Why rumors about the decline of the Apple era are greatly exaggerated

02 May 2017, 20:53 | Technologies
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On Tuesday, May 2, Apple will publish its financial report for the second quarter of fiscal year 2017. Wall Street analysts expect the iPhone and Mac maker to report earnings per share (EPS) of $ 2.01. The company's revenue is expected at $ 52.6 billion. Experts Investing named three factors that allow a positive assessment of the future of the "apple" giant.

Apple's market share is growing in the most important market.

According to the latest data from marketing company Kantar, relative to the market share of Apple, there are two opposite trends: in the US market share is growing, and in China - is declining.

In the US in the past five months, Apple's market share exceeds 40%, which was not observed since July 2013. In February, Apple's market share was 42%, which is much higher than the indicator of 38.3% recorded in February 2016. The growth of the market share by 3.7%, combined with a 3% drop in the market share of Android in the US over the same period (from 59% to 56%), makes us wonder what role the Samsung fiasco with the exploding batteries of the Note 7 model played in this.

According to a recent study by PiperJaffray, 76% of the 5,500 adolescents surveyed in the US reported using the iPhone. At the same time, 81% of these respondents plan to buy the iPhone in the future. These figures seem very high, especially given that Apple's market share in the US is 42%. Even if these data are heavily inflated, still the number of teenagers who use the iPhone in the US is very large. Considering the importance of customer loyalty in the industry and the desire of adolescents to have the most modern model of their favorite phone (because of their high interest in modern technologies and their desire to keep up with friends), this gives good prospects for Apple.

Release anniversary iPhone 8.

Undoubtedly, the launch of the iPhone 8 model and a significant number of related devices will be one of the most important events for consumers and investors in Apple's latest history. IPhone 8 should be released in September-October 2017. Its release is timed to the tenth anniversary of the appearance of the iPhone on the market. It's almost unbelievable how quickly the intellectual capabilities of mobile technologies and the performance of mobile devices have improved over the past ten years. Analysts are making a positive outlook for the iPhone 8 for three reasons: a stable "ecosystem" of interconnected devices and Apple services, the expected dramatic increase in the capabilities of the new device and the adolescent enthusiasm for Apple devices.

First, with regard to the "ecosystem", Apple retains users, offering a complete closed bundle of hardware and software, making it difficult to move to competitors' devices after creating an array of native applications and iOS services. This has always been one of Apple's best competitive advantages. When all devices and services are integrated, it is often most convenient to choose a new device from the same manufacturer.

Secondly, for a significant part of consumers it will be quite important to update your model to the iPhone 8. According to the latest report on Apple from CIRP analysts, approximately 45% of iPhone models used at the moment are released two years ago or earlier. Models iPhone 6 and iPhone 6 Plus have become one of the most successful models of Apple in the last few years. It is predicted that the model of iPhone 8 will be the next model, which will cause huge demand from Apple users.

Mac revenue and software revenue growth.

Last quarter, Apple sold the same number of Mac computers as in the same quarter a year ago. At the same time, the revenue of this segment grew by 7% due to higher prices and the release of the new MacBook Pro. Over the past year, revenues from Mac sales have decreased by 10%, so the beginning of the year can be considered successful for this segment of Apple. This year could be a watershed for Apple's computer business in the direction of improving.



Apple services have become another important segment of profit. The company's user base includes tens of millions of active users, many of whom are willing to use the company's applications and services, in particular Apple Music. Revenue from the App Store also grew. Analysts predict that revenues from this software-oriented segment (last year's growth was 18%) will grow and compensate for the lack of significant growth in the two hardware segments - iPad and Mac sales.




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