The 3 'S's Of Apple's 5S

Nov.27.13 | About: Apple Inc. (AAPL)

I've got the iPhone 5S on my mind.

It's almost funny to remember back to the day of the 5C/5S launch, when Apple (NASDAQ:AAPL) stock was down sharply. What a long way we've come.

The 5S, I had argued in a previous article, is going to be significant foreshadowing for the direction of Apple's product related business model going forward. In an article I wrote on the 5S on October 20th, I pointed out what I thought the surge in 5S orders told us both about Apple's customers, and its business plan:

This does well to prove a couple of arguments that Apple can use to tailor their business plan:

1. It shows that the average Apple consumer has the means to purchase the higher end equipment from Apple.

2. It shows that consumers want the best/higher end product, as the iPhone 5S is better made with the new top of the line A7 processor and fingerprint ID scanner.

3. Gaudy (everyone flipped out about the "gold" when it was released) might be right up the Apple consumer's alley - the same way Lexus sells cars with gold trim.

It was reported by Seeking Alpha this morning that iPad Retina Mini production has grown to 4 million, as Apple continues to iron out supply chain/logistical issues. It was mentioned by the Wall Street Journal earlier today that production for the iPhone 5S has also ramped up significantly:

Apple is now shipping all variations of the iPhone 5S smartphones within three to five business days, compared to a two- to-three- week wait last month, according to the company's online stores in China and the U.S.

Hon Hai, also known by its trade name Foxconn, has boosted production capacity for the iPhone 5S at the expense of the cheaper iPhone 5C as requested by Apple, people familiar with the situation told The Wall Street Journal last month.

The Taiwan-based contract manufacturer, which has more than one million workers in China, has operated 100 production lines around the clock in Zhengzhou, north central China, at full capacity, according to executives at Hon Hai. The company has about 300,000 workers at its Zhengzhou site , dedicated to just making the iPhone 5S and key components such as metal casings.

To get a glimpse of just how complicated it is to manufacture the iPhone 5S, Hon Hai executives said the company has about 600 workers on each iPhone 5S production line to handle assembly work.

"We have been churning out about 500,000 iPhone 5Ss everyday, the highest daily output ever," said the executive who declined to be named.

So, what has the S done for Apple now, and what will it continue to do for Apple in the future? Let's look at these three S's of Apple's iPhone 5S.

1. Stock Breakout

What have you done for me lately?

The market surely did seem to like the news this morning, as the technical picture shows Apple's stock breaking out from levels that it hasn't been at in many months. After coiling and condensing from the $510 to $530 area over the last 30 days or so, the stock has made a technical breakout upwards.

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For a superlative technical analysis of Apple's stock, check out the article penned earlier today entitled "Apple Breaks Out," which covers the technicals in a more in-depth standpoint.

The 5S has fueled, today, the beginning of a technical stock trend for Apple.

2. Speed

What is the iPhone 5S going to continue to do?

What sets Apple's 5S apart is the A7 chip, the same chip featured in Apple's new iPad Retina Minis. As I covered in my last article about the margins on the new iPads, the A7 chip, which some would have estimated to be the hog cost-wise on products, costs Apple only (approximately) $16-$20.

Here's a quick look at the differences between the two phones that Apple started offering this fall, versus Apple's Previous iPhone 5:

iPhone 5 iPhone 5C iPhone 5S
OS iOS 6 iOS 7 iOS 7
Camera 8 mpx @ 720p 8 mpx @ 720p 8 mpx @ 1080p
Processor A6 A6 A7 64-bit
Fingerprint No No Yes
Weight 3.95oz 4.65oz 3.95oz
Colors Black/White Five Pastels Grey, Gold, Silver
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For speed, the iPhone 5S clearly knocks its Apple-based competition out of the water.

According to Macrumors.com, the A7 is the sole driving force behind the desirable speed in both the 5S and the iPad retina:

Apple's new Retina iPad mini includes the same 64-bit A7 chip used in the iPad Air and the iPhone 5s, which offers significantly better performance than the A5 chip found in the original iPad mini.

According to new Geekbench 3 benchmarks, the Retina iPad mini is running at 1.3Ghz, much like the iPhone 5s. The iPad Air, however, clocks in at 1.4Ghz, giving it a slight performance edge over both the iPhone 5s and the new mini.

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3. Success

How will the iPhone 5S continue to drive the success of Apple?

24/7 Wall St. is one of many analytical websites that shares in the general view that Apple's 5S has been a legitimate success for the company:

Most analysis of the iPhone 5S claims that the smartphone has been a runaway success, while the new iPhone C has not. Apple, based on the remarkable intelligence of its management, fired up suppliers as fast as it could to meet the demand, obviously. Or, it left them alone if it did not need the phones.

As it was the driving force behind my last article about a month ago, the sentiment of success behind the 5S continues push forward. Putting the A7 into the new iPad mini retina was one step in the right direction.

As long as Apple can learn from the success of the 5S and what is making it successful, they're in a good position to implement that success strategy in other new upcoming products.

As Apple continues to find sects of success within iPhone, the company's "ecosystem" of products will continue to prove a good investment vehicle for potential investors; as Apple still has considerable market share to gain in Mac, and as Apple will likely continue to dominate music sales/streaming radio. I continue to remain bullish on Apple, with the iPhone 5S and iPad Retina Mini being the short term driving forces behind the company before the introduction to new products in 2014.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.