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Apple iPhone Sales Were 'Huge Sigh Of Relief', But Still Won't Save The iPhone As We Know It

February 1, 2017 11:43 am
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In the aftermath of Apple Inc.'s (NASDAQ:AAPL) positive Q1 earnings report, many are curious about what the figures signal about the company’s future growth.

Gene Munster, managing partner at Loup Ventures, and Mike Olson, managing director and senior research analyst at Piper Jaffray, addressed some lingering questions Wednesday morning during Benzinga’s PreMarket Prep Show.

iPhone Sales Numbers

Munster, who recently left Piper Jaffray to launch Loup Ventures (a tech-focused venture capital firm), noted the strong iPhone sales figure (78,290 in the quarter, better than estimates) is “a huge sigh of relief that the iPhone franchise is intact.”

And the relief isn't just about the numbers reported Tuesday, but about what they mean for future sales.

Olson said the strength of December sales indicates a lack of awareness among consumers about the 10th anniversary iPhone release. At least, the upcoming product launching hasn’t prevented buyers from purchasing iPhones at this point.

“So that should bode well for the March and June quarters,” he said.

Future Of The iPhone And Sales Numbers

Still, the iPhone market may not last much longer — at least not in the form consumers are used to.

“The iPhone as we know it as glass and aluminum in your pocket will likely go away,” Munster said. “They may have another product called the iPhone but it will be eventually some form of a wearable, and that’s the big focus.

"Apple made two important patents in the last week around that, and so we think the concept of your phone is just going to slowly go away. More importantly, I think that services as you said is going to become the way that Apple is going to leverage their hardware devices in the future, so the substance of the growth is going to come from services.”

Olson agreed.

“I do think that there is potential for services, given a significantly higher margin than the core businesses, to drive gross margin improvements,” he said. “Specifically, one comment that everyone’s kind of focusing on from yesterday was that they said that services will double over the next four years which…that would suggest around $150 billion services segment by 2020.”

You can hear the entire interview with Munster and Olson at 31:18 in the clip below.

PreMarket Prep is a daily trading ideas show focused on technical analysis and early morning movers. Listen to PreMarket Prep and chat LIVE with our hosts, guests, and other listeners every weekday morning from 8-9 ET! On Thursday we'll be joined by Prattle CEO Evan Schnidman, Piper Jaffray Technical Strategist Craig Johnson, and Chaikin Analytics' Sandy Chaikin.

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