in a 2 or 3 front war, 'a la DVD-HD and BlueRay.

It is all about the UI and that is it!! Multi-touch is the killer app that turns communications into a more nonlinear experience.
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post #29 of 35
Apple has said the iPhone will be closed to 3rd party developers. That kinda kills it for me. This is an awesome device, but I'd like to run my own (or other people's) apps on it as well.

I don't think the Palm developers' conference will be dead since they won't be able to develop for the iPhone.
post #30 of 35
Quote:
Originally Posted by PBG4 Dude View Post

Apple has said the iPhone will be closed to 3rd party developers. That kinda kills it for me. This is an awesome device, but I'd like to run my own (or other people's) apps on it as well.

I don't think the Palm developers' conference will be dead since they won't be able to develop for the iPhone.

Apple isn't saying much because it wants to manage expectations.
At the WWDC they will probably announce a dev program.
It will probably be similar to what exists in the world of gaming consoles.

Third parties will be able to develop software and test it in a software emulator.
If Apple likes the idea they will compile it for the iPhone and distribute it via iTunes.
Customers will be able to buy "safe" & "reliable" software through iTunes and load it on their phone. The model has already proved successful and the infrastructure is already in place.

The alternative is a wild wild west approach with thousands of dangerous, buggy & mediocre apps littering the landscape.

Apple prefers the walled garden approach.
post #31 of 35
Quote:
Originally Posted by aaarrrgggh View Post

The thing to remember is that they will have a big impact on broadening the market.......

I'm with ya 100%!

Remember the days/years prior to Apple rolling out the iPod. The mp3 player market was already rolling along quite well and it had it's 'market leaders'. What I'd like to know is at what pace was that (pre-ipod) mp3 market growing vs. the post ipod mp3 market.

We know what happened to that market... Apple owns a substantial chunk of it. Something that many people said could never happen.

The more important thing is... Prior to Apple entering the market only the 'uber-geeks' and college-age and lower people even knew what an mp3 player was (not to mention how to get them to work)... Look at things now.. I'd be willing to bet even your fair share of grandmothers own or at least know about the iPod.

Apple defined the MP3 market and I think we just witnessed them doing the same thing to the smart phone market so long as the shipping phone does what Steve's demo showed - (reliably)

Apple can NOT afford a buggy experience. It killed the Newton along with Apple's change to define and own the PDA market (the press never let go of the handwriting recognition bugs - that were eventually fixed) and the device never recovered from the bad press (or Steve Jobs wrath).

Interesting times ahead.. thats for sure!

Dave
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post #32 of 35
Quote:
Originally Posted by PBG4 Dude View Post

Apple has said the iPhone will be closed to 3rd party developers. That kinda kills it for me. This is an awesome device, but I'd like to run my own (or other people

I've heard that a few places. If it's true, it's gonna fall flat and I that's why I don't think it will be closed.

One of my biggest concerns about the iphone is that now the competition has seen it, they have 6 whole months to do something about it.

There's nothing to stop them making a similar device and the only difference would be that it couldn't have a multi-touch screen interface but a palm style interface would be fine. All they need to do is come up with the same apps and have similar behaviour.

Apple already has a fully working prototype, why is it going to take so long to get it to us?
post #33 of 35
AAPL will not approach anywhere near $125. These price spikes happen every year after Macworld and then begin to plummet.
This year the stock will tumble once the iPhone hype wears down and the reality of the thing sets in. It's already happening where people are seeing the chinks in the armor of the iPhone. Then the Cisco lawsuit will send it down further because, if nothing else, it represents an air of uncertaintly about the product, and nothing scares investors more than uncertainty.
Then once the iPhone is released, it will inevitably suffer from production problems. That will lower the price of the stock. Then there will be some unforeseen problem with it, whether it be failure to connect to networks or its easily scratched, that will bring about some kind of class action lawsuit.
Once all of this gets resolved, the stock will take off again. So there's hope yet for getting a good bargain on stock. Remember a year ago it was at $85 and then dropped to $52 by August.
post #34 of 35
Quote:
Originally Posted by Baron von Smiley View Post

AAPL will not approach anywhere near $125. These price spikes happen every year after Macworld and then begin to plummet.

I too believe it'll sink, but I don't think it's going to plummet. Last year was the Intel transition-- investors were a bit nervous. This year, there is nothing by anticipation for Leopard, new iPods, iPhone's release, and hints at other new goodies. Also, relative to other companies, Apple is STILL kicking butt. Next Tuesday's financial announcement is going to be hug, as well. They even alluded to it in the keynote.

$125 is possible. I also believe that they are not going to split the stock anymore. Apple as an "expensive" stock makes sense now that the company is so solid. The earlier split was an attempt to spur more growth. They got it. Now, they can go the Google route and let the price rise as high as it'll go.
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post #35 of 35
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Originally Posted by MacGregor View Post

The Cingular contract I bet is only 2 years long. The Cingular guy kept saying "multiyear" while Jobs said almost nothing. That means 2-3 years to me. I'm sure in 2009, there will be more choice.

You can bet some type of bidding war will happen when the exclusivity contract expires.

It'll be good for Apple and good for consumers.
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