Apple is a one product company

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This quarter, once again, the iPhone stood out for its revenue and volume growth, spurred by China and emerging markets where Apple is winning over Android by a significant margin. This is thanks to the introduction of a large screen format which is particularly favoured in emerging markets.

Apple is a one product company. Nothing else really moves the needle and the growth of iPad and Mac sales is not even close. It seems clear that the iPhone 6+ is cannibalising iPad sales – iPad revenues were down 29% year-on-year in Q1, most likely hurt by the better iPhone volumes as well as an elongation in the replacement cycle.

Looking at the Apple Watch, initial indications suggest it might be less successful in volume and profitability than expected. Currently, the information available on the Watch is very qualitative and there is a lack of clarity. Apple announced that it is not making enough watches to meet demand, but we do not know what the demand is or how many watches are being produced.

Apple is definitely benefitting from the phenomenal success of the iPhone 6 at the moment, but we remain concerned that margins will eventually start to give way. In consumer electronics margins always eventually close and although Apple might be different, there are currently many higher growth businesses with more compelling, sustainable business models.


Mark Hawtin is investment director at GAM and manages the GAM Star Technology and Star Alpha Technology funds

Jonathan Boyd
Editorial Director of Open Door Media Publishing Ltd, and Editor of InvestmentEurope. Jonathan has over two decades of media experience in Japan, Australia, Canada and the UK. Over the past 17 years he has been based in London writing about funds and investments. From editing the newsletter of the Swedish Chamber of Commerce in Japan in the 1990s he now focuses on Nordic markets for InvestmentEurope. Jonathan was awarded Editor of the Year at the Professional Publishers Association (PPA) Independent Publisher Awards 2017. Shortlisted for the same in 2016, he was also shortlisted in 2017 and 2015 for the broader PPA Awards category Editor of the Year (Business Media).

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