Sunday, July 18, 2010

iPhone4 sales could explode

The last 10 days are arguably some of the worst periods over the last 3 years when Apple has been selling the iPhone. The controversy over the iPhone4 Antenna has snowballed into a very major story throughout the blogosphere, and even in the mainstream media. Despite this, Apple announced that iPhone4 had sold 3 million units in just 3 weeks.

The iPhone4 is not even available all over the world yet. Even in the markets it is available in, the supply is way short of demand. And this sales record happened in some of the worst publicity periods for the iPhone4. I cannot imagine what the sales figure will be for the remaining 5.5 months of 2010 - but one thing is sure - I don't think ANY analyst will come even close to the final sales figure.

All the analysts looking for 8 million units a quarter to 11 million units a quarter are going to be blown away. I expect 12 million units in July-Sep quarter, and 15 million units in Oct-Dec quarter. And I think even these numbers are likely to be conservative - and only because Apple will find it difficult to make that many phones!

Remember just in Jan 2007, when the original iPhone was launched, Apple set a sales target of 10 million units for 2008 - and people thought that was an improbable target. They managed to reach that goal easily, and now they are doing over 10 million units a quarter!

And this is despite being available on just one carrier in the US, and not being present on the dominant carrier in China. With time the availability picture will definitely change. At that point, Apple could be doing 20M phones a quarter, and will be within kissing distance of 10% of global mobile phone marketshare!

Remember, 40% of Apple's revenues, and 50% of Apple's profits come from the iPhone already - and there is a clear path to potentially double both revenues and profits on the iPhone within just 2 years. So Apple's overall revenues and marketshare would go up by a third, even if other products just stay stationary. And considering the iPad still does not have any competition from other tablets, and considering the Mac is firing on all cylinders, the other product lines are also doing very well. Apple is also likely to convert AppleTV from hobby status to a full blown revenue line sometime soon.

We could easily be looking at $500 per share in 2 years time!