Apple (AAPL, Financial) looks strong this holiday season. It expects its revenue to be in the range of $63.5 billion to $66.5 billion, while the analysts are estimating revenue of $63.5 billion for the first quarter fiscal 2015. It is expected to benefit from its new larger-screened iPhones. Both these iPhones has 4.7-inch and 5.5-inch screens. Apple has sold more than 10 million of these devices since its launch on September 19, 2014.
Looking to the future
The company is releasing updates for its iOS 8 mobile-operating systems. It is also revising its pricing strategy in order to better align these iPhones with the strong market demand across the world. Additionally, Apple is providing two-year service contracts to its customers in most of the markets with the purchase of iPhones. These initiatives will certainly assist the company driving sales for its iPhone 6 and 6 plus in the future.
Apple is observing rather stronger sales momentum in iPhone markets than its predecessor. It should benefit from its strong presence in both the developed and developing countries such as United States, U.K., Japan, Canada, Germany, France, Vietnam and Greater China. Apple has started offering its iPhone 4S at a more affordable price that should capture more sales for the company in the emerging countries. Also, Apple has broadened its relationship with China Mobile.
Apple should possibly gain sales for its iPhones from the roll out of 4G network in the country. China Mobile is aggressively building out their 4G network in the region. In fact, Apple has set a new all-time record with the total iPhone sales in BRIC nations. Apple saw strong double-digit growth for its iPhones in emerging countries such as Greater China, Brazil, Indonesia, Poland and Turkey. Also, it had its sales more than doubled in couple of countries like India and Vietnam.
Catalysts to consider
In addition, the company is expected to benefit from the strong demand for its iPhones in the enterprise market. Most of the companies in this market are replacing their legacy devices and systems with that of iPhones and iOS in order to fuel innovation at their offices. For instance, Deutsche Bank has approximately 20,000 iPhones effectively running on its network. The bank has additionally created 40 internal apps that will enlarge its capabilities of its mobile workforce. Similarly, Siemens has approximately 30,000 iPhones on its network and has effectively deployed more than 50 internal apps for various teams such as service team, sales associates and corporate executives that are only possible with iOS and iPhone.
Apple might receive intense competition from its rival Samsung. Samsung’s Galaxy note 3 and Galaxy note 4 are compared with Apple’s iPhone 6 and 6 plus. Samsung had a strong start with these smart phones in fiscal 2014. Nevertheless, both these giants are now focusing on their aggregate marketplace rather than fighting with each other.
Apple also receives competition from Google (GOOG, Financial). Its Google Play is in direct competition with the Apple App store. Apple is seeing great App Store momentum. According to App Annie, an app store analytics platform, the App Store has recently generated 85% more global revenue than Google Play. Its apps download reached 70 billion. Moreover, the company should benefit from great 87% iOS devices that are running on its iOS 7. However, both Google play and Apple App Store have unit market share differences between iOS and Android devices.
Furthermore, Apple is experiencing strong demand for its iTunes software and services. The iTunes Stores are generating superior billings for the company. Its billings grew nearly 24% to $5.2 billion as it saw strong sales for its App Store. Moreover, its channel inventory initiatives are driving sales for its iPad. The company is now efficiently managing its inventory. Apple had approximately16.4 million iPads into its inventory channel and managed to sell more than 17.5 million iPads, thus reducing the inventory by 1.1 million units as compared to the same quarter last year.
Conclusion
Apple looks well-positioned going forward, and investors should definitely consider the stock going into the holiday period.
