iPhone Ubiquity

The iPhone is the coolest gizmo I have ever owned.  Nothing, compares.  Not my baseball cards, my Camera, stereo high def-TV, convertible, toaster oven, None of it.  Not even my Mac Plus (which back in the day was pretty badass)

The iPhone is simply put the single most compelling computing device to hit the market since the first PCs 30 years ago. 

It is clear that the iPhone as a handset and platform are so dramatically different and better than current market offerings that sales growth will continue to be freakish.

Gene Munster Put Apple on its "Alpha"  (Piper Jaffray)List this week indicating that there is significant short term upside in the stock of Apple (AAPL).  While mentioning that he expects Apple to sell 45 Million handsets next year.  45 MILLION.  I have not seen another analyst reporting a number that big.

Reports of manufacturing runs of 800,000 a WEEK being reported by several sources.

Munster mentioned Apples Back to School promotion which gives buyers a $299 incentive to purchase a Mac  (Free iPod woo hoo).

So I did some analysis of my own.  and projected out Sales thru 2014.  It is a Projection so by definition it will be wrong. 

Assumptions

• 15-20% annual price declines
• 10-15% cost declines
  
• iPhone kabuki deferred earnings
• 30% market share in 2014 (Nokia has 40% today you think thats going to hold?)
  
• 37% tax rate
• Declining growth in the Handset market 20-7%

I project Apple with 30% of the handset market in 2014.  (I made it up)  Nokia has 40% of the market currently so it is not unreasonable to assume that one company could have a share of that size.  There will be competition from someone we don't know who yet but someone will come up with a compelling competitor to the iPhone platform.

As a thought experiment Apples earnings per share could be 12 bucks a share from iPhone sales ALONE in 2014.  Oh and BTW 23 Billion in additional deferred earnings.  

Enjoy.

Let me know.  I can send you the Excel...

The writer has been long AAPL for a long time.  The writer is not giving advice (call your mother) am not telling you to buy this stock, and think that people that don't do their own research are lazy and doomed to failure 

iPhone IS the mobile internet

Engadget who has gone out of their way to mention they had no intentions of writing any proprietary access programs for mobile devices today announced an iPhone specific Application/browser as a result of research that showed that more than 95%! of all mobile traffic to their site is iPhones (iTouch count too).   LINK

Interweb smack down

Given the current crop of mobile computing devices and even some of the ones in near term development.  who will make the product people are more or even AS likely to use on the interWebs as the iPhone? The top Win Mobile phone is the HTC Touch Cruise and by my feeble math the TOTAL use share on Engadgets web site of all Win Mobile phones represent only 1%.  Maybe Microsoft is emulating Apple by being the “The super-small market-share guy”

Network Externalities are the path to dominance in a format war (see evil empire vs. Apple mid 80s to …) and Apple is out to a huge early lead in the mobile computing marketplace, Blackberry notwithstanding.  Businesses and individuals will find the choice to use an iPhone easier as time goes on because it will do more than other phones just because it already does it.  There is no Technical reason Engadget could not build software optimized for another device but they won’t.  They won’t because there will be no reason to and the people buying a mobile computing device that want access to Engadget ( or any of the other gazillion iPhone accelerated web sites) will find that iPhone is the only one that gives them what they want.

Apple will dominate the mobile computing space, the questions are by how much and who will be the alternatives.  The only current promising player seems to be Android but not for a while.  WinMobile is DOA so Microsoft could (not really) give up and start over with a real competing product but that would be years away.  Blackberry is a wildcard clearly a great device but the lack of a real computing/browsing environment mean it cannot win longer term (unless they do he said humbly).

The competition has a little time the market will move slowly to iPhone but there could be 50 million on the street by the end of next year.  Remember Jobs pointed out that 1% of the 1 billion unit per year market by the end of 2008.  10% world wide or 100 million a year will not happen overnight but the forces that could lead to that conclusion are undeniable and very powerful.