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Analyst: iPhone mini could increase Apple's market reach by 6X, revenue 2.5X
Analyst Toni Sacconaghi of Bernstein Research predicts Apple could increase its addressable handset market by 6X in unit volume and 2.5X in revenue with the launch of a smaller, less expensive iPhone model, says Forbes. These projected numbers come from his analysis of handset market share and Apple's current market reach. Sacconaghi suggests Apple misses 60 percent of the handset market with its current strategy that limits distribution to select carriers and sells the iPhone at a relatively high price point. Sacconaghi predicts Apple could take two approaches with the cheap iPhone. In one scenario, Apple would produce the iPhone mini, a scaled-down version of the iPhone that would offer a less robust internet and App experience. The handset would be less data-intensive and would debut with a low-cost data plan that costs $15 or less per month. The other option would be to sell an "iPhone touch," which would be an iPhone without a data plan. This hypothetical beastie would have all the capabilities of the iPod touch plus voice calling, but no cellular data. 3G connectivity would be available but optional, a scenario that would let users rely on Wi-Fi for all their data needs. [It's not clear from the Forbes excerpt of the report if Sacconaghi is explicitly saying that hardware-wise, an "iPhone touch" is identical to an iPhone -- Apple would need to include all the 3G radio chips, antenna and corresponding battery power to handle 3G data if it's a customer-selectable option. --Ed.] Sacconaghi suggests that both of these handsets could debut with retail prices close to or less than $149. if Apple could capture even 5 percent of its missed market share with a cheap iPhone, the Cupertino company could see a minimum annual profit boost of $4.50 a share. [Another bit of confusion here; it's not at all clear that Toni S. is considering the unsubsidized price of the current iPhone, which starts at $599 and goes up from there. How we get from that price down to $149 without the full support of a carrier subsidy -- harder to justify without a revenue-rich data plan attached to the phone contract -- is not really clear. --Ed.] While Sacconaghi expects Apple will make this move to a less expensive model, he believes the chance of a summer launch is low. The analyst points out that Apple's iPhone 4 supply is still constrained, and the manufacturer would not want to steal the thunder from the launch of the iPhone 5 expected in June. If Apple were to pursue this low-cost option for the iPhone, perhaps a fall launch tied into its annual iPod refresh might be a more realistic possibility. Thoughts anyone?
Visualized: Nokia R&D spending, almost 3 times its peers
Our initial reaction to the Bernstein Research chart above is to wonder what value Nokia's massive R&D spending has achieved. Sadly, that's our second and third reaction, too, having spent some time with the company's Symbian OS. Let's just hope all that money was poured into MeeGo or some other megaprofitable ecosystem that it will "build or join" in 2011. Update: Added a snapshot of Nokia's R&D spending from 2007 and 2008 (when the company topped the EU with US$7.24 billion spent on R&D) after the break.
It's official: iPad now the all-time fastest-selling gadget
For those of us who are Apple fanatics, we've had a feeling that the iPad was popular. Whether it's seeing the devices pop out all over the plane on an airline flight, or having to give hundreds of demos of the iPad on a cruise ship, it's apparent that Apple's tablet is still a hot item. Now it's officially the fastest-selling tech device in history. According to Bernstein Research financial analyst Colin McGranahan, the iPad has now sold an estimate 8.5 million units and is a "runaway success of unprecedented proportion." In an article in Information Week, writer Paul McDougall also notes that the iPad is starting to have a measurable effect on PC sales. A recent research study by NPD found that 13% of iPad users would have purchased a PC if they hadn't been able to buy an iPad. Coupled with the recent start of iPad sales at U.S. mega-retailers Target and Walmart, the device is sure to break many more records over the holiday buying season.
iPad adoption rate faster than DVD, says analyst
I first heard about DVDs in late March 1997, sitting in the back seat of a friend's car as her now-husband explained this new video format that had just gone on sale weeks earlier. Having just gotten my VCR, it was pretty hard to fathom picking up another piece of hardware anytime soon. Within the next year, I saw DVDs appear at the local Suncoast and people gradually began taking to them. The clincher? Eventually, the price of DVDs dropped to where you were paying a cheaper price and getting better quality. Consumers gravitated to the new format, and the rest is history -- the DVD took off and never looked back. The iPad? It took off a lot faster. CNBC has the story from Colin McGranahan, a retail analyst at Bernstein Research, who dug into the adoption rates. McGranahan points out that Apple sold 3 million iPads within the first 80 days of launch. By contrast, there were a million iPhones sold in the first quarter of release... and only 350,000 DVD players sold in all of 1997. Keep in mind, when it comes to non-phone electronics products, McGranahan says that DVD players had the fastest adoption rate ever before the iPad (presumably meaning new categories of gadgets). The sales rate of the iPad after one quarter matches up with the DVD sales rate after five years. The iPod's first year? A similarly modest 375,000 devices sold. Of course, the DVD player was fighting an established product in VHS, and the iPad had the iPhone and iPod touch (not to mention the App Store) to soften the ground for it -- but still, that's not bad for a product that some vocal critics gave lousy first reviews. The original predictions of a million units sold in the first year seem remarkably conservative in the face of a likely run rate of 18 million iPads. Granted, Apple does have a history of defying the odds. [Via MacDailyNews]
Analyst sees beginning of end for DVD
An analyst for Berstein Research sees a 4% downward turn in DVD sales on the year as a sign that the format is in the autumn of its years. Great news for HDM, right? Definitely maybe, according to the analyst. If a single winner ever emerges from the format war, the entertainment landscape may not be great for movies on discs. Increasing competition from VOD, downloads, internet streaming content and videogames may leave little room in consumers' entertainment budget (both time and money). Still, the smooth, immediate HD experience you get from a self-contained piece of HDM is serious competition for any entertainment medium. No doubt, the entertainment space will become increasingly complex and competitive, but there will still be room for multiple ways for consumers to get their fix. Factor in big media's comfort with the physical versus electronic distribution model, and we expect to see HDM around for a while.
