Piper's Gene Munster Sees Apple (AAPL) Taking 8% of US Handset Market; Says $199 3G Price Is Misconstrued

July 10, 2008 12:53 PM EDT

Piper Jaffray analyst Gene Munster commented on Apple (Nasdaq: AAPL) ahead of tomorrow's launch of the 3G iPhone, which he expects to be strong.

Munster believes the new iPhone 3G will drive Apple's share of the U.S. handset market to 8% in 2009, up from an estimated 3% in 2008. They said an 8% U.S. market share is consistent with their estimate of Apple selling 45 million phones worldwide in 2009.

However, Munster notes that, while Apple is advertising the new iPhone will sell for $199, the actual average entry level cost may be somewhere around $407. He estimates only 35% of AT&T (NYSE: T) subscribers will be eligible for the $199 price. Munster said the pricing misperceptions leads them to believe that some will wait until their current contracts expire or they become eligible to upgrade before buying the iPhone 3G. Munster said this will initially dilute sales, but they expect sales to pick-up over the next 18 months.

The firm is reiterating their Buy rating and $250 price target on Apple.

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