Mike Wuerthele
An analyst has mixed feelings about the iPhone X pricing and release schedule, and believes that it may drive Apple's valuation to new heights — but if it is not well accepted, then it will eat into the company's earnings for years to come.
In a report seen by AppleInsider Daniel Ives from GBH Insights sees the possibility of a super cycle being generated by the iPhone X and its array of technologies. However, he also believes that Apple is in the midst of a "white knuckle" period, with the level of success that the iPhone X will have impacting the future greatly.
Ives believes that the iPhone X is the potential "game changer" that may fire up the so-called super-cycle of demand. While the iPhone 8 may be "slow out of the gates" based on collated data — that is expected given that Apple unveiled the iPhone X at the same time.
Questions circling the release are how much will customers be willing to pay for the new phone, what does the upgrade cycle predict for the installed base, and how large a factor China's consumers will play.
China is expected to account for about 25 percent of Apple's total revenue in fiscal year 2018, with expectations that it will grow to 30 percent by 2020. The "sticker shock" of the iPhone X may be a factor, writes Ives, but he believes that the iPhone X will light a fire under middle-class and wealthy Chinese shoppers who have not committed to one platform or another.
Services have been a major source of Apple's revenue for the last few years, and Ives expects them to continue to expand. Fiscal year 2018 services are predicted to hit $36 billion, a 20 percent year-over-year expansion.
Ives expects that there will be sufficient uptake of the iPhone 8, iPhone 8 Plus, and iPhone X for the next 12 to 18 months to fuel its next leg of growth. As a result, a stock price range of between $160 and $175 is expected.
In a "bull case," Ives believes that a major average selling price increase driven by initial demand for the iPhone X, coupled with a resurgence in China could lead to a stock price up to $230 in the next year.
However, should the iPhone X "not bear fruit," then Apple may lack the growth catalyst that would be needed to fire up a super-cycle, and Apple stock would drop to as low as $135, with "much diminished earnings power" for the 2019 fiscal year, and going forward.
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26 Comments
Doomed I tell ye!!!!
I get the feeling iPhone 8 will be a “flop” like iPhone 5c and Apple Watch. Outselling the industry but still a “flop” to the android iPhone knockoff paid media.
I think the success of the iPhone X will largely depend on a combination of the economy and how many are willing to pay a premium for the latest and greatest. (I list the economy because it determines how many can afford the latest and greatest and have the optimism to go for it).
But, for the rest, essentially the iPhone X has no significant functional difference from the iPhone 8 -- or at least the 8+. That is: you can do everything on an 8 or 8+ that you can do on the X. Really, at least to me, the benefits of the X are:
1) A better screen (OLED)
2) A bigger screen in a smaller package (or some combination of the two depending on what you're comparing it to...)
But that can be a functional difference to some: For instance, I'm a runner who always carries his phone -- but I still want a larger screen. So, the X just might be perfect -- Except! Oh wait! I could just get an AW with LTE and leave the damn phone in my car. (Life is so complicated!)
But, for longer term -- over the next 5-10 years -- my gut is telling me that Apple is in a transition period where they have made the current paradigm about as perfect as possible: The next steps are/will be:
1) Longer battery life
2) More durable screens
3) Adding AI and AR features into the OS and embedded apps (such as Maps).
4) Expanding its footprint by enabling it to connect to and use external keyboards, mice and large screens. So where a business man could, for instance, walk into his office and plug his phone into a dock similar to what he does today with his laptop -- and keep right on working. One computer to rule them all!
Well since I’ve never heard of this analyst I’m going to wait until Taylor Swift weighs in.