September Is Put-Up or Shut-Up Time for Apple
Aug 22, 2012 5:00 AM PT
Apple was recently crowned the most valuable public company in history. But in order to keep that title, its next iPhone, expected to go on sale next month, will have to be a huge hit.
That could very come to pass. A report from FBR Market's Craig Berger predicted the upcoming phone could sell as many as 250 million units over its lifecycle.
Other rumors hold that Apple will also debut a so-called iPad mini next month -- a 7-inch tablet that would be similar in display and ability to the iPad but would be more the size of Amazon's Kindle Fire or Google's Nexus 7. Apple may announce the mini tablet along with the iPhone upgrade, but the product is not expected to hit shelves until closer to the holidays.
Though Apple hasn't announced a release date for the next iPhone -- and hasn't confirmed whether the iPad mini even exists -- it does seem to have high hopes for the OS that will likely arrive alongside the new handset. The company has released an extensive preview of iOS 6, showcasing its more than 200 upgrades. It also announced last month that it suspects its most recent quarterly results weren't as high as analysts had hoped because users were holding out for an iPhone upgrade.
While the next iPhone could cause a sales frenzy, said John Feland, CEO and founder of Argus Insights, with the wide range of smartphones on the market, it's important for users to determine which version of the device they'll be buying, he said.
"Given the widening performance gap between the iPhone hardware and that of Samsung and Motorola, combined with the narrowing experience gap between Android and iOS, it is increasingly unlikely that the iPhone 5 will gain much from consumers switching from Android," he told MacNewsWorld. "More likely is the same pattern of adoption we saw with the launch of the new iPad. Consumers bought iPad 2s in swarms because of the lower price point, something likely to happen with the 4S, especially for those students that must have an iPhone for school in the fall."
In order to make sure it's not just 4S models that fly off shelves, Apple needs to make sure it delivers with its newest device, he said.
"Apple is going to need some new tricks to drive excitement and adoption," he said. "Nokia remains the top-rated smartphone manufacturer in North America despite the Windows 8 mobile upgrade debacle. Enough of the new handsets from Samsung and Motorola are also strong competitive alternatives to the iPhone 5."
Not Just for US
Whatever the company comes up with, Apple's U.S. customers aren't the only ones waiting for the company's newest hardware. The company had to delay releases of the iPhone in China earlier this year when riots broke out during the launch of the 4S. Chinese customers are expected to give Apple a sales boost at the beginning of 2013, especially if Apple can negotiate a contract with the world's largest telecom provider, China Mobile.
However, "given the close of the experience gap with competitive smartphones and the widening of the performance gap, brand alone will not provide the big orders Apple needs to dominate China," said Feland. "Well-publicized issues with Siri for not only Chinese but English, too, mean that the main point of novelty for the iPhone will not provide the call to action Apple needs to shake the Earth enough to produce of a tsunami of adoption."
Keeping the Company Thriving
Optimism over Apple's upcoming products and its potential in China were two of the main factors contributing to the company's recent ascent on the stock market. Apple became the largest U.S. company ever this week, bypassing Microsoft's record market capitalization of US$616.34 billion in 1999.
The Cupertino company had already topped Exxon Mobil to have the largest market value of any publicly traded company, but Apple's latest milestone is a reminder of what put it on top, said Trip Chowdhry, senior analyst for Global Equities Research.
"It's not like this milestone is a marketshare win," he told MacNewsWorld. "It's a market-creation activity. If you create markets, you return growth to the company, and that's what Apple has consistently done with products like the iPod and the iPad. With the new products like the iPhone 5 and the iPad mini that are rumored to hit in September, there's more upside to the stock because more markets will be made for Apple to gain share of."
That emphasis on innovation came as a result of Steve Jobs' leadership and vision, said Chowdhry. Although that type of thinking is still a key tenet of business at Apple, the current leadership also needs to pay attention to another of his principles, he explained: the need to put users and innovation ahead of shareholders. While becoming the country's largest company is a significant accomplishment, making market milestones a priority needs to be avoided, lest another company overtake Apple the same way it surpassed Microsoft, he said.
"Apple is spending more time with its financial security than ever in the history of the company. You're seeing Apple's CFO meeting with analysts and its CEO talking at investor conferences," he said. "When is the last time you saw Steve Jobs doing that? That's not an all-bad strategy, but it does raise some orange flags. Nothing substantial, but the company needs to be attentive. If there is the slightest indication that Apple is putting shareholders ahead of users and innovations, then Apple will suffer much worse than even Microsoft."
Apple did not respond to our request for comment.