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Apple Presentation Will Take Place Without A New iPhone For The First Time In Almost Ten Years

Apple Presentation Will Take Place Without A New iPhone For The First Time In Almost Ten Years

The presentation of new Apple products for the first time in almost ten years will take place without a new iPhone.

Apple presentations always ended with" one more thing " – the famous phrase of Steve jobs, after which he presented something new and breakthrough. But the presentation on September 15 will be held rather in the format "without one more thing": the company announced the postponement of the release of the new iPhone 12 in October due to delays in the supply chain amid the pandemic.

As a result, in his presentation, today called "Time flies" Apple will focus on related products such as the sixth-generation Apple Watch smartwatch and the new iPad Air, as well as possibly new overhead wireless headphones AirPods Studio and the lost-things app AirTags.

Leaving the iPhone

As the Financial Times notes, the absence of the new iPhone at the presentation will allow Apple to demonstrate to the General public what wall street investors have already recognized: the company got rid of dependence on its flagship and today receives revenue from a wide range of products.

In the current fiscal year, which ends in September, Apple's revenue is projected at $274 billion. And although this is an increase of only 17% since 2015, the main difference is in the distribution of revenue: during this period, revenue from iPhone sales decreased by 16% and today accounts for 44% of the company's total earnings. And sales of wearable devices and accessories divisions grew by 144%, iPad sales by 45%, and services by 162%. For every 100 iPhones sold, the company sells 49 pairs Of AirPods and 14 Apple Watch smartwatches, according to data from Analytics firm Canalys.

At the same time, Apple has not yet exhausted its growth opportunities. According to investment firm Loup Ventures, so far only 9% of iPhone owners have purchased an Apple Watch, and the forecast could be 50% within ten years. In the market of wireless headphones, according to Canalys, the company took an impressive 38%, ahead of the nearest competitor-Xiaomi by about 4 times. But this is also not the limit, analysts say: new technologies and new models of headphones can further increase Apple's leadership in the sector.

The hype around the App Store

It is unlikely that the company will be harmed by the ongoing accusations of monopolism concerning the rules for placing applications in its App Store. Apple requires that all apps hosted in the App Store where users make internal purchases (pay for a subscription or additional features) use the iTunes payment system, for which a 30% commission is charged. For comparison, processing companies charge 1-5% of credit card payments, while online marketplaces charge 1-10% of the volume of payments to stores. App developers have expressed their opposition to the so-called Apple tax since it was introduced in 2011.

In 2019, the head of the congressional Committee on antitrust policy, David Cicilline, in the framework of an investigation into the abuse of four leading American technology companies (Apple, Alphabet, Amazon, and Facebook) by their position in the market, called the "Apple tax" exorbitant and compared it to highway robbery. In June 2020, the European Commission announced the start of a formal investigation against Apple on charges of violating antitrust laws.

And in mid-August 2020, the American Epic Games, the developer of the popular game Fortnite, sued Apple, calling the company in its lawsuit "a monopolist in the market for distributing iPhone apps, which is looking for ways to control markets, block competition and stifle innovation." Telegram, Spotify, Netflix, Match Group, Airbnb, Basecamp, ClassPass, and Facebook expressed their support for Epic Games in the fight against Apple.

Apple filed a counterclaim against Epic Games on September 8. The company demands to pay damages for violation of the terms of the App Store contract by the opponent and prohibit him from continuing to conduct "dishonest business": the latest version of the Fortnite app has its own internal direct payment system that allows you to bypass the App Store Commission of 30%. "This is just a disagreement about money," the lawsuit says. Without waiting for a court decision scheduled for September 29, Apple removed the Epic Games account from the App Store a month before the hearing. In total, the App Store now has 1.8 million apps.

Microsoft announced on August 6 that it would not place its streaming gaming platforms in the App Store. Google, Facebook, and Nvidia have the same position. And on September 11, it became known that Apple did make changes to the rules for placing apps in its store. First, developers of streaming games are now allowed to place game catalogs inside apps. However, each of the games must still be a separate app and use the iTunes payment system. Second, applications for virtual classes in the "one teacher – one student" format can use a third-party payment system. However, if there is more than one student, the built-in App Store payment system must still be used. The third easing of the rules was the permission to use a third-party payment system for applications working in the b2b sphere. However, if the sale is made to individuals, the apps must still use the iTunes payment system.

According to analysts, legal proceedings will not be able to slow down the development of Apple. According to Jim Suva, a leading Citigroup technical analyst, "this isn't the first lawsuit, nor will it be the last" – and it's just "a small distraction for Apple." Former Apple CEO John Scully calls the company "the most competent in the world when it comes to running a business and performing activities" and believes that " the iPhone will not go anywhere by 2030 and will be a billion times more powerful than the original model presented by jobs."

Since the revenue from the "Apple tax" belongs to the services sector, i.e., to the very segment that the company is betting on in the face of declining iPhone sales and a reduction in its share of total revenue, it becomes clear why Apple is not giving up under the onslaught of claims. The company does not disclose separately the amount of its revenue from the Commission for using the iTunes payment system, as well as the total amount of App Store revenue. Total revenue in the services sector exceeds $50 billion per year.

Financial stability

Over the past years, Apple has shown stable financial growth. Since 2016, the company's annual revenue has grown by 20% from $215 billion to $260 billion in 2019. This year, revenue is expected to grow by another 5% compared to last year's results. Net income for the same period also increased by 20% from $45.7 billion to $55.2 billion, with a forecast for 2020 of $57 billion.

Investors are happy with the state of Affairs in the company: "Apple" shares for the same period (since 2016) have risen in price four times, already by July 31, justifying Suva's forecast of June 16 about the target share price of $400. At the same time, the company announced the fifth share split in its history, this time on a "4 to 1" basis, thereby reducing their value by four times (on September 11, the value of Apple shares at the close of trading was $112). The company's market capitalization in August exceeded $2 trillion (a record, except for the oil company Saudi Aramco: its value reached this level in December 2019, but it is often not included among the largest public companies, since the value of shares issued by Saudi Aramco on the stock exchange is only 1.5% of its capitalization, while Apple has about 90%).

Apple consistently meets and even exceeds other forecasts. The results of the third fiscal quarter of 2020 were higher than expected by wall street analysts: revenue increased by 11% to $59.7 billion instead of the expected fall of 2% and $52.6 billion. Earnings per share were $2.58 – 18% higher than the same period last year and 24% higher than analysts ' forecasts of $2.07. Also, Apple CEO Tim Cook announced in a telephone conversation with CNBC that the company was six months ahead of its goal to increase annual revenue from services (including the App Store, iTunes, Apple Care, Apple Pay, Apple Card, and Apple Subscriptions) in five years by 2 times to $50 billion. In the third quarter, this figure increased by 14.8% compared to a year earlier and amounted to $13.1 billion.

"Our June results provide strong evidence of Apple's ability to innovate and work effectively in difficult times," said Luca Maestri, Apple's chief financial officer. Confidence in the company's future is also added by solid cash reserves: at the end of the third fiscal quarter, they amounted to $193.8 billion. That is more than in the previous quarter ($192.8 billion) but less than in the same period in 2019 ($210.6 billion). But it is enough for financial stability.

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