Monday, May 05, 2008, 03:40 pm PT (06:40 pm ET)
RBC sees 3G, new carrier model driving iPhone sales of 14MAfter meeting with top Apple brass at an event, RBC Capital Markets' Mike Abramsky claims that the electronics maker may shake up its existing business model for the iPhone and should easily pass its sales target for 2008, especially once 3G devices become available.
The analyst notes that optimism for the iPhone's future was buoyed by a gathering late last week which saw Apple's iPhone marketer Greg Joswiak, chief financial officer Peter Oppenheimer, and Mac desktop manager Tom Boger all meet the financial institution.
While mum on details of what was discussed at the event, Abramsky says RBC now has "further conviction" about Apple's plans and anticipates the Cupertino, Calif.-based firm selling as many as 14 million iPhones during 2008, easily surpassing the official estimate of 10 million units.
The revision comes from a newfound belief that Apple might alter its existing sales strategy to accommodate both carriers and users: where the company has insisted on a fixed price and revenue sharing, it may loosen its restrictions after encountering resistance to its present approach in some areas.
The company "may be planning to allow subsidized pricing, diminishing carrier exclusivity... and supporting global unlocked iphone sales," Abramsky claims, explaining that Apple could also reduce the revenue it shares from monthly plans or even drop the split entirely to secure some carriers' support.
Such a move could lift iPhone sales momentum by as much as 50 or 100 percent, he adds. An official backing of unlocked devices through sales in Apple retail stores and certain carriers could improve international sales by two to three times, according to the prediction.
Apple has increasingly shown a willingness to veer from its familiar approach in public statements and apparent leaks. Chief operating officer Tim Cook explained in February that the company is not locked to one strategy for pairing the iPhone with carriers and on Monday saw his statements echoed by T-Mobile Austria, which now says it may institute flexible pricing for the device itself.
Rethinking its strategy is also all but necessary to bring the iPhone to China, as the country's leading carrier China Mobile is currently refusing talks on the grounds that revenue sharing with a foreign business violates Chinese customs.
Abramsky nonetheless stresses that the device itself is likely to be a significant factor: the widely anticipated 3G-capable iPhone is still predicted to arrive in June and should serve as a catalyst for adoption, particularly with added enterprise and third-party software support built into the version 2.0 iPhone software. Key features that could accompany the update, such as video calling or GPS, could improve some sales — though carrier bandwidth costs could reportedly push Apple away from offering downloadable movies, the analyst says.
The report also observes that any factor in Apple growth, whether carrier adoption or device acceptance, isn't likely to be impeded by an existing monopoly. Most countries have multiple compatible carriers, while the fractured nature of the device market itself means that no one company can claim absolute control. This is seen as giving Apple an opening it doesn't have with its Mac computer line.
"Unlike the PC market, in the fast-expanding Smartphone market Apple faces no incumbent (like Microsoft), creating an opportunity for Apple to take share from existing voice handset vendors like Motorola," Abramsky says.
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