Analyst: Two New iPhones on the Way

| Apple Stock Watch

Apple may be getting ready to surprise consumers with not one, but two new iPhone models in the coming months. According to Broadpoint AmTech analyst Brian Marshall, the Cupertino company will likely roll out a low-end iPhone near the US$99 price point, and a high end model with 32GB of storage.

"We believe Apple is preparing to launch at least two new iPhones in the June quarter with a high-end version (32GB) and a low-end version ($99)," Mr. Marshall said. "Our checks indicate a substantial build plan increase for the June quarter (potentially doubling quarter over quarter) from our current 3.1 million unit estimate for March '09."

A $99 iPhone would fill a niche many analysts think Apple needs to address for deeper market penetration, although so far the company hasn't offered any indication that it is interested in pursuing the low end of the cell phone market.

Mr. Marshall also thinks that Apple will introduce a netbook or tablet-type type device sometime this year. He is expecting Apple will sell some 900,000 units by the end of December 2009, and about 2.2 million units in 2010. Much like the fabled $99 iPhone, Apple hasn't offered any hints about whether or not it has a tablet or netbook device in the works.

Even without a tablet or netbook, Mac sales are likely to continue to climb. "We are raising our March '09 Mac unit assumptions to 2.3 million from 2.1 million as our build plan checks indicate better sell-through than we previously estimated."

He added that Snow Leopard, or Mac OS X 10.6, will likely ship in the September quarter. "We believe Snow Leopard OS will launch in the September '09 quarter and assume two million upgrades at $99 ASP," he said. "In our view, this is conservative since two million Leopard upgrades were purchased in the initial weekend of its launch in December '07."

Mr. Marshall is rating Apple as a "Buy" with a $120 target price, up from his previous $110 target price. Apple closed on Monday at $95.42 with a $94.98 billion market cap.


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So now we know from Cramer on Jon Stewart that stock analysts feed mac news sites false information in order to manipulate apple share prices. Mr. Marshall could be attempting to create expectations that will then be dashed when Apple does not release any new phones or doesn’t release two new phones. Thus, we’ll expect the price to rise until the ‘lack’ of an announcement causes the price to fall. This means Mr. Marshall is probably shorting AAPL in anticipation of the coming fall in price.


I don’t about this mythical $99 iPhone. Here’s the problem as I see it—Apple has to keep the prices of the iPhone and iPod touch someone synchronized and balanced. Most consumers look at an iPod touch as a less capable iPhone and rightly so: in their mind it lacks a major feature. The iPhone should cost more than an iPod touch, right? It does more, so it should cost more—I’m speaking here as your average hypothetical consumer, not your informed consumer who understands the rough economics of mobile phone revenue streams and subsidies. If Apple releases a $99 iPhone, even if it’s an 8GB version, won’t they feel pressure to release a similarly priced iPod touch and further reducing their gross margins? As it stands the iPod touch is $30 more than an iPhone starting at $229. I’ve established a link between the two devices in that they belong to the same family of technology—I wonder if consumers have made the same link and would wonder how Apple could charge $99 for an iPhone and $229 for an iPod touch that does everything an iPhone does but can’t make calls, send SMS messages, utilize GPS, etc. Thoughts?


If Apple releases a $99 iPhone, even if it?s an 8GB version, won?t they feel pressure to release a similarly priced iPod touch and further reducing their gross margins?

No, because they make their real bank off of their share of the service plan. An iPhone with a 2 year subscription will generate several hundred dollars for Apple.

I think a reduced capacity phone without the smart phone features would make sense for Apple—say, something that has the phone and the iPod function, maaaybe WiFi, but no browser or email. My reasoning is that smart phone customers is a limited growth market, and I’m pretty sure I read somewhere recently that its growth is already capping. Just about everyone in the civilized world uses a cell phone though… heck, if there was an iPhone w/ a good, basic service plan arounde $35/mo, I would definitely be interested.

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