Needham says Apple letting iPod touch cannibalize iPhone sales
Reply 41 of 52
January 29, 2008 1:23PM
Would you also add the AppleTV to Mac sales, too, since the AppleTV OS is much closer to a Mac than the iPhone. What is being considered is how the devices are being used. The AppleTV, iPhone nor iPod Touch are replacing the personal computer as primary devices, regardless of the underlying OS.
Not really, since the Apple TV isn't a general computing device like the iPhone and Touch, which are getting developer SDKs and support a wide range of general purpose computing tasks.
Reply 42 of 52
January 29, 2008 2:10PM
They've cannabialized even more just by not letting folks in other countries buy (in their own country) the iPhone.
I just bought a Touch even though I'm also in the market for a new cell. While I could have picked up one off of Craigslist, I'd far rather wait it out for rev 2 mostly because I couldn't pick one up in a store.
Whoops! Couldn't wait to get my hands on this sweet new OS and the upcoming SDK bonanza, so I went out and got a Touch instead.
Reply 43 of 52
January 29, 2008 3:26PM
Originally Posted by
This 'cannibalization' thing is a crock that only analysts care about because they feel that they have to say something even remotely analytical. Manufacturers don't really care as much about it. What they worry about is their competitors 'cannibalizing' them. So they try to fill all the market segments and guess what? If you fill the market segments properly then you will end up cannibalizing yourself. If your products aren't cannibalizing each other then you are leaving gaps that your competitors can fill and then their products will cannibalize yours.
Very well said even if you did use that word again. In Apples case with the ipods they unfortunately are open to market share being taken by other manufactures that better meet the users demand. The problem with Apple, or so it seems, is that they are too aggressive in partitioning the feature sets of the iPhone and Touch. As far as the Touch goes they should have had a Bluetooth enabled device out by now, especially after they realized that people see these devices as PDA tablets. Apple's problem with competitors is that they leave the door wide open for them. Having just the Touch and the iPhone in the line up, after this length of time, is just asking for market share to be stolen by somebody else.
Reply 44 of 52
January 29, 2008 3:45PM
Originally Posted by
With Apple planning on starting their own music company I can see why Apple is pushing the iTouch hard.
And information on this can be found where?
Reply 45 of 52
January 29, 2008 4:37PM
Originally Posted by
Apple knowingly gave up as many as 1.5 million iPhone sales during the holiday quarter to establish the future of the iPod as a mobile device, according to investment note issued on Monday by Needham & Co.
Very naive statement. Apple did not "give up the iPhone to the iTouch. Those buyers were not going to buy the iPhone because long-term, it's a much more expensive option.
The iTouch is a one-time purchase. No monthly fees/charges and it is cheaper than the iPhone. If they have no interest in using it as a phone, the iTouch is a perfect companion.
From Apple's perspective, if they were not going to purchase an iPhone anyways, the iTouch will still give Apple an entry point to generate future revenue for other non-phone services such as 3rd party applications or other enhancements down the road.
I mean honestly, how much money are these monkeys pulling in to write stupid analytical articles like this? I'm honestly in the wrong job!
Reply 46 of 52
January 29, 2008 4:56PM
Looks like Apple may be conceding the cellphone market. No matter how great the iPhone is, if Apple can't control it 100%, then long term- why bother with these headaches: unlocked phones, bad carrier, long-term contracts, fickle customers, et, etc. At least with the iTouch, Apple controls everything and is responsible for everything related to it as it has always preferred.
Maybe that's why the iPhone was always referred as the "best iPod ever" and not a phone per se.
Apple maybe seeing more profitable growth with the iTouch rather than the iPhone. Wifi iPods will sell more than cellphones especially at those prices.
Reply 47 of 52
January 29, 2008 5:23PM
Get over the overly American perspective on this iPod/iPhone scenario. Apples revenue outside the U.S.? - about half?
Only four countries currently sell iPhones officially, the three European GSM markets are quite a bit different to the U.S. market with a generally more mature mobile market.
(by the way, I remember reading that a "mule" bringing iPhones into mainland China from Hong Kong was expected to be able to carry ca. 1000 handsets over per day.)
iPhones with their very restrictive minimum carrier plans are too much. I won't get into one of those plans. Around here a carrier can not tie you to a contract beyond 6 months, -just like in a lot of other countries.
People with iPhones in Germany are broadly being laughed at by their peers. Not because of their phones, but because they are being sucked in by T-mobile. That's no fun, - ask them.
I say, bring on the mobile touch enabled platform. Incorporate Bluetooth/speaker/mic, free us from the traditional telcos. Apple even seems quite fond of the "traditionally" national telcos, Telefonica, Deutche Telecom and France Telecom or even AT&T for that matter.
When I lived in Spain, everybody loved to hate Telefonica. New logos, denationalized ownership etc. does not "really" change this. Further along those lines, the hottest contenders for the iPhone in Scandinavia seems to be either Telia, TDC and TeleNor, all brushed-up old national telcos. Allthough they do seem the most logical and evident choices.
Whatever...?! Just some thoughts.
I must say, - I do enjoy my jailbroken/unlocked iPhone more than any other handset I've ever owned. These days I don't even feel like like looking at any other handset. The iPhone is not perfect, but it is the best I've ever seen...
Reply 48 of 52
January 29, 2008 6:15PM
The iPod touch is a stop gap purchase for people waiting to get out of their contracts with their wireless provider.
Reply 49 of 52
January 29, 2008 6:36PM
I too went with the Touch because of AT&T, I can't use the iPhone as a modem, plus they don't offer off network calling like Alltel does. It would just cost me too much extra per month to switch to an iPhone.
Reply 50 of 52
January 29, 2008 7:39PM
Cannibalize is a very inappropriate word here, whether used by analysts or AI, etc. IMO.
In this case, we are assuming that Apple is going to have a big blitzkrieg with the iPhone globally. Hence the iPod Touches are eating into these sales.
However, this is irrational for various reasons. One of which, is that why would Apple simply forgo the entire iPod base for cashing in on the big iPhone hype?
Remember that the jump from iPod Classic or iPod to iPhone is actually quite a big leap, a leap of faith as well. Apple locked AT&T (and vice versa) because initially, both were quite concerned that the iPhone may not be successful. Now that it is, Apple needs to spread the iPhone joy *both ways*. "Down" filtered to the iPod line, touch and gestures and wifi and apps, and up through new iPhone models, iPhone official launches globally etc.
I could very well say that the iPhone is cannibalizing iPod Touch sales.
Reply 51 of 52
January 29, 2008 8:02PM
Originally Posted by
....Apple even seems quite fond of the "traditionally" national telcos, Telefonica, Deutche Telecom and France Telecom or even AT&T for that matter....
(2008 refers to calendar year 2008 for ease of calculation)
Apple's strategy appears cynical, but relevant. Let's say you now know you can sell 10 million iPhones globally in 2008, full unlocked. Let's say you can sell 8 million iPhones globally in 2008, locked to carriers.
Let's do the math on this.
Full unlocked 10 million sold 2008
Assume USD$200 gross profit margin on each iPhone. = $2,000,000,000 gross profit.
Total = 2 billion USD gross profit.
Full locked to carriers 8 million sold 2008
Assume USD$200 gross profit margin on each iPhone. = $1,600,000,000 gross profit.
Assume USD$50 *annual* payment per iPhone from carriers = $400,000,000 gross profit.
Total = 2 billion USD gross profit.
Therefore on first glance it appears that hardlocked into carriers may not be necessarily more profitable than full unlocked *if* people are turned off by carrier locking.
However, locking carriers provides a more
sustained revenue and profit stream
because it is based on a cut of the customers' subscriptions to telcos. Remember also that gross profit is relevant for units sold, but *commissions from iPhone carrier subscriptions* generally are
pure net profit
. That is, profit margin 90% and above for each iPhone sold locked to carriers. Because, marketing expenses also shared by carriers.
Ok. Well and good.
Now throw in the fact that full unlocked iPhones (hacked) are as high as 30% of all sold. This means, that Apple has essentially, a stunning have-your-cake-and-eat-it-and-stick-your-*-in-it American Pie style.
Apple can sell 10 million iPhones 2008 global.
Let's say at 70% legal locked to carrier usage, that is 3 million iPhones gray unlocked.
A = Gross profit from iPhones USD$200 each,
B = Gross profit (close to net profit) from iPhone legal
carrier subscriptions USD$50 each per year,
A = 2 billion dollars
B = 350 million dollars
Gross profit from iPhones = 2.35 billion dollars gross profit in this scenario for 2008.
Feel free to adjust the calculations, I just proposed a raw scenario above.
As you can see, the gross profit is significant for iPhones, however, Apple's strategy with iPhones and iPod Touch, while apparently weird, seems to show a bit more fiscal responsibility than expected as they appear to generally be
building up a sustained revenue and profit stream, while supporting a strong Mac OS X ecosystem across connected, highly mobile devices and computers
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Reply 52 of 52
January 29, 2008 9:53PM
Correct me if I am wrong but the only network feature is Visual Voicemail, which I can live without.
Apple was trying to manage their downside by going with exclusive deals with carriers in the process they capped the upside. I don't think it was planned this way I think this is an example of an emergent strategy. I believe the change in rhetoric to "WiFi mobile platform" and the release of the SDK would indicate this, maybe the business hardheads in Apple convinced the CEO.
I would love to see 3G iPhone in Australia later this year but if it is locked to Telstra it will be a big dilemma for me.