After a series of 'home runs,' it'd be OK if Apple's next product is a 'single,' Evercore says
After the iPod, iPhone and iPad all proved to be "home run" products, the law of large numbers mean it's likely Apple's next new product category may only be a "single" or a "double" -- and that's perfectly fine, in the eyes of one analyst.
Rob Cihra of Evercore Partners issued a note to investors on Wednesday, a copy of which was provided to AppleInsider, in which he said there may only be a few incremental markets where Apple could disrupt in the same way that iPhones and iPads have. While the iPhone added some 50 percent to Apple's revenues, it would be near impossible to replicate that kind of success.
Cihra expects that Apple will enter the wearable electronics market, potentially with a so-called "iWatch." But he sees products in that category ultimately adding an incremental 5 percent to the company's bottom line.
Another new potential market category for Apple would be a larger 12-inch iPad model targeted at enterprise customers, and potentially offering a more full-featured version of iOS.
He also sees Apple launching an expanded Apple TV that could serve as a "home gateway," and potentially triple the selling price of the current low-end model to a new cost of $299.
Finally, Cihra also sees new opportunities for Apple in advertising and e-commerce, allowing the company to leverage its large user base and 600 million active iTunes accounts with connected credit cards.
The analyst is bullish on all of those potential growth opportunities, but he cautioned that investors should not expect any of them to be blockbuster products in the same way the iPhone, iPad and iPod were before them. In his eyes, each of them could still incrementally add more to Apple's net profit and keep the company growing into the future.
As such, he believes investors should buy into AAPL stock in the near-term ahead of the company's March quarter earnings call scheduled for April 23. For the just-concluded quarter, he believes Apple likely sold 37 million iPhones and 18 million iPads, with gross margins of 37.8 percent, resulting in $43.8 billion in revenue.
Evercore Partners has retained its "overweight" rating for AAPL stock, with a price target of $670.
Rob Cihra of Evercore Partners issued a note to investors on Wednesday, a copy of which was provided to AppleInsider, in which he said there may only be a few incremental markets where Apple could disrupt in the same way that iPhones and iPads have. While the iPhone added some 50 percent to Apple's revenues, it would be near impossible to replicate that kind of success.
Cihra expects that Apple will enter the wearable electronics market, potentially with a so-called "iWatch." But he sees products in that category ultimately adding an incremental 5 percent to the company's bottom line.
Another new potential market category for Apple would be a larger 12-inch iPad model targeted at enterprise customers, and potentially offering a more full-featured version of iOS.
He also sees Apple launching an expanded Apple TV that could serve as a "home gateway," and potentially triple the selling price of the current low-end model to a new cost of $299.
Finally, Cihra also sees new opportunities for Apple in advertising and e-commerce, allowing the company to leverage its large user base and 600 million active iTunes accounts with connected credit cards.
The analyst is bullish on all of those potential growth opportunities, but he cautioned that investors should not expect any of them to be blockbuster products in the same way the iPhone, iPad and iPod were before them. In his eyes, each of them could still incrementally add more to Apple's net profit and keep the company growing into the future.
As such, he believes investors should buy into AAPL stock in the near-term ahead of the company's March quarter earnings call scheduled for April 23. For the just-concluded quarter, he believes Apple likely sold 37 million iPhones and 18 million iPads, with gross margins of 37.8 percent, resulting in $43.8 billion in revenue.
Evercore Partners has retained its "overweight" rating for AAPL stock, with a price target of $670.
Comments
You clown
You clown
How dare you.
Apple products (the ones that succeed anyway) generally start out as singles and wind up as outside the park grand slams. No one knew that the I-Pod would utterly dominate the MP3 player market when it came out. Before the I-Pod, companies were making junk like MP3 player boom boxes, and Sony had an MP3 player version of their Walkman. Then within a few years of coming out with the Shuffle and I-Tunes for Windows ... that whole market was gone to Apple.
Similarly, the I-Pod and the I-Pad were mocked, derided devices initially that took a couple of years to catch on. So the chances are that even if Apple comes out with a home run, we won't know it for awhile. For all we know, their home run might be an Apple TV upgrade that turns it into a standalone gaming console that doesn't need AirPlay mirroring from a game that is really being played on an I-Pad or I-Pod Touch. The Roku 3 has gaming support but it stinks (Angry Birds is the only game and you have to use the remote as a controller). Chromecast developers are working on gaming applications, but it is very limited right now. The various Android game consoles have all failed, with the Ouya team stating that they are transitioning from consoles towards being a gaming as a service cloud platform (but they have no partners lined up to distribute their content, and not much in the way of developers lined up either). Amazon is rumored to introduce a dongle with streaming games capability today, but that effort has been so much start/stop/delay/back to the drawing board that it may not be until the second generation gets it right.
But think about it: Apple TV with the new A7 chip that could support a variety of controllers (or use the remote as a controller if you do not want to buy one) with the ability to both stream games (from a variety of sources, such as a cloud service or from your Mac or PC, so they could turn I-Tunes into a games delivery service the way that they have done with music and movies and TV shows ... since you can already sync apps bought through the I-Tunes Store for your phone or I-Pod that capability already potentially exists, they just have to develop it, where the app would run on I-Tunes itself ... I guess I-Tunes could be updated to include a platform-independent IOS virtual machine, which is very easy to do) and save games to the device and play them from the device using the same IOS virtual machine.
That would make Apple TV a competitor with the XBox, Playstation and Nintendo (or more accurately just Nintendo because it would be for casual gamers) consoles. They would succeed where the crowdfunded Android boxes failed, and also succeed where Nintendo and XBox failed (in their attempts to make people center their living rooms around their consoles). It would be both evolutionary (leveraging existing technology into a single combined product) and revolutionary (giving a new, vastly improved gaming experience in a smaller, cheaper console).
It might up the price of an Apple TV to about $125, but it would be well worth it: still much cheaper than everything but the stripped down last generation Wii that Nintendo will allow those who do not want to pay $300 for their Wii U. It would be even better if they were to copy (steal) the Roku Wi-Fi remote concept for the Apple TV remote/controller, so no matter where you point the controller (no worry about IR line of sight nonsense that the Wii and the Kinect impose on you) it will still work, so gaming will be all about response time and pressing the right button, not doing those while continuing to have to point it in the right direction. Roku 3 already has a version of this, and so do the mirroring type games where you use your tablet or phone as the controller, but Apple could do it better - do it RIGHT - with the Apple TV.
Then Apple could sell tens of millions of Apple TVs a quarter - driving Roku out of business altogether and forcing Amazon and Chromecast to play catch up - while watching Samsung and Google write down billions of losses with wearables.
Sound like a plan?
The law of large numbers doesn't suggest this at all. The analyst who suggested it is ignorant of Bayes Law.
It is like saying that someone who has just won three coin tosses in a row has a less than 50% chance of winning the next coin toss, which is nonsense. The chance of winning the next coin toss is always 50% regardless of how many coin tosses have been won or lost in the past.
In the case of successful products, a good history probably tends to predict a good future, though not with 100% certainty of course.
I'm a very happy amazon customer but I don't directly own any shares.
No way will a single be good enough for Wall Street. They're looking for a home run and the stock will take a HUGE hit if it's not. A single will also be confirmation that Apple has lost its mojo.
I want Apple's take on the Microsoft Surface Pro. A tablet/laptop hybrid, OS X, HDMI output so I can use it like Apple TV, built-in phone mic so I can make calls on it, plus straps so I can wear it as a watch. I'll call it the iEverything. It is okay if it is a "single".
/s
No way will a single be good enough for Wall Street. They're looking for a home run and the stock will take a HUGE hit if it's not. A single will also be confirmation that Apple has lost its mojo.
When Apple was in the verge of being kicked out of the majors... it strung together a few game winning hits, iMac, iPod, Powerbook, OSX... At the time, they were good solid singles and doubles... but they got Apple into the post season, and therefore enough to retain them on the roster.
The Macbook, the iPhone, the iPad... those were Out of the park grand salamis... pushing the Apple to the championships.
Now, with the ballpark sufficiently larger, hitting it out of the park is really hard. The competition has realized what Apple has done and built their teams to use where it can (and sometimes where it can't or shouldn't) apple's methods, developed the same skills, and is competitive. What used to be a screaming shot into the gap for a triple is now a long single for apple. The market and the competition have pushed fences farther back (a 1Billion a year product when you're making a 10B a year is a big deal, but a 2 Billion product when you're making 50Billion a year... not so much) , and the crowds have grown larger and restless, waiting for something really amazing to cheer for.
Swinging for the fences is high reward, but it's now high risk.
Yet the game is still won by a lot of hard work, often behind the scenes and preseason (supply chain, design, strategic acquisitions), and using this work to set the table for the potential big hit. Yet, if you get a couple singles, a double steal, and then a solid stroke... you can still win the game. And most of all, Apple has to maintain plate discipline. it can't swing at every pitch, Try to make every single into a double, and sometimes a sacrifice is the best 'team play.' All that said, I do hope Apple still swings hard at every pitch in their zone... in case they do hit it...
[okay, with that, I'm done with the baseball analogies.... I'll watch baseball and apple and not confuse the two]
The law of large numbers doesn't suggest this at all. The analyst who suggested it is ignorant of Bayes Law.
It is like saying that someone who has just won three coin tosses in a row has a less than 50% chance of winning the next coin toss, which is nonsense. The chance of winning the next coin toss is always 50% regardless of how many coin tosses have been won or lost in the past.
In the case of successful products, a good history probably tends to predict a good future, though not with 100% certainty of course.
Agreed. The "law of large numbers" mention in the summary is complete BS. On the other hand, the overall point is correct. Not everything Apple does is going to be a world-changing success. They are similar to Pixar perhaps: for years every one of their movies was simply incredible (no pun intended). Nowaways most of their movies are still great, but some are just really good.
These jokers ran out of creative ways to hurt their customers...so, the bottom line is Google and Amazon still lost money in whatever they do, which the jokers will call innovations, Facebook make acquisition which could take 40 years to see their money back...and their stocks price target would be doubled with the jokers' forecasts.
For the millionth time, Apple has launched a bunch of products that did not pan out either. They have had a good run starting with the I-Pod, other devices that built on the I-Pod (I-Phone and I-Pad) as well as with Mac OS X. But get this.
1. Apple has not come out with a new product that is not an iteration of the I-Pod. (I-Phone = I-Pod touch + telephone, I-Pad = large I-Pod touch, App Store = ITunes Store, etc.) Until they do, analysts are going to prefer companies that are trying new things, or at least trying new ways to achieve what Apple and other companies have done. Android (a free, open source OS) is new, even if it is often (but not always) used to emulate Apple products. Social networking is new, or at least newer than Apple's I-line. ChromeOS, FirefoxOS? New. Chromecast and Amazon's new offering? New, or newer than Apple TV. Wearables? New, and who knows it may actually catch on in a year or 3 like it took the I-Pod, I-Phone and I-Pad to. Maybe it just needs someone to come out with a practical device, and a Chinese chip manufacturer (the same one behind the $100 Android tablets that are, well better than the other Chinese Android tablets) that may make them possible: http://www.pcworld.com/article/2138640/newton-is-the-first-mipsbased-minicomputer-for-wearables.html
I still say that the ticket is a standalone smart watch that doesn't need to be tethered to a phone. It is already technologically feasible, even if at this point it is only capable of a very cheap or very early smart phone. Firefox should come out with $200 standalone smart watches for this market instead of $25 smart phones for developing markets, for instance.
2. You guys need to get your gripes consistent. First, you bash other companies for ripping off Apple (even when they haven't ripped off Apple you guys still claim that they have, like DED did yesterday). Then you guys bash other companies for trying to innovate. Again, what is it that you want? For Apple to be the only technology company on the planet?
These jokers ran out of creative ways to hurt their customers...so, the bottom line is Google and Amazon still lost money in whatever they do, which the jokers will call innovations, Facebook make acquisition which could take 40 years to see their money back...and their stocks price target would be doubled with the jokers' forecasts.
40 years?
Maybe you don't realize the potential Oculus has. VR and AR will be everywhere within 20 years max.
Clearly what Apple needs now is a stand-up double followed by a sacrifice fly and a bunt to score the runner for a 3-2 win in the bottom of the 11th. That'll show Wall Street that Cook knows how to play small ball. It's all about the Ws.
2. You guys need to get your gripes consistent. First, you bash other companies for ripping off Apple (even when they haven't ripped off Apple you guys still claim that they have, like DED did yesterday). Then you guys bash other companies for trying to innovate. Again, what is it that you want? For Apple to be the only technology company on the planet?
Throwing billions at start up companies is not "innovating."