Smartphone Weekly Notes: BBM User Adds, Apple’s iPhone Event, Samsung Pay
The smartphone space had an interesting week, with Apple (NASDAQ:AAPL) announcing that it would be conducting a media event on September 9, where it is expected to unveil its latest iPhones. In other news, BlackBerry (NASDAQ:BBRY) provided some updates on its BBM services, while Samsung (PINK:SSNLF) rolled out the beta version of Samsung Pay, its mobile payment service. Here’s a quick round up of the news that mattered in the smartphone industry and how it could impact the relevant companies.
New iPhones Expected September 9
Apple will conduct a media event on September 9, where it is likely to unveil its latest iPhones and possibly a revamped version of its Apple TV media player. The iPhone is Apple’s biggest money maker – accounting for over 60% of its value, according to our estimates – and this launch is likely to be very closely watched by investors, who have been somewhat jittery about the company’s prospects amid a slowdown in China, its biggest growth market, and some concerns that the iPhone’s growth momentum is cooling off (Apple missed street estimates for iPhone shipments in fiscal Q3). So what should investors expect from the device this time around? While the new devices are likely to feature similar industrial design as the 6 and 6 Plus, they are likely to sport new pressure sensitive touch screens – much like the Apple Watch – significant camera improvements and the usual specification upgrades. We don’t think that Apple will meddle with its storage mix and pricing strategy (16GB, 64GB, 128 GB), since this was responsible for much of the ASP growth with the iPhone 6.
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Trefis has a $142 price estimate for Apple, which implies a 25% premium over the current market price. We are modelling revenues of about $237 billion for CY’15. We estimate the company’s FY’15 EPS at $9.45.
BlackBerry Talks Up BBM Growth Momentum
BlackBerry recently said that its BBM messaging application posted one of its strongest months of user growth this July, driven partly by an update of its Android app. Monetizing BBM is an important part of BlackBerry’s turnaround strategy, and the company is apparently targeting revenues of roughly $100 million from the service in FY 2016, via its mobile payments platform for BBM, advertising and value-added offerings. Now, while the comments may seems encouraging, we aren’t really sure how significant the user adds were since the company doesn’t report BBM numbers. It last said that it had about 85 million monthly active users (MAU) as of Q2 CY2014 and it’s likely that a bulk of the active user base at that time was from legacy BlackBerry devices, which have been seeing significant attrition. We estimate than the company lost over 20 million BB7 users over the last year, and newer BB10 device sales have also been sluggish, effectively indicating that BlackBerry-based BBM MAUs fell. This would mean that the company is counting on cross platform adds – from iOS and Android users to drive MAU growth – but this may not be easy in the long-run, given the competition from the likes of Facebook (Whatsapp and Messenger) and WeChat.
Trefis has a $9 price estimate for BlackBerry stock, which represents a 25% upside to the current market price. We are modelling revenues of about $2.70 billion for CY’15. We estimate the company’s FY’16 loss at $0.21/share. This compares to a consensus loss of about $0.23/share according to Reuters.
Samsung Pay Rolls Out In Beta, Will It Gain Traction?
Samsung launched the beta version of Samsung Pay in the United States last week. The service is expected to see its official roll-out towards the end of September. There are three pieces to the mobile payments puzzle and in theory, Samsung’s offering seems well positioned to succeed. First, on the device side, Samsung is the world’s largest smartphone manufacturer, and it’s likely that most of its future devices will support Samsung Pay, ensuring a large base of compatible phones. Secondly, Samsung is making progress in getting major banks and payment companies on board. Finally, Samsung appears to have a big advantage in terms of points-of-sale that accept the service (80% of all points-of-sale upon debut), since Samsung Pay will leverage the same technology standard credit cards use, in addition to the tap-to-pay mechanism found on the likes of Apple Pay. In comparison, Apple Pay should be compatible with just roughly 15% of all U.S. points-of-sale by the end of this year. However, user experience will also be a key determinant of the service’s uptake, and Samsung has a mixed track record of creating robust software and services. Moreover, the service will have to compete with other Android-based payment systems, including Google’s Android Pay (related: Why Samsung Is Entering The Mobile Payments Fray).
Trefis has a $1255 price estimate for Samsung stock, which represents a significant upside to the current market price. We are modelling revenues of about $195 billion for CY’15.
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