Seeking Alpha

Will347's  Instablog

Will347
Send Message
speculator
  • My IArticle 0 comments
    Sep 13, 2013 11:32 AM | about stocks: AAPL

    everyone has one right? haha tongue in cheek. See, I used to think AAPL was doomed and even made a bearish call at 660ish, citing GOOG competition. In fact I have hated AAPL for almost as long as I can remember, use android devices, and do still somewhat hate AAPL but I believe the recent selloff is a great discount.

    The way I see it, for the first time in a LOONNNG time they have actually pioneered something. First was the "smartphone" but ya know, a snazzy OS on some commodity hardware is a pretty attainable goal,.. especially if GOOG makes an OS for charity.

    Next, they had the "retina" display AKA high quality LCD. Which is now less resolute than the competition and also commodity hardware.

    Then the amazing camera. Which is now average.

    Then the iPhone 5. Huh? What did it have? I forget. Nothing. Weak battery.

    But now, they have mass-distributed biometric security. Holy F. THAT CAN BE BIG. And this is the biggest tech upgrade, IMO, since the original iPhone.

    First, lets think about alternative technologies.. retina scanning comes to mind, and face recognition. Like fingerprint, these are existing technolgies that can be applied to phones. But, do you want to have to stare down a device to get it to recognize you? No. And surely these options would take longer. Instead, ANYONE would rather cooly slip the phone from their pocket, thumb already feeling out the button and unlocking the device. Basically, you can enter your ten digit lock code in the time it takes to even lift the screen. That's really impressive.

    The PayPal app should love it and I would like that myself. Amazon or EBay passwords, or any merchant password, would be laarrggely more convenient. And I actually know many people with 4 digit lock codes. What a ginormous pain. I actually regret texting them sometimes.

    The key point is, AAPL is actually untouchable in this feature (heh, accident ;). AAPL owns Authentec which likely has patents in the fingerprint technology, preventing.. how do you say, interlopers. There's just no cloning it... NO COMPANY will have this feature in the near future. For like 5+ years, no company will have it. Yet somehow, that's the first time I feel we can say that about a feature in an iPhone. For business purposes, AAPL has just ejected Android and Jr Windows Phone 8 as even a possibility.

    And, NFC was just owned. Why bother? Beam the transaction over the web, validated with the thumbprint.

    Next, yea the 64bit chip is "bridging the gap" and giving them power to make extremely high demands from intel on pricing and specs or replace INTC's chips with their own designs in say a future upcoming macbook Air. And that doesn't hurt their position in their own market. AAPL still owns the entire notion of "build quality" in notebooks and I'd say their position in computers is quite stable.

    Frankly, if I were to worry for AAPL, it's in the tablet space. This is an area where they can't quite amaze with extravagant features, or claim to have more apps, or even market the security feature as convincingly, and yet, they can't accept the slim margins of say a GOOG Nexus 7 (2013), which is a really sound cheap device. However, people seem to flock to them anyway, and iPad sales are a trend of success that doubtfully faded overnight. If it did, I'm hoping and assuming AAPL would protect shareholders and act quickly. This may be high hopes from such an arrogant brand, but I guess I'll take the risk that the tablet segment can be "fine", one way or another.

    With floundering MSFT and NOK now joining, the two are probably making a big push towards China with their already cheap but functional products. And, sure, AAPL didn't make a big ENOUGH stab at EM's, perhaps. I mean they could have easily repackaged an iPhone 4S with a more efficient chip process in a plastic case and sold that in lieu of the iPhone 5 internals, which are clearly AAPL's version of windows vista. And this would have made more sales of the 5C. But I will remain humble by saying, I actually believe they see something I don't, besides greed, in the pricing decision. The market is convinced that it's priced too high, and a device like the MotoX (still $530 mind you) will solve this issue. WELL, moto X thrives on voice commands. How are those working in the Chinese market? Lets ask wikipedia. "The voice recognition software is available for all devices since Android 2.2(Froyo), but the settings must be set to English.[10]"

    Now MSFT might have a play in China with their brilliant Nokia Lumina 521. This is definitely an extremely decent, ultra-budget-class smartphone, but upon closer inspection, it's not up to snuff in a lot of important areas, such as battery life. And its nowhere near the speed or capability in browsing or gaming, not that there are huge number of compelling games on Windows Mobile anyway. (thanks Anand!)

    So when we talk about direct competition at the price, maybe there's less than there appears in the 5C bracket. For example, a phone I really like, the HTC One, is still around $650-$730 with around equal specs to the iPhone 5. For the 5S, in terms of competition, there's truly nothing. That A7 chip blows the doors off of anything in the pipeline. Even if it hasn't been tested yet, I am sure of that.

    I think AAPL has escalated their brand back above the level of "one decent option within a prolific commodity" (smartphones), and on the lower end, opted to preserve margins while still delivering products that are in some ways cost effective solutions for consumers, via performance and features. With the 5C, they have stated they aren't trying to be ultra-prolific/80% market share, they are just trying to penetrate deeper into new markets while making money the way they always have since Y2K.. premium products. There are a few phones that are in the running to compete with the 5C, but AAPL hasn't had a core product flop once this millennium, for a reason. In the business world, the 5S is a titan, and I can see a much more sound fundamental position than before the 5s was officially detailed.

    Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in AAPL over the next 72 hours.

    Themes: 5S, 5C, Mobile Stocks: AAPL
Back To Will347's Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (0)
Track new comments
Be the first to comment
Full index of posts »
Latest Followers

StockTalks

More »

Latest Comments


Posts by Themes
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.