A Taiwanese source has confirmed that an Apple iPhone is now in production and that more than 10 million will be available by January when Apple Apple Computer CEO Steve Jobs will formally launch the new iPhone at Macworld in January in San Francisco.
Hon Hai Precision who make phones notebooks and devices for several manufacturers including Motorola, Apple, Cisco, Dell, Nokia, and Sony is a highly succesful Company that in the last quarter reported US$456.75 million in after-tax earnings. During the past few months sources say, HHP has built several versions of the new phone before the final design was signed off for production.
A foreign institutional investor estimated that Hon Hai would see sales grow 55% year-on-year in 2006 and the annual growth rate to reach 44% in 2007, because it expects to see considerable orders for phones and notebook PCs from Sony of Japan and Apple Computer of the U.S., as well as orders for cellphones from Motorola of the U.S. and Nokia of Finland.
UBS analyst Benjamin Reitzes wrote in a research note recently “This data point is in line with our expectations that a cell phone could be discussed in January at Macworld with limited sales by February and broader distribution in spring 2007,”
The analyst said the number of cell phones under contract exceeds estimates for 2007 and that those phones would make a “significant and incremental” contribution to Apple’s earnings. However, analysts have noted that an iPhone could cannibalize iPod sales. But the move can’t be resisted. Music is increasingly moving onto cell phones.
‘They can’t compete against the subsidized phones.’ -Derrick Wood, Pacific Growth Equities
Makers of smart phones that sport Microsoft Windows Mobile 5 are turning Windows Media into one option to turn a PDA-style phone into a music player. Meanwhile, Motorola is aligned with Apple for iTunes on cell phones. Microsoft and Nokia, among others, are eyeing new handsets.
“I think over the long term mobile music is gong to be huge,” Pacific Growth Equities analyst Derrick Wood said. “And that is playing and consuming music over your phone.”
Apple shares rose $0.23 to $85.23 in recent trading. Apple’s Outlook
For Apple, however, the business of cell phones couldn’t be any further from its own. Apple’s hardware sells for a premium because of the Mac maker’s attention to detail. That approach has yielded elegantly crafted products that have won over geeky zealots.
But the business of cell phones is littered with free phones and rebates. Cell phone makers are able to offer flashy phones with lots of bells and whistles largely because the hardware is subsidized by carrier contracts. These phones would compete against an iPhone.
“They can’t compete against the subsidized phones,” Mr. Wood said of Apple. Still, a snazzy iPhone at Macworld could be just the thing for Apple to brush back rivals.
Microsoft began selling its Zune digital media player Tuesday, putting its first product into the market that squarely targets the iPod crowd (see Zune Players Enter iPod Market). The software behemoth has previously said that a phone version of its music player was possible (see Microsoft: Zune Phone?). Nokia is in, too. In September the Finnish handset maker made a big push into music-playing cell phones with its Nseries.
Along with an expanded line of music phones packing cameras, the handset maker has taken the fully integrated approach made popular by iPod with iTunes, offering its own digital music service, dubbed Music Recommenders.