iPhone 5 Features & Design Need to Wow Users for Large Impact
Apple (NASDAQ:AAPL) has finally sent out invitations to reporters to an October 4th event, setting the stage for the widely anticipated launch of iPhone 5. [1] Apple is going to unveil the new model of iPhone just 16 months after the iPhone 4 debuted, and hence there is a huge pent-up demand for it (see Survey Says iPhone 5 Demand is Sizzling). Moreover, the new iPhone could help expand the number of wireless providers for Apple as Sprint (NYSE:S) will join AT&T (NYSE:T) and Verizon (NYSE:VZ) as providers in the U.S. market. (see Sprint’s Stock Finds New Life on iPhone 5 Announcement).
However, we believe Apple will have to come up with attractive features for iPhone 5 if it wants to have the same impact and draw as iPhone 5. The new features will also help it overcome increasing competitive pressures from the Google (NASDAQ:GOOG) camp, which has gained a significant presence in the smartphone market through its Android operating system.
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The iPhone is the most valuable business for Apple and accounts for more than 50% of our $510 price estimate for Apple stock. Our price estimate is about 25% above market price.
Processors, Camera, Graphics, Network, Design
We believe that the new iPhone could have faster A5 processor, improved camera, improved graphics performance, faster network technology and potentially be thinner and lighter. We also expect additional feature announcements related to the upcoming iOS 5 update and Apple’s iCloud service. These features will be the key if Apple wants to increase its presence in the mobile phone market.
There has been speculation that Apple could unveil two different versions of iPhone. A report from JPMorgan (NYSE:JPM) suggests that the iPhone 5 will be a world phone with support for both GSM and CDMA technology, and a revamped iPhone 4 will be a low cost phone specifically targeted for emerging markets (see Speculation About New iPhone(s) Lifting Apple’s Stock).
The reception and potential impact for the iPhone 5 is a big driver for Apple’s stock, and so we eagerly await this announcement.
See our complete analysis for Apple stock here
Notes:- Apple iPhone 5 Event Set for Oct. 4, PCWorld, September 27th, 2011 [↩]