Consumer Electronics

Apple Moves On to iPhone 7

Apple Inc. (NASDAQ: AAPL) posted extraordinary quarterly numbers, much better than expected. As usual, its forecast for the current quarter was mediocre, but the holidays and the success of the iPhone 6s should help Apple post another solid quarter. Wall Street is already looking beyond the holidays to the iPhone 7, which will have to be an extraordinary advance over the iPhone 6 family, or Apple will be in the sort of trouble pessimists expect when it finally hits a wall with product technology advances.

For the most recently reported quarter, revenue rose to $51.5 billion from $42.1 billion in the same period a year ago. Net income rose to $11.1 billion from $8.5 billion. iPhone sales were 48 million, compared to 39.3 million in the same quarter last year, and China performed as it had to. Sales rose 99% to $12.5 billion year on year.

As for the current quarter:

Apple is providing the following guidance for its fiscal 2016 first quarter:

  • revenue between $75.5 billion and $77.5 billion
  • gross margin between 39 percent and 40 percent
  • operating expenses between $6.3 billion and $6.4 billion
  • other income/(expense) of $400 million
  • tax rate of 26.2 percent

Apple will do better than that.

A quantum leap in iPhone 7 features is critical to not only Apple, but the future of its shares. The new smartphone will need to have a camera good enough to replace most of the best standalone digital cameras used by the better amateur photographers, or perhaps good enough to replace many commercial cameras. The video capture will need to be good enough to match what commercial studios at television stations and cable channels use. Siri will need to perfectly capture and interpret all the major human languages. Processor power will need to be as good as the comparable power in high-end Macs. The iPhone 7 will need to be shatterproof under most conditions, and waterproof enough to match the best diving watches. All that may not be enough unless the iPhone 7 has a special, extraordinary feature that will radically change the entire smartphone industry.

As long as the iPhone 7 has all those features, Apple should be fine.

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