Apple Bringing New iPhone; Competitors Bringing Heat
Tedra is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Nothing sparks more discussion, and even arguments, among technology investors and buffs like comparing Apple’s (NASDAQ: AAPL) stock, or its iPhone, to anything else. Many have it engrained in their very beings that Apple and its products will always be better than anything else.
As consumers and investors await the release of the next generation iPhone this week, the stock stands at historic highs, trading around $663 at the time of writing. It’s the most valued company in the world, ever. It demands respect, winning a historic $1 billion patent infringement lawsuit against Samsung for copying its products. And as dumbfounding as it may be for many to believe, sales from the new iPhone could be so huge that they boost the growth domestic product’s growth rate! That, according to J.P. Morgan, which on Tuesday released a report specifically saying:
“We believe the release of iPhone 5 could potentially add between 1/4 to 1/2%-point to fourth quarter annualized GDP growth. Our equity analysts believe around 8 million iPhone 5's will be sold in the US in Q4, even while sales of previous generation iPhones are maintained at a solid pace.”- J.P. Morgan
I must point out that some estimates being bandied about say iPhone sales can reach between 10 million to 20 million during the first week!
What Could Slow Apple’s Momentum?
In the smartphone market, Apple’s competitors pose a threat to its momentum. The main competition comes from Samsung as the handset threat; and from Google (NASDAQ: GOOG) as the platform threat. Then there are the myriad other manufacturers and platforms that are offering more affordable, and highly functional devices to meet consumer demands.
As infuriating as it may be to hear for some, you can’t help but to bring up the increasing amount of competition Apple faces in the mobile space. Furthermore, you can’t help but to wonder how much competition will affect Apple’s sales. Let’s face it, when Apple rolled out its iPhone in 2007, there weren’t nearly as many smartphones on the market as there are now.
Slowly, but steadily, more handset manufacturers have rolled out smartphone devices, with Samsung being the most prolific of them all. It seems like a quarter doesn’t go by without a new smartphone from Samsung being introduced. Most important to note when comparing Samsung's smartphones to Apple's iPhone is the fact that consumers are snapping them up. Since it launched its flagship Galaxy S III device at the end of May, Samsung reports that 20 million have been sold.
Another handset manufacturer determined to stay in the smartphone fray is Nokia (NYSE: NOK). Last week, it rolled out its new flagship Lumia phones. Whether it be because of the lack of details surrounding the device’s release (like its price), or just pure dislike for the phones, Nokia’s stock sank upon its unveiling. I think it was a combination of both, as investors weren’t impressed with the device’s ability to get the company back on the right track to be competitive in the smartphone space and save the company from further revenue declines. The stock sank despite the new phones being powered by Microsoft’s (NASDAQ: MSFT) Windows Phone 8, which could help Microsoft gain more footing in the smartphone space.
Also, Motorola, now owned by Google, unveiled three new Droid Razrs last week. Details for pricing on them were withheld for all but one of the devices. By the end of that week, Google was trading above $700, which was approaching its all-time high of around $714.
Changing Market Share, Apple Inching Up
During the three months ended in July, Samsung captured a 25.6% market share for mobile subscribers, according to a study released by comScore Inc. earlier this month. That same study found LG held 18.4% of the market; Apple held 16.3%; Motorola held 11.2%; and HTC held 6.4%. What’s interesting about these numbers is – with the exception of HTC, whose share increased .4% - only Apple gained, and that was to the tune of almost 2%.
Samsung’s dominance has been largely fueled by the popularity of the Google’s Android operating system, which powers most of its devices. The operating system saw its share of the market rise 1.4% to 52.2%, followed by 33.4% for Apple, whose share rose 2%. Managing to hang on to 9.5% of the market was Research in Motion (NASDAQ: BBRY), which ranked third, while Microsoft ranked fourth with 3.6% and Symbian with .8%. Nokia traditionally ran on Symbian, but it is switching to Microsoft’s Windows Phone 8 platform for its new flagship Lumia devices.
I’ll be watching to see how much the manufacturers I mentioned above that launched their new smartphones before Apple's new iPhone will fare in the coming months. With predictions like that from J.P. Morgan, it seems hard to believe their numbers will be as impressive as Apple’s.
All About the Consumer
Considering smartphone manufacturers are stepping up the features on their devices, consumers are not settling for subpar smartphones. The effects of all of this remain to be seen, but as an investor, I’d keep my eye out on the growth of Apple’s competitors as eagerly as I praise Apple’s innovations and growth.
TwillyD has no positions in the stocks mentioned above. The Motley Fool owns shares of Apple, Google, and Microsoft. Motley Fool newsletter services recommend Apple, Google, and Nokia. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.
