Morgan Stanley: iPhone Market Share Would Double Without Exclusivity
by John Paczkowski
Posted on October 2, 2009 at 7:34 AM PT
Add Morgan Stanley’s Kathryn Huberty to the list of analysts calling for Apple to broaden the iPhone’s distribution by ending carrier exclusivity deals.
In a research note issued this morning, Huberty–noting that the iPhone’s market share grew 136 percent in France when Apple switched to multicarrier agreements there–said iPhone sales could more than double if the company took a similar tack in other countries.
“We expect Apple to broaden iPhone carrier distribution over the next two years and believe this opportunity is under-appreciated by the investment community,” she wrote. “This total opportunity is substantial–it adds up to an incremental 20.3M iPhone units and $3.76 in adjusted EPS, 100 percent and 41 percent of iPhone units and adjusted EPS respectively.”
Adding further details to her projections, Huberty continues: “In the top six iPhone markets that are still exclusive, we believe that Apple’s market share could rise to 10 percent, on average, in a multiple carrier distribution model from 4 percent today. These six markets represented almost 70 percent percent of iPhone shipments in C2Q09.”
Huberty also claims that if Apple (AAPL) were to end its exclusivity deal with AT&T (T) and add Verizon (VZ) as a second carrier, its share of the U.S. market would more than double, rising to 12.2 percent from 4.9 percent today.
Huberty, it should be noted, isn’t the first analyst to make such a claim. In June, Bernstein Research analyst Toni Sacconaghi said that a deal with Verizon could more than double U.S. iPhone sales in the near term. Said Sacconaghi: “Verizon’s postpaid subscriber base is not only larger than AT&T’s, but more importantly, is untapped whereas we estimate more than 10 percent of AT&T’s postpaid users already have an iPhone.”
Comments
What part of Verizon uses CDMA and not GSM do these (so-called) analysts fail to understand?
Posted by Dave Barnes at October 2nd, 2009 at 8:19 amI would buy 4 of the top end 3GS 32GB phones the day Verizon announce they are selling iPhones!!
Posted by Michael Massetti at October 2nd, 2009 at 8:29 amI’m sure the analysts know that the iPhone would need a CDMA radio to work on Verizon. And, we know that Apple would not likely create a separate iPhone, unless, there were some financial guarantees, like a minimum 3M units ordered. The Chinese market is an example of this. Now, Verizon would likely be a big enough market to justify a separate iPhone, so what’s the problem?
The problem is that Verizon would want an iCripple. It’s very doubtful that Verizon would allow the iPhone to run around their VCast store, or any of their other ways they nickel and dime their customers.
Posted by Ken Cheng at October 2nd, 2009 at 10:13 amKen brings up a great point – one that explains why consumers hate the carriers – their shortsightedness. Verizon doesn’t have a snowball’s chance of creating a better online experience for their customers ala the iPhone App Store, and no developer in his right mind wants to waste time creating apps for Verizon anyway. Fingers crossed that Verizon does the smart thing and ponies up enough cash to do a deal with Apple as soon as deal with AT&T expires (I’m a Verizon customer – they do have a great network, but a horrible selection of phones).
Posted by Danny Miller at October 2nd, 2009 at 10:28 am> What part of Verizon uses CDMA
> and not GSM do these (so-called)
> analysts fail to understand?
If an analysis about iPhone carriers in the U.S. doesn’t specifically address this issue then it is completely useless. It may be practical for Apple to create a CDMA phone or not, but you have to factor that in. It’s a much bigger undertaking than is appreciated. Blackberry and Nokia make multiple versions of each phone, but they also don’t have application platforms.
You could also do an analysis that if Apple invented the flying car they would get 100% of the flying car market within a year. Still might not be the best idea for Apple to try and do it.
Posted by Fred Hamranhansenhansen at October 2nd, 2009 at 6:09 pm> I’m a Verizon customer
> – they do have a great
> network, but a horrible
> selection of phones
The reason they have a horrible selection of phones is they don’t support GSM. Verizon is in a little ghetto of their own making, and people complain that the iPhone won’t run on Verizon as if it’s Apple’s fault.
Verizon looks big if you only look at the US. But if you look globally, Verizon is one of the very worst carriers. Their network is proprietary and their business model is antiquated. They look good only because AT&T is so new, newer than the iPhone, in spite of the name.
Posted by Fred Hamranhansenhansen at October 2nd, 2009 at 6:17 pm