Five thoughts on the year ahead for Apple

  • Posted: 13 August 2011 08:58 PM

    1. By January 2012, the market will realize that the actual market share of the iPad in the tablet market is roughly 90 percent, not 60 percent as some “experts” have estimated. I travel regularly in the U.S., and I’m always looking out for what kinds of tablets people have. I can only recall seeing one or two non-iPad tablet devices, while I have seen dozens of iPads. Has anyone had a different experience? More specifically, based on your personal observation, do you see anything more than one non-iPad tablet for every nine iPads? If not, it seems to me like the official market share estimates are way, way off.

    2. I have a gut feeling that the tablet market is going to be bigger in units/year than the PC market (currently ~400MM units/year globally, I think), and not just because there is some cannibalization going on. I also think that this larger market size is going to happen much, much faster than the various official forecasts suggest. At a minimum, I see iPad sales at least doubling in CY2012 versus CY2011, and it might happen again in CY2013. At some level, I basically see tablets (primarily iPads) replacing paper, magazines and books, as well as offering a better solution for many of the things that we currently use PCs to do, as well as as creating entirely new use cases we haven’t yet envisioned. Once Apple creatively improves input opportunities on the device, I think we will experience another catalyst for rapid growth.

    3. I also think that Apple is going to again experience roughly 100 percent growth in iPhone unit sales for CY2012 vs. CY2011. I personally expect this will be in part because there will be two new iPhone devices introduced either now or by early 2012 (with the second device being the Mini / Air iPhone that we’ve kicked around from time to time). We will see the peak of Android, as well as the continued decline of RIM, which will provide some support for Apple’s continued rapid iPhone growth, as well a continued shift from dumb phones to smart phones.

    4. Thanks to its compelling designs with unmatched pricing and continued halo effects from the success of the iPhone and iPad, Apple’s success with its MacBook line is going to blow away the overall PC industry. Specifically, I see huge growth for the MBA, as well as a major MBA-like refresh of the MacBook Pro line that will garner tremendous sales and market share gains in 2012.

    5. Gross margins will continue to look very good through 2012. With massive and rapidly expanding volumes across a relatively tight portfolio of products, Apple will continue to be able to leverage its scale, supply chain management, etc., to maintain high margins, while competitors in phones and tablets, in particular, will continue to struggle.

    If I’m right, I think we could be looking at $700-800 by year-end 2012.

    Do these thoughts make sense? And what big positives am I missing?

         
  • Posted: 13 August 2011 09:02 PM #1

    One clarification on point 4 regarding “unmatched pricing”: I was referring specifically to the MBA, but I wouldn’t be surprised to see Apple become even more competitive in the MacBook Pro line as well, which likely will incorporate some MBA design elements.

         
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    Posted: 14 August 2011 12:18 AM #2

    Apple certainly has several kinds of active ammo :

    1. market momentum
    2. legal IP
    3. retail stores
    4. online stores
    5. foreign market expansion:  China, Europe with India and Brazil probable in the next 6-14 months.

         
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    Posted: 14 August 2011 01:32 AM #3

    There are so many big stories coming up - everything you have listed plus the BIG BIG deal in China.  We are converging on multiple event roll-outs.  2012 is going to be amazing for aapl investors.

    What you will see is Android users with expiring 2 yr contracts kicking them to the curb for the free subsidized iPhone at Verizon AT&T tmobile and eventually sprint and the rest of the world. I do not scoff at your 700 - 800 prediction.

    I also agree with you on your iPad theories….  This is just the tip of the iceberg in what will be the hottest product in the history of hot products.  This is NOT a fad.  Tablets are the future and Apple clearly is going to win big.

    The recent “catch up” to Exxon is just started.  Aapl will blow by xom by a wide wide margin in 2012.

    [ Edited: 14 August 2011 01:37 AM by Dennyhil ]

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  • Posted: 14 August 2011 05:10 AM #4

    The year ahead:

    1. Apple’s revenue will rise

    2. Apple’s eps will rise

    3. Apple’s share price will rise

    4. The iPhone 5 will sell like nothing seen before even by iPhone standards

         
  • Posted: 14 August 2011 08:19 AM #5

    Dennyhil - 14 August 2011 04:32 AM

    The recent “catch up” to Exxon is just started.  Aapl will blow by xom by a wide wide margin in 2012.

    In 1997, AAPL market cap was 2.3 billion, Dell was ten times that. Apple ran the “change the world” ads, and Michael Dell said he’d shut Apple down and give the money back to the shareholders.

    In 2006, Apple’s market cap equalled Dell’s at around $70 billion.

    In 2011, Apple’s market cap is twelve times Dell’s.

    Maybe in five year’s time, AAPL will be four times XOM’s current market cap!

    And still be undervalued?

         
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    Posted: 14 August 2011 08:22 AM #6

    The real “sleeper” ... Apple manufacturing partner Hon-Hai Precision Industries, more commonly known by it’s westernized name of FOXCONN is going to open 500+ franchised stores in China area, investing over $1.5 billion {US$} via it’s CYBERMART chain in mainland China.

    We have seen the huge demand for STORES as a result of the recent revelation of 22 FAKE Apple stores, in just ONE medium sized Chinese city. So the huge demand is there, we only need actual stores to fill that need.

    The huge showcase stores opening in China will provide the panache, and glitz quotient, but 5-10 actual real Apple stores, in a huge country like China, isn’t going to actually provide much “retail coverage” whereas 500 smaller OFFICIALLY LICENSED stores will.

    Taken as a whole, I can envision CYBERMART actually selling 10X what the flagship stores do, cumulatively.

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  • Posted: 14 August 2011 12:15 PM #7

    On the stores:

    In the most recent 4 fiscal quarters the stores had $14 billion representing just about 14% of the $100 billion revenue. The stores also sold 21.35% of all Macs sold worldwide.

    The stores are vital to revenue and earnings growth. If there’s a place to use the company’s cash, it’s opening retail stores in previously under served markets.

         
  • Posted: 17 August 2011 08:40 AM #8

    Here’s some evidence to support my roughly 90-percent tablet market share prediction:

    http://allthingsd.com/20110817/tablets-a-minor-threat-to-pcs-for-now/?reflink=ATD_yahoo_ticker

    [ Edited: 17 August 2011 08:45 AM by PurpleApple ]      
  • Posted: 17 August 2011 01:20 PM #9

    4. Thanks to its compelling designs with unmatched pricing and continued halo effects from the success of the iPhone and iPad, Apple?s success with its MacBook line is going to blow away the overall PC industry. Specifically, I see huge growth for the MBA, as well as a major MBA-like refresh of the MacBook Pro line that will garner tremendous sales and market share gains in 2012.

    Mac Sales Keep Booming, and the Fireworks Are in Asia

    John Paczkowski

    The Mac continues to kick ass. And it?s kicking a lot of it in Asia.

    Needham analyst Charlie Wolf notes today that June marked the 21st consecutive quarter that Mac shipment growth exceeded that of the PC market. Mac shipments grew 14.6 percent for the month ? more than five times the PC market?s growth rate of 2.7 percent.

    Driving that growth tear: The home and business markets and Asia. Mac shipments rose 13 percent in a global home market that declined .3 percent overall. In the business market, they grew 31.5 percent, more than six times the five percent growth rate charted by the rest of the market. And in Asia, they simply blew the roof off the market with shipments that grew 67.6 percent thanks to soaring demand in China.

    Wolf figures the region accounted for a jaw-dropping 55.2 percent of the year-over-year growth in worldwide Mac shipments. And this wasn?t the first quarter of double-digit growth there; it was the sixth.

         
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    Posted: 17 August 2011 10:46 PM #10

    The one you missed that will be Apple’s next game changer in a big way:

    6. iCloud. Apple is implementing cloud computing in a way that leverages everything that makes Apple… well, Apple: their hardware + software design + interoperability come together in a way that no other tech company on the planet can. This is not just Apple taking on their version of a catch phrase, it will be yet another evolution in the way we use compooters. Several years ago it your Mac as the hub of your digital lifestyle. Then with the iPad/iPhone, a computer as an information/entertainment appliance, and with iCloud, persistent data that is independent of any single computer or mobile device you own. Of course, as long as your devices are Apple products.

    iCloud. Will. Be. Huge.

         
  • Posted: 04 September 2011 12:25 PM #11

    Pats originally posted this cult of mac link in a different thread.

    http://www.cultofmac.com/why-ipad-is-conquering-the-workplace/112116

    If you haven’t read the comments at the end of the story, I would suggest that you do so. I’m already seeing tremendous adoption of iPad in my own enterprise—in sales, training and among the executive group. We in turn are seeing tremendous adoption within the businesses/clients/customers with which we interact on a regular basis.

    Also we are seeing people who get iPads (many of which have been purchased with personal funds for primary use in the workplace) starting to seriously consider other Apple products for the first time, including both iPhone and Mac.

    My gut continues to be that the tablet (i.e., iPad) market will become bigger than the PC market. Has anyone actually done an analysis to support this?

    By the way, does anyone know the rough breakdown of annual PC sales globally (around 400MM units, I think) for enterprise versus personal?

         
  • Posted: 04 September 2011 12:29 PM #12

    iCloud. Will. Be. Huge.

    You are probably right. If flawlessly executed (and that’s the big IF for me), I think iCloud will dramatically increase penetration rates for Apple products—especially iPhone and iPad.

    Flawlessly executed to me = (a) no technical glitches and (b) true ease of use (i.e., no effort required to set it up or to understand it).

    Truly separating iPad and iPhone devices from the PC and Mac (no need to sync with a computer), as well as doing so in a really straightforward way from a user perspective, could massively increase sales.

         
  • Posted: 04 September 2011 05:22 PM #13

    While I agree with all the points mention previously, there is one thing that worries me. It doesn’t keep me awake at night, but is a minor concern that I have.

    While I have to agree that we will see a lot of former Android users moving to the iPhone, specially if a low-cost is on the verge of being announced, I do fear that we will also see a movement on the other way. Before everyone starts jumping at me let me explain.

    Firstly, I am a heavy apple consumer. I have an iMac 24’ (2008) at home, a MacBook Pro 13’ (2010) for work, an iPod (very old one - 3gen and still running) and an iPad2. However, my smartphone is a rooted Samsung Galaxy (the first one - European version). Why? Because I also rely heavily on google services. Gmail is my main email account, I use google chat as my IM (I am anti Facebook person) and I also use google calendars, google documents and google groups for both personal and professional use (I work in a very big science research institute and everything here is google).

    While I know I am not the regular Joe, one can’t deny the fact that millions use google services. Either due apple’s or google’s fault, google services integration in iOS is pretty shitty (to say the least). It is mainly because of this that I see Android as a better option for this target audience. Additionally, one can’t also deny that the UI of iOS is getting extremely old. iOS5 will solve many issues, it’s true, but we will remain stuck in that never-ending sea of app icons.

    iPhone’s advantage up to now, has been its level of polishness. As every other apple product “it just works”. On the other hand, Android smartphones 2 years ago were slow, had lousy multitouch interface, were crashing all the time and had an App store which was miles away from apple’s.

    Things have changed in the meanwhile, my Samsung Galaxy is already a decent smartphone. It’s true it crashes sometimes (though very rarely) and has a terrible GPS, but the usability I get from it compensates this flaws. Nowadays Android smartphones are much better. The new Galaxy 2 works extremely well and its integration of google services and better UI (in my opinion) makes it a very strong appeal for users not happy with their iPhones. I am not talking about apple power users. I am talking about the PC/Windows users that for chose an iPhone for their smartphones. The way I see it, if even me, an Apple fanboy, has an Android smartphone, I don’t see why a non-Mac but iPhone user couldn’t be thinking about changing platform.

    I don’t want to be a bringer of the Apocalypse, but if Apple doesn’t become more aggressive in terms of pricing (with a low-cost model of course) and a UI revamp, there is a possibility that we might see Apple’s marketshare of the smartphone stabilizing around 20%.

    What do you think? Are my concerns ungrounded? Being all-in in Apple, I do hope that I am just being overly pessimistic.

         
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    Posted: 04 September 2011 05:55 PM #14

    PurpleApple - 13 August 2011 11:58 PM

    If I’m right, I think we could be looking at $700-800 by year-end 2012.

    Dude, I’d French-kiss your dog if AAPL hit that price by that date.

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  • Posted: 04 September 2011 06:00 PM #15

    Tiago - 04 September 2011 08:22 PM

    What do you think? Are my concerns ungrounded? Being all-in in Apple, I do hope that I am just being overly pessimistic.

    I think your concerns are ungrounded even though it works for you.  Gmail works just fine on my iPhone and I doubt the number of people who would choose an android phone for google services alone is significant.  The fragmentation issues, lack of security and long term viability of the platform are larger issues to me for instance.  The average consumer (not you or I) wants a product that just works.  To date that leaves the iPhone as the gold standard.  Google and Android may always be there for the market that wants to be able to say “it’s just cheap”.

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