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Apple (s aapl) executives told Morgan Stanley (s ms) analyst Katy Huberty that Apple “generally views product cycles as software driven,” according to AppleInsider. Huberty met with Apple CFO Peter Oppenheimer, SVP of Retail Ron Johnson and VP of Internet Services Eddy Cue Wednesday to discuss the company’s future outlook.
Huberty came away from the meeting expecting that we will see “major feature/function updates” at Apple’s Worldwide Developer’s Conference (WWDC) in June, according to her note to investors. WWDC is usually where Apple unveils new iPhone models each year, but rumors have been circulating that this year the conference will only focus on software updates, which will likely include iOS 5 and Mac OS X Lion.
Apple did not confirm or deny whether or not a hardware iPhone refresh was on track for summer or later this year, but Huberty reports that since Apple sees itself as focused on software, iOS 5 and Lion are expected to continue to drive strong sales. She also reports that executives conveyed the message that other factors will continue to support strong margins, like improved product cost and higher average selling prices for iPads. Huberty also left the meeting feeling that Apple’s earnings per share could climb as high as $50 in 2013, thanks to “lower-priced iPhones, iPod-like market share in tablets, and expanding distribution in China and other emerging markets.”
The Apple execs really seem to have gone out of their way to take the emphasis off the possibility of new hardware and place expectations firmly on the shoulders of software. That could be a sign the company is trying to further soften the blow of a fall or later iPhone hardware refresh, while also sticking to its policy of not revealing product release plans in advance.
A dramatically altered iOS 5 could indeed steal the show at WWDC and even stave off concerns regarding a changed hardware refresh cycle, but only if it addresses customer pain points with Apple’s mobile OS. If it’s a strong-enough release that’s available to all devices that support iOS 4, it could actually bolster customer loyalty by providing new device-style experience without the price tag. But that’s a pretty big “if,” so we’ll see if Apple can deliver.