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iPhone single-handedly driving smartphone growth

post #1 of 19
Thread Starter 
In addition to outselling a broad and combined range of Windows Mobile handsets, Apple's iPhone 3G is being credited this week as the lone force responsible for growth of the smartphone market during the September quarter.

In a report issued Tuesday, Needham & Co. noted that worldwide smartphone shipments increased 28.6% during the three-month period ending September, boosting the multi-function handsets' share of the overall mobile phone market to 13.8%, up from 12.2% in June and 11.2% a year ago.

"Apples iPhone 3G, introduced in July, is the only reason smartphone growth did not slow in September," explained analyst Charles Wolf. "Apple shipped almost seven million iPhones in the quarter, accounting for all of the sequential shipment growth in the quarter and then some."

That said, Wolf acknowledged that 2 million of those near 7 million iPhones represented shipped, but unsold, channel inventory. Without this excess inventory fill, "sales growth would undoubtedly have decelerated in September," he said, adding that he believes December quarter smartphone growth may ultimately produce disappointing growth numbers as a result.

Even if iPhone sales decline along with overall smartphone shipments during the December quarter, Wolf said the competitive dynamics of the smartphone market suggests the Apple handset won't be a one-quarter wonder as feared by some industry watchers. That's largely in part because the iPhone, along with Research in Motion's BlackBerry offerings, are winning the battle of business models in the market through their tightly integrated ecosystems of hardware and software.



By contrast, "Windows Mobile, Android and now Symbian are relying on handset manufacturers to integrate these operating systems with smartphones of their own design," he said. "The September shipment numbers indicate that the BlackBerry/Apple model is clearly winning at this stage of the conflict."



For example, Wolf points out that both Apple and RIM shipped more units than Windows Mobile despite the fact that over 30 handset manufacturers license the Microsoft operating system. Meanwhile, he notes that Symbians dominance began to fade during the past year, first with a surge in BlackBerry sales and next with the introduction of the iPhone.

"Together, BlackBerry and the iPhone captured 31.1% of the smartphone market in September, up from 14.3% a year ago," he said. "Symbian is likely to face further competitive pressures going forward when many of the industrys leaders introduce phones running on Googles Android platform."



And while it's too early to predict who will emerge victorious in the battle between Apple and RIM, the Needham analyst pointed to one metric that can often prove telling because it translates into a stream of upgrades down the road: new activations.

"On this metric, the iPhone won the activation game hands down," he said.

During its August quarter, RIM sold 6.13 million BlackBerries, of which 3.52 million were upgrade sales while 2.61 million were new activations. On the other hand, Apple's exclusive US wireless carrier activated 2.4 million iPhone 3Gs during a similar time period, in addition to approximately 2.49 million activations internationally. [Editor's note: this logic may be misleading given that many new iPhone 3G activations were the result of upgrades from the original iPhone.]

"Worldwide iPhone activations, then, totaled 4.9 million phones," Wolf said. "This was almost twice the number of phones BlackBerry activated in RIMs August quarter."
post #2 of 19
Good Numbers. And that's all with one phone. While all other companies have 20-30 different models. Simplicity wins.
Apple had me at scrolling
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Apple had me at scrolling
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post #3 of 19
Quote:
Originally Posted by iVlad View Post

Good Numbers. And that's all with one phone. While all other companies have 20-30 different models. Simplicity wins.

Not only is it being done with one phone, but with one carrier, at least here in the States and in most international markets. RIM, Palm, et al, are all on every network imaginable, which makes what the iPhone is doing all the more impressive.
post #4 of 19
Not sure I follow the logic of the last statement. RIM sold 6.1 million, 2.6 million to new customers (a little over 40%). AT&T sold 2.4 million iPhones, 1 million to new customers (a little over 40%).
Hands down? Wouldn't this seem to indicate that RIM and Apple were pretty much equal in this regard, other than a one-time international bump for Apple from entering new markets?
post #5 of 19
"Microsoft CEO Steve Ballmer, alongside Nortel CEO Mike Zafirovski, spoke with CNBC Business News' Scott Wapner today regarding a variety of subjects, including Microsoft's Zune and Apple's iPhone and iPod:

Wapner: Steve, let me ask you about the iPhone and the Zune, if I may. The Zune was getting some traction and Steve Jobs goes to Macworld and he pulls out this iPhone. What was your first reaction when you saw that?

Ballmer: (laughs) $500 full-subsidized with a plan! I said that is the most expensive phone in the world and it doesn't appeal to business customers because it doesn't have a keyboard which makes it not a very good email machine. Now, it may sell very well or not, I, you know. We have our strategy, we've got great Windows Mobile devices in the market today, we, you can get a Motorola Q phone now for $99, it's a very capable machine, it'll do music, it'll do, uh, Internet, it'll do email, it'll do instant messaging. So, I, I kinda look at that and I say, well, I like our strategy. I like it a lot.

Wapner: How do you compete with that though? He sucked out a lot of the spotlight in the last few weeks because of what happened at Macworld, not only with the iPhone, but with the new iPod. How do you compete with that, with the Zune?

Ballmer: Right now, well, let's take phones first. Right now we're selling millions and millions and millions of phones a year, Apple is selling zero phones a year (half smile). In six months, they'll have the most expensive phone by far ever in the marketplace (laughs) and let's see (shrugs), you know, eh, what's the expression, let's see how the competition goes. In the case of music and entertainment players, Apple ob.., uh, absolutely has a preeminent position. We said we wanna be in this market, there's a lot of reasons why there's synergy with other things that we're doing, we think we've got some unique innovations - particularly what we're doing with community, with wireless networking. And, we came into the market, a market in which they are very strong, and we took, I don't know, but I think most estimates would say we took about 20-25% of the high end of the market. We weren't down at some of the lower price points, but for devices $249 and over we took, you know, let's say about 20% of the market. So, I feel like we're in the game, we're driving our innovation hard, uh, and, uh, okay, we're not the incumbent, he's the incumbent in this game, but, uh, at the end of the day, he's going to have to keep up, uh, an agenda that we're gonna drive as well.

Wapner: You still feel like you can be very competitive in that space?

Ballmer: Sure. Absolutely. If we didn't think there was transformation going on, we woudn't be playing."

post #6 of 19
If their sales keep going exponentially, unfortunately everyone might as well just give up. \
post #7 of 19
I have a problem with this artical in the sense that some of the supposed competitors are even in the same market. Windows mobile for one is not a smart phone platform at all in my mind. I haven't seen an Android phone so I can't comment on those.

This may be agreeing with the artical some what but that leaves iPhone and Blackberry as contenders. Frankly I see Blackberry as being very limited and appealing to people that like to show off that the have a Blackberry. Note that this does not include newer hardware from RIM that might be more useful.

In effect you have currently a one horse market for smart phones with iPhone as that horse. Part of what makes it THE smart phone is it's software which is just starting to gel but more so it is that large screen which makes the hugest diffrence. It makes E-mail a snap and makes the web at least somewhat usable on the device. These two things are huge and frankly are what is defining what a smart phone is. It is also why windows mobile is such a loser as the demand for desktop apps on these devices is close to nill. App store itself highlights this in that the apps that are great sellers are simple to the point solutions.

If anything the report missed an important truth here, iPhone is defing a market and the software needs of that market. What the report should of highlighted is that Apple simply meet the needs of the marketplace in a way that Windows never did. For all intents the Windows Mobile devices are not smart phones in the eyes of the marketplace. So we now have this balancing act between RIM & Apple to determine just what a smart phone should be. RIM is down at the moment but I believe they have enough resources to remain Apples primary competitor for some time. Basically Blackberry is the only other competitor delivering a competitive suite of services, software and devices (SSD).

Apple needs to counter with a wider range of devices. Especially devices with larger screens and much more flash. An almost dumb phone in the mold of a nano would hurt either.

Dave
post #8 of 19
Who needs logic. It's the iPhone!!!!.
Quote:
Originally Posted by culturate View Post

Not sure I follow the logic of the last statement. RIM sold 6.1 million, 2.6 million to new customers (a little over 40%). AT&T sold 2.4 million iPhones, 1 million to new customers (a little over 40%).
Hands down? Wouldn't this seem to indicate that RIM and Apple were pretty much equal in this regard, other than a one-time international bump for Apple from entering new markets?
post #9 of 19
I must have missed the memo that stated Windows Mobile was no longer considered a smartphone OS. You do realise that the HTC Touch HD has a larger, higher resolution screen than the iPhone, and runs Windows Mobile? By your definition that'd make it the ultimate smartphone! The Nokia N97, announced today, has the same sized screen as the iPhone, but with a larger res, and runs the Symbian platform. Again, that would seem to make it a cracking smartphone by your definition. So far from Apple being the only smartphone maker in the market, they are but one in a sea of options and possibilities.
post #10 of 19
If God had a cell phone... what would it be?
I never get tired of being right all the time... but I do get tired of having to prove it to you again and again.
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I never get tired of being right all the time... but I do get tired of having to prove it to you again and again.
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post #11 of 19
Quote:
Originally Posted by culturate View Post

Not sure I follow the logic of the last statement. RIM sold 6.1 million, 2.6 million to new customers (a little over 40%). AT&T sold 2.4 million iPhones, 1 million to new customers (a little over 40%).
Hands down? Wouldn't this seem to indicate that RIM and Apple were pretty much equal in this regard, other than a one-time international bump for Apple from entering new markets?


That's 1 million to new AT&T customers.
The 1.4 Million were sold to current AT&T customers. Not all of the 1.4M were iPhone users, from the little data I have been able to gather, I suspect 50-60% of the 1.4M were upgrades.
So, assuming 700K were upgrades out of 2.4M - 30% of U.S. sales were upgrades, 70% new activations.

RIMM had 2.6M new activations on 6.1M units- about 42% were new. Compare that to AAPL around 70% new activations. 70% new acts is just for U.S. sales, including international the percentage of new would be much higher, but most those are new markets which wouldn't be a comp basis.
post #12 of 19
Quote:
Originally Posted by Chris_CA View Post

Ballmer: (laughs) $500 full-subsidized with a plan! I said that is the most expensive phone in the world

Why do so many people on Apple-related forums insist on bringing this Steve Ballmer quote up when in fact it's an embarrassment to Apple that he was right about the cost of the iPhone? Apple proved it by lowering the iPhone price not much more than a month after its release. It's quite embarrassing to Apple that they had to heed Ballmer's advice to make the iPhone a success and yet all across Apple forums people bring this quote up like it's supposed to make Ballmer look bad.

Unless you can point to an iPhone still selling for $500, I would stop bringing this up. It only underscores how shortsighted Apple was from the start and how much they overestimated the demand for their phone.
post #13 of 19
Quote:
Originally Posted by inkswamp View Post

Why do so many people on Apple-related forums insist on bringing this Steve Ballmer quote up when in fact it's an embarrassment to Apple that he was right about the cost of the iPhone? Apple proved it by lowering the iPhone price not much more than a month after its release. It's quite embarrassing to Apple that they had to heed Ballmer's advice to make the iPhone a success and yet all across Apple forums people bring this quote up like it's supposed to make Ballmer look bad.

Unless you can point to an iPhone still selling for $500, I would stop bringing this up. It only underscores how shortsighted Apple was from the start and how much they overestimated the demand for their phone.

It's short-sighted to think that Apple wouldn't cut it's price. It's also false assertion that a price cut is an embarassment/failure. It's called a SKIMMING strategy. You think Apple had planned on keeping the price @ $500/600???? No, Apple knew there were people willing to pay that much, so Apple captured demand at that price point. Why introduce a phone at $400 if there are people willing to pay $600?? Take them out first. It was a little more than 2 months when Apple cut the iPhone prices, couple days before the introduction of the iPod Touch. It was best for Apple to lower iPhone prices so that the Touch wouldn't cannibailze sales.

The fact is- Apple sold almost 7M units last quarter for about $630 / unit. So, there you go. The original iPhone wasn't subsidized.
post #14 of 19
Quote:
Originally Posted by inkswamp View Post

Why do so many people on Apple-related forums insist on bringing this Steve Ballmer quote up when in fact it's an embarrassment to Apple that he was right about the cost of the iPhone?

My post was more about
Quote:
Right now, well, let's take phones first. Right now we're selling millions and millions and millions of phones a year, Apple is selling zero phones a year (half smile). In six months, they'll have the most expensive phone by far ever in the marketplace (laughs) and let's see (shrugs), you know, eh, what's the expression, let's see how the competition goes.

and the headline "iPhone single-handedly driving smartphone growth " of this article, not the cost.
Even so with the initial cost, it still jumped way up in the charts.
post #15 of 19
It's not even expensive imo, not now anyway.
post #16 of 19
Quote:
Originally Posted by inkswamp View Post

Unless you can point to an iPhone still selling for $500, I would stop bringing this up. It only underscores how shortsighted Apple was from the start and how much they overestimated the demand for their phone.

Seen eBay recently?
post #17 of 19
Quote:
Originally Posted by inkswamp View Post

Unless you can point to an iPhone still selling for $500, I would stop bringing this up. It only underscores how shortsighted Apple was from the start and how much they overestimated the demand for their phone.

http://www.vodafone.co.nz/iphone/16gb-white.jsp
post #18 of 19
Quote:
Originally Posted by inkswamp View Post

Why do so many people on Apple-related forums insist on bringing this Steve Ballmer quote up when in fact it's an embarrassment to Apple that he was right about the cost of the iPhone? Apple proved it by lowering the iPhone price not much more than a month after its release. It's quite embarrassing to Apple that they had to heed Ballmer's advice to make the iPhone a success and yet all across Apple forums people bring this quote up like it's supposed to make Ballmer look bad.

Unless you can point to an iPhone still selling for $500, I would stop bringing this up. It only underscores how shortsighted Apple was from the start and how much they overestimated the demand for their phone.



I love it-

If Apple charges $500 and AT&T doesn't subsidize the phone price, they were being shortsighted. when AT&T subsidizes the cost of the phone and increases rates slightly the phone is "really" too expensive.

Which one is it? Was it too expensive then or is it too expensive now?

P
post #19 of 19
Quote:
Originally Posted by Pachomius View Post

I love it-

If Apple charges $500 and AT&T doesn't subsidize the phone price, they were being shortsighted. when AT&T subsidizes the cost of the phone and increases rates slightly the phone is "really" too expensive.

Which one is it? Was it too expensive then or is it too expensive now?

P

Don't waste your time dude.
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