The thing that is missing from every analysts' opinion I read is that Apple is going to innovate within the iPhone line, just as they have done with iPod. Every "estimate" is based on the assumption that the product isn't going to evolve and that Apple will continue to offer a single $399 product, albeit with some minor feature updates like 3G. Can't these guys see that Apple will do the same thing with the product line as they have with iPod by offering multiple products at multiple price points? Isn't that obvious to everybody who has witnessed the iPod (or any other consumer products company)? I realize that it is difficult to model that exactly, but discussions/questions about whether they can hit 10M subs are ridiculous--the bigger question for investors is: what is the upper limit of subscribers with their strategy in 1 and 2 years from now?
Or, put another way, what does the market look like when we have iPhone Touch, iPhone Nano, iPhone Classic, and iPhone Shuffle, if you get my drift, with price points from $99 to $399? I don't think it is a stretch to see 50M phones a year under this scenario, and that picture will begin to emerge next year and the following. These guys are looking through the wrong end of the telescope--I guess that is why they have the jobs they do: zero imagination. Any twit can sit here today and go "gee, I dunno, with this product only, they _might_ do 10M." Wow, what "insight." I'm glad I'm not paying for this genius.
Apple's annual revenues are around $22B if my memory serves me. 10M iPhones in 2008 (no matter what Jobs meant) would be $4B, or pretty darn good revenue growth. I wouldn't complain on that.
So, the question is what is the maximum market penetration percentage Apple could get in the current arrangement with carrier lock-in? Between the US, UK, and Germany, they are at about 165M subscribers on their preferred carriers. They would need 6% market share in those countries to sell 10M phones, or roughly the market share they have in the US for PCs.
From personal experience, I don't think they stand to dominate in the phone world the way they do with computers. Sure, the iPhone is cool like the Mac, but 30-50% of the population thinks that a basic phone that just makes calls is "good enough." They have to reach a critical mass where people can't live without the internet on their phone. Apparently, they have chosen this strategy rather than competing with the Windows Mobile and Blackberry phones... since they don't seem to think things like e-mail, address books, and third-party applications are so important. From where I sit today, I'd be surprised if Apple can sell more than 7-8M units before Dec 08. Maybe 2.0 will be more compelling to a mass-market, or it will be clad in gold and diamonds so they can sell it at a higher margin...
I'd like to see a whole lot of countries pass laws that say, "If you want your device to use the publicly-owned airwaves, in exchange for that privilege we demand, on behalf of the public, that your device be portable among any and all signal-compatible (all GSM, all CDMA, etc.) carriers."
If consumers had greater sway over politicians than the deep pockets of the carriers and cell phone manufacturers, that's what the laws would say in any reasonably democratic country.
You are lost here. These are NOT publicly owned airwaves. Each of these companies has paid billions to the various government for their share of the spectrum. This isn't like broadcast Tv and radio. Even that's disappearing. Governments have realized that they can make a lot of money by auctioning off this spectrum. Digital Tv is going this way as well.
Apple sacrifice profit for market share? No effing way.
Apple is doing what it does best: Making great products for a premium market with a decent, although not necessarily huge market share (iPod excepted).
Apple's iPhone may never command a huge percentage of the smart phone market because the market already existed. The iPod was a new market, still small when the iPod took off. It took off because of the iPod.
Jobs has a plan. He's up to something. We're just not sure what it is.
Yeah, Scully had a plan when he didn't sign the contract to license the OS. No one knew what his plan was either.
What he did do was to raise the prices, whatched profits go up, and marketshare go down.
this isn't exactly the same, but Jobs is boxing himself in.
By demanding a share of revenue from those companies where he can, he's limiting what he can do where he can't.
What are the companies who agreed to this going to say if Apple releases the phone in countries where it isn't legal to lock the phone?
This may be a good short time plan, but long term, it stinks, and this is from a stockholder with a fair amount of position in Apple.
Toni Sacconaghi Got it WRONG, again! Market share is of secondary importance.
Steve Jobs got it RIGHT! Profitability is of primary importance.
Motorola has approximately 21% of the cell phone market share in 2007 and it's LOSING MONEY. Apple has only approximately 3% of the world computer market, yet Apple has the highest profitability of the major computer manufacturers. Apple stock is among the best performing and Motorola stock is among the worst performing. Profitability is better than market share.
Apple isn't looking to sell a laptop for $100, and it sure is not looking to sell a cell phone for $10 either.
Apple's niche is high quality, high performance, high design, with excellent service. It's not looking to compete at the low end by going for market share. Apple is the BMW or Porsche of the cell phone industry, and they are very profitable with only a small share of the market.
Apple doesn't need to have every cell phone service provider in a country sell its products. It only needs ONE good cell phone company to sell Apple products. THAT is the attraction: the people that want quality and service WILL move to that service provider. That is the whole point. That is why the cell phone companies are competing to be the sole iPhone provider: That provider WILL attract the users who want the iPhone. Toni Sacconaghi may be an analyst, but he sure is NOT a marketeer!
Not entirely. Marketshare is important. At least, in the segment you are selling into. So is total number of sales.
If you don't sell enough, profitability isn't assured, long term.
I wasn't satisfied with the YouTube link you supplied as the casual setup could have simply been Jobs misspeaking. So I dug up the MWSF07 Keynote to see what he said then.
Sometimes, jobs refines his astatements later. I've seen him do that a number of times.
I've seen him make a statement that was somewhat general in nature, and then refine it in a later interview so that it was more specific. I believe that happened with this as well.
Apple was able to break the control the carrier had over the phone manufacturer. If Apple had released the phone to all carriers in the US it would not function at all the way it does now. Most of the apps would not be allowed to freely function without additional charge.
Like not paying for ringtones for example?
Quote:
Originally Posted by solipsism
I don't know that. I want exclusive carriers. I want Apple to make carriers add feaures they should have added or removed decades ago.
Whereas many of us are just simply waiting for Apple to add features to the iPhone we've already got with $30 phones you can get from a supermarket with cheap or no contracts and the ability to choose our own carrier. Apple's lock on both development and their illegal SIM lock stop that.
Quote:
Originally Posted by anantksundaram
Let's give this product at least one generation before all the carping?
It's not really the product that is the problem. It's the lock down and exorbitant charges Apple are forcing on carriers and ultimately customers. Even a shiny well marketed turd is still a turd.
Quote:
Originally Posted by Oh Blah Dee Blah Dah
Steve Jobs got it RIGHT! Profitability is of primary importance.
Which at the moment seems to be at our expense, not of the carrier or Apple. Thanks Steve for really breaking the lock carriers had on our phones.
Toni Sacconaghi Got it WRONG, again! Market share is of secondary importance.
Steve Jobs got it RIGHT! Profitability is of primary importance.
Motorola has approximately 21% of the cell phone market share in 2007 and it's LOSING MONEY. Apple has only approximately 3% of the world computer market, yet Apple has the highest profitability of the major computer manufacturers. Apple stock is among the best performing and Motorola stock is among the worst performing. Profitability is better than market share.
Apple isn't looking to sell a laptop for $100, and it sure is not looking to sell a cell phone for $10 either.
Apple's niche is high quality, high performance, high design, with excellent service. It's not looking to compete at the low end by going for market share. Apple is the BMW or Porsche of the cell phone industry, and they are very profitable with only a small share of the market.
Apple doesn't need to have every cell phone service provider in a country sell its products. It only needs ONE good cell phone company to sell Apple products. THAT is the attraction: the people that want quality and service WILL move to that service provider. That is the whole point. That is why the cell phone companies are competing to be the sole iPhone provider: That provider WILL attract the users who want the iPhone. Toni Sacconaghi may be an analyst, but he sure is NOT a marketeer!
Well said! I totally agree with you! That's why we love Apple.
Apple's annual revenues are around $22B if my memory serves me. 10M iPhones in 2008 (no matter what Jobs meant) would be $4B, or pretty darn good revenue growth. I wouldn't complain on that.
So, the question is what is the maximum market penetration percentage Apple could get in the current arrangement with carrier lock-in? Between the US, UK, and Germany, they are at about 165M subscribers on their preferred carriers. They would need 6% market share in those countries to sell 10M phones, or roughly the market share they have in the US for PCs.
From personal experience, I don't think they stand to dominate in the phone world the way they do with computers. Sure, the iPhone is cool like the Mac, but 30-50% of the population thinks that a basic phone that just makes calls is "good enough." They have to reach a critical mass where people can't live without the internet on their phone. Apparently, they have chosen this strategy rather than competing with the Windows Mobile and Blackberry phones... since they don't seem to think things like e-mail, address books, and third-party applications are so important. From where I sit today, I'd be surprised if Apple can sell more than 7-8M units before Dec 08. Maybe 2.0 will be more compelling to a mass-market, or it will be clad in gold and diamonds so they can sell it at a higher margin...
Weird, i didn't think that Apple in any way shape or form "Dominated" the computer market. The MP3 player market, sure, they OWN it.
As for sales, in the USA they shifted 1 mil units in under 80 days, thats PRE-Christmas sales. The iPhone like the iPod before it is arguably not the best in its class, but like the iPod it will sell boatloads. Infact, this holiday their biggest competition is going to be the iPod touch.
My company is an 02 dealer in the UK and we have been taking pre-orders for our business customers, many of whom are canceling business contracts to take out an iPhone contract. This is IMO not financially sound, they are taking a more expensive contract just to get an iPhone. The crazy thing is, they just don't care. £269 for a phone doesn't seem to be an issue. Me personally, I will get one, but with the commission taken off of the handset cost.
Many of you in the US do not appreciate how crazy Apples apparent strategy for the iPhone in Europe seems to us. Locked in contracts are in a minority and are fading. I would guess that only businesses and the self employed, use contracts. Individuals mostly use prepaid phones.
I think the strategy is to offer the iPhone exclusively to certain carriers to get them to change their current practices and behaviour, with regard to introducing flat data rates and modifying their systems for visual voicemail.
The flat rate data charge is the biggie. It is one area where the US consumer is far better off than the European. Data charges over here are monstrous, which is why the 3G networks are sitting idle mostly. What differentiates the iPhone operationally over most other products are those features which are bandwidth intensive.
So by insisting it's European partners introduce flat rate data charges they are forcing a new paradigm into the European market, and there is no going back. Once consumers over here get the idea of flat rate data there will be no going back, it will become an 'expectation' - a genie released from it's bottle.
So Apple will get the network providers to modify their systems and practices and the Apple friendly genie will have been released. For a short while the Carriers will get exclusivity but maybe they only get that for the current iPhone and the first of the 3G versions. 69% of all new phone subscriptions in Europe are prepaid. I don't think Apple can ignore that reality. In some countries like Italy and Russia, nearly the whole market is prepaid. So I think Apple will shortly address these markets simply by making the 3G version available as a straight purchase.
Then, consumers in the countries where there are exclusive arrangements will be free to buy their phones from the countries where the iPhone is freely available. The Carriers might scream but Apple will just shrug it's shoulders and point out that it is supposed to be a single market and they can't be held accountable for that, besides, they will say, You have the visual voicemail ace so if you market that intelligently these people who are importing their phones might want to use them on your network.
But the other networks, seeing what is happening, and if they know what is good for them, will equip their back ends for visual voice mail and introduce flat rate data rates to stay competitive and voila, Apple has changed the market to be more friendly to it's products.
But this is just the start, there is a bigger plan afoot - omnipresent Net access and mobile computing. I think an Apple tablet and other mobile products are a certainty, but they rely on WiFi hotspots, which are not as widespread as I am sure Apple would like. But 3G network coverage is a lot more widely available. Flat rate data charging introduced for phones will morph the Carriers into providers of more general wide area data services for all sorts of uses beyond just phones. This is where Apple wants to be, but it needs the Carriers to change and provide the infrastructure it's products will need to function at costs consumers can stomach.
This is an outstanding observation. Everyone carping -- developers, analysts, unlockers, consumer-electronics-geeks, etc etc -- has missed this key point.
Let's give this product at least one generation before all the carping?
I would agree that the original hype/launch allowed Apple some latitude, but now that the wheel has been reinvented, any smart carrier would want to be able to support those features. Overseas, TMobile will be an iPhone carrier. would it really be a stretch for them to be able to support visual voicemail and the aforementioned apps on their network here? In fact, I think that would be an extremely savvy move for them, if not a coup- allowing full functionality for unlocked iPhones in the US.
What exhorbitant charges? iPhones and their plans cost less than comparable plans at most other carriers.
Except you're ignoring users who would, by virtue of external factors, be perfectly capable of enjoying everything the iPhone has to offer exclusively using WiFi, without ever accessing the EDGE service.
Those people are paying for more of AT&T's services than they are using. They'd pay less on a different carrier. Heck, they'd pay less on AT&T if they could separate out and remove the data portion of the fees.
If AT&T has officially adopted a position of allowing people to activate the iPhone on non-data plans (and if the rumours are false of people who claim that they've already convinced AT&T to allow this on individual cases, installed AT&T-branded SIMs that were already activated on different service plans, never hacked their iPhone's firmware, but still ended up with warranty-voided, bricked iPhones courtesy of Apple), then I'll concede this point.
Toni Sacconaghi Got it WRONG, again! Market share is of secondary importance.
Steve Jobs got it RIGHT! Profitability is of primary importance.
Motorola has approximately 21% of the cell phone market share in 2007 and it's LOSING MONEY. Apple has only approximately 3% of the world computer market, yet Apple has the highest profitability of the major computer manufacturers. Apple stock is among the best performing and Motorola stock is among the worst performing. Profitability is better than market share.
Apple isn't looking to sell a laptop for $100, and it sure is not looking to sell a cell phone for $10 either.
Apple's niche is high quality, high performance, high design, with excellent service. It's not looking to compete at the low end by going for market share. Apple is the BMW or Porsche of the cell phone industry, and they are very profitable with only a small share of the market.
Apple doesn't need to have every cell phone service provider in a country sell its products. It only needs ONE good cell phone company to sell Apple products. THAT is the attraction: the people that want quality and service WILL move to that service provider. That is the whole point. That is why the cell phone companies are competing to be the sole iPhone provider: That provider WILL attract the users who want the iPhone. Toni Sacconaghi may be an analyst, but he sure is NOT a marketeer!
Gee you beat me to it, well said!!!
These analysis do not get nor understand Apple's business model. Apple never said they were trying to sell the iphone to the mass market, they are going after a very select group of people who understand value. Not the people who are looking from something for free or do not have enough money to buy a phone on their own.
I suspect that this guy's motives is to create doubt there by driving the value does so they can buy up shares at a lower value so they can again ride up to where the stock will eventually get to. This happen in the past where some analysis put out FUD and the shoke dropped back and if you looked at the volume it went up just as that happen.
They have to reach a critical mass where people can't live without the internet on their phone. Apparently, they have chosen this strategy rather than competing with the Windows Mobile and Blackberry phones... since they don't seem to think things like e-mail, address books, and third-party applications are so important.
Apple isn't looking for a ritical mass. They are looking for 1% of a billion phone industry. Don't look at things are they are now. Apple has sold 1.25-2M iPhones in the US with one carrier. UK and Germany have yet to launch, but seem to be getting massive pre-orders, other countries are up for the iPhone later in the year or the next and I suspect 2.0 with 16GB NAND and 3G will be announced at the MWSF08 or as close to the Asian market release as possible while still giving the FCC time to get things together.
You have a point with the 3rd-[party apps and there are valid points on both fronts of this argument, your statement about the iPhone not thinking email and an address books is important is just asinine FUD.
Quote:
Originally Posted by melgross
Sometimes, jobs refines his astatements later. I've seen him do that a number of times.
I pulled that from the original MWSF07 iPhone announcement. He apparently didn't say "through 2008", unless he's gotten more cocky and had the audio edited to say "in 2008". Ireland scores a Century on this one.
Quote:
Originally Posted by chabig
What exhorbitant charges? iPhones and their plans cost less than comparable plans at most other carriers.
If you change "charges" to "changes" his post makes more sense. During the MWSF07 keynote Jobs clearly stated--I listened to it just yesterday--that the joint effort with the carriers was purposefully done to allow for integration and less stagnation due to separation between the carrier and manufacture (my words) and that Visual Voicemail is just the first of these efforts.
Beyond 3G data speeds, the entire cell industry is completely defunct. There is so much more that can be offered by joint efforts between carrier and manufacturer. I really hope Apple gets it's own spectrum in the coming years. Then we'll see some real changes.
I pulled that from the original MWSF07 iPhone announcement. He apparently didn't say "through 2008", unless he's gotten more cocky and had the audio edited to say "in 2008". Ireland scores a Century on this one.
Yes, I saw what he said there. But, he modified that statement later. He often does that, as I said. He did several interviews after Macworld, I don't know which one, but he did refine his original statement in answering a question about sales.
You are lost here. These are NOT publicly owned airwaves. Each of these companies has paid billions to the various government for their share of the spectrum. This isn't like broadcast Tv and radio. Even that's disappearing. Governments have realized that they can make a lot of money by auctioning off this spectrum. Digital Tv is going this way as well.
Haven't you read any of this over the years?
I'm talking about how things should be, not the sleazy way things are. But nevertheless, note what you've just said about who's being paid: the various governments.
Governments are the ones who decide who gets what part of the spectrum, for how long and under what terms. Governments have that job because they are administering a public trust. If our governments are simply going for the biggest bucks they can get, and not trying to enforce terms favoring consumers at the same time, that's exactly the problem I'm complaining about, and why I think the laws should be changed.
If government has sold out on us by merely looking for the highest bidder and nothing else, isn't watching out for the interest of the general public when they dole out pieces of the broadcast spectrum, that's not going to make me feel any particular sympathy for "these companies" which have "paid billions" if they think they now own the right to abuse the power that their share of the spectrum gives them.
Comments
Or, put another way, what does the market look like when we have iPhone Touch, iPhone Nano, iPhone Classic, and iPhone Shuffle, if you get my drift, with price points from $99 to $399? I don't think it is a stretch to see 50M phones a year under this scenario, and that picture will begin to emerge next year and the following. These guys are looking through the wrong end of the telescope--I guess that is why they have the jobs they do: zero imagination. Any twit can sit here today and go "gee, I dunno, with this product only, they _might_ do 10M." Wow, what "insight." I'm glad I'm not paying for this genius.
So, the question is what is the maximum market penetration percentage Apple could get in the current arrangement with carrier lock-in? Between the US, UK, and Germany, they are at about 165M subscribers on their preferred carriers. They would need 6% market share in those countries to sell 10M phones, or roughly the market share they have in the US for PCs.
From personal experience, I don't think they stand to dominate in the phone world the way they do with computers. Sure, the iPhone is cool like the Mac, but 30-50% of the population thinks that a basic phone that just makes calls is "good enough." They have to reach a critical mass where people can't live without the internet on their phone. Apparently, they have chosen this strategy rather than competing with the Windows Mobile and Blackberry phones... since they don't seem to think things like e-mail, address books, and third-party applications are so important. From where I sit today, I'd be surprised if Apple can sell more than 7-8M units before Dec 08. Maybe 2.0 will be more compelling to a mass-market, or it will be clad in gold and diamonds so they can sell it at a higher margin...
I'd like to see a whole lot of countries pass laws that say, "If you want your device to use the publicly-owned airwaves, in exchange for that privilege we demand, on behalf of the public, that your device be portable among any and all signal-compatible (all GSM, all CDMA, etc.) carriers."
If consumers had greater sway over politicians than the deep pockets of the carriers and cell phone manufacturers, that's what the laws would say in any reasonably democratic country.
You are lost here. These are NOT publicly owned airwaves. Each of these companies has paid billions to the various government for their share of the spectrum. This isn't like broadcast Tv and radio. Even that's disappearing. Governments have realized that they can make a lot of money by auctioning off this spectrum. Digital Tv is going this way as well.
Haven't you read any of this over the years?
Nah, I believe it's the former....
Yes. Even if we can't always find the quotes when we need them, "in 2008" doesn't even make sense.
Apple sacrifice profit for market share? No effing way.
Apple is doing what it does best: Making great products for a premium market with a decent, although not necessarily huge market share (iPod excepted).
Apple's iPhone may never command a huge percentage of the smart phone market because the market already existed. The iPod was a new market, still small when the iPod took off. It took off because of the iPod.
Jobs has a plan. He's up to something. We're just not sure what it is.
Yeah, Scully had a plan when he didn't sign the contract to license the OS. No one knew what his plan was either.
What he did do was to raise the prices, whatched profits go up, and marketshare go down.
this isn't exactly the same, but Jobs is boxing himself in.
By demanding a share of revenue from those companies where he can, he's limiting what he can do where he can't.
What are the companies who agreed to this going to say if Apple releases the phone in countries where it isn't legal to lock the phone?
This may be a good short time plan, but long term, it stinks, and this is from a stockholder with a fair amount of position in Apple.
Toni Sacconaghi Got it WRONG, again! Market share is of secondary importance.
Steve Jobs got it RIGHT! Profitability is of primary importance.
Motorola has approximately 21% of the cell phone market share in 2007 and it's LOSING MONEY. Apple has only approximately 3% of the world computer market, yet Apple has the highest profitability of the major computer manufacturers. Apple stock is among the best performing and Motorola stock is among the worst performing. Profitability is better than market share.
Apple isn't looking to sell a laptop for $100, and it sure is not looking to sell a cell phone for $10 either.
Apple's niche is high quality, high performance, high design, with excellent service. It's not looking to compete at the low end by going for market share. Apple is the BMW or Porsche of the cell phone industry, and they are very profitable with only a small share of the market.
Apple doesn't need to have every cell phone service provider in a country sell its products. It only needs ONE good cell phone company to sell Apple products. THAT is the attraction: the people that want quality and service WILL move to that service provider. That is the whole point. That is why the cell phone companies are competing to be the sole iPhone provider: That provider WILL attract the users who want the iPhone. Toni Sacconaghi may be an analyst, but he sure is NOT a marketeer!
Not entirely. Marketshare is important. At least, in the segment you are selling into. So is total number of sales.
If you don't sell enough, profitability isn't assured, long term.
I wasn't satisfied with the YouTube link you supplied as the casual setup could have simply been Jobs misspeaking. So I dug up the MWSF07 Keynote to see what he said then.
Watch iPhone Introduction — 1:16:54 • touché
Sometimes, jobs refines his astatements later. I've seen him do that a number of times.
I've seen him make a statement that was somewhat general in nature, and then refine it in a later interview so that it was more specific. I believe that happened with this as well.
Apple was able to break the control the carrier had over the phone manufacturer. If Apple had released the phone to all carriers in the US it would not function at all the way it does now. Most of the apps would not be allowed to freely function without additional charge.
Like not paying for ringtones for example?
I don't know that. I want exclusive carriers. I want Apple to make carriers add feaures they should have added or removed decades ago.
Whereas many of us are just simply waiting for Apple to add features to the iPhone we've already got with $30 phones you can get from a supermarket with cheap or no contracts and the ability to choose our own carrier. Apple's lock on both development and their illegal SIM lock stop that.
Let's give this product at least one generation before all the carping?
It's not really the product that is the problem. It's the lock down and exorbitant charges Apple are forcing on carriers and ultimately customers. Even a shiny well marketed turd is still a turd.
Steve Jobs got it RIGHT! Profitability is of primary importance.
Which at the moment seems to be at our expense, not of the carrier or Apple. Thanks Steve for really breaking the lock carriers had on our phones.
Toni Sacconaghi Got it WRONG, again! Market share is of secondary importance.
Steve Jobs got it RIGHT! Profitability is of primary importance.
Motorola has approximately 21% of the cell phone market share in 2007 and it's LOSING MONEY. Apple has only approximately 3% of the world computer market, yet Apple has the highest profitability of the major computer manufacturers. Apple stock is among the best performing and Motorola stock is among the worst performing. Profitability is better than market share.
Apple isn't looking to sell a laptop for $100, and it sure is not looking to sell a cell phone for $10 either.
Apple's niche is high quality, high performance, high design, with excellent service. It's not looking to compete at the low end by going for market share. Apple is the BMW or Porsche of the cell phone industry, and they are very profitable with only a small share of the market.
Apple doesn't need to have every cell phone service provider in a country sell its products. It only needs ONE good cell phone company to sell Apple products. THAT is the attraction: the people that want quality and service WILL move to that service provider. That is the whole point. That is why the cell phone companies are competing to be the sole iPhone provider: That provider WILL attract the users who want the iPhone. Toni Sacconaghi may be an analyst, but he sure is NOT a marketeer!
Well said! I totally agree with you! That's why we love Apple.
Apple's annual revenues are around $22B if my memory serves me. 10M iPhones in 2008 (no matter what Jobs meant) would be $4B, or pretty darn good revenue growth. I wouldn't complain on that.
So, the question is what is the maximum market penetration percentage Apple could get in the current arrangement with carrier lock-in? Between the US, UK, and Germany, they are at about 165M subscribers on their preferred carriers. They would need 6% market share in those countries to sell 10M phones, or roughly the market share they have in the US for PCs.
From personal experience, I don't think they stand to dominate in the phone world the way they do with computers. Sure, the iPhone is cool like the Mac, but 30-50% of the population thinks that a basic phone that just makes calls is "good enough." They have to reach a critical mass where people can't live without the internet on their phone. Apparently, they have chosen this strategy rather than competing with the Windows Mobile and Blackberry phones... since they don't seem to think things like e-mail, address books, and third-party applications are so important. From where I sit today, I'd be surprised if Apple can sell more than 7-8M units before Dec 08. Maybe 2.0 will be more compelling to a mass-market, or it will be clad in gold and diamonds so they can sell it at a higher margin...
Weird, i didn't think that Apple in any way shape or form "Dominated" the computer market. The MP3 player market, sure, they OWN it.
As for sales, in the USA they shifted 1 mil units in under 80 days, thats PRE-Christmas sales. The iPhone like the iPod before it is arguably not the best in its class, but like the iPod it will sell boatloads. Infact, this holiday their biggest competition is going to be the iPod touch.
My company is an 02 dealer in the UK and we have been taking pre-orders for our business customers, many of whom are canceling business contracts to take out an iPhone contract. This is IMO not financially sound, they are taking a more expensive contract just to get an iPhone. The crazy thing is, they just don't care. £269 for a phone doesn't seem to be an issue. Me personally, I will get one, but with the commission taken off of the handset cost.
Many of you in the US do not appreciate how crazy Apples apparent strategy for the iPhone in Europe seems to us. Locked in contracts are in a minority and are fading. I would guess that only businesses and the self employed, use contracts. Individuals mostly use prepaid phones.
I think the strategy is to offer the iPhone exclusively to certain carriers to get them to change their current practices and behaviour, with regard to introducing flat data rates and modifying their systems for visual voicemail.
The flat rate data charge is the biggie. It is one area where the US consumer is far better off than the European. Data charges over here are monstrous, which is why the 3G networks are sitting idle mostly. What differentiates the iPhone operationally over most other products are those features which are bandwidth intensive.
So by insisting it's European partners introduce flat rate data charges they are forcing a new paradigm into the European market, and there is no going back. Once consumers over here get the idea of flat rate data there will be no going back, it will become an 'expectation' - a genie released from it's bottle.
So Apple will get the network providers to modify their systems and practices and the Apple friendly genie will have been released. For a short while the Carriers will get exclusivity but maybe they only get that for the current iPhone and the first of the 3G versions. 69% of all new phone subscriptions in Europe are prepaid. I don't think Apple can ignore that reality. In some countries like Italy and Russia, nearly the whole market is prepaid. So I think Apple will shortly address these markets simply by making the 3G version available as a straight purchase.
Then, consumers in the countries where there are exclusive arrangements will be free to buy their phones from the countries where the iPhone is freely available. The Carriers might scream but Apple will just shrug it's shoulders and point out that it is supposed to be a single market and they can't be held accountable for that, besides, they will say, You have the visual voicemail ace so if you market that intelligently these people who are importing their phones might want to use them on your network.
But the other networks, seeing what is happening, and if they know what is good for them, will equip their back ends for visual voice mail and introduce flat rate data rates to stay competitive and voila, Apple has changed the market to be more friendly to it's products.
But this is just the start, there is a bigger plan afoot - omnipresent Net access and mobile computing. I think an Apple tablet and other mobile products are a certainty, but they rely on WiFi hotspots, which are not as widespread as I am sure Apple would like. But 3G network coverage is a lot more widely available. Flat rate data charging introduced for phones will morph the Carriers into providers of more general wide area data services for all sorts of uses beyond just phones. This is where Apple wants to be, but it needs the Carriers to change and provide the infrastructure it's products will need to function at costs consumers can stomach.
The iPhone is the first move on this chessboard.
This is an outstanding observation. Everyone carping -- developers, analysts, unlockers, consumer-electronics-geeks, etc etc -- has missed this key point.
Let's give this product at least one generation before all the carping?
I would agree that the original hype/launch allowed Apple some latitude, but now that the wheel has been reinvented, any smart carrier would want to be able to support those features. Overseas, TMobile will be an iPhone carrier. would it really be a stretch for them to be able to support visual voicemail and the aforementioned apps on their network here? In fact, I think that would be an extremely savvy move for them, if not a coup- allowing full functionality for unlocked iPhones in the US.
It's not really the product that is the problem. It's the lock down and exorbitant charges Apple are forcing on carriers and ultimately customers.
What exhorbitant charges? iPhones and their plans cost less than comparable plans at most other carriers.
What exhorbitant charges? iPhones and their plans cost less than comparable plans at most other carriers.
Except you're ignoring users who would, by virtue of external factors, be perfectly capable of enjoying everything the iPhone has to offer exclusively using WiFi, without ever accessing the EDGE service.
Those people are paying for more of AT&T's services than they are using. They'd pay less on a different carrier. Heck, they'd pay less on AT&T if they could separate out and remove the data portion of the fees.
If AT&T has officially adopted a position of allowing people to activate the iPhone on non-data plans (and if the rumours are false of people who claim that they've already convinced AT&T to allow this on individual cases, installed AT&T-branded SIMs that were already activated on different service plans, never hacked their iPhone's firmware, but still ended up with warranty-voided, bricked iPhones courtesy of Apple), then I'll concede this point.
Toni Sacconaghi Got it WRONG, again! Market share is of secondary importance.
Steve Jobs got it RIGHT! Profitability is of primary importance.
Motorola has approximately 21% of the cell phone market share in 2007 and it's LOSING MONEY. Apple has only approximately 3% of the world computer market, yet Apple has the highest profitability of the major computer manufacturers. Apple stock is among the best performing and Motorola stock is among the worst performing. Profitability is better than market share.
Apple isn't looking to sell a laptop for $100, and it sure is not looking to sell a cell phone for $10 either.
Apple's niche is high quality, high performance, high design, with excellent service. It's not looking to compete at the low end by going for market share. Apple is the BMW or Porsche of the cell phone industry, and they are very profitable with only a small share of the market.
Apple doesn't need to have every cell phone service provider in a country sell its products. It only needs ONE good cell phone company to sell Apple products. THAT is the attraction: the people that want quality and service WILL move to that service provider. That is the whole point. That is why the cell phone companies are competing to be the sole iPhone provider: That provider WILL attract the users who want the iPhone. Toni Sacconaghi may be an analyst, but he sure is NOT a marketeer!
Gee you beat me to it, well said!!!
These analysis do not get nor understand Apple's business model. Apple never said they were trying to sell the iphone to the mass market, they are going after a very select group of people who understand value. Not the people who are looking from something for free or do not have enough money to buy a phone on their own.
I suspect that this guy's motives is to create doubt there by driving the value does so they can buy up shares at a lower value so they can again ride up to where the stock will eventually get to. This happen in the past where some analysis put out FUD and the shoke dropped back and if you looked at the volume it went up just as that happen.
change the telecom industry toward more consumer control
make boatloads of dollar to expand other products massive halo effect
os x everywhere...work to dominate os in the most growing markets.
They have to reach a critical mass where people can't live without the internet on their phone. Apparently, they have chosen this strategy rather than competing with the Windows Mobile and Blackberry phones... since they don't seem to think things like e-mail, address books, and third-party applications are so important.
Apple isn't looking for a ritical mass. They are looking for 1% of a billion phone industry. Don't look at things are they are now. Apple has sold 1.25-2M iPhones in the US with one carrier. UK and Germany have yet to launch, but seem to be getting massive pre-orders, other countries are up for the iPhone later in the year or the next and I suspect 2.0 with 16GB NAND and 3G will be announced at the MWSF08 or as close to the Asian market release as possible while still giving the FCC time to get things together.
You have a point with the 3rd-[party apps and there are valid points on both fronts of this argument, your statement about the iPhone not thinking email and an address books is important is just asinine FUD.
Sometimes, jobs refines his astatements later. I've seen him do that a number of times.
I pulled that from the original MWSF07 iPhone announcement. He apparently didn't say "through 2008", unless he's gotten more cocky and had the audio edited to say "in 2008". Ireland scores a Century on this one.
What exhorbitant charges? iPhones and their plans cost less than comparable plans at most other carriers.
If you change "charges" to "changes" his post makes more sense. During the MWSF07 keynote Jobs clearly stated--I listened to it just yesterday--that the joint effort with the carriers was purposefully done to allow for integration and less stagnation due to separation between the carrier and manufacture (my words) and that Visual Voicemail is just the first of these efforts.
Beyond 3G data speeds, the entire cell industry is completely defunct. There is so much more that can be offered by joint efforts between carrier and manufacturer. I really hope Apple gets it's own spectrum in the coming years. Then we'll see some real changes.
I pulled that from the original MWSF07 iPhone announcement. He apparently didn't say "through 2008", unless he's gotten more cocky and had the audio edited to say "in 2008". Ireland scores a Century on this one.
Yes, I saw what he said there. But, he modified that statement later. He often does that, as I said. He did several interviews after Macworld, I don't know which one, but he did refine his original statement in answering a question about sales.
I really hope Apple gets it's own spectrum in the coming years. Then we'll see some real changes.
That would rock in the beginning and devolve into a legal quagmire. I'd rather the phone manufacturer and the service provider stay separate.
You are lost here. These are NOT publicly owned airwaves. Each of these companies has paid billions to the various government for their share of the spectrum. This isn't like broadcast Tv and radio. Even that's disappearing. Governments have realized that they can make a lot of money by auctioning off this spectrum. Digital Tv is going this way as well.
Haven't you read any of this over the years?
I'm talking about how things should be, not the sleazy way things are. But nevertheless, note what you've just said about who's being paid: the various governments.
Governments are the ones who decide who gets what part of the spectrum, for how long and under what terms. Governments have that job because they are administering a public trust. If our governments are simply going for the biggest bucks they can get, and not trying to enforce terms favoring consumers at the same time, that's exactly the problem I'm complaining about, and why I think the laws should be changed.
If government has sold out on us by merely looking for the highest bidder and nothing else, isn't watching out for the interest of the general public when they dole out pieces of the broadcast spectrum, that's not going to make me feel any particular sympathy for "these companies" which have "paid billions" if they think they now own the right to abuse the power that their share of the spectrum gives them.