Throughout Apple Inc. (NASDAQ:AAPL)'s decline, most of the blogosphere's coverage has discussed topics like shrinking market share, leadership issues, uncertainty over product offerings, and even bearish technical indicators, but one analyst on CNBC last week also brought emerging markets to the discussion.
James Gautrey, a global sector specialist at Schroders, was on the network's "Tech Check" segment. Gautrey mentioned that short term issues will vary, but over the longer term, people are concerned over "growth in the very high-end markets [...] it's quite saturated," adding that "the market shifts from being a growth market to a replacement market." On the subject, Gautrey shared his thoughts:
"There are only a few marginal consumers left to break into that market [...] the stock has been priced for growth [...] and we're moving to a different phase now [...] Emerging markets - that's really where the growth opportunity is in smartphones and tablets - it's kind of what will drive the next 3 to 5 years. The problem at the moment is that Apple has nothing for that market. The products, the iPhones are $500 to $600 products. That's affordable in [the] developed world; in the emerging markets that's not really of interest."
Regarding the subject of low-cost product options for emerging markets, it doesn't seem that a premium television will help Apple Inc. (NASDAQ:AAPL) in this arena, and Gautrey was quick to point out that margins on this product are much lower than previous products, saying that "the margins that you'll earn on the television - they're not going to be anything like the iPhone."
In short, it appears that Gautrey isn't taking a firm buy or sell stance on the stock, but he is pushing the one story that Apple investors seem to be forgetting about: emerging markets. Aside from China, other countries like Russia for example, where the tech giant is rumored to be working on a direct retail network, will be crucial. It remains to be seen, though, just how Apple Inc. (NASDAQ:AAPL) plans to market to consumers in this segment, but we'd have to think that a low-cost smartphone or tablet need to be in the discussion.
Let us know your thoughts on Apple's potential in emerging markets, and if it's a viable growth story for investors to hang their hats on, so to speak.