AT&T’s rivals have become more aggressive about their pricing, and that — paradoxically — could be good for Apple (AAPL), according to Kaufman Bros.’ analyst Shaw Wu.
In a report to clients issued Monday, Wu notes that Sprint’s (S) Boost Mobile unit now offers a $50 plan that includes unlimited talk, messaging, Web, and walkie-talkie service. Deutsche Telekom’s (DT) T-Mobile, meanwhile, is test marketing a $50 unlimited voice plan plus $25 more for unlimited data/Internet.
That means that iPhone customers pay more than twice as much for all-they-can-mobile service as, say, T-Mobile customers using Google (GOOG) Android G1s.
How is that good for Apple’s iPhone, whose fate is tied for now to AT&T — at least in the U.S. market?
According to Wu, evidence shows that it’s the high cost of AT&T’s monthly service plans, not the cost of the devices themselves, that is the limiting factor keeping iPhone sales from growing faster than they are. (See here.)
He believes Sprint and T-Mobile’s price cuts will boost their lagging smartphone sales, which will in turn put pressure on AT&T and Verizon to cut their rates — to the ultimate benefit of iPhone owners.
Wu is modeling Apple to sell 3 million iPhones in its second fiscal quarter, which ends in March, although recent checks with his supply-chain sources suggest that sales are tracking closer to 3.5 million.
He’s sticking with a price target of $120 a share, arguing that concern over possible management changes are mostly priced in and that a 15X price multiple these days is “reasonable and conservative.”
Apple closed Monday at $86.95, down 4.66% for the day.