I don't see the iPhone 5 upgrade cycle kicking in til next year. It will be challenging for Apple to come up with 50 million new iPhone buyers this quarter, especially since they already grabbed 5 or 8 million for September quarter. They might be lucky to get more than 40 million iPhone purchases this quarter which would be flat with last December.
Over the past 10 years, the main reason people bought new phones because they didn't work. I kept buying a new one to see if it worked any better. The iPhone is the first phone in 10 years I don't need to upgrade. I certainly don't plan on spending money for a new one that I don't need. I think I can get another 2 years out of the iPhone 4S til the iPhone 5 is free.
Right now, smart phones are the worst value in the technology food chain. People can buy any kind of PC, laptop, tablet, or Smart TV for the price of a $600 cell phone. The technology has now gone sideways in Smartphones for the last 2 years with the exception of Siri, although the networks are faster this year in 4G markets. This year, prices are beginning to erode $100 vs last year's iPhone model.
Lower prices could shave $5 billion in revenues at $550 vs $650 prices for the iPhone price distirubtion at 50 million iPhones per quarter. Apple needs to sell an extra 11 million iPhones per quarter to compensate for lower handset prices. That process would then need to repeat itself year year when handset prices are lowered again.
I don't see the visibility for subscriber growth until upgrade cycle kicks in or carriers like T Mobile, China Mobile and DoCoMo sign up for the iPhone. New markets in China won't kick in til this Winter, and US upgrade cycles won't kick in til next summer. Another $100 worth of handset price decay next year, and next year there won't be any reason to pay more for 4G phones.
2 words sum up all the risk for Apple going forward - price decay. |
