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Apple’s (NASDAQ:AAPL) iPhone 5 won’t make its retail debut until September 21st, but its pre-orders have already surged their share price to record levels. As news unfolded that yesterday’s orders had surpassed 2 million units, Apple’s stock soared briefly over the $700 mark for the first time in the company’s history, settling in at $699.78 at the closing bell.
A Wow Kind of Day
For the bean counters and the other arithmetically challenged, 2 million units is double the pre-order of the previous iPhone edition. With a base price of $199 (with a two year contract), that’s just shy of $400 million in sales for one day on that Apple product alone. Assuming Apple’s current average gross margin of 46%, that’s a tide gross profit in excess of $183 million on one consumer product that you can hold in your hand, sold in one business day.
A Wow Kind of Response
When a mining company makes the news, people who follow that sector are interested. When a banking scandal hits the news, a lot more people are interested. But it seems like when Apple introduces a new product, everyone is interested. Googling “Apple iPhone 5” at this very moment generates 87.5 million results. Folks, this is a product that is not even on the market yet!
By comparison, if you google “Iran nuclear” right now, you get a mere 127,000 results. Even if you google “Kate Middleton” you only get 24.4 million results!
A Wow Kind of Product
The iPhone 5 features the new Samsung (what?) A6 chip, a 1GHz dual-core processor. In benchmark testing, the iPhone 5 scored at 1601. Of course, that means nothing to the average person without some kind of comparison. The Samsung (who?) Galaxy S3 scored 1387, whilst the HTC One X scored 709 against the same parameters. The iPhone 5 blew the doors off of the iPhone 4S, which scored 629.
For the less geeky readers, the iPhone 5 offers over 200 new features not included in any previous iPhone version.
A Wow Kind of Company
Forty years ago if you went into a store looking for an apple, it was a grocery store. Today when the average Joe says he’s going to get an apple, it has an unpronounced capital “A”, and he’s not going to end up in the produce section. Think about the magnitude of that change. We are talking about the original fruit being displayed by a technology company. Try googling again. At this moment googling “apple” yields 2.3 billion results. You’ll have to go four pages in to get to a single reference to the fruit. There’s even a result for Fiona ahead of that. This little enterprise that started back in the late 1970’s is now the largest company in the world – and of all time – with a market capitalisation of $655 billion.
A Wow Kind of Approach
The singular thing that has set Apple apart from and ahead of all others is its unique ability to understand what consumers really want and how to deliver that to us. This is evident even in some of their failures. For instance, in the mid-1990’s when Apple’s WYSIWYG approach was light years ahead of IBM’s operating system for PC’s, it was not their understanding of their innovation that was off-target; everything we do on PC’s today stems from the original Apple understanding of how that product would meet everyone’s needs. Their struggle was in the failure of their approach to capturing the growing business needs for PCs. They envisioned capturing the classroom. Macs were in schools everywhere. They reasoned that if students learned on Macs, they would insist on Macs in the workplace. They just didn’t factor in that those rising young stars don’t have much influence when it comes to capital expenditures when they enter the business world.
Be that as it may, the product was what the public wanted, but IBM had won over the business execs, most of whom knew little to nothing about PCs.
A Wow Kind of Future
Your questions are: So where is Apple headed? Will its stock continue to rise? Will the company continue to grow? Will its share price dip? If it does, how far will it go? When should I invest?
My question is: Why are you asking me? Do I look like a fortune teller to you?
Nonetheless, here is my perspective (Please deposit 2p into USB port #1). Apple is the prime example of a solid, long-term investment. Playing the up-and-down, day trading game is for the foolish. The best time to by Apple stock was 20 years ago – just ask those who did. If you can afford $700 a throw, go for it, but don’t be so foolish as to think you will increase your net worth in a couple of weeks or months without some corrections. This is a company with an operating and product development philosophy that has pushed it to the top, not just of tech companies, but ALL companies. Sure, if it were to fall, it has a long way to go. But if you are scared of heights, then you don’t belong in this game.
My bet is, even though Apple’s top execs have always been known for their casual attire, the company is dressed for success for a long time to come. And you can almost be certain that its next product introduction will be enjoy similar success to the iPhone 5.
First time on this site, have not clicked around …
After having read the article, i get a feeling the “A” (in ADVFN) stands for “Apple” … if it doesn’t, it should.
Blind fanaticism and one sided opinions are bad qualities for journalists, especially when dealing with a company who rely 99% on hype and marketing to sell their overpriced, ultra proprietary products.
Everyone and their dog have an opinion about Apple and their products, but no one have their own opinion …
(Please forgive my english grammar/spelling, i’m swedish (yes, the home of IKEA))