Apple's $199 iPhone Is a Game-Changer 45 comments
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Remember what happened when Nike (NKE) hooked up with Michael Jordan? The $199 3G iPhone is Apple's MJ. The world is about to change. By Christmastime, if you're not ichatting, igaming, or ipoding on your mobile device you will be severely outdated. It is rumored that the new applications will allow the iPhone to access your home computer and your home television. This technology will allow users to stream any movie, television show, or song directly to your phone over the 3G network.
Other applications will turn the phone into a remote control, video recorder, flashlight, scientific calculator, business email device, and hundreds of other cool apps from the SDK developers. It was assumed that because no subsidies had been offered for the 1st generation iPhone that consumers would have to pay at least $400 for the new version. AT&T's move just changed the game.
Unfortunately, this iPhone explosion is going to cause some casualties. The first was Palm (PALM). CEO Ed Colligan ignorantly "laughed off the idea" that the Cupertino, Calif.-based company would experience any immediate success in delivering a device to the fastidious smart phone market. "We've learned and struggled for a few years here figuring out how to make a decent phone,'' he said. "PC guys are not going to just figure this out. They're not going to just walk in.'' Poor Ed, since that statement on November 22, 2006 his stock has dropped 32% to $5.80 a share. My sources tell me that the Treo makes a better paper weight than a smartphone.
Palm might have been the first casualty but they won't be the last. The next wave starts with Research in Motion (RIMM). RIMM's stock price as of market close on Wednesday sat at $121.78 reflecting a p/e of 54. As a company, not only is RIMM a one-trick pony, but their one trick is a one-trick pony as well.
Let me explain. According to a recent study by ChangeWave, 56% of Blackberry owners cite email as the primary appeal to own the device. The famed physical keyboard only received a 5% necessity rating. What's going to happen when RIMM customers discover that they can get the same email functions on another phone that also features the best music, video, web browsing, touch screen, and other business apps for only $199? RIMM's growth rate will decelerate and their story will begin to fade.
Until this point, RIMM has been able to compete on price; the $199 eliminates that. What about the cheap consumer market? The $199 price break effectively eliminates any line separating business smartphones from cheap residential use phones. The fire that has been started in the smartphone market is about to spread to the residential market. The AT&T price cut, combined with Apple's international expansion plan, officially opens up the iPhone to the 1.1 billion-unit cell phone market. Growth rate weakness will be felt by the entire industry from Motorola (MOT) and Nokia (NOK) to Verizon (VZ) and Sprint (S).
Investors have failed to grasp this iPhone story. On February 26th BMO analyst Keith Bachman declared that Apple's three growth drivers - the Mac, iPod, and iPhone - have been reduced to just one: the Mac. I do agree that the iPod's days as a growth driver are over, however, I do believe that iPhone growth hasn't even begun to be priced into Apple stock.
Many are still wondering if Apple can meet the sales goal of 10 million this year. I've got some new numbers for you all to think about. Try 25 million phones sold this year and 100 million phones next year. The less expensive iPhone is a game changer. This could be the greatest market share story of our generation. Any money manager who isn't invested in Apple should be required to take a breathalyzer.
The anti-Apple people are like the anti-Jordan guys during the Chicago Bulls run of 6 NBA championships. It just doesn't make much sense; you're missing out on history. When my kids ask me about how amazing Jordan was, what if I had to tell them that I was actually a Clipper fan? My kids would laugh me out of the room if I tried to tell them how great Danny Manning, Charles Smith, or Gary 'the General' Grant were. The time has come to be long AAPL and short RIMM. Don't be caught on the wrong side of history.
Disclosure: Long AAPL.
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This article has 45 comments:
1. the $199 price point will definitely help sales. however...
2. how many people are ready to pay $20/mo extra for the data plan?
3. while it is easy for smaller businesses to move over to att/iphone why would corporations move away from what they're used to (blackberries)? biz users don't need the multimedia (usually).
4. didn't apple sign a 5 yr iphone agreement with att (and vodafone in Europe)? for them to really start moving huge volumes, they need to either get out of the att/vodafone deal and let other wireless companies start selling iphones officially.
5. once they get out of the deal, they can also start developing cdma versions
until some of the issues above are addressed, i think your figures are overly optimistic
Apple is taking it's computer market back from Microsoft quite dramatically, but the market is oblivious to this fact.. And, as with the iPod, they really have no competition whatsoever in the phone market. I can't for the life of me think of any reason, aside from 'Wintardation' that made RIMM go up 5+% today. That is just stupid. Blackberry hasn't a chance against iPhone let alone iPhone II.
If iPhone II allows video to be streamed from your computer at home, think what that will mean for their computer business!
Another tidbit today is that Apple has an agreement with the major movie studios to get iTunes movies on the same day as DVD release. Also, Rogers has an agreement for iPhone in Canada (prior to this the iPhone had to be unlocked.
There are so many things Apple can do now. What about a TV with Apple TV reciever built in? They could build it themselves, or market it with LG, NEC, etc... They could release OS X for all PCs. They could partner with Dell, HP, etc... who are BEGGING to sell OS X.
And remember, the stock did NOT go down after the iPhone release, so just because it normally dips on ship, that doesn't mean it will happen next month.
My sources??? Ever heard of the Centro? 1+ milion others did...
Check your sources again.
LOL what a moron.. more so considering there would be no Palm or Graffiti without Apple , Palm was started by an ex Apple employee
and the Newton/emate had all the Palm features (more actually) including the graffiti recognition software LOL I can't stop laughing about these corporate morons ... Although I am sympathetic with Palm
because they always supported the Mac , it's because of people like Ed Colligan they are in the shit not because Apple or Rimm have a better product.
They had years to come up with a new device but when CEO's gets cocky about their product that's where they end up.. in the crapper
Rimm is doing the same thing , feeling confident Apple can't touch their precious corporate market , let's just wait and see
That is why Apple's phone has an "i" as the first letter: "INTERNET."
No one should buy an iPhone, if they don't expect to be able to get on the INTERNET.
Apple's contribution is that it got the carriers to give UNLIMITED mobile internet access for a very reasonable $20 per month.
The EDGE network was the ONLY way to kick-start the iPhone. The U.S. and Europe, at that time, had very little 3G networking up and running. AT&T expects to 3G rolled out across the U.S. by the end of 2008
The 3G iPhone will take care of the EDGE delay. Then, EVERYONE will want an iPhone.
The iPhone at this time is sold with a 24 month contract, so $20/mo. over 24 months is the SAME after the $200 rebate as it is NOW. The difference is that you get the iPhone for $199, a lot less, and the contract period is expected to remain the same.
No morons here!
No, actually, this rumor has a single source, and it's Scott Moritz. If you follow the people that follow Apple, you know that he has a terrible track record in the Apple prognostication category. He has little credibility. Actually, he's a fool.
Don't put much faith in this.
"I heard a train crashed in China"
"Who lost on American Idol last night?
"Did that movie get good reviews?"
"What happened at that rally for Tibet?"
It's a wonderful thing to be totally up to date with the entire world while working to educate a village in India...
The number of useable software programs will explode by Christmas creating more good word of mouth. Apple will be developing microprocessors for hand held functions for their devices with the engineers of the recent acquisition. Their many patents portend an integrated view of the technological future for personal use where only they can provide the integrated solution.
DUDE,
CDMA is a dead technology even Verizon will be moving away from CDMA in the future. 4G is where it will happen. Apple absolutely picked the best battle with AT&T. AT&T was purchased at the same time the iphone came to market. AT&T is great in most areas of the country. What we don't need is a CDMA version. We need pressure to be put on Verizon to update their technology.
Go Apple!
following RIMM / AAPL as well - great breakout charts
As you can see 30 phones are regarded better than the iPhone. That isn't very impressive at all.
alatest.co.uk/cellular...
I'm long Apple stock, but I don't like what I see. SEC?
See "Jim Cramer admits to Stock Manipulation - from YouTube" on basherbusters.com.
SO true. That's the impression anyone gets from daily bits and pieces of news - but when you list Apple vs MS news stories side by side, it's really eye-opening. Like this: www.mactivist.com/wall
No one will mistake that page for a complete or unbiased compilation of news; it's no one-stop resource for investment decisions! But it's interesting to ask: If one were to deliberately compile only positive MS news and negative Apple news, just how short would the list be? (Hint: Very!)
While people (and investors) are picking up the "Apple is hot" story piece by piece, I think many of them are missing the scale of the quiet sea change taking place – with the iPhone, with media downloads, with the Mac in homes, schools, and even enterprise. That's fine with me, as I keep scooping up Apple shares in anticipation of the coming day when the world catches on to what's happening!
Manipulators are forever pulling out this SEC stuff whenever they want to drive the price down
Perhaps you misunderstood me.
I don't like the blatant manipulation by Moritz, Savitz and Cramer.
Is that more clear?
I've got no interest in seeing the stock go anywhere but up, as it should based on its offerings and potential.
Understood.
Perhaps you deliver newspapers or serve hamburgers as a vocation, but many people regard cell phones as an important business tool, allowing easy, mobile communication. Many of us rely on web-based as well as people-based data. A mobile FULL FEATURED web browser has way for uses than "joke of the day" or Yahoo's latest dope on Britney Spears.
All iphone is about is the usability and the new look factor which is good for few but as a core enterprise user I cannot do without keyboard which would certainly slow me down in replying to lot of emails.
If you dwell deep into blackberry technology they have better technology for enterprise data than what iphone does now, in terms of security, timeliness of push, enabling of enterprise applications and many other. You cannot simply strike off blackberry .
Last but not least iphone craze lasts for as long as some one else does not release another super touch screen device. Android platform is on the way and let us see how it does.
-zach bass
www.zachbass.com
Are you serious? Apple makes products which last much longer than those of the competitors.
Eg. iPhone features will be added or updated through software upgrades. For most other manufacturers the handsets have to be tossed out and replaced with new ones in order to get new features.
How many new Blackberry models are slated for intro later this year, and do you know why????