Report: iPhone could make or break Apple's bank
Wealth management experts have banked on the iPhone as the driving force behind Apple's near-future growth — but cautioned that the fourth major platform in the company's lineup could also eat away at the very iPod share that has helped build its recent success.
In a note directed only towards those private investors, the researcher remained confident that developments in Apple's cornerstone iPod and Mac sales would carry the California-based company upward, growing the former to 24 percent of the world's media player share and its share of computers by half a percentage point. Mac OS X Leopard in particular would help the Mac, he said.
However, Andersson labeled the iPhone as the real spark for Apple's flame in 2007. It would help jumpstart Apple's revenues both during the June launch of the handset in the US as well as towards the end of the year, when the device should make its first appearance in Europe.
He added that there was no reason to doubt that Apple would meet its target share for the end of next year, alluding to the company's tendency to rarely leave its product line unaltered.
"We think the iPhone can gain 1% of the worldwide market share by 2008," Andersson pointed out, "particularly since we expect more than one model in the next two years."
This optimistic forecast, however, presented a mixed blessing from the analyst's point of view. To him, the self-same explosion of iPhone sales could potentially tear people away from the iPod, creating a squeeze as shoppers are increasingly forced to choose between one or the other. Other music-savvy cellphones were also a possible threat to the iconic music jukebox and the 47 percent of profits it should generate for Apple this year, he said.
Similarly, the periods immediately before and after the iPhone's debut were also seen as treacherous paths where Apple could scarcely afford to stumble if it hoped to continue its excellent track record. "Negative news, delays in the iPhone launch, quality or usability issues" could easily damage Apple's reputation and its stock, Andersson cautioned.
The UBS specialist used this reasoning to justify issuing a "hold" rating on the stock, as the promise of the future gadget was offset by its potentially volatile side-effects.
"The recent rally of the stock reflects much of the iPhone expectations and leave little room for any negative news flow," Andersson wrote.
131 Comments
I suppose I can cross UBS off the list. If an iPhone sale means a "lost" iPod sale, then all that means is even more money for Apple. Besides, there's growing market pressure for more function convergence, if Apple can make it work, then that's another worthy market for them to tap. Apple also has plenty of money and is very profitable, so I don't see how iPhone development would have to mean hurting other divisions and other projects because they can hire more people to cover a new project, so I don't see how it has a strong chance of hurting the development of other products.
I am tired of hearing the same old analyst's canard that company X's new product B is a mixed blessing because it might cannibalize sales of their other product A. This refrain has been played so often that people have started to believe it. The fact is, successful manufacturers are constantly seeking to cannibalize their own sales with new product because if they aren't doing it, then somebody else will beat them to it. Cannibalizing your own sales means that you're consistently developing new, more advanced, and more desirable products.
You want a company that doesn't do a good job of cannibalizing its own product? Take a look at Motorola and it's boom and bust cell phone cycle.
Everytime I read this... The fact is the iPhone doesn't replace the iPod or even the iPod nano. There's a lot of people out there still who don't want to have a cellphone or have to sign mutl year agreements...
If the iPhone eventually becomes flexible, so you can use any carrier, prepaid plans, etc... then it might be close to being bigger than the iPod. But the iPhone will likely have to be charged everyday... doesn't have as much storage as an iPod, it's bulkier than the nano. If they ever release a widescreen ipod with all the features of the iPhone except the phone part, I'd buy it...
And AAPL isn't also gaining because of the best laptops on the market, Intel Macs with Parallels, new OS Leopard due soon and new 8 core, new FCPro Suite due and new CS3 and ... Oh sorry it's just due to iPhone how silly of me ...
I am tired of hearing the same old analyst's canard that company X's new product B is a mixed blessing because it might cannibalize sales of their other product A. This refrain has been played so often that people have started to believe it. The fact is, successful manufacturers are constantly seeking to cannibalize their own sales with new product because if they aren't doing it, then somebody else will beat them to it. Cannibalizing your own sales means that you're consistently developing new, more advanced, and more desirable products.
You want a company that doesn't do a good job of cannibalizing its own product? Take a look at Motorola and it's boom and bust cell phone cycle.
This is THE point. This what they said about the mini->nano transition. 'They're replacing such a successful product...' blah blah blah. This is another area the Apple really excels at the moment. They don't wait for a product to be on the decline and dragging them down to find 'the next great thing' they go ahead and find it beforehand. tundra is right, you want them to cannibalize their own sale, at the right time, and with something even better.