The Apple Watch is set to launch at some point in the next three months, and Apple Pay is already underway. So will either of them become the company’s next big thing? Analysts generally aren’t expecting much from either, at least not at first.
Apple Pay targets the U.K.
In their report dated Dec. 31, 2014, JPMorgan analysts Rod Hall, Ashwin Kesireddy and Rajagopal Raghunathan note that there have been reports Apple is in talks with the top banks in the U.K. The company wants to expand into the country through its biggest banks in the first half of this year, according to a report from The Telegraph.
The JPMorgan team rates this news as having a neutral impact on Apple. For now, it seems as if talks with one of the U.K.’s biggest banks are in trouble because they can’t come to an agreement on terms. One of the terms is related to what types of data Apple will be allowed to access.
Qualivian Investment Partners Up 30% YTD; Long ORLY Thesis
Qualivian Investment Partners commentary for the second quarter ended July 30, 2020. Q2 2020 hedge fund letters, conferences and more “Short-term investors will accept a 20% gain because they didn’t spend the time to develop the conviction and foresight to see the next 500%.” - Ian Cassell Executive Summary Readers of investment letters fall into Read More
U.K. banks fear Apple Pay
Apparently some executives are afraid of Apple Pay and the data the company could receive, which might enable it to invade the banking industry.
However, it seems doubtful that the big banks will want to miss out on the revenue they could see from Apple Pay because early signs of possible success in the U.S. seem to suggest it might finally be the tipping point that will convince consumers to pay using their mobile phones.
In a separate report also dated Dec. 31, 2014, Raymond James analysts Tavis McCourt and Daniel Toomey focused on the Apple Watch and analyzed the results of their latest survey, which was conducted Dec. 18-19. They report that about 9.4% of iPhone users plan to buy an Apple Watch, which is an increase from the 6.5% recorded in their previous survey in September, which was conducted right after the smartwatch was unveiled.
The analysts estimate that there are about 60 million to 70 million iPhone users in the U.S. and about 250 million globally. This means just the small percentage can result in “meaningful volume.” In addition, they point out that four to five years after the iPad launch, 56% of iPhone owners also have iPads, and 37% of iPhone owners have Macs. They believe these numbers offer “reasonable long-term goals” for the smartwatch in the U.S. market—if it ends up being a success.
So-called “iPhone Killer” to go out of production
The JPMorgan team also mentioned the report from Korea’s ETNews that Samsung is planning to stop producing the Galaxy Alpha, which some have called the “iPhone killer.” The analysts see a slight positive impact from the news. Instead of the Galaxy Alpha, Samsung is reported planning to shift more of its resources to low-end smartphones because of rising pressure from low-end smartphone manufacturers like Xiaomi.
This month, Samsung is said to be planning to launch the Galaxy A5, which is reportedly in the mid- to low-price range. Along with that launch, Samsung is reportedly stopping production on the Galaxy Alpha, which has similar specs. Another reason the company is reportedly halting production on the Alpha is that it apparently wasn’t popular.
The JPMorgan team thinks the end of production of the Galaxy Alpha continues to show that Samsung “is not quite sure what to do about Apple in the high end.” The analysts also note, however, that Nokia proved that skipping the high end of the smartphone market and focusing instead on the low end just isn’t a good strategy.