Presumably, Apple Inc. (AAPL)
will follow its normal release schedule for iPhones and launch a new
version in September. While the company may call the smartphone the
iPhone 6s, if Apple adds enough features, it will be the equivalent of
an all-new iPhone. Whether or not it is called the iPhone 7, the new
product will be the most critical contributor to the recovery of Apple's
shares, which were beaten down after earnings disappointed Wall Street.
To
some extent, the anxiety about Apple's finances was overblown. The
company did post revenue of $49.6 billion and net income of $10.7
billion, compared to $37.7 billion and $7.7 billion in the same quarter
last year. Apple did sell 47.5 million iPhones. Carefully watched
revenue growth in Greater China was up 112% to $13.2 billion. However,
forecasts for the current quarter where light, against many analysts'
forecasts.
If revenue growth mostly relies
on sales of the iPhone, and the iPhone 6 is at the end of its highest
demand life cycle, the iPhone 7 release has to be a blockbuster. The
iPhone 6 posted sales of 10 million during the first weekend it was
available. To impress investors, that numbers for the new iPhone better
be closer to 12 million or 13 million. Otherwise, Apple can be
criticized for a slowdown in demand for its major product line.
So,
the future of Apple's share price will have a foundation in just a few
days of sales, those that run from the day of release of the iPhone 7
and the two or three days of performance right afterward. Apple cannot
otherwise prove that it does need a new high-demand product, just as it
did when the iPhone replaced the iPod in 2007. Eight years later, Apple
has to answer for what happened in 2007. One product was dying, and
another wildly successful one took its place.
If the iPhone 7 does not draw crazy high numbers of sales, Apple's
engine will have stalled, which is something it has not done in the
short history of the smartphone market.
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