BofA sees 3G iPhone build in May, predictions "too conservative"
Further fueling talk of a 3G-capable iPhone this spring, a research note from Bank of America claims knowledge of next-generation Apple handset production beginning in May, and warns that past sales predictions have been timid.
In his message to investors, financial analyst Scott Craig points to channel investigations which show an iPhone capable of faster, third-generation cellular Internet access produced in small numbers in May, with a larger number surfacing in June as Apple prepares a formal rollout for the new device.
"This likely implies a launch announcement in [the second calendar quarter]," Craig says.
Apple is also likely to significantly increase its iPhone production compared to its most recent full quarter. While iPhone production during the holidays totaled 2.3 million, the Bank of America researcher estimates about three million 2G and 3G iPhones made during the spring quarter and a much larger eight or more million during the summer. Each additional million units sold could add about $400 million to Apple's bottom line, Craig notes.
Simultaneous reports on Friday supported the analyst's statements., with the Taiwanese Commercial Times paper alleging that bidding is underway for 3G iPhone manufacturing while Dow Jones ventured so far as to claim that Hon Hai had already won a contract for production of an advanced model.
The investigations of the supply chain have been enough to warrant a significant rethink of longer-term predictions for 2008. As Apple may now produce the same eight million iPhones in one quarter that analysts have been predicting for the entire year, previous estimates are now "starting to look too conservative," according to Craig.
The expert maintained existing forecasts for the rest of Apple's lineup. iPod shipments are estimated to drop by several percentage points year over year for the first quarter, dipping below 10 million units, while a combination of the MacBook Air and refreshes to existing portables is tagged as a likely upside for computer sales.
In his message to investors, financial analyst Scott Craig points to channel investigations which show an iPhone capable of faster, third-generation cellular Internet access produced in small numbers in May, with a larger number surfacing in June as Apple prepares a formal rollout for the new device.
"This likely implies a launch announcement in [the second calendar quarter]," Craig says.
Apple is also likely to significantly increase its iPhone production compared to its most recent full quarter. While iPhone production during the holidays totaled 2.3 million, the Bank of America researcher estimates about three million 2G and 3G iPhones made during the spring quarter and a much larger eight or more million during the summer. Each additional million units sold could add about $400 million to Apple's bottom line, Craig notes.
Simultaneous reports on Friday supported the analyst's statements., with the Taiwanese Commercial Times paper alleging that bidding is underway for 3G iPhone manufacturing while Dow Jones ventured so far as to claim that Hon Hai had already won a contract for production of an advanced model.
The investigations of the supply chain have been enough to warrant a significant rethink of longer-term predictions for 2008. As Apple may now produce the same eight million iPhones in one quarter that analysts have been predicting for the entire year, previous estimates are now "starting to look too conservative," according to Craig.
The expert maintained existing forecasts for the rest of Apple's lineup. iPod shipments are estimated to drop by several percentage points year over year for the first quarter, dipping below 10 million units, while a combination of the MacBook Air and refreshes to existing portables is tagged as a likely upside for computer sales.
Comments
Wow, so many rumours on the new iPhone--seems like I'll be able to use my stimulus payment just in time for my future iPhone.
Yeah, they could peg the price of the 3G phone at $600 even to match the giveaway. The first gen phone could be reduced to $300 and marketed to minors (to match their giveaway number). I can see the advertising angle now...
They better hurry up and get it out, though. I don't know how long people will have that $$. Easy come, easy go!
Yeah, they could peg the price of the 3G phone at $600 even to match the giveaway. The first gen phone could be reduced to $300 and marketed to minors (to match their giveaway number).
Still too high. Keep it at $499 and lower the current one to $249.
Still too high. Keep it at $499 and lower the current one to $249.
Well, $600 (ok, $599 if you must) for the first month. Then they can drop if $200. Think of all the free publicity!
While I was in Paris, my iPhone was dog slow. In the US, it is much faster. I think that my iPhone browsing the web is not really that much different than my blackberry pearl. I get a better experience on the iPhone too. Maybe it is my location but I couldn't wait for a 3G when I can have it now and be happy.
As Apple may now produce the same eight million iPhones in one quarter that analysts have been predicting for the entire year, previous estimates are now "starting to look too conservative," according to Craig.
So if the estimates for ONE QUARTER equal what analysts projected for an ENTIRE YEAR, previous estimates are starting to look too conservative? DUH, ya think?
Seriously, in fairness to the analysts, predicting big numbers in absence of historical data is fuzzy guesswork at best.
Mark
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Read 'iPhone: Mobile Reasons for Optimism'
http://thenetworkgarden.com/weblog/2...e-reasons.html
I can't imagine 3G being such a leap in speed people hold out for it. Especially when you consider people in the States have limited 3G coverage through AT&T.
While I was in Paris, my iPhone was dog slow. In the US, it is much faster. I think that my iPhone browsing the web is not really that much different than my blackberry pearl. I get a better experience on the iPhone too. Maybe it is my location but I couldn't wait for a 3G when I can have it now and be happy.
"While I was in Paris, my iPhone was dog slow" - it a Parisian thing!
"I couldn't wait for a 3G when I can have it now and be happy", while envious of you and your satisfaction with your iPhone purchase, I compose a great deal of stoic patience awaiting the revised iPhone that hopefully will have the hardware that people who are smarter than me say the original iPhone lacks to make it a truly complete phone filled with the 'latest and greatest' from a technical standpoint.
While AT&T may not have universal 3G service, they do have a list showing 3G coverage, where you click on your city and it shows a PDF map of the area of your city in Blue that is 3G capable and Orange where EDGE takes over. That is, if I am understanding it correctly. If I am, my local area has nice 3G coverage and if a side by side comparison regarding speed of the web, where 3G is as fast as people familiar with it say it is, then Dial-up is to EDGE what 3G is to DSL/Cable?
Of course, when I got cable internet and ditched the dial up I was amazed at the speed, now that I became familiar with cable speeds, it now seems slow at times. What does the future hold for both Internet speeds for the home computer and the iPhones et. al.
While I was in Paris, my iPhone was dog slow. In the US, it is much faster.
Well, as the current iPhone is 2.5G, you were either on EDGE or GPRS while in Paris, not HSDPA(3G).
If your iPhone was really, really slow there, chances are you were on GPRS (~ 40 kbps), which is somewhat common in Europe. And all the more reason to go 3G.
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a) the price
b) at&t
Each additional million units sold could add about $400 million to Apple's bottom line, Craig notes.
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He surely means "top line", not bottom line?
I think one of the reasons of slow 3G adoption is the fact that the operators don't have any bandwidth to spare and even their current slow-speed offerings are overloaded with traffic. That way simply making the channel faster won't help.
I'm not directly addressing this just to you, but everyone else as well. I think it's really important to distinguish a few different things that I see lumped together so often.
1) USA rollout of 3G cellular service differs TREMENDOUSLY between carriers. It's not so simple to just say "USA cell service suckz".
AT&T, the leading GSM carrier still has nowhere near the 3G/UMTS coverage that Verizon has with it's 3G/EVDO service, which obviously blows since the iPhone is tied to AT&T.
2) Related to #1, the actual rollout of 3G service and sales of 3G-capable phones are both much better/higher than actual USAGE of 3G data services on phones.
3G broadband laptop cards are somewhat popular, however.
Now don't get the wrong idea, I am definitely not defending the wireless telecom companies in the USA (ESPECIALLY NOT THE WIRED CABLE/DSL PROVIDERS), but I just want to provide a more accurate picture of the actual state of 3G in the USA.
So, pfft. Screw it. I'm waiting for 4G. Yeah, that's my excuse.
(Kidding. I already bought one on July 3.)
Oh, and to those of you that are waiting for your "economic stimulus" rebate checks to pay for your new iPhones -- I paid over $30K in taxes for 2007 and made too much money to qualify for a rebate myself. So, you're welcome.
I cannot believe an investment analyst would think that 3G would be such a huge deal that millions more phones would be sold on that feature alone. EDGE isn't THAT slow ..... This smells way more of stock hype than anything.
I couldn't agree more. I think EDGE has been unfairly dumped on. I have tried it in a few cities in Europe as well, and it works fine for the typical sites to which I navigate (e.g., nytimes, wsj, google news, redsox, celtics, engadget, etc; AI though is interminably slow). Heck, with 5 bars, even Youtube is actually pretty decent!
Is 3G faster? Yes, but only slightly more so. But because everyone -- esp. outside the US -- has bought into the hype and because that's how many non-US phones are being sold these days, it's here to stay, unfortunately.
I cannot believe an investment analyst would think that 3G would be such a huge deal that millions more phones would be sold on that feature alone
I agree that no one who can currently get an iPhone now should wait for the 3G feature alone but...
I think the unwritten assumption is that along selling more because its now 3G the phone will be deploy(able)ed to MAJOR new markets. I think it will be severely disappointed if 3G iPhone isnt launched in Japan simultaneously with the current markets. This additional market alone would be enough to boost sales by quite a bit, justifying some of the talk of additional millions of iPhones.
I do think the 3G feature will double sales in Europe from their fairly anemic current levels.
He surely means "top line", not bottom line?
Maybe he is factoring in the estimated recurring revenue also.
Maybe he is factoring in the estimated recurring revenue also.
Quite unlikely. A generous estimate on the sale-related net profit margin on each iPhone sold is 25% - 30%. Say 30%. That would imply that each million phones sold contribute to $120 million in profits. It is not possible that estimated recurring revenue is contributing to an additional profit $280 million.
Indeed, I have seen guesstimates (can't find the cites now) that Apple makes $3/month on its ATT contracts (perhaps a little higher in Europe). Assuming all of that is net profit -- again unlikely -- that is just $36 million per year (with an additional $36 million kicking in to the following year's net income).
This analyst mis-spoke, that's all.
I can't imagine 3G being such a leap in speed people hold out for it. Especially when you consider people in the States have limited 3G coverage through AT&T.
Well it is an improvement but People don't seem to understand the technology. The often given numbers are the optimal transfers that can happen.
On the other hand many of us are waiting not so much for 3G as some of the other hoped for technologies coming in the next phone. In any event my current cell is on its las leg I may be force to update no matter what Apple does. The other thing is that once an improved iPhone comes out some of us are also hoping for lower rates on the currnet phone.
Lets face it AT&T contract is a bit stiff, more so than many of us feel comfortable with. I'd be very pleased if AT&T cut the contract rate for the current iPhone in half. It would move a lot of hardware and allow Apple a little breathing room for the expanded capability model.
While I was in Paris, my iPhone was dog slow. In the US, it is much faster. I think that my iPhone browsing the web is not really that much different than my blackberry pearl. I get a better experience on the iPhone too. Maybe it is my location but I couldn't wait for a 3G when I can have it now and be happy.
There are many factors that come into play with respect to transfer rates. Just because people in Europe like to tout their 3G networks doesn't also imply that the infrastructure is in place to support all that 3G hardware. Europe in many ways is still a technology backwater.
In any event yes waiting for just 3G is stupid.
Dave
I cannot believe an investment analyst would think that 3G would be such a huge deal that millions more phones would be sold on that feature alone. EDGE isn't THAT slow...
Just because it might be mostly hype doesn't mean that it won't affect people. If people hear that "something better is coming!" enough they might be waiting. If you were on the fence about buying one, wouldn't you consider waiting?
Also, there have been plenty of rumors about other things that might be arriving with the update. Better camera? OLED screen? Real GPS? More storage? Voice recognition? Therefore, waiting for 3G also means waiting to see what else is coming.
I like to think that I'm not a lemming or a tool of the analysts, but if I buy, it will be after 3G arrives.