Expect two new models and expansion into untapped U.S. and Chinese carriers
J.P. Morgan’s Mark Moskowitz, one of the last holdouts on Wall Street, has come around to what has become conventional wisdom among Apple AAPL watchers: That the company is set to release not one but two iPhones, an iPhone 5 and what Moskowitz calls an iPhone 4-plus.
In a report to clients Monday he describes what his “research” has turned up. I quote:
- We now expect two new iPhones. Our research indicates that there will be an iPhone 5 based on a lighter, thinner form factor that is GSM + CDMA capable, i.e., a “world-mode” smartphone. A second device (4-plus) based on the current iPhone 4 but with some minor improvements could target the midrange and focus on China. As for the current iPhone 4, we expect it to subsume 3GS as the lower-end offering.
- A new iPhone 4-plus could target China. Our research indicates Apple could release an iPhone 4-plus, targeting one or more China network carriers. While we think a China-focused iPhone could be in the works, it is not likely to be exclusive to the region. There could be other use cases, particularly in the midrange. Either way, the size of the China opportunity overcomes any potential drawbacks of making a specially-designed device for a few wireless carriers in one region, in our view. In China, Apple currently sells its iPhone 4 only through China Unicom.
- Expecting another potential big bang with a few big carriers. Apple added 42 carriers in the June quarter, which partly contributed to the bigger-than-expected iPhone units of 20.3 million. While we do not expect a similar QoQ increase in the number of carriers going forward, we think that the size of the next potential new carriers can have a big impact. Examples include China Telecom (100M subs), Sprint (52M subs), and T-Mobile USA (33M subs).
- Separately, we do not expect iPad 3 this year, but there’s no rush. The other tablet entrants have stumbled. Offerings by MMI and RIM have been the latest disappointments. Also, we had the opportunity to demo Sony’s tablet before its launch. We were not impressed. Sony’s tablet lacks the refined, sleek feel of the iPad. We felt that the sloping or bezel-like back of the Sony tablet feels more like petrified, folded-over pages than a 21st century consumer electronics device.
“If penetrated,” he writes, “China Mobile and China Telecom with approximately 600 million and 100 million subscribers, alongside Sprint and T-Mobile USA with 52 million and 33 million subscribers, stand to have an effect tantamount to the big increase in the number of carriers exhibited in the June quarter. In other words, we believe that investors should start to prepare for more positive surprises related to the quarterly run rate of iPhones in the near- to mid-term. In summary, we would expect such a big bang if Apple introduces two new iPhones this fall and penetrates the untapped U.S. and China carriers.”
Moskowitz is sticking with his price target of $525 a share. At midday Monday, Apple was setting new all-time intraday highs above $410 a share.