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On July 1, one of the world’s top Apple analysts, Neil Cybart, wrote an article titled “Apple is pulling away from the competition.”
Since then, Apple has gained $500B+ in market cap and -- on the road to becoming the world’s first $2T company -- smoked its Big Tech frenemies. Apple has built its advantage for yearsEach of its new products is designed to handle tasks once managed by sibling devices -- and in “an increasingly personal way,” Cybart told us yesterday. Computing tasks are moving from the Mac to the iPhone to the Apple Watch -- while all of Apple’s products work seamlessly together (except the charger cables). In comparison, Apple’s top tech competitors are all over the place: Samsung is aimlessly launching products just to be “first” (i.e., foldable screens) Amazon bet big on the Echo instead of wearables Microsoft’s Surface has failed to break through with consumers |
iPhone sales are slowing but other products are picking up the slackApple has built a sticky ecosystem around its flagship product with services and non-iPhone revenues accelerating in recent quarters. Cybart estimates that of Apple customers, 50% own only one product (iPhone). Once these people go deeper into the ecosystem, watch out. Expect millions of users to add additional items like the AirPods, Watch, subscription or -- as Cybart predicts -- a face wearable in the years to come. The biggest risk to Apple?To be sure, Apple has significant supply chain and business exposure to China (~17% -- or $40B+ of its 2019 revenue) as well as antitrust concerns (e.g., Epic Games). However, Cybart tells us the biggest risk to the Cupertino giant is a lack of focus. Customers are embracing Apple’s current strategy, he says -- but “if you see Apple stretch itself into areas where it doesn’t have the same user experience, that could start the gradual unwind of its ecosystem gains.” |
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