Is Apple Falling Behind?
In a recent interview at All Things D’s D11 Conference, Apple’s (AAPL) Chief Executive Officer Tim Cook tried to offer some solace to the company’s increasingly skeptical investor base. In the annual event, Tim Cook highlighted Apple’s innovative approach and said that the company has a few “game-changers” under its sleeve.
Although Tim Cook did not divulge any specific information about Apple’s upcoming innovations, he said that the wrist-wearable computing products can be an interesting market. He also said that Apple TV continues to hold great importance for the company. However, Tim Cook refused to give details about the product and an imminent launch date.
So what could be these game-changers? A cheaper iPhone, long awaited overhaul of the iTV, an Apple Watch or a combination of any of these?
The most important question that arises in each and every Apple enthusiast’s mind: “Is Apple Falling Behind” in terms of innovation and competition versus its peers.
This is primarily due to the fact that since the launch of iPad (Apr 2010), Apple did not release any product that can be called an innovation. Additionally, Apple’s botched mapping effort and problems with the voice-enabled application Siri raised questions about its technical expertise in each and every aspect of mobile computing.
On the other hand, arch rival Google (GOOG) came up with Google Glass. Although its mainstream adoption will take some time, we believe that Google’s effort may be seriously challenging Apple’s “leading innovator” image in the technology sector.
Apple’s closest hardware competitor, Samsung, continues to frequently update its entire product portfolio, which has increased its penetration in all segments of buyers (both high income and low income level) over the last year.
In comparison, Apple’s strategy of launching a yearly update of iPhone and iPad has not helped the stock much. Additionally, Apple’s dilly-dallying over a cheaper iPhone has not helped its cause either in recent times.
Further, in the wrist-wearable computing product segment, Apple is expected to face competition from both Samsung and Google, who have already shown keen interest in developing these products.
The tremendous growth opportunity from this emerging market can also attract other major companies such as Microsoft (MSFT) and Amazon (AMZN).
Conclusion
Traditionally, Apple has refused to divulge details about its product pipeline. Although this secrecy has helped Apple to gain significant attention in the past (which also helped the stock price), we believe that investors are likely to be cautious this time, which will not help the stock price much in the near term.
Moreover, we believe that it is high time for Apple to launch a new product or at least give a time line for the launch, which will calm the nerves of jittery investors.
Currently, Apple has a Zacks Rank #4 (Sell).
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