Electronista, which provides updated news related to tech, mobile phones, GPS etc, is reporting that the United States Department of Defense (DOD) is ordering 650,000 iOS devices. Reports show the breakdown as 120,000 iPads, 100,000 iPad minis, 200,000 iPod touches, and the remaining 210,000 filled by various iPhones. It should be mentioned that Electronista also reports that the actual order of these devices is being delayed because of the sequester but will be completed when Congress resolves the remaining issues.
Another source familiar with the situation told us that the iOS devices were intended to replace nearly all the older BlackBerry devices incompatible with the new BlackBerry 10 software release. Statistics gathered from devices deployed by the DoD show 470,000 BlackBerry devices in daily use, none of which use the new BlackBerry 10 operating system. Testing of the new operating system has been gravely impacted by the sequester, and the outright elimination of funds earmarked for the BlackBerry 10 platform may never be restored.
So, what exactly will these 650,000 iOS devices be used for? They are expected to be used in many situations, with over 50% of them “headed to the battlefield, afloat, and to associated support commands.” The remaining units will be used in office settings in such places as the Pentagon. This may seem like a lot of devices, but if the average device cost $800 (and it shouldn’t be that much), its only $520 million. Not to belittle half a billion dollars, but considering Apple’s revenues in the TTM are around $165 billion, the actual purchase probably won’t affect Apple Inc. (NASDAQ:AAPL) much.
Research In Motion Ltd (NASDAQ:BBRY) may feel the effects of this more than Apple. This is just speculation on my part entirely, but let’s say the DOD had planned on buying an additional 180,000 Research In Motion Ltd (NASDAQ:BBRY) devices (to match the 650,000 that they are buying from Apple) in 2013. If the average device was $400 (half of what we discussed for Apple), the total would be $72 million. The estimated $520 million Apple may generate from this deal is only .32% of their TTM of revenue. If the DOD had bought those additional 180,000 from BlackBerry, it would have generated .57% of their TTM of revenues.