It's been a quiet year for
We have learned that longtime CFO Peter Oppenheimer will
retire later this year, that
Tim Cook made an awkward joke
during the annual shareholder meeting about not introducing new
products plus rumors continue to
fly about a potential iWatch
But besides that, not much new information has been made
available to investors. In the absence of major news, investors
often turn to analyst estimates and historical data for
I found two Apple iPhone charts that will scare you whether
you own shares of the company or are considering an investment.
One comes from historical data and the other comes from analyst
Did you know that more than half of Apple's revenue comes from
just the sale of iPhones? More than iPad, Macbook, the iTunes
store and all other products combined, iPhone is the product that
makes Apple the global juggernaut that it has become.
clearly illustrates the importance of iPhone sales to Apple's
financial results. It should concern investors that more than 50%
of revenue comes from one product, a product that faces stiff
competition from multiple fronts.
However this trend is nothing new, as iPhone has accounted for
most of Apple's revenues since late 2011.
What this chart doesn't show is the number of "new" iPhones
sold rather than "replacement" iPhones sold to existing
customers, a measure of how many new iPhone customers Apple is
If you are an Apple investor that is banking on the growth of
new iPhone sales to boost the share price,
should terrify you. But this chart certainly makes sense if
you consider Apple's iPhone strategy.
After selling you an iPhone, Apple hopes that you are hooked
on its iTunes and App stores, product eco-system and the iPhone
in general. The ecosystem makes it tough to go from an Apple
phone to, say, a Samsung phone.
More importantly, the company hopes that you will love your
iPhone and want to upgrade when they release the newest version
later that year.
As the company sells more iPhones to first-time customers and
these customers turn into repeat customers, it is no major
surprise that the number of new customers declines, as
What is a surprise, and should be especially terrifying to
investors, is that these estimates suggest the total number of
iPhones sold in 2014 and 2015 will be about the same.
This chart is based on estimates produced by an analyst at
Pacific Crest Securities, so it doesn't present verifiable
historical data. However it does present the analyst's best
estimates, so we can't just ignore it.
The bottom line is that the iPhone is Apple's most important
product. With more than 50% of the company's revenue coming from
iPhone, Apple simply cannot afford to lose ground to competitors
like Samsung and the Windows phone by
The second of the Apple iPhone charts that should scare you
paints a picture of a low or no-growth 2015 with an increasing
reliance on "replacement" sales rather than sales to "new" iPhone
customers. This is a bleak financial prospect for Apple if it is
to grow around the world.
As an Apple shareholder myself, this data is certainly
concerning. But I believe it overlooks the new markets that Apple
has entered and the potential for new products that bring new
customers into the Apple ecosystem.
What do you think?
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