As The iPhone Market Matures, How Strong Is Apple's Pipeline Of New Products And Services?

Since it's debut in 2007, iPhone sales have become one of the most watched line items in Apple Inc. AAPL quarterly report. With the iPhone segment making up over 70% of sales for the tech behemoth, it's now become critical for the company to start diversifying their revenue stream.

For their fiscal third quarter, 500 Estimize contributors have made estimates for Apple, an all time high for any stock covered on the platform. The Estimize community is expecting Apple to record EPS of $1.86 vs. Wall Street's $1.80, a 45% increase YoY. The top-line is almost equally as impressive with Estimize looking for $49.5B, topping both Wall Street and company guidance, and also posting YoY growth of 32%. 

China is becoming an increasingly important market for Apple. Nearly 29% of total revenue came from the Greater China region in the last quarter. Sales in the region also grew 71% YoY, far outpacing the 27% increase in global revenue during the period. And while global growth has slowed for the overall smartphone space, with many analysts believing the US in particular will be fully saturated by 2017, Apple must continue to expand into developing and emerging markets to achieve growth targets. Price could be the biggest pain point as they do this. While India is often seen as the largest untapped smartphone market, affordability is tantamount and makes the iPhone an unpopular choice.

As the smartphone space continues to mature, Apple is working on diversifying revenues with products like the Apple Watch, Apple TV, and Apple Music. This quarter we get the first glance at Apple Watch sales which are expected to clock in at around 4.3M, the fourth best showing after iPhones, iPads, and Macs. There has been the general consensus that the Apple Watch doesn't matter much for Apple, it won't make or break the company, and overall is expected to be a bit underwhelming. It's possible Apple is just ahead of it's time here, and that wearables won't become fully mainstream until 2016. Competitor's such as Fitbit certainly seem to be capitalizing on the trend, with social arbitrage platform, TickerTags, pointing out that social mentions of Fitbit have been rising, while Apple Watch mentions are decelerating.

In addition to the watch, it has also been rumored that Apple intends to create a streaming video service that would compete with the likes of Netflix and would offer a certain niche viewing experience based on specific topics. While mention of Apple TV have vanished from the media amid supposed stalled negotiations with TV networks, the rumor mill has started up again, alluding to the idea that Apple is secretly hard at work on this service behind the scenes. In a similar manner, Apple's highly anticipated music service will compete with Spotify and Pandora and curate tunes for special occasions.

It's still debatable how much these new products and services will prop up the top-line, but anyone that has followed Apple over the last 5 years knows it's never a good idea to bet against the tech giant. With a full pipeline and sales growth that rarely fails to impress, today's report should not be a letdown. There is still time to get your estimates in here!

(Photo Credit: Jeremy Piehler)