The iPhone is by far the most valuable business for Apple
There’s a huge amount of frenzy around Apple’s iPhone 6 launch that’s expected on Tuesday. But the controversies surrounding iCloud security over the last few days have overshadowed the excitement for the iPhone 6 release to some extent.
The recent celebrity photo leak issue has certainly compromised Apple’s reputation as a secure player. Before these attacks, the general perception was that Google’s (GOOG)(GOOGL) Android was the most vulnerable smartphone operating system, with Apple being the most secure.
Still, next week is a crucial week for Apple, as the iPhone is its most valuable business. Not only does the iPhone contribute more than 50% of the company’s revenues, but it also contributes the majority of its operating profits. According to Apple and as the chart below shows, the iPhone contributed 53% to Apple’s revenues in fiscal 3Q14, which ended in June.
Apple is expected to introduce some attractive features in the iPhone 6
There’s been lot of media attention around the bigger screen size of the iPhone 6 that Apple is expected to launch. A bigger iPhone 6 was more of a compulsion for Apple, as the phablet (or bigger smartphone) market is showing much stronger growth compared to the non-phablet market. But the iPhone 6 is also expected to be compatible with NFC technology, as there’s huge growth potential for the mobile payments market that Apple can leverage.
Apple has reportedly partnered with payment networks like Visa (V), MasterCard (MA), and American Express (AXP) for its new mobile payments system. Apple could also be in discussions with a few retailers for its mobile payment system to be compatible with their point of sales (or POS) terminals.
Apple could easily disrupt the dominance of eBay’s (EBAY) PayPal payments system, as it can leverage its own large iTunes user base.
Apple’s also expected to introduce the iWatch along with the iPhone 6
Apple is late to introduce the iWatch and may delay shipments to early next year, according to a few reports. But fortunately for Apple, the wearable device market is still in its infancy. Although competitors have already introduced various activity trackers and smartwatches in the market, Apple would rather not rush to the market with an unbaked product.