Report: iPhone could make or break Apple's bank
Wealth management experts have banked on the iPhone as the driving force behind Apple's near-future growth -- but cautioned that the fourth major platform in the company's lineup could also eat away at the very iPod share that has helped build its recent success.
Joining comments on Apple from his fellow investment bank analyst, UBS specialist Tony Andersson on Wednesday ventured beyond the Mac, addressing the more difficult subject of the iPhone while offering high net worth financial consulting to the firm's top clients.
In a note directed only towards those private investors, the researcher remained confident that developments in Apple's cornerstone iPod and Mac sales would carry the California-based company upward, growing the former to 24 percent of the world's media player share and its share of computers by half a percentage point. Mac OS X Leopard in particular would help the Mac, he said.
However, Andersson labeled the iPhone as the real spark for Apple's flame in 2007. It would help jumpstart Apple's revenues both during the June launch of the handset in the US as well as towards the end of the year, when the device should make its first appearance in Europe.
He added that there was no reason to doubt that Apple would meet its target share for the end of next year, alluding to the company's tendency to rarely leave its product line unaltered.
"We think the iPhone can gain 1% of the worldwide market share by 2008," Andersson pointed out, "particularly since we expect more than one model in the next two years."
This optimistic forecast, however, presented a mixed blessing from the analyst's point of view. To him, the self-same explosion of iPhone sales could potentially tear people away from the iPod, creating a squeeze as shoppers are increasingly forced to choose between one or the other. Other music-savvy cellphones were also a possible threat to the iconic music jukebox and the 47 percent of profits it should generate for Apple this year, he said.
Similarly, the periods immediately before and after the iPhone's debut were also seen as treacherous paths where Apple could scarcely afford to stumble if it hoped to continue its excellent track record. "Negative news, delays in the iPhone launch, quality or usability issues" could easily damage Apple's reputation and its stock, Andersson cautioned.
The UBS specialist used this reasoning to justify issuing a "hold" rating on the stock, as the promise of the future gadget was offset by its potentially volatile side-effects.
"The recent rally of the stock reflects much of the iPhone expectations and leave little room for any negative news flow," Andersson wrote.
Joining comments on Apple from his fellow investment bank analyst, UBS specialist Tony Andersson on Wednesday ventured beyond the Mac, addressing the more difficult subject of the iPhone while offering high net worth financial consulting to the firm's top clients.
In a note directed only towards those private investors, the researcher remained confident that developments in Apple's cornerstone iPod and Mac sales would carry the California-based company upward, growing the former to 24 percent of the world's media player share and its share of computers by half a percentage point. Mac OS X Leopard in particular would help the Mac, he said.
However, Andersson labeled the iPhone as the real spark for Apple's flame in 2007. It would help jumpstart Apple's revenues both during the June launch of the handset in the US as well as towards the end of the year, when the device should make its first appearance in Europe.
He added that there was no reason to doubt that Apple would meet its target share for the end of next year, alluding to the company's tendency to rarely leave its product line unaltered.
"We think the iPhone can gain 1% of the worldwide market share by 2008," Andersson pointed out, "particularly since we expect more than one model in the next two years."
This optimistic forecast, however, presented a mixed blessing from the analyst's point of view. To him, the self-same explosion of iPhone sales could potentially tear people away from the iPod, creating a squeeze as shoppers are increasingly forced to choose between one or the other. Other music-savvy cellphones were also a possible threat to the iconic music jukebox and the 47 percent of profits it should generate for Apple this year, he said.
Similarly, the periods immediately before and after the iPhone's debut were also seen as treacherous paths where Apple could scarcely afford to stumble if it hoped to continue its excellent track record. "Negative news, delays in the iPhone launch, quality or usability issues" could easily damage Apple's reputation and its stock, Andersson cautioned.
The UBS specialist used this reasoning to justify issuing a "hold" rating on the stock, as the promise of the future gadget was offset by its potentially volatile side-effects.
"The recent rally of the stock reflects much of the iPhone expectations and leave little room for any negative news flow," Andersson wrote.
Comments
You want a company that doesn't do a good job of cannibalizing its own product? Take a look at Motorola and it's boom and bust cell phone cycle.
If the iPhone eventually becomes flexible, so you can use any carrier, prepaid plans, etc... then it might be close to being bigger than the iPod. But the iPhone will likely have to be charged everyday... doesn't have as much storage as an iPod, it's bulkier than the nano. If they ever release a widescreen ipod with all the features of the iPhone except the phone part, I'd buy it...
I am tired of hearing the same old analyst's canard that company X's new product B is a mixed blessing because it might cannibalize sales of their other product A. This refrain has been played so often that people have started to believe it. The fact is, successful manufacturers are constantly seeking to cannibalize their own sales with new product because if they aren't doing it, then somebody else will beat them to it. Cannibalizing your own sales means that you're consistently developing new, more advanced, and more desirable products.
You want a company that doesn't do a good job of cannibalizing its own product? Take a look at Motorola and it's boom and bust cell phone cycle.
This is THE point. This what they said about the mini->nano transition. 'They're replacing such a successful product...' blah blah blah. This is another area the Apple really excels at the moment. They don't wait for a product to be on the decline and dragging them down to find 'the next great thing' they go ahead and find it beforehand. tundra is right, you want them to cannibalize their own sale, at the right time, and with something even better.
To him, the self-same explosion of iPhone sales could potentially tear people away from the iPod, creating a squeeze as shoppers are increasingly forced to choose between one or the other.
Does this really matter? It's not like Apple would be losing out on a sale. He's trying to separate the products when really they're the same, albeit one with more features. What would be negative is for other companies losing out, being when someone is looking to upgrade their phone AND iPod they might turn to Apple for an all-in-one solution.
Such an app could well be DICTATION-OCR SOFTWARE (since a microphone is already present, and a stripped down OS X) . . . software that would let a user dictate an outgoing Email, or dictate text that could go into a rudimentary word processor (like TEXTEDIT), and thence to a memory file or, by any one of several means, to a printer if desired.
Then that device, trademark issues permiting, could be renamed the POCKET MAC !
And then that software could well be incorporated into LEOPARD, which would give it the boost needed to stand out as more than a slight improvement over TIGER !
That is what Jobs said Apple's predictions are back at MacWorld 2007! Com'n people, If you aren't gonna do any real number crunching at least start off with a courteous "We agree with what Steve Jobs said...".
Apple doesn't sell iphones now, so if they sold zero iphones, they would be in the same financial situation they are now... looking great for Mac sales now that CS3 will be shipping, looking great for ipod sales because nothing can touch it (wait until the touch screen ipods!), looking great for software - Final Cut Studio gettin a great update at NAB (I didn't say nothin').
All in all, buy Apple stock now!
What the iPhone truly needs to succeed, in view of its obvious disadvantages (high price, limitation to Cingular, small memory for music/video, lack of voice dialing, etc.)
It really doesn't have voice dialing? Man, I need that! My Samsung has such great voice recognition, no learning, it just works. If this is true, I'm very disappointed.
It really doesn't have voice dialing? Man, I need that! My Samsung has such great voice recognition, no learning, it just works. If this is true, I'm very disappointed.
Oh and it doesn't make coffee or walk the dog either,
I assume your Samsung has Safari running along with Address Book, Listen to voice mail in any order feature, touch controls and all the other zillion new things iPhone does have then?
Oh and it doesn't make coffee or walk the dog either,
I assume your Samsung has Safari running along with Address Book, Listen to voice mail in any order feature, touch controls and all the other zillion new things iPhone does have then?
No but I don't think I'd be able to use that while driving anyway. I buy everything Apple and that short coming won't stop me from buying one but it will not replace a cell phone that has voice dialing. I just can't get by without it. Did I mention I really really need voice dialing.
No but I don't think I'd be able to use that while driving anyway. I buy everything Apple and that short coming won't stop me from buying one but it will not replace a cell phone that has voice dialing. I just can't get by without it. Did I mention I really really need voice dialing.
Ok you are forgiven
Thinking about this further ... this is a Mac of sorts, hard to believe some bright spark won't add this feature later.
Customers moving to a different, newer product from the same company as such does not affect profits as long as number of customers, units per customer, and margins are at least maintained (and Apple seems very capable of achieving and surpassing these targets).
The main concern I would see, that having to deal with network operators, their tie-ins, their mandatory contracts, and their subsidies of handsets might mess up Apple's operational freedom such as to reduce their ability to sell ever higher number of devices at generous margins.
I think there is no doubt that the iPhone sales will to some extent replace iPod sales as iPhone owners realize that they have no need for an additional device in the form of the iPod.
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Maybe some but not many. I bet my wife and me are typcal of many iPod owners. We have both of our 60 GIG iPods almost full of our CDs and Audio books. We use them to connect to other Hi Fi systems as well as listen in Cars and on the beach. I don't think iPhones (which we will get) can replace this functionality nor would we want them to really. Maybe one day when an iPhone has a massive storage capacity?
I think there is no doubt that the iPhone sales will to some extent replace iPod sales as iPhone owners realize that they have no need for an additional device in the form of the iPod.
The iPhone is only a viable replacement/substitute for the shuffle or nano - not the 'real' iPods with HD's It just hasn't got enough capacity.
I for one have always thought iPods were useless. I have no need for one and frankly can't understand why people spend so much money on them. But for years I have been dying to get something half as good as the iPhone.
On the flip-side, there are plenty of people who have 2, 3, or more iPods. Are these people going to stop buying iPods just because they have an iPhone? They really might not want to take their $500 iPhone out on the bike trail for some blading... when they could take a relatively cheap, unobtrusive Shuffle instead.
Ok you are forgiven
Thinking about this further ... this is a Mac of sorts, hard to believe some bright spark won't add this feature later.
ummm, at the risk of flogging the proverbial deceased equine, its not released (nor probably even feature frozen) yet. We don't know what is or isn't in the final release.
As for killer app, does any phone have 'personal blacklisting'?
Voice spammer burns me once, but with one click I prevent future calls from even getting to my voicemail. Seems simple enough, and boy, would I love that.
Apple is Doomed!!!!!
teh doomed!