There are 57 Wall Street analysts in Bloomberg’s database who follow Apple Inc., and only one of them has a “sell” rating: Edward Zabitsky.
His reasoning? Zabitsky, an analyst at Toronto-based ACI Research, doubts Apple will be able to maintain the margins of its top product, the iPhone. He’s betting that a new web standard called HTML5 will overcome some of the deficiencies of web apps that led to the rise of so-called native apps, the type sold in Apple’s App Store.
Web apps — applications that are accessed through a mobile Web browser — are useless if the phone isn’t connected to the Internet. HTML5 apps will allow users to do some off-line activities, such as working on documents that can later be synched over the web. If that standard takes off, customers will be able to get to most of their favorite services without the need of Apple’s app ecosystem, he says. The move to speedier 4G cellular networks and the increased availability of Wi-Fi hotspots will also make the web apps more useful.
As a result, he expects iPhone prices to tumble to better compete with Android and Windows phones. Over time, he predicts the gross margin on the iPhone will fall from more than 50 percent to about 25 percent — roughly the same as the iPad and Mac. Or maybe worse. Since Samsung Electronics makes many of the parts used in its own phones — displays, chips, modems — it will be able to undercut everyone, including Apple.
“If a price war breaks out in Android phones, Samsung wins hands down,” he says.
Zabitsky also says cell carriers are getting tired of watching profits from iPhone sales accrue to Apple.
“I think carriers’ attitudes are already changing,” he says, citing a recent promotion in which Verizon offered more data per month to owners of Android phones.
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