Apple Inc. Readies for Faster and More Frequent Product Releases
Apple is building a team of engineers in Taipei to ramp up iPhone product development.The recruiting plan is just one part of a bigger effort that has compelled Apple to hire "hundreds of new engineers and supply-chain managers in China and Taiwan" since mid-2013, according to The Wall Street Journal.The purpose of the hiring? "[T]o speed product development and introduce a wider range of devices," the Journal's Eva Dou reported.
Changing competitive landscape
Given how limited Apple's product lineup is, it would only take a few new products each year for the company to meaningfully speed up the pace at which it introduces new products. And considering the scale of Apple's operations, even a few additional products annually would likely require a boatload of new talent.
The engineers will work with Asian suppliers on "faster and more-frequent" iPhone and iPad releases, according to Dou. The strategy isn't surprising given Apple's first bifurcated iPhone lineup last year, which saw the iPhone 5s and the 5c released on the same day. Furthermore, a growing number of devices from rivals is making the landscape of the smartphone market more competitive.
The company is juggling more projects than ever against the industry's shortening product cycle. Apple is trying to fend off competition from low-cost phones using Google Inc.'s Android operating system by introducing more devices.
Will faster launches help Apple maintain growth?
A move to speed the pace and frequency of product launches could help Apple address its slowing revenue growth. With single-digit year-over-year iPhone unit sales growth in Apple's fiscal first quarter, the company's top line only grew 6% from the year-ago quarter. Some investors are worried revenue growth could decelerate further.
Apple's conservative price-to-earnings ratio of 13 reflects the market's concern about Cupertino's ability to grow revenue robustly going forward. In August 2013, Fox Business' Charlie Gasparino, who said his sources were "solid," reported that even Apple's board was raising concerns about the lack of new products in the company's pipeline. Maybe Apple's subsequent hiring spree was a response to this concern?
But is the market being overly conservative? With Apple reportedly about to ramp up the pace of product launches, and Apple CEO Tim Cook promising "new categories," Apple stock is looking enticing at these levels. Generating $44 billion in free cash flow in the trailing 12 months and trading at just 10.7 times free cash flow, Apple is a cheap cash cow with the nice upside bonus of new categories that could take off.
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The article Apple Inc. Readies for Faster and More Frequent Product Releases originally appeared on Fool.com.Daniel Sparks owns shares of Apple. The Motley Fool recommends and owns shares of Apple and Google. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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