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Analyst: Apple’s iPod phone set for production

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By LC Angell

Contributing Editor
Published: Tuesday, September 5, 2006
News Categories: iPod

American Technology Research analyst Shaw Wu believes that Apple’s first cell phone will be introduced in the first half of 2007 and is urging investors to purchase shares of Apple before such an announcement is made. “With a history of revolutionizing the PC industry, the music industry, and the movie industry, we encourage investors to get aggressive in purchasing shares of Apple prior to the potential revolution of the handset industry,” Wu wrote in a research note. “Our research indicates that an Apple-designed smart phone has moved from concept to prototype and recently has progressed to near completion as a production unit,” Wu said. “We believe this smart phone has been in development for over 12 months and has overcome substantial challenges including design, interference, battery life, and other technical glitches. We believe that Steve Jobs is finally satisfied with the end product Apple engineers have produced in terms of quality and the right blend of cell phone and portable media player.”

Citing no sources, Wu claims the Apple phone will have a candy bar form factor, similar to the iPod nano, and will come in three colors. “Clearly, we would like to share more detail as we have conducted extensive work on the product pipeline, but for now, here is what we will convey. The design will be an iPod nano-like candy bar form factor and come in three colors (we are not certain of the exact colors but we suspect black, white, and platinum, similar to Apple’s current color scheme on iPods and Macs),” Wu said in his report.

Before Apple enters the U.S. cell phone market, it needs approval from the FCC. Wu notes that Apple could announce the phone first and then get approval before it ships. This would stop product details from first appearing on the FCC’s public website, allowing Apple to surprise consumers with the product. “We believe a filing would be required at least 6-8 weeks prior to an actual product launch. We believe Apple could protect potential leaks by announcing its cell phone product and then shipping around two months later.” Wu said. “This could be similar to the Intel transition where actual product shipped seven months after the announcement. Moreover, we believe it is possible that a filing under an OEM manufacturer (not Apple) could be possible similar to Microsoft Zune (was filed under Toshiba). We believe the key is that the underlying electronics get approved, as opposed to a specific brand name.”

Wu said the area that is still unclear is Apple’s go-to-market strategy. “As we have mentioned previously, we believe this is under serious debate and consideration within Apple,” Wu wrote. “It could participate the traditional way by partnering with carriers like Cingular, Sprint-Nextel, T-Mobile, and Verizon or it could also go with an MVNO (mobile virtual network operator) model where it would have tighter control over the user experience. We believe the go-to-market strategy is likely the gating factor in Apple shipping its cell phone imminently. However, we believe the company’s 155 Apple stores will prove to be a boon regardless of the marketing strategy, providing Apple local presence and competitive advantage.”

In closing, the analyst said Apple could benefit greatly by only acquiring 1% of the cell phone market. “We are very positive on Apple’s prospects in building a material smart phone business given its strong brand name, loyal customer base, unique user experience, large installed base of 58 million iPods, and what we estimate to be about 300 million iTunes users,” Wu said. “Should Apple gain 1% share in a billion unit market, we believe that could amount to a $2 billion opportunity assuming around 10 million units at a $200 ASP (similar to its current iPod), but not including potential services and accessories revenue.”

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Comments

1

I don’t believe in ana-lysts, but I sure believe Apple could do something about the cellphone market. Apple habitually releases products that actually work, and they do not build up hype about unreleased hardware for years just to mess up when they finally get it to market. This is a strategy totally alien to the phone market. At the moment, one tends to get excellent hardware that is crippled by slow, unusable software (Motorola), or overhyped “next gen” products that do not even live up to the standards of their predecessors (Sony Ericsson P990), or a combination of both. Phones get worse these days, not better as they should. Then a lot of brands just have no hint of decent Mac support (Samsung? Hello?). Apple could put an end to all of this. Also, there needs to be something done about the network influence in the US. In Europe, people would burn providers at the stake if they tried to tell them which phones they can or cannot use on their network. That’s just as ridiculous as if your DSL-telco would try to tell you you could not access their network with a Mac because they do not like Macs.

Posted by Bad Beaver on September 5, 2006 at 11:33 AM (PDT)

2

Apple, in comparison to the phone market, release products rarely.
I believe if they do release an iPhone, it will be bundled with a 2gb transflash, not internal memory-based. Well, it may have some, for messages and settings and so forth.

Posted by Liam on September 5, 2006 at 12:17 PM (PDT)

3

“I believe if they do release an iPhone, it will be bundled with a 2gb transflash, not internal memory-based.”

Since when does Apple release things that aren’t internal memory based? Apple’s mode is simplicity; external memory could possibly confuse a basic user, so I think Apple would probably shy away from it, much the way they shy away from multi-button mice (as the default, anyway).

Posted by Harris Lapiroff on September 5, 2006 at 1:10 PM (PDT)

4

I’m so sick of hearing crap from this Wu guy.

Posted by |LOST on September 5, 2006 at 1:41 PM (PDT)

5

I hate Shaw Wu, he’s not much of an analyst.

Posted by STFU Wu on September 5, 2006 at 2:05 PM (PDT)

6

I would hope if they do anything phone related, that they won’t sign an exclusivity contract with anyone.  As much as some people hate certain cell phone providers, I’m happy with my current provider, and don’t want to change to get a nice new phone.  I get to miss out on the Moto Q because of junk like this.

Posted by ajservo1 on September 5, 2006 at 2:12 PM (PDT)

7

Seems like this Wu guy is within the inner circle of the Apple Phone project together with the assigned Apple engineers. How else, would he know about the design, colors and the still ongoing discussion regarding the right market strategy? Well, just kidding! I believe this Wu guy has just a great imagination and a great desire of how the new phone should look like but indeed no clue just like everybody else what it will be like. I just hope, if they enter the market, its really something that rocks. But as much as I agree that the currently available phones are fare away from perfection, it want be easy to revolutionize. But they have to if they really want to enter into this market. Otherwise, the whole Apple image is demised.

Posted by Rouven on September 5, 2006 at 11:32 PM (PDT)

8

Well, regarding cellphones being crap, have you picked up a Treo 700w lately?  Something about running Skype mobile, calling free anywhere in the nation and to Europe for 2c a minute using broadband unlimited access while not burning up my minutes.  Tell me that isn’t cool.

Add in TCPMP (the core pocket media player) with a plug-in for AAC files, plus iTunes agent so your phone can be seen by iTunes, and with a 2GB memory card it pretty much replaces the iPod nano.  Add in all the third party programs for ripping DVDs and you have a video-ipod too.  Throw in the ability to browse the web at broadband speed, plus open word, xl & powerpoint docs, and synchronize with outlook e-mail and address book.  Then add in 3rd party software to mimic any IR remote control using the IR port, so you cancontrol the TV at home.  Then add PDAnet so you can use it as a modem for your laptop.  Then forget about carrying a map ever again because it runs google maps or virtual earth mobile.  Put a GPS card in the slot and it does even better.  Put in 3rd party softwarte and it will run any Palm OS based program despite being a windows mobile device.

Yes, it can only be had thru’ verizon (well, now sprint has the 700wx).  Yes it is a little short on RAM, but who cares when I can get this much functionality from a phone?  Who cares if it’s CDMA and not GSM - as long as I can get a good signal anywhere and the internet is fast.  Yes cingular/ATT has GSM but their coverage and data speeds suck.  Regarding the motoQ - do yourself a favor and skip it (no touch screen). 

Bottom line, if Apple wants to compete, they’re gonna have to compete with the Treo, because that is where the cutting edge of “convergence” devices is right now.

Posted by Dopial on September 6, 2006 at 5:54 AM (PDT)

9

I got on here to ask if anyone else thought this Wu guy was just completely full of ####, but it already seems that some do. Carry on.

Posted by fakey on September 6, 2006 at 7:31 AM (PDT)

10

As tech analysts go, Wu’s actually is better than most, which is probably he’s quoted so much. From what I’ve read in the past, he does seem to hit it right more than others, particularly when compared to those predictions from the ‘fanboy analyst’ contingent (various sundry pro-Apple websites, certain Apple-bullish investment houses, etc.).

Posted by flatline response on September 6, 2006 at 8:47 AM (PDT)

11

Apple iPhone: Network-independent; 1GB Flash; Video; 2 Megapixel camera; looks like iPod Nano but more resistant to scratches; less than $200; launching Sept. 12.

If Wu can fantasize, so can I.

Posted by Kunal on September 8, 2006 at 8:31 AM (PDT)

12

“Who cares if it’s CDMA and not GSM “

Why would you want GSM over CDMA?.

CDMA is a technology used in 3G networks like CDMA2000 and GSM is a standard that uses TDMA as its technology.

3G networks have higher specs and provide more services. Therefore could be described as better.

I would like to know why you would prefer GSM

Posted by Rooi on September 28, 2006 at 6:13 AM (PDT)

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