Apple: One product down, two more to go

Posted on March 7th, 2012

Back on January 26th, we wrote a piece (click here to re-read it) about whether Apple could ever generate another blow-out quarter like the one it has just announced. I am sure you remember it – Apple earned more than the GDP of many 3rd world countries!

Our hypothesis was straight-forward: we believe Apple could eclipse its record quarter again in the December 2012 quarter if it launched three key consumer products in 2012:
  • An upgraded 4G iPad
  • An upgraded 4G iPhone
  • An Apple TV product that upgrades the consumer television experience

After today’s announcement, Apple can check one of these off of the list. The 4G iPad is launching on March 16th – and Apple has packed some nice new features in to it along with the 4G network capability. It has amazing screen clarity, better camera, voice dictation – and many developers lined up to launch new apps that take advantage of all of these features.

One other key feature that I noticed but may get over-looked by some: the ability for the iPad to be a mobile hotspot if the network provider permits it. Many busy professionals have iPads – and many have mobile hotspots also. But the hotspots often have weak battery life. Using your phone as a hotspot isn’t much better – in fact it is worse. I am optimistic that tapping the 4G network will be tempting to many – and the larger battery in the iPad should supply a much longer battery life for the hotspot. Many busy traveling professionals will be able to shed an extra device with the iPad as a 4G hotspot; they will shed the mobile hotspot that they currently have. I know I will be.

As for the Apple TV product upgrade announced today, that does not constitute a meaningful upgrade to the consumer television experience. Apple is still working on this one. The Apple CEO recently called Apple TV a hobby for the company. Don’t believe his efforts to downplay this product. Apple wants to re-define the consumer entertainment consumption in the living room. Apple won’t be happy until it can replace your cable provider as your key source for programming – BELIEVE IT!

But the launch today of Apple TV doesn’t come close. This product launch is the one product in this list that is most at risk of not occurring in 2012 – and putting the blow-out quarter that we expect at risk. However, with the 4G technology built in the iPad today, I think a 4G iPhone is now a ‘fait-accompli’ in 2012. So, with one item on this list checked off, and one item a likely done deal, it will all come down to whether Apple can re-define the TV viewing experience.

Apple would still have a great year with just a new iPad and new iPhone (and expected new Mac laptops). Expected growth in these products alone could justify the current market cap in my opinions. But Apple's stock has higher expectations - and to generate a new push for the stock, they need to make inroads in another key area – and Apple TV could be that landscape.


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