The iPhone 5: Impacting GDP?

The iPhone 5, expected to be announced tomorrow, could boost the U.S. economy in a measurable way, according to the Wall St. Journal.

Sales of the new iPhone could add between a quarter and half a percentage point to annualized economic growth in the fourth quarter, estimates J.P. Morgan ’s chief U.S. economist Michael Feroli.

In a note to clients today (titled “Can one little phone impact GDP?”), Feroli walks through the math.

J.P. Morgan expects Apple to sell about 8 million iPhone 5 units in the final three months of the year. If the phone sells for around $600, with about $200 of it counted as imported components, then $400 per phone would figure into the government’s measure of gross domestic product.

Bottom line: The new iPhone sales could boost GDP by $3.2 billion in the fourth quarter, or $12.8 billion at an annual rate. That is an increase of 0.33 percentage point in the annualized rate of GDP growth.

PEW finds that 45 percent of all American adults currently own a smartphone, as of February 2012, while two in five adults (41%) own a cell phone that is not a smartphone.

The impact on LTE carriers like AT&T and Verizon Wireless could be significant. Their new LTE data plans will squeeze more money from subscribers. According to management consulting firm Chetan Sharma Consulting, mobile data is expected to comprise 95 percent of the global mobile traffic by 2015.

Three of the four major carriers offer LTE, but it will cost you $80-$90/month for basic voice and data service.

But how many people will pay $100/month for LTE service they can’t get?

In the end, sales of the LTE iPhone 5 may be capped by the number of people who can afford it. Currently only 12% of Verizon’s 89 million customers use LTE.

More than 114 million people in the U.S. owned smartphones during the three months ending in July, 2012. That’s up 7 percent versus April. Android ranked as the top smartphone platform with 52.2 percent market share, while Apple’s share was 33.4 percent. ComScore says there are roughly 37 million iPhone owners in the United States.

Apple reported a total of 365 million cumulative iOS device sales earlier this summer. Google says there have been 500 million Android activations, worldwide.

The iPhone 5 doesn’t need to be a huge seller domestically. It’s about international sales.

The iPhone 5 is probably designed to be a “world phone”. Don’t look for innovation. It just needs to run everywhere — especially on China Mobile’s TD-SCDMA network. China Mobile, the largest mobile operator in the world, has nearly 700 million subscribers, but most are still using 2G phones.

Still, Qualcomm’s MDM 9615 chipset, which supports TD-SCDMA as well as FD and TD LTE networks on many bands, could be delayed by a shortage, forcing a delay on the China Mobile launch.

Related Dailywireless articles include; AT&T Adds LTE Cities, LTE iPhone: Game Changer?, Sprint: 100 LTE Cities by Year End, T-Mobile USA Upgrades to LTE, U.S. Cellular Goes LTE, C-Spire Goes LTE, U.S. LTE Networks Expand Rapidly, Sprint: $1B in Ericsson Gear, Nextel Decommissioning Begins

Posted by Sam Churchill on .

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