Initial sales of the iPhone will be modest, but sales will accelerate once the the price of the iPhone starts to hit the “sweet spot of the mobile phone market”, according to analyst Charles Wolf of Needham & Co in a note to investors.

One day we might all be able to afford an iPhone

Wolf predicts that the cost of the iPhone will decline at about 20% per annum due to lower component costs and increasing carrier subsidies.

He believes that US distributor will initially subsidize the iPhone to the the tune of US$100, and that this this rise by US$5 per annum to US$150 in 2016. As a result, he expects that the price of the iPhone will eventually be around US$75 by 2016, and that as Apple improves the functionality of the iPhone users will use more data services and pay higher access fees (so, cheaper phone, but more usage charges).

The iPhone will go on sale in June for US$499. The initial sales target is to sell 1 million phones within a year.

Needham & Co has raised the target price of Apple shares from US$115 to $135.

”We’re forecasting sales of 135 million iPhones in 2016, equivalent to a seven percent market share,” wrote Wolf. 

To put this in perspective, with a market share of 30%, Nokia’s sold over 300 million mobile phones in 2006.

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Entry was posted on Monday, January 29th, 2007 at 10:51 am under Apple, Cell phones, Technology.

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