The coming release of
iPhone will give the tech titan more than a toe in the mobile phone market, according to one observer.
The hotly anticipated iPod-inspired cell phone also will give Apple a nice handle on a partner's pocketbook, a Wall Street
analyst said Tuesday.
The iPhone, due out from Apple in June, commands enough potential sales leverage that
is willing to share some of the proceeds, says American Technology Research analyst Shaw Wu, in a note Tuesday.
According to the two-pronged revenue sharing arrangement, AT&T will pay Apple a commission for each new customer and a cut of the customer's monthly payment, writes Wu.
successfully sued phone makers to honor its patents and enter royalty agreements has a tech equipment shop of Apple's size managed to wring recurring fees out of the ever expanding wireless industry.
Verizon Wireless, a joint venture between
, was offered an exclusive deal for the iPhone but
said no to Apple's revenue sharing proposal in January.
But AT&T may believe the half-inch thick iPhone -- with its large touch screen, music player, 2-megapixel camera and $500 price tag -- might be the big hit with gadget lovers. And that's a lucrative opportunity, given that Apple says 100 million iPods have been sold.
Depending on the iPhone features, Wu estimates that Apple could collect "low double-digits" in monthly fees through the arrangement.
And since there is little additional cost to Apple, Wu figures the monthly revenue will be high margin, "in the 80% range."
"We believe this recurring revenue stream is high quality and adds an additional degree of stability and predictability to Apple's financial results," writes Wu, who increased his share price target to $145 from $118 based on the juiciness of this deal.
Apple shares fell 93 cents to $90.50 Tuesday.