Apple Recap: iOS Wins at Home, iPhones Get Cheaper, New Priorities

Apple (NASDAQ:AAPL) shares recouped early losses on Tuesday, rising just under 1 percent on the day to close at $504.77, in anticipation of its earnings release after hours on Wednesday. Reports from analysts were slightly conflicting on the day, so here is a cheat sheet to the top stories related to the company:

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Happy at Home

Apple may have gotten a string of bad news about its products recently, but according to a new survey, its iOS platform continues to be the market leader in the U.S. and is stealing users away from rivals Google (NASDAQ:GOOG) and Research In Motion (NASDAQ:RIMM). According to Kantar Worldpanel ComTech data, Apple’s iOS accounted for 51.2 percent of all U.S. smartphone sales for the 12-week period ending December 23, 2012. This represented a growth of more than 7 percent from the 44.9 percent over the same period in 2011. Meanwhile, Android’s share fell from 44.8 percent in 2011 to 44.2 percent, while RIM suffered an even bigger decline — falling from 6.1 percent of smartphone sales to 1.1 percent.

According to the research firm, Apple’s strategy of annual iPhone upgrades alongside price cuts for its previous-generation versions contribute to its growth and help it extend its reach to low-tier markets. (Read more)

iPhones Get Cheaper?

A survey that found customers were increasingly shifting to cheaper iPhones with less memory has prompted UBS analyst Steve Milunovich to cut his price target on Apple’s stock from $700 to $650. Milunovich maintained his Buy rating on the company, but also trimmed his sales estimates for both the current fiscal year and the next. The Consumer Intelligence Research Partners survey found that average demand for storage had fallen from around 30GB with the iPhone 4S to 20GB with the iPhone 5. Also, fewer customers were opting for the 64GB models of the newer phone and demand for older models grew from 33 percent in the 4S product cycle to 50 percent in the iPhone 5 cycle. (Read more)

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Shifting Priorities

Apple needed to start focusing less on hardware sales and more on the potential revenue from its services, according to Barclays Capital analyst Ben Reitzes, who reiterated an Overweight rating and a $740 price target on the stock in a research note on Tuesday. According to the analyst, new services could lead to a two-point recovery — equating to about a $100 move — in Apple’s multiple points rather quickly. Reitzes even provided an example from Google’s software value to prove the importance of having a strong ecosystem, citing the maps debacle. The analyst expected to see the “seeds of this innovation” in March, when, according to him, Apple will preview iOS 7 at an iPad launch event. (Read more)

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