Between Apple Inc. (NASDAQ:AAPL)’s upcoming WWDC conference and its rumored involvement in the major NSA security scandal, there’s been no shortage of Cupertino-related news lately. A couple studies, though, have flown under the radar, and we at Insider Monkey thought it’d be best to bring them to the forefront of the discussion.
IDC, smartphones and value proposition
When it comes to keeping a beat on the smartphone market, International Data Corporation (IDC) does a great job. This global provider of market intelligence knows a thing or two about this market, as well as many others, while also focusing on major players in the tech industry including Apple Inc. (NASDAQ:AAPL).
In a recent report, IDC stated that the smartphone market is expected to grow by 32.7 percent in 2013. This increase will be due in large part to declining prices as well as growth in emerging markets. For more on this data from the IDC Worldwide Quarterly Mobile Phone Tracker, here is a brief excerpt explaining where the market is headed:
“Smartphone shipments are expected to grow 32.7% year over year in 2013 reaching 958.8 million units, up from 722.5 million units last year. 2013 will mark the first year that smartphone shipments surpass those of feature phones, with smartphones expected to account for 52.2% of all mobile phone shipments worldwide.
This trend will continue for years to come as demand for mobile data and handheld computing spreads across both developed and emerging markets. Emerging markets will account for 64.8% of all smartphones shipped during 2013, which is up from 43.1% in 2010.”
As you can see, IDC is not just predicting a big jump in 2013. This is something they are expecting to see more of for the next few years. This is great news for Apple Inc. (NASDAQ:AAPL), especially if the company decides to release a more affordable smartphone.
With consumers in emerging markets becoming more and more interested in smartphone devices, it would only make sense for Apple to throw its hat in the ring. However, Cupertino has not talked about this as of yet and right now the only thing we have to go on is rumors.
Ramon Llamas, Research Manager for the IDC Mobile Phone program, had this to say:
“If you look at the number of vendors who support both feature phones and smartphones, many of them have not only successfully transitioned their product portfolios to highlight smartphones, but smartphones have become their primary value proposition going forward.”
All in all, feature phones are on the way out and smartphones are on the way in. If nothing else, this means that Apple Inc. (NASDAQ:AAPL) is positioned appropriately. Whether or not the company takes full advantage is another question entirely.
Does Apple rule the BYOD (bring your own device) world?
In today’s day and age, a growing number of companies are allowing employees to rely on their smartphones to stay connected. For this reason, the “bring your own device” trend is beginning to pick up steam. In short, this means that employees have the right to choose their own smartphone, from Apple Inc. (NASDAQ:AAPL) to one of its many competitors.
For a better idea of how Apple is performing in the enterprise sector, we don’t have to look any further than the recent Good Technology Q1 2013 Mobility Index Report.
There is no denying the fact that Apple is facing stiff competition. That being said, Cupertino is performing quite nicely and there is no reason to believe that this is going to change anytime in the near future. When you give employees the ability to choose their own smartphone, Apple is definitely one of the companies that is at the top of their list.
Here’s some more info:
“Among Good’s customers, Apple’s iOS platform remains the clear market leader, and once again claimed the top five spots for device activations. However, the company’s share of activations dropped by more than five percentage points compared to this time last year.”
As you can see by this quote, Apple is performing well right now. Although this may be the case, Cupertino has seen a drop off when compared to last year at this time. Whether or not this trend continues is something to keep an eye on, as the folks at Good Technology allude to:
“The Apple iPhone 5 reigns as the device of choice among business users. This is followed by the iPhone 4S, high-lighting the trend of users wanting the latest and greatest in the palm of their hand.”
Once again, this is good news for Apple. The iPhone 5 is top dog among business users. Even better is the fact that the second most popular device is the iPhone 4S. There may be competition out there, but based on this report Apple is having no trouble taking home top honors.
As a growing number of companies begin to subscribe to the “bring your own device” train of thought, it will be interesting to see if Apple is able to hold onto its spot at the top or if Cupertino begins to lose ground to the competition.
Google Inc (NASDAQ:GOOG)
In the second study covering BYOD trends, Good Technology also released this graph. On the chart, iOS is compared to Google Inc (NASDAQ:GOOG) Android for the first three months of 2013. According to Good, the least popular iOS smartphone—the iPhone 3GS—was still nearly twice as popular as the most popular Google Android device—the Samsung Galaxy S3—in the first quarter of the year.
The least popular Google Android devices among business users, meanwhile, were the Samsung Galaxy S2 and the Droid XYBoard, the latter of which is a tablet released by Motorola Mobility. Both of these devices are more than one year old, but still generate less use than the original iPad, which was released in April 2010.
Research In Motion Ltd (NASDAQ:BBRY) BlackBerry
Obviously, no one has ever thought that Google’s Android platform would dethrone Apple in the business arena; the title of “closest contender” in this space more likely rests in Research In Motion Ltd (NASDAQ:BBRY) BlackBerry’s corner. At present, BlackBerry’s Z10 and Q10 have not been released to global audiences for a significant amount of time, and thus, cannot be included in broad-range studies like IDC’s discussed above.
Still, one potential bellwether for the private sector is the public sector, more specifically the Department of Defense. We’ve reported on this subject many times throughout the year, but the most recent news out of Washington indicates that BlackBerry bulls may want to hold their tongues.
According to an official DoD spokesman, the Pentagon isn’t relying solely on BlackBerry phones as it has done in the past, due to its previously advantageous security measures. As of last month, the agency said that it is using “approximately 470,000 Blackberries, 41,000 Apple Operating Systems and 8,700 [Google] Android Systems.” In other words, BlackBerry still controls over 75% of the DoD’s mobile budget, but is losing dollars to Apple first and foremost, and Google secondly.
Final thoughts
From an investment standpoint, the iPhone generates over two-thirds of Apple’s profits, and any sign of increased support from Uncle Sam should only aid the company’s long-range outlook going forward. The sell-side expects Apple to experience EPS growth of 20-21% a year over the next half-decade, far above what’s expected of Google (15-16%) and BlackBerry (5-6%).
Obviously, we’ll be watching the business space closely to determine if these estimates are worth tweaking, but it’s worth noting that even at current forecasts, Apple is by far the cheapest of this trio from an EPS growth standpoint; shares sport a PEG of 0.50, 70% cheaper than Google and 83% cheaper than BlackBerry.
That’s what one would call growth at a very reasonable price, and the fact that suits prefer iOS is icing on Cupertino’s proverbial cake.
Disclosure: none
