Market Overview

3 Apple Stories Investors Might Want To Ignore


Investors are quick to react to any and all news relating to Apple Inc. (NASDAQ: AAPL), but there are times when they might want to ignore the headlines.

For example, Apple recently filed a patent for a unique stylus that works on any surface and could theoretically beam what the user writes or draws to another device. This is exciting, but it's just a patent.

An actual product may never be released -- and if it is, it could be years before it arrives at retail.

What else could be worth ignoring?

Related Link: Weekly Highlights: Apple Pay Growth, Apple Watch Sales Potential And More

1. Apple Watch Is Unpopular

Apple Watch isn't out yet, but bloggers are analysts are already measuring its popularity. Opinions (positive and negative) are to be expected, but now a survey is attempting to shine light on the watch's potential.

A surprising 80 percent of iPhone users said they are not likely to buy an Apple Watch this year. At first glance, this sounds pretty horrific. In reality, it could actually indicate that Apple will sell millions of watches in 2015.

More than 160 million iPhones were sold during fiscal 2014. If only 20 percent of those customers are interested in the watch, that still leaves Apple with more than 30 million potential buyers.

"Everybody wants to write the product off as a loser before it's even out and selling," Sean Udall, CIO of Quantum Trading Strategies and author of The TechStrat Report, told Benzinga. "I think it's either going to be [Apple's] second- or third-biggest product once it gets going, once it has a couple quarters under its wing." Udall said that despite having no plans to buy an Apple Watch at this time.

"I don't need to be a buyer of an Apple product to evaluate its [potential]," he said.

2. iPad Sales Expectations

For better or worse, growth in the tablet market is starting to slow. It is an issue that will eventually impact every manufacturer in the business.

Apple's overall success in the tablet space means that it must endure the most criticism when sales decline.

Andreessen Horowitz analyst Benedict Evans found that an iPad's "useful life" is more than two years. Some Reddit users say they've gotten three years out of iPads that are still running strong.

Other users weren't so lucky, but most consumers seem to get a lot of use out of the device.

Now that the tablet market has peaked, there aren't as many new buyers for Apple to acquire. Consequently, iPad sales have begun to decline. It's not something to be alarmed about so long as the company builds new products that will replace the iPad over time. Plus, the iPhone -- Apple's flagship product -- continues to set new sales records nearly every quarter.

3. iOS 8 Lawsuit

Investors should first assume that the iOS 8 lawsuit (in which Apple is being accused of hiding the operating system's true storage space) has merit. Does anyone really think that a jury would award the plaintiffs with several billion dollars in damages?

BetaNews' Joe Wilcox doesn't think that question is necessary. He recently detailed several reasons why he thinks the suit is bogus.

"The newest iPhones offer more by default," he wrote. "Yes, 16GB is still entry, but the next model is 64GB instead of 32GB and the high-end 128GB rather than previous 64GB. Who offers more? No one among the major manufacturers."

Wilcox thinks that the plaintiffs went after Apple (instead of another manufacturer) because it is seen as an easy target. The company won its iPod trial, but that didn't deter others from taking Apple to court.

Disclosure: At the time of this writing, Louis Bedigian had no position in the equities mentioned in this report.

Posted-In: Andreessen Horowitz Apple Benedict Evans BetaNews iPad iPhoneOpinion Tech


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