Piper Jaffray’s Apple (AAPL) bull Gene Munster defends his 45-million-iPhones-in-2009 estimate, which some investors have chastised as “outrageously aggressive.” The target this year is 10 million ($3 billion of revenue). 45 million iPhones in 2009, Gene says, would contribute $11.7 billion of revenue, or 25% of Apple’s total for the year.
So how does Gene think Apple will increase iPhone unit sales 4.5X, and what will this mean for the company’s financial performance?
WHY APPLE WILL SELL 45 MILLION IPHONES NEXT YEAR
Gene makes three key assumptions:
- Introduction of 3G iPhone in next 3-6 months (consensus)
- Family of iPhones (including some $200-$300 ones) by January 2009 (logical)
- International rollout doubling market opportunity in each of next two years. Important: Gene expects a Japan deal this year and a China deal by mid-2009. Our man in Beijing still laughs at the latter idea.
The risky/questionable part of this forecast would seem to be the international assumptions, especially China. As we’ve noted, iPhones are already selling like hotcakes in China (as are iPhone clones called HiPhones). Apple does make some money off these sales, but it doesn’t get a cut of the lucrative subscription revenue. Our man in Beijing doubts it ever will.
Gene details his international rollout assumptions, which are as follows:
The three key countries here are Mexico, Italy, and Japan. Gene assumes a specific carrier partner for each, and, together, they total nearly twice the size of the US market (AT&T).
China (5 times the size of the US market, including China Mobile only)
India (almost the size of the US market)
Spain (relatively small)
Gene assumes 8% penetration of the total iPhone market opportunity (subs on carrier partners) in 2009. This does seems a bit aggressive, given that iPhone’s US penetration on AT&T (in its largest and most-hyped market) was only about 4% by the end of 2007.
Gene offers a handy chart comparing his iPhone unit assumptions versus those of iPods a few years ago:
WHAT THIS MEANS FOR APPLE’s FINANCIAL PERFORMANCE
- Average Selling Prices (ASPs) drop from $489 in 2007 to $365 in 2008 and $314 in 2009 (reasonable)
- Apple gets less subscription revenue per iPhone unit (in part due to decision to drop carrier exclusivity in certain regions (reasonable)
CY2007: $364 million, 1% of Apple revenue
CY2008: $3 billion, 9% of Apple projected revenue
CY2009: $11.7 billion, 25% of Apple projected revenue
Business Insider Emails & Alerts
Site highlights each day to your inbox.