Report: Economy Won't Dim Apple's iPhone
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Apple's iPhone will continue its meteoric rise next year, according to a new analyst report that finds that the smartphone will represent nearly 20 percent of the PC maker's overall sales in 2009.
Piper Jaffray senior research analyst Gene Munster predicts the iPhone 3G, which accounted for 5.7 percent of the company's total sales this year, will total 18.4 percent in 2009.
Comparatively, Apple's (NASDAQ: AAPL) MacBook business, thanks to a lineup refresh in October that included four new notebooks, is projected to grow between 8 percent and 16 percent next year. The laptops are "selling well despite the weakened consumer confidence," Munster wrote in a report.
The news comes as tech vendors struggle to push product and advance revenues amid a chilly climate for consumer and business spending. In particular, the holiday buying season is being closely watched, with many expecting a grim season for retailers and device manufacturers due to the downturn.
So far, however, the iPhone and iPod manufacturer appears to have been able to skirt much of the negative impact from the current economic malaise. Apple's third-quarter earnings were stellar and showed that the iPhone has come to represent a staggering 39 percent of Apple's revenue.
During the quarter, Apple sold 6.9 million iPhones -- outstripping a full year's worth of sales for the first-generation iPhone, of which Apple sold 6.1 million units.
Those figures are adding up to a growing share of the market: A recent study by IDC shows Apple's iPhone holding 30.5 percent share in the U.S. smartphone market as of the third quarter. Research in Motion, the maker of the popular BlackBerry devices, held 40.5 percent.
The iPhone's share of the market is only likely to have grown after the fourth quarter's holiday numbers are in, according to Munster.
However, he noted that one Apple product isn't faring as well. Sales of Apple's iPod are on the decline, with Munster's report noting that growth of 6 percent in 2008 is quite low compared to the 31 percent it achieved in 2007.
Next year may only be worse for the popular music player, of which the company has sold 174 million as of September. Munster wrote that he expects sales to decline 12 percent in 2009.
The negative turn could impact iPhone and MacBook sales, he added, since he views the iPod as "an important product entry point into the Apple device ecosystem."
"It introduces users to other Apple products like the iPhone and Mac," Munster wrote.
But in the short term at least, he doesn't see declines in iPod sales negatively impacting sales of other Apple offerings.
"Apple has a large addressable base for iPhone and Mac sales from which it can draw in the coming years," Munster wrote.
Tablets or tiny Macs ahead?
In terms of future Apple products, Munster added that he envisions devices that span features between the iPhone and MacBook portfolio. One could be an 11-inch MacBook Air priced between $800 and $1,000.
Apple could also leverage its multi-touch patent portfolio for a touchscreen-based tablet PC design, with a similar price range and the feature set of a standard Mac notebook, according to Munster.
In terms of new iPhone development, Apple could go low or high-end, Munster said. It could offer a cheaper iPhone in the future by removing features such as 3G or GPS capabilities.
Or the company could expand past the current capabilities on the iPhone 3G, he added.
"Apple could make a premium product with a sleeker design, higher-end materials, more processing power, better graphics and more storage," Munster wrote.
So far, Apple has not presented a strategy around expanding the iPhone lineup as yet, he added.
In terms of retail plans, Munster expects Apple to shell out to create 20 to 30 additional U.S.-based storefronts in 2009, which will further help its plans to push new products.
"The company is taking a disciplined approach to new lease obligations given the current macroeconomic reality. The retail initiative is also maturing to a point where slower growth is warranted," he wrote in the report.
"We expert Apple to add more stores in fewer countries but anticipate it will steadily increase the number of stores in countries it has already entered," he added.