Analyst: How Apple sells 45 million iPhones in 2009
Piper Jaffray analyst Gene Munster took a lot of heat back in June 2007 when he predicted, three weeks before Apple even began selling the iPhone, that the company would be shipping them at the rate of 45 million a year by 2009.
But Munster is sticking to his guns, and on Monday released a detailed report to clients in which he lays out the steps by which he expects Apple (AAPL) to hit his target — quadrupling 2008 sales.
- By introducing a 3G iPhone within the next 3 to 6 months
- By offering a family of 2 to 3 iPhones — including lower-priced models selling for $200 to $300 — by Jan 2009 at the latest
- By entering new countries, effectively doubling the addressable market every year for the next two years.
- By adding new features, such as games (Tiger Woods Golf, played by swinging the iPhone?) and remote purchases (Starbucks lattes without the wait?) starting in June.
Conceding that most investors consider his 45 million estimate "outrageously aggressive," Munster supports it with a somewhat mysterious chart that compares the 409% year-to-year growth rate of the iPod in its breakout years with his estimate of just over 300% for the iPhone.
What's mysterious about this chart is that it shows sales of 35.6 million iPhones in fiscal 2009, not the 45 million Munster is projecting. The discrepancy may be due to the difference between Apple's fiscal year and our calender year, but Munster does not explain it.
Slightly clearer is the roadmap Munster offers for Apple's overseas expansion. He points out that iPhone has achieved roughly 3% penetration of the 153 million subscriber base in the six countries in which it is currently sold. The following chart shows how he expects Apple to double that addressable market over the next two years. Note that Japan is the only Asian country he's counting on for 2008. China, he says, is not likely to sign on until Apple drops its insistence on revenue sharing, something he expects the company to do in 2009.
Munster didn't predict that they'd sell 45MM iPhones in 2009 – the article says they'd be selling them at a 45MM rate by 2009, and that's exactly what the table shows. 11MM in the Sep '09 quarter is 44MM annually if there's not a real strong seasonal component in that quarter (or if the data is already seasonally adjusted). By the way, it's the best phone by far that I've ever had/used.
ex ped: Munster did say they'd sell 45 million iPhones in 2009. The language used in the article is ambiguous — it could be read either way — but it was mine, not Munster's.
WOW did you notice great music composer Al di Meola comment "I travel all over the world as a touring musician and there is absolutely no interest for the Blackberry phone".
Talk about excitment for Apple and the iPhone, even great composers come to defend this 21st century icon!
Bottom line is that these phones will never be accepted by IT professionals, hence never find the market required to hit such sales figures. People in the market for a true smart phone, will get exactly that. A blackberry, Windows Mobile device, or one of the many upcoming devices based on, lets here that dirty word, OPEN, mobile operating systems.
I work at an 11,000 person corporation which recently made iPhones available to replace our existing Blackberry infrastructure. I work in a group which supports Windows-only financial software. Of the 20 people in the group, 18 have switched from Blackberry to iPhone. I believe we are typical of the company overall.
Also, the gaping logical hole in " A blackberry, Windows Mobile device, or one of the many upcoming devices based on, lets here that dirty word, OPEN, mobile operating systems." is just too much for me. You appear to be implying that the iPhone is bad because it runs a propriety OS while at the same time promoting two proprietary OS's alongside newer open ones.
To Brian – my fellow Portlander,
I am confused by your comment "Bottom line is that these phones will never be accepted by IT professionals…"
Have you not seen that SAP is developing its CRM mobile-phone application for the iPhone BEFORE any other? Did you not see the rational that they gave as "This is what our salespeople want"??
I suppose that the users will not be the IT professionals – rather they are the users whom these IT professionals are paid to support. If the professional users want the iPhone the IT-ers will support it.
I am afraid that you are in a bubble equal to the worst of the Apple fanboys.
I am waiting it out until IPhone is available with other providers. If Apple wants to hit this goal they should partner up with VZ and T-Mobile, I will definately upgrade today.
Is Australia up for the 1st 3G iPhone on 850 or 900Mhz Band ?
Australia's Mobile Leader is Telstra 850Mhz Band HSUPA same as AT&T Wireless ,Vodafone Australia is running 900Mhz which could be the New iPhone Winner with Rollout 900Mhz Band in Europe & Asia to expand the Coverage in smaller outlying areas more Economical over the 2100 Band .
I travel all over the world as a touring musician and there is absolutely no interest for the Blackberry phone. The I Phone is the rage in every single country I have visited. Thats, 6 countries in South America,Ukraine,Russia, Italy, France, Hungary, just about every place we have gone the excitement is evident and everyone says that they are waiting for it with great anticipation! This phone is going to far exceed the 10 million Apple has said! They are being so conservativeas usualy and will blow the estimates away! There is nothing like this phone out there at least for 2-3 years! Mark my word here!
It never ceases to amaze how easy it is to excite an Apple fanatic, the iPhone is just about as amazing as when Mac's starting coming complete with "two-button" mice, and luckily just as easy to use. 45 million iPhones by Q4 09'? I think these expanding markets they talk about must include extra terrestrials. Bottom line is that these phones will never be accepted by IT professionals, hence never find the market required to hit such sales figures. People in the market for a true smart phone, will get exactly that. A blackberry, Windows Mobile device, or one of the many upcoming devices based on, lets here that dirty word, OPEN, mobile operating systems. Not an overpriced under-featured radioactive iPod.
Dave,
John Doerr also funded Webvan and Segway and claimed them to be the birth of a new platform as well. Past success is a poor predictor of future success.
I don't mind paying up to $300 for an iPhone as long as I can connect to T-Mobile with a prepaid plan. I don't use that many minutes a month and want an iPod Touch that could make the occasional phone call and store some contact info and basic calendaring. I have a WinMobile PDA and I hate the interface on it. Web browsing is unusable. On the iPhone it is a joy.
45m? I don't know but maybe that's not the point.
Point is the SDK is also for the TOUCH and probably there'll be more 'iDevices'. I suspect with the (SDK) apps that will come out in June and beyond (e.g. Games like Spore) sales of iPod touch and future 'iDevices' will go through the roof.
Like John Doerr (financier of Google and Amazon) said it's the birth of a new platform and he added 'bigger than the PC'.
The iPhone is a tremendous phone that outpaces my prior Blackberries and Treo.
As people use the iPhone they will realize the values extend far beyond smartphone users. I have converted many a soul simply by handing them my iPhone
How the hell does Gene Munster figures a 3% penetration out of 153 million partnering subscriber base — when 40-50% of those phones have gone to China and other overseas country?
Contrary to what people may think, Munster may have been too conservative!
The revolution and success of the iPhone comes not from it being a smart-phone but an all new handheld computer platform everything else is converging to.
It is also Apple/Steve Jobs' second shot at conquering the world['s computer market] after he lost it to MSFT decades ago by letting the Mac OS GUI be copied into Windows.
In view of this, if you add up the potential for a smart-phone, a computer, a games console, a remote control, a media player all this in handheld form factor you inevitably come up with a figure of zillions.
It is obvious – but people/analysts many times fail to bear in mind – that the sales potential for desktops are smaller than laptops are smaller than handhelds. Hence the different numbers for phones/iPods/PSPs, notebooks and desktops.
Now think of a machine that is all this. It would be zillions if it was just a handheld computer.
It all depends on Apple's strategy this time, if it wants to remain a niche market company or if it wants to grab the full potential that is at hand this second chance.
Be it Symbian or Android, there will always be a less sophisticated, more volume, cheaper product market out there that Apple may not want to address because it is too much work for too little profit.
However, it seems that this new do-it-all platform makes for mandatory volume market addressing. In other words, it's probably not possible to keep using the same niche market strategy, however wanted, Apple pursued to date with the Macintosh in this new "handheld device" world.
Does anyone know when Verizon will be carrying the iPhone? I'm waiting it out over here but in the northeast AT&T service stinks.
Remember the 4GB model that didn't sell well at $499, so they discontinued it? Bought mine at $299 – best purchase I ever made – use it every day, including this post!
With their current business model, Apple isn't going to reach anywhere near 45 million iPhones annually. If they want even a chance at that number they'll have to diversify the product line like they did with the iPod. From what I've seen they don't seem to have any interest in doing, which is a mistake. Not everybody wants or needs a smart phone, some people just want a regular cellphone that's easy to use; just like how not everybody wants or needs 160 gigs of music on the go, some just want 1 gig.
I would buy iphone ASAP if the price dropped between 199-249 
) JUST waiting that moment.
I don't need too much function or memory but this basic function with game is good enough to buy for other family members.
I don't understand why they don't lower price,,,. They can grab share from telephone company even if they sell it as free 
Not to mention people like me who are waiting for the new 3g phone, so I can buy a one of the current phones, at a 50% discount from people looking to upgrade.
Phillip,
Do an article on what this means to Apple's bottom line on Jan 2010 assuming 45 mm phones in 2009 and recognizing:
1 – Phone sales are recorded as deferred revenue over 8 qtrs.
2 – Phones that go to subscription return at least $12/month cash flow to apple.
——————————————-
a – 57mm phones sold = 12 mm phones sold by 1/09 added to 45 mm in 2009.
b – guessing 40 mm are not jail broken, then subscriptions in 1Q10 generate 40mm phones x 3 months x $12/mon = $1.44B! for Q1!
c – Deferred revenue recognized in Q1 2010 = 57mm phones x avg seeling price of $400 x 1/8 = $2.85 B (to the bottom line since the cost of the phones has been previously accounted for.
d – This isn't quantum mechanics: Apple will be bringing in $4.49B in additional iPhone quarterly revenue in Q1 2010 alone!
e – iPhone revenue for 2010 ANNUALLY, will be upwards of $20B and the profit on that will approach $15B. With about 900mm shares outstanding The iPhone EPS in 2010 will be $16.50!.
f – EPS of $16.50 times a multiple of 30 gives PPS impact of iPhone segment alone of $505!
g – Since the current iPhone PPS impact is (guessing) $40 and Apple is blowing the doors off w/ the iPod and Mac sales, I value aapl at $900 PPS by Jan 2011.
WHAT THE HELL AM I SMOKING!????
Let's not forget ActiveSync. It doesn't necessarily open up every corporate user, but it's going to open up a LOT. For most small and mid-market business users (and many corporate), it's less about all the detailed security features as the fact that the iphone just doesn't sync OTA calendar and contacts with anything today. As soon as it syncs to Exchange, it's 'game on'. And the IT guys will support it…they want to use the iphones they already bought for themselves and finally ditch the corporate phone they've been carrying. (As long as sync and remote wipe are there.) There are a ton of business users waiting in the wings for this (myself included…I can't WAIT to get rid of this horrible windows-based TILT). Big Spike when this is released. And by the way…3G is just icing (in fact, half the people will probably want to turn it back to 2G for better battery…if it supports doing that.)
The only way that Apple will be able to have the US add a significant roll to this goal is if they open the phone to other carriers. making the phone only available on the AT&T network is crippling their growth in the US. Consider the widespread sales of the razor.
While the iPhone is very cool, the network sucks. Reception is terrible and what's the point of having a fancy phone if it doesn't function…as a phone.
Dear Tom, (highland beach, florida)
> the I phone in general are not as good as a blackberry
> very poor surport associates in the stores know little
> on how to wirk phone i would not buy another
Thank you for the demo of the superior keyboard experience on the Blackberry. We need more guys like you to market the iPhone. Again, THANK YOU!
The Article:
Note that Japan is the only Asian country he’s counting on for 2007. China, he says, is not likely to sign on until Apple drops its insistence on revenue sharing, something he expects the company to do in 2008.
You need to get the years right 
ex ped: Fixed. Thanks. That's what I get for dashing this off before breakfast.
"What’s mysterious about this chart is that it shows sales of 35.6 million iPhones in fiscal 2008, not the 45 million Munster is projecting."
Should read fiscal 2009
ex ped: Thanks. Fixed.
Maybe Munster meant Apple will have sold 45m iphones by the end of 2009, because if you notice, the total he gives for '08 and the total he gives for '09 combined totals the 45m he claims Apple will have sold. Just a thought.
Investors missed the effects of the ipod and they are missing again the effects of the iphone. appl 25-100 on ipod sales. will go 100-400 with iphone sales by end of 2009.
No mystery. The key phrase is "…the company would be shipping them at the rate of 45 million a year by 2009." While this is a quote from the start of your piece (and not Munster's report), iPhone shipments in the Sep-09 quarter of 11 million yields an annual rate of 44 million.
ex ped: Munster's report says he estimates Apple will sell 45 million in 2009.
well 35 mil sounds about right 45 mil it's a stretch but then it depends on what markets are opened and on how well Apple markets the newer lower cost models…
One thing is sure the iPhone is the next platform of choice for many many developers
the I phone in general are not as good as a blackberry very poor surport associates in the stores know little on how to wirk phone i would not buy another
Go Apple Bad news: naysayers will dine on crow the entire year ahead. Good news: Swanson is preparing a new TV dinner for you.
What’s mysterious about this chart is that it shows sales of 35.6 million iPhones in fiscal 2009, not the 45 million Munster is projecting.
Is it mysterious? It depends on how you read what he said.
he predicted, three weeks before Apple even began selling the iPhone, that the company would be shipping them at the rate of 45 million a year by 2009.
The Sept-09 quarter shows 11.00m unit sales, which is a rate of 44m/year.
[I haven't see the original comment, so I can't tell if this is what he means, but this may be what he meant. Someone should ask him.]