Written by Ophir Gottlieb, 4-10-2016. This was originally published on news.cmlviz.com
The headlines will have you believe Apple is dead. Its innovation is dead. It's just "a phone company." Those same headlines called the iPhone a luxury bauble with appeal to only a few techno-geeks -- that's actually from Bloomberg in 2007. But, we didn't really think Apple was going to watch its growth slow, did we?
Apple is ahead of us, not behind us. In fact, here's the incredible rise in investment in research and development the firm is making:
There's so much going on with Apple that we can't contain it in one dossier -- there are eight separate transformative thematic shifts it's leading in. But, we don't have to get fancy at all -- let's just look at the iPhone and Apple Watch. It's actually this easy:
Apple announced its new iPhone SE, a smaller phone and a starting price of $399, the lowest price ever for an iPhone. The iPhone SE was not built on a wing and a prayer. It was calculated, almost frighteningly so.
India's smartphone market is tremendously large. Here's the growth via Statista
By 2017, India will be larger than the United States. But, here's Apple's share of the Indian smartphone market as of January:
Up until recently, the country prevented outside companies from selling products without a tremendous penalty. But then this happened:
Apple's CEO Tim Cook had a private meeting with India’s Prime Minister. Shortly after the meeting we got this news: India has singled out "cutting-edge technology" as a segment that can side-step the 30% local producer rule and Apple has been singled out as "cutting-edge technology." What a coincidence.
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PROGRESS BEFORE IPHONE SE
Since that little handshake, Apple's market share in India has risen from 2% to 4.6% in a matter of months, and remember, the new iPhone has not been released yet. iPhone 6 holds nearly 20% of the market share in China and all signs now point to the reality that Apple is going to dominate India as well using the iPhone SE as the conduit. Apple actually discontinued both the iPhone 4s and iPhone 5c from India to pave the way for the more affordable SE.
At 20% market share, Apple is looking at 40-50 million units in India alone.
IPHONE SE PROJECTIONS
Sales projections for the iPhone SE are already rising. You can read the headlines, estimates have already come up to 40-50 million worldwide in the first year. Those numbers used to read 5-10 million. Here's what's happening:
Barron's reported that RBC Capital's Amit Daryanani wrote that Apple is "on track" to see 15 million units this year of its recently introduced "iPhone SE" based on his assessment of the "lead times" to deliver the product, as listed in U.S. and China markets. Daryanani wrote that "demand is outstripping supply" and that "iPhone SE currently has 1-3 weeks lead time in Apple online store."
We'll keep this short and sweet. Almost all of us have a natural bias against the smart watch, so let's just be totally data driven. To start, for the first time ever last quarter we saw that the smart watch segment sold more units than the Swiss watch market:
You will find more statistics at Statista
Just to be perfectly clear: Smart watch sales rose more than 4-fold just as Swiss watch sales started to dip. Again, throw out our biases -- this is data driven. Let's look at more facts: This is simply the market share of smart watches from last year to this year via Statista:
The Apple Watch didn't exist in 2014 so it carried no market share, while Google's device held nearly 75% of the market. Then 2015 happened and Apple jumped to 75% of the market while Alphabet / Google (GOOG, GOOGL) fell to single digits.
This is really just the beginning. As we have reported several times over, the argument against mass adoption of any smart watch, not just Apple's, is simply that it doesn't provide enough functionality beyond the phone to make it a mass market product. Fair enough, but Apple knows that.
The soon to be released Apple Watch 2 will have Wi-Fi capabilities so that users will have connectivity when they're not near their smartphone. But let's go further. It appears that either Apple Watch 2 or Apple Watch 3 will have a FaceTime camera. In English, that means the device will be able to perform face to face video calls -- Facetiming, Skyping, everything. If we can digest that and then slow down the data, we realize rather quickly that the Apple Watch will become a stand-alone product -- untethered from the iPhone.
The iPhone sold 15 million units in its second year, and as of right now, Apple Watch is estimated to hit 14 million. Just wait until those numbers are revised upwards, again.
RISK FOR FACEBOOK AND GOOGLE
Facebook's growth is now based on mobile ads. But here's the rub for Facebook and Google, and it isn't trivial. On its latest earnings call, Founder and CEO Mark Zuckerberg noted the material risk to Facebook of ad blockers. Here's what he means:
According to a report published by PageFair and Adobe, ad blocking software worldwide has increased 41% year-on-year to 198 million monthly active users and is expected to cost publishers more than $21.8 billion in 2015 in lost revenue (BusinessInsider).
Here's the incredible chart:
PROLIFERATION OF AD BLOCKING
A second risk Apple brings to Facebook is yet more direct. CML Pro broke news of a filing that Apple submitted to the US Patent and Trademark Office for a new social network, loosely referred to "Social Groups." It's too big of a report to go over here, but if you want to see the filing broken down, including renderings from Apple, you can read it as a member of CML Pro.
SEEING THE FUTURE
We have really just started the analysis. There's so much going on with Apple -- it actually spans eight different thematic transformations. But, to find the 'next Apple' or 'next Amazon,' we have to get ahead of the curve. This is what CML Pro does. Our research sits side-by-side with Goldman Sachs, Morgan Stanley and the rest on professional terminals, but we are the anti-institution and break the information advantage the top .1% have.
Each company in our 'Top Picks' is the single winner in an exploding thematic shift like artificial intelligence, Internet of Things, drones, biotech and more. In fact, here are just two of the trends that will radically affect the future that we are ahead of:
The Internet of Things (IoT) market will be measured in trillions of dollars as of next year. CML Pro has named the top two companies that will benefit. Then there's cyber security:
Market correction or not, recession or not, the growth in this area is a near certainty, even if projections come down, this is happening. CML Pro has named the single best cyber security stock to benefit from this theme.
These are just two of the themes we have identified and this is just one of the fantastic reports CML Pro members get along with all the visual tools, the precious few thematic top picks for 2016, research dossiers and alerts. For a limited time we are offering CML Pro at a 90% discount for $10/mo. with a lifetime guaranteed rate. Join Us: Get the most advanced premium research delivered to your inbox along with access to visual tools and data that until now has only been made available to the top 1%.
Thanks for reading, friends.