Image Source: mashable.com
When you think about Apple, what's the first thing that comes to mind? If you're like most people, the iPhone is what you're thinking about. While Apple offers a host of products ranging from computers to watches, tablets, and more, there's no denying the fact that the iPhone is the company's core product. As a matter of fact, iPhone 6 is so popular that sales topped all expectations, even the most optimistic of them! Believe it or not, many believe that this in itself could lead to major problems for Apple, and their stock in the future. It's a classic “Victim of Success” story; and there's definitely at least some truth in the tale.
How Could Topping All Expectations Be Bad For Apple?
As mentioned above, this is a classic “Victim of Success” story. The reality is that the iPhone 6 did so well that it blew away all expectations. As a matter of fact, it sold so well that the iPhone's growth in sales is more than 2.5 times the growth seen industry wide. This huge expansion means that more people have iPhones today than ever before. So, where's the problem?
With so many people already having an iPhone model at this point, some investors are worried that the market is saturated. Simply put, Apple did so well that they're going to have a harder time with iPhone sales during the big end of the year push. As a result, Apple will make sales, but investors worry that sales growth on the iPhone will fall into the negative. If this were to happen, it would surely affect financial results; which in turn would trickle down to the value of the stock. So, all in all the argument makes sense. However, there are a few pieces of the puzzle that the bears are missing here…
Why This May Not Be Such A Problem
There's no doubt that it will be harder for Apple to generate iPhone sales at the end of this year, but that doesn't mean that they're not capable of producing phenomenal results. After all, they didn't become the largest company in the world by producing mediocre products and reports. With that being said, Apple has a few things going for iPhone sales and beyond.
- Growth In China – In the first quarter of 2015, I phone sales saw massive growth in China. The number was close to 70%. However, there's still more room for growth in the market as China is the world's largest in the mobile phone market space. So, we are likely to see more growth in China moving forward; driving iPhone sales up!
- Apple's Ecosystem – Another thing that the bears seem to be forgetting here is that Apple has built an incredible ecosystem of products; many of which rely on others. The iPhone is the company's flagship product, and rightfully, the center of this ecosystem! For example, the Apple Watch has great features, but users don't get the full functionality until it's coupled with an iPhone. Several Apple products have this type of relationship with the iPhone. So, this is likely to drive even more sales for the iPhone.
- Growth In Other Areas – There's no questioning the fact that Apple's most profitable product is the iPhone. However, it's important to remember that we're seeing growth in other products; and that new products like Apple's streaming TV service will be hitting the market soon. So, if iPhone sales are a bit lack luster throughout the rest of 2015, we can expect other products to pick up the slack.
All in all, Apple is a great company that has an amazing management team. When the strong management is coupled with a worldwide, well-known brand and products that continue to push the limits of innovation, good things happen. That's exactly what I'm expecting to see moving forward.
What Do You Think?
Where do you think Apple is headed and why? Let us know in the comments below!