IPhone 6S Record Sales: Power Of Apple Brand Or An Investment Risk?

  • Apple iPhone 6S enjoyed a record-breaking release.
  • Investors were not convinced by the keynote and innovations showcased at the annual event.
  • Competition is rapidly rising, and Apple has to hit the ball out of the park in its next keynote to inspire some investor confidence.

After a rather disappointing keynote on September 9th- which caused Apple (NASDAQ:AAPL) shares to plummet- Tim Cook and co will breathe a sigh of relief that early sales figures are strong. With 13 million iPhone 6s and 6s Plus models sold in 3 days, this has been a record-breaking year. Apple’s iPhone is a status symbol with an almost cult-like following. It is worth noting that the pre-order period was twice as long as last year's, and a new market -China-  made up a considerable portion of the sales.

Regardless of the strong sales, tech investors remained unmoved, evident by the fact that Apple stock price hasn't really moved since the new product announcements. Apple revenue is increasingly dependent on the iPhone as a larger percentage of revenue can be attributed to the iPhone, with every passing year. As of the 3rd quarter of last year, this figure stood at 53%. At this moment in time, it has increased by 10% to 63%. The iPhone is a lot of eggs in one basket for Apple.

This has triggered some alarm bells for investors.

It is no secret that the rate of innovation in the consumer electronics space has stagnated. And where Apple used to lead the way, it is now a follower. For instance Huawei, a comparatively small smartphone manufacturer was able to beat Apple to announcing an iPhone with similar 3d touch capabilities. In fact, Huawei’s offering allows people to weigh small objects by placing them on the smartphone’s screen. This might sound gimmicky- and it is- but in such a competitive industry sometimes you need gimmicks in order to rise above the noise.

With Samsung Electronics (OTC:SSNLF) breathing down their necks, Apple needed to come with something incredibly strong for the iPhone 6s and 6s plus. Keeping the same design, bumping up the specs slightly, and adding ‘3d touch’ is arguably not a big enough pull to have people ditch rival smartphones. As so much of Apple’s revenue hinges on the iPhone, they couldn’t afford to get it wrong.

iPad Sales Continue To Fall

Apple iPad sales are dwindling fast. This isn’t due to lack of marketing on the part of Apple. Quite simply, consumers aren’t upgrading their tablets as often as they used to. When we compare the iPad air to the iPad air 2, the biggest improvement is the implementation of touch iD. For a lot of people, this isn’t worth dropping a minimum of $500 on an upgrade. This is evidenced by the fact that sales of the Apple iPad have dropped by 23% YoY. In terms of units sold, 2.3 million less iPads were sold as compared to the 3rd quarter of last year.

The iPad’s dwindling sales isn’t helped by the fact that Amazon (NASDAQ:AMZN) has released  bargain price tablets in time for the busy christmas period. To the technologically- misinformed consumer- of which there are many- it can be challenging to distinguish a difference. After all, Kindle fire tablets have similar features to the Apple iPad. Moreover, the most expensive Kindle fire tablet is less than half the price of the cheapest iPad air 2.

And Amazon isn’t the only one providing consumer electronics with comparable features to the iPad and iPhone 6s. This saturation of devices has created a perfect storm for sales to plummet. It would be interesting to see how many more Apple iPhone 6s devices are sold in the coming months. If they are strong, Apple stock price will jump.

Going back to the point about Apple being behind in terms of innovation, the iPad Air Pro was released to compete with the fairly successful Microsoft Surface Pro 3. It was as if they waited to see how the Surface will perform before entering the market with their own offering. This is unlike Apple. Apple used to murder the competition by shooting out innovative devices first, and asking questions later.

Although the iPad Pro 3 is aimed at professionals, there is an issue because it runs on a mobile OS. Similar offerings from Microsoft and HP run on a PC compatible Windows 10 OS.

In conclusion, the aforementioned points have left investors clutching their capital a bit more tightly when contemplating investment in Apple stock. Apple will need to come out with something mesmerizing for their next keynote in order to excite the market again. Much like the first iPhone, they need a device which causes the competition to hang their mouths open as they scramble to keep up. Consumers have so much choice, and investors are beginning to lose faith, especially when there are more promising stocks, i.e Microsoft and Samsung.

Abdul Jawula Abdul Jawula   on Amigobulls :
Author's Disclosures & Disclaimers:
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  • I am not an investment advisor, and my opinion should not be treated as investment advice.
  • I am not being compensated for this post (except possibly by Amigobulls).
  • I do not have any business relationship with the companies mentioned in this post.
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