Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Will Apple, Inc. Face New iPhone Competition Tomorrow?

Apple's (NASDAQ: AAPL  ) iPhone business is incredibly important to investors. Not only is it the tech giant's most profitable segment, but it also accounts for a whopping 57% of Apple's total revenue. Anything that has an impact on Apple's iPhone business will ultimately have an impact on the intrinsic value of the business. This is why investors will be watching closely tomorrow when Amazon (NASDAQ: AMZN  ) unveils its new device, which is predicted to be a smartphone. Can the e-commerce king compete with Apple?

This is the only official image available of the alleged device Amazon will launch tomorrow. Image source: Amazon.

What do we know about the device?
First, there are the presumptions. Amazon likes to build its consumer electronics products around a shopping experience. That's exactly what the company did with its Kindle and Kindle Fire line of e-readers and tablets. Perhaps CEO Jeff Bezos plans to take these efforts to a whole new level tomorrow with the launch of an Amazon-branded smartphone. However Bezos manages to make it happen, the central goal of the phone will almost undoubtedly be to get more customers actively using its Prime membership for their shopping needs.

And investors are intimately familiar with Amazon's approach to pricing. Bezos has said on multiple occasions that he sells hardware at a loss or at cost, making money from the improved Amazon shopping relationships with customers. The phone, therefore, will likely be cheap -- perhaps wildly cheap. But in an industry where phones are already heavily subsidized by carriers, competing on price won't be easy.

Then, there is the little we know: The phone has some sort of intriguing and entertaining display technology -- perhaps some sort of 3D hologram? This inference can be made from watching the one teaser video Amazon has provided.

For a limited time, Amazon was taking requests from individuals who wished to receive invitations to the event. The company was even accepting requests from customers. But Amazon now says it has stopped taking requests due to "an overwhelming response."

Competition or not?
Competing with Apple and other dominant players in the smartphone and mobile OS space, like Samsung and Google, won't be easy. Given the expansive reach of the iOS and the Android ecosystem, particularly when it comes to Apple's App Store and Google's Google Play, any new content and operating system offerings (or lack thereof) that come with the device may be what will make or break its success.

Sure, both low price and whatever intriguing display technology Amazon has built into the phone will likely help build a value proposition for the device. But Amazon will need to sell tens of millions of phones annually to hinder iPhone sales enough to concern Apple investors. In the last 12 months, Apple sold about 160 million iPhones.

The Amazon event will kick off at 1:30 PM EST tomorrow.

A rare investment opportunity?
Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out, and some early viewers are claiming its everyday impact could trump the iPod, iPhone, and the iPad. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!

Read/Post Comments (1) | 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 June 18, 2014, at 6:00 AM, baligeko2 wrote:

    A lot of actors reading their scripts. They probably do not even have anything in their hands.

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2998138, ~/Articles/ArticleHandler.aspx, 8/31/2015 6:03:03 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

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.

Today's Market

updated Moments ago Sponsored by:
DOW 16,528.03 -114.98 -0.69%
S&P 500 1,972.18 -16.69 -0.84%
NASD 4,776.51 -51.82 -1.07%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

8/31/2015 4:00 PM
AAPL $112.76 Down -0.53 -0.47%
Apple CAPS Rating: ****
AMZN $512.89 Down -5.12 -0.99% CAPS Rating: ***