It seems that Apple Inc (AAPL - Free Report) is on track to unveil its latest iPhone right before the holiday season.
Per media reports, Apple will host its product announcement event on Sep 12. Apple usually holds a big event in September to reveal its latest offerings, which start retailing a week after the event.
Reportedly, at this year’s event, Apple will be announcing three new phones. iPhone 7S and iPhone 7S Plus are updates to its iPhone 7 and 7 Plus editions unveiled last year. In addition to these, a mega edition, widely labeled as iPhone 8, will likely be introduced to the world, per reports.
Apple’s Mega iPhone
For some time now, Apple’s mega edition phone has caught the fancy of one and all. Apple is likely to make a big innovation leap with iPhone 8. The phone is rumored to have features like a glass body, a dual curved edge-to-edge OLED (organic light-emitting diode) display with wireless charging (USB-C) and higher storage options. The camera is likely to be far better than its predecessors.
Reportedly, iPhone 8 will be the first of its kind to support OLED display. Per reports, the company has ordered nearly 100 million OLED screens from Samsung Electronics. OLED display is being increasingly adopted as it comes with improved brightness, contrast and efficiency compared with LCD or Plasma displays. Television sets have long been equipped with OLED displays. Smartphones are fast catching up now.
The revolutionary iPhone released first in June 2007 had changed the world forever. The iPhone was the first phone to have a touch screen and was a "breakthrough internet device". The original iPhone was powered by an ARM-based 1176JZ (F)-S processor and had a PowerVR MBX Lite 3D graphics chip. It had a 1400mAH battery.
Upon release, the phone received a terrific response. Following that, the success of iPhone over the last decade is well chronicled. Apple has sold over a billion iPhones across the globe. However, over the past few quarters, Apple’s iPhone sales have been marred by increasing competition from cheaper handsets like Oppo and Vivo.
Since the first iPhone release, Apple shares have skyrocketed compared to the industry to which it belongs. Over the last decade, Apple stock has returned 826% while the industry saw a rally of 382.3%.
Delay Rumors Losing Fizz
Last month, it was widely reported that there could be a delay in the launch as the company faces technological issues involving fingerprint and 3D sensors. Consequently, analysts had lowered their iPhone shipment expectations for the quarter ending September.
Expectations regarding the upcoming iPhone 8 are humongous, as it will mark the tenth anniversary of the first iPhone. Analysts have already dubbed sales of iPhone 8 as a “super cycle.” Hence, any delay can severely impact Apple’s quarterly results.
The latest developments assuage concerns regarding a delay in the launch to a great extent. Per a Barron’s report, “the consensus sales estimate for Apple’s fiscal year ending September 2018 has climbed to 247 million units from 239 million since the end of March. That would mark 14% growth from the current fiscal year.”
Also, Apple had given an upbeat guidance along with its third quarter fiscal 2017 results for the quarter ending in September, thereby widely alleviating fears of a delay in the launch of the next edition iPhone. For fourth-quarter fiscal 2017, the company forecasts revenues in a range of $49–$52 billion compared with $46.9 billion reported in the year-ago quarter when it released iPhone 7 and 7 Plus.
Plus, if we go by Broadcom’s (AVGO - Free Report) recent results, reported a couple of days back, the concerns are further mitigated. Broadcom supplies chips for iPhones. The company recently reported better-than-expected third quarter fiscal 2017 results. The company’s Wireless Communications (28.7% of total revenue) revenues were up 27.3% year over year and 11.6% quarter over quarter to $1.28 billion.
Broadcom’s top line benefited from the rise in production volumes of the company’s large North American smartphone customer’s (Apple) next-gen platform (iPhone). Management noted that increase in total dollar content in the upcoming platform drove revenues.
Further, management noted that Wireless Communications revenues are expected to grow strongly in the fourth quarter, both on a sequential and year-over-year basis. The upside is likely to be driven by higher dollar content in the company’s large North American smartphone customer’s next-gen platform. This implies that iPhone 8 will be up for sale in September.
Will Price Prove to be a Deterrent to Sales?
Nonetheless, it is the price point that might prove to be an impediment as observed by various analysts. Reportedly, iPhone 8 could be priced more than $1,000 dollars. Many analysts argue that the existing iPhone 7 and 7 Plus editions with 256GB storage carry price tags of $849 and $969, respectively. So a price tag north of $1000 should not be considered unreasonable for a fully redesigned OLED iPhone 8.
iPhone (4GB model) was priced at $499 way back in 2007, which was unheard of back then. Yet, Apple scored a home run with iPhone. The power of Apple’s fan base cannot be undermined.
Other Things to Watch Out For at the Event
Apart from the new iPhones, per media reports, Apple could launch a new Apple watch. Then there could a new Apple 4K TV. Apple is likely to speak at length about iOS 11 and new MacOS and watchOS.
At the WWDC earlier this year, Apple gave a sneak peek into its AR efforts. The company also displayed an augmented reality (AR) tool called ARKit. We expect more on this at the September event along with HomePod.
At present, Apple carries a Zacks Rank #3 (Hold).
Stocks to Consider
Better-ranked stocks in the broader tech space include Garmin Ltd. (GRMN - Free Report) and The Trade Desk, Inc. (TTD - Free Report) , both sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Garmin and Trade Desk have delivered average positive earnings surprise of 22.89% and 483.79%, respectively in the trailing four quarters.
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