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.
Cheaper iPhone = Digital One Rate
Some of you may remember "Digital One Rate," the first "bucket of minutes" wireless voice plan, launched by AT&T when Dan Hesse, now Sprint Nextel CEO, ran the AT&T Wireless business. You might also remember that Digital One Rate ignited a huge wave of wireless voice usage.
It is conceivable that the new 3G iPhone, with price points aimed at the "the other side of the chasm" crowd (the mass market), as well as the inevitable responses by competitors, could well ignite a new round of data services use by fairly "average" mobile users.
A $200 iPhone with 3G is just the sort of thing that could trigger dramatically-expanded mobile Web and mobile broadband use, driving smart phones and mobile Web services into the lead edge of the "early majority" market that mobile providers will have to crack if 3G is to become a user mainstay.
With the latest release, Apple is taking aim at the enterprise segment, one of several key smart phone segments, as well as the broader "entertainment-focused" segment. Some of us are in the less-well-defined segment that rely relies on the Web, even if we use BlackBerries, so the mobile Web element also now comes into play.
The point is that the 3G iPhone might one day be seen as a key turning point for mobile broadband.
It is conceivable that the new 3G iPhone, with price points aimed at the "the other side of the chasm" crowd (the mass market), as well as the inevitable responses by competitors, could well ignite a new round of data services use by fairly "average" mobile users.
A $200 iPhone with 3G is just the sort of thing that could trigger dramatically-expanded mobile Web and mobile broadband use, driving smart phones and mobile Web services into the lead edge of the "early majority" market that mobile providers will have to crack if 3G is to become a user mainstay.
With the latest release, Apple is taking aim at the enterprise segment, one of several key smart phone segments, as well as the broader "entertainment-focused" segment. Some of us are in the less-well-defined segment that rely relies on the Web, even if we use BlackBerries, so the mobile Web element also now comes into play.
The point is that the 3G iPhone might one day be seen as a key turning point for mobile broadband.
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.
iPhone, Other Devices Will Drive Data Revenue to $70 Billion
Goldman Sachs analysts Simona Jankowski and Thomas Lee now predict there will be 15 percent compounded annual growth in revenue in smart phones over the next five years as a result of “more affordable smart phone devices and focus by handset vendors following iPhone.”
That will result in increased email, Web and other data uses, leading to a ballooning of telecom services revenue, from $19 billion last year to $70 billion in 2012.
That will result in increased email, Web and other data uses, leading to a ballooning of telecom services revenue, from $19 billion last year to $70 billion in 2012.
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.
BlackBerry Vs. iPhone
The most-important take-away from the new 3G Apple iPhone announcement is the lower prices, which we flagged up as a barrier to uptake in the first version, says Steven Hartley, senior analyst at Ovum. But Alec Saunders over at Saunderslog.com thinks BlackBerry will start to feel some real heat, now that it is clear the iPhone and BlackBerry devices will be priced head to head.
Many of us BlackBerry users might concur, but also might note that we are quite attached to the reliability of key entry. If Apple can do just a bit better on that front, many of us will find few barriers to switching. Right now, it remains an issue.
Many of us BlackBerry users might concur, but also might note that we are quite attached to the reliability of key entry. If Apple can do just a bit better on that front, many of us will find few barriers to switching. Right now, it remains an issue.
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.
YouTube for Business
Cisco is announcing what will surely be seen as "YouTube for business." Enterprise TV, a new YouTube-like video posting and viewing service aimed at enterprises, aims to make it easier for companies to do everything related to video: creating it, capturing it, and playing it.
Employees can capture video of meetings or training programs and upload it immediately to their enterprise networks, where employees can watch it on demand.
Employees can capture video of meetings or training programs and upload it immediately to their enterprise networks, where employees can watch it on demand.
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.
Social Nets Used by 22% of "40 or Older" Internet Users
About 22 percent of U.S. Internet users ages 40 and over use social networking Web sites, according to JWT BOOM/ThirdAge. A separate survey by ExactTarget fount that 39 percent of 35 to 44 year-olds used social networks, use fell sharply with age.
Only 13 percent of 55 to 64 year-olds were social networkers, and only four percent of those ages 65 and older used social networking.
About 75 percent of Internet users ages 15 to 24 use social networking sites, ExactTarget finds.
The implications are most significant for marketers who rely on word of mouth. According to the JWT BOOM/ThirdAge study, more than 75 percent of 40-and-over users received promotional e-mails about products and services and then clicked through to the site being promoted.
More than 55 percent of 40-or-older users purchased a product or service promoted in an e-mail.
Some 93 percent of respondents read an article about a Web site in print and later visited the site.
About 83 percent visited a Web site after seeing an advertisement for the site in a newspaper or print magazine.
Why don't consumers 40 and older use social networking sites? Respondents say their main concerns are privacy, time and just not seeing the point.
It might be hard to find a serious observer who would argue social networking will not climb among the 40 or older demographics, though. Other innovations such as iPods, the Internet, text and instant messaging were adopted more slowly by older users than by younger users. Social networking won't be any different.
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.
Monday, June 9, 2008
14 Million iPhone Sales in 2008?
Analysts at RBC Capital think a stunning 14 million--not just 10 million--new Apple iPhone units will be sold in 2008.If so, it will be clear why higher-bandwidth mobile networks are needed. What isn't so clear yet is the precise impact all those new devices might have on access bandwidth.
RBC estimates that 70 percent of those 14 million units will be sold to first-time iPhone buyers. In all likelihood, that means 9.8 million new users who will disrupt traditional usage patterns.
But AT&T executives say they are confident they understand the dimensions of new demand, based on the 2G iPhone users they already are supporting. If not, they'll have time to adjust, says Ralph De La Vega, AT&T Wireless CEO.
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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