iPhone: Cultural Force Meets Cash Cow

By David Weir

Rarely has a tech product hit the market with more buzz than the original iPhone. Today’s introduction of the sequel, 3G, just might top its big brother. Its price, $199, is half that of the original, and it’s twice as fast and packed with upgraded functionality.How can it fail? It can’t.

Although early reviews list some deficiencies, the overall impression seems to be “Wow!” At the new price-point, a much broader segment of the population will be tempted to buy the new model. Internet search data already indicate that only 5% of people searching about the iPhone are focusing on price.

At group-think site Predictify, members are now predicting what Apple’s sales volume of its iPhones will be by the end of this year. Steve Jobs has said he expects 10 million units to be sold. In Q-1 and Q-2, 4 million units were sold — all before the new 3G hit the stores. My own guess is 12.5 million units by the end of Q-4. Why? Jobs was purposely lowering market expectations when he made his statement, and if the company exceeds his prediction, Apple will once again be rewarded by investors. The company’s stock price is in the mid 170’s today, but if the 3G does as well or better than I expect, you’ll probably see it break through the $200/share barrier by Christmas.

David Weir is a veteran journalist based in San Francisco; an editor/ blogger at Predictify.com; media analayst/blogger at BNET; and a member, Editorial Board at The Nation.