Apple could potentially sell 30 million iPhones in 2007

“I have read article after article, on this site included, about the reasons why the iPhone will fail to ship Apple’s forecast of 10 million units in 2007. Having spent a lot of time covering wireless and working under one of the Street’s top ranked wireless analysts for some time, I believe most of the negativity is baseless,” Will Gabrielski writes for SeekingAlpha.

MacDailyNews Note: Just a note, so nobody gets the bright idea to try to move the goal post on iPhone: Apple’s official goal is 10 million iPhone units (all models) in FY 2008, Apple’s first full year in the market, not “in 2007.” Since Gabrielski get most everything else correct, we’ll assume it’s just a misunderstanding or a typo, but it’s telling that Gabrielski still thinks Apple can hit their FY 2008 goal in the last half of 2007. Apple’s goal is very conservative. “Under-promise and over-deliver” always works much better than vice versa.

Gabrielski continues, “First, people gawk at the price. Uh, the iPhone is priced competitively with most other smart phones and has a $200 to $300 MP 3 players embedded. The iPod, which has 70% plus market share in Apple’s target market for the iPhone, in the US, shipped about 20 million units in the fourth quarter alone, so it wouldn’t take too much cannibalization for an iPod replacement cycle alone to drive strong unit sales. Also, Cingular will likely subsidize the cost of the phone by at least $150.”

“Second, Cingular has about 60 million subs. The average replacement rate on these subs is about 1.5 to 2 years. At the mid-point, the company will sell about 35 million phones in 2007 to existing customers. Given the large installed base of iPod users, their replacement rate, iPod cannibalization, and the potential for churn at other carriers looking to change to Cingular to grab an iPhone, it’s not too hard to get to 10 million units,” Gabrielski writes. “Third, Apple will likely announce at least one more phone this year, possibly at the lower end with a modified OS with a longer battery life that is geared more towards iPod users than pure wireless customers.”

Gabrielski goes through some more good reasons why iPhone will succeed and then writes, “I have written in the past about my expectation for potentially 30 million iPhones to ship in 2007. I stand by this despite the negativity.”

Clearly, Gabrielski gets it. More reasons why Apple’s iPhone will succeed in his full article here.

[Thanks to MacDailyNews Reader “Macaday” for the heads up.]

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37 Comments

  1. I dont think the iPhone will cannibalize the iPod that much. The majority of iPod buyers buy the lower end iPods and the people who buy the higher end iPods usually do so to fit their entire music collection on them.

    Last I checked the iPhone only has 8GB max which wouldn’t hold many high end buyers’ collections.

    I’ll likely have both and iPhone and a larger capacity iPod.

  2. I don’t have much faith in that article.

    He makes too many assumptions.

    Jobs has already said that he DIDN’T want the phone to be subsidized. We’ll see on that one.

    Most of Apple’s 21 million iPods were less expensive models, a large number were $79 Shuffles.

    We don’t know if Apple will come out with more models in 2007, or wait until sometime in 2008, after having ecaluated the sales and feedback.

    Many people get either free, or $19 to $49 phones, they are rarely going to be candidates for an expensive smartphone, built-in iPod or not. The estimate is that about 10% of AT&T’s customers are smartphone customers, that would put the total a about 6 million. Will all of them switch? No way! The push, Blackberry mail, the iPhone uses is from Yahoo. Consumer only, no security as RIM offers. As most customers use for this is for business, that cuts out a big portion.

    Sync with Outlook? Who knows? Without it, again, it will be limited to consumers.

    EDGE only might also put off those on the high end who want faster response.

    I think Apple’s numbers, which other are questioning, are more realistic.

    30 million! That would be a laugh, even if Apple COULD get that many produced!

  3. I may be misunderstanding what the author wrote, but Cingular will NOT subsidize the phone anymore than it already does. From what I’ve read, they already subsidize it by about $129 to Apple.

    Apple supposedly won’t allow a carrier to drop the price of the phone, which is good, because it devalues it.

    Apple wants to be able to sell it for $499 in it’s stores and every other outlet.

  4. Giiven the features of this device, the passion of the Mac community, and the dearth of comparable devices I believe Steve’s goal will be reached within 6 months of release. I predict Apple will ship 10M iPhones by the end of 2007. You heard it here first. I can’t speak with the definitiveness of Will Gabrielski but my gut says 10M isn’t going to be a difficult goal to reach.
    My $.02

    MW=chance as in there is a chance this will be correct.

  5. Gross, et al.:

    Apple went with EDGE because it is Cingular’s most widely available data network. While they are working on installing more 3G, EDGE has coverage NOW. Better slower access in more places than faster access in fewer places. Apple can upgrade the phone as faster networking becomes more available.

    Apple also gets it.

  6. If iPhone brings Cingular customers from other networks of course they will discount it further. Yo will see the price go down to the median of smart phone prices.

    Which will give other networks a major problem.

    And which is why the Europeans, Japanese and every other country’s operators will be falling over themselves to compete for Apple’s business.

    Go Apple.

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