The iPhone 5 Ripple Effect
Punnoose is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Apple’s new iPhone 5 Launch was awaited by all, top analysts and investors alike. The effect of the new launch has already started to show in the technology market. The iPhone 5 launch did not show many surprises as it fulfilled many expectations laid out by tech analysts. Post launch Apple (NASDAQ: AAPL) shares ended the day up 1.4 % at $ 669.79.
Analysts believe though investors are being conservative, the smartphone market will grow tremendously once the iPhone sales occur. Analysts forecast sales to reach 12 million this month alone.
Apple faces stiff competition from current leaders Samsung and Google. Samsung leads the smartphone market followed by Apple with 17 % according to IDC reports. With this launch Microsoft is now trying to push its Windows Phone 8 OS as an alternative to Apple and Android.
The launch is also going to benefit a host of other companies. Here’s an overview of companies that will benefit from the new iPhone launch
Jabil Circuit (NYSE: JBL) is a worldwide provider of electronics manufacturing services. The aluminum casing that the new iPhone proudly showcases is manufactured by Jabil Circuit and Jabil earns about 10% of its revenue from Apple as per RBC Capital Markets. IPhones sleek and unique body is a result of Jabil. The unique body entices many customers to buy the device. Jabil share prices have rose to a high in the last few months on the expectations that it will generate more revenue from iPhone 5 sales. Only in the coming quarters will we be able to understand the extent to how much Jabil Circuit will benefit.
Molex Incorporated (NASDAQ: MOLX) is also expected to benefit from the launch. Molex is a supplier of electronic interconnectors. Molex supplies multiple connectors for the iPhone 5 and it is believed that each iPhone has connectors worth $4 in them. Molex earns 5 % of its revenue from Apple and this has boosted investor’s confidence.
Amphenol Corporation is a major producer of electronic and fiber optic connectors, cable and interconnect systems such as Coaxial cables. Amphenol provides dynamic antennas for the iPhone 5 and it is estimated to gain around 2 to 3 percent from iPhone 5.
Flextronics International Ltd. is also expected to gain around 2 to 3 percent. Flextronics is a service provider that offers services to original equipment manufacturers (OEM). Flex provides power cubes for the iPhone 5.
Not all will gain from the iPhone 5 launch; many rival companies are going to feel the pinch. Samsung and Google, Apple’s closest competitors will have their share of the pie reduced once the iPhone 5 hits market.
Samsung which has launched Galaxy S3 recently may run the risk of losing market share to the iPhone 5 adding to the bitter loss it incurred in the patent case against Apple.
Samsung’s loss also affects Google (NASDAQ: GOOG), and though it won’t be directly affected by the new iPhone launch, the operating system will surely feel the heat with the iOS 6. Google Maps on Android is fabulous and since 2007 Google maps have been in the iPhone, now Apple has announced its own Google-free map solution. Google needs to do more so that its business is not hit by this. Google is now planning to add new features to its Maps app for Android phones.
The iPhone 5 will be available from 21st September in the US, Australia, Canada, France, Germany, Hong Kong, Japan, Singapore and UK. Though the “wow” factor is not there, but it has done enough to satisfy. The smartphone market atmosphere is tensed as the stakes are high with Apple’s iPhone 5 and many of its rivals staring at the unknown future.
Foolish Bottom Line
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