New iPhones are on the way, and the sun shall rise again for Apple.
Mark Sept. 9 on your calendars as another unofficial Apple Day. That’s the expected launch date for iPhone 6s and iPhone 6s Plus, which are might sell as fast as Taylor Swift CDs and garner as much press as the pop diva. The marketing magicians at Apple are hoping for a jolt of positive vibes after a summer of malaise that thumped its stock and raised questions about smartphone sales in key regions like China.
Apple faces yet another seminal moment in its storied 39-year history — about 20% of its stock price (AAPL) was shaved in recent weeks, torching $155 billion in paper wealth held by investors. The thumping underscores investors’ concerns about Apple’s financial fate in China and elsewhere.
“It’s a critical event for Apple to help turn the negative investor tide and lay out its growth vision for the next year, based on iPhone 6S sales,” says Daniel Ives, an analyst at FBR Capital Markets. “This is one of (Apple CEO Tim) Cook’s biggest moments.”
Ives says Apple is in the grips of a “white knuckle period” that could prove to be a seminal moment for it to regain investor confidence. “The iPhone 6 was the LeBron James of smartphones — a once-every-five-years moment.”
The smartphone market in the second quarter logged its slowest growth since 2013, according to Gartner. Saturation, already an issue in the U.S. and Europe, is seeping into China, the biggest country for sales, where buyers are opting for replacement units instead of first-time purchases.
Apple has made steady financial headway in the world’s most-populous country. It struck a deal in 2013 with China Mobile, the largest phone carrier on the planet, to sell iPhones, and Apple intends to increase its number of stores to 40 there by mid-2016.
The region holds a key to the company’s future, especially with some analysts unconvinced Apple can maintain its overall torrid pace of growth.
But before we predict the ignominious decline of Apple, consider another part of the company’s long-running narrative: It rises like a phoenix when things are seemingly about to unravel. This is the same company, after all, that welcomed Steve Jobs back in late 1996, just in time to save it from the disastrous Gil Amelio era.
There is a silver lining to the smartphone situation: During the second quarter, Apple’s share of the market increased to 14.6% from 12% during the same time period a year ago. Samsung’s share dipped to 21.9% from more than 26%.
The numbers are a testament to Apple’s enduring appeal and its status as the world’s most valuable company ($646 billion). Indeed, in spite of its recent stock slide, Apple shares are up 22% from a 52-week low.
“Things could slow down, but when you sell 40 million, 50 million phones a quarter, a decline still is good enough to be a market leader,” says Brian Blau, lead Apple analyst at Gartner.
Blau’s optimism doesn’t end there. He argues it’s too early to offer a verdict on Apple Watch. An improved operating system and some snazzy apps could ignite sales, which he expects to top 10 million units this year. The same goes for Apple Music, whose three-month free trial for initial users soon ends. “Who knows how many people will switch over and pay?” he says.
Additionally, an initiative by Apple to sell more Macintosh computers to businesses might develop into a digital Trojan Horse in corporate America, Blau says. On Monday, Apple and Cisco Systems announced a partnership to help Apple’s mobile devices communicate more effectively over corporate networks where Cisco gear is widely used.
“With Apple, you never, ever know,” he says.
Time for another chapter in Apple’s storied history. Expect a thrill ride.
Apple fans are expecting to see the new phone ship with an amazing feature called Force Touch, which will allow them to apply varying levels of pressure to the phone to activate various control functions.
Force Touch is widely assumed to be coming to all of the new iPhones and iPads Apple will announce this year.