The Wall Street Journal's Market Beat blog has rounded up some major Wall Street Analysts reactions to yesterday's unveiling of the Google Nexus One:
Susquehanna Financial: “As computing shifts from the PC to the phone, Google wants to remain an advertising leader. With its own phone, Google assures the device is Google-friendly, supporting its applications and advertising network, and optimized for Internet-usage. We note Google has had a history of developing competitive products with its customers, spurring their innovation and time to market (i.e., shopping, travel, and other vertical search efforts). By launching its own device while mobile advertising is still nascent, it has an opportunity to shape the future.”
Broadpoint.AmTech: Android head Andy Rubin indicated that while there is an opportunity for GOOG to make some margin on unit sales of the Nexus One, profit is not the primary objective of this effort. (We believe that GOOG would like to see its mobile hardware business grow into a large business, but will not state that as an objective for fear of damaging the Google brand if it does not work.)
Citigroup: We don’t believe selling SmartPhones will be a new, material source of revenue for the company. And since Google gives away the Android OS for free, we believe there is limited channel partner risk. In our opinion, Google developed its own SmartPhone to 1) Help accelerate mobile search, which will increase as SmartPhone penetration increases; 2) Showcase new technologies on the Android OS; and 3) Allow users to have more control over their own devices by customizing their mobile web and mobile apps (and not being governed by carrier or OEM restrictions) experiences.
Barclays Capital: “We believe Google could sell 5 - 6 million units in 2010 generating incremental revenue of $2.6 billion–$3.2 billion. We expect this revenue to be booked in Licensing and Other, but we are not updating our model at this time … However, given our assumption that Nexus One revenue would have low or no margins, our overall 2010 EBITDA margin for Google would come down from our 62.2% current estimate to ~55%.”
Goldman Sachs: “We do not view Google’s new device
as a near-term threat to the iPhone 3GS as: 1) the price tag of the
Nexus One does not seem aggressive enough to entice potential iPhone
buyers;
2) Apple’s AppStore, which has over 115K applications and over 3
[billion] cumulative downloads to date, remains far ahead of competing
app platforms; and 3) internationally, Nexus One’s availability seems
limited at this point, with the unlocked version only available in
three countries and Vodafone’s UK subsidy not starting for a few
months.”
BofA Merrill: “We expect that Google will record $500+ in revenues per phone, and a low gross margin after subtracting the hardware costs. Therefore, hardware sales could be about EPS neutral (after software R&D), while additional search and applications activity could contribute to operating profit. A big potential side benefit for Google is that search and advertising on a Nexus One phone will not require revenue sharing with carriers or manufactures (such as Apple).”
Comments