Another firm sees Apple selling existing 8GB iPhone 3G for $99
With more and more evidence pointing to Apple's 2009 iPhone lineup consisting of three distinct models, the Royal Bank of Canada is the second investment firm to predict that one of those models will be a repackaged version of the existing 8GB iPhone 3G that will see its price tag lopped in half.
Discoveries within betas of Apple's upcoming iPhone 3.0 software over the past several months have turned up references to at least two new versions -- iPhone 2,1 and iPhone 3,1 -- of the touch-screen handset that could hit the market this summer. Meanwhile, it's been speculated that references to "ChinaBrick" found in the same software could indicate a third model may be in the works specifically for mainland China.
Those assumptions were reinforced earlier this week when unnamed sources claiming to be familiar with Apple's plans said the company is gearing up to introduce a trio of iPhones with distinct wireless hardware, each of which would be available in two capacities for a total of six new models.
More specifically, the report implied that countries with the most capable wireless networks, like the United States, would see an enhanced version of the iPhone 3G capable of 7.2Mbps downloads while other countries receive a version similar to the current iPhone 3G capable of 3.6Mbps 3G downloads. The third model would reportedly target only China and feature more limited functionality, possibly forgoing 3G connectivity entirely or offering compatibility with the government-backed TD-SCDMA standard.
In a lengthy research report to clients Wednesday, RBC Capital Markets analyst Mike Abramsky made no mention of a model specific to China but did take a stab at predicting the specifications for the other two models.
Echoing a recent forum post from an alleged insider with ties to Apple's Taiwanese manufacturing partners, Abramsky said he believes that next month's Apple Worldwide Developers Conference will see the introduction of an "iPhone Pro" that will sell for $199 and $299 with storage capacities of 16GB and 32GB respectively. Inside, he expects a new 3G wireless chip capable of connecting to wireless networks that support download speeds of up to 7.2Mbps, a 600MHz Samsung ARM processor, 3.2-megapixel camera with video capabilities, a magnetometer, and other features already found on the current iPhone 3G.
However, the core of analyst's report revolves around a prediction that Apple will continue to sell its existing iPhone 3G in an 8GB configuration, only pricing it down to $99 from $199 in a bid to broaden its share of the worldwide smartphone market, boost its multi-touch install base, and poke holes in any price umbrella rivals may seek out in their own bid for market share.
Abramsky is the second analyst in as many days to make such a call. His research follows on the heels of a similar report Tuesday from Morgan Stanley analyst Katy Huberty that boosted Apple shares by nearly 7%. Like her colleague at RBC, she predicted that Apple would continue to sell its current iPhone 3G hardware for either $99 or $149 when it announces new models next month. She said the move could spur a 50 - 100% incremental increase in unit demand that could help the company sell 9.9 million total iPhones during the third quarter, 24.8 million during the entire 2009 calendar year, and 36.2 million in 2010.
For his model, Abramsky cited an internal ChangeWave survey of 2,900 respondents in making a more conservative prediction that a $99 iPhone would accelerate iPhone momentum by 30 - 40%. He estimates Apple could sell 5 million of the cheaper devices in fiscal 2009 and 22 million in fiscal 2010, for a total of 18 million iPhones in fiscal 2009 and 28 million in fiscal 2010. Apple's fiscal year runs October through September, while the calendar year is obviously January through December. As of press time, Apple share were up roughly another 3% to $134.50.
Assuming Apple's moves play out as expected, Abramsky sees Apple capturing a 2.4% share of the global handset market by 2010 while the total install base of multi-touch devices capable of tapping into the App Store swells to 94 million. He also cited a different internal study of 2,700 respondents as suggesting that iPhone sales could see an additional 20 - 25% momentum boost should carriers introduce more affordable data plans alongside new models.
"While iPhone carriers (especially AT&T) may be cautious to reduce monthly data pricing ($30/mo currently at AT&T for unlimited data) given network capacity constraints, introduction of a ‘light’ data plan for $15-20/mo with data caps (e.g. 100-250MB/mo) would further expand iPhone’s addressable market and accelerate uptake with more price-sensitive buyers," he wrote. "However, this may require Apple and the carrier to offer a convenient way to protect ‘light’ data users from unexpected data charges over their limits."
In addition, the RBC analyst refuses to discard the notion that Apple is working on an "iPhone mini," which he now believes could arrive next year and serve as a catalyst for further share gains, momentum and valuation.
"While features, pricing distribution appear to be not yet finalized, we believe an iPhone Nano could be sold on a pre-paid or device only (no SIM card) basis over-the-counter in Apple stores and third party distributors, which are more prominent internationally vs. carrier stores," he told clients. "The prepaid market is massive (est. 60% or 2.4B of 4B total mobile phone users) and dominant in key mature phone markets like Germany, UK, Italy, and emerging markets (Brazil, China, India, Russia, etc.)."
Abramsky reiterated his Outperform rating and $165 price target on shares of Apple.
Discoveries within betas of Apple's upcoming iPhone 3.0 software over the past several months have turned up references to at least two new versions -- iPhone 2,1 and iPhone 3,1 -- of the touch-screen handset that could hit the market this summer. Meanwhile, it's been speculated that references to "ChinaBrick" found in the same software could indicate a third model may be in the works specifically for mainland China.
Those assumptions were reinforced earlier this week when unnamed sources claiming to be familiar with Apple's plans said the company is gearing up to introduce a trio of iPhones with distinct wireless hardware, each of which would be available in two capacities for a total of six new models.
More specifically, the report implied that countries with the most capable wireless networks, like the United States, would see an enhanced version of the iPhone 3G capable of 7.2Mbps downloads while other countries receive a version similar to the current iPhone 3G capable of 3.6Mbps 3G downloads. The third model would reportedly target only China and feature more limited functionality, possibly forgoing 3G connectivity entirely or offering compatibility with the government-backed TD-SCDMA standard.
In a lengthy research report to clients Wednesday, RBC Capital Markets analyst Mike Abramsky made no mention of a model specific to China but did take a stab at predicting the specifications for the other two models.
Echoing a recent forum post from an alleged insider with ties to Apple's Taiwanese manufacturing partners, Abramsky said he believes that next month's Apple Worldwide Developers Conference will see the introduction of an "iPhone Pro" that will sell for $199 and $299 with storage capacities of 16GB and 32GB respectively. Inside, he expects a new 3G wireless chip capable of connecting to wireless networks that support download speeds of up to 7.2Mbps, a 600MHz Samsung ARM processor, 3.2-megapixel camera with video capabilities, a magnetometer, and other features already found on the current iPhone 3G.
However, the core of analyst's report revolves around a prediction that Apple will continue to sell its existing iPhone 3G in an 8GB configuration, only pricing it down to $99 from $199 in a bid to broaden its share of the worldwide smartphone market, boost its multi-touch install base, and poke holes in any price umbrella rivals may seek out in their own bid for market share.
Abramsky is the second analyst in as many days to make such a call. His research follows on the heels of a similar report Tuesday from Morgan Stanley analyst Katy Huberty that boosted Apple shares by nearly 7%. Like her colleague at RBC, she predicted that Apple would continue to sell its current iPhone 3G hardware for either $99 or $149 when it announces new models next month. She said the move could spur a 50 - 100% incremental increase in unit demand that could help the company sell 9.9 million total iPhones during the third quarter, 24.8 million during the entire 2009 calendar year, and 36.2 million in 2010.
For his model, Abramsky cited an internal ChangeWave survey of 2,900 respondents in making a more conservative prediction that a $99 iPhone would accelerate iPhone momentum by 30 - 40%. He estimates Apple could sell 5 million of the cheaper devices in fiscal 2009 and 22 million in fiscal 2010, for a total of 18 million iPhones in fiscal 2009 and 28 million in fiscal 2010. Apple's fiscal year runs October through September, while the calendar year is obviously January through December. As of press time, Apple share were up roughly another 3% to $134.50.
Assuming Apple's moves play out as expected, Abramsky sees Apple capturing a 2.4% share of the global handset market by 2010 while the total install base of multi-touch devices capable of tapping into the App Store swells to 94 million. He also cited a different internal study of 2,700 respondents as suggesting that iPhone sales could see an additional 20 - 25% momentum boost should carriers introduce more affordable data plans alongside new models.
"While iPhone carriers (especially AT&T) may be cautious to reduce monthly data pricing ($30/mo currently at AT&T for unlimited data) given network capacity constraints, introduction of a ‘light’ data plan for $15-20/mo with data caps (e.g. 100-250MB/mo) would further expand iPhone’s addressable market and accelerate uptake with more price-sensitive buyers," he wrote. "However, this may require Apple and the carrier to offer a convenient way to protect ‘light’ data users from unexpected data charges over their limits."
In addition, the RBC analyst refuses to discard the notion that Apple is working on an "iPhone mini," which he now believes could arrive next year and serve as a catalyst for further share gains, momentum and valuation.
"While features, pricing distribution appear to be not yet finalized, we believe an iPhone Nano could be sold on a pre-paid or device only (no SIM card) basis over-the-counter in Apple stores and third party distributors, which are more prominent internationally vs. carrier stores," he told clients. "The prepaid market is massive (est. 60% or 2.4B of 4B total mobile phone users) and dominant in key mature phone markets like Germany, UK, Italy, and emerging markets (Brazil, China, India, Russia, etc.)."
Abramsky reiterated his Outperform rating and $165 price target on shares of Apple.
Comments
I doubt it.
The smaller details display ignorance with regards to Apple's goals. Whether this is the year the iPhone becomes a family of products is a tough call but there's no god damn reason only one of the models would have magnetometers. This is a software platform. Making completely different hardware sensors and features available to different phones is what screwed over every other 'smartphone' producer. The name of this game is making it as easy for one app developer to put out something that takes advantage of as many units in the wild as possible.
RBC you've had a decade to examine how the Macintosh line has developed. Take a hint.
This is a software platform. There is no economy model without a compass.
This is a software platform. There is no economy model without a compass.
I like your thinking, and think you're right. But in respect of other features, I'm worried that Apple is clinging to backwards-compatibility and uniformity; namely the screen. It concerns me that they're going to try to eke out another generation of the iPhone with a 480x320 screen, if that really is the case; especially if they don't go OLED. They're going to have to change the resolution and break backwards compatibility (to, e.g. take advantage of faster processors) at some point. There's certainly no reason for them to sell concurrently models that can't take advantage of the latest software, but there's no reason why they should hold back the latest iterations of the device. They need to come up with (and I'm sure they already have) a strategy for dealing with improvements like screen resolution, memory and processor speed, and I'm interested to see what they'll do. Particularly WRT resolution.
A model specifically designed for Chinese market??
I doubt it.
Why is that? China has both the money and the need (CDMA).
i don't see it. IF the 8gb goes down to $99-150 it will likely be end of line pricing to sell out any last units and then that's it. if 8gb sticks I highly doubt it will be anything more than perhaps a $50 drop until the same terms (no device only at that price, no pre-paid except where local law requires that option)
why not? the build costs are very low on the 8GB model using the new flash chips. it will be the entry level phone to compete with the pre, BB and winmo. a lot of people aren't willing to pay more than $50 or $100 for a cell phone and this will be the perfect way to capture that market.
As for the software platform, looking at the actual iPod touch, without camera, I think there is nothing to go against keeping the current iPhone with 8GB. Just the same way they kept the first iPhone in the loop of the software-improvement.
why not? the build costs are very low on the 8GB model using the new flash chips. it will be the entry level phone to compete with the pre, BB and winmo. a lot of people aren't willing to pay more than $50 or $100 for a cell phone and this will be the perfect way to capture that market.
Exactly !
And this way, as it is a software platform, they will be able to deliver the software to even more people.
Just by the way, didn't they do the same thing with the Whitebook ?
Now he is up to a $165 target!? No mea culpa, no explanation?
(If I am wrong about this, let me apologize in advance).
why not? the build costs are very low on the 8GB model using the new flash chips. it will be the entry level phone to compete with the pre, BB and winmo. a lot of people aren't willing to pay more than $50 or $100 for a cell phone and this will be the perfect way to capture that market.
Absolutely. And it does make sense to differentiate in hardware, not software. Developers are used to it. First gen iPhone, both Touch generations and the 3G all have different hardware, and nobody has a problem with it. The biggest annoyances for them are different OS versions, screen resolutions and input methods ? Apple intelligently avoided those.
A 99-150 USD price point would make this the cheapest multi-touch smartphone on the market, and none of the competitors offers more than 8GB, even at 200-300 USD. With the biggest software selection, all the accessories and car integration, the entire iTunes ecosystem, etc. nothing any competitor can match for many years, this would sell a lot.
Why is that? China has both the money and the need (CDMA).
Because Apple has been chanting the " One phone for all " mantra at every conference and press meet to date.
I like your thinking, and think you're right. But in respect of other features, I'm worried that Apple is clinging to backwards-compatibility and uniformity; namely the screen. It concerns me that they're going to try to eke out another generation of the iPhone with a 480x320 screen, if that really is the case; especially if they don't go OLED. They're going to have to change the resolution and break backwards compatibility (to, e.g. take advantage of faster processors) at some point. There's certainly no reason for them to sell concurrently models that can't take advantage of the latest software, but there's no reason why they should hold back the latest iterations of the device. They need to come up with (and I'm sure they already have) a strategy for dealing with improvements like screen resolution, memory and processor speed, and I'm interested to see what they'll do. Particularly WRT resolution.
Apple is no doubt checking out every combination that makes sense. What they will do going forward is a fools errand for us to try and figure out. They surprise us in many ways, most what we think of as good, but also some we think of as bad.
But often, in the end, they are proven to be right.
I would love to see an OLED screen. There is more than one phone with decent size OLEDS, and the new HD Zune will have one. There are some rumors that the new iPhones will as well, but it's just rumors.
Higher rez is difficult at this point. I'd like to see it, but how useful it will really be in the 3.5" screen, I don't know. It would be a bit sharper when one looks closely, but can more data be presented? Doubtful.
Because Apple has been chanting the " One phone for all " mantra at every conference and press meet to date.
Let me get back to you after you MMS messages and pics on iPhone 3.0. Remember that mantra?
Isn't this the same analyst who was, for the longest time, predicting a two-digit end-2009 price for Apple -- i.e., essentially asking us to short AAPL?
Now he is up to a $165 target!? No mea culpa, no explanation?
(If I am wrong about this, let me apologize in advance).
It doesn't really matter. Situations change, and so should their forecasts.
As Apple says; they're not economists. These guys aren't either, and economists had exceptionally poor results in their own forecasts.
If I expected the economy to drop the way it did, I would have sold Apple when it was $200. The best I can do here is to understand that Apple is a very good company. They have very good products, are exceptionally conservative in their finances (too conservative for some), and are spending good amounts in R&D, as Jobs said they would during the downturn as others are slacking off there.
The stock is bouncing back in a bumpy way, and will get back to $200 at some point. It will move higher after that.
But when it was in the high 70's, that was hard to see, and the economy was in free fall.
Because Apple has been chanting the " One phone for all " mantra at every conference and press meet to date.
The One for All concept is easier to understand if we're talking about software compatibility. That's where it matters most.
Here in the US, a CDMA model likely isn't useful. But in China, a model that more closely conforms to their standards may. China has a market for cells that is substantially larger than anywhere else. That makes the difference.
I'm not a big app downloader, and I do have wifi at home and in the office, but most of my usage is out and about.
I'm sure as hell not buying another smartphone that is SIM-locked. It's like throwing your life away when you are out of the country.
Here in the US, a CDMA model likely isn't useful. But in China, a model that more closely conforms to their standards may. China has a market for cells that is substantially larger than anywhere else. That makes the difference.
Not useful?