Apple (NASDAQ:AAPL) is widely regarded as the archetypal rags-to-riches story. Though innovation has always been a part of the company's DNA, it hadn't really been rewarded for it until it revolutionized the mobile computing market with the iPhone and – to a lesser extent – the iPad. As we move into 2015, here are three things that you need to know about Apple.
The iPhone 6 will actually be a game changer
There's no doubt that the iPhone is still the biggest driver of Apple's sales and profits. The iPad seems to be sputtering, the Mac isn't big enough to move the needle, and any iWatch speculation is just that – speculation. The good news is that the iPhone 5s, which is nearly a year old at this point, is still selling better than Samsung's Galaxy S5.
The even better news is that this is despite having a "small" 4-inch screen and an industrial design that's more or less two years old. The expectation is that once Apple brings on a 4.7-inch model (and potentially a 5.5-inch model), it should be able to drive further share gains against Samsung, as well as the other higher end Android devices.
If Apple can grab meaningful share due to the larger iPhones, then not only does Apple win that new business this year, but it has likely won many new repeat customers for years to come.
The iPad needs to improve
The iPad – which is Apple's newest product category – was the company's fastest growing category for quite a while. However, as this product line doesn't enjoy the subsidies that the iPhone does, the sales numbers seem to have hit a brick wall. In the most recent quarter, iPad sales were down 16% year-over-year .
Though it is extremely unlikely that Apple's iPad will ever be as large, profitable, and ultimately important a business as the iPhone, Apple can probably do better here. Samsung's premium tablets – in particular the Galaxy Tab S – has a number of key advantages over the current iPad Air such as a slightly better display, fingerprint sensor, and thinner chassis.
The good news is that Apple will probably be able to more than address these shortcomings with the next generation iPad models likely due in October. Even if the high end of the tablet market is hitting a growth wall, Apple may be able to win back share from other premium tablet vendors like Samsung throughout 2015 with updated models.
If anybody can do a smartwatch that sells, it's Apple
Many industry watchers are expecting Apple to introduce its take on the smartwatch concept that a number of vendors – including rival Samsung – have been touting. Though it's not entirely clear that this product category has much promise beyond sheer novelty, if there is a real, large market for such a device, Apple will be able to exploit it.
Remember that Apple wasn't first to the smartphone, nor was it first to market a personal computer. Heck, it wasn't even the first to bring a "tablet PC" to market. What Apple does is that it takes these concepts and designs a product that's so useful that once consumers actually use it or a device like it, it becomes very hard to go back to life without it.
Watch for a launch in late 2014 (according to KGI Securities' Ming-Chi Kuo) and for consumer adoption trends to be clear by 2015 .
Foolish bottom line
There's a lot to like about Apple in general, and going into 2015, the impact of the iPhone 6, the potential revival of iPad sales, and any uplift from a potential iWatch should be closely monitored. If the stars align, then Apple should not only have a shot at testing all-time highs, but could blow right past them.