RBC sees 3G, new carrier model driving iPhone sales of 14M
After meeting with top Apple brass at an event, RBC Capital Markets' Mike Abramsky claims that the electronics maker may shake up its existing business model for the iPhone and should easily pass its sales target for 2008, especially once 3G devices become available.
The analyst notes that optimism for the iPhone's future was buoyed by a gathering late last week which saw Apple's iPhone marketer Greg Joswiak, chief financial officer Peter Oppenheimer, and Mac desktop manager Tom Boger all meet the financial institution.
While mum on details of what was discussed at the event, Abramsky says RBC now has "further conviction" about Apple's plans and anticipates the Cupertino, Calif.-based firm selling as many as 14 million iPhones during 2008, easily surpassing the official estimate of 10 million units.
The revision comes from a newfound belief that Apple might alter its existing sales strategy to accommodate both carriers and users: where the company has insisted on a fixed price and revenue sharing, it may loosen its restrictions after encountering resistance to its present approach in some areas.
The company "may be planning to allow subsidized pricing, diminishing carrier exclusivity... and supporting global unlocked iphone sales," Abramsky claims, explaining that Apple could also reduce the revenue it shares from monthly plans or even drop the split entirely to secure some carriers' support.
Such a move could lift iPhone sales momentum by as much as 50 or 100 percent, he adds. An official backing of unlocked devices through sales in Apple retail stores and certain carriers could improve international sales by two to three times, according to the prediction.
Apple has increasingly shown a willingness to veer from its familiar approach in public statements and apparent leaks. Chief operating officer Tim Cook explained in February that the company is not locked to one strategy for pairing the iPhone with carriers and on Monday saw his statements echoed by T-Mobile Austria, which now says it may institute flexible pricing for the device itself.
Rethinking its strategy is also all but necessary to bring the iPhone to China, as the country's leading carrier China Mobile is currently refusing talks on the grounds that revenue sharing with a foreign business violates Chinese customs.
Abramsky nonetheless stresses that the device itself is likely to be a significant factor: the widely anticipated 3G-capable iPhone is still predicted to arrive in June and should serve as a catalyst for adoption, particularly with added enterprise and third-party software support built into the version 2.0 iPhone software. Key features that could accompany the update, such as video calling or GPS, could improve some sales -- though carrier bandwidth costs could reportedly push Apple away from offering downloadable movies, the analyst says.
The report also observes that any factor in Apple growth, whether carrier adoption or device acceptance, isn't likely to be impeded by an existing monopoly. Most countries have multiple compatible carriers, while the fractured nature of the device market itself means that no one company can claim absolute control. This is seen as giving Apple an opening it doesn't have with its Mac computer line.
"Unlike the PC market, in the fast-expanding Smartphone market Apple faces no incumbent (like Microsoft), creating an opportunity for Apple to take share from existing voice handset vendors like Motorola," Abramsky says.
The analyst notes that optimism for the iPhone's future was buoyed by a gathering late last week which saw Apple's iPhone marketer Greg Joswiak, chief financial officer Peter Oppenheimer, and Mac desktop manager Tom Boger all meet the financial institution.
While mum on details of what was discussed at the event, Abramsky says RBC now has "further conviction" about Apple's plans and anticipates the Cupertino, Calif.-based firm selling as many as 14 million iPhones during 2008, easily surpassing the official estimate of 10 million units.
The revision comes from a newfound belief that Apple might alter its existing sales strategy to accommodate both carriers and users: where the company has insisted on a fixed price and revenue sharing, it may loosen its restrictions after encountering resistance to its present approach in some areas.
The company "may be planning to allow subsidized pricing, diminishing carrier exclusivity... and supporting global unlocked iphone sales," Abramsky claims, explaining that Apple could also reduce the revenue it shares from monthly plans or even drop the split entirely to secure some carriers' support.
Such a move could lift iPhone sales momentum by as much as 50 or 100 percent, he adds. An official backing of unlocked devices through sales in Apple retail stores and certain carriers could improve international sales by two to three times, according to the prediction.
Apple has increasingly shown a willingness to veer from its familiar approach in public statements and apparent leaks. Chief operating officer Tim Cook explained in February that the company is not locked to one strategy for pairing the iPhone with carriers and on Monday saw his statements echoed by T-Mobile Austria, which now says it may institute flexible pricing for the device itself.
Rethinking its strategy is also all but necessary to bring the iPhone to China, as the country's leading carrier China Mobile is currently refusing talks on the grounds that revenue sharing with a foreign business violates Chinese customs.
Abramsky nonetheless stresses that the device itself is likely to be a significant factor: the widely anticipated 3G-capable iPhone is still predicted to arrive in June and should serve as a catalyst for adoption, particularly with added enterprise and third-party software support built into the version 2.0 iPhone software. Key features that could accompany the update, such as video calling or GPS, could improve some sales -- though carrier bandwidth costs could reportedly push Apple away from offering downloadable movies, the analyst says.
The report also observes that any factor in Apple growth, whether carrier adoption or device acceptance, isn't likely to be impeded by an existing monopoly. Most countries have multiple compatible carriers, while the fractured nature of the device market itself means that no one company can claim absolute control. This is seen as giving Apple an opening it doesn't have with its Mac computer line.
"Unlike the PC market, in the fast-expanding Smartphone market Apple faces no incumbent (like Microsoft), creating an opportunity for Apple to take share from existing voice handset vendors like Motorola," Abramsky says.
Comments
Is the AT&T agreement with the 1.0 Version iPhone, or with any domestic iPhone? Is is possible that SJobs could release subsequent phones in the US without the carrier agreement?
After meeting with top Apple brass at an event, RBC Capital Markets' Mike Abramsky claims that the electronics maker may shake up its existing business model for the iPhone and should easily pass its sales target for 2008, especially once 3G devices become available.
There's simply no way in Hades any 'top brass' would fill this guy in on future Apple plans.
If it gets 32GB, 3G, real GPS and an OLED screen then the sky's the limit. If that was the case then I'd bet iPhone sales would go through the roof.
Funny how last year's heresy becomes today's conventional wisdom.
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I don't recall anyone calling 3G heresy. They just didn't think coming out with EDGE first was some horrible, horrible idea, especially given apple's own statements at the the iPhone's announcement that 3G would be coming down the pipe.
Even Teno, who now has undergone a slight conversion for the better regarding 3G, originally said Apple could wait "two years" before going 3G, and it wouldn't be a problem... and he wasn't alone in that sentiment. I've also heard the current, limited feature set defended to the death, even now. Single-carrier exclusives? Still has its defenders, even though it really only made sense for the US launch.
So yeah, I am kind of a heretic. Oh well. Someone has to be.
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once 3G comes, what's holding ANYONE or anymarket from surging, then once this concept is realized, then its spread the details over more models,, e.g christmas and voila instant megamillions sold
The company "may be planning to allow subsidized pricing, diminishing carrier exclusivity... and supporting global unlocked iphone sales," Abramsky claims
Would this apply to everywhere the iPhone is sold, as in the U.S. where AT&T has exclusive carrier agreement with Apple or is this new sales philosophy for Europe, Asia, China, South America, etc.?
Is it still AT&T for us? What does anyone else out there think?
Would this apply to everywhere the iPhone is sold, as in the U.S. where AT&T has exclusive carrier agreement with Apple or is this new sales philosophy for Europe, Asia, China, South America, etc.?
Is it still AT&T for us? What does anyone else out there think?
If it isn't I'll have an iPhone as soon as the new one comes out. If it is, I'll have one next year this time.
Would this apply to everywhere the iPhone is sold, as in the U.S. where AT&T has exclusive carrier agreement with Apple or is this new sales philosophy for Europe, Asia, China, South America, etc.?
Is it still AT&T for us? What does anyone else out there think?
Pretty sure the ATT deal is ironclad for at least the first two years, i.e. mid-2007 to mid-2009.
Originally it was reported as being five years, but the news coverage later shifted and started saying two years. What they learned that caused the change, I don't know. Apple and ATT have been cagey about releasing details of their deal to the public... they both have used the term "multi-year exclusive" a lot.
But hey, two years is 'multi-year', isn't it? Not that this sort of language is to be trusted in any case.
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Oh geez, the need for 3G, even for the European launch, got pooh-poohed so many times I lost count. Which was often followed by the ever popular (and ever wrong), "But it's got WiFi! It doesn't NEED 3G!!!"
Even Teno, who now has undergone a slight conversion for the better regarding 3G, originally said Apple could wait "two years" before going 3G, and it wouldn't be a problem... and he wasn't alone in that sentiment. I've also heard the current, limited feature set defended to the death, even now. Single-carrier exclusives? Still has its defenders, even though it really only made sense for the US launch.
So yeah, I am kind of a heretic. Oh well. Someone has to be.
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There were and still are perfectly valid reasons for opting for 2.5G & limited feature set.
There were and still are perfectly valid reasons for opting for 2.5G & limited feature set.
TBaggins seems to think the fact that Apple is coming out with a 3G iPhone is evidence that Apple made a mistake with the original iPhone.
I simply don't see the evidence that indicates that that bit of convoluted logic is true.
Even Teno, who now has undergone a slight conversion for the better regarding 3G, originally said Apple could wait "two years" before going 3G, and it wouldn't be a problem... and he wasn't alone in that sentiment. I've also heard the current, limited feature set defended to the death, even now. Single-carrier exclusives? Still has its defenders, even though it really only made sense for the US launch.
You've gone back to taking my statements out of context. We've already gone over this ad-nauseam.
Much of the defense of Apple's iPhone launch was for the short term. I doubt anyone thought Apple would or should continue this policy for the long term. It was understood Apple would need to change as all business needs to change and adapt to competition in the market.
Now that Apple is changing to meet the changes in the market you attempt to use this as proof that Apple should not have had this strategy in the first place. That is not entirely true.
The strategy has worked as Apple has earned over a billion in deferred revenue in less than a year.
All this stuff is interesting, but just try not to get carried away. People expect too much and that excessive exuberance is probably going to tarnish your acceptance of what's still a solid product.
"Unlike the PC market, in the fast-expanding Smartphone market Apple faces no incumbent (like Microsoft.....
[ View this article at AppleInsider.com ]
Nokia, SonyEricsson, Samsung etc may not be Microsofts in their product-market category, but to casually dismiss the power of incumbency of companies like that tells me that this guy is talking nonsense.
If so then iPhones on Verizon is a given since they will allow any phone on there networks soon. The open question would be the cost of a data plan although they would have to be competitive with AT&T.
You've gone back to taking my statements out of context. We've already gone over this ad-nauseam.
Much of the defense of Apple's iPhone launch was for the short term. I doubt anyone thought Apple would or should continue this policy for the long term. It was understood Apple would need to change as all business needs to change and adapt to competition in the market.
Now that Apple is changing to meet the changes in the market you attempt to use this as proof that Apple should not have had this strategy in the first place. That is not entirely true.
The strategy has worked as Apple has earned over a billion in deferred revenue in less than a year.
It appears, Apple may have played AT&T like it played the record labels. Not exactly, but being new to the cell phone game, Jobs' knew he had to play nice with someone. Offer exclusivity to them, then pull the rug out from them once the iPhone gained acceptance. Well, I'm not sure about the details of the agreement, but Jobs can be very convincing as we all know.
I really hope the 3G iPhone has two cameras with iChat. If that were to happen, the iPhone would just leave all the other handsets in the dust for social networking. I'm still trying to figure out what is going to be the killer app that drives iPhone sales. VOIP? Exchange support? Some game that uses the accelerometers? C'mon Apple. Make the iPhone the most desired handset on the planet.