New Apple Hardware Meets the Wobbly Macro
iPhone 14: The Phone That Saves Christmas?
07 SEPTEMBER 2022 - While most are not expecting huge changes for iPhone 14, there are sizable expectations for it. A headline from CNET says, “iPhone 14 Will Be the Only Bright Spot in a Bummer Holiday-Shopping Season.” But - you know… no pressure. With an anticipated price range of $700 - $1,700, the piece says:
iPhones historically have good sales, but it's an exception and not a guarantee. The reality is that the economic situation makes it hard to guess whether consumers will embrace Apple's phones, and while there's enthusiasm among some people for the device, it's unclear whether that can overcome the dour feelings everyone seems to have.
JP Morgan: Wobbly Macro May Weaken Wearable
Some say items like iPhone will take a hit, according to CNET. Still, others indicate that big ticket items like iPhone will sell well, with fewer little things to go along with. Take Apple Watch, for example. A note from JP Morgan indicates that the wearable may suffer, even as iPhone soars. Apple Insider has the firm saying:
Pricing is a key watch-point in a tough macro [economy] which comprises inflationary pressures and pull back in consumer spending… but we believe it matters more for Wearables which are considered more discretionary purchases relative to iPhone by consumers.
With all of the ongoing belt-tightening, JP Morgan expects a few moves from Apple to keep iPhone sales humming. Those include fairly aggressive trade-in offers and a push for buy-now-pay-later (BNPL) options. Quoting the firm again:
…there are numerous credit card based alternatives for paying for iPhone purchases in installments, but the average consumer still remains largely unaware of the BNPL plans. We expect a broader roll-out of BNPL as well as a greater focus on it with consumers can help with both switchers and upgraders.
What Else Can We Worry About?
Pulling back a tiny bit, JP Morgan is up on Apple overall, though the firm’s note does have an asterisk or two. Points on which to keep an eye:
…overall "economic conditions or shifting consumer demand could cause greater than expected deceleration or contraction" in the smartphone market
There’s risk in foreign markets, ranging tariffs to local competitors undercutting iPhone on price
Also, Tim Cook’s gonna retire someday. That said, his exit is only a “modest risk” compared to Jobs’ departure over a decade ago, according to the firm, which sees “a strong group of executives to support business performance without disruptions.”
JP Morgan has a positive rating on Apple shares. The firm’s price target on the shares is $200.
