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Opinion: Two factors explain Tim Cook’s optimism versus Wall Street’s pessimism

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Tim Cook’s interview on CNBC last night highlighted the huge gulf between his optimistic view of Apple’s future prospects, and the pessimistic one being expressed in both Wall Street commentary and the share price.

The share price speaks for itself. As Business Insider notes, the stock has dropped 11% since Apple announced its first-quarter earnings, and 27% over the past year. Even billionaire investor Carl Icahn – who once couldn’t stop talking about how under-valued AAPL was – sold 7M shares back in February and has now dumped the stock altogether. Not the greatest expression of confidence in the company’s future.

Analysts have been queuing up to pronounce that Apple is doomed, the iPhone is on a slide, it’s all over. Tim Cook, meanwhile, claims that Wall Street is guilty of ‘hugely over-reacting’ to a short-term glitch …

I’ve written at length before about the ‘peak iPhone’ phenomenon. I outlined there the specific reasons we shouldn’t read too much into the previous quarter’s results, while at the same time arguing that Apple is not immune to market forces and would have to bring iPhone pricing more into line with the competition – which was exactly what the company did with the launch of the iPhone SE. The company went one better, in fact, pretty much squeezing a flagship phone into a classic casing (much to the delight of both Zac and myself).

Since then, of course, we’ve seen another quarterly fall in sales – albeit one in line with Apple’s guidance. But Cook had a lengthy list of reasons to be optimistic about the company’s future. The points he squeezed into a relatively short interview were these:

  • Apple still outperforms every other company out there
  • Pent-up demand for larger-screened phones was bound to see a fall-off afterwards
  • The Chinese economy is tough, but there’s still lots more growth to come there
  • And the iPhone SE is doing well in China (no figures specified)
  • And India will also become a huge market over time
  • Android switching is very high
  • Customer satisfaction and loyalty among existing owners are also very high
  • Services are now Apple’s second-largest segment, and are growing rapidly
  • The Apple Watch still has lots of potential
  • New iPhones will show you features that you won’t be able to live without
  • There’s plenty more innovation on the way

That’s a lot of bullet-points. But there are three problems with the list in the eyes of investors. First, it’s Cook’s job to talk up the company’s prospects, so it’s not news to them when he does just that. Second, they’ve heard it all before: these are all pretty generic arguments in Apple’s favor, and ones Cook has voiced on previous occasions. Third, Cook refused to be drawn on when things might turn around.

Asked whether the final fiscal quarter of the year might be the point at which growth resumes, his response was non-committal.

I’m not projecting quarter by quarter. But what I can tell you is, backing up and looking at the larger picture, we’re in great markets. We have huge opportunities geographically. We’ve got great innovations in the pipeline. People love our products, they love using our services. All of this to me equals great opportunity.

After-hours trading suggests investors weren’t impressed, the stock price barely moving.

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But this is, in my view, the heart of the disconnect between the two viewpoints. Wall Street is interested primarily in the short-term, and is focused on the difference between expectation and performance, rather than performance per se. Apple is in it for the long haul, and is focused on delivering what its own guidance promises, not on what external analysts and investors might have predicted.

Cook’s arguments aren’t new, so Wall Street shrugs and takes the view that these points are already factored-in to the share price. But the fact that the arguments aren’t new doesn’t mean they aren’t valid. They are all good arguments, and from Apple’s perspective, the important thing is not the precise quarter in which the business returns to growth, rather the fact that it is taking the actions now that will bring about that result at some point down the line.

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And there is an obvious second factor at play: Cook has peeked beneath those black cloths. He knows what Apple has planned in terms of future products and pricing; Wall Street doesn’t.

There’s an equally obvious counter-argument, of course. As I said earlier, it’s Cook’s job to talk things up, and Apple has a lot of form for trying to keep Steve’s reality distortion field running, presenting rather ordinary things as if they were the most awe-inspiring inventions in the history of the planet. So just because Cook says Apple is working on a new iPhone with features we won’t want to live without doesn’t make it so. (Don’t get me started on a keynote that presented a bunch of watch bands as if they were deserving of awe.)

But while even Steve’s Apple never was a place where there were innovations every year (iPod 2001, iPhone 2007 and iPad 2010), the company does know that it has to pull a rabbit out of the hat every now and again – and it is for sure working on that. Whether it’s an Apple Car or something else entirely, there will be new product categories from time to time, and those will – given Apple’s history – be big.

Some may object that the most recent new product category, the Apple Watch, isn’t yet big. But neither was the iPod when it first launched. Some things take time to build, and my own journey from skeptic to addict has persuaded me that there is plenty of slow-burn potential left in the Watch as functionality ramps up.

Cook’s arguments about the future potential of existing product categories in China and India are equally valid. Apple will, as I argued before, have to be willing to be a little more flexible on price than it has in the past, but the iPhone SE demonstrates that the company is (a) aware of that fact and (b) on the case.

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My view, then, is that both sides are right. Wall Street is right that, in the short-term, nothing magic is going to happen. Not this quarter, not next quarter, maybe not even with the next iPhone release – whose rumors currently sound rather less exciting than Cook’s tease. But I see no reason to be pessimistic in the medium to long term. Apple will continue to innovate, and it will continue to expand its global footprint.

I’m not expecting to see the stock price start shooting up anytime soon, but nor am I expecting Apple to gradually slide into obscurity. Wall Street is right in its short-term outlook, and Cook is – probably – right about the company’s long-term prospects.

What are your own views? Are you a pessimist or optimist where Apple’s medium- to long-term future is concerned? Take our poll, and share your thoughts in the comments.

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Comments

  1. Grayson Mixon - 8 years ago

    I look at my investment account, and I see that my stocks are down, and it looks like I lost money, but I didn’t. My assets lost market value, but I own the same thing I did yesterday. I only lose money if I sell at the lower price. If I hang onto it, I haven’t lost anything, so long as the company stays in business and the price comes back by the time I want to sell.

    But the main thing is, I’m not in a mood to sell. I’m building a retirement investment account. I’m in a mood to buy. And when the price goes down, it’s a great time to buy.

    I would love for the markets to go way down for the next 40 years so I can get some assets real cheap, and then spike back up in time for me to sell and retire.

    • bytesbobs - 8 years ago

      damn I thought I was the only one who understood that you don’t lose anything unless you sell.
      Cheers

    • chrisl84 - 8 years ago

      Not everyone has 30 years left to wait for Apple to get their ass in gear…..some people are 55+ and actively planning their retirement…..so great you have time to wait, that isn’t representative of global investors time frame however. See how you feel when your 60 years old and your retirement loses 20% of its value…..bet you would have a different tone.

      • rnc - 8 years ago

        Then, can you tell us where’s this guaranteed investment where you can earns lots of money in a short period, and can only profit?

      • chrisl84 - 8 years ago

        Want to be a publicly traded company and use investors money for your own benefit….then you are responsible for the weight that carries and you get backlash when you LOSE their money. end of story.

      • twelve01 - 8 years ago

        If you’re only a few short years from retirement, then a portfolio heavy in stocks, let alone a single stock is ill-advised to say the least. Assuming you’ve been in Apple for sometime – 5-10 years, then you’ should be plenty in the black. By most measures, Apple’s financial performance has been historic. Unfortunately, for whatever reason the ever “efficient” market has not rewarded us (shareholders) as such. I’m sure you had no complaints a year and a half ago.

      • chrisl84 - 8 years ago

        55 year olds still belong heavily in stocks, typically 50/50 split in your 5th decade is considered safe, moves to an even further conservative portfolio at that age is far to cautious an approach. 70 year olds are the ones out of the stock game.

      • Rich Davis (@RichDavis9) - 8 years ago

        Well, there is no guarantee in the stock market. If you’re older and you are more reliant on your retirement, then you have to have much more stable investments and they usually pay out less, but are just more stable. Apple is in that area where they are struggling between a high growth and a stable dividend stock.

        They pay amongst the highest dividends, so if you do dividend reinvestment, then it will automatically do dollar cost averaging so any drops will be minimized. Obviously, right now they are struggling with certain things, so for the short term, it’s dicey, but for the long term, I’m sure they’ll continue to grow.

        As they say, if a stock drops, that creates a buying opportunity and it was done more as a knee jerk reactions. Unless Apple posts a loss, I think the recent drop will be minimized because Apple’s just going to purchase large blocks of stock, helping push the share price back up. So if you can’t invest more, then just sit back and relax because it will go back up, it’s just a matter of when. Remember, the 6SE just started to ship in April, so if they are getting a lot of sales, then last month’s sales were due to the drop in 6S/6S+ sales and the 6SE simply hasn’t been posted yet. But they are selling quite well in China, according to Cook.

      • Rich Davis (@RichDavis9) - 8 years ago

        Well, you would have to look at how your retirement is set up and how you have your investments managed. If you rely too much on one company or one method to invest, then you have exposure. For those that are simply relying on profits, then you have to be diversified. There are many philosophies. Some will tell you to have a certain percentage in bonds, mutual funds (a variety of different types) and stocks that pay high dividends. If you are concerned about one of your investments, then you might want to consult with a professional financial planner to help manage your portfolio so you aren’t exposed to as much risk. Everyone’s situation is different, but there is no guarantee when investing in the stock market, so a hiccup happens and either you are exposed or you aren’t.

        If I was invested in Apple Stock, I would be doing dividend reinvestment and that will help minimize risk and Apple has announced a higher dividend rate, and have announced stock buybacks, which should help boost the share value. So for the short term, it was more of a knee jerk reaction and it seems to be tied to Icahn’s pull out since he owned a huge chuck of stock. If he goes back in, then it will boost the share value. That’s the problem with guys like Icahn. They can pump and dump stock and there’s not much you can do, but to pay attention and hopefully be able to weather the ups and downs.

        My suggestion, meet with a good financial planner and figure out what the best way to handle your portfolio to minimize risk. Going into the summer months is always weird for Apple, but hopefully they’ll have a better second half since they have a lot of products to announce. Remember, they have the iPhone 7, MacBook Airs, MacBook Pro, MacMini, IMacs, MacPros, A10 based iPads, possibly a new Apple Watch and anything else they are going to announce during the second half. They also have new OS’s which might help drive sales. So, the first 6 months is different than the last 6 months. Apple is also always on this downhill sales cycle and then they spike with Christmas. So people get caught up with that as well.

        Maybe they’ll have some game changing technology that will help drive sales.

      • Well I’m 64 and have owned Apple since the week after 9/11/2001 — I’ve taken some profits along the way and purchased too. For my age group the key is not to have more than 25% of your global assets at risk. And stocks are a risk, not doubt. Also look at things (like Apple) that are paying a 2% dividend!! (Look at other stocks like “O” and “NBTB” which pay nice dividends even if they may not always increase in price). Personally I would not have as much AAPL today if it were not paying that nice dividend (which I use to repurchase shares immediately). Where can you earn 2% today AND eventually see capital appreciation? (I have one 2% CD – won’t see that payout till 2021!)– Apple is going to climb towards $170, and it will likely be at $150 on 15 Dec 2017 at 2:00 pm EST! (Andy maybe higher when iPhone 8 and the next great thing come-out in Fall 2018!!). Of course I don’t know this… But stocks like Apple are for long-term investing. And if you don’t have the guts to ride the lows, then do what Carl Icahn did and get out. (He made $2 billion but his goal was to make $20 billion. I really don’t admire what he did with AAPL but hey, he can do what he wants, it’s a free country and he’s done better than I have!). In the USA it is too bad that many companies take the very short-term approach. Long-term planning in the US for many companies is “Friday”! Also too bad that human assets are not listed on the balance sheet. I’ve always felt that a company with 1 or 1,000 or 100,000 employees should be able to list employees as an asset. But we treat employees like short-term expenses — almost as liabilities (for salary-owed). Pretty sad. OK I’ve rambled enough. GO APPLE!! Steve MacOnly since 1989. (Yes, still have my SE and yes, works great…).

      • iphonedevbr - 8 years ago

        So, If you had USD 100.000,00 to spend in Nasdaq. Would you buy or Not buy Apple Stocks at this time? Or should you just exit the position in Apple?

  2. bytesbobs - 8 years ago

    Talking about the company’s views and Wall St’s views are like comparing Apples to Oranges (pardon the pun). I remember back in 2000s when I bought shares for $35 a pop people thought I was crazy. We need to realize that Wall St. interests are not telling us how the company is doing but making money for it’s investors. If the share price is hight then there is very little upside. How do they make the share price go down? hmmmmm. It also isn’t the investors views that are different from Apple’s it’s Wall St. I’m an investor and most investors are in it for the long game. But I like when Wall St. says they are doomed and the stock drops it gives me a chance to buy shares at a better price. A company with more billions in the bank than some companies make in profit, that are still cranking out products and selling them in numbers their competitors would sell their first born to have. Yep they are definitely doomed!

  3. I hope Apple simply do the best work they can. Making money is not the only measure of success.

  4. kpom1 - 8 years ago

    “We’ve heard this before” is probably at work, as well. 2 years ago the iPad began its sales slide and Cook said the same thing about not being concerned. It finally seems to have troughed 2 years later with the release of the 9.7″ iPad Pro, which seems to be the first model in a while that makes people want to upgrade aging iPads. If iPhone goes through a similar phenomena (and the popularity of the $400 iPhone SE may be a sign of that), it would have a much more significant impact on the company as it is 2/3 of its revenue and 3/4 of its profits.

  5. Bryan Nau - 8 years ago

    this is just a temporary drop. it will return to normal very quickly.

  6. chrisl84 - 8 years ago

    Cook literally regurgitates the same “product pipeline” speech annually. It used to get people hyped up but after years of just “meh” no one falls for it anymore. The masses sat on the edge of their seat for a long time for the Apple Watch to be released. It was going to be EPIC and its just a damn smartwatch like every other. The new Apple TV was going to change the TV industry forever and its just Apple TV plus Siri with a weak app store. Now we know the Tick Tock iPhone cycle has crawled to Tick Tock Tock. Services will take a long time to really matter and it will never WOW customers because they are just copies of what other companies already offered for years (dropbox, spotify) that’s not innovation, its imitation.

    • rnc - 8 years ago

      Meanwhile at Google, everything they did (Android Wear, Android TV, Android Pay, etc.) has turned out to be a complete failure, and they still depend on advertising on clickbait sites, and putting even more ads on YouTube (seriously, this is their growth strategy they have presented to investors, go look it up!)

      And at Microsoft, the revolutionary Surface is nothing more than a dud, it sells even less than the Apple Watch that you call a failure (and I’m not talking sales numbers, I’m talking dollars, for a much cheaper product). Windows Phone has managed to sell even less than what they were selling. I am yet to see one of those Surface book in the wild!

      And Amazon? Losing high profile costumers like Dropbox, that’s what they have been doing.

      • chrisl84 - 8 years ago

        Struck a nerve today….always easy to spot the Apple Zombies…..must defend mediocrity.

      • chrisl84 - 8 years ago

        And by the way, when did I mention Google Microsoft or Amazon? You have a sick obsession with the idea that outperforming a failure makes you a success…..it doesnt. Woohoo, we beat Android Wear, so that doesn’t make you successful, it just makes you not the last loser.

      • edenk121d - 8 years ago

        Amazon makes Apple Look Like a KId without Mazon Apple Microsoft Itunes Apple Music Apple icloud wont exist fool

      • Aunty T (@AuntyTroll) - 8 years ago

        Gonna agree with chrisl84 here – it’s incredible the amount of people who try to deflect any criticism of Apple onto A.N.Other company even though they weren’t mentioned in the first place.

        Apple, Microsoft & Google are the three most valuable brands in the world – not quite sure using the last two as a yardstick to measure failure is a good idea on that basis really is it, and while you criticise Google for relying on advertising on clickbait sites, you fail to mention that Apple rely on ripping punters off every year by releasing slightly improved tech year in year out.

        Fact of the matter is, Joe Public is slowly and surely starting to vote with their wallets and rightly so. Hopefully it will spur Apple on to release tech worthy of their name.

    • jaredinyosemite - 8 years ago

      As far as the AppleWatch and the new AppleTV with App Store. These are 1.0 products. Since when did the first 1.0 of any product be the absolute best product Apple has every shipped? I’d say if by iteration 3.5 or so of each of these and they’re still lack luster that Apple will have a flop.

      I’m curious to see what Apple will have for developers and the technologies they announce at WWDC. Developers have always made what make Apple products great.

  7. norbertosica - 8 years ago

    Apple is missing a market with a great potential: Latin America.

    • Rich Davis (@RichDavis9) - 8 years ago

      Uh? They already have set up in most of the Latin American countries. Here’s a link http://www.apple.com/choose-your-country/

      Now, with respects to having Apple Stores, there are several reasons why they might not have Apple Stores built.

      1. They might not have clearance from the Government in that country. India is in the process of approving Apple to build Apple Stores, which is why they don’t have any yet. Some of the Latin American countries may not have given Apple approval yet, or they still might be in the planning or negotiations stage. Right now, Apple’s focus is with India and China because they represent the largest populations that are ramping up to the point where a large number of their population is capable of even affording Apple products.

      2. They may still be in the process of planning stages. It takes a long time in some of these countries once they get government approval, so it just takes time.

      3. It might be cost prohibitive. In some countries, they might not have enough population or enough business yet to warrant building an Apple Store.

      4. In addition to Apple Stores, they might have to also ramp up Support Call centers, data centers, etc. and there is only so much Apple can do at any one time, so they have to be very strategic in how they manage their growth.

      But as far as Apple going after Latin America? They already do business in most Latin American countries. Refer to the Choose your country to find out what countries they are setup to do business in.

      Some countries that don’t the a large amount of wealth simply can’t afford their products at a large enough scale, so their presence might not be as big.

  8. alanaudio - 8 years ago

    There has never been a time when analysts have demonstrated that they understand Apple and as a result, all their predictions and suggestions end up wide of the mark. It’s made worse by the point raised in the article that Apple takes a long term point of view while Wall Street is obsessed with a very short term point of view, which is further exacerbated by the fact that many analysts gain financially when customers either buy of sell shares, so it’s very much in their interest to make people feel alarmed if they are holding, or missing out if they haven’t bought. .

    As an investor, my interests are best served by Apple looking to the long term and not being distracted by the noise created by the day traders. Apple has always played by it’s own rules and those rules have served it well and will continue to do so.

  9. Peter Schwitz - 8 years ago

    50 record quarters in a row. Has any other company ever achieved that? Has any company ever achieved the numbers of Apple’s recent declining quarter (10.5 B Profit) ? Who is still the most valuable company in the world even after the sharp market slide…Apple. They did not do anything wrong, they are simply too awesome to be understood by the street analysts. If you are not holding your Apple Stock IMHO you’re a fool.

  10. andrewplacker - 8 years ago

    The overall health of Apple as a company is a completely different conversation than what Apple’s stock will be doing in the near term/long term. It seems a lot of these types of stories get those two things hopelessly intertwined.

    My personal opinion is that Apple as a company will do fine but their stock will remain relatively stagnant until such time they come up with another device/service that generates iPhone type sales revenue. Nothing they currently offer will do that.

    • Doug Aalseth - 8 years ago

      That’s very true. People often don’t understand that in today’s speculative, quarterly profit minded, greed driven/panic driven market things like stock price and market cap have only a peripheral relationship to how well the company is actually doing.

  11. flaviosuave - 8 years ago

    The difference between Cook’s outlook and Wall St.’s outlook is the exact same as the difference between investors and traders.

  12. Greg Pryor (@gpo613) - 8 years ago

    In the product lifecycle of the smartphone we basically are at the top of the curve and maybe heading down a little. Market penetration is nearing 100%. Competition will just become more and more fierce. Profits will shrink. It happens to every product made unless you have an monopoly. The question is what will be the next big thing in technology and will Apple be leading that charge?

    I will say I can’t see myself living without a smartphone. I see two options. One is the use of holograms. The other which is more likely is your smartphone becoming powerful enough to be your computer. Basically I take my smartphone home and plug it into a dock and it works just like my laptop. The smartphone was so successful because it replaced many devices. The question will be what will be the next thing and will Apple create it. No one knows for sure. Not Wall Street and not Cook.

  13. dksmidtx - 8 years ago

    Ben touched on a very salient point – since when in the history of Apple would the announcement of watch bands have been worth of even being in an event, much less a mere press release? Watchbands, stuffing new “innards” in a three year old phone case, and an anniversary update of the MacBook without even a second USB-c port, are all hallmarks of dying on the vine. Worse yet, when iPhone 7 turns out to be iPhone 6s with a few side improvements, the roof is likely to cave in on the stock.

  14. Todd C Neumann - 8 years ago

    I have decided that Tim is on the way to taking Apple private. Normally like with Dell it happens in one big event where the company partners with an investment bank to buy all shares back. That often entails a huge premium on the current stock price. I believe Tim is being sneaky. These share buy backs are funded by debt (granted debt that is backed by the overseas cash – hence the crazy low interest rates). I predict this will continue for about 5 years to the point the outstanding shares have shrunk dramatically and then they will announce going private and grab the rest of the outstanding shares. Apple has always hatted the Wall Street short term focus.

    One last comment. I understand Apple’s growth might slow. That would be a problem for the stock (logically) if it was trading at a high p/e ratio. They are not. People talk as though they are on the verge of bankruptcy or they have this high p/e ratio because people were anticipating crazy growth.

    If I am wrong about going private I think Tim should consider it. Let these idiots sell Apple shares for 90-100 dollars – while Apple pulls in 10 billion in profit a quarter and can be the one to buy those shares on the cheap.

  15. cdm283813 - 8 years ago

    I’m neutral. While I think Apple will be fine I just believe the competition has more talent.

  16. rnc - 8 years ago

    This cloud bubble is nothing more than that, a bubble.

    It’s a commodity!

    If you don’t get the prices you want from Amazon, e.g., then you pack overnight and go to Microsoft, IBM, Google, etc.

    That’s the point of “cloud”.

    And demands constant investment, not only in engineering, but in hardware that has to be renewed all the time.

  17. jak24 - 8 years ago

    Consumers around the world are becoming more and more price-sensitive. Because the economy is going down way way down. So the only thing Apple can really do is to lower their prices .

  18. Rich Davis (@RichDavis9) - 8 years ago

    I was hoping that India was going to allow Apple to sell refurbished iPhones, that would certainly help and I think that’s probably the best way to sell products in countries that have large populations of people that simply can’t afford to buy their higher priced products as new.

    I believe Apple can sell refurbished iPhones in the US, but they don’t have them listed, so what’s up with that? If they want to sell refurbished iPhones, then they need to list them. Oh well, I guess Apple just reserves those for out of warranty sales for existing customers.

  19. aerobat01 - 8 years ago

    First, the majority of the ‘Influencers’ on Wall Street are not investors. They are gamblers and manipulators. Icahn is a good example. He pushed and pushed Cook to buy back shares for ‘the sake of the investors’ as a means to boost share value. When Apple finally did, Icahn sold some shares at the ‘better value’. Last week when it looked like Apple wasn’t going to buy back anymore shares for a while, he dumped everything because Cook couldn’t get Cook to manipulate the company to Icahn’s advantage.

    Of course that huge sale devalued the shares BUT Apple sits on a bunch of cash (which Icahn hated) so they bought back $58 Billion more shares at the bargain price that Icahn helped create. And that’s why Icahn hates the fact that Apple sits on so much cash. When a company sits of enough cash, they can’t be bullied or be held hostage by Opportunists and Raiders. Instead they can actually take advantage of those trying to abuse the company.

    But the real crime here is that Wall Street is even allowed to USE the word “Investor” anymore. They aren’t in it to build companies in the long term. Instead they just pump up companies and then pull out before the ‘Sucker Money’ can get out, thus raping the small investors who were the only ones actually ‘investing’ for the long term.

    If this were tennis (Icahn vs. Cook) it would be advantage Cook … Or because Icahn completely pulled out, it might be Game, Set and Match Apple.

  20. drgeert - 8 years ago

    Apple has no interest in talking up their stock price. They don’t need investors. They buy their own stock back. Their priority is to be realistic.

  21. giuseppe9000 - 8 years ago

    To get big profits you can:

    Increase your spending, for innovation, research, developement, new services and new products

    Cut your actual spending, increasing product’s lifecycle and innovation cycle, relying on huge marketing tecniques involving actors and sportsmen rather than on new product, research and efforts

    Cook’s recipe looks more oriented towards a conservative, less innovative approach

  22. iphonedevbr - 8 years ago

    Apple must urge to improve battery life, that is worst thing in usability!!!
    iPhone and iPad should have an even more resistent Display and do not bend. iPad Pro bends like a paper.
    What about water resistance and dive possibilities?
    OLED displays may come only in iPhone 7S and iPad… Ultra… Pro

  23. I would like to remind everybody how the leaked images of iPhone 5/6 made them look very unimpressive, yet both did very well once they were released. So this might well be the case with the iPhone 7. I think better not judge the product until it is released.

  24. lcfbill - 8 years ago

    Apple profits are driven mostly by the iPhone and the smartphone market is becoming saturated. This is natural and not some failure by Apple. To keep the iPhone business strong, Apple needs to continue to innovate. However, the wild growth rate seen when the iPhone was new is not likely to be seen again in this product line. In that way, the iPhone becomes a more mature product like the Mac. Growth still happens, just more slowly. For rapid growth to return, Apple needs to develop new classes of product. They have done this in the past, but products like the Mac and the iPod and the iPhone do not come along very often. So, unless Apple leadership gets overly cautious and fails to take chances with new innovations, the business will continue to grow and make profits. (However, I wish I could say that what one sees rumored for upcoming products fills me with confidence that Tim Cook will continue to take the risks he needs to, but you cannot condemn a CEO based on rumors.)

Author

Avatar for Ben Lovejoy Ben Lovejoy

Ben Lovejoy is a British technology writer and EU Editor for 9to5Mac. He’s known for his op-eds and diary pieces, exploring his experience of Apple products over time, for a more rounded review. He also writes fiction, with two technothriller novels, a couple of SF shorts and a rom-com!


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