RBC says iPhone 3G 'Pro' won't boost iPhone momentum
The Royal Bank of Canada is maintaining its bearish near-term outlook on shares of Apple, claiming that although consumer interest in a new version of the iPhone remains healthy, sales of the new device are unlikely to provide the company with the same boost seen during the transition from the original iPhone to the iPhone 3G.
In a report to clients Monday, analyst Mike Abramsky laid out some pretty obvious predictions for the future of Apple's smartphone business. Specifically, he believes the company "will announce an updated iPhone 3G 'Pro'" at its annual developers conference slated for June 8-12, with a release to follow in July.
Among his feature predictions for the new model is a new 3.2 megapixel camera, better battery life for video playback, "a faster 3G chipset (HSUPA vs current HSDPA), improved graphics processor, video recording, more memory (16GB/32GB)" and an enclosure that's one-tenth of a millimeter thinner than the one employed by the iPhone 3G.
A proprietary survey by RBC's ChangeWave market research division conducted this month found "healthy pent-up demand" for a new iPhone, with 20% of the 4,300 respondents saying they'd consider buying a 16GB iPhone 3G 'Pro' (11%) priced at $199 or 32GB iPhone 3G Pro (9%) priced at $299. Another 8 % expressed interest in the current iPhone 3G if it were to be priced at $99.
However, Abramsky told clients the update won't be enough to boost the iPhone's momentum above current levels and is only likely to sustain the touchscreen handset's current market traction. In support of this theory, he cited about a half dozen reasons, namely that the expected jump in internet download speeds is unlikely to be as dramatic as last year's switch from EDGE to 3G.
Although Apple has reportedly been discussing options that would make the next iPhone more affordable (1, 2) for customers during the global recession, Abramsky isn't holding high hopes for these changes either. Instead, he believes pricing will remain relatively the same, which is yet another reason he doesn't expect new models to spark a noticeable increase in consumer demand.
"The prior 3G product cycle coincided with the move to subsidized iPhone pricing (from prior $399/$499), boosting buying intentions est. 50-100%," he wrote.
Among the other factors cited by the analyst as weighing against a surge in momentum are the availability of pre-paid iPhones, pending launches from iPhone rivals, a slowdown in consumer spending, and a lack of new international territories for iPhone expansion.
That said, one international expansion prospect with "big" potential is China, Abramsky told clients. Assuming Apple finalizes a deal with the nation's second-largest wireless provider China Unicom, he believes the company could sell upwards of 1.5 million additional iPhones during the 2009 calendar year.
Abramsky also used his note Monday to quell rumors of an entry-level iPhone that he helped fuel just one month ago.
"Build data and other checks suggest Apple may not launch a lower priced iPhone as soon as generally thought," he wrote. "If so, his would help protect iPhone margins (est 55% at $400 subsidy), but might leave Apple vulnerable to share gains from pending lower-priced competitive alternatives."
The RBC analyst maintained his Underperform rating and bleak $70 price target on shares of Apple.
In a report to clients Monday, analyst Mike Abramsky laid out some pretty obvious predictions for the future of Apple's smartphone business. Specifically, he believes the company "will announce an updated iPhone 3G 'Pro'" at its annual developers conference slated for June 8-12, with a release to follow in July.
Among his feature predictions for the new model is a new 3.2 megapixel camera, better battery life for video playback, "a faster 3G chipset (HSUPA vs current HSDPA), improved graphics processor, video recording, more memory (16GB/32GB)" and an enclosure that's one-tenth of a millimeter thinner than the one employed by the iPhone 3G.
A proprietary survey by RBC's ChangeWave market research division conducted this month found "healthy pent-up demand" for a new iPhone, with 20% of the 4,300 respondents saying they'd consider buying a 16GB iPhone 3G 'Pro' (11%) priced at $199 or 32GB iPhone 3G Pro (9%) priced at $299. Another 8 % expressed interest in the current iPhone 3G if it were to be priced at $99.
However, Abramsky told clients the update won't be enough to boost the iPhone's momentum above current levels and is only likely to sustain the touchscreen handset's current market traction. In support of this theory, he cited about a half dozen reasons, namely that the expected jump in internet download speeds is unlikely to be as dramatic as last year's switch from EDGE to 3G.
Although Apple has reportedly been discussing options that would make the next iPhone more affordable (1, 2) for customers during the global recession, Abramsky isn't holding high hopes for these changes either. Instead, he believes pricing will remain relatively the same, which is yet another reason he doesn't expect new models to spark a noticeable increase in consumer demand.
"The prior 3G product cycle coincided with the move to subsidized iPhone pricing (from prior $399/$499), boosting buying intentions est. 50-100%," he wrote.
Among the other factors cited by the analyst as weighing against a surge in momentum are the availability of pre-paid iPhones, pending launches from iPhone rivals, a slowdown in consumer spending, and a lack of new international territories for iPhone expansion.
That said, one international expansion prospect with "big" potential is China, Abramsky told clients. Assuming Apple finalizes a deal with the nation's second-largest wireless provider China Unicom, he believes the company could sell upwards of 1.5 million additional iPhones during the 2009 calendar year.
Abramsky also used his note Monday to quell rumors of an entry-level iPhone that he helped fuel just one month ago.
"Build data and other checks suggest Apple may not launch a lower priced iPhone as soon as generally thought," he wrote. "If so, his would help protect iPhone margins (est 55% at $400 subsidy), but might leave Apple vulnerable to share gains from pending lower-priced competitive alternatives."
The RBC analyst maintained his Underperform rating and bleak $70 price target on shares of Apple.
Comments
Also, with all the more serious games coming out, it looks to be giving the phone some leading reason why it will be bought in good numbers. I know of some younger people who hadn't considered the phone up to now, but are thinking about buying one because of the new games coming out, the same ones they're playing on their 360's and PS3's.
My guess is that the new iPhone will be the "iPhone HD", and that it will have both a performance and screen update, and that games will be able to be specified as "HD capable".
Please, I can't even get an iMacHD- what makes you think the iPhone should get HD first?
An HSDPA phone should be firmware up-datable to HSUPA -- if not, shame on Apple! By the same token, it was sad that the 1st. Gen. iPhone was not up-datable to 3G -- it's called planned obsolescence, and I strongly frown upon it!
It's called not putting expensive antenna hardware into a phone that isn't set up to use it.
Nobody tell him about WiMAX or he'll get mad that the iPhone doesn't have an antenna for it yet.
Case in point, the opening up of the 30-pin connector for third party accessories in iPhone OS 3.0, a move that I believe is destined to lead to all sorts of interesting hardware-software accessory innovations, in the process dwarfing the $2B+ iPod accessories industry, something that I blogged about in:
PC 1.0, iPhone 3.0 and the Woz: Everything Old is New
(http://bit.ly/7hLJY)
Check it out if interested.
Mark
Shouldn't that read one tenth of an inch thinner?
2.54 mm != 0.1 mm
Are they simply trying to temporarily deflate the stock price so they can cash in, or are they cow-towing to the wishes of their investors who happen to be Apple or Rogers competitors?
I mean, I'm not shy about voicing my negative opinions of some of the things that Apple does, but I'm coming from the perspective of an Apple customer since 1979 who just wants them to make the best products possible. I'm not out to claim that Apple can't sell 'unit x', only that 'unit x' may not be what I hoped for. I have no doubts whatsoever that Apple can sell as many 'unit x' as they project they will, no matter what that product might be, now and in the future.
More interesting question is what's on for the June launch. My money is on a 10-inch iTablet. I suspect there's a twist to the new product that we've not even considered. What about a 10" completely portable TV which incorporates a Kindle, a bar-code reader for direct service-consumer linking to a company's servers (as in delivery people, Apple stores, doctors' offices, etc. etc), an oversize game platform, not to mention netbook killer, all in a 1.5 pound package with a 10-hour battery using PA semiconductor designed chips
I will purchase the new one just to jump from 16Gigs to 32Gigs. I dont even care about the others new hardware features that would be present here, although the possibility of controlling games via a game-dock is extremely enticing.
RBC and RImm are in bed with each other; well known,,,of course he's going to bear on aapl and bull about rimm.
RIM! Of course, that makes perfect sense, and perfectly answers my question.
seems to me like somebody might have a pretty good source regarding the phone enhancements. Or maybe thats just me.
Believe nothing Abramsky has to say about Apple, Inc. He's a shill, as is his company, for RIMM.
The low cost iPhone is in everybodies pocket already. Really when the "Pro" comes out they will simply lower the price on the current model. Maybe at the same time reworking it for lower costs and slightly better performance. I just don't believe the iPhone costs $250 to produce. So with the contract a sub $100 price ought to be easy and an unlocked price of around $175. Yes I believe iPhone is grossly over priced and the rumors of 40% margins highlight this.
Since we really don't know the specifics of the "Pro" it really isn't possible to project interest. However if we take a stab at a guess we could come up with a machine that would really drive sales. For example give us a machine with three times the CPU performance, twice the RAM and an OpenCL capable GPU and the "Pro" would sell very quickly. A bigger screen would be nice two.
The point is we can't really project demand here until real specs leak. I just look at my iPhone and think about it's short comings and what would cause me to upgrade. CPU performace is certainly an issue and frankly I'd settle for less than 3X. Even a slightly larger screen would also be a huge factor.
Dave
The low cost iPhone is in everybodies pocket already. Really when the "Pro" comes out they will simply lower the price on the current model
I think this is wrong. AT&T and Apple both are selling the current iPhone without a contract in an effort to clear the current stock. It makes sense that they are not planning to continue selling the current iPhone after May. That is also why AT&T is selling a refurbished iPhone for $99 here in the USA and some European carriers are reducing the price of the iPhone 3G. They want to eliminate all current stock and possibly build up demand for the new model for 3-4 weeks before the new model is available in June.
Apple will only have 2 models for sale at any one time. As with the current models, the amount of onboard memory storage will be the price/model differentiator, not other hardware features.
"Among his feature predictions for the new model is a new 3.2 megapixel camera, better battery life for video playback, "a faster 3G chipset (HSUPA vs current HSDPA), improved graphics processor, video recording, more memory (16GB/32GB)" and an enclosure that's one-tenth of a millimeter thinner than the one employed by the iPhone 3G."
Shouldn't that read one tenth of an inch thinner?
2.54 mm != 0.1 mm
Yes, you are absolutely right. Only people measuring geometry in equivalent body parts would make such a mistake. The correct value is 2.5 mm thinner, not 100 microns. Quite a difference, I would say!!!