Hot News On Apple: iPad on Sale, iPhone 12 Leaked And More
Apple is always in the news. As the stock meanders up and down this week, still nearly 20% off the all-time highs, developments about the company keep popping up. Here are some of the most interesting ones today, along with my commentary on each.
iPad on sale
The new iPad 8 generation has just been announced, and it is already being discounted – by third-party vendors Amazon and Walmart at first, now even by Apple itself. The first two retailers offer the product for $299, with Walmart promising free delivery within the US in as few as 5 days. Apple is selling the basic model for $309, down from the announced price of $329, but delivery does not happen for another three weeks. Best Buy has not lowered its price yet.
The discounting activity is unusual, only one week after the product’s launch. One interpretation is that demand for the device has been underwhelming out of the gate, which is plausible given the more nuanced feature updates compared to last year’s model. This is the glass-half-empty way to look at the news.
The other interpretation is that the major retailers have gotten aggressive about the holiday season. Amazon’s Prime Day, for example, is rumored to happen on October 13. It would make sense for the retailer to have a popular “loss leader” to attract customers to its online store. Once one company lowers the price, others tend to follow suit to remain competitive.
iPhone 12 launch (nearly) confirmed
MacRumors has just reported that the iPhone 12 will be unveiled any time now. The giveaway was a presentation by the CEO of a large phone carrier in Europe, talking to his employees about the upcoming iPhone 12. The rumor was given credence by the appearance of an Apple executive in the leaked video.
I don’t think there is any doubt that Apple’s new smartphone will be announced in the next few weeks, and that it will have 5G capabilities. The questions that remain are (1) what the versions and features will look like, and (2) what the products’ availability will be.
Check out my recently-published article on this subject.
Dissecting the bear case
Analyst David Vogt believes that Apple is primarily a product company, and that 2020 will benefit from the stay-at-home dynamics (iPads and Macs, mostly) and the 5G cycle (iPhones). But by 2021, he expects sales to revert to a less exciting normal. Also, the analyst defends that service revenues associated with new product sales will decelerate, with upside to his estimates relying on a rebound in underperforming offerings like TV+ and News+.
I understand the cautious arguments above, but I think that they may be a bit too conservative. Sure, Apple is still largely a product company, but this profile has been changing each year (see graph below). Also, the company has found in wearables an interesting source of growth, which can be further boosted by the introduction of new AR and VR devices soon. Lastly, service growth should slow down as the segment matures, but maybe not by much. New offerings can and will likely be introduced, and the Apple One pricing strategy could drive demand for Apple’s services higher.
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