Latest iPhone deals nearly quadruple Apple's addressable market
An announcement by France Telecom's Orange subsidiary on Friday to deliver the iPhone to 10 more countries later this year effectively quadruples Apple's total addressable market when combined with other carrier announcements over the past two weeks, according to investment firm Piper Jaffray.
"Currently Apple's total addressable market includes 153 million subscribers in 6 countries with AT&T, T-Mobile Germany and Austria, O2, and Orange," analyst Gene Munster wrote in a report. "These announcements increase those numbers to 575 million subscribers in 42 countries including recent agreements with Vodafone, SingTel, American Movil, Swisscom, and Orange."
The rapid international rollout is about 8 months ahead of the analyst's expectations, giving him much higher confidence in his earlier predictions that the company will sell 12.9 million iPhones this year and 45 million next year.
"To give some context to these numbers, Apple sold 3.7 million iPhones in 2007 into a total addressable market of 148 million subscribers (or 3 percent penetration)," he explained. "Taking the recent carrier announcements into consideration, we are modeling for Apple's penetration rate to remain at 3 percent in 2008 and double to 6 percent in 2009."
Munster's model for 2009 factors in the assumption that the handset maker will have by that time rolled out the iPhone into the blistering Chinese and Japanese markets, which would nearly double the iPhone's addressable market again from 575 million to 1.1 billion.
In general, the analyst believes the majority of Apple's new carrier agreements are non-exclusive deals that will have a
positive impact on iPhone units and a negative impact on iPhone revenue share. For investors, however, the overall net impact should be positive, he said, as he believes Apple shares will trade on unit numbers alone for the next year or so.
"We expect the next generation iPhone to launch in mid-June, shortly after Apple's Worldwide Developer's conference on June 9 and the international rollout will continue throughout the second half of 2008," Munster wrote. "While there is little question that the next version of the iPhone will include 3G mobile data, we can now all but confirm 3G in the second-generation iPhone."
The analyst maintained his Buy rating and $250 price target on shares of Apple.
"Currently Apple's total addressable market includes 153 million subscribers in 6 countries with AT&T, T-Mobile Germany and Austria, O2, and Orange," analyst Gene Munster wrote in a report. "These announcements increase those numbers to 575 million subscribers in 42 countries including recent agreements with Vodafone, SingTel, American Movil, Swisscom, and Orange."
The rapid international rollout is about 8 months ahead of the analyst's expectations, giving him much higher confidence in his earlier predictions that the company will sell 12.9 million iPhones this year and 45 million next year.
"To give some context to these numbers, Apple sold 3.7 million iPhones in 2007 into a total addressable market of 148 million subscribers (or 3 percent penetration)," he explained. "Taking the recent carrier announcements into consideration, we are modeling for Apple's penetration rate to remain at 3 percent in 2008 and double to 6 percent in 2009."
Munster's model for 2009 factors in the assumption that the handset maker will have by that time rolled out the iPhone into the blistering Chinese and Japanese markets, which would nearly double the iPhone's addressable market again from 575 million to 1.1 billion.
In general, the analyst believes the majority of Apple's new carrier agreements are non-exclusive deals that will have a
positive impact on iPhone units and a negative impact on iPhone revenue share. For investors, however, the overall net impact should be positive, he said, as he believes Apple shares will trade on unit numbers alone for the next year or so.
"We expect the next generation iPhone to launch in mid-June, shortly after Apple's Worldwide Developer's conference on June 9 and the international rollout will continue throughout the second half of 2008," Munster wrote. "While there is little question that the next version of the iPhone will include 3G mobile data, we can now all but confirm 3G in the second-generation iPhone."
The analyst maintained his Buy rating and $250 price target on shares of Apple.
Comments
Will other currently exclusive markets be going multi-carrier as well?
"Currently Apple's total addressable market includes 153 million subscribers in 6 countries with AT&T, T-Mobile Germany and Austria, O2, and Orange," analyst Gene Munster wrote in a report. "These announcements increase those numbers to 575 million subscribers in 42 countries including recent agreements with Vodafone, SingTel, American Movil, Swisscom, and Orange."
The addressable market is ONLY the customers that the carrier currently has? The "official" addressable market should be the entire population of those countries, especially since the latest rumours state quite convincingly that there will be no vendor lock in or revenue sharing, just distribution agreements.
Unreal. Apple is prospering beyond measure! The iPhone is going literally all over the world! There is a new 3G iPhone inevitably set to be released! The MacBook family is set for updates! Apple just opened its biggest retail store in the world! All this and Apple stock is down almost $2.00/share!
The stock has had significant growth lately and that $2/share equates to under a 1% drop. Every company's stock price fluctuates no matter how well or poorly they are doing.
The MacBook line was recently updating, don't expect anything until the fall.
Unreal. Apple is prospering beyond measure! The iPhone is going literally all over the world! There is a new 3G iPhone inevitably set to be released! The MacBook family is set for updates! Apple just opened its biggest retail store in the world! All this and Apple stock is down almost $2.00/share!
Yes, Apple should go up every day!
Duh!
Unreal. Apple is prospering beyond measure! The iPhone is going literally all over the world! There is a new 3G iPhone inevitably set to be released! The MacBook family is set for updates! Apple just opened its biggest retail store in the world! All this and Apple stock is down almost $2.00/share!
Besides others' comments, I'd just like to say that all the information you mention has been known for some time, and is therefore already factored into Apple's current stock price. Something has to change-- at least in terms of perceptions-- for the stock to change, which is why you'll see fluctuation as WWDC approaches but little right now.
The store Apple just opened is *not* "the biggest Apple store in the world." It's big, but not the biggest by quite a bit.
Unreal. Apple is prospering beyond measure! The iPhone is going literally all over the world! There is a new 3G iPhone inevitably set to be released! The MacBook family is set for updates! Apple just opened its biggest retail store in the world! All this and Apple stock is down almost $2.00/share!
Apple is up more than 50% from its low this year of $120 in late February and is only 6 or 7% off its all time high.
The NASDAQ is down a bit to day, and Apple is lagging a little behind the market. It can't go up every day. That's just not how it works.
The addressable market is ONLY the customers that the carrier currently has? The "official" addressable market should be the entire population of those countries, especially since the latest rumours state quite convincingly that there will be no vendor lock in or revenue sharing, just distribution agreements.
No, if another carrier is added, their market will be counted. You can't count entire nation's populations, particularly as the iPhone enters Africa, because the entire population of many countries is not a legitimate market. Some bedouin cowherder without a pot to piss in is not in the market. Likewise, you have the opposite problem in some countries like Italy where the cellphone market can actually exceed the population. These are decent estimates, no need to get overexcited.
Unreal. Apple is prospering beyond measure! The iPhone is going literally all over the world! There is a new 3G iPhone inevitably set to be released! The MacBook family is set for updates! Apple just opened its biggest retail store in the world! All this and Apple stock is down almost $2.00/share!
The stock market goes up and down on many factors and the price of AAPL reflects this to a greater degree at times more than just on how Apple's products are selling. There are underlying factors of confidence in the market itself. This fact and the weakness of the market as a whole took the stock down from 190 to 120. There was little impact on the price because of the solidity of the company. Now it has gone back up to where it should be and small ups and downs are meaningless. It is the long haul that counts!!
Now for the international expansion itself... that's incredible. Here are a couple of my wishes and maybe some expert out there can chime in on the future, near and far, possibilities of these.
Once the AT&T combine is past the exclusive stage, how about an iPhone that will be usable on other networks or have multiple frequencies built in for great roaming and if the original contract carrier is not available any other carrier can be used. Of course, the carriers themselves would have to agree to this which I think is a great idea.
To carry this idea forward to international use. What about a phone that you CAN take anywhere from country to county and be able to use it without the terrible, high, premium roaming charges. Whether or not a quad iPhone is a possibility or not for this, you could leave behind the idea if getting different cards for different counties/networks. I would think that if all the wireless carries would work together for this, all of them would prosper more with co-operative agreements for usage. The various frequencies technically is one major hurdle, but if they can make scanners that you can dial in any frequency within a certain range, why can't the same be true with a phone?
I am sure this universal blending will take a long time, but there was a phone that I had heard about from "National Geographic" that was truly international. You had to pay a high price of usage, but it would work in many countries. I don't know if it still exists but wouldn't it be great to see the iPhone be able to work the same way?
Ok, there is my 4 cents worth.
The crazy thing about the stock market is that despite record numbers, it doesn't always equate to record highs in share price.
If Apple sells their targeted $10mil iPhones this year...the 'street' will say, well we expected 12.9 mil.
Unreal. Apple is prospering beyond measure! The iPhone is going literally all over the world! There is a new 3G iPhone inevitably set to be released! The MacBook family is set for updates! Apple just opened its biggest retail store in the world! All this and Apple stock is down almost $2.00/share!
Barring any splits or other changes in the stock, I am planning for $300 a share.
The reason they are still where they are is that Wall Street is having a rather difficult time coming to the realization that Apple is no longer a "tech company" as much as its a "Consumer Electronics" company.
AAPL is not even close to bloated at 188 a share.
The question is...will AAPL hit $250 in the coming months?
The crazy thing about the stock market is that despite record numbers, it doesn't always equate to record highs in share price.
If Apple sells their targeted $10mil iPhones this year...the 'street' will say, well we expected 12.9 mil.
yeah, but remember, this is APPLE. The "street" wil say they expect 12.9. Apple will say they plan to deliver 10.9.
Then Apple will deliver 15.
Unreal. Apple is prospering beyond measure! The iPhone is going literally all over the world! There is a new 3G iPhone inevitably set to be released! The MacBook family is set for updates! Apple just opened its biggest retail store in the world! All this and Apple stock is down almost $2.00/share!
Stocks are about future expectations, not what's happening right now or yesterday (unless those things are indicative of future expectations.)
The question is...will AAPL hit $250 in the coming months?
The crazy thing about the stock market is that despite record numbers, it doesn't always equate to record highs in share price.
If Apple sells their targeted $10mil iPhones this year...the 'street' will say, well we expected 12.9 mil.
Apple should have passed $250 by now, but it's the most watched stock by
analysts, critics and never good enough for them no matter what apple
accomplishes.
Apple shareholders tend to sell quick on any slight negative news or low
prediction estimates caused by analysts. I see other tech stocks shareholders
not panic as bad with their stocks.
I'll bet the day the 3G Iphone is anounced, people will complain the price is too high
or not enough features on the phone so more silly reasons to sell the stock that day.
I will be thankful if Apple passes the 52 week high. ($201.)
The addressable market is ONLY the customers that the carrier currently has? The "official" addressable market should be the entire population of those countries, especially since the latest rumours state quite convincingly that there will be no vendor lock in or revenue sharing, just distribution agreements.
Thank you. I pity the f00ls that listen to this tripe the analysts spin. With due respect to Gene Munster who is/ has championed Apple for several years now (for whatever reason)...
Addressable market should realistically be defined on three levels. One: subscriber base as Gene has done. Two: entire population of those countries (depending on vendor lock). Three: THE ENTIRE POPULATION OF THE EARTH.
Point three is not so far-fetched, anyone in the world that wants or conceivably is going to purchase a mobile phone is the real addressable market of the iPhone, and it has been since DAY ONE. Read: Unlocking. From Bahrain to Penang to Slovakia to Jakarta. Everyone has a bloody iPhone.
I respect the current thinking and earning ability of analysts, investors, business owners and managers. But this is 2008, and addressable market based on Telco subscription is basically, rubbish. It is the chronic lack of foresight that has lead to the Western demise of their outdated music, TV and movie economies as they have known it.
Unreal. Apple is prospering beyond measure! The iPhone is going literally all over the world! There is a new 3G iPhone inevitably set to be released! The MacBook family is set for updates! Apple just opened its biggest retail store in the world! All this and Apple stock is down almost $2.00/share!
See my points above. Apple resellers, for example in South East Asia, maybe excluding Singapore, have never been able to properly manage and "synergise" with the global Apple growth. Due to greed, ineptitude or simply, since some of those business owners are fundamentally well-schooled, brilliant and widely-travelled... unlucky. So, generic shareholders, I don't think quite "get" AAPL. Yet.
The addressable market is ONLY the customers that the carrier currently has? The "official" addressable market should be the entire population of those countries, especially since the latest rumours state quite convincingly that there will be no vendor lock in or revenue sharing, just distribution agreements.
I don't think that makes sense either. For the most accurate number of potential iPhone customers, They need to count all the current mobile phone subscribers in the country as the "addressable market". First of all, this metric only counts the people that actually have an existing cell phone account, thus filtering out (most) segments of the population that won't become iPhone customers (children, poor, etc). More importantly, this metric also takes into account all of the potential iPhone customers that currently have mobile phone accounts with carriers other than the official iPhone carrier(s). The analyst in the article only counts the mobile phone subscriber base of the carrier(s) that have specifically announced future iPhone availability. This is a stupid way to do this, as we have seen with AT&T that many of their iPhone subscribers are new to the network, having switched from other carriers such as T-mobile, Verizon, et all. IIRC, the number was around 30%.
I am going to crunch some numbers later, but I would guess that with my simple method of also counting "potential switchers", the "addressable market" for the iPhone would increase by at least 50% ~500 million cited.
Once the AT&T combine is past the exclusive stage, how about an iPhone that will be usable on other networks or have multiple frequencies built in for great roaming and if the original contract carrier is not available any other carrier can be used. Of course, the carriers themselves would have to agree to this which I think is a great idea.
...
...The various frequencies technically is one major hurdle, but if they can make scanners that you can dial in any frequency within a certain range, why can't the same be true with a phone?
Well, I don't doubt its possible to make a phone capable of operating in all the bands, but it would most likely add a lot to the cost of the radio chips. What you are really describing is something called "software defined radio" (SDR), in which a radio system would have adaptable hardware antennae whose's operating frequency and multiplexing scheme (TDMA, CDMA, OFDMA, etc) are controlled by software. This would be great for not just phones, but other wirelesss equipment in that they could constantly monitor their surrounds and adapt transmissions for best possible signal. Of course, this would mean that both ends of a transmission would have to be able to communicate and tell each other what frequency bands to switch to.
Anyways, back to the present for a moment. It would most likely be much easier to develop a radio chip capable of operating on all the frequency bands of a particular technology, say UMTS/GSM or CDMA (CDMA2000), but NOT both. Throughout the world, there are many frequency bands that CDMA, GSM, and UMTS operate on, frequently divided up by region. Usually North America, South America, Europe, Middle east+Africa, and Asia. Australia and New Zealand are split between North America and European tech. Now of course, this is not true for all cellphone technology and there are many exceptions. To show you how complicated this can get, here's just the USA:
Verizon Wireless
CDMA 1xRTT (2.75G) = 800Mhz
EV-DO rev. A (3.5G) = 800+1900mhz (independent upload/download bands)
Sprint Nextel
CDMA 1xRTT (2.75G) = 1900mhz
EV-DO rev. A (3.5G) = 1900mhz
AT&T
GSM+EDGE = 850Mhz or 1900Mhz (same band for both upload/download)
UMTS = 850 or 1900Mhz (same band for both upload/download)
T-Mobile
GSM+EDGE = 1900Mhz
UMTS 1700+2100Mhz (independent upload/download bands)
and here is all the current frequency bands for the popular technologies
World GSM operating bands = 450Mhz (Scandinavia), 850Mhz (USA/Canada), 900Mhz (Europe), 1800Mhz (Europe), 1900Mhz (USA/Canada)
World UMTS operating bands = 800Mhz (Japan), 850Mhz (USA/Canada/Australia), 900Mhz (Europe), 1700+2100Mhz (USA T-Mobile), 1900Mhz (USA/Canada), 2100+1900Mhz (Europe)
World CDMA2000 operating bands = 450Mhz, 450+800Mhz, 450+1900Mhz, 700Mhz, 800Mhz, 800+1900Mhz, 850Mhz, 1700Mhz, 1900Mhz, and 2100Mhz
Anyways, back to the present for a moment. It would most likely be much easier to develop a radio chip capable of operating on all the frequency bands of a particular technology, say UMTS/GSM or CDMA (CDMA2000), but NOT both. Throughout the world, there are many frequency bands that CDMA, GSM, and UMTS operate on, frequently divided up by region. Usually North America, South America, Europe, Middle east+Africa, and Asia. Australia and New Zealand are split between North America and European tech. Now of course, this is not true for all cellphone technology and there are many exceptions. To show you how complicated this can get, here's just the USA:
Thanks very much. That was very informative. For now, with the limits naturally there, I guess travelers have other options like even renting a phone. Maybe though, with the WiFi in the iPhone all of this frequency blending doesn't matter. We can iChat easily for free at least with text! I have heard the rumors of the next iPhone may have video chat possibilities. So there can be a simple answer.