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March 1, 2007

Will Apple's iPhone really dominate?

Posted by Tricia Duryee at 11:28 AM

Yesterday, Apple Chief Operating Officer Timothy Cook said at a conference in Las Vegas said Apple expects 10 million customers to pay at least $499 to buy an iPhone next year.

A Bloomberg story today said the iPhone will start shipping in June in the U.S. Chief Executive Steve Jobs said in January that Apple expects the iPhone to capture 1 percent of the roughly 1 billion worldwide mobile-phone sales.

Let's look at the claims Apple and AT&T were making yesterday.

Up to 75 percent of U.S. iPhone buyers probably will be first-time subscribers to AT&T's mobile-phone service, said AT&T Chief Financial Officer Rick Lindner. The phones will only work on AT&T's wireless network, formerly known as Cingular Wireless.

This is a back-of-the-napkin analysis because we don't have all the projections, but let's say the iPhone is launched in other countries by next year, and half of the projected sales come from outside the country.

That leaves AT&T, the former Cingular, responsible for selling 5 million iPhones -- a very conservative estimate.

Last year Cingular Wireless added 6.8 million new subscribers to its network. If that's the case, then what Lindner said has to be true: 75 percent of its new subscribers, or 5.1 million, would have to buy the iPhone to reach those kinds of targeted numbers.

To be clear, that's 5.1 million people opting to purchase a phone for $499 or $599 over free, the common price of a phone for a new subscriber, or a couple hundred dollars, which is frequently the price of a new BlackBerry or Windows Mobile device that for the most part have the same capabilities or more.

I ask you, what are the chances of that happening?

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Tricia Duryee
Tricia Duryee
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Angel Gonzalez
Angel Gonzalez
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Kristi Heim
Kristi Heim
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Benjamin J. Romano
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