iPhone yearly sales rate should top 45 million by 2009, says firm

Posted:
in iPod + iTunes + AppleTV edited January 2014
While categorizing its prediction is a bold one, research and investment firm PiperJaffray said Thursday it believes Apple can grow its iPhone sales into a 45 million unit per year business by the 2009 calendar year.



In doing so, researchers at the firm say the Cupertino-based consumer electronics maker would need to capture a 7 percent share of the mobile handset market in North America and a 2.8 percent share throughout the rest of the world.



"It is critical to keep in mind that the iPhone will be a combo device (iPod and mobile handset), which will attract more than just a mobile phone customer," analyst Gene Munster wrote in a report on the matter.



In support of his estimates, which factors in cannibalization of standalone iPod models, the analyst pointed to Motorola's widely successful RAZR handset, which reached record sales volumes in a relatively short time following its inception.



"While Motorola has stronger global distribution than Apple and the RAZR retail price fell well below $300 by 2006, this is one example of a successful product selling tens of millions of units in a 12-month period," he explained.



After tapping fellow wireless analyst Mike Walkley for his advice on the matter, Munster said he expects iPhone to have somewhat limited impact on other mobile handset manufacturers. As such, he does not believe the iPhone will compete with the more enterprise-based smartphones, but does see the device scrapping for higher-end consumer dollars.



"The currently declining Motorola market share at AT&T will continue and other higher-end multimedia devices such as Palm and HTC could suffer slowing sales versus his expectations of strong initial iPhone sales," he wrote.



However, the analyst said that BlackBerry, which launched its $199 Curve device this week, could end up competing with the iPhone and may even benefit from increased store traffic from the iPhone launch. He believes consumers walking into AT&T stores to view iPhone could end up walking out with a Curve given its similar features at a substantial discount ($199 versus expectations of $499-plus for the iPhone). Still, he expects "very strong initial sales of the iPhone" due to checks indicating a strong consumer interest and wait lists already at AT&T stores for the product.



Given the enormous global buzz going into the iPhone launch, Munster said its more than likely that rivals are preparing to declare war on Apple and AT&T by launching a series of promotions to prevent users from switching to AT&T.



"The most powerful tactic will likely be deep subsidies on cutting edge music phones," he said. "For example, Verizon has several new music phones launching, including an improved version of its Chocolate phone. In addition, Verizon recently lowered prices on several music phones such as the VX8600 from $130 to $80, and VX8700 from $180 to $150."



Demonstrating the strength of music phone sales, Walkley's May checks indicated the $100 UpStage was the top-selling phone at Sprint, passing the $25 RAZR. Similar to Verizon, Sprint increased its marketing of music phones ahead of the iPhone launch, he said, as the UpStage fell from $150 to $100.



Munster expects those deep subsidies to run indefinitely, which is one of the reasons he is keeping a modest lid on iPhone estimates in 2007 and 2008 (3.2 million and 12.4 million, respectively). While the iPhone will be competing with handsets that are free or near free, he remains confident in the device's success. For example, he pointed to the the history of the MP3 player market as a benchmark, where the iPod grew market share from 31 percent at the end of 2003 to 65 percent at the end of 2004, with an average iPod price of $290, when players like Samsung, Creative, Dell, and Sony had products priced (with less functionality) at less than $150.



"The bottom line: just because something is inexpensive or free doesn't mean people will want it," the analyst wrote.



At the same time, Munster does not believe enterprises will purchase the iPhone due to its touch screen keyboard and multimedia functions, as many businesses do not allow features such as cameras. "Would organizations really purchase products for its employees that provide them more entertainment and perhaps limit productivity?"



The analyst, who maintains an Outperform rating on shares of Apple, raised his price target on shares of the company's stock to $160 from $140.



"We believe investors should own shares of Apple today for the 2009 ramp in iPhones," he wrote.
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Comments

  • Reply 1 of 41
    spindriftspindrift Posts: 674member
    Ooh.. time to speak to my broaker again I think!
  • Reply 2 of 41
    tbagginstbaggins Posts: 2,306member
    Not trying to be a downer here, but I have to say that 45 million units a year by 2009 seems overly optimistic. Yeah, the market is huge, but the iPhone's segment of it isn't, so much. They'd likely have to be very aggressive on price to hit those numbers, and that's not Apple's game usually.



    I'm getting the odd feeling that the 'fix' is in on Apple stock, and that its being pumped/hyped beyond realistic expectations so that the big boys can ride the roller coaster up, and then dump the stock for a huge profit.



    'Buy and hold' investors won't be hurt, but speculators jumping in late will be. Ah well, it was ever thus.



    .
  • Reply 3 of 41
    hattighattig Posts: 828member
    Presumably there will be a downward effect on the sales of iPods as people consolidated the two devices with the iPhone.



    45m iPhones, sure. But there's 25 million people there who didn't replace their old iPod and who opted for a 16/32/64GB iPhone instead (in 2009).
  • Reply 4 of 41
    davegeedavegee Posts: 2,765member
    And in a slightly more forward looking statement Munster is also predicting Apple will own 40% of everything by 2010.



    D
  • Reply 5 of 41
    What is the basis for this number? Look to see what is the best selling phone ever, and see if it's close to 45 million.
  • Reply 6 of 41
    tbagginstbaggins Posts: 2,306member
    Quote:
    Originally Posted by BlackSummerNight View Post


    What is the basis for this number? Look to see what is the best selling phone ever, and see if it's close to 45 million.



    I think the RAZR has sold 100 million units total, but that's since 2004... still not a 45 million-per-year pace.



    And of course, price-wise, it has become a mass-market phone in recent years... you can get it almost for free with a 2-yr contract from some carriers. Nor is it available from just one US carrier, the way the iPhone is.



    I think there was also a Nokia that sold 200 million units worldwide over its lifetime, but it was an entry-level (read 'cheap') phone.



    .
  • Reply 7 of 41
    tundraboytundraboy Posts: 1,593member
    Quote:
    Originally Posted by SpinDrift View Post


    Ooh.. time to speak to my broaker again I think!



    I'm not buying Apple stock at this time. People like me who bought at the 40's will just be making money off people like you who will be buying at the crest of a speculative bout. I think long term Apple stock will be headed way beyond even the 160 target that this analyst is predicting but I fear right now there are quite a few who are getting carried away by the mob's exuberance.
  • Reply 8 of 41
    aegisdesignaegisdesign Posts: 2,914member
    The analysis is more than optimistic.



    The Razr is free with a packet of cornflakes. I think you can get them even on pay-as-you-go now for under £50. The iPhone is never going to be that cheap.



    45m is more than half the entire smartphone market worldwide in 2006. Either they're expecting Apple to overtake Nokia or the smartphone market to grow ten-fold in 2 years.
  • Reply 9 of 41
    petermacpetermac Posts: 115member
    Quote:
    Originally Posted by aegisdesign View Post


    . Either they're expecting Apple to overtake Nokia or the smartphone market to grow ten-fold in 2 years.



    You might be right there.
  • Reply 10 of 41
    davegeedavegee Posts: 2,765member
    Quote:
    Originally Posted by aegisdesign View Post


    ....Apple to overtake Nokia or the smartphone market to grow ten-fold in 2 years.



    We have a winner...



    Lets face it, the phones that had previously made up 'the smart-phone market' were the precise reason why the market was what it was... That is to say, the market was TINY with a capital T mostly due to the complexities (real or perceived) of your average smart-phone. The fact is, if you didn't have geekish tendencies you weren't likely to use a smart-phone. Now that Apple has entered the fray it's a safe bet that most phones that are designed by the rest of the manufacturers will try to become 'smarter' in one way or another and in time it will be odd to see a 'simple phone' being introduced.



    This opinion is hinged on Apple/ATT 'doing the iPhone right'.



    Something that's still not certain at this point, the real proof will be the rollout and initial reactions. From our experience with the Newton - the initial reaction is **everything**. When first introed the HW recognition was less than stellar (but it was fixed) and the media basically destroyed it (well it destroyed itself really).



    Anyway - IMHO, yes Apple will certainly grow the 'smart-phone market' and to a point morf the entire cell phone industry into a 'smarter' phone industry. Lets face it imitation is the sincerest form of flattery and I have a really strong feeling that the iPhone will be flattered up the ass by the rest of the manufacturers.



    Dave
  • Reply 11 of 41
    ajhillajhill Posts: 81member
    Well, it happened again. Piper Jaffrey raised its price target for AAPL shares from $140/share to $160/share. Okay so maybe the woman at Morgan Stanley wasn't so outrageous with her $225 target for the end of 2008.



    And she is also predicting an ultra portable from Apple before the end of the year (Monday, Steve?)



    You gotta love analysts who also predict future hardware.



    And Still we don't even yet know how much Apple will get from every subscriber, each and every month....



    Stay tuned.
  • Reply 12 of 41
    Quote:
    Originally Posted by AppleInsider View Post


    However, the analyst said that BlackBerry, which launched its $199 Curve device this week, could end up competing with the iPhone and may even benefit from increased store traffic from the iPhone launch.



    I don't see the BlackBerry Curve being much competition to the iPhone, given the screen, ability to play music and videos, browser, etc. They are completely different from each other. I could see that it may help sales of the Curve with the increased store traffic, but people who are interested in buying an iPhone will either buy an iPhone or not.
  • Reply 13 of 41
    benroethigbenroethig Posts: 2,782member
    I'm thinking they forgot a decimal point somwhere. 4.5 million may be doable. 45 million is is a number that even the most rabid Mac zealot couldn't even think up.
  • Reply 14 of 41
    spindriftspindrift Posts: 674member
    Quote:
    Originally Posted by BenRoethig View Post


    I'm thinking they forgot a decimal point somwhere. 4.5 million may be doable. 45 million is is a number that even the most rabid Mac zealot couldn't even think up.



    45 million is only about 4% of the total phone market. That's more than realistic if Apple bring out more handsets.
  • Reply 15 of 41
    pmjoepmjoe Posts: 565member
    Quote:

    Apple can grow its iPhone sales into a 45 million unit per year business by the 2009 calendar year.



    ROTFLMAO!



    "Can" would be the key word there. I think Apple could pat themselves on the back if they can even get it to 10 million. 45 million a year??? Sure, if Apple could get the iPhone down to $159/$199 by this time next year, maybe, and that'd still be a big maybe (but I doubt we'll see that pricing on the iPhone). Does anyone follow this PiperJaffray's track record? Seems like whenever I see one of their stories on this site, they're either predicting the blatantly obvious or the clearly impossible, never anywhere in between.
  • Reply 16 of 41
    aegisdesignaegisdesign Posts: 2,914member
    Quote:
    Originally Posted by DaveGee View Post


    Lets face it, the phones that had previously made up 'the smart-phone market' were the precise reason why the market was what it was... That is to say, the market was TINY with a capital T mostly due to the complexities (real or perceived) of your average smart-phone. The fact is, if you didn't have geekish tendencies you weren't likely to use a smart-phone. Now that Apple has entered the fray it's a safe bet that most phones that are designed by the rest of the manufacturers will try to become 'smarter' in one way or another and in time it will be odd to see a 'simple phone' being introduced.



    I partly agree although the worldwide smartphone market is very, very different outside the USA. Over two thirds of the world market for smartphones is dominated by Symbian based phones which aren't very popular at all in the USA. So the World's perception of a smartphone is a lot easier to use and less geeky than the USA's perception of a smartphone.



    The Nokia N95 is doing extremely well here in Europe just now and it's as smart a phone as they come and it's not sold to just geeks and businesses. It's a bit of a brick though, even by Nokia standards.





    Quote:
    Originally Posted by DaveGee View Post


    This opinion is hinged on Apple/ATT 'doing the iPhone right'.



    The USA is a tiny market though. If they're going to hit 45m then they have to get it out to Europe where the phone market is richer and more developed.



    Quote:
    Originally Posted by DaveGee View Post


    Something that's still not certain at this point, the real proof will be the rollout and initial reactions. From our experience with the Newton - the initial reaction is **everything**. When first introed the HW recognition was less than stellar (but it was fixed) and the media basically destroyed it (well it destroyed itself really).



    Anyway - IMHO, yes Apple will certainly grow the 'smart-phone market' and to a point morf the entire cell phone industry into a 'smarter' phone industry. Lets face it imitation is the sincerest form of flattery and I have a really strong feeling that the iPhone will be flattered up the ass by the rest of the manufacturers.



    Yes, it'll be a good thing for us all that the other players in the market, notably Symbian for us in Europe, will pick up their game. Symbian already rules on features but it's not all about features. Symbian S60/UIQ isn't a bad user interface but it's certainly not as slick as an iPhone, not even close.



    But then most people seem to buy phones based on how the hardware looks not the software - case in point being any Motorola phone - funky looks, shite software.
  • Reply 17 of 41
    bryandbryand Posts: 78member
    If the iPhone becomes a big seller, and indications are good that it will, then I think that Apple will quickly regret granting a 5 year monopoly to AT&T. As popular as the phone may be, competing cellular providers won't stand by and watch themselves lose market share. They are going to offer up intense competition for those customers, and this could ultimately eat into Apple's market share in the music player market.
  • Reply 18 of 41
    SpamSandwichSpamSandwich Posts: 30,412member
    Quote:
    Originally Posted by TBaggins View Post


    Not trying to be a downer here, but I have to say that 45 million units a year by 2009 seems overly optimistic. Yeah, the market is huge, but the iPhone's segment of it isn't, so much. They'd likely have to be very aggressive on price to hit those numbers, and that's not Apple's game usually.



    I'm getting the odd feeling that the 'fix' is in on Apple stock, and that its being pumped/hyped beyond realistic expectations so that the big boys can ride the roller coaster up, and then dump the stock for a huge profit.



    'Buy and hold' investors won't be hurt, but speculators jumping in late will be. Ah well, it was ever thus.



    .



    Expect the stock to tumble around June 28th. Then, just swoop in and grab another handful.
  • Reply 19 of 41
    SpamSandwichSpamSandwich Posts: 30,412member
    Quote:
    Originally Posted by ajhill View Post


    Well, it happened again. Piper Jaffrey raised its price target for AAPL shares from $140/share to $160/share. Okay so maybe the woman at Morgan Stanley wasn't so outrageous with her $225 target for the end of 2008.



    And she is also predicting an ultra portable from Apple before the end of the year (Monday, Steve?)



    You gotta love analysts who also predict future hardware.



    And Still we don't even yet know how much Apple will get from every subscriber, each and every month....



    Stay tuned.



    Ahh... if only these people could be held legally responsible for their 'analysis', the investing world would be a much safer (but far less exciting) place.
  • Reply 20 of 41
    davegeedavegee Posts: 2,765member
    Quote:
    Originally Posted by bryand View Post


    If the iPhone becomes a big seller, and indications are good that it will, then I think that Apple will quickly regret granting a 5 year monopoly to AT&T.



    Hold the phone... when and where was it revealed that AT&Ts 'multi-year deal' was in fact a 'five year deal'?



    Dave
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