The mobile industry had a busy week, led by Apple launching its much-awaited iPhone 6 and Apple Watch, along with a new mobile payment service. BlackBerry also had a good week, reinforcing its strategy in the bring-your-own-device space through its acquisition of Movirtu, a U.K. based start-up. Here is a quick roundup of the developments in the mobile industry.
Apple’s New Devices And Payment Service
On Tuesday, September 9, Apple announced a pair of large-screen iPhones, a new mobile payment service and a wearable device - dubbed the Apple Watch - which is the company's first new product category since the launch of the iPad. Anticipation of the new product launches was largely responsible for driving up Apple's stock price this year and by the looks of it, the company has met expectations, with the stock making some modest gains over the week. While the iPhone update is an incremental, although meaningful, upgrade to a mature product, it should give shipments a boost since it fills a void in Apple's phone lineup and marks the company's entry into the fast growing large-screen mobile phone market. The large-screen (5.5+ inches) smartphone market is expected to grow at a CAGR of around 60% over the next four years, while regular smartphone sales are expected to grow at around 5.5%. While the mobile payment and watch bets also look impressive, displaying Apple's typical attention to detail and ease of use, they are in effect an upsell to the company's existing users and will have to compete in markets in which few companies have found success in the past (see Apple's New Launches Look Good, But Don't Expect Large Upside From The Watch Yet).
- Trefis has a $97 price estimate for Apple, which is about in line with the current market price.
- We estimate the company's FY 2014 EPS at around $6.27, compared to a consensus estimate of around $6.33 according to Reuters.
BlackBerry Acquires Movirtu
The bring-your-own-device trend has been growing in the enterprise mobility space, allowing employees to use their personal smartphones for corporate purposes with enterprise applications and security needs alone being addressed by corporate IT departments. BlackBerry has been seeking to leverage this trend as a key component of its turnaround strategy. On Thursday, the company announced that it had acquired Movirtu, a U.K. based start-up that provides a virtual SIM platform that enables users to have their personal and business phone numbers operating on the same smartphone. The technology works on devices running iOS, BlackBerry OS as well as Android devices. Although the terms of the deal were not announced, we believe that it should have a net positive impact on BlackBerry, since it complements much of the company's current efforts in the mobile device management space. The deal is an extension of the company's existing technology offerings such as BlackBerry Balance and Secure Work Space, which separate personal and enterprise applications and data on a smartphone.
- Trefis has a $8.80 price estimate for BlackBerry, which represents an 18% downside from the current market price.
- We estimate the company’s FY 2015 loss per share at around $0.68 which compares to a consensus of around $0.61 according to Reuters.
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