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International growth played an important part in Apple’s (AAPL) better than expected quarterly results. The company reported 131% year-over-year growth in iPhone unit sales for the quarter in addition to improvement in overall margins. We estimate that the iPhone constitutes about 50% of our $294 price estimate for Apple’s stock.

High growth came from Asia Pacific where iPhone unit sales grew 474% year-over-year, Japan grew 183%, and Europe grew 133%.

We highlighted in our previous article how Apple’s stock could exceed $300 if iPhone unit sales growth were to trend in line with quarterly growth in 2009. Below we explain how iPhone market share is expected to trend and why Apple’s stock is increasingly dependent on iPhone sales in international markets where additional distribution and pricing will be important.

iPhone Market Share Expected to Grow Fast

Apple iPhone’s market share has increased from 0.3% in 2007 to 2% in 2009. We currently forecast that iPhone market share will reach 3.2% in 2010 and 11% by the end of Trefis forecast period. As highlighted in earlier article, iPhone market share could reach 4.5% in 2010 (implying 58 million iPhones sold in 2010) if the company were able to grow unit sales in line with 2009 quarterly iPhone unit growth rates.

By increasing our original forecast (shown below) to 4.5% in 2010, while maintaining our outer year market share growth rates, you can see how the higher share in 2010 would lead to 13% share by the end of the Trefis forecast period.

iPhone Unit Sales Mix Shifts to International Markets

We estimate that AT&T (T), the sole iPhone carrier in the US, has about 13 million iPhone subscribers. With more than 40 million iPhones sold to date, a significant mix of iPhones sold are already in international markets. Even if both AT&T and Verizon (VZ) distribute the iPhone in the US in 2010, more than half of the 58 million 2010 iPhone sales implied by our earlier 4.5% market share estimate would come from high growth international markets.

The mix of international sales will shift further as demand for iPhones in the US market levels off. We estimate that about 85% of iPhones sold by the end of our forecast period will be sold outside the US. If Apple’s mobile phone market share were to increase to nearly 13% by the end of our forecast period, that would imply sales of about 35 million iPhones in the US and nearly 200 million internationally.

Given a market of about 300 million US mobile phone subscribers and 50% (150 million) purchasing new phones each year, iPhone’s US unit sales would represent about a quarter of US mobile phone sales by the end of our forecast period.

New Carriers and Competitive Pricing Crucial for International Growth

Apple has expanded iPhone’s reach by adding both carriers and countries, and now has iPhone distribution with 151 carriers in 88 countries. In addition to broader distribution, the pricing of the iPhone will play an important role in how much market share the company can capture. We forecast that iPhone pricing will fall from about $530 in 2010 to about $370 by the end of our forecast period.

You can modify our forecast for iPhone market share above to see how the $294 Trefis price estimate for Apple’s stock would be impacted if international growth did not materialize as we forecast and Apple’s market share did not reach the levels shown in our forecast.

For additional analysis and forecasts, here is our complete model for Apple’s (AAPL) stock.

Disclosure: No positions

Source: International Sales Could Prove Crucial to Apple's iPhone Strategy