Apple’s iPhone is its biggest business by revenue and will be driving the company’s growth over the next several years. In a note today, Morgan Stanley analyst Katy Huberty outlined how different iPhone product scenarios could affect Apple’s market share and stock price.
One scenario Huberty outlines is one in which Apple eventually starts selling entry-level iPhones with no subsidy at all for a $99 retail price, forcing carriers to compete by lowering monthly service prices and offering the best-possible network. (Click here to see a few slides with more assumptions.)
In this scenario, Apple’s revenue-per-phone would go way down, but Apple’s market share would go way up, and the company would be able to drive much higher revenues from accessories, App Store sales, and services, ranging from MobileMe to media downloads.
Under that circumstance, Apple stock could shoot past $300 and maybe even past $400, Huberty predicts.
We wouldn’t peg this as the most likely scenario in the next few years, but anything’s possible. To make it happen, Apple would need to dramatically lower its production costs and drive service and accessories revenue much higher. (Again, click here to see a few slides with more assumptions.)
But it’s an interesting idea that could be disruptive if it ever happens.
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