Seeking Alpha
Long/short equity, contrarian, special situations, wild cards
Profile| Send Message|
( followers)  

Introduction to WWDC

In case you were living under a rock for the past 24 hours, you would know that yesterday was the much coveted, much awaited WWDC (Worldwide Developers Conference) for Apple (NASDAQ:AAPL), and the corresponding keynote delivered tons of news about new products and where the company is heading with many different facets.

As I've stated in the past, much like Macworld, the WWDC is an annual conference that Apple holds to let developers have a peek at its new software and developments. It includes workshops, interactive labs, lectures, and everything an Apple fanatic could possibly need to put themselves several degrees deep into the ultimate "dorkdom of Apple nirvana."

As I noted in a previous article, "Every year, attendees sign NDAs before heading into the WWDC and every year, someone leaks information. You can bet we're going to get a good look at what's coming down the pipeline with Apple one way or another, whether it's hardware or updated operating systems and iOS features."

Here's a roundup of what this investor thinks are the 3 biggest studs and 2 biggest duds that Apple revealed and that will have an impact on investors in the immediate future.

Studs

1. Big Focus on Mac with Redesigned Mac Pro/ New Macbook Air Hits Important Price Point

The Mac Pro update is bang on for several reasons. First, Apple is reviving an entire line of products that they've been carrying in inventory for years, yet haven't put the focus and time into that they have been putting into developing other new products. In a SWOT analysis of Apple a couple weeks ago, you could have arguably placed the Mac Pro in "opportunities", "weaknesses", or both.

The Mac Pro has been the neglected redheaded stepchild in the room, sitting quietly in the corner of most Apple stores until the occasional pro video editor or animation expert meanders in, needing to buy one completely decked out.

This not only breathes life into a forgotten line of Apple products, it now shifts the feeling of the Mac Pro from being used only by "professionals" to, "Hey, that would look good on my desk at home." There's a retail aesthetic with how the new Mac Pro looks. For professionals and casual computer users that just like to have something "under the hood", it supports some crazy specs:

  • Intel Xeon E5 Processor with Configurations up to 12 Cores
  • Four-channel DDR3 memory controller running at 1866MHz
  • 4 USB 3 ports
  • 6 Thunderbolt 2 ports
  • 2 Gigabit Ethernet Ports
  • 1 HDMI Port
  • 802.11ac Networking

Having it being built in the USA will also cozy it up to certain buyers that are hooked on USA only products, as well. Trust me, I can see a lot of fathers saying in the future, "Give the kids the iMac, I want the Mac Pro in my office."

Also part of the "wild card" of focusing primarily on Mac, the revamped MacBook Air has again hit what I will argue is an extremely important price point for retail buyers, under $1000.

CBS News gives the details:

Apple's Phil Schiller took to the stage to announce a new line of MacBook Airs with longer battery life, faster graphics and faster Wi-Fi. The MacBook Air's 11-inch will now have 9-hours of battery life, up from 5-hours, and the 13-inch model will now have 12-hours of battery life, up from 7-hours. The 11-inch model will start at $999 and the 13-inch model will start at $1,099.

Redesigning the Mac Pro was a great surprise, and focusing on the price point of the MacBook Air confirms to us that Apple is now not only focused on innovation, but also on appealing to retail buyers even more as a tool to increase income. Potential Apple investors will love the fact that the more expensive stream of Mac Pros are now looking more "mainstream" and that the MacBook Air, like the iPhone, has a low price appeal.

2. Monstrous Retail Success

A lot of the online retail success, in my opinion, is overlooked. Tim Cook mentions it in every conference call, and every post-call analysis that I read somehow seems to not give it the attention that it deserves. WWDC 2013 led off with some very tasty metrics for Apple longs.

Maclife.com commented:

Cook started out with a recap of the success of the Apple retail stores over the last year, citing that there are now 407 stores in 14 countries. He also introduced their new Berlin store, even including a video showing Berliners enjoying the store and playing up its location in a 100 year-old theater. Surprisingly, Apple chose to retain its former purpose to an extent. "The theater is integral to the building but separate from the store and we'll be hosting many events throughout the year," Cook said, adding that "Berlin is a fantastic store in a great location. Only Apple could do this."

This was a great lead in for the presentation, not only because they were specifically trying to appeal to developers, but because it put a tone on the presentation that Apple, as a company, is going to put a bit more of an emphasis on the numbers, and maybe a tiny bit less on innovation. I know a lot of shareholders that wouldn't necessarily mind a bit of a sea change in this regard.

Leading out with these impressive metrics reminded developers and shareholders the same thing: Apple is a number oriented company that continues to want to find way to build value for the people that get involved with and back the company.

3. Ongoing Potential of iOS in Vehicles (especially now with iTunes Radio)

As reported by The Verge:

Apple added turn-by-turn directions to its last version of iOS, and it's expanded vehicular options with iOS 7. A new "iOS in the Car" system will mirror your iPhone on the infotainment displays found in many cars: it's supported on everything from Kias and Hondas to Jaguars and Ferraris. That means Maps, Siri, Messages, and more will be available directly on the dashboard. You'll have to wait a while to use it, though; car manufacturers will begin adding the feature in 2014.

This is a big one for a couple of reasons - getting iOS into vehicles is going to be another place where you're interacting with the Apple ecosystem. You're going to have Apple available everywhere you have media available.

I started to allude to this in my previous article about Apple, speaking about how Apple is moving from current products to products that we use in all facets of life.

So, not only do I think that Apple will continue to improve on the AppleTV, but I also believe there's going to be much more home/daily life integration with Apple products as years pass.

As Apple moves forward with the iWatch and Google develops Glass, the line between home electronics, computing, and other things we use around our house begin to blur. If Apple can integrate your phone, watch, and TV - why can't it integrate your coffee maker, clocks, and home air conditioning?

Years ago, when Bluetooth finally started to become standard on a lot of electronics, I would have sworn to you up and down that by 2013 all of your home appliances would be controlled by universal tablet/remote. Although we're starting to see bits and pieces of this with tablet control of your cable, we're nowhere as far along as I thought we would be in terms of this type of in-home standardization.

I expect Apple to be a large player in this type of integration going forward.

Let us not forget, also, that Apple is taking a direct stab at Pandora (NYSE:P) and Sirius (NASDAQ:SIRI) here. It looks as though Sirius' argument points they made years ago in front of the Senate for the merger have some validity after all. When want to merge with XM, they posed the argument that they were competing with companies like Apple - an argument I didn't take seriously then, but do now.

These two companies need to be on high alert immediate - Apple is coming to eat their lunch.

Duds

1. iCloud Growth and taking on Google Docs

While necessary for Apple to eventually get into this niche that Google is now currently pioneering, I did not think making a massive deal over this type of integration was something that deserved more than a couple moments worth of notice.

Apple has been developing and offering the iWork suite for years now, and they are all in semi-advanced stages of development. Now, like Google Docs, you can access the software using nearly any device with a web browser. It was noted that it also has full support of Microsoft Office.

Did Google Docs pose so much of a niche threat to Apple that they needed to react to, and hype up, this development? In my opinion, absolutely not.

The iCloud growth was underwhelming because namely I don't like the fact that Tim Cook referred to iCloud's 300 million member mark as the "fastest" to get to 300 million. He conveniently failed to mention all of the carry-over subscriptions from .mac and MobileMe. That was kind of a cheap move, in my opinion.

2. iOS 7's Camera Updates, Siri Voice Updates and Searching with Bing

First things first -- iPhone camera app is going to be using filters now. Take that, Instagram. If only Apple had thought of this idea a few years ago, when the filter fad was front & center. Now, you're likely to find more people on Facebook (NASDAQ:FB) and other social media complaining about how lame the use of Instagram and filters are, than actually using them. I have to say, I think Apple missed the boat on the photo filter idea.

Now, onto Siri -The Verge reports on Siri:

Siri's signature robotic voice is getting an overhaul. A redesigned version of the personal assistant comes with the option of a male or female voice, both more natural-sounding than the original. Several languages are supported, and Siri's data sources have been expanded: users can query her (or him) for information from Wikipedia or Twitter. Apple touted a partnership with Bing which is currently used to pull in web results, but it's possible other search engines will be available.

I can't really say that the difference in Siri is a huge impact maker for the company. I think that Siri is a very supplemental part of Apple's innovating iOS and I think it was harped on a bit too much during the keynote. Many iPhone users still do not use Siri regularly, and the ones that do are less concerned with the voice that they're hearing and more concerned about Siri being able to understand them.

Also, I don't necessarily like Bing, and am wondering what the thought process behind that partnership is. Several of my colleagues in the technology field tend to feel the same way. I understand that Apple can't go out and partner with Google for search queries, but why not try something with a revamped Yahoo! before going to Microsoft's Bing? Why not create your own search engine? To me, Bing is a second rate search service that doesn't belong paired with any Apple products.

Conclusion

To conclude and to reiterate my past sentiments, I'm still bullish on Apple as a company. As they start to make a shift from innovation to focusing on the numbers a bit more, they're going to be able to squeeze significantly more value from their stock.

Regarded Solutions offered his/her sentiments earlier today:

I own shares of Apple, but not for the growth aspect of the company. I own shares because the company might become a stellar dividend paying winner. Apple has increased dividends steadily since it began paying them and I believe that trend will continue.

My personal opinion is that the share price of Apple could be range bound until they decide to announce anything that might be up their other sleeve.

I am holding the stock and not selling. The share price might pop or drop, but now I am convinced that I own it for the right reasons for my needs.

For the most part, even though I don't hold shares right now - I agree. Apple is poised to continue to become a dividend stock, will remain a staple in tons of portfolios (and more importantly, institutional portfolios), and with their new found line of credit, are poised to squeeze more value from their stock. I'm staying long-term bullish here as Apple marches forward towards 2014.

Source: Apple's 2013 WWDC: 3 Surprising Studs, 2 Overhyped Duds