Apple Inc. appeared poised to enter the second phase of its foray into the mobile industry, judging by events last week.
Apple’s Web site reflected that its two models of iPhones (8 GB and 16 GB) are “currently unavailable,” though AT&T Mobility’s online site continues to show the devices in stock.
The iPhone’s absence at Apple’s online store harkens back to a month ago when reports surfaced of similar shortages at Apple’s U.S. locations – the hallmark, analysts have said, of Apple’s product-transition strategy, which is to draw down stock ahead of a new device launch.
The situation appeared to reflect the widespread view that Apple may launch its much-anticipated 3G iPhone next month, perhaps at Apple’s annual developer conference in San Francisco beginning June 9, where CEO Steve Jobs is set to deliver the keynote address.
Apple is also expected to announce enterprise-grade push e-mail and security features in its next iteration of the iPhone, challenging Research In Motion Ltd.’s traditional hegemony in that market segment.
Broadening the base
Meanwhile, the scale of Apple Inc.’s announced international rollout – albeit likely with a new business model that eschews exclusive carrier deals and data revenue sharing – is becoming clearer.
In early May, about 142 million subscribers worldwide had official access to the iPhone, about half of them at AT&T Mobility in the United States.
Wipe that number from your mind.
Later this year, something like 500 million-plus subscribers will be offered a legitimate iPhone deal – after announced rollouts earlier this month in 10 of Vodafone Group plc’s international markets, a score of markets addressed by America Movil, Rogers Communications in Canada and Telecom Italia. Apple added to that haul late last week when France’s Orange said it would sell the device in parts of Europe, the Middle East and Africa.
The presumed 3G iPhone thus will have a massive global footprint at launch and rumors broke out last week that carriers in four Asian markets were poised to announce their own deals with Apple. News reports last week, including at Fortune, said that Apple’s international rollout would soon include SingTel in Singapore, Bharti Airtel in India, Globe Telecom in the Philippines and Optus in Australia – a move that would add nearly 100 million potential customers to its markets, which have grown in the past week to include more than two dozen countries.
Playing with numbers
The recent deals and the access they provide to consumers worldwide seem capable of propelling Apple to its stated goal of selling 10 million devices, or 1% of the annual global handset market, in 18 months.
In fact, Apple watchers like to cite the “Oppenheimer Effect,” named after Apple CFO Peter Oppenheimer – a company-specific version of “under-promise and over-deliver” that pundits say gives Apple’s stock an almost predictable boost – and could well send Apple’s year-end iPhone volumes well above the 10 million mark.
Perhaps the juiciest speculation in the industry is that when AT&T Mobility launches its 3G version of the iPhone, it may subsidize the device down to as low as $200, with a two-year contract. AT&T Mobility doesn’t pre-announce its pricing plans nor comment on speculation, the company has said.
“If the iPhone price dropped substantially, that could have a big impact on the U.S. market,” said Miro Kazakoff, analyst at Compete Inc. “People are excited about every aspect of the iPhone, except its price. So a big price drop could really shift consumer behavior on handset purchasing.”
A corollary, however, is that the iPhone’s value to the industry as a whole could shift as well.
Where once its high price tag and flashy feature set were cited for restoring a sense of value to U.S. consumers’ perception of high-end handsets, subsidies are likely to be cited as eroding that sense of value. Unlike the cautionary tale played out at Motorola Inc., however, as it slashed the price of its signature Razr handset and watched its fortunes plunge, Apple’s track record would appear to indicate that future, improved models of the iPhone will continue to appear with a premium price tag.
