Investors Don't Like the New iPhone?

The day after Apple announced the iPhone 5S and 5C investors were not pleased. The stock was down over 5% to new monthly lows after a few downgrades from brokerage firms. To put this in laymen's terms it basically means the experts do not think the new iPhone models are going to help the bottom line of Apple. This does not mean the phones will not be popular. It also does not mean Apple will not sell over 40 million phones in the quarter. They may sell more phones than they have ever sold in the past but the margins are not going to be as high. The new iPhone 5C starts at just $99 which means Apple is not going to make nearly the amount they made on the iPhones that were launched in past years. What these analyst downgrades tell me is that the experts feel as if Apple is going to sell a lot more iPhone 5C models than 5S models. Just yesterday I mentioned this in my Grown Up Geek article. WalMart has made billions of dollars selling cheap items. Americans love to find a low price. If they can get the latest iOS operating system on a cheap phone there is a very good chance they are going to do just that. Prior to Android getting popular Apple would have never considered making a cheaper phone because they could print money with the more expensive phones. Times have changed and Apple realized they are going to have to compete at the lower price point. Once again, this does not mean Apple will not sell a ton of phones. It means they won't make as much per phone.

Has Apple Given In To Android?Apple logo

The fact that Apple is willing to offer a cheaper, plastic iPhone is a sign of the times. Never before would Apple have considered this type of product. Not that Apple was an elite product, but it was made for someone who wanted the high end smartphone. In fact, that was the only option when it came to a high end smartphone. Now Apple is offering a low end smartphone. This tells me they are willing to try something different because they are losing market share to Google. Once again, this does not mean they do not have the best selling smartphone in the world. They do have the best selling smartphone in the world. That said, it is nearly impossible to stay on top forever. Android offers a ton more options. There are so many Android phones I cannot even begin to list them. There are now two iPhones. This means we have to step back and look at the big picture. Yes, Apple did come out with a cheaper iPhone model with the iPhone 5C but it is only one of two unique phones they offer. I think two new Android phones come out each and every day.

Apple and Google have been in an all out war for quite some time. It is well documented that I left iOS when they decided to offer a Google-less phone. When the YouTube, Google Maps and Google Search apps were no longer stock I saw the writing on the wall. It was all in due time before Apple tried to start pushing other products like Bing or another video service. Apple is not happy with Google so they are going to do everything in their power to give iOS users other options. Unfortunately, this does not make it easy for the end user. Every time Apple tries to take away some of the Google apps the users end up putting the Google apps right back on the "Hot" chart because the apps are so effective. All Apple is doing is helping to show the Google dominance when it comes to video and mapping apps. The Apple Maps disaster showed the entire world there are no players that can compete with Google when it comes to a mapping app. Whether or not that will continue to be the case has yet to be determined. I know very few people that do not use Google Maps. The only reason they don't is simply to be different and they end up getting lost time and again.

Do Investors Matter?

Absolutely. Investors matter quite a bit as this is where companies get the money for research and design. If investors are pulling money out of Apple stock it could hurt the bottom line when it comes to spending money on new products. Let's be perfectly honest, Apple is a huge company with plenty of cash on hand. At this point they have close to $50 billion in cash so they are not hurting when it comes to capital. If the stock price continues to drop and gets close to $300 or below then Apple needs to worry. At this point, it was a one day drop because a few investment firms decided to downgrade the stock. It is important to point out that a few downgrades can go a very long way towards pushing a stock or company into a downward trend. Right now, Apple has absolutely nothing to worry about. The stock is still above most moving averages and the public perception of Apple is great. If they were having trouble in the press with their upper management that would be a different story. As long as they keep pumping out beautiful products that run efficiently Apple will remain one of the big players in the tech industry. A change may occur when Apple decides they need to be everything to everyone. If Apple offers a MacBook for $299 then we have to worry. If you see a Mac desktop computer under $500 there are concerns. At this point that has not happened so we will carry on.

Enjoy the Android vs iPhone battle and chime in if you would like.

 

   

   

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