Analyst's own research contradicts his iPhone forecast

Piper Jaffray analyst Gene Munster sent out mixed signals regarding his view of the future success of third-party apps on the iPhone.

Munster's research note to clients indicates that he believes Apple's new App Store could generate anywhere from $416 million to $1.2 billion in revenues during 2009, and suggested the iPhone could sell as many as 45 million units.

However in a separate note, Munster detailed some of his research from the floor of WWDC. He found that as many as 7 out of every 10 apps on the store could end up being free, with the average price being a relatively cheap $2.29.

With such an overwhelming number of applications for the iPhone being free, it seems as though it will be difficult for Apple to make much money off of the App Store -- at least to the extent of the above forecast.

The forecast assumes, even in the most conservative possible scenarios, that some 75 percent of all iPhone and iPod touch users will spend at least $10 on applications annually. With the average sale price price well below this number, a majority for free, and many unlocked phones already using the third-party application store "Installer" that will bypass Apple's push notification scheme, even that low number will be hard to achieve.

Such news could be the reason why Apple has been rumored to be pushing developers to charge for programs they otherwise planned to give out for free. With no charges for hosting or payment processing, the Cupertino company needs some way to recoup its costs.

Another problem that some are pointing out with Munster's forecast is his unit count. His most cautious forecast suggests some 45 million iPhones will be sold during 2009 -- a number far above forecasts made by his peers. Even the most aggressive forecasts say that Apple will only manage to sell about 20-25 million units next year.

So what's a more reasonable expectation for the top end of App Store revenues come next year? Adjusting the numbers of total iPhone users down to 30 million as seems to be the average consensus (2008 and 2009 sales together), and then bringing down the average revenues to $3, using the most conservative case, the revenues drop considerably: $67.5 million in 2009.

Using the "aggressive case," revenues jump to $150 million, but are still nowhere near the original numbers.

A detailed graph of Munster's original projections can be found on AppleInsider, which initially covered the news on Wednesday.