Piper: iPhone 3G a 'forest for the trees' situation
updated 11:40 am EDT, Tue June 10, 2008
Piper: Long view of iPhone
Investors should concentrate on the long-term when considering the impact of the iPhone 3G, says the analyst firm Piper Jaffray. Expanding on earlier arguments, Piper notes that despite Apple losing out on subscription revenue from iPhones, its CY08 and CY09 shipment predictions remain unaffected, at 12.9 and 45 million units. Apple is moreover believed to be charging carriers approximately $466 per iPhone, with companies such as AT&T absorbing a subsidy of roughly $267. Wholesale iPhone prices are only expected to decline to $425 during CY08.
What may be of greater interest to investors is the impact of the App Store, as Piper is predicting an average of two apps sold per user per year, at an average cost of $5 each. If there are 78 million iPhone owners by the end of of CY09 there should be $780 million in extra revenue, with 30 percent ($234 million) diverted to Apple. That in turn could represent 3 percent extra for Apple's CY09 operating income.
More than 2 apps
06/10, 11:56am reply
I think people will buy more than 2 apps per year on average, especially as they are going to be priced low.
Parky
Mac Elite
Joined: Oct 1999
Music too
06/10, 12:17pm reply
We shouldn't discount music and ringtones sales as well. With more phones expected to be sold, there's additional revenue too. While geeks may buy iToner and similar apps, the average cell phone user will not balk at paying $1.99 per ringtone.
hayesk
Professional Poster
Joined: Sep 1999
Razors, Blades, etc.
06/10, 12:35pm (1 reply) reply
I think I see what is happening here. For the first iPhone, Apple could do a few unusual things.
For one thing, this was an Apple 1.0 product, so earlier adopters are happy to pay a premium. (I, for example, still don't begrudge paying $600.)
Second, as a new entry into an industry, but a major player elsewhere, they wanted to test where they could change the business model, and where they would have to live with the status quo.
(continued)
njfuzzy
Fresh-Faced Recruit
Joined: Apr 2001
cya apple
06/10, 01:08pm (1 reply) reply
The only thing that my iPhone is good for now is the $20 a month data plan. I actually have stopped using it. It is worth $50 now, thanks Apple. Fastest depreciating device next to a Ford Focus.
ibugv4
Fresh-Faced Recruit
Joined: Jun 2003
Apple
06/10, 01:23pm reply
Ohh jeez ibugv4m, if you had let Apple know I am sure they would have held off updating their products so that your 1 year old phone didn't devalue or seem old...
rytc
Mac Enthusiast
Joined: Jan 2001
ibugv4
06/10, 01:34pm reply
It's not like your phone will stop working the day the new ones come out. Besides, Apple is offering v2.0 of the software at no charge to us "old" iPhone users, which is something they don't have to do.
64stang06
Mac Elite
Joined: Aug 2007
! ibugv4
06/10, 02:20pm reply
Why would you stop using your iPhone? Besides, are you seriously surprised that a mobile phone depreciated quickly? You do know that you can upgrade your 2G iPhone so you will have the latest software on July 11, right?
Think of it this way – you're saving $10/mo on the data plan by buying early.
Buschman
Fresh-Faced Recruit
Joined: Aug 2001
wow
06/10, 02:23pm reply
So apple is no longer taking a piece of the monthly pie?
And I guess now we know why AT&T raised their data plan price. Its to cover the subsidized cost of the iPhone.
testudo
Fresh-Faced Recruit
Joined: Aug 2001
beg to differ...
06/11, 09:50am reply
All these posts lamenting the iPhone 1.0's devaluation sure seem short-sighted. I, for one, plan to hold on to my original which should be worth a lot more than $600 in about 5 years or so.
(Got mine on the 1st day last year!)
/
pairof9s
Fresh-Faced Recruit
Joined: Jan 2008