Apple's Killer New Strategy And Why Everyone Missed It

Posted on by The INO.com Team

Hello traders everywhere! Adam Hewison here, President of INO.com and Co-creator of MarketClub, with your mid-day market update for Thursday, the 24th of October.

Earlier this week, Apple (NASDAQ:AAPL) unveiled its new lineup of iPads and Macs that are going to push it into the fourth quarter. One key in the presentation that most observers might have missed while focusing on the products, was the fact that Apple intends to include and provide free software like Pages, Numbers, Keynote, iPhoto, iMovie, and GarageBand. These software programs are first class and represent some of the company's crown jewels. It's Apple's new strategy to bring more and more new users into Apple's ecosystem. Once in, it is hard to get out and Apple has you for life.

This strategy reminds me of King Gillette, of Gillette shaving and razors. King Gillette's strategy was simple, give away the razor and I will sell you the high-profit razor blades. In Apple's case, the software is the razor, the iPad, iPhone, the Mac and all of the other Apple hardware pieces are the razor blades. Not a bad strategy for Apple in the tablet wars.

Apple closed out last week at $508.60 and last month at $476.53. Apple is up almost 10% for the month of October and there is still one more week left to trade. I still believe Apple could be headed higher.

Netflix Grinds On
It has been quite a week for Netflix (NASDAQ:NLFX) as it reached a record high price of $389.16 on Tuesday, before heavy profit-taking moved in and pushed prices back down to reality. Last Friday, Netflix closed out at $333.18 and last month it closed at $309.23. I don't believe that the final chapter for this stock has been written. I expect to see further consolidation before it resumes its upward trend.

Amazon Bides Its Time
Amazon (NASDAQ:AMZN) is set to report earnings after the close today. It closed out last month at $312.92 and continues to grind upward on its relentless pursuit to e-commerce domination. All of our indicators are positive on this stock and I expect Amazon to meet or exceed earnings expectations.

Has Tesla Lost Its Spark?
Recently I had some questions from members on the stock price of Tesla (NASDAQ:TSLA). Looking at the stock, one can quickly see why. Tesla closed out the month of September at $193.31 and is presently trading around the $160 to $170 level. This stock closed out last week at $183.35. The major trend for Tesla remains positive while it retrenches and regroups after its dramatic run-up. I'll be looking at this stock today with the Trade Triangle technology.

Is Crude Oil Entering A Bear Market?
The price of crude oil continues to slip (good news for the economy and every motorist in America) and is now trading well below the $100 a barrel level. A classic Fibonacci retracement for this commodity would take it back to the $96 a barrel level. Both the short and intermediate term Trade Triangle strategies have worked well on this market and continue to advocate a short position. I will be covering crude oil in today's report.

The World Prepares For America's First Female Fed Chairman
It's a secret no longer, the world knows that Janet Yellen will be taking over the Fed chairmanship from Ben Bernanke on January 14th. How is Miss Yellen going to differ from "Helicopter Ben" and the insane QE strategy that has done very little for the country except move stock prices higher? I continue to be negative on the dollar based on the Trade Triangle technology.

I always appreciate your comments and feedback, so please feel free to leave them on this blog, along with any questions you might have for us.

Have a great trading day,
Adam Hewison
President, INO.com
Co-Creator, MarketClub

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Adam appears frequently on the following financial news channels as a guest expert. Click on any cable logo to watch Adam's latest appearance.

14 thoughts on “Apple's Killer New Strategy And Why Everyone Missed It”

  1. It boils down to what an individual thinks they're 'owed' in this country. A self-made, self-reliant person would say "not much". A person with disabilities/tragedies, real or faked, would say "everything". Many on government assistance probably think: "this is all free". Note: nothings free. Even if they grasp that concept, they probably think that they are 'owed', because of their 'special' situation, and that folks with money are evil and must be punished by taxation. What we need is a government that supports those in need, but STRONGLY pushes those people toward self-reliance, not our current government which is making dependence a lifestyle. For those who truly can't make it on their own, we do what we can, because that's who we are.

  2. Sad that the banks have had so many months of publicity still survives like the Morgan and still we close our eyes and keep them trading . At least USA has CAP 11 what does UK have I wonder I thank you Firozali A.Mulla DBA

  3. Where is privacy? Swiss banks are believed to have accepted tens of billions of undeclared dollars from US citizens, though they now refuse such money, and a number of banks are under US investigation. I thank you FirozaliA.Mulla DBA Once the Swiss bank was the best for KEEPS now???

  4. WE need cheaper of everything from India Malaysia China Thailand as UK and USA has had allowed these long time back . The poor folks just cannot afford the clothes toys Cells TV etc so we go shopping any place we can with little cash then and now and in future We need these at the right price What are the supermarkets doing 2% margin you jest I thank you FirozaliA.Mulla DBA

  5. Adam....... A year or maybe two ago, you performed a profit/loss analysis of TSLA using the trade triangle. TSLA was still young and you received some criticism about this as it was a new start up. I would be interested if you performed this analysis again for the period since your prior analysis.....thanks

  6. Funny...when Microsoft "gave away" Internet Explorer many years ago, competitors cried foul. The US government stepped in and changed MS's business. I wonder if the same problem will befall Apple.

    1. Jason,

      Thank you for your feedback. I think the circumstances were a little bit different for Microsoft and their free Internet Explorer browser.

      I seem to recall what they were doing was trying to their browser part of the Microsoft operating systemblock and blocking another browser from being on their system. I could be wrong and maybe some other people who read this and have a better recollection of the circumstances.

      With Apple giving away its key software it's your choice to use it or not to use it. Users are free to download other people's software if they wish in the form of other apps in the app store. Apple is much freer than the restrictions that got Microsoft into trouble with the DOJ.

      Thanks for your view point and comment.

      Regards,

      Adam
      Adam Hewison
      President, INO.com
      Co-Founder of MarketClub.com

      1. That is the way I remember, it Microsoft disallowing competition; Also, Microsoft was successfully sued by competitiors in other arenas at the same time for failing to document code complexitites that allowed them to provide some functionality with the office suite that nobody else could duplicate.

  7. I agree that the free software is key plus consider their effort to get wide spread school usage of iPads. Additionally, with the addition of iWork in the cloud being only browser dependent, the ability to keep documents from pc and chrome platforms accessible, compatible and cross-synced with their favorite phone/tablet will appeal to many enterprise customers. The offsite backup advantage is also hard to give up and enhances customer stickiness. Get 'em and keep 'em, through customer experience. Many consider Apple a tech company. They view themselves as an experience company. There are lots of tech companies, there is only one Apple.

    1. imac007,

      Judging by your name I would say you are probably a Mac fanatic like myself. I think your comment about Apple being an experience company is a very very good one. It's one I think that Apple has worked on for a long time to get right.

      Apple wants to make sure that the user has that experience that's memorable while at the same time enjoyable across their entire product line.

      Thanks for your view point and comment.

      Regards,

      Adam
      Adam Hewison
      President, INO.com
      Co-Founder of MarketClub.com

  9. Adam:

    I love Tesla... Whether it is over valued ...you know all that Wall Street stuff.. You know I been waiting for this Electric car success.. It funny how the BIG 4 dont really want make a sincere commitment... I guess to much BIG OIL Money and afraid of losing those CREAM PUFF jobs... I am all in on Tesla... I hope the rest of your readers.. People who want to SAVE OUR EARTH .. get on board and help this GREAT COMPANY... have the LAST LAUGH... I own two Fords and a KIA... good products... but I cant wait til the $40000 Tesla car is available

    1. Chris,

      Tesla is awesome car!

      I had the good fortune to drive one in Washington and I have to say it drives like a dream. I would like to get one when prices like you come down. They were offering to lease them, but unfortunately in the state of Maryland where live the car dealers all revolted and said they can't do that. Talk about stifling innovation. I guess when disruptive technologies come around the entrenched hierarchy does not want to see any changes made on their watch.

      Thanks for your view point and comment.
      Cheers
      Adam
      Adam Hewison
      President, INO.com
      Co-Founder of MarketClub.com

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