The Impact of iPhone 5

Apple released the newest successor to their line of consumer electronics late last week, the iPhone 5. The highly touted and anticipated phone received reviews ranging from lackluster to brilliant. But for investors it’s important to look beyond the glitz of the new device and into the sales numbers – all of which are anything but lackluster.

Think about it: Apple released the first generation iPhone in 2007, which peaked with total sales of 6,124,000 units. The latest iPhone 5 released with pre-order sales of over two million units and estimates over 40 million of the gadgets will walk out the door in the 4^th quarter of 2012¹. With only one week of sales available in the third quarter, analysts project that Apple will sell between 27 and 30 million units in the fourth quarter.²

It doesn’t take a business degree (or even a pulse) to see the astounding impact and growth of Apple and its products. But the broader implications of the company’s success are worth considering as well.

JP Morgan recently stated that projected iPhone 5 sales could boost the annualized economic growth in the US economy between 0.25% and 0.5%. Taking into account the retail cost less imported components; the phone would produce $3.2 billion in the fourth quarter or $12.8 billion annualized and add 0.33% GDP growth in the fourth quarter.³

The numbers are all there, and they look good. But go beyond the quantitative data and the case for Apple’s success gets even stronger.

In a stagnant and weak economy, Apple continues to develop innovative, groundbreaking technology that supports the consumers who purchase them. They consistently strive to push the technology in their devices past their original limits to be more efficient and reliable than previous products and competitor’s products. Their impact shows consumers and companies in the US that innovation, development and persistence will not be held back when economic challenges face the nation. Rather these elements are emphasized to spur growth and dominance in the global market place.

I think it is the global marketplace where Apple will soon find its most rapid growth. In the past, the iPhone has not catered to or been compatible with Chinese mobile networks. However, recent updates include advancements in Chinese language recognition as well as a comprehensive Chinese dictionary. If and when Apple fully penetrates the Chinese markets, they will have access to an additional 120 million potential users, all of who could add an additional $30-40 billion in sales.⁴

I think the future is big for Apple. But more importantly, Apple and the iPhone 5 reflect a positive future for the U.S. economy and the consumer. Apple’s progress shows that regardless of the market or economic environment, companies can flourish through innovation and development.