AAPL’s previous all-time high was nearly 2 years ago; September 19, 2012 saw an all-time closing high of $702.10 pre-split ($100.30 post-split) while September 21, 2012 saw an intraday high of $705.07 pre-split ($100.72 post-split). Back then, there was all kind of talk as to when AAPL would hit $1000/if it would be the worlds first trillion dollar (by market capitalization) company back in this 2012 time frame.
Neither of these happened and wasn’t surprising to me as even I mentioned earlier that year that it would depend on what the company did (more specifically what they did in 2013; and most everything was incremental iterations as opposed to entering new markets <- this being what Wall Street is more interested in).
Apple of course has been aggressively buying back shares via their share repurchase program (retiring around 600 million shares over this same period) so their current market capitalization at these all-time highs, would be much lower compared to back in 2012.
iPhone 6 is a given (uncertainty lies in how quickly they’ll bring a 5″+ screen size form factor to market; IMHO, that needs to be this year while Samsung is showing signs of weakness PLUS the fact that many folks who passed over the iPhone 5 upgrade cycle/switched to Samsung, are going to be looking at what Apple has to offer this fall).
What the market is expecting though is something related to a wearable device. That is the long rumored iWatch (which I gave my own take about back in 2013). Funny thing is that back when I posted this, I estimated it would take at least 2 years for the stock to get back to this all-time high territory without any catalyst; it’s taken less time than that and Apple still hasn’t discussed this rumored wearable device.
Back in July, the company was awarded a comprehensive patent for something dubbed “iTime”. Part of this patent was based in part on the old iPod nano (the square one which spawned a cottage industry of wristband makers that allowed the nano to be worn on the wrist). Then there is one drawing which is a completely self-contained unit (the route Apple will likely be going). The more pertinent parts though go beyond the hardware; it’s more about how Apple envisions the software end and how the product will communicate with other devices.
OS X 10.10 (Yosemite) AND iOS 8 have several key features (Continuity and Handoff) that are key to this wearable device. As my 2013 take alluded to, I can’t see Apple’s version of this device, being packed to the guild; instead, I can see it being a complimentary device that communicates with other devices (like your iPhone, iPad, Mac, Apple TV for example) and works seamlessly between them, handing off functions which make sense for that wearable device.
Key things are going to be its size, design, and the big one, price. With a very well iterated set of functions, I can potentially see Apple hitting a price range that makes one of these things a no-brainer for any customer within the Apple ecosystem. Samsung’s Gear 2 currently costs in the $290 price range and interoperates with compatible Samsung Galaxy devices. That large form factor and the amount of functionality, isn’t the way an Apple iWatch/iTime will be. Some controls are going to be standard fare (music/media controller, notifications, weather, clock (duh), health monitoring sensors) for devices like this.
But none of this gives these devices any sort of wow factor. And that’s the Apple challenge where it comes to distilling and refining things as well as delivering that wow factor. All one needs to look at is back in 2007 when the iPhone was first unveiled as well as 2010 with the first iPad (and comparing it to what currently existed in the marketplace). Both devices were panned and dismissed to some degree because of what they lacked; but both had an industrial hardware design as well software user interfaces which made sense for each respective device. Apple’s wearable will follow this same design ethos and strip out features that don’t work well with such a form factor.
This is probably why this still remains just a rumor at this juncture. It’s a challenge of both hardware (the necessary supply chain components and their economies of scale) and the software. It might also be that Apple wants to hit certain key price ranges which puts it into that range (like how the iPod shuffle was) where people don’t have to think too long and hard about whether it’s a purchase or not.
The wearable market does represent that new area which will drive new growth opportunities though. And this is what Wall Street is looking for from Apple when it comes to valuation/share appreciation, which would allow these current all-time high levels, to be in the rear view mirror by 2016.
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