Why Apple needs an “Epic” reveal of the iPhone 6 during Monday’s WWDC

Posted: June 1, 2014 by mattmargolis24 in Apple Investor Information, Uncategorized
Tags: , , ,

Apple’s keynote WWDC delivery from CEO Tim Cook is just over 24 hours away. The iPhone 6 is still likely a month or more away from making it’s well anticipated arrival. Foxconn is expected to begin assembling the iPhone 6 in July, which means the earliest the device may arrive in customer hands is July at this point.

Apple has made some waves recently regarding the company’s pipeline of products. Apple VP Eddie Cue recently said that, “later this year, we’ve got the best product pipeline that I’ve seen in my 25 years at Apple”. The center of Apple’s product pipeline is Apple’s iPhone 6, which boasted sales of over 150m units in 2013. However, Apple iPhone sales in 2013 failed to keep up with the smartphone industry growth rate. IDC reported that in 2013, “Apple had the lowest year-on-year increase of all the leading vendors,” yes even LG had a larger year-on-year increase than Apple!

Although, Apple’s iPhone 6 may not be ready for distribution until July at the earliest I believe 2014 is the year Apple needs to show off the device whether or not it will be ready for sale in just 2 weeks. Apple historically introduces its next generation iPhone and then follows it up with a product launch within 2 weeks.

Apple’s smartphone market share is well under 20% and even though introducing a new iPhone 6 a month or more ahead of it’s expected sale date may hurt Apple sales, it’s the right thing to do. If Apple wants to gain additional market share they need to demonstrate that the company’s iPhone 6 is awesome enough for Samsung loyalists to switch over to Apple. Samsung just officially announced the Galaxy S5 Active on Thursday with mobile carrier AT&T. LG just announced its latest LG G3 smartphone, which will be launching in various countries over the next several weeks.

Conclusion

The best way for Apple to rain on Samsung and LG’s smartphone sales parade is by showcasing the iPhone 6 on Monday during the WWDC. If Apple’s 2014 product pipeline is truly the “best pipeline the company has had over the last 25 years,” then it is time for Apple put up or shut up on Monday. If Apple’s upcoming iPhone 6 is “truly epic” it should create a the perfect storm to rain on Samsung and LG’s product launch sales parade even if the iPhone 6 won’t show up in consumer hands for another month or more.

Apple can win significant smartphone market share right now by forcing consumers to rethink what is cool and what is innovative in the smartphone marketplace. If Apple delivers an “epic” iPhone 6 product during Monday’s WWDC, it may hurt iPhone 5s/5c sales, but at the same time it would deliver a tremendous amount of damage to the other 80% of the smartphone handset marketplace.

A preemptive strike by Apple on Monday during the WWDC would be more rewarding for Apple in the long term versus being predictable and announcing the iPhone 6 just weeks before the product launches, which is consistent with every previous iPhone launch cycle. Apple needs to disrupt consumer behavior and force the remaining 80%+ of smartphone consumers to delay their smartphone purchases and wait for Apple’s iPhone 6 device to go on sale. The only way to disrupt consumer behavior and significantly increase smartphone market share is by way of an “epic” iPhone 6 announcement during tomorrow’s WWDC keynote speech scheduled for 1pm EST.

Full Disclosure: I have no position in AAPL but I am long Apple’s newest sapphire supplier GTAT.

Reminder: My PTT Research Forensics Newsletter that is scheduled to be published on Thursday June 5th at 3pm EST.

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My next pick is a company that is built on top of a strong foundation of intellectual property. My analysis of the company’s data and public comments indicate that a “major ramp” in future sales is just getting underway. The company’s C-suite is in the process of scaling up the business and preparing to manage a much larger and more complex company. The company has quietly created an integrated eco-system comprised of software and hardware that continues to extend its competitive edge over its largest competitors. The industry that the company primarily supports is in the early stages of what is expected to be an explosive and long-term growth cycle.

 

 

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Comments
  1. pat says:

    I always enjoy reading your article ….. However I prefer to read you when the article is based on research, facts , evidence etc rather then opinion. I agree an iPhone6 announcement is great especially if it features sapphire , BUT it is unlikely and it is certainly unlike APPLE.
    The iPhone 5s is still selling very well, they do not need to disturb the line , they are still producing 4s and selling it very well too . WWDC is more about solutions , perhaps a new product category will be announced because it will be ( have to) associated with a new ecosystem . Developers will need to need to know about it …

    Like

    • Thanks Pat. I like writing the research, fact and evidence articles more! It is very unlikely Apple announces the iPhone 6 tomorrow since it is “un Apple like”. I just felt the need to address the business reason why they need to.

      Like

  2. retailbaloon says:

    Matt,
    This was my reasoning as to why the buzz surrounding the potential slideshow leak (fakery) could in fact be genuine; Apple’s true-believers and even others want the new larger screen iPhone YESTERDAY, and a pre-emptive strike as you call it, would force many to GLADLY delay their purchase of their next mobile device in anticipation of the iPhone6… perhaps another groundbreaking device will be announced/unveiled like the wearable we all know is coming. A good CEO (think Jobs) finds a way to manage his company AND the stock price, and until recently Cook has been criticized for failing to do either. I expect some fireworks of SOME type early next week too.

    Like

  3. pkdecville says:

    Matt,

    I think if they do drop the bomb, the time to do it is the scheduled Tuesday “Special Event”.

    The Keynote will reveal new technology, APIs and systems leaving Tuesday for one or two huge surprise(s).

    If they announced the 4.7″ for July and the 5.7″ for September, consumers will be left talking about and comparing these two A6s and the current 5S with all the Androids and Win phones.

    What if Apple announces sapphire, LiquidMetal, and an awesomely powerful A8?

    Jimmy Iovine’s curated playlist?

    Hammer singing “Can’t Touch This”!

    Like

    • retailbaloon says:

      I agree pk, the “special event” makes sense for ANY kind of revelation regarding future products, and the coy nature of Apple’s own itinerary for day 2 (if I read it correctly) could be a hint.

      Like

  4. Barry Fitzgerald says:

    I can not find any mention of a special event outside of Monday….are people finding this somewhere?

    Like

  5. Mike says:

    Matt,

    Excuse me if this is the wrong place for this question, but i just read this and was wondering your take on it regaurding the iwatch.

    http://www.pfhub.com/apple-inc-aapl-plans-slim-round-iwatch-possibly-with-sapphire-screen-776/

    It was the last sentece that caught my eye….

    “Two iWatch variants are expected, which is frequently interpreted as women’s and men’s versions. However, Mr. Blair also indicated that an iWatch with a sapphire display was planned. This raises the possibility that one of the two variants is a lower cost one with Gorilla Glass display, and the other is a scratch-proof premium smartwatch with a sapphire crystal covering. There is just as much of a chance that the sapphire variant was canceled or lies in the future, however”

    As always thanks in advance for your continued research and work on GTAT.

    Mike

    Like

    • I would say gorilla glass on the iWatch is as wishful thinking as you can get from the Corning side. Samsung uses sapphire on its smart watch and sapphire for an iWatch is not very expensive. It would be completely silly to sell one watch that would get destroyed and one that has sapphire. The idea of 2 sizes iWatches has been on the table for a long time but the cover glass will be the same (sapphire).

      Like

  6. Barry Fitzgerald says:

    I have said all along that I didn’t expect an iPhone6 announcement today and hate to say I was right. So we will have to wait at least a month more (can’t imagine Apple will have another event this soon) to see out baby born. For now the speculators are taking a bit of blood….GTAT started down right after Tim finished his speech.

    Like

    • It means a lot of sapphire sales into a tight second half window 🙂 Consensus seemed to agree that there would be no phone announced today.

      Like

      • Barry Fitzgerald says:

        Matt – I am still trying to understand this deferred recognition issue. For GTAT to recognize revenue, where does that sapphire have to be? Received as a boule by Apple contractors? Installed in a phone? This tells us when it might be reported as income.

        Like

      • Depends on what is being done. If cored boules it would be recognized revenue upon receipt by the Chinese screen finisher. If GTAT is making the screens then it would be revenue recognition based on acceptance at Foxconn/Pegatron for assembly.

        Like

  7. Barry Fitzgerald says:

    Matt – thanks, that makes sense….thought it might be less obvious….

    Like

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