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Apple Has Reportedly Boosted iPhone Production

2011-01-03 06:57:19

Mark Long, newsfactor.com Mark Long, newsfactor.com Mon Dec 27, 5:00 pm ET

According to sources, Apple has boosted its iPhone global shipment target for

the first quarter of 2011 to between 20 million and 21 million units -- up from

19 million previously. Industry sources also told the Taiwan-based DigiTimes on

Monday that Apple intends to ship five to six million WCDMA iPhones to carriers

in North America and the Asia-Pacific region during the first three months of

next year.

The unconfirmed production boost would be substantially higher than the 15

million iPhone shipments that Wall Street analysts have predicted for the

fourth quarter of this year -- up from the 14.1 million units Apple shipped in

the three months through September. But demand would increase dramatically if

Apple terminates its U.S. exclusivity agreement with AT&T and launched a

CDMA-compatible iPhone to satisfy pent-up demand for such a device from rival

Verizon Wireless' 90 million subscribers.

"We believe that Apple's exclusive agreement with AT&T has limited demand for

the device," Piper Jaffray analysts Gene Munster, Michael Olson, and Andrew

Murphy noted earlier this month.

Embracing the Multi-Carrier Model

The United States is the only remaining country of the 89 nations in which the

iPhone is sold that involves an exclusive agreement, Munster, Olson and Murphy

observed. "The company has exhibited a clear trend toward the multi-carrier

model in recent months, and we believe [Apple] will complete the trend by

adding Verizon in the U.S. in the first half of 2011," they wrote.

Apple currently trails behind Nokia (36.6 percent) and Android (25.5 percent)

in the smartphone market with a 16.7 percent share worldwide, according to

Gartner. So launching the iPhone on Verizon's network early next year would

undoubtedly help Apple continue to grow even as Google's Android platform

becomes more widely available on a global basis.

Moreover, the iPhone's move to Verizon's network might even take some of the

wind out of Android's sails, at least in the lucrative U.S. smartphone market.

According to Gartner, Android phones accounted for 75 to 80 percent of the

smartphone trade at Verizon in the third quarter.

Piper Jaffray pointed to Apple's App Store as one of the iPhone maker's most

significant competitive advantages with 300,000 apps. Ultimately, however, the

firm's analysts "believe both Apple's iOS and Google's Android platforms will

be successful in the smartphone and tablet categories."

More Competition Ahead

Still, don't count out Microsoft's Windows Phone 7 just yet. "The Windows Phone

7 Marketplace reaching 4,000 apps two months after launch has to be one of the

most rapid ramp-ups in recent times," said Al Hilwa, director of applications

development software at IDC.

With both iPhone and Android app stores being much bigger, Microsoft has its

work cut out, Hilwa observed. "However, reaching this milestone faster than

Android, which took from October 2008 to March 2009 to reach about the same

level, is not bad," Hilwa said. "We can say that for a company that just a few

months ago was an also-ran in mobile, having 10 smartphones released in 30

countries is not a trivial achievement."

Hilwa said he won't be surprised if Microsoft has the third-largest app

portfolio in the industry by the middle of next year. "They have really strong

application development tools and a strong developer ecosystem from their PC

universe," Hilwa said. "This is a long-term battle that will be pivotal for

Microsoft's long-term relevance."

Research In Motion is also gearing up a new operating system that will enable

future BlackBerry devices and RIM's new PlayBook tablet to be highly

competitive. "International expansion appears to be one of their bright spots,"

Hilwa said. "The astounding thing is that they have been growing well for a

long line of quarters."