UBS on Apple profits

A number of positives and negatives are likely to affect Apple's gross profits in the near future, notes UBS analyst Maynard Um. Among the negatives is argued to be the possibility of an 8GB iPhone 3GS. If real the device would at least be carried by Canada's Rogers, where it would cost $99. It is believed that most iPhone buyers are opting for the $199 and $299 3GS models, rather than the $99 iPhone 3G; in putting out a $99 3GS, Um contends, Apple could leave little incentive to buy the most expensive products.

The company already faces problems with pricing on displays and DRAM memory, which Um suggests could mark its 34 percent gross profit guidance for Q409 as realistic, rather than typically conservative. Adding to the pressure is upcoming hardware, such as new iPods and a rumored device for Verizon, all of which could be forced to sell at more reasonable price levels. Apple is however expected to sell more products through its retail stores, which generate larger margins.

Microsoft is thought to pose both a threat and an opportunity. The October arrival of Windows 7 is expected to attract notebook buyers, who might otherwise consider a MacBook. At the same time, iPhones coming into the enterprise world are said to be replacing Windows Mobile devices. Some steps are still needed to ensure enterprise support, Um contends. These include 24/7 customer support, sharing of the product roadmap, and options other than iTunes when upgrading firmware.

by MacNN Staff