Potential 5% Upside to Apple’s Stock from New iPhone OS Share Gains
Apple (NASDAQ:AAPL) recently announced the new iPhone 4.0 Operating System (OS) which includes many new features that can help make the iPhone even more attractive to consumers that may be considering smartphones from competitors like Google (NASDAQ:GOOG), Research in Motion (NASDAQ:RIMM) and Nokia (NYSE:NOK).
We believe that support for multitasking with low battery consumption and security features for businesses are the key features of the new iPhone OS that can help Apple grow its customer base. Apple’s iPhone has increased its global market share from 0.3% in 2007 to 2% in 2009, and we expect it to increase to 11% by the end of Trefis forecast period.
However, there could be an upside of 5% to the $267 Trefis price estimate for Apple’s stock if the new iPhone OS could help Apple lift its share from 11% to 12% by the end of Trefis forecast period.
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Below we highlight the two most important features for iPhone 4.0 OS and how it can benefit iPhone’s market share.
1. Low Battery Usage on Multitasking an Advantage over Google Android and Nokia
Earlier versions of iPhone’s OS lacked the multitasking feature, while competing mobile operating systems like Android, webOS (Palm), Symbian (Nokia) and BlackBerry already had this feature.
Multitasking allows users to simultaneously run more than one application at a time. iPhone’s new multitasking feature allows apps to save their state and be idle in the background without consuming additional power. The apps can be restarted instantly from where they were left.
Apple claims that the multitasking feature will not be a drain on the battery, and this could give the iPhone an edge over Android and Nokia-based smartphones which consume additional power as more applications are run.
2. Better Security Features for Businesses Could Help Apple Gain Share over RIM
Key security features added in the iPhone 4.0 OS for business users are:
1. Encryption key: This will protect email messages and attachments stored in the iPhone through encryption.
2. Mobile Device Management service: This service provides wireless synchronization of email and app distribution. This iPhone feature will directly compete with BlackBerry’s BES service.
5% Upside to Apple’s Stock if iPhone Market Share Increases to 12% by 2016
Although we forecast that iPhone’s market share will increase to around 11% by the end of our forecast period, there could be an upside of $13 (5%) to the $267 Trefis price estimate for Apple’s stock if new iPhone 4.0 OS could boost its market share to 12% instead.
You can modify our forecast above to see how Apple’s stock could be impacted if it were to increase its iPhone market share at a faster rate than we forecast.
For additional analysis and forecasts, here is our complete model for Apple’s stock.