Chris Barylick
June 11th, 2008, 11:45 AM
<div id="inlinead" class="inlinead"><IFRAME src="http://adserver1.backbeatmedia.com/servlet/ajrotator/13894/222/viewHTML?pool=13886&type=3158&pos=20&zone=5000" width="300" height="250" align="middle" frameborder=0 marginwidth=0 marginheight=0 scrolling=no><script language="JavaScript" src="http://adserver1.backbeatmedia.com/servlet/ajrotator/13894/222/viewJScript?pool=13886&type=3158&pos=20&zone=5000"></script></IFRAME></div><div class="nodecontent"><img src="http://www.iphonealley.com/images/storyimages/appstore.jpg" align="right"/> In business news, investment banker Piper Jaffray is urging investors to focus on Apple's upcoming software strategy, particularly its upcoming App Store, which could generate over $1 billion by 2009. Per a research note offered to clients this morning, analyst Gene Munster said the financial prediction represents the better of a three-case scenario that would add anywhere from 1 to 3% in operating income for the Apple by the end of the 2009 calendar year.
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To create the scenarios, Munster initially conceived a neutral case scenario in which he assumed 91% of a market comprised of 85 million multi-touch handheld users (61.6 million iPhoner users and 23.4 iPod touch users) would access the App Store during the course of a year.
These numbers were based off the adoption rates announced at this year's Worldwide Developer's Conference wherein Apple CEO Steve Jobs stated that 98% of iPhone owners browse the web, 94% use email, 90% send text messages, and 80% use 10 or more of the integrated features of the phone.
"Mobile service adoption rates show that iPhone owners are more sophisticated mobile users, likely a result of both the user profile and the device itself," the analyst told clients. "The bottom line is that we expect similar adoption of the App Store to other advanced services."
The case itself assumes 77.7 million active App Store owners will downloads two applications from the service each year - the first one being free while the second retails for $10, thereby generating $777 million in sales and a profit of $163 million. Munster also noted that adoption rates could actually be much higher given the quality and ease of use of Apple's iPhone experience -- or around 95 percent (or 80.8 million active users) -- which would bump revenues to $1.21B and profits to $254 million.
A conservative trial of the case sees the company as generating $416 million in sales with a profit of $75 million. This version assumes that only 75% of iPhone and iPod Touch users will download content from the app store.
"According to April m:metrics data, 45% of smartphone users play a game on their phone at least once in a month," he said. "For iPhones, data suggests the rate is closer to 32%; however, we believe the rate of application users/gamers for iPhones is depressed given that third party developers were not able to produce applications for the iPhone previously."
Each of Munster's three case scenarios assume a 60% operating margin on the 30% cut of App Store sales Apple will received.
[Via <a href="http://www.appleinsider.com/articles/08/06/11/apples_app_store_could_emerge_as_1_2b_business_by_ 2009.html" target="_blank">AppleInsider</a>]
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To create the scenarios, Munster initially conceived a neutral case scenario in which he assumed 91% of a market comprised of 85 million multi-touch handheld users (61.6 million iPhoner users and 23.4 iPod touch users) would access the App Store during the course of a year.
These numbers were based off the adoption rates announced at this year's Worldwide Developer's Conference wherein Apple CEO Steve Jobs stated that 98% of iPhone owners browse the web, 94% use email, 90% send text messages, and 80% use 10 or more of the integrated features of the phone.
"Mobile service adoption rates show that iPhone owners are more sophisticated mobile users, likely a result of both the user profile and the device itself," the analyst told clients. "The bottom line is that we expect similar adoption of the App Store to other advanced services."
The case itself assumes 77.7 million active App Store owners will downloads two applications from the service each year - the first one being free while the second retails for $10, thereby generating $777 million in sales and a profit of $163 million. Munster also noted that adoption rates could actually be much higher given the quality and ease of use of Apple's iPhone experience -- or around 95 percent (or 80.8 million active users) -- which would bump revenues to $1.21B and profits to $254 million.
A conservative trial of the case sees the company as generating $416 million in sales with a profit of $75 million. This version assumes that only 75% of iPhone and iPod Touch users will download content from the app store.
"According to April m:metrics data, 45% of smartphone users play a game on their phone at least once in a month," he said. "For iPhones, data suggests the rate is closer to 32%; however, we believe the rate of application users/gamers for iPhones is depressed given that third party developers were not able to produce applications for the iPhone previously."
Each of Munster's three case scenarios assume a 60% operating margin on the 30% cut of App Store sales Apple will received.
[Via <a href="http://www.appleinsider.com/articles/08/06/11/apples_app_store_could_emerge_as_1_2b_business_by_ 2009.html" target="_blank">AppleInsider</a>]
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