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Does Apple Have Only 2 Months to Live?

If there's one thing Apple (NASDAQ: AAPL  ) shouldn't do, it's rush a product to market. But that's exactly what Global Equities Research managing director Trip Chowdhry suggests Apple should do.

"They only have 60 days left to either come up with something or they will disappear," Chowdry said, according to CNBC. "It will take years for Apple's $130 billion in cash to vanish, but it will become an irrelevant company ... it will become a zombie, if they don't come up with an iWatch."

Though it may be on the extreme side, Chowdry's notion that the wearables market is a crucial space for Apple isn't new. A number of analysts have made the case for Apple to enter the wearables space. Even Apple CEO Tim Cook has called the category "another very key branch of the tree."

But there is one major problem with Chowdry's impatient timeline.

A flop is a bigger risk for Apple than tardiness
As long as either Steve Jobs or Tim Cook have been running Apple, the company has always had a very limited product portfolio. With a concentrated product lineup, product flops could be detrimental for the company.

Consider the iPhone, for instance. Apple's iPhone business makes up more than half of its revenue and an even larger share of its operating profits. Even Apple's Mac business accounts for more than 10% of Apple's revenue. With only a few products, a flop can really damage Apple's earnings potential.

Beyond the immediate negative effects a flop could have on Apple's earnings potential, Apple's reputation is on the line every time it enters a new category -- especially in the post-Steve Jobs era. If the company is working on an iWatch, investors should hope the device isn't a typical smartwatch. Instead, it should revolutionize the entire category. Apple has a history of innovation and revolutionary new products to live up to.

Investors should be patient
Apple CEO Tim Cook has said already promised that the company will be launching new categories this year. Whether it happens in 60 days or at the end of the year will make little difference for the long-term story for Apple stock. Perhaps Chowdhry is simply getting desperate for something to happen in order for his bullish $800 price target to ring true.

For investors with a Foolishly long-term approach to investing, the biggest catalyst for Apple stock will not be whether or not the iWatch is launched within Chowdhry's timeframe. Instead, Foolish investors should be concerned whether Apple's new devices in new categories are innovative and revolutionary. If it takes extra time for Apple to get its next category right, it will be worth the wait.

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Read/Post Comments (10) | Recommend This Article (4)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On March 22, 2014, at 5:11 PM, skyisfalling wrote:

    I am glad that Mr. T. Chawdhury is not running Apple.

  • Report this Comment On March 22, 2014, at 6:14 PM, Jec3 wrote:

    MF, why even comment on such drivel, especially now when Microsoft will hand over to Apple the key into enterprise business with Office for iPad on March 27?

  • Report this Comment On March 22, 2014, at 6:19 PM, jnorris441 wrote:

    Exactly like how Apple needed to rush into the tablet, phone and MP3 player market 2 months after the category was created. What a genius prediction

  • Report this Comment On March 22, 2014, at 7:19 PM, marv08 wrote:

    There is zip indication that anybody is making any money in wearables yet, there is no market leader, no product people line up for or even selling out...

    Chowdhry tries to make his own garbage a bit more credible by pointing out the first mover advantage and developer support. Of course, it does not work like that. Wearable apps are simple companion apps for smartphone OSs and apps. Developers will follow the money, and as long as we do not know where the money goes, there is no need to hurry.

  • Report this Comment On March 22, 2014, at 8:34 PM, MartinMTurner wrote:

    In a world of media competition, it's probably only by making outlandishly extreme statements that someone like Mr Chowdry can get international coverage.

    Apple could pull out of all markets for a year and not sell a single primary (i.e., non-accessory) product, and it would return to face enormous pent-up demand. That's the power of brand value.

    As far as wearables are concerned, Apple only has to fear if someone comes up with an Apple-like watch before Apple does. It would have to be something stylish, high quality, extremely easy to use, consistent, and actually fulfilling a function which people didn't know they needed until the device came out, and then decided they couldn't live without.

    So far, no such device has emerged.

  • Report this Comment On March 22, 2014, at 11:14 PM, jdmeck wrote:

    Chowrdy is an idiot.

  • Report this Comment On March 23, 2014, at 12:14 AM, iphonerulez wrote:

    Chowdry is an annoying little nobody who couldn't run a lemonade stand and turn a profit. I know analysts live are meaningless so they have to pump out drivel just prove to themselves they're alive. These people are always prognosticating about how Apple is going to become irrelevant without this or that. They said it when Steve Jobs refused to put Adobe Flash on iOS and they said it when every company was building Windows netbooks. These people never seem to learn from the past. I think Apple won't have major market share in wearables, but Apple will do OK as long as the product is fairly decent and Apple pushes it in their retail stores.

  • Report this Comment On March 23, 2014, at 5:43 AM, fauxscot wrote:

    I'd rather wait to buy something that works than rush to buy another doorstop.

    Most folks would.

    MF is getting irrelevant WAY MORE than Apple.

    This article, for instance, was rushed to print a tad on the early side and I'm not buying it, either.

  • Report this Comment On March 23, 2014, at 8:56 AM, gsagi wrote:

    We were taken for a ride by a struggling Hollywood under-five prankster: the dude has been taking acting-classes to play roles of Sikh characters and as a role-playing exercise he invented this Trip Chowdhry YouTube talking-head with a rather racist exaggeration of a beturbaned airhead. Totally shameful!

  • Report this Comment On March 23, 2014, at 11:36 AM, Jec3 wrote:

    MF is getting as bad as CNN, posting phony sensational headlines such as this just to grab eyes.

    Next we'll be reading about flight MH370 here.

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Daniel Sparks

Daniel is a senior technology specialist at The Motley Fool. To get the inside scoop on his coverage of technology companies, follow him on Twitter.

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