How long can Apple dominate the stock market?
iPhone, the best-selling phone of all time, made Apple the world’s most valuable company. But with the flagship phone now in its seventh generation and not having launched a new line since their iPad in 2011, could the California tech star be losing its shine?
Certainly compared to Google and Facebook, Apple’s ongoing investment in research and development is staggeringly low. But while Apple could be seen to be underspending on their product line-up, they ploughed over $45 billion into buying back shares in 2014. Investor Carl Icahn, who holds a 1% stake in the company, wrote an open letter to Tim Cook entitled Sale: Apple Shares at Half Price encouraging an even more aggressive buyback programme.
Despite what could be seen as a slip in innovation, Apple’s confidence in their future is clear. In iHouseholds, the number of devices is rising. By quietly rolling out new ways to mesh them together and interact with other products, Apple’s new protocols allow for control and monitoring of your home and health. The incentives to stay within the ecosystem bring untold retention value. And this seems to be paying dividends for its earnings.
As Brenda Kelly, analyst at IG – one of the top sites for financial spread betting in the UK –noted after Apple’s last earnings release impressed, ‘Comparatives will be much harder next year, since Apple needs to maintain the pace of sales, an unlikely prospect when the new products will be old (relatively speaking) and thus less attractive.’
If 2014 was about Google, Amazon and Apple jostling for position in a ‘battle for the living room’, those battle lines have now shifted beyond the living room and into all parts of daily life.
With the new protocols working in harmony, you’ll get in your car after work – CarPlay will switch the music playing on your iPod to the car’s speakers. As you approach home, iBeacon will tell HomeKit to turn on the lights and open the garage. Later, you go for a run where sensors in your shoes and watch work with HealthKit to monitor your temperature and heart rate for review on your phone or computer. You pick up the bill in a restaurant using ApplePay by tapping your phone against a contactless payment point. The technology already exists and Apple is banking on your phone becoming the indispensable key to everything.
Apple’s advantage is that, according to the inquirer.net, as of November 2014 around 42% of UK mobile users own an iPhone, with a similar figure in the US and Japan – those keys are already in people’s hands. The Apple Watch may offer gimmicks like sending your heartbeat pattern to a friend and having it buzz out on their wrist, but when Tim Cook introduced it as Apple’s most personal device yet, his point was that you’ll never want to be without it.
Though still wildcards in terms of revenue they’ll bring to Apple and their investors, if home automation and the Apple Watch take off, the bet on themselves and their ecosystem could see them continue to dominate markets for years to come.