Neil Hughes
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.
Christine McKee
AppleInsider Staff
Andrew O'Hara
50 Comments
Huh? Lately all they've been hitting are singles!!! Still waiting for things like a watch, carplay (for Jeep :/), the TV, etc...
[quote name="AjbDtc826" url="/t/177013/after-a-series-of-home-runs-itd-be-ok-if-apples-next-product-is-a-single-evercore-says#post_2508520"]Huh? Lately all they've been hitting are singles!!! Still waiting for things like a watch, carplay (for Jeep :/), the TV, etc...[/quote] You clown
Home runs? More specifically I would call the iPod / iPhone / iPad "grand slams"! They not only changed Apple but they changed the way we interacted with "computers".
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?