This would seem to be a good time to be Apple (AAPL). The consumer tech giant sold a record 9 million new iPhones during the iconic smartphone’s debut weekend last month. On Tuesday, Apple has another media event — its traditional way of unveiling its latest updates.
“We still have a lot to cover,” reads the invitation.
Don’t Hold Your Breath
Despite the tantalizing nature of Apple promising that it has a lot to cover, fans shouldn’t hold out for Apple smart watches, smart televisions, or computerized glasses. Analysts aren’t expecting for much more than the fifth generation of the iPad, plus some refreshed Macbooks and Macs, and and an updated desktop operating system.
Apple doesn’t march to the beat of conventional wisdom. Simply following rival Samsung into smart watches and TVs or Google (GOOG) into smart specs isn’t its style.
Apple isn’t a follower. The iPod raised the bar for digital media players. The iPhone wasn’t the first smartphone, but it changed the game, transforming them from email-centric devices with physical keyboards into its now widely duplicated design and touchscreen interface. Nobody thought they needed a tablet until the iPad suddenly made it an essential.
The iPad hit the market in 2001. The iPhone followed in 2007. The iPad started converting skeptics in 2010.
Based on that calendar, it would seem as if Apple is due to create a new category or disrupt an old one. But it doesn’t look like that’ll happen soon.
The Competition’s Heating Up
Growth has been a challenge at Apple in recent quarters. Macs, iPads, and iPods saw sales slide 1 percent, 31 percent, and 27 percent, respectively, in Apple’s fiscal third quarter. We’ll get a more current snapshot of the Mac Daddy’s state when it reports quarterly results later this month.
Analysts expect to see a sharp drop in profitability with a mere 2 percent uptick in sales, and that’s essentially how the former tech darling’s financial check ups have been going lately. Sales growth has been sluggish, and profitability has been slipping as Apple makes less money off every product it sells in this competitive marketplace.
Right now, the iPhone is carrying Apple. Sales of the consumer tech giant’s iconic smartphone rose 15 percent in the fiscal third quarter. However, with sources telling The Wall Street Journal that Apple is cutting orders of its entry-level iPhone 5c — the iPhone 5s is still selling well — it may not be long before Apple needs a new workhorse.
Wearable computing is all the rage these days, yet Apple has surprisingly stayed out of this potentially lucrative market. It’s not just about Google Glass, those costly yet vaguely creepy high-tech spectacles.
Smart watches fall into the realm of wearable computing, and it seems as if everybody outside of Apple is racing into this market, intent on putting out wristwatches that also interact with smartphones via Bluetooth to provide incoming texts and emails, as well as running a few apps.
An upstart named Pebble kicked things off last year with one of the more successful Kickstarter campaigns on record. Best Buy (BBY) began stocking Pebble smart watches earlier this year. This summer we saw the only company selling more smartphones than Apple — Samsung — introduce its smart watch.
Another area where investors expected Apple to have made a bigger splash by now is the smart television market. Yes, Apple TV has been around for years, but we’re not talking about those Web-tethered set-top boxes. We’re talking about a full-blown smart television.
One of the last things that Steve Jobs told his biographer was that Apple had finally “cracked” the problem with smart televisions. Well, maybe it did, but whatever cracked hasn’t hatched.
Apple really could make a major dent in this market if it’s able to pair up to the Internet-connected TV with a mold-breaking streaming cable service. Google and even Intel (INTC) have gotten into the market of offering pay TV services. Apple — with its deep video connections through iTunes — could breathe new life into a surprisingly moribund TV market.
Still, we are unlikely to see any of these new toys that have been staple rumor mill chatter for years when it stages its media event on Tuesday. However, Apple can’t take its current product portfolio for granted. Apple’s last breakthrough was the iPad in 2010. Jobs died a year later, and the market’s been questioning if Apple can innovate in a material way without him.
Apple needs to show us something new, and that can’t happen soon enough.
Motley Fool contributor Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends Apple, Google, and Intel. The Motley Fool owns shares of Apple, Google, and Intel. Try any of our newsletter services free for 30 days.
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