No cheap, mass-market iPhone — ever. A deal with Verizon or T-Mobile next summer. And a $30 – $40 subscription TV service on iTunes that could compete with cable TV within the next year.
Those are some of the predictions offered by Piper Jaffray analyst Gene Munster in a note to clients Monday that addressed 14 “unanswered questions” about Apple (AAPL). The exercise has become an annual tradition for Munster and can be a useful way to catch up on the news, although some of his answers are more surprising than others.
The three this year that interested us had to do with cheap iPhones, the end of AT&T (T) exclusivity and competing with cable television:
Will the iPhone remain exclusive at AT&T for the foreseeable future?
We believe Apple is slowly transitioning each country into which they sell the iPhone to a multi-carrier model. In other words, we expect Apple to add new iPhone carriers in the U.S. within the next year (likely with a new product launch next summer) … [Munster doesn’t name carriers, but Verizon (VZ) and/or T-Mobile (DT) would be the logical candidates.] In France, the company now enjoys dramatically higher market share (in the 40% range vs. about 15% in ROW) than in countries with exclusive carrier agreements (such as AT&T in the U.S. where the iPhone has market share in the mid-teens). We believe Apple is seeing the increased unit sell-through more than offset the slightly (~10%) deteriorated economics per unit involved in non-exclusive agreements.
Will Apple ever make a cheap, mass-market phone?
We do not believe Apple will make a basic phone, or feature phone, to compete with rudimentary $10 models like those that dominate the cellphone market in India. … The screen resolution and all the apps made for the current iPhone 3G, 3GS and iPod touch also represent a barrier to Apple creating a smaller, cheaper device, one that likely could not run the apps developed for the current devices, and eliminating one of Apple’s key features of the iPhone.
Would Apple ever consider a subscription video service through iTunes?
We continue to believe that Apple will eventually offer a monthly subscription for iTunes TV shows accessible on Apple TV, iPods, iPhones, and Macs/PCs. Apple could leverage its deep library of content with many network and cable channel content owners to provide unlimited access to a sub-library of its TV shows for a standard monthly fee ($30 to $40 per month). Such a product would effectively replace a consumer’s monthly cable bill (~$85/month) and offer access to current and older episodes of select shows on select channels. While timing on the launch of such a product is very uncertain given the negotiations that would need to take place, Apple may work to launch it simultaneously with a new version of Apple TV, or updated Apple TV software within the next year.
