Morgan Stanley’s Katy Huberty says that an analysis of Apple’s recent SEC filing strongly suggests that the company has not only made a big bet on the success of the iPhone 6, with large advance orders, but also that it is likely to launch the long-awaited iWatch this quarter.
The graph, obtained by Business Insider, shows the historical correlation between off-balance sheet commitments – the technical financial term for money invested in things like tooling, component purchases and manufacturing contracts – and quarterly revenue. Essentially, if you know how much Apple is investing in new products in one quarter, you can pretty accurately predict its revenue in the following quarter … The correlation between the two is, she says, almost perfect, with a 97 percent match. The massive 46 percent year-on-year jump in investment, which is also the highest quarter-on-quarter increase since Apple launched the iPhone in 2007, tells the story, argues Huberty.
1. The iPhone 6 is going to be really big, and Apple is ramping up for it.
2. Apple has the iWatch coming, and it’s buying tools for its manufacturing partners to start cranking out iWatches.
We’ve already heard evidence that Apple is betting big on early sales of the iPhone 6, the WSJ reporting that Apple is placing orders for 70-80 million units this year and Foxconn confirming that it has hired 100,000 new workers for production of the new model. Analysts and government officials have also pointed to big component spends by the company.
It has to be noted that Huberty’s analysis supports her own prediction that iWatch sales will grow as quickly as those of the iPhone or iPad. It’s possible that the rumored two different iPhone models alone, along with new iPad and MacBook models, could account for this level of investment without the iWatch. But the numbers she points to are impressive, so whatever the reason behind the investments, it certainly looks like we can expect big things this quarter.
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The iPhone will be amazing as long as there’s two different sizes and the plastic lines are something more pleasing. The iWatch will win big as long as it has more sensors than any other watch for the next 12 months. And by the look of this accurate graph, those things are probably gonna come true.
The iPhone 6 will be the best selling iPhone to date, and it will have absolutely nothing to do with whether or not there are two sizes, and whether or not there are nice prominent plastic lines on the back.
But, ya know, keep pretending whiny blogger bullshit makes any difference in the real world.
I like how “this year” and “throughout the year” for Apple has now come to mean October, November, and December.
I have to agree, I am not a big fan of this No New Products until Fall mechanism.
Its a cycle that allows Apple to release new products when buying is hot, and ride the coattails of those products for revenue for the entire first half of the next year.
I think plans changed and that’s absolutely acceptable. If you have to wait to release a product then so be it. Don’t release something that doesn’t solve any problems, or work properly. They learned this through maps.
Seriously, if all the hype that has been caused by both Apple (quoting Eddy Cues pipeline related words with Recode) and fans alike do not end up coming true, I will go spare. This article makes it sound like not only is the iWatch going to be exciting (duh!) but that also we may have underestimated how huge the iPhone 6 is going to be. Yes, we’ve all seen the “leaks” but as Apple have proven in the past, the general look and feel of the device rarely dictates what it can actually DO. If it is going to be so huge, I doubt it is solely because it has a bigger screen. I imagine (and hope) that it actually carries a new and truly innovative functionality along with this new design. A bigger screen isn’t enough to warrant the excitement and hype that everyone is creating. There has to be more to it…but what?
Mobile payments, possible useful sensors (aka not health sensors, those are for the iWatch), sapphire glass, and I’m missing a couple others.
A bigger screen on the iPhone could be a sea change all by itself. The iPad is a larger screened iPod Touch.
There has not been new products throughout 2014 that I have seen, although iPhone in the car may have already happened in some car models. There have, however, been the Mac Pro, incremental “upgrades” in the iMac and Macbook Air, and updates to Mavericks, iOS 7, and improvements to various apps and services. Swift was a big move that most will never directly experience — very cool how the SDK has improved.
I don’t take the iWatch as a necessary given. I do expect something wonderful. At worst, iOS 8 and Yosemite will make me happy. An iPhone phablet would make a great ebook reader for me, the current iPhone not so much.
I think there will be 2 new categories this fall; iWatch for healthkit, and Apple TV massive upgrade for homekit. I think the rumors of the built in router in the upcoming Apple TV could point to it acting as a central hub. Apple TV with gaming (Apple designed controller is necessary), App Store, completely redesigned UI, the ability to centrally control all smart home devices from it (although not sure what this would offer over an iPhone), and also it completely controls the UI and control of the content which is being fed to it through your respective provider’s box, etc. Imagine hooking it up to any HD TV and having it completely transform the experience into something far better. Granted this isn’t the TV solution yet, but it may be far off due to content providers. This seems like the best option in the interim.
In the analysis, it should also be considered that all released products were major hits… will be this the case for iPhone 6 and iWatch/iTime?
I think it’s a given the iPhone 6 will be a hit; the iWatch, I shall, uh, watch with interest.
Hoping to see revamped notebooks with new screen sizes. Maybe a 12in & 14in Macbook Air and 14in & 16in rMBP’s in the daze size chassis. Apple is really doing a revamp with this R&D so we can bet on some new product categories or at the very least a major redesign across product lines. I personally still can’t see an iwatch like product coming yet… but who knows.
same*
Can it really be possible that Apple is releasing the wearable so soon? They still have only recently added on seemingly crucial members to the team seems to me like it’ll be one more year