Thursday, January 31, 2008

10 Million iPhone Goal Is Unlikely, Will Require Changes

Apple may have a difficult time reaching its 2008 sales goal of 10 million iPhones, says market publication The Street. The publication notes that while Apple has sold over four million iPhones to date, to reach 10 million by the end of this year, it will have to average 2.5 million phones per quarter, which is 200,000 more than what was sold during the last, holiday-driven December quarter. The company is also facing a number of financial obstacles, internal and external. The latter may be the most significant, as a $400 smartphone, ignoring accessories or monthly fees, may now be too expensive for some due to a failing US economy. Over a quarter of American iPhones are now also said to be unlocked, which may continue to provide some income to Apple, but deprives the company of the 10 percent in monthly fees it receives from AT&T.To reach the 10 million mark, some analysts suggest that Apple may need to make some significant shifts in its iPhone plans. Ezra Gottheil of Technology Business Research, for example, argues that Apple may already be planning to cut $50 off the 8GB iPhone by the middle of the year. When Apple dropped the price by $200 in September, sales rose 20 to 25 percent. "There is room in the iPhone margin to cut price now," Gottheil says.Analyst Mike Abramsky of RBC Capital contends that instead, Apple will likely introduce new models, and/or upgrade the existing phone. 3G is guaranteed at some point this year, but Apple could also decide to introduce components such as a built-in GPS receiver, according to Abramsky.Regardless of the average sales it has to meet, Gottheil says Apple is determined. "The number is a challenge, but unless the global economy slows down profoundly, Apple will make it happen."

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