Even more than most electronics companies, Apple is driven by product launches. Instead of offering dozens of variations of every gadget it sells, Apple makes huge bets on a handful of products–and it then rides them for the next 9-18 months after it launches them.
Not surprisingly, these product launches are awaited with breathless anticipation.
Unlike last year, when the company only had two major product launches (iPad 2 and iPhone 4S), both of which were upgrades of existing products and both of which left some observers disappointed, this year could feature three mega-launches, all of which might represent quantum leaps over their predecessors:
- iPad 3 (expected in February or March, with a high-def screen)
- iPhone 5 (expected this summer, with a much bigger screen
- iTV (Apple’s entry into the TV market, expected for the holidays)
(See « Apple’s Product Rollout Schedule » for the latest expectations).
Meanwhile, Apple’s « slow-growth » Mac business continues to gobble up share of the PC market, growing 20%+ while the rest of the industry shrinks.
The hype and speculation leading into each of the new product launches could dampen demand for existing versions of the products, as it did for the iPhone in Q3. But because of the timing and type of the launches, this pause should be more muted than it was before the iPhone 4S was released.
The new iPad should be here soon, just as demand for the iPad 2 begins to wane.
The iPhone 5, meanwhile, should come relatively close on the heels of the iPhone 4S–9-12 months, versus ~18 for the 4S. And the iPhone 4S is still seeing astounding demand.
The iTV, meanwhile, is expected to be a revolutionary new product that isn’t replacing anything.
All in all, 2012 should be chock-full of innovations spearheaded by the late Steve Jobs. And it won’t be until 2013 or beyond that Apple really has to demonstrate that it can continue to innovate without Steve. (2013 will be a real moment of truth of the company. And by the last third of this year, the market will probably begin to worry about it.)
Even at $460 a share, Apple is still trading at 15X trailing earnings–an average market multiple. And it now has ~$100 billion of cash, about 1/4 of its overall market value. All this for a company that is still growing at an absolutely astounding rate–~70% per year–compared to the low-single digit growth of the average S&P 500 company.
Is there downside for Apple? Of course, there’s always downside, especially in a business evolving this quickly–and especially especially when there’s this much bullishness and optimism.
But if all three big launches go well this year, there should not just be plenty for Apple fans to write home about. There should also be considerable upside to the shares.