Apple could sell 12 million iPhones next year - analyst
Apple Computer could sell as many as 12 million iPod-enabled cell phones next year, potentially boosting earnings by as much as 10 percent above current Wall Street estimates, one analyst says.
While he does not expect Apple to announce a cell phone at its Showtime event this week, PiperJaffray analyst Gene Munster told clients on Monday that he continues to expect the company will ship an "iPhone" within the next 4 to 6 months.
"That said, we have not seen any concrete evidence that the product is near completion or launch," Munster wrote in a research note.
Still, the analyst notes that there have been several indicators that a cell phone project at Apple is underway, including the company's registration for the iPhone.org domain name and its "Mobile Me" trademark filing.
Munster, in his research note, also referred to recent comments from Japanese cell phone maker, Softbank, and Apple's own chief financial officer, Peter Oppenheimer.
"Also, given music enabled handsets are being introduced by potential handset maker competitors (ex: LG Chocolate), Apple will likely need to get in the game fairly soon to avoid missing the early adopters," he wrote.
Assuming Apple ships an iPhone early next year, at the Macworld 2007 trade show or a special event shortly thereafter, Munster expect the company will sell between 8 million and 12 million units in the full calendar year.
"We believe the most likely iPhone buyers would be those who have previously owned a higher average selling price hard disk drive iPod," he told clients. "We estimate that by the end of the December 2006 quarter, Apple will have shipped 34.5 million hard disk drive iPods at an average price of $323."
"Assuming 1.2 iPods per owner and assuming 33 percent of these higher average selling price iPod buyers buy an iPhone in 2007, we estimate approximately 10 million iPhones could be sold," the analyst added.
As part of his 2007 iPhone sensitivity, Munster is assuming an iPhone operating margin of 10 percent -- slightly less than the 12 to 15 percent achieved by major handset makers such as Nokia and Motorola.
"We are using a 10 percent operating margin in our sensitivity, which is more in line with the op margin of Palm," he wrote. "We believe Palm provides a better margin benchmark than Nokia and/or Motorola, given Palm is focused on high end devices and the devices are made with an ODM partner, which we would expect to be the case for the iPhone."
Apple currently has an overall company operating margin of 13 percent, so while the iPhone would add incremental revenue and earnings, it could have a slight negative margin impact, Munster said.
The analyst maintains an "Outperform" rating on shares of Apple with a price target of $99.
Last week, American Technology Research analyst Shaw Wu said his research indicated that an Apple-designed smart phone has moved from concept to prototype and recently has progressed to near completion as a production unit.
Wu later pointed to a recent Apple patent filing as proof that Apple holds ambitions to enter the cell phone market.
While he does not expect Apple to announce a cell phone at its Showtime event this week, PiperJaffray analyst Gene Munster told clients on Monday that he continues to expect the company will ship an "iPhone" within the next 4 to 6 months.
"That said, we have not seen any concrete evidence that the product is near completion or launch," Munster wrote in a research note.
Still, the analyst notes that there have been several indicators that a cell phone project at Apple is underway, including the company's registration for the iPhone.org domain name and its "Mobile Me" trademark filing.
Munster, in his research note, also referred to recent comments from Japanese cell phone maker, Softbank, and Apple's own chief financial officer, Peter Oppenheimer.
"Also, given music enabled handsets are being introduced by potential handset maker competitors (ex: LG Chocolate), Apple will likely need to get in the game fairly soon to avoid missing the early adopters," he wrote.
Assuming Apple ships an iPhone early next year, at the Macworld 2007 trade show or a special event shortly thereafter, Munster expect the company will sell between 8 million and 12 million units in the full calendar year.
"We believe the most likely iPhone buyers would be those who have previously owned a higher average selling price hard disk drive iPod," he told clients. "We estimate that by the end of the December 2006 quarter, Apple will have shipped 34.5 million hard disk drive iPods at an average price of $323."
"Assuming 1.2 iPods per owner and assuming 33 percent of these higher average selling price iPod buyers buy an iPhone in 2007, we estimate approximately 10 million iPhones could be sold," the analyst added.
As part of his 2007 iPhone sensitivity, Munster is assuming an iPhone operating margin of 10 percent -- slightly less than the 12 to 15 percent achieved by major handset makers such as Nokia and Motorola.
"We are using a 10 percent operating margin in our sensitivity, which is more in line with the op margin of Palm," he wrote. "We believe Palm provides a better margin benchmark than Nokia and/or Motorola, given Palm is focused on high end devices and the devices are made with an ODM partner, which we would expect to be the case for the iPhone."
Apple currently has an overall company operating margin of 13 percent, so while the iPhone would add incremental revenue and earnings, it could have a slight negative margin impact, Munster said.
The analyst maintains an "Outperform" rating on shares of Apple with a price target of $99.
Last week, American Technology Research analyst Shaw Wu said his research indicated that an Apple-designed smart phone has moved from concept to prototype and recently has progressed to near completion as a production unit.
Wu later pointed to a recent Apple patent filing as proof that Apple holds ambitions to enter the cell phone market.
Comments
But I'd buy an Apple iPhone in a heartbeat. I think this analyst is greatly underestimating the number of potential buyers of the iPhone.
if they have there own network they may see a lower sales then if you can use it more networks.
"Also, given music enabled handsets are being introduced by potential handset maker competitors (ex: LG Chocolate), Apple will likely need to get in the game fairly soon to avoid missing the early adopters," he wrote.
Right, so he's supposed to be tracking Apple's market strategy?
Next.
Apple would be doing damned well to overtake SE or LG from no market to being the fifth or sixth biggest mobile handset company in the world. It would also mean they'd have to ship worldwide too as they aren't going to sell that many with just the US market or even the US AND European markets.
Source of figures: http://www.cellular-news.com/story/19008.php
I'm a minority but...I hate cell phones (how do you guys do it? I could never allow myself to make myself available to talk to anyone at anytime) and I don't particularly care for listening to music outside my house.
I hear what you're saying, most people have no control over their cellphones (or at least it seems that way). For me, I carry my cell absolutely everywhere. However, I am not available to everyone all the time and I do not use it everywhere. For instance in a restaurant. I think every cell nowadays has an silence/ignore button that most people need to learn how to use it. Also, before bed, I turn the phone off.
As for the music, I only use my iPod at home or at the gym. Plus, because I have my cell with me all the time, so it must fit nicely in my pocket. The only thing that is ever hanging off my belt is a security badge for work. Anything that's going to replace my current phone must be smaller or same size.
i just want a regular phone. i don't need all that extra b.s.
There are several of those currently available, so looks like you're in luck.
Given the complete lock that most US phone providers have over their customers' handset choices, I just can't see a scenario in which my carrier (Sprint) would ever offer an Apple phone.
I agree. That's why the micro-carrier approach makes the most sense for Apple. Additionally, Apple would like this model because it gives them end-to-end control of the sales and customer-service experience. They don't have to direct you to anyone for anything.
I'm a minority but...I hate cell phones (how do you guys do it? I could never allow myself to make myself available to talk to anyone at anytime).
The more recent models have the capability of being turned off when you don't want to be reached.
The more recent models have the capability of being turned off when you don't want to be reached.
Yes, you can turn them off, but for the urgent matters,I always keep my phone on, depending of the situation I might turn it to silent however. Best way is to only give your private number to people who know when it's appropriate to call you, and try to avoid company paid phones, firms like to believe that if they give you a this marvelous asset they can call you when ever they want.
Yes, you can turn them off, but for the urgent matters,I always keep my phone on, depending of the situation I might turn it to silent however. Best way is to only give your private number to people who know when it's appropriate to call you, and try to avoid company paid phones, firms like to believe that if they give you a this marvelous asset they can call you when ever they want.
My phone has two numbers. I've my business number which gets switched to answerphone when I'm not working and my personal number which is a closely guarded secret. Depending on which rings, I get a different ringtone.
Easy.
Considering how popular text messaging is now, Apple would be serving the needs of their users by providing more smart phone capabilities.
--Problems with carriers
Apple would be better off just selling a $300 GSM phone direct to consumer. People can then pop in a GSM chip to use with their existing GSM carrier or new carrier. Keep the same number, contacts... very easy.
Qwerty keyboard
GSM
wifi
bluetooth 2.0
USB 2.0
--Why would you want it to be a "regular" phone?
Considering how popular text messaging is now, Apple would be serving the needs of their users by providing more smart phone capabilities.
--Problems with carriers
Apple would be better off just selling a $300 GSM phone direct to consumer. People can then pop in a GSM chip to use with their existing GSM carrier or new carrier. Keep the same number, contacts... very easy.
Qwerty keyboard
GSM
wifi
bluetooth 2.0
USB 2.0
1000% Agree. Gimme that I'll call it a day.
--Why would you want it to be a "regular" phone?
Considering how popular text messaging is now, Apple would be serving the needs of their users by providing more smart phone capabilities.
--Problems with carriers
Apple would be better off just selling a $300 GSM phone direct to consumer. People can then pop in a GSM chip to use with their existing GSM carrier or new carrier. Keep the same number, contacts... very easy.
Qwerty keyboard
GSM
wifi
bluetooth 2.0
USB 2.0
Cool, sign me up. As long as it's at or under 4.5" x 2" x 1".
--Why would you want it to be a "regular" phone?
Considering how popular text messaging is now, Apple would be serving the needs of their users by providing more smart phone capabilities.
--Problems with carriers
Apple would be better off just selling a $300 GSM phone direct to consumer. People can then pop in a GSM chip to use with their existing GSM carrier or new carrier. Keep the same number, contacts... very easy.
Qwerty keyboard
GSM
wifi
bluetooth 2.0
USB 2.0
Text messaging is more popular in Europe where they have more expensive phone service. Beyond kids, not many people use "texting" in the US.