CDMA iPhone represents $9 billion opportunity for Apple, says analyst
Analyst Mark Moskowitz of J.P. Morgan Research issued a note to investors on Tuesday detailing Apple's "multi-billion dollar revenue opportunity" in the CDMA market. According to Moskowitz, the Cupertino, Calif., iPhone maker should maintain above-market growth over the next 18-24 months, especially if boosted by accelerating CDMA market penetration in Asia-Pacific and the U.S.
The analyst commended Apple's pursuit of Verizon first as a sound approach, given that Verizon represents a "major piece" of the global CDMA opportunity, while noting that Apple will likely go after China, India, Japan and South Korea next because of their high penetration rates of smartphone usage and the increased purchasing power of their growing consumer bases.
Moskowitz predicts Apple will sell 10 million iPhones through Verizon in 2012, amounting to roughly $6 billion in revenues. In the overseas CDMA market, the analyst projects a 10 percent market share in 2012, resulting in approximately $3 billion in revenues.
Citing figures from research firm IDC that project Asia-Pacific to outpace all other regions with 40 percent growth from 2009-2014, Moskowitz sees the region continuing to drive the iPhone's year over year growth.
Apple has seen phenomenal growth in Asia. Revenue in Greater China reached $2.6 billion last quarter, up four-fold from the prior year quarter. Apple revenues in Japan saw 83 percent growth year over year and the company has seen healthy growth in Korea as well.
Several other analysts have predicted that the CDMA iPhone will soon arrive on Asian carriers, such as India's Reliance and China Telecom. China Telecom has reportedly succeeded in activating test units of Apple's CDMA iPhone 4 and could launch a limited test program in Beijing as early as this June.
For its part, Verizon announced in February that the launch of the CDMA iPhone 4 was the largest in the carrier's history. Executives at the largest carrier in the U.S. have projected a conservative 11 million units in sales of the iPhone in 2011, with the possibility of 'explosive' growth in coming years.
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This report doesn’t jibe with me. Based on the $625 average price in Apple’s quarterlies $6 billion in revenue is just under 10 million units for 2012. AT&T reportedly sold 4.1 million units in the 2010 holiday quarter.
Multiplying by 4 that is 16.4 million for 2011, or $10.25 billion in sales… and that’s without accounting for growth trends in 2011, much less 2012 or the size and demographics of Verizon’s network over AT&T’s.
So what am I missing because it seems impossible that the analyst could be undercutting a CDMA-based iPhone by such a large gap?
So what am I missing because it seems impossible that the analyst could be undercutting a CDMA-based iPhone by such a large gap?
From what I gather, the thinking is that in the US, AT&T has already siphoned away the die-hard Apple fans--the low hanging fruit, so to speak. Also, Android is somewhat entrenched there and some people may be buying into their ecosystem.
Still, I agree. Numbers seem low. Maybe they were predicting "new" iPhone owners and subtracting out those who switch from AT&T (because they are not a part of incremental growth)?
The analyst(s) are high.
iPhone will only expand for GMS after the T-Mobile merger finalizes, not shrink.
The analyst(s) are high.
iPhone will only expand for GMS after the T-Mobile merger finalizes, not shrink.
I?m not so sure. AT&T said they?d keep T-Mo a separate entity and without the AWS band in the iPhone it still will only work on GSM (2G), not UMTS (3G). If they use their AWS band for their LTE network that?s still some time away, still would require the iPhone to be updated, and if not used for both carriers would still keep the iPhone only on AT&T and not T-Mo.
I?m not even convinced the merger will go through, though if I had to make a bet right now I?d say it will.
Adding the iPhone to Sprint would be considerably easier for Apple as there are no HW changes needed to support their network now that they have a shipping Verizon iPhone. I?d even think a Sprint iPhone would yield more users at this point than T-Mo.
So what am I missing because it seems impossible that the analyst could be undercutting a CDMA-based iPhone by such a large gap?
Keep in mind that Android is completely, utterly destroying the iPhone. I read that somewhere.