Apple WWDC: Lots Of Software; Hardware, Not So Much

Updated on

It’s day two of Apple Inc. (NASDAQ:AAPL)’s Worldwide Developers’ Conference (WWDC), and analysts from multiple firms are avidly churning out reports about it. The main point raised by most of them is nearly the same: expect details on updated software and not near-term catalysts like announcements about the rumored iWatch or iTV or the iPhone 6.

iWatch, other hardware won’t make an appearance

In a report dated June, 2, 2014, Barclays analysts Ben Reitzes and Ryan Jones said they think the lack of hardware announcements on Monday was the reason Apple Inc. (NASDAQ:AAPL) stock hasn’t moved much around WWDC. They weren’t too surprised with the improvements the company made to iOS 8 and Mac OS X Yosemite.

However, they noted that Monday’s keynote speech did not offer any hints of an iTunes ad platform or payments platform coming soon. They believe both of these items were on investors’ wish lists, as they seek recurring revenue streams with high margins to protect Apple Inc. (NASDAQ:AAPL)’s earnings power in the long term.

The Barclays team now thinks Apple Inc. (NASDAQ:AAPL) may wait until the more hardware-centric launch dates in the fall to show off the expected two iPhone 6 models and some kind of payments innovation. They believe Apple might even hold a second event before thanksgiving to launch the iWatch along with new iPads, Mac computers and an improved Apple TV.

Best parts of WWDC so far: Swift, HomeKit and HealthKit

So far, most analysts agree that Apple Inc. (NASDAQ:AAPL)’s new programming language Swift, as well as HomeKit and HealthKit, are the biggest takeaways from Tuesday’s keynote. Analysts Amit Daryanani and Mark Sue and their team at RBC Capital say they think the HealthKit and HomeKit APIs in particular could be key building blocks for the rumored iWatch, which they expect to be announced and launched by the end of this calendar year.

The Barclays team agrees about the importance of the new Swift language, HomeKit and HealthKit. Swift replaces the Objective-C programming language and is designed to work better with Apple Inc. (NASDAQ:AAPL)’s A7 processor. The analysts from Barclays believe developers were especially excited about having a more simplified coding language for iOS 8.

They note that a number of apps already offer what the HealthKit and HomeKit APIs do but believe these frameworks are aimed at making the iPhone the “central control device” of all users’ daily interactions. However, they see the lack of near-field-communication as being a continuing problem for Apple but think this will be solved with the iPhone 6 release this year.

Apple raises the bar

In their WWDC report, Stifel analyst Aaron Rakers and his team said they think Apple Inc. (NASDAQ:AAPL) is continuing to raise the bar for user experience, content sharing and making iOS the centerpiece of both healthcare and the connected home. In addition to HomeKit and HealthKit, they think another major announcement from Apple was improvements in the Chinese language in iOS 8. They said this is important because the company is trying to increase its share of the Chinese market. The company also improved its maps for China, turn-by-turn directions, weather and other information elements for the Chinese market.

Other features they like include Apple Inc. (NASDAQ:AAPL)’s new security and enterprise features and the new iCloud drive capabilities with the price reduction. Users can now get 200 GB of storage for about $48 per year, compared to the previous 55 GB for $100 per year.

Is Apple alienating Google?

Barclays analysts suggest that the new programming language could provide another competitive edge for Apple Inc. (NASDAQ:AAPL) over Google Inc (NASDAQ:GOOGL) (NASDAQ:GOOG)’s Android. They say the simplified language could make it easier and faster for developers to get their apps to market. The Stifel team also said they think the Swift language gives Apple Inc. (NASDAQ:AAPL) a leg up against Android.

The RBC Capital team said WWDC’s announcements suggest Apple Inc. (NASDAQ:AAPL) is alienating Google Inc (NASDAQ:GOOGL) (NASDAQ:GOOG)’s Android even more than it already had been doing. For example, Apple is now using Microsoft Corporation (NASDAQ:MSFT)’s Bing search engine to “run spotlight / search natively on OS X and iOS.” Also Swift makes it more difficult to port apps from iOS over to Android.

Leave a Comment