Analyst: Apple iPhone economics aren’t that compelling

“As more cell phone makers launch handsets that also play music, Apple Computer looks poised to defend its turf by going on the offensive with an iPod music player capable of making phone calls,” Patrick Seitz reports for Investor’s Business Daily.

“Until Apple Chief Executive Steve Jobs unveils one on stage at a press event or tech conference — possibly Jan. 9 at Macworld in San Francisco — the iPhone will remain speculation,” Seitz reports.

“‘It makes sense for Apple to come out with an iPhone,’ said Kevin Burden, an analyst with telecom research firm Telephia. ‘With mobile phones becoming pretty good media players themselves, they’re already starting to cannibalize the MP3 player market a little bit, and it’s only going to accelerate,'” Seitz reports.

“If Apple can get even 1% or 2% of the estimated 1 billion cell phones that are sold next year it would be a huge positive, said Richard Stice, an analyst with Standard & Poor’s,” Seitz reports. “A true blockbuster could do far better. Motorola in July said it had sold 50 million of its ultra-sleek Razr handsets. Other analysts said an iPhone business is nothing to cheer about. ‘The economics of something like that aren’t that compelling,’ said Morningstar analyst Rod Bare.”

“Just look at Walt Disney’s failed ESPN Mobile venture, Bare said. Like Apple, the sports network has a strong brand and fanatical audience. But ESPN couldn’t make its mobile phone and service a success. Critics said ESPN’s service was overpriced and the one phone it offered wasn’t very appealing,” Seitz reports. “Don’t expect Apple to make the same mistakes.”

“‘Every time they come out with something, it’s eye-opening and it tends to send the market in a slightly different direction — which is to follow,’ Telephia’s Burden said,” Seitz reports.

Full article here.

MacDailyNews Take: If and when Apple releases the product and reveals sales figures, we will certainly revisit Rod Bare’s ‘iPhone’ comment: “The economics of something like that aren’t that compelling.”

Related articles:
BusinessWeek: Wish List for Apple ‘iPhone’ – December 08, 2006
Apple ‘iPhone’ could cause Nokia, Palm, Motorola, and RIM to really start to sweat – December 07, 2006
Apple shares fall as CIBC sees ‘iPhone’ release delayed – December 07, 2006
Analyst expects 16GB flash-based Apple iPod video player, 4-8GB flash-based ‘iPhone’ models – December 07, 2006
CNET editor Kanellos: ‘Apple iPhone will largely fail’ – December 07, 2006
Prudential: Apple ‘iPhone’ to sport iPod click wheel; video iPod by Q2 – December 06, 2006
RUMOR: Apple’s smart phone project to feature ‘extensive integration with Mac OS X’ – December 05, 2006
Apple begins ‘iPhone’ production – December 05, 2006
Apple needs to think different about data security for ‘iPhone’ – December 05, 2006
Kevin Rose: Dual-battery Apple ‘iPhone’ coming in January; $249 for 4GB, $449 for 8GB – December 03, 2006

47 Comments

  1. I don’t know anything about ESPN mobile but just the sound of it isn’t enticing. What do ESPN and phones have in common? You can sign up people for a service to get sports updates but u don’t need an entire phone and carrier to do that. Can do that with every carrier and phone thru text messeges.

  2. The mighty U.S.S. Apple strikes the reef of communications complacency. So what? More time for Apple to improve OS X, work on the next Office-killer, develop the next generation of iPods, prepare iTV, expand iTunes, etc, etc, etc.

  3. Yes, the economics will be poor for Apple, which is why Nokia, Motorola and all the carriers just can’t wait to get out of the cellular business and go into more lucrative areas such as the US steel industry…

    What a numb-brained comment. Yes, he is right, Apple should just sell MP3 players and stay away from other markets and die on a vine.

    Sounds like this is an analyst who own lots of cellular companies stocks, and not enough AAPL, and is in denial that Apple is going to do some major damage in this industry, turning the typical model upside down.

    All analysts that says stuff like this do is ruining their credibility (some still have a bit), and making themselves look really dumb.

    But I suppose if they are getting paid by certain entities to say such things, their house on the coast they can afford makes it worth it…

  4. My best friend said the same thing when the first iPod came out “it won’t sell, there are other better products out there blah blah blah”

    all I know is that I’m saving my $$ for an iPhone so that I can get rid of my Treo Brick

  5. Comparing this to ESPN is way off. Seriously how many people are so obsessed wth sports they will pay for that???
    How many have internet access on their phone?
    who uses it?

    The music is where it’s at, if my phone can have some songs on it like a shuffle, and allow me to swap out songs, excellent.

    This will be something. If not that big in America then Europe and Japan.

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