Apple Inc. (AAPL) Faces Upside Risk, Downside Is Not Limited

Cool brand perception only viable card left

In light of all these possibilities, I could argue that cool brand perception is the only viable card left for Apple. Look at it from this angle. The U.S market is heading to saturation and mobile penetration all over the world is approaching a tableland. The folks over at Cisco actually believe that mobile devices will outnumber people by the fall of 2013. This inevitable glut in the supply end of the market will compel handset makers to be more competitive.

Turnaround players like Research In Motion Ltd (NASDAQ:BBRY) already know this. In addition to turning surprise profits, the struggling device maker has already made significant inroads in the U.K. and Canada. Moving forward, things look good in the U.S. Verizon Wireless, which incidentally played a huge role in Apple Inc. (NASDAQ:AAPL)’s U.S. success, is offering more marketing support to BlackBerry’s Z10. A recent analysis by online advertising network Chitika revealed that traffic from the Z10 increased greatly after it debuted on Verizon Wireless.

Although this seemingly passes by as a small victory, it sets the tone for future events and suggests that the battle for a third ecosystem is not only real, but that the competitive implications of this battle will sink in sooner than expected.

In view of this, Apple will have to sharpen its selling point — cool brand perception. It will be interesting to see how it pulls this off considering it’s working on price incentives in emerging markets; something that supposedly wipes off the cool factor.

Conclusion

This suggests that the stock will trend downward for a better part of the year, or at least till it releases the iPhone 6, which according to Jefferies, could be somewhere in mid 2014. Until a full reversal of the negative trend materializes, Apple Inc. (NASDAQ:AAPL) has given its shareholders a good reason to hold on. The tech big wig’s board increased its share repurchase program from $10 billion last year to $60 billion in the past quarter. Talk about creating shareholder value — good play.

The article Apple Faces Upside Challenge, Downside Is Not Limited originally appeared on Fool.com and is written by Lennox Yieke.

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