The iPhone 6 and iPhone 5S may not even have a chance with the rumored budget iPhone. This is what analyst Steve Milunovich, from UBS, thinks will happen in the near future.
Estimates for iPhone 5C sales
The iPhone Light (sometimes referred to as iPhone 5C or iPhone M) could sell a total of 92 million units toward the end of 2014 and could possibly account for over a total of 53 percent total of iPhone sales. Since it’s estimated that this phone will launch by the end of the year, the iPhone Light will make up about 3 percent of the total of iPhone sales in 2o13.
Exclusive: Third Point Expands Private Equity Business With New $300 Million Fund
Dan Loeb's Third Point recently completed the first close for TPVC, its new dedicated private growth-stage fund. The $300 million fund is part of Third Point's private investing strategy. At the end of February, Third Point managed $16.5 billion overall for clients around the world. New talent According to an investor update dated March 5th Read More
Potential of sales for iPhone 5s and iPhone 6
Milunovich explained in more detail, “‘In our model, the iPhone M is dilutive not only to gross margin but to gross profit dollars. The impact of the M depends on assumptions. We estimate the 4/4S, which the M would replace, currently have a gross margin of 55 per cent because of the low cost of older components. We also assume the gross margin of the M will be near 32 per cent. And we estimate shipment of 92 million iPhone M units in F14 [Fiscal year 2014]. ‘Because the M has such a lower gross margin than the 4/4S, the M reduces earnings in our model. iPhone gross profit declines by 4% or $1.6bn with the iPhone 5/5S profit up $4.9bn and the 4/4S/M profit down $6.5bn. The net iPhone impact is a reduction to F14E EPS of $1.16. In this case, Apple Inc. (NASDAQ:AAPL) would be looking to add new users to its ecosystem at the expense of short-term profit, which CFO Peter Oppenheimer said the company occasionally does.”
A cheaper iPhone could do wonders for Apple Inc. (NASDAQ:AAPL) and increase interest in their brand. However, it could cause Apple Inc. (NASDAQ:AAPL) to lose a lot of money in the long run as the iPhone 5S and iPhone 6 have potential to be key sellers.