Will Apple Inc. Take Over the Video Game Industry?
Apple Inc. (NASDAQ:AAPL) may be the most profitable company on the market, but the slowing growth numbers for some of its top products have the owners of AAPL stock shares sweating. The company’s top revenue generator, the “iPhone,” was Apple’s biggest growth driver in the latest quarter, but other product lines have started to mature. Apple’s Macs witnessed slowing sales, while “iPad” sales actually fell. Apple’s management held off from giving any tangible figures on sales and the new product launch of the “Apple Watch.” Nonetheless, the company knows how to survive. After all, it’s been doing so for more than two decades now.
Apple has experimented with new product lines time and again, sometimes failing, but usually winning. “Project Titan” is the company’s next big move to delve into the auto industry. However, there’s one more avenue the company hasn’t fully tapped yet—video gaming.
Could Apple Inc. Put Xbox Out of Business by 2018?
In spite of the rising dominance of mobile games, where Apple continues to expand its “iOS” ecosystem, traditional video gaming still leads the gaming industry. As Nintendo Co., Ltd (ADR) continues to lose its stronghold over the market, Sony Corporation (NYSE:SNE), with its “PlayStation” lineup, and Microsoft Corporation (NASDAQ:MSFT), with its “Xbox” lineup, are emerging as the only two dominant forces.
Video gamers are out of choices and want something new, something different. Now is the right time for Apple to grab some share of this lucrative market. If it can, it would be an enormous boost for Apple stock.
This venture into the gaming market wouldn’t be Apple’s first, although its first gaming console, “Apple Bandai Pippin,” was pretty much a dud. Lately, “Apple TV” has been touted as the company’s next big attempt to win the gaming industry, but it failed to bring in hardcore gamers.
Powered by “Siri,” the touchpad remote that accompanies Apple’s set-top box may have some resemblance to the Nintendo “Wii,” but it barely matches up to the “PlayStation4” and “Xbox One.” For starters, Apple TV doesn’t offer local storage and misses out on the high-definition graphics offered by the industry’s top two consoles. Additionally, Apple has kept its focus narrowed on iOS games, which doesn’t win the greater market. Besides, “Android”-powered set-top boxes, the “Google Nexus Player” and Nvidia “Shield,” are posing a direct threat to the smaller iOS market.
Apple fans now await a full-blown powerhouse of video gaming that will not only serve the iOS gamers, but will also appeal to traditional video gamers. Apple management must realize how key players in the tech arena are moving fast to take a slice out of this pie. Facebook, Inc. (NASDAQ:FB), for instance, has gone a step further than a conventional video gaming console to offer a futuristic virtual reality gaming device, “Oculus Rift.” Its virtual reality headgear will grant Facebook the first-mover advantage in the lucrative immersive gaming industry.
Bottom Line on AAPL Stock
Apple already enjoys strong brand recognition in two of the biggest gaming markets, the U.S. and China. The local gaming scene in the U.S. is expected to grow by 30% in the next three years, and Apple’s technological strength and unique position in the market may prove a boon to the company. (Source: “U.S. games industry forecast to grow 30 percent to $19.6B by 2019,” VentureBeat, June 2, 2015.)
Regardless, Apple remains the most profitable corporation in the U.S. and AAPL stock’s year-to-date performance has far outpaced the S&P 500 index. Also, the company is in a financially strong position and boasts attractive margins.
The bottom line: I’m still bullish on AAPL stock.
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