The new iPhone 5 is good enough and a lot more revolutionary than the iPhone 4S. It is now the world’s thinnest smart phone. Main stats being
- Bigger screen 4 inches from 3.5
- 20% lighter and 18% thinner than its predecessor
- Processor twice as fast with 44% better colour saturation
- New earphones, apparently spent 3 years designing what they now call earpods
- It’s just as much about the software as the hardware as racing games now have rear-view mirrors in the car, multiplayer is available and applications are integrated with facebook
- Own maps with 3D flyovers over cities, at least when I’m lost it looks cool
- Passbook which keeps transport such as airline tickets, event tickets and store loyalty cards in a single application
According to the CEO Tim Cook each Apple (AAPL) owner has downloaded an average of 100 apps, an amazing competitive moat with switching costs for users increasing every year with each additional app. AAPL also has 435 million accounts with once click purchasing, more than twice as much as Amazon with 180 million accounts. AAPL historically has sold off in the weeks after an iPhone announcement but I am not expecting the same. According to Ben Reitzes of Barclays Capital
“Historically, AAPL’s stock performance has on average performed in line with the S&P 500 in the three-months following an iPhone announcement but significantly outperformed over the six-months following an announcement. We note that AAPL’s average six-month return following an iPhone announcement is 18 per cent compared to 6.4 per cent for the S&P 500.”
I am expecting AAPL to at least match this performance if not better it because of the rumoured upcoming iPad mini. Leaks from Taiwanese suppliers suggest a launch in October, the shortening of the Ipad number three to just the new Ipad is a sure indicator of an upcoming mini product. AAPL has never released 2 new products in such a short two month period.
What about mini me?
The iPad seems to get left out due to the popularity of the iPhone. As Tim Cook mentioned during his key note speech in the last quarter APPL sold 17 million iPads more than what any other PC manufacturer sold from their entire PC lineup. The iPad is on track to help the tablet market grow larger than the PC market.
The iPad has 68% tablet market share up from 62% in the prior year and amazingly is 91% of tablet web traffic. For app developers it is much more attractive developing for just one device which gets 90% of web usage especially compared to competitor systems which require more work for less reward. The iPad ties in users to AAPL's eco-system as once they have an iPhone it is a familiar transition to the iPad and vice versa.
You can find the entire AAPL iphone 5 presentation (goes for nearly two hours but well rewarded with Foo Fighters performing at the end) at
http://www.apple.com/au/apple-events/september-2012/
Disclosure: Decisive is long AAPL
Jason
http://decisiveassetmanagement.blogspot.com.au/
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