Mobile Weekly Notes: Apple and Samsung

The mobile and consumer electronics industry had a relatively interesting week, with Apple (NASDAQ:AAPL) hosting a media event during which it revealed additional details on the Apple Watch, and also launching a new MacBook laptop. In other news, Samsung (PINK:SSNLF)  has reportedly increased the initial orders for its upcoming flagship device, the Galaxy S6.  Here’s a quick look at the news that mattered for the mobile companies we cover.

Samsung Raises Production Targets For Galaxy S6

Samsung is reportedly boosting its production targets for its upcoming Galaxy S6 and S6 Edge flagship devices – which are set to go on sale on April 10 – following strong consumer interest and pre-orders. Korea’s Electronic Times reported that the company has placed an order for an additional 1 million units for April, boosting its total order to 8 million units for the month. The company had previously placed orders for 5 million units of the smartphones for March, bringing the total potential supply over the launch month to 13 million units. For perspective, Samsung shipped roughly 12 million units of the Galaxy S5 and 16 million units of the Galaxy S4 during the first three months after launch. and this indicates that the company is optimistic about the new handsets. As we’ve noted before, the Galaxy S6 looks like a promising device. Samsung appears to be learning from its past mistakes, by doing away with many of its oft-criticized software features while focusing on improving the design and user interface of the handsets. At the same time, the company has not skimped on features either – offering higher resolution screens, more battery-efficient processors and improved cameras compared to the Galaxy S5.

• Trefis has a $1,285 price estimate for Samsung, which implies a market cap of around $194 billion. Our price estimate is slightly ahead of the current market price. We estimate the company’s CY 2015 revenues at about $192 billion.

Apple Watch Price And Battery Life

Apple revealed additional details on its first wearable device, the Apple Watch, in a media event held last week. The device will start shipping in nine countries beginning April 24. The two mainstream models – Watch Sport and Watch – will be priced starting at $349 and $549, respectively, with prices ranging up to $1,099, depending on the case size and type of wristband. While the Apple Watch addresses some of the user interface and ecosystem related issues of previous smart watches, the two big fundamental problems that have riddled the category – battery life and the lack of a true killer application – remain unaddressed. Apple has indicated a battery life of roughly 18 hours. Despite the issues, we expect the device to get off to a strong start, owing to Apple’s brand momentum and its loyal and relatively affluent base of iPhone users (see Brand Momentum, Solid Margins Should Drive Apple’s Watch Business Despite Some Shortcomings). However, the device’s long-term sales trajectory will remain a crucial factor to watch, and this will be dictated by how customers perceive the core-utility of the product. Separately, during the media event, the company also launched a new ultra-thin 12 inch MacBook that sports a high-resolution display. The company also reduced the price of its Apple TV by $30 to $69.

• We have a $128 price estimate for Apple, which translates to a market cap of $740 billion. Our price estimate is slightly ahead of the current market price. We are modeling Apple Watch shipments of 17.5 million units for CY 2015. We estimate the company’s CY 2015 revenues to come in at around $220 billion. Our FY 2015 EPS estimate of $8.77 compares to a consensus of $8.60 according to Reuters.
• Apple stock declined by about 1.5% through Thursday.

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