Apple's Ecosystem play

in AAPL Investors
Between 2015 and 2016, and with the launch of the iPhone SE, Apple is poised to sell 400 million phones.

Those 400 million phones will all have support for Apple Pay - and by the end of 2016, Apple Pay should have expanded its footprint across many more banks and institutions in many more countries. These 400 million users will all be high end consumers - the ones who have the money to spend, and who aren't shy about spending it. In just 9 months from now, Apple Pay should start contributing very significantly to the bottom line. In iOS X, I expect Apple to incorporate a prepaid wallet into Apple Pay, to facilitate micro payments as well - for bus/train commutes, small purchases, etc. Also, there are rumors and noises about Apple Pay being extended to support browser based payments. And with these 3 initiatives, Apple could become one of the most important players in the global financial landscape.

Apple Music has started off on a strong note, and it should soon become a powerhouse contributor to Apple. Assuming Apple retains its standard 30% cut of Apple Music revenues, this could become huge very quickly. Very soon, Apple TV will also be in a similar position, and even better position. Apple will soon start investing in content creation in a much bigger way than it has currently.

Maps started off with a lot of issues, but these issues are being fixed extremely rapidly. Apple has also started deploying its own vehicles to create its own version of StreetView. And by the end of 2016, Maps should be at a level where it is as good as Google's offering in most places of the world.

Same with iCloud. Apple is slowly but surely fixing all the glitches in iCloud, and you can expect iCloud to be a much more reliable platform before the year is out.

The AppStore obviously is doing very well, but the performance of the AppStore is only going to get better with the large number of high end devices getting added to the ecosystem in the last couple of years. Apple will get exponential growth in revenues from the App Store.

At some point, Apple is going to get into Search proper - either organically, or via an acquisition.

HealthKit, CarKit and HomeKit will either be market leader or honorable runner-up in their respective ecosystems.

By 2020, expect the ecosystem to contribute $30 Billion to Apple's bottom line. And if Search happens, then that number could possibly be closer to $40 Billion.

Not bad for a company that made $53 Billion last year!

And this is what Wall Street is totally missing out on.


Sign In or Register to comment.