(By Ron Haruni) As iPhone fans eagerly await the release of Apple's (AAPL)
forthcoming iPhone 5, already one of the most highly anticipated tech
products of 2012, many are left wondering if the iPhone 5 is actually
the iPhone 4S. And with good reason. Over the past few days the iLab factory, an
iPhone repair shop in Japan, has leaked completely assembled pics of
the next generation iPhone, which looks pretty much like the iPhone 4S.
Nothing appears extremely new from what we've seen and I suspect we are
not the only ones being deflated by the photos floating around the
internet.
BusinessInsider's Henry Blodget summarized (generally speaking) the latest round of iPhone 5 pics as the same iPhone with a paint job and slightly larger screen.
"[I]f the iPhone 5 looks like the pictures that have
recently appeared, Apple may be screwed," wrote Blodget in his column
today.
"Why?
Because the "iPhone 5? looks pretty much like the iPhone 4S. Which
looked exactly like the iPhone 4, a phone that is now two years old."
Blodget is right. Apple may face a bumpy road if the iPhone 5
disappoints. The next-generation smartphone, which accounts for almost
two-thirds of Apple's profits, will not only define the co.'s balance
sheet and reputation for at least the next eight quarters, but will also
be Apple's only shot at fully regaining its dominance that has been
slowly deteriorating from the tech giant since the release of the Samsung Galaxy S3 and the other large Android phones.
"Samsung and other manufacturers have come out with
phones that make people's jaws drop, such as the Galaxy S3, which has a
(relatively) humongous screen", wrote Blodget. "Although the Apple
faithful may start hyperventilating about things like the movement or
elimination of a button, most phone buyers couldn't care less. Now that
most phones do the same things and work pretty much the same way, the
most obvious (and, arguably, important) difference between them is the
screen."
"In short, the Galaxy feels like a next-generation phone", continued
Blodget. "The iPhone, meanwhile, looks small and old. And the pictures
that purport to be of the iPhone 5 show a phone that is pretty much the
same small, old phone."
If the iPhone 5 turns out to be a hit, Apple will continue to command
premium prices for its devices — which often are made very
inexpensively in China — and a premium stock multiple. AAPL currently
trades at a trailing P/E of 14.26, a forward x of 11.55 and a P/E to
Growth ratio of 0.62. If the iPhone disappoints, the Wall Street may
have to cut its Apple estimates. The average price target of analysts
who cover Apple is $730.00 per share / high target: $1,100.00 p/sh. The
company has a market cap of $568 billion based on prev Nas close of
$606.81 p/sh.
Here is some interesting data. In the last 24 months, iPhone went
from an installed base of 10 million units to 30 million units, while
Google's (GOOG) Android went from
an installed base of less than 5 million units to 50 million units over
the same period of time. While no one is alluding that Apple will go
bankrupt if the iPhone 5 doesn't perform according to expectations, the
reality is that over time, the co.'s profit margins will be eroded by
competition from cheaper and high quality pads and smart phones, which
will cut eventually into the tech giant's market share significantly,
forcing it to consequently play catch-up.
While it is hard to predict the future, the idea that Apple can keep
producing products that replicate iPhone's success again and again,
seems impossible from a marketing model perspective. Once that happens, notes
Blodget, "consumers and investors will likely conclude that Apple's
magical run is over and that the company is no longer the company it was
before Steve Jobs died. In short, Apple will, once again, become
ordinary."