Apple Inc. (AAPL) has finally regained some momentum in recent months as the broader market took a turn and the company unveiled the new iPhone SE. Apple stock has gained over 17% since mid-February — nearly double the S&P 500. Shares are only up 4% when all of 2016 is considered, but that’s still better than the flat broader market.
Apple stock swung higher just as the S&P did, so it’s hard to gauge precisely how much credit the iPhone SE gets for the stock’s recent continued momentum, and what impact the device will have on the future.
The iPhone SE was released on Thursday, so it’s had little time to impact Apple stock. But AAPL has hardly budged on the announcement through release, with the reaction being somewhat shrug worthy. To some degree, the Tesla Motors Inc (TSLA) event Thursday night overshadowed some of the media buzz around the iPhone.
Meanwhile, Mac Rumors noted that many Apple Stores had “no queues whatsoever as excitement was unsurprisingly more tepid compared to the launch of a flagship smartphone like the iPhone 6s.” In fact, a survey of 100 outlets found 90% availability for the standard-storage silver model, according to Piper Jaffray analyst Gene Munster.
The takeaway here is that the iPhone SE isn’t as important as a flagship device for Apple. That’s true from a publicity perspective and from a business perspective, especially considering the device is a bit cheaper than the iPhone 6 line.
If the iPhone SE were the next big thing, I’d be concerned. I’ve noted before that Apple needs to continue innovating to keep its margins from racing to the bottom. But because it’s more of a filler device, I’m actually optimistic about the lower price point, especially since it could mean an easier entry into price-sensitive markets like India.
That said, Apple still needs to reinvent the wheel (or in this case, the iPhone) with its next flagship release. While we’re obviously not seeing a company in the midst of its death throes (despite chatter about the end of Apple) Tim Cook needs to deliver a breakout to avoid spiraling downward.
The Apple Watch and Apple TV don’t seem to be on the path to filling those shoes, but Apple payments looks promising (although it doesn’t have the same buzzworthy nature as a new piece of hardware).
The ability to use Apple Pay with Touch ID is a new feature brought to the iPhone SE, for instance, and plays into what Forbes noted as the “company’s high margin payment revenue stream.”
Apple’s next iPhone (remember, a new flagship device is slated for the fall) will likely continue that focus.
Keep an eye on the usage and attention there — it’s far more important than sales of the “new” iPhone SE.
