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iPhone 5 The Sequel

September 17, 2012

When Apple introduced the iPhone 5 on Wednesday, Tim Cook described it as “the biggest thing to happen to iPhone since iPhone“. Grammatical questions aside, numerous blog comments indicate that it might not have been a big enough thing for many. Critics dismissed the iPhone’s new features (mainly the larger screen and LTE) as standard in high-end Android phones and slammed Apple for charging $29 for an adapter required to use 30-pin peripherals with the iPhone’s new Lightning connector. Others however seemed very content with the way Apple improved what is already a well-refined, mature product.

Wall Street analysts, to a large extent, appear to agree with the latter: most analysts have upped their target for Apple’s stock in response to Wednesday’s presentation. And the market has reacted accordingly. On Thursday, Apple’s stock closed at $682.98, up 3.4 percent since markets closed on Tuesday, the last day before the big announcement.

A look at the chart above suggests Tim Cook’s statement quoted above may not be so wrong after all: in terms of the initial reaction, the iPhone 5 was the biggest thing to happen to Apple’s stock price since the original iPhone. There is no product or service that cannot eventually be outcompeted. Android offers a robust platform to which Apple is now playing a “me too” strategy. The number of iOS based smartphones are lower in number than the Android based. And true to Apple’s beginnings there is a segment of Apple devoted willing to pay a premium for the brand. Apple is aiming for a global broad market strategy and will require more R&D and developer innovation than they are currently. 




From → business, Strategy

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