iPhone 5 'not just a phone'

2012-09-15 10:13


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Washington - Apple's iPhone 5 is one of the biggest product launches ever in the sector, and may also deliver a well-timed stimulus to the US economy ahead of the presidential election, analysts say.

Apple is expected to sell as many as 10 million of the devices in just the first days of the launch starting 21 September, and upwards of 50 million in the fourth quarter, including a big chunk in the United States.

JP Morgan economist Michael Feroli said he sees the iPhone 5 adding between 0.25 and 0.5 percentage points to US economic activity in the fourth quarter, based on projected US sales of eight million.

Feroli said it was a simple math calculation: if the phones are worth $600, including carrier subsidies, minus $200 for import costs, that would be $3.2bn in net sales, or $12.8bn at an annual rate, boosting gross domestic product (GDP) by 0.33 points.

Cary Leahey, chief US economist at Decision Economics, said the calculation "makes sense."

"It just shows the power of an extremely popular product which is priced very dear," Leahey said.

He said the boost was "noticeable but not earth-shattering."

But with the US economy having expanded at a tepid 1.7% pace in the second quarter, the stimulus will be well-timed.

"The economy absolutely needs it, it could not come at a better time," said Joel Naroff at Naroff Economic Advisors.

"Household incomes are flat, real disposable income is going nowhere. You don't have any source of fuel, so it's got to come from somewhere."

Naroff said that US consumers will likely pull money out of savings for the iPhone and similar devices, and in some cases, it may be simply a matter of pulling the spending forward.

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