World of Apple

Both IDC and comScore recently released reports on smartphone market share for the last quarter of 2009.

According to comScore Apple’s share grew to 25.3% up from 24.1% in the previous quarter in the U.S. At the same time Research in Motions’s share fell to 41.6% from 42.6%.

IDC also reported that in the worldwide market Apple gained significantly to reach a 16% share during 4Q09 with unit shipments of 8.7 million. IDC also offered market share information for the whole of 2009 showing Apple in a dominant third place behind Nokia and RIM. During 2009 Apple’s market share almost doubled from 9.1% to 14.4%.

Apple has stated that it intends to stay “nimble” on iPad pricing if sales are sluggish upon release. The information comes from a note to clients from analyst Bill Shope on behalf of Credit Suisse recounting meetings with Apple executives.

Shope starts with downplaying the idea of potential cannibalisation of other Apple products by the iPad. Shope wrote that, “the company [Apple] believes it could eventually be seen as superior to both handheld and notebook devices for browsing the Internet, using the App Store, and consuming mobile media (video, photos, and e-books). Nevertheless, in other areas, notebooks, the iPhone, or an iPod may be more appropriate. This clear segmentation of capabilities suggests that cannibalization may be less of a concern than most currently believe.”

On the subject of iPad pricing, Apple indicated that it would cut the price of the iPad if demand wasn’t meeting expectations reporting that Apple management would stay “nimble” on pricing.

Betanews reports on data obtained exclusively from NPD that reveals that Apple dominates sales of PC hardware above the $1,000 mark. The information was gleaned by Joe Wilcox directly from Stephen Baker, NPD’s vice president of industry analysis.

In the report Wilcox reports that, “Nine out of ten” premium PCs (over $1,000) purchased in the United States during the fourth quarter of 2009 was a Mac. The data which isn’t presented in raw format showed that lower-priced Macs were also in demand.

In a startling change of tone Wilcox goes onto quote Baker with a warning for Apple:

“They continue to gain share in those segments, but almost all the growth was in under $500 computers, where they don’t play,” Baker told me today. “So at some point they are clearly going to run out of headroom in $1,000-plus, and in the $500-$1,000 segment they are still pretty small. And, of course, if selling prices continue on this path, the ‘premium’ segment is going to be over $500 not over $1,000.”

Wilcox goes onto to compare Apple’s ASP (average selling price) numbers to that of the Windows PC industry which was $475, down from $589 a year earlier, according to date from NPD. Mac ASP was $1,361, down from $1,499.

On Monday Apple will announce its first results for the 2010 fiscal year. The results which will be watched closely by analysts, bloggers and wall street are expected around 4.30PM EST (9.30PM GMT) with a conference call being held at 5PM EST (10PM GMT).

As is always the case before Apple’s fiscal results, analysts have been making their predictions for what Apple will announce.

During the last quarter of 2009 results Apple CFO Peter Oppenheimer said, “Looking ahead to the first fiscal quarter of 2010, we expect revenue in the range of about $11.3 billion to $11.6 billion and we expect diluted earnings per share in the range of about $1.70 to $1.78.”

The street consensus polled by Thomson Financial Network is for Apple to report earnings of $2.07 a share on revenue of $12.05 billion. The street also expects Apple to sell 8.96 million Macs, 20.67 million iPods and 3.09 million Macs.

Piper Jaffray’s Gene Munster has this week raised his Mac sales estimate for Q1 2010 which ended December 31st, 2009 and will be reported on by Apple this coming Monday and simultaneously dubbed 2010 year of the Mac.

Munster now estimates that during Q1 2010 that Apple has sold 3.1 million Macs causing him to also rise his price target for AAPL to $279. Munster also writes that the “hype surrounding the expected tablet will be focus of Apple long-term strategy, we believe we will see meaningful near-term upside from the Mac business.”

During the last quarter of 2009 Apple sold 3.05 million Macs, but of course the first quarter of the year includes the lucrative Christmas shopping season.

Despite not yet even existing in the publics eyes one analyst writes that the tablet will have a similar launch pattern to its sibling, the iPhone.

Shaw Wu analyst for Kaufman Brothers writes that “the product would most likely not ship in volume until the June timeframe, as there may [be] minor issues that need more work including battery life and durability. We believe the timeline could be similar to the original iPhone, where it was announced in January 2007, but didn’t ship until six months later.”

In addition Wu goes onto discuss some of the rumours he’s heard about the speculated Apple tablet.

• Act as an intermediary between the iPod touch/iPhone and Mac. “it is not intended to replace a Mac but to be somewhat of a ’super’ iPod touch where video, gaming, web browsing, e-books, and the ability to run multiple apps, would be enhanced with the much larger screen.”
• Believes that Wi-Fi would be the “most likely option” for internet access making no clear ruling out of 3G network access
• Estimates price point close to $999 but says that carrier subsidies could reduce cost
• Supply chain sources suggest Apple is looking to sell 5 million tablets in first year.

A Bloomberg report this week republished by BusinessWeek has reiterated previous rumours that Apple will begin selling it’s rumoured tablet device in March after unveiling it later this month.

Details are thin in the report but the author does speculate that the device will help Apple “capitalize on demand from consumers for devices that can surf the Web and play movies and music.” Additionally the tablet could be competition for Amazon’s Kindle eBook reader according to the report.

In separate but related news analyst Brian Marshall with Broadpoint.AmTech said that the Apple tablet will support multiple carriers and will definitely connect to Verizon’s 3G network.

“The tablet will be supported by multiple [mobile] carriers,” said Brian Marshall of Broadpoint AmTech, citing unnamed sources he said were close to the situation. “Verizon and others,” he continued. “Definitely Verizon. I’ve been told that’s a certainty.”

Speculation is widely expected to come to an end on January 27th when Apple is rumoured to have scheduled a special media event to unveil the touchscreen tablet. The event is said to be held at the Yerba Buena Center in San Francisco, a common stage for Apple product releases.

One analyst has come out with some new rumours about Apple’s highly anticipated Tablet Mac which is rumoured to launch in March or April 2010 and feature a 10.1-inch LCD display.

Oppenheimer analyst Yair Reiner revealed in a note to investors that his checks with Apple’s supply chain suggest that “the manufacturing cogs for the tablet are creaking into action and should begin to hit a mass market stride in February,” with Apple looking to produce as many as “1M units per month.”

Additionally Reiner stated that the tablet would use a 10.1-inch multi-touch display using LTPS LCD technology, the same technology used on the iPhone.

Reiner also wrote about how Apple has been approaching book publishers “with a very attractive proposal for distributing their content,” adding that “Apple will split revenue 30/70 (Apple/publisher); give the same deal to all comers; and not request exclusivity. We believe the typical Kindle split is 50/50, rising to 30/70 if Kindle is given ebook exclusivity.”

Reiner went onto predict that Apple could sell 1-1.5 million tablets per quarter at an average selling price of $1000.

In a note to investors this week analyst Doug Reid of Thomas Weisel Partners said that despite persistent rumours that Verizon will receive the iPhone in 2010 when AT&T’s exclusive agreement runs out he believes that T-Mobile will instead be the chosen carrier.

Reid’s thoughts come off analysing the carriers different advertising campaigns, “AT&T advertising in the United States has in recent weeks clearly shifted away from iPhone as the carrier likely readies itself to lose exclusivity in the United States (to T-Mobile and not to VZ, we believe) while VZ ads promoting Droid and other anti-iPhone devices appear to have intensified markedly”.

Rumours earlier in 2009 suggested that AT&T was looking to extend its exclusive contract—which expires sometime in 2010—through to 2011 but such suggestions died off around the middle of the year.

Reid added that Verizon could pick up the iPhone in 2011 when its 4G network is more established.

T-Mobile would be an easier target for the iPhone than Verizon as it will already be able to work on T-Mobile’s GSM network but will be unable to access thaw 3G portion of the network as the iPhone is only compatible with 850MHz, 1900MHz and 2100MHz bands where as T-Mobile operates on 1700MHz.

According to NPD data Apple grabbed 47.71 percent of U.S. retail desktop revenue during the month of October. The data which comes from Joe Wilcox who spoke to Stephen Baker, NPD’s vice president of industry analysis.

Baker attributed this impressive number down to the release of new iMac models and a decline in PC desktop sales ahead of the October 22nd release of Windows 7.

“Apple gets a huge bump out of new products that no one else gets,” Baker said. “Those [share increases] haven’t tended to be sustainable in the long term.”