Wednesday, April 24, 2013

When Is Apple's Next Big Thing

Apple released its earnings last night and while all signs point to a healthy business, its stock price reflects a drop in profits and and product growth.  Despite what appears to be a solid infrastructure of software and hardware, Apple is no longer seen as innovating, merely refining its product line.  In the last decade, prior to Steve Job's death, Apple successfully introduced the iPod, the iPhone, and the iPad.  But threats of a future new product line have yet to appear.  Rumors of an Apple TV set or iWatch have yet to be announced, or any other new device; instead, we get only bigger, lighter, and cheaper.  But once you reach a tipping point of growth, it is hard to ask consumers to keep buying new devices every two years.  iPhones may achieve some of that thanks to renewal contracts that offer discounted phones, but when faced with choice some new consumers opt for an older iPhone version that can be had for a cheaper or even no cost. I believe that consumers will be less likely to update their iPads as frequently.

So Apple shareholders face a market that is lowering the stock price, despite a financially sound company delivering a strong dividend.  Apple lacks the perception of future growth and that is the fear that depresses the price.  Should Apple surprise us this year with a new product that supports our technological hunger, then this new revenue stream will re-energize the share price.  Till then, we wait and watch hoping a new product release is in the cards.