Apple Inc. may be planning to manufacture as many as 8 million iPhones before the end of the 2007 calendar year, ahead of second-generation models that will reportedly include more storage capacity and brandish higher-resolution displays, according to researchers at RBC Capital.
"Consistent with its iPod product cycles, Appleâs 2007 plans may include offering higher memory (e.g. 16GB) iPhones, while refreshing existing models at lower cost (possibly a refreshed 8GB version at $349 - $399) to expand demand," the analyst wrote.
Abramsky said the Cupertino-based firm's build plans appear to include inventory for both Canadian and European launches between the fourth quarter of 2007 and the second quarter of 2008, as well as inventory for an iPhone roll-out in Asia by mid-2008.
By the Spring of 2008, the analyst also see "a 3G/HSDPA iPhone" and says Apple appears to be planning a larger display (480x720, vs. 480x320 currently) for that specific model, or others.
"The higher definition version could be compelling, able to replay content in near HD as well as splay resolution of digital cameras and video recorders," he wrote. "Additionally, given 480x720 is the lowest resolution Apple TV supports, this higher resolution iPhone may also offer some form of personal entertainment integration to Apple TV."
At the same time that Apple launches iPhone in Europe and Asia, the company may also upgrade its existing iPhone to UMTS/HSDPA (3G) and possibly bump storage capacities as high as 16GB, Abramsky added.
However, the analyst advised clients that "UMTS/HSDPA is newer, more complex technology (unlike EDGE which is more proven) and poses battery consumption and other challenges, thus it may take more time for Apple to stabilize and complete carrier testing and certification a 3G iPhone, hence our view of a Spring 08 launch."
Meanwhile, the RBC analyst said iPod-related checks indicate that Apple is planning an iPod line refresh during the fourth quarter of this year that would include an updated iPod Nano and new video iPod.
"Some or all are of these iPods are expected to include larger displays, more memory and integrated wireless (Wi-Fi)," he wrote. "The most significant update may be a new iPod Video, which could include iPhone- like features including widescreen, touchscreen, WiFi, Mac OS X, and possibly larger flash memory capacity (16GB) or HDD (30/80GB)."
Contrary to recent speculation of a âNanoâ phone, Abramsky said Apple is likely to maintain clear distinction between lower priced media devices (iPods) and more expensive devices with communications (iPhones) that also require a service commitment.
Thus far, the analyst believes Apple has sold somewhere between 850,000 and 950,000 iPhones, but expects that number to balloon to 1.1 million to 1.5 million by the time the company reports fiscal third quarter results on July 25th.
"From checks we estimate iPhone sell-through at 850- 950k to date (we est. 450-500k 1st weekend)," he told clients. "Supply constraints caused stock-outs at most AT&T stores and some Apple stores, but most are replenishing this week, and checks indicate sustained demand."
Based on his checks, Abramsky raised his iPhone sales outlook to 13.5 million units by the end of 2008. He said first weekend sales of the device are likely to contribute $10 million in revenue to the company's recently-ended June quarter, ultimately boosting the firm's total annual sales to $32.2 billion in fiscal 2008.
RBC maintains an Outperform rating on shares of Apple with a $160 price target.