RBC on Apple iPhone plans

Sales of the iPhone in 2008 will exceed Apple's projected goal of 10 million and reach 14 million, in part due to some radical changes to the device's distribution schemes, argues RBC analyst Mark Abramsky. He first agrees with suggestions that AT&T may subsidize the iPhone by up to $200, reducing the price of an 8GB model to $199; this could increase sales by between 50 and 100 percent. In exchange, however, Apple would likely have to agree to drop revenue sharing, which has been extremely lucrative but an obstacle to adoption in countries like China.

Abramsky further supports the notion that Apple will scale back exclusivity in some regions, possibly dropping it entirely. Countries currently without the iPhone (such as Australia) would be primary candidates, but Abramsky notes that the strategy could also applied to the US, opening the iPhone to T-Mobile subscribers. This though would require a mutual deal between Apple and AT&T, overturning their five-year exclusivity agreement.

Fully unlocked iPhones are another possibility, but these would probably be sold at the same price as current ones, says Abramsky. The major advantage would be in sales outside North America, where unlocked phones are more accepted; in theory, the rate of adoption could increase by two to three times.

Abramsky predicts that even with unlocked $400 iPhones, Apple's margins should not be significantly hurt. A gross margin of 35 percent is expected, an improvement on last quarter's 32.9.

by MacNN Staff