Apple expected to have 100M iPhone subscribers by end of 2011
With a total user install base of 30 million at the end of 2009, Apple's number of active iPhone subscribers is expected by one prominent analyst to more than triple to 100 million by the end of 2011.
Analyst Katy Huberty with Morgan Stanley issued a note to investors this week citing an AlphaWise survey that suggests more than half of all iPhone users plan to upgrade to Apple's latest handset. Factoring in new purchases as well, she expects Apple to sell at least 42 million iPhones in calendar year 2010, significantly growing the active iPhone subscriber base. Her "bull case" scenario goes even farther, with 48 million sales this year.
"We see the iPhone installed base rising from approximately 30M subscribers at the end of 2009 to over 100M by the end of 2011," she wrote.
Earlier this year, Apple reported having sold more than 85 million total iOS-based devices. However, that total includes the iPod touch, which does not include a subscription, as well as users who upgraded their iPhone to a newer model while deactivating their previous handset. In April, it was suggested that about 30 percent of Apple's first-generation iPhones, released in 2007, remain in use today.
The upgrade rate for iPhone 4 is expected to be significantly higher than previous generations. While the AlphaWise survey found that 58 percent of current iPhone users intend to upgrade this year, that's well above the 18 percent who said they would upgrade in November 2008, and the average 25 percent since the 2007 launch.
Huberty's base case sales of 42 million iPhones in 2010 assumes a 30 percent upgrade rate for existing customers. But that number goes up to 48 million if 50 percent of customers upgrade in 2010.
The analyst said she sees at least 9 million total iPhone upgrades in 2010, increasing to 19 million renewals in 2011. Customers will stick with the iPhone, she said, because redesigned hardware brings new features, software on the App Store creates "stickiness" with consumers, and 57 percent of the U.S. installed base is not fully upgradeable to iOS 4 with multitasking.
Many iPhone 3G customers who signed a contract in 2008 will see their two-year agreements end soon, and those two-year-old handsets are not capable of multitasking with the iOS 4 upgrade. First-generation iPhone owners will not be able to run iOS 4.
Another factor driving upgrades is AT&T's decision to push forward upgrade eligibility by 6 months. Customers who are upgrade eligible for a new iPhone at any point in 2010 may take advantage of the fully subsidized price of iPhone 4 on its June 24 launch. AT&T customers can verify their upgrade eligibility by going to att.com/iphone or dialing *639#.
Huberty has also been a proponent of Apple and carriers offering a lower cost of ownership for the iPhone. AT&T recently instituted tiered data plans, with the high-end offering costing $25 per month -- $5 less than before -- but with a new 2GB monthly data cap. Users can also obtain an entry level 200MB-per-month plan for $15. The analyst noted that AT&T's changes reduce total cost of ownership of the iPhone by about 20 percent.
Analyst Katy Huberty with Morgan Stanley issued a note to investors this week citing an AlphaWise survey that suggests more than half of all iPhone users plan to upgrade to Apple's latest handset. Factoring in new purchases as well, she expects Apple to sell at least 42 million iPhones in calendar year 2010, significantly growing the active iPhone subscriber base. Her "bull case" scenario goes even farther, with 48 million sales this year.
"We see the iPhone installed base rising from approximately 30M subscribers at the end of 2009 to over 100M by the end of 2011," she wrote.
Earlier this year, Apple reported having sold more than 85 million total iOS-based devices. However, that total includes the iPod touch, which does not include a subscription, as well as users who upgraded their iPhone to a newer model while deactivating their previous handset. In April, it was suggested that about 30 percent of Apple's first-generation iPhones, released in 2007, remain in use today.
The upgrade rate for iPhone 4 is expected to be significantly higher than previous generations. While the AlphaWise survey found that 58 percent of current iPhone users intend to upgrade this year, that's well above the 18 percent who said they would upgrade in November 2008, and the average 25 percent since the 2007 launch.
Huberty's base case sales of 42 million iPhones in 2010 assumes a 30 percent upgrade rate for existing customers. But that number goes up to 48 million if 50 percent of customers upgrade in 2010.
The analyst said she sees at least 9 million total iPhone upgrades in 2010, increasing to 19 million renewals in 2011. Customers will stick with the iPhone, she said, because redesigned hardware brings new features, software on the App Store creates "stickiness" with consumers, and 57 percent of the U.S. installed base is not fully upgradeable to iOS 4 with multitasking.
Many iPhone 3G customers who signed a contract in 2008 will see their two-year agreements end soon, and those two-year-old handsets are not capable of multitasking with the iOS 4 upgrade. First-generation iPhone owners will not be able to run iOS 4.
Another factor driving upgrades is AT&T's decision to push forward upgrade eligibility by 6 months. Customers who are upgrade eligible for a new iPhone at any point in 2010 may take advantage of the fully subsidized price of iPhone 4 on its June 24 launch. AT&T customers can verify their upgrade eligibility by going to att.com/iphone or dialing *639#.
Huberty has also been a proponent of Apple and carriers offering a lower cost of ownership for the iPhone. AT&T recently instituted tiered data plans, with the high-end offering costing $25 per month -- $5 less than before -- but with a new 2GB monthly data cap. Users can also obtain an entry level 200MB-per-month plan for $15. The analyst noted that AT&T's changes reduce total cost of ownership of the iPhone by about 20 percent.
Comments
Probably makes more bank than you.
In 2009 there were 30 million iPhones. If they just maintain those sales figures each year that alone is 90 million by 2011. And we all know popularity is only growing. Sales figures prove that. Not to mention the new countries including China who's sales numbers are most likely just getting started.
T-Mobile USA is a technological no-brainer. iPhone 4 supports GSM 1900, which T-Mobile USA uses, and if the bozos at AT&T can get Visual Voicemail to work, pretty much anybody else should be able to. I expect Apple to announce a T-Mobile deal about 3 nanoseconds after their 5 years of AT&T exclusivity torture is over. Unless, of course, Apple can somehow buy out of the AT&T contract before 2012.
Not so fast with Verizon. Seriously, does Apple really, truly want to design, prototype, bug-fix, beta-test, then manufacture a CDMA phone? Just for Verizon and a few international carriers who use CDMA? When 4G LTE is just about to be rolled out? Yes, GSM and CDMA will both be obsoleted by 4G in a year or two, but at least Apple's GSM iPhone has already had a 3 year product lifespan.
I wonder if Huberty's numbers include a possible 4G-enabled iPhone next year.
Apple doesn't have ANY subscribers. Article title fail.
Yeah, hey...does that Apple iPhone service come in white?
I'm selling my phone to a overseas employee of my company.... So my iPhone 3(no G) will live on on some unnamed phone network.
I figure for every 3G or 3GS upgraded, 45% will go grey market, and 45% will become the 'significant others/childs' phone. As long as the charge holds, these phones are pretty indestructible (he says using his warranty replaced iPhone (bad audio jack sensor).
Katy Huberty? Oh, she's a sharp one.
Probably makes more bank than you.
Speak for yourself, Frank.
Katy Huberty? Oh, she's a sharp one.
As I read the article, I think she missed one fundamental point that when one user upgrade his/her phone to the new version, the number of user will still be the same - only the phone is different. Unless they are capturing new subscribers, the growth won't be that massive.
NICE!
http://www.macrumors.com/2010/06/17/...-ipad-and-3gs/
Agreed.
This goes against Apple's philosophy of being a niche/high-end product but I think one very important debate they should have at the Cupertino HQ is the following: are they in this fight to win or not? They claim they want to make great product and that they are at the intersection of liberal arts and technology. That is nice and all but what good is it when you pioneer something and have others copy it?
During the PC war, Microsoft was ingenious enough to understand that if they made Windows the default operating system, they would dominate the market and could command a premium price afterward. It was brilliant and it worked.
I really believe Apple should care less about profit margins right now and focus on making sure their devices are more accessible.
Unfortunately, I don't see Apple doing this. They don't seem to want to offer a variety of mobile phones or partner up with more carriers. It's a shame, they could really crush Android and Nokia right at this moment.
T-Mobile USA is a technological no-brainer. iPhone 4 supports GSM 1900, which T-Mobile USA uses
Actually T-Mobile uses 1700 and 2100 Mhz. So it wouldn't be compatible with the iPhone at all for 3G at this time. The T-Mobile supports 1900 Mhz for 2G service only, so you're stuck there until Apple does a complete revamp of the hardware. Still, it's nothing short of a few drivers and a chip that can support 1700/2100 Mhz. It's not like jumping from GSM to CDMA.
... They claim they want to make great product and that they are at the intersection of liberal arts and technology. That is nice and all but what good is it when you pioneer something and have others copy it?
During the PC war, Microsoft was ingenious enough to understand that if they made Windows the default operating system, they would dominate the market and could command a premium price afterward. It was brilliant and it worked.
I really believe Apple should care less about profit margins right now and focus on making sure their devices are more accessible.
Unfortunately, I don't see Apple doing this. They don't seem to want to offer a variety of mobile phones or partner up with more carriers. It's a shame, they could really crush Android and Nokia right at this moment.
Well, contrary to popular belief, and unlike Google, and Microsoft before them, I don't think Apple is necessarily interested in World Domination.
Perhaps more importantly, analogies with Mac OS vs. Windows (often made from a flawed perspective to begin with) don't really carry over to the current market, which doesn't resemble the market you allude to in your analogy (and your analogy doesn't accurately describe what happened in that market anyway). No one was giving away a "free" OS back then that was worth anything, so the current dynamic vs. your analogy is entirely different. Even Microsoft will have difficulty pushing WP7 against free Android, so the idea that Apple should license iOS doesn't make any sense. I also don't think it makes any sense for them to make a bunch of different models themselves -- one phone to rule them all is their best strategy.
(And Microsoft did not become the dominant OS vendor in the PC market in the way you describe. The IBM PC and clones became the dominant platform by virtue of IBM's reputation at that time in the business world, and Microsoft was lucky enough to be invited along for a free ride. Microsoft then leveraged that advantage on DOS in the transition to Windows to hold onto and extend their market dominance.)
I do, however, think it would be worth creating a CDMA phone and expand onto more carriers in the US (and elsewhere), but only if they can do so without being forced to dumb down the phone due to carrier demands or technology limitations.
"Huberty has also been a proponent of Apple and carriers offering a lower cost of ownership for the iPhone. "
Agreed.
This goes against Apple's philosophy of being a niche/high-end product but I think one very important debate they should have at the Cupertino HQ is the following: are they in this fight to win or not? They claim they want to make great product and that they are at the intersection of liberal arts and technology. That is nice and all but what good is it when you pioneer something and have others copy it?
During the PC war, Microsoft was ingenious enough to understand that if they made Windows the default operating system, they would dominate the market and could command a premium price afterward. It was brilliant and it worked.
I really believe Apple should care less about profit margins right now and focus on making sure their devices are more accessible.
Unfortunately, I don't see Apple doing this. They don't seem to want to offer a variety of mobile phones or partner up with more carriers. It's a shame, they could really crush Android and Nokia right at this moment.
I don't get it. Apple doesn't set rates, AT&T does. Apple can affect TCO only marginally. AT&T's lowering of the data rates is going to pull a lot of new people into the market, much more than anything Apple could do.
Further, Microsoft was not ingenious and hardly brilliant. The PC hardware market was not created by them, and they were never in that market from day one. They were merely in a fortunate position to exploit it. They played the high cards they were dealt. The only "ingenious" thing Microsoft did was use illegal means to force what few competitors they had out of the PC OS market.
None of this replicable. Not sure what you are suggesting for Apple.
As I read the article, I think she missed one fundamental point that when one user upgrade his/her phone to the new version, the number of user will still be the same - only the phone is different. Unless they are capturing new subscribers, the growth won't be that massive.
They have a growth plan for 100 Apple stores in China and the rest of Asia.
The number is not far fetched.
With the cost of some products, like the original iPhone, I'm surprised people have them de-activated. We simply jailbreak/activate them and pass them down the line. If and when the battery dies, we'll replace them ourselves and keep using them or send them off to some 3rd world country where they will be used until they break.
We still have a 10GB iPod (the one with the row of buttons above the click wheel) and a iPod mini (which has had it's 4GB HD replaced with 8GB flash card) and both of these work just fine in docks, both at home and in the car. Why throw away something which still looks and functions as well as it did when it was first bought?
I'm sure that there isn't anyone on this planet who actually has anywhere near an accurate figure of how many iPhones are actually in daily use across the globe.