Because Apple rumors come and go faster than the latest celebrity gossip, it’s often challenging to to know whether they are worthy of your attention. When they come from KGI Securities’ Ming-Chi Kuo, however, anyone interested in what’s coming from the consumer-electronics giant should perk up. Last year, Kuo laid out a road map in January that nearly predicted Apple’s product releases for the remainder of 2013 to the letter. And now he’s back for more, suggesting that Apple has a doozy of a third quarter planned, as reported on AppleInsider. If Kuo is right — and it’s likely much of what he says will come to pass — not only will Apple release new iPhones, but it will also offer more powerful iPads, a brand new Macbook Air, the long-awaited iWatch, an updated AppleTV. Let’s breakdown his report and take a quick look at why you might care:
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iWatch: Kuo sees the watch arriving in the middle of the third quarter, and being offered in two sizes, to accommodate the physical differences between men and women. He believes the product will offer wireless charging along with biometric sensors and include Apple’s first NFC chip. What that would be for, Kuo doesn’t say. An iWatch that could pass over payment terminals at retailers that support “contactless payment” and link back to your iWallet in the forthcoming iOS 8 might be a good supposition. While such a two-piece system might seem clunky, it would avoid the need to enter security credentials to pay; the presence of both devices would be sufficient.
Where Kuo’s forecast seems sketchiest is that he believes battery life will be at least one day. That’s not going to cut it unless the phone can recharge wirelessly though some sort of magic technology that allows it to do while still being worn (Such technology is possible, though no implementation shown publicly would work with the iWatch at this point due to size constraints). He also believe Apple will offer multiple designs and price points, being that the watch is a fashion accessory. While this does seem believable — especially given Apple’s willingness to expand iPhone SKUs past the 100 mark last year — his speculation the top-end iWatch could cost thousands of dollars seems a reach.
Kuo sees 5.5 million iWatches selling this year, and 40-50 million next year. If he’s right about 2015 and the average selling price winds up at $200, the iWatch could add $10 billion or more to Apple’s top line next year. There are a ton of ifs here, but Kuo joins a chorus that believes the iWatch will arrive in 2014. Aside from possibly bringing NFC to the “i” family, the watch seems certain to be Apple’s first product using an OLED display. Whether this herald’s any possible change for the iPhone in coming years is another matter.
iPhone: Last week, I discussed the likelihood that the new iPhone will have a larger screen and Kuo has shed more like on the discussions around the two-model strategy, with a 4.7-inch phone and a 5.5-inch phablet. He believes the two models will carry different resolutions with the smaller model at 1334 x 750 and the larger one at 1920 x 1080. While differing pixel counts are more than believable, the smaller resolution seems unlikely.
It would be an entirely unique display among smartphones and an odd one at that. Apple could achieve very nearly the same pixels per inch with a 1280 x 720 screen of that size and not wind up with the only 1334 x 750 display on the market. So why would it bother? If it chooses the more standard resolution, the visuals between the two models will scale perfectly at 1.5:1 as well.
Kuo thinks the phablet won’t arrive till fourth quarter, much the way the Retina iPad Mini didn’t reach the market till late in 2013. It might be worth the wait, however, given he made a point I first raised here more than a year ago about how a bigger phone allows for a bigger battery. It’s true a larger screen will use more juice, but proportionally, the phablet should run longer if Apple uses all the extra interior space for battery. Kuo believes the late arrival means only 9 million of the phablet model, but 60 million of the iPhone 6, will ship before year end. Both will include improved cameras with optical image stabilization, a new A8 processor, and slightly thinner bodies.
Finally, addressing another point I raised last week, Kuo sees the lineup simplifying with the death of all iPhone 4/4s versions and the 5c and 5s slotting into the lower price points. He didn’t speculate on how low Apple might go but if there was ever a time to increase the spread between old and new, the time seems to be 2014 when the new phones are big and the old ones are smaller.
iPad: Like the iPhone, the iPad is due to get the improved A8 chip and also to get TouchID, which it currently lacks. But while Kuo sees the updated iPad Air arriving a bit earlier in the year than the Air itself did, he doesn’t expect much else in the way of change. Given the major overhaul last year, that seems like a safe bet.
The big iPad product that he doesn’t see this year is a larger-screen model (12.9 inches has been discusses) that could possibly also include a keyboard and act as a laptop replacement. The A8 is expected to be close in performance to the Intel Core i5 chips common in laptops and a robust hybrid iPad is a product some analysts believe could give Apple a huge market opportunity. If Kuo is correct that opportunity will have to wait a year.
Kuo sees the Retina iPad Mini getting cheaper and likely that means the death of the non-Retina model.
Macbook Air: This product has been rumored for an overhaul for some time and Kuo believes what other Apple pundits who track the supply chain do as well: The new Macbook Air will come in a single 12-inch design (bye bye 11 and 13-inch models) with a Retina display, a trackpad without buttons and no fan. It’s allegedly going to be even thinner than the current design. Don’t expect much in the way of speed, but do expect to be impressed by the engineering and overall utility. Intel’s own processor roadmap limits what Apple can do on raw performance here.
The rest: Look for a new iMac, including a cheaper model, perhaps with a few months…. AppleTV should be refreshed this fall with an App Store of its own and possibly motion control. A number of sources suggest there might be a model with a built-in Wifi router, too, to improve performance of Airplay, Apple’s wireless video streaming technology… Don’t look for a full-blown television from Apple, though recently word has surfaced Apple is testing OLED panels from LG… Macbook Pro will likely get just small changes later in the year…
Summary: Apple’s major news is likely going to be the 1-2 punch of a bigger iPhone (finally) and an iWatch (finally!). The revenue potential seems fairly extraordinary and if Kuo is right, Apple will have its biggest smartphone quarter ever, though perhaps at the expense of some iPad Mini sales. That’s all the more reason we’ll see the Mini get a bit cheaper in 2014.
The hypothetical laptop/tablet device is the 2015 wildcard. If JP Morgan is correct, there’s a $63 billion market in $500-1000 laptops that Apple barely plays in with the existing iPad Air. Barrons reported on this idea in which JP Morgan speculated Apple could sell an incremental 25 million of those devices next year for $15 billion or more in new revenues. But that’s next year’s possibility. If Kuo is right, 2014 will be impressive in its own right.