iTv
This would be the Holy Grail for Apple shareholders, if it is done correctly. If Apple Inc. (NASDAQ:AAPL) produces a big-screen LCD with a razor-sharp display and great features at a reasonable price (most important), it could be a game changer for the company. However, I think that the TV is further out than people assume, simply because Apple will be looking for a cost-effective way to make the TV. The effect of this on the share price would depend on just how cool and affordable the final product is.
Likelihood: 7+ (but not for another year)
Cheap iPhone
A cheaper iPhone would be nice, but I really don’t see it happening without a China Mobile deal. It is simply not worth developing and producing a lower-cost device for use in the emerging markets if half of the Chinese market is unreachable.
Likelihood: 3 (without China deal)
China Mobile Deal
This deal, combined with a lower-cost device, could really help Apple Inc. (NASDAQ:AAPL)’s revenues. I think that a deal with China Mobile is coming this year, and the company will announce a low-cost iPhone soon after. A lower cost device and access to the entire Chinese mobile market could mean sales of 100 million + new devices in the first year. A deal and a lower cost phone could mean a significant increase in the share price in the short term, and more importantly, higher growth over the long run.
Likelihood: 7 or 8
A “real” Game-Changer
What Apple truly needs to continue its historic growth story is a game-changing product that no one has even considered yet. For example, Apple Inc. (NASDAQ:AAPL) has hired most of the engineering team that designed the Segway, including their robotics expert. What could they be building? Who knows? Maybe Apple is designing an iCar?
Not that I think an iCar is likely, but my point is that no one really knows what is under development at Apple headquarters except for a select few people. If Apple’s next product turns out to be a game-changer of the same magnitude as the original iPhone, they sky is the limit.
Likelihood: 2 (within the next year)
Conclusion
So, why invest in Apple Inc. (NASDAQ:AAPL) and not one of the other companies with rumors of innovative future products, like Google Inc (NASDAQ:GOOG)? First of all, Google tends to brag more about what they are working on. Although it is still almost a year away from being available to the general public, the details of Google’s wearable computer are well known, and have already been analyzed in terms of marketability and have been priced into the stock, which has been soaring over the past year.
In fact, Google is starting to look like Apple did last year at this time. I think Apple Inc. (NASDAQ:AAPL) makes the better investment by far at this point. Yes, it’s a mystery as to what their engineers are up to, but at less than half of the P/E of Google Inc (NASDAQ:GOOG), for my money it’s worth betting that they are up to something that will produce a little more growth than you’re paying for by buying the stock.
The article Breaking Down The Apple Rumors originally appeared on Fool.com and is written by Matthew Frankel.
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