As analysts and pundits scoured the tea leaves in the wake of Apple Inc.’s 3G iPhone launch, a few issues emerged.
Who, besides Apple, will get a boost from iPhone mania? Who gets hurt?
Will a rising iPhone-tide lift all boats in the second half of the year?
Did the 3G iPhone refresh demand, or siphon off existing demand?
Surely there are dozens of such questions to be answered, but a handful of analysts took a crack at these particular ones.
Advantage Qualcomm
Several analysts contended that the 3G iPhone’s publicity and feature set would simply boost demand for broadband-equipped handsets and – despite no direct role in the iPhone – that Qualcomm Inc., with a strong position in W-CDMA, would hitch a ride.
Short-term, in the critical fourth quarter, analyst Maynard Um at UBS wrote last week that the iPhone halo effect might well lift unit volumes of 3G-equipped handsets in general and that would boost revenue for the San Diego-based chip maker and IP licenser. Longer-term, as 3G becomes “table stakes” for smartphones, higher average selling prices also will favor revenue for Qualcomm.
Analyst Ittai Kidron at Oppenheimer concurred.
“Those positioned to immediately benefit include Qualcomm and Skyworks, which supplies a power amplifier module to the iPhone 3G,” Kidron wrote. “We also see RIM as a winner benefiting from increased interest in the smartphone market overall, although it isn’t completely immune to some near-term disruption.”
In RIM’s case, an Oppenheimer survey found 11% of RIM users shifting to the 3G iPhone, but 44% of respondents mentioned RIM as an alternative option, and carriers besides AT&T Mobility (exclusive carrier channel for the iPhone) will tout RIM, helping the latter’s sales. (The Oppenheimer survey applied to 200 early adopters waiting in line on July 11 in New York and San Francisco.) Other original equipment manufacturers were more likely to see defections: Motorola Inc. (14%), Samsung Electronics Co. Ltd. (13%) and LG Electronics Co. (11%). Note, however, that the survey found the largest segment of 3G iPhone 3G (33%) were owners of the first-generation iPhone.
The pressure’s on
According to Kidron, all handset OEMs are under some pressure from Apple’s latest entry in the market.
“In the U.S., we see LG as the most exposed, given its position at Verizon Wireless, though Samsung could also see pressure,” Kidron said. “Nokia and Sony Ericsson face the most pressure in Europe as the leading 3G OEMs.
“Bottom line, we view the iPhone 3G launch as a positive creating demand as carriers accelerate promotional activity and OEMs respond with new product releases, which should drive greater overall handset volumes,” the analyst said. “This should be a positive for regions where sales recently have been sluggish – the U.S. and Europe.”
Migration from VZW
Three other points from Oppenheimer’s survey:
– 3G iPhone buyers who switched carriers to make their purchase did so largely from Verizon Wireless (21% of new buyers) and T-Mobile USA Inc. (10%), but only 4% from Sprint Nextel Corp., which has launched a massive campaign around its $130 Samsung Instinct touchscreen phone.
– The 3G iPhone appears to be creating demand, rather than simply pulling from other handset OEMs. Of the survey’s respondents, 64% said they would have stuck with their current handset, had the 3G iPhone not hit the market.
– 60% of 3G iPhone buyers chose the larger, more expensive 16GB model at $300, perhaps indicating that the new price ceiling for handsets lies somewhere between $200 and $300.
Lastly, a teardown analysis by Portelligent Inc., revealed that Infineon Technologies AG maintained its position as the baseband and transceiver supplier, and added the GPS module to its design wins with Apple. And that TriQuint Semiconductor Inc. made “a significant addition to its business” by winning the front-end power amplifier supply.
“Pretty much everyone maintained their position from the first iPhone,” said Howard Curtis, VP of operations at Portelligent. “This was not a dramatic redesign.”
