REPRINT: Blackberry – The Problem (7/19/12)

Here is a reprint of my 2012 post on why RIMM (Blackberry) failed.


What Happened – A Lesson in Psychology

The simple answer is that they have totally flubbed the move from feature phones to the modern smartphone and tablets. The Blackberry Storm did not go over well, largely due to quality of interface issues, and the PlayBook tablet was a total flop.

But for the investor this information is not enough. This is 20/20 hindsight. By the time RIM dropped to a four year low on June 17, 2011, it was too late. We want to know: How did such a smart company make such a huge mistake? What where the early warning signs?


Full post here

 

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Understanding Apple: Three Keys To Stock Price – 3. Looking Ahead

Apple  share price has been slammed recently, falling as low as $92.43 last Wednesday. The question for investors is whether this downward trend will continue, if the price will remain range bound as it has for over a year, or if share prices will reverse and continue to appreciate.

I have identified three key factors in the future value of Apple stock. The first article focused on iPhone sales which many see as leveling off in growth, or even declining in the current year. Since this product currently accounts for well over 60% of Apple’s income, this would clearly affect performance. Fears over this are what drove the price down.

The second post focused on how the Services and Other Products categories – particularly the new Apple Watch – will likely drive moderate growth.

In this post we will examine what may be the most important influence on Apple stock price:

  • Apple’s forward guidance for the March quarter

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Apple developers conference – the coming revolution


UPDATE

The WWDC has come and gone with no announcement of an updated Apple TV nor network streaming. Still, rumors continue that the Apple is waiting to seal deals for the streaming. With all that was announced, it is likely what I discuss here is merely posponed.
As for the Apple TV – Jonny Evans at ComputerWorld writes:

HomeKit support has been present in the Apple TV firmware since v7.0, though Apple hasn’t discussed it.

So this, at least, is going forward.


On June 8 Apple (AAPL) opens its World Wide Developers Conference, a week long event for developers of apps for both the Mac and iOS platforms. The schedule is full of workshops and sessions that instruct software engineers and designers on the technicalities of the trade – how to program Apple products.

No session is more anticipated than the opening keynote address (10 AM Pacific time). Here CEO Tim Cook and cohorts will present several important classes of information:

  1. Key updates and statistics on the various platforms and products,
  2. Introduction of new versions of iOS and Mac,
  3. Possible introduction of important product upgrades.

The first point will eye-popping figures of product sales, usage statistics for various features such as Apple Pay, the number of billions of dollars that have been earned by iOS app developers, and so on. Hopefully, there will be some update on Apple Watch sales, a topic of great interest.

Number two is a longer section which will detail all that is new in the upcoming versions of the two operating systems. There are rumors that new features will be few as Apple may have focused more on improving performance. This is what it did with the Snow Leopard release, one of its most successful. However, there will be new features added to each system, but that is not my focus here.

In this article I will focus on number three. While there might be an upgrade to the Apple Watch – most likely with a new, faster processor, there is another product that I believe will take center stage.

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Interesting iPhone Ad in China

A friend pasted on Facebook this very interesting/cute video of kids in a “China has talent” type of show. (Anyone out there who can correct me on the details, please do.)

Screen Shot 2015-04-08 at 9.06.48 PM

All is fine with the little dribblers, until we get to the 39 second mark, when one of the judges pulls out…

Screen Shot 2015-04-08 at 8.29.27 PM

I guess iPhone IS really big in China. Looks like he has the gold model. I can’t believe that this went unnoticed.

By the way – the kids are awesome!


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The Definitive Debunking of Touch ID Fingerprint Hack

When Touch ID was announced at the iPhone 5s launch, it was immediately besieged by detractors.

One area in particular for detractors is that the Touch ID system is susceptible is via spoofing an owner’s fingerprint. If true, this would  pretty much leave the whole system open to an attacker, and now, with the iPhone 6 and Apple Pay, spoofing would easily expose the owner to fraudulent charges placed on the his credit cards.

The most convincing  exposition on this was by the German Chaos Club group which quickly posted online video of how to spoof the Touch ID sensor system.

With the advent of Apple Pay based on Touch ID, this issue becomes even more critical.

Screen Shot 2014-09-24 at 8.19.58 AM

Two facts are clear:

  1. it works,
  2. it is not all that difficult.

However, there is one clarification to point #2. It ought to read:

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Apple Watch: ASP at $510 or higher? [Updated]

There has been a lot of interest in Apple Watch since it was announced last week. The two big questions for investors are

  1. How many will Apple sell? and
  2. What will the average selling price be?

An article at Seeking Alpha by Stone Fox Capital make the argument that it will likely not move earnings significantly.

They note that, with revenue close to $200 billion next year, the Watch would need to sell $22 B in order to account for 10% of the total.

Additionally, they note that Citigroup estimated Apple will sell 14 million units next year. They then go on to calculate out at a price of $349.

If my calculations are accurate, Apple must sell roughly 55 million watches at the average low-end price of $349.

While the writer’s point is made, the price is obviously absurd. This is the base price and we all know that it will only go up from there.

So, I have made some projections of price points and percentage of sales in each range. I created what I see as reasonable ranges for low, middle, high and ultra-high ranges, and I believe the distribution curves are both rather reasonable. In each price range I have expected that the average price is closer to the bottom than the top.

First I do a conservative estimate using the 14 million units estimate.

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