Yesterday Apple released its September 9, special event invitation to select media with the message “Hey Siri, give us a hint.” Thousands of people instantly grabbed their iOS devices asking Siri to “give them a hint” to see if anything particular regarding the event came up. At times, Siri does say “Well, I hear there is something big happening on September 9,” but beyond the cute response, Apple's keeping Siri quiet. At times Apple has hidden hints within their invitations as to what may be coming. This invitation may also hold some clues.
Apple’s late summer special events have historically focused on the release of new iPhones. This season’s forthcoming September 9th event appears to be no different, but there is one product that appears ready to grace the stage which rarely makes an appearance anywhere, and it is likely to steal the show. Apple TV. Sorry iPhone, it appears you are about to be trumped.
When the all-new Apple TV arrives, likely introduced by Apple’s Senior Vice President, Worldwide Marketing, Phil Schiller, it will not be as a feigned hobby. It won't have the same look. It won't have the same remote. It will not have the same interface, and it will host a slew of new features. According to a recent report by Parks Associates, Apple TV sales have slipped into 4th place behind Roku, Google and Amazon streaming solutions. Don't expect this to continue being the case after September 9. When Apple enters a market, they play to win, and not to be one of many participants on the stage. If rumors surrounding the Apple TV are accurate, the diminutive streaming set-top-box should acquire the living room’s top sales spot in a matter of days after its release.
Lately things have not gone so well for Apple — not that they have been disasters, but for about 8-10 years there was nothing our favorite fruit company could do that wasn’t a gigantic success. iPhone, iOS SDK, iPad, Mac transition to Intel, OS X,... just to name a few. That does not mean Apple did everything right (kill Xserves for example), but overall their successes far outweighed any shortcomings.
However 2015 has been a different year for Apple. With much promise, Apple Watch was going to be that “new product” that everyone was wearing. It was supposed to be the year that whether you went to the mall, to church or to the airport, you would always spot several people wearing Apple Watch. Nearly five months in, that just is not the case. Apple Watch is for sale, but even Apple hid its sales numbers for the device in their last quarterly earnings report (expect the same for this quarter’s as well). That is not something you do for a product that is flying off the shelves.
Last week I wrote about whether Tim Cook was the right guy in 2015 to lead Apple forward. I then followed with an article about the stock being in a dulldrums. While comments to both stories were not necessarily positive, both postulations may be true. Sometimes people do not like to hear the truth, especially when it goes against their preconceived ideas. Change is difficult for most, and adjusting to reality is often something people prefer to avoid.
The fact is Apple is in a funk this year. While OS X will add some nice do-dads to its plethora of features and iOS 9 looks to be a welcomed update as well, it hasn’t been since the iPad’s launch that Apple’s luster was shining bright. Sure the stock has done amazing things since the beginning of this decade as has Apple’s savings account. Tim Cook has proven to be a very good manager of what is. Incremental change over time with the direction of the company in an upward direction. But while good for the first four years of the 2010 series, year number five is proving a bit more difficult.
Since its climb in February of 2015 from around $110/share, Apple’s stock has been hovering between $120-$130/share for four months now. Never mind continual profits or record iPhone sales quarter after quarter. No, no. Don’t be confused that actual performance of Apple will translate into actual growth in the value of the company.
It seems like a lifetime ago when Steve Jobs took over Apple for the second time as iCEO. Jobs ran Apple for nearly 15 years before pancreatic cancer took his life. Tim Cook stepped into the CEO position and has run Apple for almost four years. At the time Tim Cook was a good choice. He was a safe choice. He wasn’t going to rock the boat or try to pretend to be Steve Jobs II. He would take what was a growing and great company and drive it forward, building on its success.
That was back in 2011, and times were different. Apple’s needs were different. While Cook has indeed grown Apple’s value and savings account, the question is what kind of leadership does Apple need going forward? Is safe and steady the right formula or does Apple once again need a visionary to lead it into unchartered waters?
Last September, during an Apple special event, Tim Cook finally showed off what engineers at Apple had secretly been working on for years — Apple Watch. It was simply amazing. The watch’s hardware was impressive as was an entirely new OS that took touch and tech to a new level. In the aftermath, many eagerly anticipated saving enough money to be the first on their block to own and wear one. Then the worst product launch in Apple’s recent history occurred.
Unfortunately, all the launch excitement for Apple Watch was sucked out the room when all of Apple's inventory had been purchased online in less than an hour. It would be another six-eight weeks before one could walk out of an Apple retail store with an Apple Watch.
You can forget yesterday’s record shattering numbers Apple CEO, Tim Cook, proudly revealed for Apple’s 3rd quarter of 2015. Ignore the fact that iPhone sales grew 35% year-over-year, or that Apple now has over $200 billion in cash for the first time in history. This is all irrelevant. None of this matters. Why? Because analysts guessed that Apple would sell between 50 - 55 million iPhones in the quarter, when in reality Apple only sold a record breaking 47.53 million iPhones. Apple did not achieve the conjured up sales figures the “experts” spewed forth, and therefore the result was Apple’s stock price must be punished. No offense to the political naive who do not understand history, but in the investment world, this makes about as much sense as, say, cutting a nuclear deal with Iran trusting they will do the right thing. The sad reality is, this vapid illogic is how the stock market largely operates each and every day. Companies stocks rise when they beat the expert guesstimates. Stocks prices fall when companies do not meet the expert expectations. It does not matter how the company actually preformed. It is all about the experts guessing game. Reason and logic need not apply.
Financial reports and comments on them are one thing, but getting those little morsels of coded information from Tim Cook or Luca Maestri are quite another. Today at 2:00 p.m. Pacific Time, Apple will be holding their Q3 2015 financial conference call with a host of financial analysts and investment researchers. Apple's financial statement, released at roughly 1:10 p.m. Pacific, should be fairly pedestrian. Financial analysts are anticipating 50-55 million iPhones sold, earnings at the higher end of Apple’s revenue guidance of $48 billion, all while keeping a keen eye for any Apple Watch sales information. But beyond the expected is where questions from the likes of Piper Jaffray's Gene Munster or UBS’s Steve Milunovich come forth precious nuggets of Apple’s future.
There are three major areas of commentary I'm looking for during the Q3 call. The first is HomeKit. It was a no-show at Apple’s Worldwide Developers Conference in June. The likely reason for the omission was due to the second area of interest, Apple TV. Both topics go hand-in-hand, as it is highly rumored that the next generation Apple TV will be, amongst other things, Apple’s home automation hub, requiring HomeKit specific tools. Cook will be asked about Apple TV. The question is, will he deliver any hints as to what may be coming, or how current Apple TV sales have been since the $30 price drop earlier in the year (now only $69)?
According to JMP Securities technology analyst Alex Guana, Apple’s slow launch into the wearables market has left a large opening for competitor Fitbit. Guana claims Fitbit is the “clear leader in the market with over 11 million units sold last year.” Guana continued by saying that Fitbit is currently ahead of Apple Watch as far as price points, battery life and GPS tracking. However, he did concede that long-term, Apple can bring a lot of “power” with iOS and versatility. These Apple advantages will give Fitbit some serious competition.