Sunday, March 4, 2007

Obligatory iPost du Jour

It’s time for my iPhone post du semaine — not really du jour since it’s been more than a week since my last iPhone-specific post.

The first two news items come from the MacRumors website, which (as its name suggests) is the leading source of rumors and unsubstantiated gossip for Mac fanatics. Two items caught my eye:

  1. MacRumors predicts the iPhone will support VoIP when it is released in June. Presumably Apple would use its iChat (IM+VoIP+H.264) client. (Jajah claims they’re the one, but I doubt Apple would transfer so much brand equity to a virtually unknown partner). VoIP over cell phones will someday be huge, and it would be nice if the iPhone did iChat, but there are two problems with this claim. First, Apple specifically said no iChat on the iPhone; second, Cingular has been among the most closed in their strategies, demanding a special WiFi-free version of the popular Nokia E61 BlackBerry knock-off.
  2. Transcript of an interesting interview with Apple COO and heir apparent Tim Cook at an analysts’ conference. Cook made the predictable claims that Cingular was picked for its quality and that leaving out 3G is not big deal, while dodging a question how much the iPhone will cannibalize other iPod sales. (AppleInsider fixed some of the grammar in the transcript). Still, he offered a concise definition of how Apple’s market-creation is different from the conventional market-finding strategies of its competitors:
The traditional way that all of us were taught in business school to look at a market was, you look at the products you are selling. You look at the price bands that are curving the market. You think about the price band that your product is in. You assume that you can get a percentage of it. And that is kinda how you get to the addressable market.

That kind of analysis doesn’t make really great products. The iPod would not have been brought to market if we had looked at it that way. How many $399 music players were being sold at that time? And so, today in the cell phone industry, a lot of people pay zero for the cell phone. Guess why? That’s what’s it worth! And so, if we offer something that has tremendous value, that is sort of this thing that people didn’t have in their consciousness — it was not imaginable — then I think there are a whole bunch of people who will pay $499 or $599. And our target is clearly to get 10 million. And I would guess some of those people, and there are probably some in the audience, that are today paying zero because it’s worth zero or going to pay a bit more because it’s worth it.
The final prognostication comes from Morgan Stanley analyst Kathryn Huberty, who found extremely strong iPhone demand in a survey of 2,500 US customers. From this, she raised her 2007 iPhone estimates from 6 million to 8 million sales (and her stock price target), thus boosting the stock by 3% on an otherwise dismal week.

Huberty estimated a high cannibalization effect both for existing smartphone and iPod owners. On the one hand, existing owners of competing smartphones are 12x more likely to buy an iPhone than non-owners. On the other hand, 48% of the iPhone buyers will buy one instead of an iPod, so she reduced predicted 2007 iPod sales from 46.5 million to 45 million.

Former Forrester analyst Carl Howe argues that the stars are perfectly aligned for Apple in 2007. I’d still worry about those stock options (and Steve’s health).

Full disclosure: I own no Apple shares. 10+ years I bailed because it was too speculative, and today it seems too pricey. But then if I’d shorted it 5 years ago, I would have lost a pile of money.

Technorati Tags: , , ,

No comments: