Telecom & Wireless
With Extraordinary Start, Apple (AAPL) Moves To Dominate Smartphone Market
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Apple (AAPL) probably sold over 425,000 3G iPhones in the first three days it was on the market. That would put it on track to hit forecasts from Piper Jaffray that the company will sell four million handsets this quarter.
According to Bloomberg, aside from shortages at AT&T (T) stores in the US, "carriers in the U.K., Germany, Canada and Japan said many shops ran out of the iPhone 3G," That is an indication that Apple’s inventory forecasting and management may have been flawed, but, going forward, it is likely to be a stumble which will be forgiven.
Piper puts its estimate for total iPhone sales this quarter at four million. And, the new 3G version was not available at all in June. Based on those numbers, Apple could sell 20 million iPhones over the next year.
Sony Ericsson, a major player in the smartphone business, sold 23 million handsets last quarter. The high end phones that make up its product mix are particularly attractive from a financial standpoint. Manufacturers like Nokia (NOK) are facing falling per-unit revenue as they sell more handsets in places like China and India. Margins on these less expensive phones are poor.
Apple has the chance to break the industry cycle of falling handset prices and margins. If it can get to 50 million unit sales a year, Apple could become the dominant global supplier of the most financially attractive products, those which have the largest margins and also bring carriers the biggest profits for subscriber data and voice plans.
New to the handset industry, Apple now has a chance to rule its sweetest spot within the next two of three years.
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