I’ve written a number of notably bearish posts about Apple Inc. (NASDAQ:AAPL) in recent months, but after CEO Tim Cook’s interview at the D11 conference, I believe there’s reason to be optimistic: It appears that Apple Inc. (NASDAQ:AAPL) is slowly gearing up to release a slate of new products — some of which could be huge for the company.
Tim Cook at D11
Cook was interviewed at the D11 conference Tuesday night (read the The Verge’s play-by-play). As usual, he was relatively tight-lipped. However, he did give some clues about the direction Apple is taking.
As Cook said, Apple Inc. (NASDAQ:AAPL) remains fundamentally a product company. And to become more valuable, it must continue to pump out high-quality products.
Given Cook’s statements Tuesday, investors might expect upcoming Apple products to include a TV, a watch, and a phablet.
Apple’s grand vision for the TV market
In the past, Apple Inc. (NASDAQ:AAPL) has characterized its Apple TV set-top box as a “hobby.” But on Tuesday, Cook did not downplay the device whatsoever.
In fact, he gave sales statistics, noting that Apple TV had sold 13 million units, half of those in the last year, and all despite the fact that Apple hasn’t put its marketing muscle behind the device. In fact, going to Apple’s website, Apple TV is one of the only products that doesn’t have a tab at the top.
Cook reiterated sentiments he’s made previously — TV remains an area of “intense interest” for Apple, and an area of technology that has significant user interface problems.
As I’ve written before, Microsoft Corporation (NASDAQ:MSFT)’s next Xbox, the Xbox One, is arguably more of a smart TV than a game console. With the Xbox One poised to go on sale later this year, Apple could be going against after a fairly competent rival.
But even with the Xbox’s impressive features, parts of the device appear to be lacking. For example, while the Xbox One interfaces directly with a user’s cable box — it doesn’t replace it entirely.
The earliest Apple TV rumors suggested that the company was brokering a deal with the content providers to circumvent the cable industry entirely — perhaps that’s why the device has been held up for so long. (Steve Jobs said Apple Inc. (NASDAQ:AAPL) had cracked the interface problem back in 2011 — so what’s the hang up?)
If Apple can bring a TV to the market that allows users to purchase channels a la carte, it would completely blow away the Xbox One.
Apple is probably working on wearable computing devices
In addition to a TV, Apple is also likely to be working on wearable computing devices; in particular, a smartwatch.
Responding to questions about Google Inc (NASDAQ:GOOG) Glass, Cook said he doubted the product would be good enough to persuade people to start wearing glasses. Watches would be another matter.
Rumors of an Apple smartwatch have been going around for months, so a Pebble-like device wouldn’t be much of a surprise. It certainly wouldn’t be as revolutionary as Google Glass, but it would probably offer a much more polished experience.
It’s also likely to be much cheaper, which means that it would probably outsell Google Glass — at least initially. One imagines future headlines reading, “Apple’s Wearable Computing Device Outsells Google’s.” While those types of headlines ignore the larger story, they could provide some positive sentiment.
But interestingly enough, Cook hinted that a watch might only be the beginning. He characterized NIKE, Inc. (NYSE:NKE)’s Fuelband as a solid product, and said he viewed wearable devices as part of the larger ecosystem tree.
And that last point is really the important part. In the past, people talked about Apple’s ecosystem in terms of only software — iTunes Music libraries or consistent apps. But in the future, it might be more appropriate to apply it to hardware.
Say Apple Inc. (NASDAQ:AAPL) were to release a wearable computing a device — a watch perhaps — that interfaces only with iPhones, and say that device cost a few hundred dollars.
Well then, the customer that buys that device is one that is likely to stick with the iPhone. Otherwise, their expensive gadget turns into a worthless of piece of junk.
The more wearable computing devices Apple offers, the stronger the company’s ecosystem becomes which, as David Tepper said, could deserve a fairly high multiple.
An iPhablet?
Cook took a question on the possibility of a larger screen iPhone. He remarked that he thought the Retina display was the overall best on the market, and that there were significant “tradeoffs” present with larger screen phones — lesser battery life, poor color quality, brightness, etc. But this time, he seemed more open than ever to the idea of a larger iPhone in the future:
“In a hypothetical world where those tradeoffs didn’t exist, you could see a bigger screen as a differentiator.”
And that really cuts to the essence of Apple’s current problems. The company, which remains largely dependent on its iPhone, has faced challenges from a whole host of competing phones, most of which run Google Inc (NASDAQ:GOOG)’s Android operating system.
Google Inc (NASDAQ:GOOG)’s made significant improvements to the Android operating system in recent years, but its hardware partners have played an important role as well.
Samsung popularized the concept of a larger-screen phone with its Galaxy S3. It’s Galaxy Note line offers even larger screens, with the Note 2 measuring in at a massive 5.5-inches.
While Google Inc (NASDAQ:GOOG)’s Android has long had the advantage at the low end of the market, the larger screens have served to make Android phones more competitive with Apple Inc. (NASDAQ:AAPL)’s high-end iPhone.
Android is already the dominant global mobile operating system, and a wave of new Android phones could soon overwhelm Apple at the top end of the market. However, by introducing a larger phone, Apple could, to some extent, neutralize one of the biggest draws to Android handsets.
Apple needs new products
It probably isn’t a coincidence that Apple’s share price has languished since last September, right around the time the company released the iPhone 5. Apple is fundamentally a product company, and without new products, it’s hard for investors to get excited about the future.
But that excitement could return in the form of three devices, that if released soon, could have enormous positive effects on Apple’s business. Reinventing the TV would give Apple Inc. (NASDAQ:AAPL) an entirely new market to play in; wearables should strengthen the company’s iOS ecosystem to an extreme degree; and a larger iPhone would help fight off Apple’s top-tier Android competitors.
Investors will need to wait and see if Apple can deliver.
The article A Perfect Storm for Apple Bulls? originally appeared on Fool.com and is written by Salvatore “Sam” Mattera.
Joe Kurtz has no position in any stocks mentioned. The Motley Fool recommends Apple and Google. The Motley Fool owns shares of Apple, Google, and Microsoft. Salvatore “Sam” is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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