Apple's 10 Million iPhone Target

Last summer, around the time that the iPhone was launched, Apple (AAPL) indicated that its aim was to sell 10 million of the sleek handsets in 2008. This is essentially about 1% of the total handset sales for the year. Recently, there were reports, which projected that the sales would fall short of this target.

Apple, in the meantime, is not leaving any stone unturned. On Thursday, it announced that it was modifying the iPhone to support Microsoft (MSFT) Exchange Server along with extra security features. This, the company hopes, will compete head-to-head with the Blackberrys and the Treos that the business population loves for their mobile email services. Now, will this not boost iPhone sales, bringing to its fold some of the folks who shunned it for want of corporate email support?

And then, of course, despite the lack of any announcement, the iPhone v2 (3G) would be coming out soon. In my mind, this development is more definitive than speculative. I think the only reason Apple did not announce the iPhone v2 is because such an announcement would halt the sales of the current generation of iPhones. Would you buy a 2G iPhone if you knew that Apple's 3G iPhone would be hitting the market in another month? The lack of a definitive date will, on the other hand, allow for a smoother transition to 3G units, and an unhindered march to the 10 million target.

The present indicators, coupled with the 3G iPhone launch sometime this year, make Apple's iPhone sales target very achievable.

Comments

[EtoileBrilliant]

10 million by 2008, no problem. But on what terms and how will the terms affect earnings? This would help us get a better idea of share price.

[samij]

the biggest problem for apple seems to be the european sales. 3g sometime in 2008 is too little, too late. 2nd generation iphone should have at least 3g, gps, 3.2-5mpix camera with autofocus and 16/32gb of flash at the current 8/16gb price pointsor preferably somewhat below that. further, the subscription costs should be reduced by at least €10/month. otherwise, iphone is doa in europe and in asia.

btw. 1% of mobile phone sales would be closer to 13m in 2008, and considering that "apple always exceeds its targets by wide margin", anything less than 15m should be considered failing to meet the expectations.

[vraj]

It has been very clear to everyone that Steve Jobs was either drunk or missed a decimal in forecasting sales for iPhone, especially 10 million phones in a single year. Steve Jobs took cell phone users for granted and of course his great fan(atics) base who will shell out anything for a product if Apple logo is embossed. Steve Jobs knew his blunder after just two weeks of iPhone sales and rushed to reduce the price. Now Apple has to meet their promised target and we can expect another round of price cuts for iPhone before next quarterly results. In conclusion, will 10 million iPhones make any difference to Apple's growth - less likely? It's a recession year and consumers will hesitate to spend money on luxury items which Apple churns out. How many Macs and Air Notebooks can Apple sell in next two quarters? Will iPhone SDK have any impact on sales? - will have to wait and see.

[michael1]

@vraj -
Sounds like you've never touch the iPhone. Because if you think Jobs took cell phone users for granted, I can't imagine what Blackberry, Treo and Nokia think of their users, with their overly complicated, underpowered phones. Apple doesn't sell luxury goods. Apple sells high-quality products at a fair price, and is often a value leader when total cost of ownership is considered. My wife has a Sidekick, purchased before the iPhone was available, so it's been easy for me to compare the two. Unfortunately, there IS no comparison. Stop bashing Apple for the sake of bashing them, and look objectively. You might be surprised.

[blah-blah]

Blackberry = overly complicated?!?!? For grade one students maybe...

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[VijayNagarajan]

I agree that 10 million does not say much about Apple's profits. I expect there will be another price cut on the 2G product when the 3G iPhone comes along. But we should not discount the market share that Apple will capture. That is a non-trivial positive side-effect of the 10 million target. Besides, my hunch is that Apple will come up with a innovative range of phones in the years to come helping grow its market share. So, there is certainly optimism on that front.

[F. J. Taylor]

Does Vraj work for the competition? (Not that iPhone HAS any viable competition.)

10 million units? Even in a recession year, no problem. 15 plus will be more like it.

DOA in Europe and Asia? Vraj, what ARE you smoking, and where can I get some?

2G aside, the biggest problem with sales here in the EU (and I have heard in Asia the same) is GETTING them! They go out of stock IMMEDIATELY when they hit the shelves. I have plenty of friends here who want me to get them one next time I am in the States.

Re: iPhone sales prospects - everyone is currently trying to rush an iPhone "clone" to market - but they are not doing nearly as well as the real deal.

Re: the "missing" phones so many pundits were commenting on a while back - they're not actually missing - they are being unlocked, and resold - and they too are flying off the shelves. While it is true Apple won't get the monthlies from their locked-in suppliers, they are still sold units.

So is Apple a good buy? That depends on how you look at stocks. A company with several phenomenal products that are selling like hot-cakes, zero debt and 18 Billion in the bank, and a growing market share sounds like a good bet to me.

The drubbing Apple and many other good companies has taken in the market is just symptomatic of the number of people out there who don't do their homework, listen to the "experts" and run around buying and selling with no idea of why. (And BTW - if these pundits are so expert, why are they publishing and sharing their "expertise"? Why aren't they Warren Buffet and running Berkshire?)

I'm holding Apple - and if the market drops down to where it was a few years ago or below - I'll buy some more and hold it!