There simply is no denying Apple’s dominance, but there is no guarantee that it will continue.
In fact, the company is about to face the biggest threat it has seen in years.
In the fourth quarter of 2014, Apple sold 74.5 million iPhones, boosting earnings to $18 billion.
By some measures, this was the biggest quarterly profit ever by a public company. Revenue also climbed 29% to $74.6 billion.
Share prices have gone up by about 15% since the announcement, and the next batch of quarterly data is expected to drop after market close on April 27th.
Shareholders are insatiable, and expect ever-increasing sales and financial figures. Yet one trend that Apple has ignored to date threatens to siphon sales off to its competitors.
Apple has nothing to offer when it comes to wireless charging, and early indications show that other smartphone manufacturers have an advantage because of Apple’s biggest blunder in years.
Samsung Takes the Lead
Wireless charging, believe it or not, has been available for six years now. It has been plagued by limitations that simply didn’t add much appeal for consumers.
2015 has become the year where all of that will change.
This is starting with the Samsung Galaxy S6 release. One of the most defining features of this new flagship product is the complete lack of a charging port.
The phone is wholly reliant on wireless charging, and many questioned how consumers would react.
From what we can tell, they love it.
T-Mobile’s early sales information from pre-orders shows that sales of the Galaxy S6 are already “nearly double” those of the Galaxy S5 during the first 10 days.
The phone just hit stores four days ago, suggesting a much larger surge of interest will come once more patient consumers can actually see it in action.
Analysts expect the two types of Galaxy S6 phones to set a sales record, with 55 million units shipped. That would top Samsung’s most popular phone ever, the S4, by over 22%.
Bloomberg quoted Neil Mawston, executive director of Strategy Analytics as stating, “We expect Samsung to regain its position as the world’s clear No. 1 smartphone vendor by volume.”
Samsung’s shares have withered in recent times, but the phone is driving share prices up and prompting a slew of analyst upgrades.
Everyone Else Piles In
HTC is getting in on the wireless charging trend too, if the rumors Taiwan’s CTimes published are true.
The publication cites Howard Lee, Senior Director of Project Management and Electrical Structure, claiming they heard from a senior official that it will be standard in the company’s next flagship phone the One M10.
Fifteen automakers offer some form of wireless charging.
The world’s largest appliance manufacturer, Haier, is exploring wireless charging through its products.
Ikea is building it into furniture. Hotels, Starbucks, and even McDonald’s have plans to install it for customers.
Mobile computer chip manufacturers are rolling out chipsets designed specifically for wireless charging.
Two of the three industry standard groups are merging, clearing one of the last hurdles for widespread implementation.
Yet the biggest name in the mobile game isn’t keeping up.
Apple Realizes Its Mistake
The most puzzling aspect of Apple lagging behind on bringing wireless charging into its phones is that it clearly has some capacity to do it.
The Apple Watch uses a form of wireless charging, and clearly has been in design for quite some time. Yet for some reason, the tech was not incorporated into the iPhone 6.
Perhaps it simply wasn’t ready for the September 19th release date. After all, the company always releases new models right before the holidays.
Or perhaps it was vetoed out of the design for cost or space reasons.
Regardless of the reason for falling behind, there is now considerable expectation that Apple will want to catch up to the trend.
The strong sales from Samsung will only further increase the urgency to make sure it is added to the iPhone 7.
Apple seems to be responding. News of recent Apple job listings point towards a much stronger interest and investment. The company is hiring for a Santa Clara-based Senior Wireless Charging Design Engineer to work on new power management technology.
How to Play
There are a handful of ways to play this trend. One could be to buy any dip in Apple share prices if investors don’t see their high expectations realized.
Apple is quite frankly an amazing company. It is a cash-generating machine and, in spite of its meteoric share price rise, it still trades at a price-to-earnings ratio of just 17.
Yet over the last year, share prices have risen by 70%. From the beginning of this year alone, shares are up 15%.
I wouldn’t be surprised if people decide to cash out on any sign of weakness in the smartphone division, such as losing market share to Samsung and other rivals, or lackluster features in an iPhone 6s model expected later this year.
All of this is dependent on rumors and expectations though, and it is always better to trade on quantifiable data.
In this regard, smartphone manufacturers aren’t the best play on the wireless charging growth, which is expected to see 60% compound growth to $13.6 billion by 2020.
The best way is to go to the companies on the leading edge of developing the charging systems.
One company in particular stands out. It landed an exclusive deal with Haier, has 16 joint development agreements, and chairs an influential working group of the newly merged industry standards group.
Plus, it is working with Foxconn, a major supplier of iPhones and iPads, giving it direct exposure to Apple executives.
Right now, the company is relatively small, with a market cap of about $120 million. At that size, Apple could just buy it with pocket change and leap to the head of the pack.
Nick has been extensively covering this topic, and this small wireless charging pioneer. Check out his research to get an advantage.
