Middle-class Americans to spend $481 a year on Apple products by 2015

Posted:
in AAPL Investors edited January 2014
The average middle-class American will spend roughly $481 each year on Apple products by 2015, up from $321 this year, while emerging middle-class consumers in developing markets will drive substantial growth for the company in coming years, according to a new analysis.



In a report sent to clients on Tuesday, Credit Suisse analyst Kulbinder Garcha attributed the $160 increase to affordability and product distribution in America, saying he believes the number of consumers with disposable income levels greater than $30,000 will rise by 10 percent over the next four years to 178 million.



Garcha sees iPhone and iPad sales growth as a critical factor in per-capita spending, estimating Apple's share of the smartphone and tablet markets to rise to 25.6 percent and 93.8 percent, respectively, from 23.5 percent and 88.7 percent over the next 4 years.



The analyst also noted that emerging markets have the potential to bring Apple another $68 billion in sales by 2015, citing an estimated base of 244 million people earning more than $30,000 per year.



"Importantly, by 2015, there will be 244 million consumers in (emerging markets) with similar income profiles, up from 133 million this year," Garcha wrote. "Assuming Apple addresses these markets, this drives an incremental $70 billion in sales by 2015?and $17.50 in EPS."



Five countries -- China, India, Brazil, Mexico and Russia, will account for most of the increase, according to the analyst. He noted China as having the most potential for growth, estimated at $28 billion by 2015, as Apple continues to extend its reach in the country.



Emerging countries accounted for $8.2 billion of Apple's revenue in 2010, however, Garcha estimates that number to increase to $24.1 billion in 2011.







A product by product analysis by the firm also indicated that emerging markets could contribute incremental EPS of $18 for Apple by 2015. By expanding the iPhone to the next 50 top carriers in emerging markets, the company could extend its reach to an estimated 1.98 billion mobile subscribers in 2012. Apple's current carrier relationships cover nearly 2.7 billion subscriptions globally, according to the analyst.



Garcha assumes that $400+ smartphones make up 10 percent of the emerging market and customers would adopt a two-year replacement cycle. Given Apple's 57 percent market share in the high-end handset market, that could translate to sales of 54 million additional iPhone units annually,







The analyst projects that iPad growth in emerging markets could add $7.26 in EPS for Apple. He estimates Apple will maintain a 45 percent share of emerging market tablet shipments, which are expected to rise to 126 million units by 2015.



He also pointed out that the firm's estimates may prove conservative, as they don't account for "any further innovation from Apple" or new product launches. For instance, a low-end iPhone, which he says is likely to come in 2012, could add an additional $4.50 to EPS. Credit Suisse projected that Apple could reach total iPhone volumes of 230 million in 2015, though it did note that, without a lower end version, shipments of the device may peak at 135-140 million units per year.



The firm reiterated on Tuesday its Outperform rating and $500 target price for Apple stock.
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Comments

  • Reply 1 of 37
    To this day, I marvel at the fact that Jobs (claimed he) would be happy with 1% of the worlds mobile phone market!
  • Reply 2 of 37
    Quote:
    Originally Posted by AppleInsider View Post


    The average middle-class American will spend roughly $481 each year on Apple products by 2015, up from $321 this year, while emerging middle-class consumers in developing markets will drive substantial growth for the company in coming years, according to a new analysis.



    What that means, then, assuming I'm reading this correctly, is that the biggest threat to Apple's future profitability is the Republican party and their cohorts in the Democratic party, like Barack Obama.
  • Reply 3 of 37
    Quote:
    Originally Posted by anantksundaram View Post


    To this day, I marvel at the fact that Jobs (claimed he) would be happy with 1% of the worlds mobile phone market!



    Always with the low guidance and followed by the up-side surprise...
  • Reply 4 of 37
    Quote:
    Originally Posted by patrickwalker View Post


    What that means, then, assuming I'm reading this correctly, is that the biggest threat to Apple's future profitability is the Republican party and their cohorts in the Democratic party, like Barack Obama.



    Whiskey Tango Foxtrot does this mean?
  • Reply 5 of 37
    Quote:
    Originally Posted by ChristophB View Post


    Whiskey Tango Foxtrot does this mean?



    The GOP (and pathetically weak DINOs like Obama) seem hell-bent on destroying the middle class. If there is no middle class, then there is no Apple market (within the USA). In a lot of nations, the middle class is dependent on the middle class inside the USA. You pull that leg out...
  • Reply 6 of 37
    Quote:
    Originally Posted by ChristophB View Post


    Whiskey Tango Foxtrot does this mean?



    Politicians are destroying the middle class. The right is doing it openly the left is pretending to be on our side but they are all corporatist pigs.
  • Reply 7 of 37
    Quote:
    Originally Posted by patrickwalker View Post


    The GOP (and pathetically weak DINOs like Obama) seem hell-bent on destroying the middle class. If there is no middle class, then there is no Apple market (within the USA). In a lot of nations, the middle class is dependent on the middle class inside the USA.



    This to.
  • Reply 8 of 37
    Quote:
    Originally Posted by AbsoluteDesignz View Post


    Politicians are destroying the middle class. The right is doing it openly the left is pretending to be on our side but they are all corporatist pigs.



    Got it. Corporations are bad unless named Apple. Theft is OK as log as the the majority says so. Property rights be damned.



    My two pence - Apple is a corporation that doesn't compromise its principles and its principles are compatible and complimentary to the market place. They don't put profit before principle. Apple will be a success long after the U.S. and the E.U. have slayed themselves. Oh, and politicians reflect the electorate. Hold your locals to task.
  • Reply 9 of 37
    solipsismsolipsism Posts: 25,726member
    Quote:
    Originally Posted by anantksundaram View Post


    To this day, I marvel at the fact that Jobs (claimed he) would be happy with 1% of the worlds mobile phone market!



    Wasn't that for 1% in the first year of iPhone sales, not 1% forever?







    PS: What's with the asshat jacking the thread with political crap? 2nd fraking post! Jeez
  • Reply 10 of 37
    Quote:
    Originally Posted by ChristophB View Post


    Got it. Corporations are bad unless named Apple. Theft is OK as log as the the majority says so. Property rights be damned.



    My two pence - Apple is a corporation that doesn't compromise its principles and its principles are compatible and complimentary to the market place. They don't put profit before principle. Apple will be a success long after the U.S. and the E.U. have slayed themselves. Oh, and politicians reflect the electorate. Hold your locals to task.



    I'm pretty sure Apple has it's demons but I'm also sure they are amongst the best of the bunch.



    In fact I can't even think of anything Apple has allegedly done bad.



    But they are still a corporation and as such technology is all that interests me when it comes to corporations like Apple and Google.
  • Reply 11 of 37
    cameronjcameronj Posts: 2,357member
    What a stupid study/prediction
  • Reply 12 of 37
    Quote:
    Originally Posted by AbsoluteDesignz View Post


    I'm pretty sure Apple has it's demons but I'm also sure they are amongst the best of the bunch.



    In fact I can't even think of anything Apple has allegedly done bad.



    But they are still a corporation and as such technology is all that interests me when it comes to corporations like Apple and Google.



    I'll put it like this - when you don't buy what corporations are selling they fade away. When you don't buy what the gov is selling they show up with guns. I'll take the corporation every time. I'm armed better than they are.



    Edit: stock holders assume the risk and those demons.



    Edit 2: My annual purchases are covering 6 or so non-Apple middle-class.



    Edit 3: Google scares me for the reason that they sell their consumer - a principle incompatible with me.
  • Reply 13 of 37
    Quote:
    Originally Posted by patrickwalker View Post


    What that means, then, assuming I'm reading this correctly, is that the biggest threat to Apple's future profitability is the Republican party and their cohorts in the Democratic party, like Barack Obama.



    Go buy an aluminum foil hat...\
  • Reply 14 of 37
    Quote:
    Originally Posted by lamewing View Post


    Go buy an aluminum foil hat...\



    Ha! I can totally envision iFixit selling cone shaped aluminum hats crafted from recycled MacBook Pros for next April 1.
  • Reply 15 of 37
    paxmanpaxman Posts: 4,729member
    Quote:
    Originally Posted by ChristophB View Post


    Oh, and politicians reflect the electorate. Hold your locals to task.



    Increasingly not true. Our spineless politicians reflect well heeled interest groups such as the banking sector.
  • Reply 16 of 37
    Quote:
    Originally Posted by paxman View Post


    Increasingly not true. Our spineless politicians reflect well heeled interest groups such as the banking sector.



    Empowered to be spineless. They get paid by the Party! When the party calls me I tell them to suck it cause I give me property (news flash:money is property) to the individual, not the group. Our politicians are spineless because they are permitted. That happens with a corporation? The only things that save them are buyout for some unrelated value or government grant or loan garranty (gift from taxpayers yet to be BORN!).
  • Reply 17 of 37
    Quote:
    Originally Posted by anantksundaram View Post


    To this day, I marvel at the fact that Jobs (claimed he) would be happy with 1% of the worlds mobile phone market!



    It's a pretty big world. 1% of 5 billion (the current number of mobile phones in use worldwide) is 50 million. Apple's profit margin on each phone is $380. $380 * 50 million = $1.9 billion profit. Profit, not revenue!
  • Reply 18 of 37
    Quote:
    Originally Posted by ChristophB View Post


    I'll put it like this - when you don't buy what corporations are selling they fade away. When you don't buy what the gov is selling they show up with guns. I'll take the corporation every time. I'm armed better than they are.



    Edit: stock holders assume the risk and those demons.



    Edit 2: My annual purchases are covering 6 or so non-Apple middle-class.



    Edit 3: Google scares me for the reason that they sell their consumer - a principle incompatible with me.



    Yea we aren't Google's customers, we are their products.



    But as scary as that sounds what does that really mean?
  • Reply 19 of 37
    Quote:
    Originally Posted by AppleInsider View Post


    Garcha sees iPhone and iPad sales growth as a critical factor in per-capita spending, estimating Apple's share of the smartphone and tablet markets to rise to 25.6 percent and 93.8 percent, respectively, from 23.5 percent and 88.7 percent over the next 4 years.



    Does the prediction for iPad market share four years form now seem ridiculously optimistic to anyone else here???
  • Reply 20 of 37
    Quote:
    Originally Posted by AbsoluteDesignz View Post


    Yea we aren't Google's customers, we are their products.



    But as scary as that sounds what does that really mean?



    For me - I dont give up my liberty or sense of the individual for convenience. As long as I think Apple agrees with that principle, I'll buy their products.
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