Apple iPhone 7 Gets More Important

Consumer Electronics

Published: July 22, 2015 6:31 am

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Presumably, Apple Inc. (NASDAQ: AAPL) will follow its normal release schedule for iPhones and launch a new version in September. While the company may call the smartphone the iPhone 6s, if Apple adds enough features, it will be the equivalent of an all-new iPhone. Whether or not it is called the iPhone 7, the new product will be the most critical contributor to the recovery of Apple’s shares, which were beaten down after earnings disappointed Wall Street.

To some extent, the anxiety about Apple’s finances was overblown. The company did post revenue of $49.6 billion and net income of $10.7 billion, compared to $37.7 billion and $7.7 billion in the same quarter last year. Apple did sell 47.5 million iPhones. Carefully watched revenue growth in Greater China was up 112% to $13.2 billion. However, forecasts for the current quarter where light, against many analysts’ forecasts.

If revenue growth mostly relies on sales of the iPhone, and the iPhone 6 is at the end of its highest demand life cycle, the iPhone 7 release has to be a blockbuster. The iPhone 6 posted sales of 10 million during the first weekend it was available. To impress investors, that numbers for the new iPhone better be closer to 12 million or 13 million. Otherwise, Apple can be criticized for a slowdown in demand for its major product line.

So, the future of Apple’s share price will have a foundation in just a few days of sales, those that run from the day of release of the iPhone 7 and the two or three days of performance right afterward. Apple cannot otherwise prove that it does need a new high-demand product, just as it did when the iPhone replaced the iPod in 2007. Eight years later, Apple has to answer for what happened in 2007. One product was dying, and another wildly successful one took its place.

If the iPhone 7 does not draw crazy high numbers of sales, Apple’s engine will have stalled, which is something it has not done in the short history of the smartphone market.

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