Jeff Kagan: Will Apple’s Growth Continue?

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Apple earnings showed growth after three quarters of falling revenue. Will that growth continue? We have watched the smartphone sector explode with growth over the last decade. However, growth has been slowing. Apple CEO Tim Cook said they would focus on growth, and the good news is this quarter was good. The only question is, was it because of Apple (AAPL) or the widely publicized Samsung problems? And what’s coming next in the smartphone marketplace?

So, how did Apple recover this quarter? I don’t believe Apple has done anything different with marketing or advertising, and except for some annoying changes with headphones keeping many with the older devices, they are not that different than the last iPhone. So, unless you always want the newest and hottest device, users are generally OK not updating this year. That said, Apple is still selling plenty of devices and is still very healthy.

Apple is Still Strong, Growth is Only Question

The Apple iPhone and iPad are still industry leaders, but the whole industry seems to be taking a breather from the rapid growth we have seen over the last several years. With no hot new features that require a new device, more users are hanging onto their existing devices longer.

Remember, Samsung had a complete meltdown several months ago with the launch of their new Galaxy Note 7 which, well, melted down in user’s hands and pockets. That device has been pulled and is now off the market and dead except for the users who have not turned in their devices.

Where Did the Apple Earnings Bump Come From?

Mike Deerkoski via Wikipedia

It’s quite possible that many Samsung users moved to Apple. This would partially explain the successful quarter at Apple. However, not all Samsung users left. Many of them are sticking with the company and simply chose a different device. Surprisingly, their device revenue is still strong.

Bottom line, this quarter is very difficult to read. Congratulations to Apple on hitting it out of the park once again. However, before we can know that they have done this on their own and not because of the Samsung debacle, we’ll have to wait till next quarter, or the quarter after.

Smartphone Growth Will Accelerate with AI, IoT, Cloud and VR

As for Samsung, I don’t think they are dead. They still have many loyal smartphone customers, and they will forget this major problem after a while. It may take several quarters, but if there are no other meltdowns, I think Samsung will recover. Eventually.

So, it will take another quarter or two to get a real reading on this slowing smartphone marketplace. With that said, I see this smartphone sector able to explode with growth once again when something new and exciting is added to the mix. AI, IoT, Cloud, VR and so much more are now part of what is coming. Things are going to get exciting once again.

Of course, the specifics are always hard to predict. What they are, when they will happen and who will offer them are the real questions, but I firmly believe they will happen. They always do. The only question is… will growth come from Apple, Samsung and Google (GOOG), or will it come from other players?

Jeff Kagan is an Equities.com columnist. Kagan is a Wireless Analyst, Telecom Analyst, Industry Analyst, speaker and consultant. He follows wireless, wire line, telecom, Internet, cable TV, IPTV, Cloud, Mobile Pay, FinTech and communications technology. Email him at [email protected]. His web site is www.jeffKAGAN.com. Follow him on Twitter @jeffkagan