Wall Street expects Apple's WWDC announcements will leverage strength of connected platforms against

Posted:
in AAPL Investors edited June 2014
With Apple's annual Worldwide Developers Conference highlighting tight integration between the upcoming OS X Yosemite and iOS 8 platforms, market watchers on Wall Street saw the announcements as a direct shot at Google's competing Android platform.




Following the abundance of news at Monday's keynote presentation, analysts on Wall Street offered their reactions to clients via research notes. AppleInsider offers a roundup of the highlights below.

Evercore

Analyst Rob Cihra took particular note of Apple's emphasis on user upgrades, as 89 percent of iOS users are running the latest version of iOS 7, while OS X Mavericks has been adopted by 51 percent of the Mac installed base. In contrast, just 9 percent of devices running Google's Android are running "Kit Kat," its latest version, while Microsoft's Windows 8 has just 14 percent adoption.

"This positions Apple to capitalize on unique levels of consistency/security/functionality attractive to users but perhaps even more so to developers," Cihra wrote.

Cihra, like many on Wall Street, was encouraged by WWDC, but is more excited about profitable new products from Apple expected to launch in the second half of 2014. In addition to new, larger iPhone models, he's also hopeful that Apple will debut an updated Apple TV that will be able to run third-party applications, as well as a wrist-worn "iWatch."




RBC Capital Markets

Analyst Amit Daryanani questioned whether Apple has placed Google squarely "in the crosshairs" at this year's WWDC. He noted that both iOS and Yosemite will use Microsoft's Bing, rather than Google to run native Spotlight searches for Internet content.

In addition, Daryanani said that Apple's newly announced and simplified Swift programming language could help ensure that applications written for iOS aren't as "easily portable," meaning they might stay exclusive to iOS and not appear on competing devices running Android.

Daryanani also believes that Apple's HomeKit and HealtKit application programming interfaces could be the building blocks for Apple to sell connected home devices and a so-called "iWatch" at some point down the road.

Morgan Stanley

For Katy Huberty, Apple's keynote hinted at potential service opportunities the company could capitalize on. In particular, she's excited about the Touch ID fingerprint scanner being opened up to third-party apps, which she believes could pave the way for mobile payment services.

And improvements to iCloud, along with much cheaper storage options, could result in more meaningful services revenue for Apple, she believes. Huberty noted that while Apple previously charged $8.33 per month for 100 gigabytes of iCloud storage, its new plan is less than half that, at $3.99 per month, for twice the storage.

With at least 450 million iCloud users, Huberty believes storage upgrades represent a $5.3-billion-plus revenue opportunity for the company.




Piper Jaffray

Like Huberty, analyst Gene Munster also believes there are future opportunities for Apple to monetize new services. Specifically, he mentioned HealthKit and HomeKit as ways that Apple could charge parters for building authorized "Made for iDevice" accessories that are compatible with the company's ecosystem.

Munster also sees the HealthKit tools as setting the stage for an "iWatch" launch later this year. He believes Apple will likely announce such a product around October, at an event after it introduces its next iPhone.

Cowen and Company

Apple's new software and services will bode well for long-term ecosystem lock-in, analyst Timothy Acuri believes. He was especially impressed by the "continuity" features that bring OS X and iOS closer than ever, including Handoff, AirDrop, and iCloud Drive.

"The increased integration between OS X and iOS is further evidence, in our view, that Apple will eventually move to collapse the new high-end tablet and notebook markets with a new product(s) and that iPhone is being further positioned as a drive of Mac/iPad sales," Acuri wrote.




J.P. Morgan

Connectivity between iOS 8 and Yosemite, allowing phone calling and text messaging via a Mac, should help to lock users in to Apple's ecosystem, analyst Rod Hall believes.

And he believes that Apple's improvements to iCloud, including the addition of iCloud Drive, look better than competing services like Dropbox, thanks to the fact that background syncing is maintained across all Apple devices.

Wells Fargo Securities

Compared to other analysts, Maynard Um has been bearish as of late on Apple, with a "valuation range" for the company's stock of between $595 and $640. Following WWDC, Um said the keynote was a "slight disappointment" to him because of the lack of hardware announcements.

Um also said he felt Apple offered only a "cursory address" of its new home automation capabilities in iOS 8.

He did admit, however, that he was "encouraged" by the announcement of Apple's HealthKit and corresponding Health application, which he believes could allow the company to monetize user data analytics. But he also said that the transition to profiting off of this data would be "difficult."
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Comments

  • Reply 1 of 48
    SpamSandwichSpamSandwich Posts: 33,407member
    This clearly illustrates NONE of the quoted analysts will admit they were all completely wrong in their predictions, they also lack a basic ability to comprehend what was presented. Idiots all!
  • Reply 2 of 48
    rob53rob53 Posts: 3,271member

    Katy, where were all of your rumored announcements? Bad guesses or money spent on poor inside information?

     

    Maynard, why did you expect hardware to be announced? It's the software that makes things run and if you don't understand this, get a new job. There was enough software enhancements and new directions announced to drive plenty of new hardware. The hardware is easy, it's the software that's difficult. Of course, analysts can only analyze what they can see.

  • Reply 3 of 48
    chipsychipsy Posts: 287member
    A little off topic but am I the only one who finds it strange that Spotlight for OSX uses Bing and Spotlight for iOS 8 uses Google?
    I wonder what the reason behind this is...

    [IMG]http://d35lb3dl296zwu.cloudfront.net/uploads/photo/image/16340/DSC_1153.jpg[/IMG]
  • Reply 4 of 48
    chandra69chandra69 Posts: 638member
    Quote:

    Originally Posted by Chipsy View Post



    A little off topic but am I the only one who finds it strange that Spotlight for OSX uses Bing and Spotlight for iOS 8 uses Google?

    I wonder what the reason behind this is...



    DSC_1153.jpg

    Even I was surprised to see Google on live event. 

    But I read on other blogs that - it was tested for the pre-event with Google. So, continued.

  • Reply 5 of 48
    apple ][apple ][ Posts: 9,233member

    What a bunch of clueless clowns.

     

    Analysts contribute nothing at all besides making idiotically wrong, boneheaded predictions and they produce nothing besides noise. The best thing to do is just ignore them all. 75% of news and rumors about Apple is just garbage and should be filtered out, in my opinion.

     

    The last thing that I would do before buying any stock or investing in Wall Street is to listen to what any of those clowns have to say.

  • Reply 6 of 48
    lkrupplkrupp Posts: 10,557member

    I’m waiting for Rob Enderle and Paul Thurrott’s take on this. They’re the only truly unbiased analysts when it comes to all things Apple. You can trust what they say about Apple and they’re always right.

     

    Wait a minute. What did I just say?

  • Reply 7 of 48
    bloggerblogbloggerblog Posts: 2,480member
    Quote:

    Originally Posted by Chipsy View Post



    A little off topic but am I the only one who finds it strange that Spotlight for OSX uses Bing and Spotlight for iOS 8 uses Google?

    I wonder what the reason behind this is...

     

     

    Quote:

    Originally Posted by Chandra69 View Post

     

    Even I was surprised to see Google on live event. 

    But I read on other blogs that - it was tested for the pre-event with Google. So, continued.


     

    If I remember correctly, it was Google search but Bing Translate.

  • Reply 8 of 48
    alfiejralfiejr Posts: 1,524member

    not sure the "analyst" quotes above are consistent with this article's headline - but the headline is, yes indeed, the real story yesterday:

     

    - Apple finally added its own versions of the most popular features of Android that iOS previously lacked, taking that advantage away from Google.

     

    - Apple is taking every opportunity, especially its newly prominent Spotlight search, to make using Google search unnecessary for common everyday needs, incorporating strategic connections with Wikipedia, Yelp, and even Microsoft, and others (furthering this strategy which began with the iOS Maps app over a year ago).



    - Apple greatly reinforced the consumer "stickiness" of its ever-expanding Apple ecosystem, ensuring it will remain much harder to switch from iOS to Android than vice-versa just to save a few hundred $'s, and further reinforcing the "halo" effect of iOS that boosts all Apple products.



    - All the new iOS (and OSX) software tools for developers will result in a burst of new/much improved apps later this year that will be a big hit with consumers. just about every current app will get some useful enhancement, and virtual world game graphics will get a "wow!" upgrade (which Google can't match until Android gets 64 bit power).

     

    - In response to this, current iPhone and iPad owners will update to iOS 8 at a record pace to take advantage this app explosion (even the 4S and iPad 2!), and the launch of the next iPhone(s) this Fall will be sensational.

     

    Apple is offering consumers an ecosystem that is even smoother, more seamless, simpler - and safer - than before. Except for Google's own excellent but limited cloud services (at the very high cost of your privacy), Android simply can't do any of that - that is the intrinsic downside of its "openness."

  • Reply 9 of 48
    revenantrevenant Posts: 621member

    i was shocked to read these- they were actually being kind, i thought.  i was expecting something like, 'another major letdown by apple- sell your stocks, they are crashing and burning 8 years straight with bankruptcy in sight.'

  • Reply 10 of 48
    mde24mde24 Posts: 27member
    Quote:


     He did admit, however, that he was "encouraged" by the announcement of Apple's HealthKit and corresponding Health application, which he believes could allow the company to monetize user data analytics. But he also said that the transition to profiting off of this data would be "difficult."


    Dear analyst.  When has selling user data ever been part of Apple's business model?  (Ans: never)

     

    "Monetising" personal medical data is really easy for Apple.  They are careful with their APIs and give their customers (the end user) the ability to tightly control how that data is used, and take 30% on sales of the new apps that will be launched to make use of it.  They state quite clearly "we will not sell your medical records to anyone..." and lo, it shall come to pass that people who value their privacy shall buy iPhones.

  • Reply 11 of 48
    chris_cachris_ca Posts: 2,543member
    With Apple's annual Worldwide Developers Conference highlighting tight integration between the upcoming OS X Yosemite and iOS 8 platforms, market watchers on Wall Street saw the announcements as a direct shot at Google's competing Android platform.
    It's a direct shot because Android & some other operating system have a similar tight integration?
  • Reply 12 of 48
    rogifanrogifan Posts: 10,669member
    So according to Bloomberg Apple gives users Stockholm syndrome. :rolleyes:

    http://www.bloombergview.com/articles/2014-06-03/apple-gives-customers-the-stockholm-syndrome?cmpid=yhoo
  • Reply 13 of 48
    tallest skiltallest skil Posts: 43,388member
    Originally Posted by SpamSandwich View Post

    This clearly illustrates NONE of the quoted analysts will be fired, as they were all completely wrong in their predictions

     

    Fixed. :devil:

     

    Originally Posted by Chipsy View Post

    A little off topic but am I the only one who finds it strange that Spotlight for OSX uses Bing and Spotlight for iOS 8 uses Google?

     

    I’m sure it doesn’t matter. You’ll be able to change it.

  • Reply 14 of 48
    macxpressmacxpress Posts: 5,871member
    lkrupp wrote: »
    I’m waiting for Rob Enderle and Paul Thurrott’s take on this. They’re the only truly unbiased analysts when it comes to all things Apple. You can trust what they say about Apple and they’re always right.

    Wait a minute. What did I just say?

    Paul is one of the biggest Microsoft asspuppets there are. In typical Microsoft fanboy'ism, he downplays everything Apple does. I see him on TWIT all the time and he always makes himself look like an ass when he talks about Apple. I guess when you're paid by Microsoft to write books for them you're supposed to do this.
  • Reply 15 of 48
    slurpyslurpy Posts: 5,385member
    Quote:

    Originally Posted by macxpress View Post





    Paul is one of the biggest Microsoft asspuppets there are. In typical Microsoft fanboy'ism, he downplays everything Apple does. I see him on TWIT all the time and he always makes himself look like an ass when he talks about Apple. I guess when you're paid by Microsoft to write books for them you're supposed to do this.

     

    Yeah, the guy pretends he's being "objective", yet you can tell he's an angry little troll. 

  • Reply 16 of 48
    SpamSandwichSpamSandwich Posts: 33,407member
    Fixed. :devil:


    I’m sure it doesn’t matter. You’ll be able to change it.

    ????????????
  • Reply 17 of 48
    apple ][apple ][ Posts: 9,233member
    Quote:

    Originally Posted by Slurpy View Post

     

     

    Yeah, the guy pretends he's being "objective", yet you can tell he's an angry little troll. 


     

    The guy is an ass, and is obviously not objective at all. He's a Windows shill.

     

    Paul Thurrott

    @thurrott

    I write Paul Thurrott's SuperSite for Windows and co-host the Windows Weekly and What the Tech podcasts.

  • Reply 18 of 48
    Where are their usual "Apple is doomed" speech? They could just admit that they know absolutely nothing, especially when they make their silly predictions.

    Like many previous posts! Whatever they say is simply just pure rubbish!
  • Reply 19 of 48
    thrangthrang Posts: 1,024member
    Apple's new Search (well the resurrection of Sherlock, if you're old enough to remember) is to me the most pointed dagger toward Google. If Apple does this right, more and more users will rely on Search as a go to tool, and not google.com and their ad revenue model.

    Search provides the foundation for Apple to launch its own search engine, which I think is strategically important for Apple. Getting the front end right first is a large baby step...once operating smoothly, they can launch their own engine. I'm sure they have been building one for years...may or may not turn it live, but like developing OS X for intel concurrently and secretly, controlling search is very vital to so many services.
  • Reply 20 of 48
    tundraboytundraboy Posts: 1,901member
    Quote:
    Originally Posted by Chris_CA View Post

     




    Originally Posted by AppleInsider View Post



    With Apple's annual Worldwide Developers Conference highlighting tight integration between the upcoming OS X Yosemite and iOS 8 platforms, market watchers on Wall Street saw the announcements as a direct shot at Google's competing Android platform.


    It's a direct shot because Android & some other operating system have a similar tight integration?


     

    No, it's a direct shot in the sense that Google/Android is glaringly vulnerable on the 'seamless integration of devices' front due to fragmentation, no PC OS, and no real hardware operations.  A better description would have been a 'lethal' rather than 'direct' shot.

     

    Anyway, this is not surprising.  When complex mass consumer products reach a certain level of maturity, refinement, fine-tuning and optimization become the battlefield for competition and when you are building software to run on a hundred and one different devices, you will not be able to keep up with the guy who's dealing with five or six.  It's inevitable.  If you think of software as a problem-solving exercise, the solution is much easier (and simpler!) if you have only five or six moving parts to contend with as opposed to a hundred.  Something similar happened with automobiles in the early 20th century --By the 1930's pretty much all the independent engine, chassis, and coach builders have either disappeared or coalesced into integrated auto manufacturers.  

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