..or he’s not telling us something. If the multi-year exclusive agreement is true, then the goals are probably unachievable. In the keynote yesterday, Jobs put out there that almost a billion phones are sold each year to consumers. Granted, most of these are regular phones without the whiz-bang and special features of the iPhone — and are usually free to the consumer, subsidized by the contract agreements. Still, he set what most would consider a modest goal, of getting 1% of the cell phone sales - 10 million phones, by the end of 2008.
However, lets do some napkin math. A very small percentage of phones out there today are smart phones. C|Net says that 37.4 million smart phones out there. This is probably a pretty conservative estimate by now — the Gartner study was released in October. Let’s give the smart phone people the benefit of the doubt and say that usage triples by the end of 2008. That makes about 100 million smart phones out there. 10 million is ten percent of that market.
Let’s look at the math another way. Cingular has 58 million subscribers. Assuming that they gain 20% per year, they will have 68 million at the end of 2008. If Apple is aiming at 10 million phones, that is one out of every seven Cingular customers. Next time you walk down the street, notice count 7 people that you can notice have a phone. If Apple makes its goal, one of those 7 people will own a iPhone, and will have shelled out at least half a grand on it.
These are amazingly high goals for a company that is new in the market. Granted, the iPhone is pretty revolutionary, but I don’t think Steve is that crazy. I’m betting that he has something up his sleeve that will help him meet or beat this 10 million goal.
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Interesting. But I think you also have to consider that:
1) with this phone Apple is not just going after the current smart phone market, they are going to make this market explode. I mean, a _lot_ of people are going to buy their first smart phone without knowing it, they’ll just be buying a beautiful, easy to use phone with integrated iPod and goog connectivity.
2) Cingular in the US, but the rest of the World is open to them. You don’t have 1 billion mobile phones in the US, it’s a worldwide figure.
Posted 10 Jan 2007 at 11:36 am ¶I did calculate a bit of market explosion in there. 200% increase in a 2 years is a huge increase in smart phones.
I don’t think that people are going to buy this as a smart phone without knowing it. I do think it’s going to expand the market by a lot - this makes smart phones actually available to the commoner after all. If they’re tied to Cingular in the US, people underestimate the evilness of contracts. This is one of the reasons that announcing early is one of the smartest parts about his presntation. People now know it’s coming - half a year of subscribers that aren’t going to sign contracts (or are going to sign with Cingular) so that they can get one.
True with the worldwide figure, especially with the introduction of the phones to Europe and Asia fairly quickly after the US markets.
Posted 10 Jan 2007 at 11:50 am ¶An opinion piece at theregister.co.uk thinks that those figures are actually rather modest, btw:
http://www.theregister.co.uk/2007/01/10/iphone_where_is_the_market/
Michael
Posted 10 Jan 2007 at 11:51 am ¶Cingular just merged with AT&T Mobile, so you need to add their subscriber bases together. And what makes you think people won’t change network just to use an iPhone (that being the whole purpose of exclusivity)?
Posted 10 Jan 2007 at 4:11 pm ¶Because they are already locked into a multi-year contract with their current carrier. They aren’t going to pay the extortion to get out of their contract (sometimes up to $300) on top of the $500 for the iPhone with a 2 year contract. I predict that there will be a lot of high-technology and early adopters that will postpone a new contract for this, but not switch from one they still have a year or more left. Let’s also not forget that we don’t have any details on what kind of plans are going to be allowed for this — is a $20/month data plan going to be required? How much for the fancy visual voicemail?
The merger with AT&T Mobile happened over a year ago. I have the bills to prove it — I was on AT&T Mobile when they got acquired by Cingular. The 58 million includes that subscriber base. I don’t know why the Cingular CEO guy was bringing up AT&T.
Posted 10 Jan 2007 at 5:20 pm ¶Two comments:
1. End of 2008 gives time for one or even two hardware revisions between now and then. Given the two year contract you will probably have few people upgrading, but Apple has a tendancy to start high in a market and then move down - See Ipod, then mini, then shuffle. If they get the price to a more reasonable premium over an ipod nano you may see a lot of nano users ‘upgrading’ to a iPhone Nano. I’m betting they are counting on the iPhone cannibalizing the iPod upgrade path for their numbers.
2. I believe the exclusivity is only within the US market. In nine months when they announce a version for europe they will probably have no need for an exclusivity arrangement in that market. Same with Asia in 2008. If they expected to match 1% of world numbers with just a single US carrier, I would agree that they were off their rocker.
Posted 11 Jan 2007 at 12:40 am ¶Desire is left out of your equation. People didn’t buy iPods because they needed them. People will see these and drool over them. That’s what will sell them.
Posted 22 Jan 2007 at 2:15 pm ¶That, and bringing another carrier onboard down the road.
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