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Apple May Earn $1 Billion With iPhone 3G Launch

Based on iSuppli's forecasts, it looks like Apple will take in a windfall when the smartphone hits store shelves Friday.

By Antone Gonsalves
InformationWeek


July 8, 2008 03:40 PM
While no official estimates are available, Apple could take in as much as $1 billion in the initial launch of the 3G iPhone, which is scheduled to go on sale in 22 countries on Friday.Apple on Tuesday said its U.S. stores would open two hours early, at 8 a.m. local time, for what will likely be the biggest product launch of the year for the computer and consumer electronics maker. AT&T (NYSE: T), the exclusive wireless carrier for the smartphone in the U.S, will open its stores at the same time.

iSuppli estimates Apple will need 1 million to 2 million iPhones on hand to meet initial demand worldwide. The market researcher also believes Apple makes $499 for every phone sold. Assuming that number is correct, the company could take in as much as $1 billion.

If Apple has a successful launch, then it will be well on its way to meeting its forecast of selling 10 million iPhones this year. Sales of the device have stalled since Apple unveiled its next generation iPhone June 9 at the Worldwide Developers Conference in San Francisco.

People willing to buy a two-year service contract from AT&T, the exclusive wireless carrier for the iPhone in the United States, will be able to purchase the smartphone for $199 for the 8-GB version and $300 for the 16-GB model. Those who prefer to buy the iPhone without a service plan will have to pay $600 and $700, respectively.

While the subsidized price may appear to be a bargain, buyers will actually be paying more for the device over the life of the service contract than the original model. That's because AT&T will be charging $75 a month for the same package that cost $60 a month for the slower original iPhone. Therefore, over the course of a two-year contract, people will be paying $1,999 for hardware and monthly fees versus $1,839, according to the San Francisco Chronicle.

Nevertheless, excitement among Apple enthusiasts is building. The first line for the iPhone started forming July 4 at Apple's flagship store in New York City, according to Fortune magazine.

Along with the iPhone, Apple plans to launch its App Store for the device the same day. The online store will offer third-party software that can run on the smartphone.

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