In a sidebar accompanying the article “iPhone mania nears fever pitch,” which we’ll get to in a moment, USA Today reports that “home computer market share” for Apple Mac in May 2004 stood at 3.2% and has now rocketed to 7.6% in May 2007. Those figures, which also accompany iPod and iTunes numbers, are sourced: “Apple, USA Today research, Wolf Bytes, IAG Research. By process of elimination, knowing what each source provides, we assume that the market share number came from USA Today research. We are also assuming these figures pertain to the U.S. market as opposed to worldwide which have always been lower historically.
Now, for the iPhone stuff:
Jefferson Graham reports for USA Today, “June 29 is the day many gear-heads have marked on their calendars as iDay, the release of what independent analyst Richard Doherty calls “the most eagerly awaited consumer technology device of the last 20 years.”
“The iPhone is being sold only at Apple’s 200 retail stores, Apple’s website and nearly 1,800 AT&T (formerly Cingular) stores beginning at 6 p.m. local time across the country. AT&T says it will close its stores at 4:30 p.m. and reopen at 6 p.m. Apple would not comment on its plans. No pre-orders are being accepted. Fans are expected to camp out in front of stores for days,” Graham reports.
“Online discussion boards debate shopping scenarios: Should you stand in line with mobs at a big urban store, only to discover they have only a handful of phones? Or go out to the suburbs and try your luck with a smaller, less-busy store?” Graham reports. “Doherty says that big urban outlets generally receive bigger supplies of must-have products, such as the Nintendo Wii and Sony PlayStation 3. He recommends going to the busiest stores that do the most volume.”
Graham reports, “AT&T won’t say how much its data plan for the iPhone will cost. A current “unlimited” data plan — which makes sense if you’re going to be surfing the Web from the phone — is $20 monthly. Couple that with a 900-minute $59.99 monthly voice plan and yearly usage costs could approach $1,000.”
“Gene Munster, who covers Apple for investment firm Piper Jaffray, says the iPhone could nearly double the size of Apple within two years. Apple revenue is now at $24 billion. Munster projects iPhone sales could push that to $42 billion — including $15 billion in iPhone sales — by 2009,” Graham reports. “It’s simple math, Munster says: The wireless industry is 12 times the size of the digital music player market that Apple dominates… ‘Within 10 years, I see Apple selling 100 million phones a year,’ says Charles Wolf, an independent analyst who has covered Apple for 22 years. “Apple will have 7% of the phone market.”
More in the full article here.
Apple will have only 7% of the phone market? We’ll see.
In ten years there will be NO phones as we know them today. This is a load of rubbish.
I think ron is right. Too far out to make that prediction.
If Apple doubles in 2 years, that would be phenomenal.
If recurrent costs are slated to be $1,000 per year (atop the initial $499-$599 cost) I suspect many will say “I don’t need it THAT badly” and its success will be below that envisioned by many.
MikeR: Apple will have only 7% of the phone market?
Yes, but the smartphone market will expand to 7% of the phone market during that time too.
Raymond – how much are you paying a month now for cellular service? discount that from the $1000 because it is a replacement cost.
If you want a voice plan, you will have those costs regardless of the phone you use. If you don’t want to use the data plan (why?) then don’t get the $20 unlimited plan – pay as you go or something. It does not add to the cost of the phone. The phone gives you access to more features you would not otherwise be using because of the lack of access.
Personally, I’m more pleased by the 7.6% market share. Conjecture on the iPhone is great, but not as satisfying as reality.
does this 7% include ipods?
I’m still agog over Mac owning over 7% of the US market. And, that would be the entire market, not just it’s niche. I guess the iMac, MacBook and Mac mini (I want a ‘midi, thanks) are drawing people into that niche that would not normally be there … still. If that niche is only 20%-25% of the total market, that would make Apple the big frog in that pond. “That pond” being the high end of the market, from $1,000 to $5,000 – the Good Stuff.
DLMeyer – the Voice of G.L.Horton’s Stage Page Pod Cast
Once the storage capacity on the iPhone starts going up, who’s gonna even buy iPods anymore?
Tossing out a $1,000 / year figure is just silly.
Going the other way, if you keep your iPhone for 3 years, take the 900 minute plan and the unlimited data plan, having an iPhone will cost about what you’d spend imbibing one latté per day. ($4.40 – making a huge assumption that my math is correct!)
I’ll take an iPhone over a latté any day.
the phone is for sale from the web store the day of release?
i thought it was going to only be brick and mortar for the first little bit….
I know some DINKs who have no landline at home. Home cable is only for internet and cable TV. Now they’re getting rid of the cable TV since they never watch it.
Now they can potentially get rid of the cable entirely since they can do their internet banking & surfing anywhere on their iPhone. What you save on home cable goes a long way towards the iPhone data costs. I’d keep the cable internet for my Mac, aTV, WiiConnect24, iPhone WiFi and Skype.
Where on AT&T is this $20 unlimited data plan?
Last I checked the Blackberry personal unlimited data plan was $34.99. Smartphone connect with unlimited EMAIL was $19.99 (no internet) and Data Connect Unlimited w/ WiFi was $99.99.
See for yourselves:
http://www.wireless.att.com/cell-phone-service/cell-phone-plans/data-cell-phone-plans.jsp
Here’s something to chew on…
If Apple are receiving a 5% kick-back from AT&T (and their other partners) from the customers’ service plans (for two years) and the average monthly bill is $50, Apple – even on a conservative 40 million phones/year – would be receiving (80M x $50)*5% (i.e. $200M) per month: that’s right – $2.4 billion every year just in network commissions, which is – to all intents and purposes – pure profit.
Any “tweak” on that model makes the figures even more incredible.
If the iPhone family (for this is what it must ultimately become) is a runaway phenomenon and sells 75 million units a year (7.5% of today’s market) and the figure becomes (150M * $50)*5% or $375M per month. What if the average plan is $80? Apple’s take now increases to $600M per month. And if the commission is 7.5%, Apple’s global take annually would be over $10 billion, plus the $30 billion odd that it would make from handsets.
Assume that a rump iPod business continues selling around 50M units annually at around $180.00/unit: that’s another $9 billion.
A further assumption would be that the “halo” effect would continue building and Apple might increase CPU sales to a consistent 10 million units annually; at current levels, Apple would look to sales of $12.5 billion.
So that’s $61.5 billion and we’re not even into talking about the “incidentals” of Apple’s business, such as iTS or the pro software title, which currently generate around $1.25 billion every quarter.
If you take all of these areas into account, Apple might be a $70 billion business in three or four years generating a perfectly conceivable $10 billion in profit.
Put a P/E multiplier on that of 33 – which is conservative at the moment (39) – and Apple might be worth $330 billion; if you want to know why Microsoft has its astroturfers working 24/7, there’s your answer – it fears an Apple which is able to compete financially whilst being more able to deliver a better “innovation on investment” ratio.
I don’t normally do the MW thing, but mine is currently ‘blood’! You can draw your own meaning.
This MDN article title is incorrect when it says the “iPhone to sell 100m units per year…” (Wolf only said “phones”).
Anyway, in 10 years there will be no iPhone as we know it today. Itʻll be a “sunset” product all split up into various models and forms and on its way out, just like iPod is today (the kind we now use).
just my 2c
I’ll use wifi for internet access, no data plan necessary. I’m not paying $20/month for dial-up modem speed internet connection. I can’t imagine I would ever need to use the data feature of the iphone when I’m not near any wifi anyway.
Am I the only person who is not at all excited about the iPhone release?
I don’t even want one. And I really enjoy Apple products.
I just see myself dropping it, or worse yet, loosing it and watching $500, my phone, my iPod, and everything else related to my personal electronic communications…just go away. In one shot.
Ouch.
“Am I the only person who is not at all excited about the iPhone release?”
Yes. And coincidentally, you are the only person to ever ask a rhetorical question.
P.S. You could solve the problem of losing the iPhone with a hot glue gun. Just a thought.
That’s the other big last minute announcement bringing good news. AT&T will no doubt offer a good deal on the iPhone service plan (at least a “for the first six months” type of deal) to maximize conversions from other carriers. First there was the perfectly timed “upgrade” to the battery and from surface. The announcement of the iPhone service plan rate will add more fuel to the fire. Apple is the master of marketing…
“Couple that with a 900-minute $59.99 monthly voice plan and yearly usage costs could approach $1,000.”
And this is related to it being an iPhone how? What do you think the yearly usage costs are for a Blackberry? Or a Treo? Or a Verizon VCast phone?
(Verizon 900-min plan with unlimited messaging = $80/mo. Add VCast Internet service = $15/mo. Yearly cost = $1140)
It’s amazing that people are suddenly applying economic calculations to the iPhone that no one cared about before like “yearly usage costs”
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MCCFR – a P/E of 33 may be conservative for Apple, at its current rate, but is aggressive for most stocks … even in today’s minor bubble. Even the Leading P/E of ~25 (the 36 is Trailing P/E) is twice anything regarded as “conservative”. Even today. Just because you don’t remember when single-digit P/Es were the norm does not mean that you get to apply such a tiny yardstick – one stock over a less-than five-year range – to define a term that relates to the entire market over much more than a decade.
DLMeyer – the Voice of G.L.Horton’s Stage Page Pod-Cast
PS: this is what people mean when they note that those who forget the past are doomed to repeat it.
7.6% of the HOME computer market share??? Gee, I figured Apple’s home share would be much bigger than that! I’d always guesstimated it at 15-20%. I find it hard to believe that, when you take all the office computers and POS machines out of the equation, Apple’s market share only jumps a few points!
DL,
I can remember everything of which you write.
However – because of AAPL’s classic tech-stock profile of a) not paying dividends and b) having a massive intellectual property portolfio plus the atypical ‘je ne sais quoi’ of being a ‘cool’ brand with massive loyalty – the P/E ratio attached to the stock almost seems to defy the laws of logic.
But then, if you really want to see financial surrealism in action, go look at Google.
chuck,
there’ll be a 100 GB (hard-disk) iPod on the market before Christmas. It’ll have ALL the features of the iPhone, except the ‘phone’.
It’ll be the best iPod ever.
Think of all the music, videos, MOVIES, podcasts, photos, and GAMES you’ll be able to get on it – as well as an extra back-up for your most important documents etc., etc.
It’ll be a while before the iPhone replaces the iPod for the simple reason that although flash memory is getting cheaper and cheaper, so are the mini hard-disks.
So the price relationship will stay about the same, i.e. one unit (GB) of hard-disk memory is TEN times cheaper than than one unit of flash memory.