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Can Apple Really Sell 10 Million iPhones?

Analysts are doubtful. They cite the high price point as one major barrier. And even though the worldwide market for smartphones swelled by 42% to 80.5 million devices in 2006 (which is just a drop in the overall cell phone bucket), for Apple to jump in and score such a large percentage in the first year seems unlikely.

While it's true that about one billion cell phones were sold in 2006 and Apple's hoped-for number of 10 million doesn't even scratch the surface of a market so large, many factors stand in Apple's way. One of them is Apple itself. Its decision to only pair with one wireless network operator in the U.S. is certainly a limiting factor.

Another is the way the cell phone industry works in the U.S. While AT&T's wireless unit may have well over 60 million subscribers, only potentially 2.5 to 5 million of them may have contracts expiring around the time the iPhone is released, which limits the number of people who can buy it. Sure, some will probably ignore any additional costs of upgrading before their contracts expire, but that number will be relatively small.

This also applies to subscribers who have contracts with other cellular network operators. The likelihood of large batches of subscribers jumping from their current carriers for Cingular also is probably small.

Then there's the $499 and $599 price tags. Most cell phones sold in the U.S. go for $100 or less. Enterprise-class smartphones, which can run a bevy of third-party productivity applications, sell in the $200 to $400 range. Many of them have media capabilities such as video players, cameras, and music players.

With such fierce competition lined up against it, you'd think Apple would be making the iPhone as attractive to as many people as possible (with lower prices and greater availability). Apple is, however, charting its own course.

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