Apple – Maps and screens

There is no point in acquiring Tom Tom.

• The wires have been alive for the last few days with the notion that Apple is on the acquisition trail to fix its mapping issues as well as delaying its iPhone 5S launch to increase the screen size.
• When it comes to maps the hornets are circulating around HopStop (public transport app) and Locationary (local business locations) as two potential acquisitions.
• These would be useful bolt-ons for Apple but they will not fix the two fundamental problems that Apple has with maps.
  • First. Apple has no location based services platform upon which base all of its location and map oriented services.
  • In reality there are only two platforms out there that are both well developed and mature: Google Maps and Nokia Here.
  • Second. Both Nokia and Google have thousands of people working on their maps and it took both them more than 5 years to get to where they are today.
• Apple has been under the illusion that it can achieve the same result with no platform and just a few hundred people working on the product.
• Furthermore, acquiring Tom Tom will not fix Apple’s problems as Tele Atlas is really only a map. It is not a platform from which Apple could quickly re-launch Apple maps.
• Hence, I think it is extremely unlikely that Apple will acquire Tom Tom and I think it also unlikely that Apple Maps will suddenly improve.
• The most likely scenario will be slow gradual improvements but as most have already switched back to Google Maps on iOS, will anyone notice?
• The other notion doing the rounds is that Apple has delayed the iPhone 5S in order to increase the screen size.
• This is something that is badly needed in order update the iPhone and keep it competitive against Samsung’s Galaxy Series.
• The iPhone 5 looks tired and old against its larger screen rivals and without an upgrade, the iPhone5S will be just the same.
• Hence it makes complete sense to upgrade the screen size and it is something I have been waiting on for some time (see here).
• However, one can’t just turn around at the last minute and change the screen size which is why I suspect that if there is a larger screen size coming, it will have been in the plan for a long time.
• This could also co-incide with the release of a lower priced version where the differentiation could be on the size of the display as it is with the iPad and iPad Mini.
• This is an incredibly dangerous strategy for Apple as the risk of people forsaking the high priced device for the cheaper alternative is very real indeed.
• This would have a negative effect on margins as costs would have to rise to support more model variants but revenues could easily stay the same (lower ASPs).
• I am still not convinced that Apple will release a mid-range iPhone but I am expecting something when it comes to addressing the screen size problem.
• Apple remains very much on the back-foot at the moment and the next set of results (this week) and product releases look unlikely to catapult it back into the lead.
• I remain indifferent to the stock despite an attractive valuation.