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:
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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. The ESPN phone was all about subscribing to exclusive ESPN material and having it delivered to your mobile phone, not about the overall phone experience or even making calls. If the rumors are true, Apple’s iPhone will basically be an iPod strapped to a very cool phone, with easy to use features, a (finally!) good UI, and great connectivity to OS X’s address book, iCal, etc.

    If Apple moves into making a smart phone, then it will almost assuredly be the most easy to use smart phone on the market, as well as an iPod and some other cool features.

    Uncle Steve’s not about to release an iPhone if it doesn’t do something revolutionary. Plus, Apple is looking to make money off of the hardware, not just as a service provider.

  2. In case you’re new to The Game</i>, here’s how it works:

    1. Analyst realizing he didn’t recommend a stock to his clients that is poised to go through the roof, quickly tries to deflate the stock. To do this effectively, he not only trashes the stock but gets some of his equally inept buds to do the same. Result: Sheep sell and the “shorts” make a quick buck.

    2. Once the stock drops say 4% ~ 6%, the same analyst “discovers” new compelling reasons why in fact the stock is great <b>buy and raises the target 10% ~ 20% above last trade. His clients now buy low and immediately sees a gain as the sheep now buy in mass. Programmed institutional trades help here.

    3. Having successfully dumped and pumped, the analyst can goes back to his three our cocktail lunches.

    ” width=”19″ height=”19″ alt=”raspberry” style=”border:0;” />

  3. Macmania

    You said dumped, pumped, analyst and cocktail all in one sentence.

    We don’t need that kind of sexual inyourendho here. ” width=”19″ height=”19″ alt=”wink” style=”border:0;” />

  4. Jimbo– I always thought your name sounded like a porn star; good call though! ” width=”19″ height=”19″ alt=”wink” style=”border:0;” />

    Seriously, how can Bare compare the ESPN phone with an Apple product. First of all, APPLE IS A ELECTRONICS HARDWARE AND SOFTWARE COMPANY THAT HAS A PROVEN TRACK RECORD OF DESIGNING AND MANUFACTURING POPULAR CONSUMER ELECTRONIC DEVICES. ESPN is a SPORTS NETWORK. Gee, do think Apple might have just a little bit more to bring to the table, Rod???

    Rod… you’re a dick.

  5. I do hope Apple makes a cell phone. The cell phone industry needs a player like Apple. Current cell phones are NOT easy to use, they are ugly and poorly designed. I hate my cell phone, it has so many badly designed “features”. I don’t need to look for a better one, because that phone doesn’t exist.
    I hope apple deletes some of the stupider “features” on its phone if it building one.
    Of course Apple cannot fix some of the other cell phone nightmares like bad connections, dropped calls etc.
    Will entering that business be good for Apple, I can’t tell weither it would be good for them.

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