Opportunities glaring at Apple Inc.(NASDAQ:AAPL) on back of strong demand for its iPhone product line justifying sentiments that the company could be a $1 trillion company in the next 12 months according to Patrick Moorhead, of Moor Insights & Strategy. However, speaking on CNBC, Point View Wealth Management John Petrides, argued that over-reliance on the iPhone product line that currently accounts for 70% of the total revenues could come back to haunt Apple Inc.
There is no doubt that iPhone sales remain a key driving force behind the company’s total earnings; a fate that calls for Apple, which owns one of the most profitable businesses ever, to always reinvent itself with a revolutionary product each passing year. A reduction in prices for the iPhone 6 could be in the offing later in the year, should Apple come up with a new smartphone as the successor of iPhone 6. Should the new phone fail to live up to expectations in terms of new features and capabilities, consumers may end up going for the less expense model, at the expense of the new phone.
“Apple Inc. (NASDAQ:AAPL) is heading to a point with the iPhone where it is an evolutionary stage not revolutionary. When Steve Jobs introduced the iPhone back in 2007, it was revolutionary with the touch screen. When iPhone 4S came out with Siri that was revolutionary because it had the push to talk and then the iPhone 6 came out was revolutionary because it had the Apple Pay,” said Mr. Petrides.
A point of concern for Petrides is the fact that the average selling prices of the iPhones has always dipped in between the evolutionary stage, something that always puts profit margins at risk. How long Apple can be able to sustain, this model remains to be seen.
However, Moorhead is remaining confident on Apple Inc. (NASDAQ:AAPL) dominating the smartphone space having only tapped 20% of current iPhone users with iPhone 6. Apple watch and Apple Pay are some of the other products that the analyst believes will go a long way in supplementing the company’s earnings from the iPhone sales, in the long run.
“They have only hit 20% of current iPhone users, so that is a ton of headway. Mac’s while the entire PC market is going to down, Mac market share is actually going up. I think the next three to five years they are looking further than that with big bets around research kit and even home kit these are big bets,” said Mr. Moorhead.
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