New Markets Mean More Upside for iPhone
As high as they are, growth estimates for Apple’s iPhone are still too low. Why? The dramatic increase in addressable market created by the end of carrier exclusivity in the U.S. and the promise of further market share gains in China with the launch of the CDMA iPhone.
Piper Jaffray analyst Gene Munster figures that if the iPhone continues to grow apace with the broader smartphone market at a rate of roughly 35 percent in calendar 2011, Apple could conceivably sell over 200 million iPhones in 2015.
Today, Apple’s addressable market is about 1.7 billion subscribers thanks to distribution deals with a multitude of carriers worldwide. And according to Munster, there’s further upside still. “We believe Apple still has meaningful opportunity remaining to add to its addressable subscriber base,” he wrote in a note to clients. “The recently added Verizon has over 90 million subs, and with the launch of the CDMA iPhone, Apple could add China Telecom (also 90 million subs) and Indian carrier Reliance (110 million subs). We believe Apple could add China Telecom and/or Reliance to its list of carrier partners in CY11.”
In other words, though Apple’s current carrier agreements give it access to 1.7 billion subscribers, it’s still just beginning to tap into a number of critical markets. For evidence of this, one need only look back to Apple’s last earnings report. iPhone sales in Asia more than doubled in Q1. Revenue from China was a staggering $2.6 billion, and according to COO Tim Cook, Apple stores in the country were among the company’s highest traffic and revenue stores in the world.