In customary, almost religious fashion, the new generation of iPhones were unveiled this last Wednesday at the annual Apple “Special Event”.
Data from social media chatter showed a lack of consumer purchase interest (and, in turn, investor sentiment) for the new models (dubbed the iPhone Xs, iPhone Xs MAX, and iPhone Xr) in comparison to previous iPhone products. While the new models don’t really offer any major breakthrough features, it caught me a little off guard when I heard one of the phones was going to be bigger than the iPhone X.
For someone who has a 5.5-inch sized iPhone 6 Plus that can barely fit it into the front pocket of my slacks, it was difficult to comprehend why someone would need, much less want a huge phone (the iPhone Xs Max’s 26% larger than the previous largest iPhone display, diagonally measuring 6.5 inches).
The ginormous screen size will play a pivotal role in the Chinese market. Apple has been losing market share to Samsung and their series of Galaxy Note 9 products, and hopes to tap into the larger screen size trend.
Moreover, according to a Wall Street Journal podcast episode, Apple decided to supersize the iPhone to drive profits. When it comes to consumer behavior, bigger screens means more time on the phone and more time on the phone equates to an increase in the likelihood you’ll end up downloading applications to stream media or play games. The more apps purchased, of course, means more money in Apple’s already sizable pockets.
Smart move by Apple. While the company makes the majority of their revenue from the sale of the iPhones (about two-thirds of sales comes from iPhone sales), the company is undoubtedly taking certain steps to relay less on the sales of their hardware products and make their ecosystem even sticker. With Apple making further in roads into film industry with recent film acquisitions and even eyeing a subscription offering for a bundled entertainment service package, it’s clear why analysts are forecasting continued double-digital growth for Apple’s services business arm.
Bullish sentiment much? Yeah. Like most of you guys, I’m not sure what the future holds, but my fundamental analysis of Apple puts them at the center of the consumer tech space. Could this also be why Warren Buffet’s Berkshire Hathaway decided to increase their holdings of Apple shares 5%, making them the 2nd biggest shareholder, earlier this year? Perhaps…