Right now it's hard to say for sure, but there's sound logic behind predictions that Apple now will attempt to dramatically increase sales of iPhones, now that carriers are subsidizing the device. The rationale?
Richard Windsor, Nomura analyst, notes that higher volumes are necessary. "Apple must increase its volumes very substantially to make up the difference” between what it was making before, and what it will be making now on subsidized devices, without a recurring revenue share.
Windsor notes that a dollar from revenue share has EBIT margins of 100 percent, while hardware revenues have an EBIT margin of closer to 30 percent.
So a simple back of the envelope analysis suggests that if Apple wants revenue to grow, it will have to sell three times as many devices at the lower margins, to make up for what it might have earned under the old business model.
Tuesday, June 10, 2008
iPhone Sales to Triple?
Gary Kim has been a digital infra analyst and journalist for more than 30 years, covering the business impact of technology, pre- and post-internet. He sees a similar evolution coming with AI. General-purpose technologies do not come along very often, but when they do, they change life, economies and industries.
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