Apple introduced its "iAd" mobile advertising platform, which will allow third-party developers to embed advertisements within mobile apps, as part of its upcoming iPhone OS 4. An analyst with Broadpoint AmTech predicts that iAd could earn Apple billions of dollars annually once actualized, but another analyst suggests that the platform could also present its share of legal headaches. In addition to iAd, the iPhone OS 4 update also includes multitasking and a social-gaming hub.
Apple's "iAd" mobile advertising platform, introduced April
8 along with a variety of other updates to the upcoming iPhone OS 4, may
generate billions of dollars for the company once fully integrated into the
iPhone's mobile apps.
a presentation at Apple's Cupertino, Calif., headquarters
, Apple CEO Steve
Jobs displayed a slide suggesting that the iPhone and the iPod Touch was
capable of delivering "1 Billion Ad impressions per day," if users of those
devices spent an average of 30 minutes engaging with advertisement-seeded
That could translate into a good deal of money, according to
"It is in our view Apple's new mobile advertising platform
(-iAd') stole the show and will be significant to the financial model,"
Marshall, an analyst with Broadpoint AmTech, wrote in an April 9
research note. "In fact, we believe the iAd platform could generate an
[billion] in revenue and $1.00+ to Apple's financial model when the
hits its stride."
Marshall points to the iPhone's global ramp-up, with the
device now available in around 90 countries, and its $39.8 billion cash
reserves as indicators of the company's future success; at the same time,
however, unsustainable carrier subsidies, peaked gross margins, and the
potential for the iPhone to cannibalize the iPod family could all become drags
on Apple's bottom line.
Marshall's research note indicates that the analyst firm
could become more negative on Apple if "international expansion slows in the
computing, iPod and smartphone markets," carrier subsidy premiums decline, or
if the company's innovative product pipeline dries up. "If Apple is unable to
continue designing leading-edge consumer products for mass markets, this would
clearly negatively impact the financial model and result in a lower target
price for Apple shares," Marshall wrote.
iPhone OS 4 is due for release at an as-yet-unannounced point this summer.
In addition to the "iAd" platform, other updates include multitasking, an
ability to collect mobile applications in specific folders, a unified inbox for
e-mail, and a social-gaming hub. But "iAd" may end up attracting the most flak
from a number of different players and overseers in the mobile space.
"The iAd is a big step for Apple-their way to stick a finger
in the eye of Google, and even MSFT (Bing)," Jack Gold, an analyst with J. Gold
Associates, wrote in an April 8 research note. "Sounds like the only ads going
to iPhone and iPad ultimately will be through Apple's ad-equivalent of iTunes
monopoly for music. This is a game changer, and I'll bet someone legally
challenges this monopoly position (probably in Europe, where iTunes is being