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'Apple Will Sell 45M iPhones in 2009 -- for $12B of Rev'

Posted Mar 31, 2008 12:20pm EDT by Henry Blodget in Products and Trends

From Silcon Alley Insider, March 31, 2008:

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:

2008:

Ireland (done)
Austria (done)
Canada
Mexico
Italy
Japan
Australia

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).

2009:

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.

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)

iPhone Revenue:

CY2007: $364 million, 1% of Apple revenue
CY2008: $3 billion, 9% of Apple projected revenue
CY2009: $11.7 billion, 25% of Apple projected revenue

See Also: Video Site VTap Makes Your iPhone Video Better

30 Comments

yu_h@att.net
yu_h@att.net - Monday March 31, 2008 12:42PM EDT

He thinks others just sit there and watch Apple cashing in the money.

sven
sven - Monday March 31, 2008 12:43PM EDT

Bit bold, but as an Apple share holder...lets do it The release of the Ipod was similiar in some sense to. I wont quote or state anything but I do remember seeing some reports that talked about both electronic devices releases.

you
bluehorsehere - Monday March 31, 2008 12:52PM EDT

Yea right.

you
cbwministry - Monday March 31, 2008 01:08PM EDT

I am trying to communicate with someone that can assist me in purchasing YTB stock. Can you assist me?

Carl Gabat
Carl Gabat - Monday March 31, 2008 01:10PM EDT

Dream Big...Do the Work...Enjoy the Ride...Cash In and Do it all over again. Sounds like Typical Apple. Gene's forcast is exactly what this Economy needs to hear!

you
simon templar - Monday March 31, 2008 01:12PM EDT

If there is a company that could do that then it would be Apple 45mil sounds a bit high, but considering this is going to be the next platform of choice in the end it might even be conservative ... I have no doubt that the iPhone will be in about 30-35mil hands by the end of 09 but what really will make it the greatest platform is the software available .It isn't even going to be an iPhone anymore most likely but another device and way more than 45mil people will own one of some kind of flavour.. the sky is the limit

sacman
sacman - Monday March 31, 2008 01:13PM EDT

i love the iphone and i think people are catching on to what a truely amazing device it is. people might be waiting for their verizon contracts to end before making the switch.

you
Yahoo! Finance User - Monday March 31, 2008 01:15PM EDT

Ain't no reason why the iPhone won't do to the cell phone market what the iPod did to music player market. Music player vendors didn't sit around either but all attempts have been futile. Zune what?

you
James C - Monday March 31, 2008 01:15PM EDT

Could happen.

David
David - Monday March 31, 2008 01:23PM EDT

The iPhone differs from the iPod in the sense that most cell phones are sold thru cell retailers. Moreover, the iPod was a technolgical feat with no competition early on. There are a myriad of cell phone choices these days. Gene Munster is an Apple cheerleader so his objectivity must be called into question. And, if 45 million cell phones sounds like a huge number to you, know that almost 1.2 billion cell phones were sold worldwide in 2007. As the burgeoning middle class market in China continues to grow, Apple will find abundant competition from the likes of Nokia, LG, Samsung, Sony and Motorola. Additionally, Apple is being sued by some state Attorney Generals over the soldered in battery. Apple needs to let go of the battery switching revenue or it will face significant hurdles, especially in regulatory laden Europe.

you
afmcpa - Monday March 31, 2008 01:24PM EDT

the iphone is great, have one, but carrier dropped my service after moving to another state without at&t coverage. what a bummer! when will at&t expand coverage to all of usa?

you
kerry b - Monday March 31, 2008 01:34PM EDT

I would probably buy an iphone at $200, IF the subscription fees didn't send me to the poorjouse. Iphome only prospers when people have money they don't know what to do with. As a device, it sucks - who wants to squint at a Can't-do PC for the rest of their life? My eyesight means more to me than trying to impress those simpleminded enough to think iphone has some significance.

you
d_st - Monday March 31, 2008 01:49PM EDT

The reason why iPhone will have no competition and crush all rivals is "iTunes". Legitimate music and movies will outlast bootleg media that are low quality. If the iPhone goes below $100 with old versions that weren't sold before the upgrades then Apple will dominate the market and accomplish its goal of 45 million iPhones sold. This is how Apple did it with the iPod.

madmilker57
madmilker57 - Monday March 31, 2008 02:06PM EDT

this apple thig....is rotten to the core! with the consumer getting so tight their breath is gonna smell like sh!! and they squeak when they walk.......jobs will have to pay people in India to cook iphones with Kotu Aloo Pakora in order for them ther things to sell.

you
d_st - Monday March 31, 2008 02:17PM EDT

iPhone will create new businesses. Its open source OS will allow programmers to create thousands of applications. It is new so it will take time for people to understand. iPone will dominate but iPod will go out of style. Steve Jobs is the best CEO in the world.

dick
dick - Monday March 31, 2008 03:18PM EDT

i agree w/milker....not to mention prison labor

inquisitor_01
inquisitor_01 - Monday March 31, 2008 03:35PM EDT

Bored with all the Apple cheerleading! Apple(Steve Jobs) was smart enough to see and capitalize on the digital music revolution when others didn't quite get it but, still had the technology. The "innovator" again, Steve Jobs, has come up short with the iFlop and no amount of hype has been able to generate the kind of #'s that were originally expected. Munster and Blodget are in way over their heads to admit it and investors are likely to pay the price. I's say sell and NO, I'm not short the stock!

you
basher - Monday March 31, 2008 03:52PM EDT

AAPL=Strong Holding, 2009=$500

you
jwarren_2001 - Monday March 31, 2008 05:09PM EDT

I love all the Apple-haters who bash Gene but likely haven't done 1/1000th the amount of research that he has in order to reach his projections. It's so easy to sit behind a keyboard and call someone an idiot when you don't have the first clue what you are talking about. I guess ignorance really is bliss.

tiffanyrink
tiffanyrink - Monday March 31, 2008 05:12PM EDT

So whats the play?

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