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Steve Jobs forecasts iPhone sales to grow at least 50% y/y

Well, not exactly.

During the WWDC keynote Steve Jobs announced that “we will ship 10’s of millions of FaceTime devices in 2010″.  Since only iPhone 4 currently runs FaceTime(*) then it stands to reason that there will be “10’s of millions” of iPhone 4 devices sold.  And since the year is half over, it means we can divide “10’s of millions” over two quarters.  That puts sales in the 10+ million range per quarter.

My current forecast shows 11 million in Q3 and 13 million in Q4 corresponding to 50% y/y growth.

Steve Jobs seems to be indicating this is well within reason.

(*) one exception to this assumption is that he’s including a future iPod touch running FaceTime.  This may very well be the case when the iPod line-up will be released probably in October.

  • Tom Ross

    Have you factored in a Verizon launch? I think there are several signs that it's gong to happen on September 24, like At&t's upgrade deals and the fact that the iPhone 4 is oddly launching on a Thursday, not a Friday or Saturday.

    Verizon might be able to sell 2 million CDMA iPhones in September and 4 million in Q4, don't you think? That would be on top of the 24 million GSM phones you predicted.

    There's also the question if At&t lowered their iPhone subsidy from $400 to $300 or less to compensate for the cheaper plans, and what that means in terms of Apple's ASP. Have they finally made the iPhone cheaper? That could help a lot in international markets where price sensivity is higher. This will be more visible when prices for the UK, Germany etc. are announced soon(ish). Likewise, At&t's $15 plan could be a huge catalyst to sell to the mainstream in the US, but that remains to be seen.

  • http://www.asymco.com asymco

    There are many signs that iPhone will move to Verizon, but nothing is certain. I don't think Apple is going to change its pricing or strategy to accommodate Verizon. I don't expect Apple lowered its pricing on the iPhone. Fundamentally, the demand for the product exceeds the supply. The supply is not constrained by production but by distribution. Apple currently only addresses 40% of the world's pre-paid consumers. They can and will reach more operators, countries and points of sale. I therefore think they can still get 100% growth without having to broaden their price points or to change the strategy.

    At some point, perhaps after they reach maximum distribution potential they can begin to fill out the price gaps. The most important operational takeaway from the event was Jobs' "fastest ramp" statement (88 countries by September).

    As I wrote in http://www.asymco.com/2010/05/20/the-next-billion… the product ramp is one of their biggest challenges (along with price umbrella and positioning i.e. cultural universality).

    "Product cycles and product ramps. Apple has imposed upon itself a yearly product cycle for the iPhone and the iPod. This is a brilliant move because it keeps the product fresh without having it seem disposable. It also keeps competitors within its turning radius. However, the challenge is that the distribution network has to be filled rapidly and drained rapidly to maximize availability. This gets harder and harder as the volume grows. Imagine having to manufacture and ship into the channel a billion devices in less than a quarter."

    Clearly Apple is signaling that they are focused on growth with iPhone 4.

  • kevin

    Altho it's possible that other components have caused the price to remain the same, I think the fact that Apple held at 16GB and 32GB is an indicator that the cost to carriers (and to consumers where it is not subsidized) may have decreased.

    And altho I agree that generally demand still exceeds supply, I think Apple is acutely aware of the "pricing umbrella", and is working to eliminate it and pressure its competitors.

    We'll know a bit more once international pricing is announced.

  • Tom Ross

    kevin,
    "Altho it’s possible that other components have caused the price to remain the same, I think the fact that Apple held at 16GB and 32GB is an indicator that the cost to carriers (and to consumers where it is not subsidized) may have decreased."

    Right, that's another sign, or let's say it's a factor in favor of a price drop decision, because I believe that Apple probably said "People don't need that much memory anyway", and indeed even 8 GB is plenty of space when not every iPhone customer is an ex-iPod customer anymore, therefore not expecting to bring is whole media library, and most smartphones still sell with less than 1 GB.

    Plus, Apple have their own CPU now, so variable costs for that component will be lower.

    "Pricing umbrella" used to be a term that Tim Cook regularly used on Apple's fincancial calls last year. Obviously, they have not acted on those promises so far.

    asymco,
    Can you elaborate on those 60 % of untapped market at the $500+ price point that you see? Is that purely based on subscriber numbers? Wouldn't we have to prorate that by ARPU? That would play down the importance of some big Chinese and Indian networks, and would leave some rather complicated candidates at the top of Apple's To Do list: Verizon and NTT Docomo.

    And I don't believe Apple is oblivous to the threat of Android establishing itself in the mid-market. The thing about horizontal platforms is that they suck when they're small, but they become unbeatable when they're big.

    "Clearly Apple is signaling that they are focused on growth with iPhone 4."

    That's the thing about Apple's (vocal) signaling. It doesn't always turn out to be relevant when you look back 12 months later. Much better to judge them by their actions.

    "I don’t expect Apple lowered its pricing on the iPhone."

    So how do you explain AT&T's price drop on their plans worth $120 to $360? Do you think they swallow it whole? There has to be some pressure on smartphones subsidies.

    • http://www.asymco.com asymco

      "Can you elaborate on those 60 % of untapped market at the $500+ price point that you see?"

      I refer to the claim from Bernstein Research quoted:

      "Our analysis suggests that the iPhone is only distributed to 40% of the world’s postpaid subs currently, pointing at significant latent opportunity for market expansion. Given that we estimate the iPhone’s global smartphone share at existing carrier partners is already ~40%, and even higher at ~70% in the U.S., the largest driver of incremental sales will be the rate of expansion into more carriers.”

      Note that the iPhone is not aimed at a certain price point but at the whole postpaid addressable market. The iPhone is sold as a service (you pay for it through your service contract) so many operators will easily package it to their postpaid customers as an attractive bundle. The claim is that right now only 40% of the world's postpaid customers can actually buy an iPhone.

      http://blogs.wsj.com/marketbeat/2010/06/08/new-ap

  • Tom Ross

    Too bad, no price drops, at least not in Germany. The up-front price even went up by 50 € to account for the weak Euro. This is quite disappointing and will probably steer quite a few people to an iPad which is both cheaper and more powerful.