Goldman Sachs Picks Apple

Apple’s shares are going to soar 43%: Goldman Sachs

 

Apple’s (NASDAQ: AAPL) share price could see a 43 percent rise over the next 12 months as investors shift their focus on the amount of iPhones the company is selling to the number of services it is getting users to pay for, Goldman Sachs (NYSE: GS) said in a note on Wednesday.

The U.S. investment bank has put a $163 price target on Apple’s stock, up from Tuesday’s close price of $113.69 and added it to its “conviction buy list”.

Goldman says Apple currently trades like a “hardware stock” at an 11 times price-to-earnings ratio (P/E), but with the company introducing services such as Apple Music, it will become more akin to Google or Facebook.

“Apple’s multiple embodies the scars from prior fallen giants in hardware (Motorola, Nokia, BlackBerry, and HP, to name a few). However, we think Apple’s business model has less in common with traditional hardware companies, and more in common with companies that monetize mobile users through content and services,” Goldman Sachs said in a note.

“In addition, the recurring nature of Apple’s relationship with a customer base that consumes content and services exclusively through Apple’s hardware has similarities to service providers such as AT&T or Comcast; these similarities are becoming more pronounced with Apple’s new installment plan model for the iPhone, and its expected launch of a live TV service.”

Apple’s stock took a hit earlier this year amid concerns that iPhone growth was slowing. While Goldman agrees, it estimates Apple will still have an install base of 700 million in 2017, up from 500 million currently. The investment bank also notes that it is user base is very loyal and spend much more than Google’s Android users. This year, Apple will generate $467 in revenues per iPhone user, above Google’s $44 and Facebook $11, Goldman said.

Related Quotes

• AAPL116.99+2.90%

Apple Inc. Watchlist

116.99+3.30(2.90%)

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But Apple is still trading at a discount, a view that is likely to change as the idea of “Apple-as-a-service” emerges.

Apple recently launched Apple Music, which costs $9.99 a month, and is rumored to launch an on-demand TV product next year which Goldman said could be around $40 a month. Given the number of services being launched by Apple, the average revenue per user (ARPU) could be as much as $150.

“We calculate a current ARPU of $42/mo per iPhone user, pro rata for the current adoption rates of Mac, iPad, Watch, and services. The theoretical ARPU (assuming every iPhone user has all other Apple hardware products and services) is $153/mo, implying significant growth potential as the adoption of Apple hardware and services increases within the user base,” Goldman noted.

And this will be the driver of Apple’s share price over the next year.

“We think that view will start to shift in 2016 as Apple’s revenues become increasingly sticky and recurring with the launch of installment plans and a TV service, and we would use the near-term concerns over a y-o-y (year-over-year) unit decline as very attractive buying opportunity for the re-rating of Apple from a hardware stock (11X P/E) to a content and services platform (15X P/E),” Goldman’s analysts wrote.

 

Apple Valued at $ 180

Cantor Fitzgerald sets Apple’s market value at $1 trillion

Having factored in the Watch, Apple TV, cash, the iPhone in China and rumors about other stuff, like cars.

Cantor Fitzgerald’s Brian White, whose neck was already stuck out further than the rest of the sell-side Apple analysts, stuck it out even further Monday.

His old price target, $160, was the market high. With his new price target, $180, he’s betting that within 12 months Apple’s market capitalization (stock price times number of shares outstanding) will have passed $1 trillion.

To put that number in perspective, the total value of the gold mined in all of history, according to the World Gold Council, is roughly $8.5 trillion.

As White sees it, Apple is firing on all cylinders:

Next month, Apple will enter its first new product category in five years, while media reports over the past several weeks have highlighted potential new areas of future innovation. Also, we believe Apple’s iPhone portfolio and position in China have never been stronger. Finally, Apple has shown its commitment to returning cash to shareholders, and we expect more in April. We believe the combination of these forces will drive the market to reward Apple’s stock.”

Below: Our current spreadsheet of analysts’ 12-month price targets, as up to date as we can make it. Corrections appreciated.

 

Apple has The Most Rating Upgrades of the Top 25 List

This is the list of the 25 companies that have been upgraded by (or have had their price target increased) brokerages the most during the last ninety days.

Most Upgraded Companies

• 31 Upgrades – Apple Inc. (AAPL)
• 21 Upgrades – Palo Alto Networks Inc (PANW)
• 19 Upgrades – Amazon.com, Inc. (AMZN)
• 18 Upgrades – LinkedIn Corp (LNKD)
• 16 Upgrades – salesforce.com, inc. (CRM)
• 16 Upgrades – Skyworks Solutions Inc (SWKS)
• 15 Upgrades – Urban Outfitters, Inc. (URBN)
• 15 Upgrades – Twitter Inc (TWTR)
• 15 Upgrades – Facebook Inc (FB)
• 15 Upgrades – Yahoo! Inc. (YHOO)
• 14 Upgrades – Freescale Semiconductor Ltd (FSL)
• 14 Upgrades – Boston Scientific Co. (BSX)
• 13 Upgrades – Ambarella Inc (AMBA)
• 13 Upgrades – ITV plc (ITV)
• 13 Upgrades – Best Buy Co Inc (BBY)
• 13 Upgrades – CGI Group Inc. (GIB.A)
• 13 Upgrades – Netflix, Inc. (NFLX)
• 13 Upgrades – NXP Semiconductors NV (NXPI)
• 13 Upgrades – Alimentation Couche-Tard Inc (ATD.B)
• 12 Upgrades – Cavium Inc (CAVM)
• 12 Upgrades – Texas Instruments Incorporated (TXN)
• 12 Upgrades – BAE Systems plc (BA)
• 12 Upgrades – Mallinckrodt PLC (MNK)
• 12 Upgrades – Pearson plc (PSON)
• 12 Upgrades – Actavis plc (ACT)

Recent Ratings

• Airgas, Inc. (ARG) had its “market perform” rating re-affirmed by analysts at William Blair. (3/22/2015)
• Veracyte Inc (VCYT) had its “outperform” rating re-affirmed by analysts at William Blair. (3/22/2015)
• Mattress Firm Holding Corp (MFRM) had its “market perform” rating re-affirmed by analysts at William Blair.(3/22/2015)
• Huron Consulting Group (HURN) had its “outperform” rating re-affirmed by analysts at William Blair. (3/22/2015)

Apple to Hold Special Event March 9th the Apple watch

 

(Bloomberg) — The countdown has begun to Apple Inc.’s next big thing: the Watch.
The company on Thursday sent out invitations to an event on March 9 in San Francisco, where it will unveil details for the release of the Apple Watch, a person with knowledge of the matter said.
Optimism about Apple has been growing since Chief Executive Officer Tim Cook first took the wraps off the smartwatch, along with larger-screened iPhones, in September. The new phones helped fuel record profit in the last three months of 2014. Apple shares are trading near all-time highs, giving the company a market capitalization of about $758 billion. The event gives Cook the chance to show off the gadget’s capabilities and convince consumers they need one.
“The development community has had at least three months to start writing apps so I think they’ll profile some of the best apps,” said Tim Bajarin, president of Creative Strategies Inc. “It will start giving us reasons for why we may want the watch.”
Cook said last month that the smartwatch will ship in April. The connected, fitness-tracking wristwatch is the first entirely new gadget line to debut since he took the helm at Cupertino, California-based Apple. The company hasn’t given much information about the gadget’s battery life or how much models will cost, other than $349 for the basic version.
Time Shift
“Spring forward,” reads the invitation to the event, to be held at the Yerba Buena Center for the Arts Theater at 10 a.m. The headline refers to the annual switch to daylight savings time, when Americans move their clocks and watches forward by one hour. This year, the time shift begins on March 8, a day before Apple’s event. The event’s focus will be Apple Watch, said the person with knowledge of the matter, who asked not be identified because the topic wasn’t made public.
Apple Watch, with a rectangular touch-screen face, includes sensors to detect pulse rates and other health-related features and must be paired with an iPhone to work properly. It will come in two sizes and three styles — classic, sports and gold editions. The company may give more details about styles and prices at the event.
“The creativity and the software innovation going on around Apple Watch is incredibly exciting,” Cook said when he announced the watch would begin shipping in April.
Sales Projections
Morgan Stanley has projected Apple Watch will generate $8.1 billion in revenue in fiscal 2015, including $1.35 billion in the March quarter, while RBC Capital Markets said Apple could “conservatively” generate $6.5 billion from 20 million watch shipments.
At a Goldman Sachs Group Inc. conference earlier this month, Cook talked about uses for the watch, saying he uses it to track his activity levels.
“If I sit for too long it will actually tap me on the wrist to remind me to get up and move because a lot of doctors believe that sitting is the new cancer,” he said. “It’s something that you’re going to think, ‘I can’t live without this anymore.’”

Apple Pay Slammed by CVS, Rite-Aid, Wal-Mart in favor of CurrentC

The introduction of Apple Pay last Monday was widely described as the dawn of a new era for smartphone payments.

But within a week, two major pharmacy chains, Rite-Aid and CVS, rejected Apple’s version of the future: Both disabled Apple Pay (as well as other tap-to-pay mobile payments systems Google Wallet and Softcard). As expected, customers took to Twitter to complain, and they almost universally sided with the smartphone company over the drug stores.

CVS hasn’t publicly explained itself. Rite-Aid spokeswoman Ashley Flower defended the company in an email to Bloomberg Businessweek. “We are continually evaluating various forms of mobile payment technologies, and are committed to offering convenient, reliable, and secure payment methods that meet the needs of our customers,” she wrote.

That’s not the whole story. Objections to Apple Pay aren’t actually about convenience, reliability, or security—they are about a burgeoning war between a consortium of merchants, led by Walmart, and the credit card companies. Rite-Aid, CVS, Walmart, Best-Buy and about 50 other retailers have been working on their own mobile payments system, called CurrentC. Unlike Apple Pay, which works in conjunction with Visa, Mastercard, and American Express, CurrentC cuts out the credit card networks altogether. The benefit to the merchants is clear: They would save the swipe fees they pay to the credit card companies now, which average about two percent of the cost of transactions.
CurrentC is also likely to allow merchants to gather data about transactions and offer discounts and loyalty programs. This stands in marked contrast to the anonymity built into Apple Pay, which has drawn concerns even from some merchants who are actively supporting the system.

Apple chief executive Tim Cook would be happy to have this fight with MCX’s backers. When he introduced Apple Pay last month, Cook said mobile payments had failed so far because they were built to serve the business models of their creators, rather than to provide a useful experience for customers. Because Apple’s primary goal is to sell more phones, tablets, and laptops, its system is more straightforward.

Rite-Aid and CVS screwed up the optics on this one. It’s hard to argue that you’re doing right by your customers when you stop accepting a form of payment that you’ve already demonstrated presents no technical hurdles. They also don’t have an alternative to offer. CurrentC isn’t expected to be ready until 2015, and the specifics of the system aren’t public.
The irony of this conflict is that Apple, the innovator, is in the position of endorsing the status quo. Walmart and its brick-and-mortar allies, on the other hand, are actively trying to turn the payments industry on its head and challenge the entrenched power of the credit card networks. Apple is happy to help the incumbents make the existing system feel slicker to customers, without touching the underlying economics. In return, American Express, Visa, and Mastercard have been solidly in Apple’s corner.

Apple Update Target Price $ 120

AAPL : NASDAQ : US$99.76
BUY 
Target: US$120.00

Technology — Communications Technology — Wireless Equipment
STRONG RESULTS; RECORD IPHONE 6 UPGRADE CYCLE DRIVES SOLID Q1/F’15 GUIDANCE

Investment recommendation:

Apple reported strong September quarter results above our and consensus estimates. Consistent with our surveys
indicating very strong global iPhone 6 demand with limited supply, Apple
issued strong Q1/F’15 EPS guidance slightly above our estimates as Apple is
currently selling all iPhone 6 devices it can produce. Please see our October
13 report titled “Monthly surveys indicate very strong iPhone 6/6 Plus
demand; limited supply” for more details on our survey work.

We maintain our expectations for a record iPhone 6 upgrade cycle driven by strong
replacement sales to existing iPhone customers and strong high-end
smartphone market share gains due to our surveys indicating a greater mix
of Android smartphone consumers switching to the iPhone 6 smartphones
than during the iPhone 5 series launches. Mac sales were also above our
expectations as Apple gained material PC market share during the important
back-to-school season. We reiterate our BUY rating and increase our price
target to $120 from $115.

Investment highlights

 Apple reported Q4/F’14 sales of $42.1B and EPS of $1.42, above our
$39.7B/$1.28 and consensus of $40.0B/$1.30. The strong results were
driven primarily by stronger iPhone sales of 39.3M units at $606 ASP
versus our above-consensus 37.7M/$574 estimates.
 We believe Apple’s Q1/’15 sales guidance in the range of $63.5-66.5B
was adversely impacted by F/X from the stronger dollar and iPhone
demand well above Apple’s ability to supply throughout the December
quarter. Our updated estimates are at the high-end of Apple’s guidance
due to our surveys indicating an increasing sales mix of higher-ASP
64GB (versus 16GB) iPhone 6/6 Plus SKUs combined with a growing
demand for the higher-ASP iPhone 6 Plus, particularly in China. We
anticipate materially higher iPhone ASPs during Q1/F’15 and maintain
above-consensus iPhone ASP of $680 adjusting for deferred revenue.
 Given the strong results and guidance, we maintain our bullish F2015
product cycle thesis and raise our F’15/F’16 EPS estimates from
$7.77/$8.19 to $8.00/$8.50.

Valuation:

Our $120 price target is based on shares trading at roughly 14x
our F2016 EPS estimate.

You Can’t Buy a BlackBerry Passport – ‘Being Sexy’

It’s a good thing that some people can’t buy BlackBerry Ltd. (BBRY)’s Passport phone, Chief Executive Officer John Chen said.

That means it’s popular.

Disclosure : Blackberry remains one of Jack A. Bass Managed Accounts largest long positions.

Shortages of the business-focused smartphone show that efforts to turn around the unprofitable company, formerly known as Research In Motion Ltd. (BB), are taking hold, Chen told an MIT Enterprise Forum event today in Hong Kong. Demand for the phone — the first major new device released globally since Chen took charge in November — has exceeded the Canadian company’s expectations.

“I’m glad to have inventory issues. It shows that people want the phone,” said Chen, 59. “We took a very conservative approach and didn’t order too many.”

In his attempt to return the company to profitability by 2016, Chen is focusing on products such as the BlackBerry Blend feature that appeals to corporate customers because it helps them merge work and personal information. BlackBerry’s smartphone shipments sank to 13.7 million units last year from 52.3 million in 2010, according to data compiled by Bloomberg, as it struggled to compete with touch-screen devices produced by Apple Inc. (AAPL) and Samsung Electronics Co.

‘Being Sexy’

The Passport pre-sold 200,000 units in the first two days, selling out in six hours on BlackBerry’s website and within 10 hours on Amazon.com. The square-screen smartphone is designed for business users who write e-mails, study spreadsheets and read documents on their phones.
BlackBerry was focused on the 30 percent of the market that sees their phones as a tool, not as an entertainment portal, Chen said.

“That is not a space that we can afford to be in now. Being sexy and being a workhorse are two different things,” he said.

Chen, a Hong Kong native, said he doesn’t yet have a strategy for expanding into China. The company got 16 percent of its sales from the Asia-Pacific region during the fiscal year that ended in March, compared with 19 percent from the U.S., according to data compiled by Bloomberg. Chen said he hopes to get ideas when he attends the Asia-Pacific Economic Cooperation summit in Beijing next month, his first trip to the country as CEO.

“China is too big a market to ignore,” Chen said. “It is clear that BlackBerry needs to and should be in that market.”

Shares of BlackBerry rose 1.3 percent to $9.42 at 9:37 a.m. New York time.

Avago Technologies Limited iPhone Upgrade Target price $97

AVGO : NASDAQ : US$83.47
BUY 
Target: US$97.00

COMPANY DESCRIPTION:
Avago Technologies Limited is a designer, developer and
global supplier of analog semiconductor devices. Avago
offers products in three primary target markets: wireless
communications, wired infrastructure, and industrial and
automotive electronics. Applications for Avago products
include smartphones, connected tablets, consumer
appliances, data networking and telecom equipment, and
enterprise storage and servers.

Technology — Communications Technology — Semiconductors
RAISING ESTIMATES BASED ON STRONG IPHONE 6 CONTENT SHARE AND INCREASED IPHONE 6 ESTIMATES
Investment recommendation: Based on our analysis, industry
conversations, and recent iPhone 6 teardown reports, we believe Avago has
roughly doubled its dollar content in the recently launched iPhone 6/6 Plus
smartphones versus the iPhone 5s/5c models and has the highest RF dollar
content share among the RF suppliers. With our recent surveys indicating
extremely strong demand for the new iPhone 6 products, we anticipate very
strong Q4/14 iPhone sales and high-end smartphone market share gains for
Apple versus high-tier Android OEMs, particularly Samsung. Given Avago’s
strong dollar content in the new iPhones and our recently raised iPhone
estimates, we are raising our Avago estimates. We reiterate our BUY rating
and raise our PT to $97.
Investment highlights
 Our recent surveys and analysis indicate very strong iPhone 6 demand,
and we anticipate a record iPhone 6 upgrade cycle. Please see our
separate Apple note, published Sept. 22, titled “Monthly surveys
indicate record iPhone 6 upgrade cycle, strong market share gains,” for
our updated iPhone estimates.
 We estimate the RF front-end content in the iPhone 6/6 Plus increased
to roughly $15.25-15.50 per device versus $11.25-11.50 in the iPhone
5s/5c models due to increased LTE band support and features such as
envelope tracking and carrier aggregation. Due to the increased
number of higher-frequency bands supported that require FBAR filters,
we believe Avago increased its RF dollar content to roughly $6/iPhone 6
models versus roughly $3 in the iPhone 5s/5c.
 While we believe Avago has growing dollar content in other flagship
Android smartphones such as Galaxy Note 4, Avago has stronger dollar
content share in the iPhone 6 devices given Android smartphones tend
to support more regional LTE SKUs. Therefore, we believe Avago will
benefit from strong iPhone 6/6 Plus sales despite our recently lowered
Android estimates due to share losses to the iPhone 6 products.
 Given these trends, we raise our F2014/15 Wireless business sales
estimates, resulting in our F2014/15 pro forma EPS estimates
increasing from $4.63/$6.35 to $4.65/$6.45
Valuation:

Our $97 price target (was $95) is based on shares trading at
roughly 15x our F2015 pro forma EPS estimate.

Apple’s New iPhones Face Shipping Delays

Apple Inc. (AAPL)’s new iPhones will take as many as four weeks to ship, a sign that early demand for the smartphones is outstripping supply.

The iPhone 6 Plus, which has a larger display, will take three to four weeks for shoppers who pre-ordered online yesterday, according to Apple’s website, as people rushed to buy the handset hours after the company began taking pre-orders. Certain iPhone 6 models, which have a slightly smaller screen, will take seven to 10 business days to arrive, though some versions are still available for delivery on Sept. 19 when the devices are set to go on sale in stores. Pre-orders through some individual carriers’ websites indicate shipments could take even longer.

“Response to iPhone 6 and iPhone 6 Plus has been incredible, with a record number of pre-orders overnight,” said Trudy Muller, a spokeswoman with Cupertino, California-based Apple.

Apple this week unveiled the new smartphones with rounded edges, thinner frames and higher-resolution displays, and they became available for pre-order starting at 3 a.m. New York time yesterday. Chief Executive Officer Tim Cook is counting on the new devices to usher in demand for other products he introduced this week, from the iPhone-compatible Apple Watch to the credit card-substituting Apple Pay service.
Demand for the latest iPhone is the greatest AT&T Inc. has seen in two years, Ralph de la Vega, CEO of its mobile division, said yesterday at a Goldman Sachs media conference.

“Every time there is a change in design, and this is clearly a change in design for Apple, there is an uptake,” de la Vega said. “I think there’s going to be a great uptake, which is good for us.”

Familiar Pattern

This isn’t the first time Apple and phone carriers have seen iPhone models delayed well before they were available in stores. In 2012, the iPhone 5 was delayed for shipment by a week after a rush of orders, and in 2011 the iPhone 4S sold out at AT&T, Verizon Wireless, and Sprint Nextel Corp. only five days after pre-orders began.

“The iPhone 6 Plus experiences severe supply constraints,” Brian White, an analyst at Cantor Fitzgerald, wrote in a note to investors.

The iPhone 6 has a 4.7-inch display and the iPhone 6 Plus has a 5.5-inch one, while the previous iPhones have a 4-inch screen. The iPhone 6 costs $199 to $399 with a two-year contract, while the 6 Plus is priced at $299 to $499. The devices will come in silver, gold and space gray.

“It’s the biggest advancement ever in iPhone history,” Cook said yesterday in an interview with Charlie Rose at Bloomberg headquarters in New York. “We think that the upgrade cycle here and the number of people that will switch from other smartphones — it will be enormous.”

Twitter Gripes

Customers took to Twitter to complain of difficulties loading Apple’s website to place pre-orders. The website had problems loading at about 3:22 a.m. New York time yesterday, according to Isitdownrightnow.com, a site that tracks Internet issues.

Shares of Apple rose less than 1 percent to $101.66 at the close in New York yesterday. The stock is up 27 percent this year.

While the company normally doesn’t disclose figures for its production runs of new products, it typically has a supply of its new devices in stores on the first day.

Carriers, which often offer deals when a new iPhone comes out to lure more data-hungry smartphone users and bolster their market share, are again offering incentives that may be bolstering interest.

Carrier Incentives

Verizon is promoting a “Trade In & Trade Up” smartphone sale on its website, offering $100 to $300 for used devices. AT&T said earlier this week it will let customers swap in their old iPhone for a new iPhone 6 and as much as a $300 credit. Sprint is offering the “iPhone for Life” plan, which for $70 a month lets users rent the iPhone 6 and upgrade to a new version every two years, while T-Mobile US Inc. says it will top the best trade-in price with an added $50.

“Right now, we’re in an online, preorder phase, and will share info on in-store when it becomes available,” Debra Lewis, a Verizon spokeswoman, said in an e-mail.

While AT&T is planning on having new iPhones in stores by Sept. 19, the company won’t comment on which specific models will be available, said Mark Siegel, a spokesman for the carrier.

Legere Apologizes

T-Mobile will have the iPhone 6 Plus in stock in stores when the device goes on sale next week, said Tolena Thorburn, a spokeswoman for the Bellevue, Washington-based company. The company’s website was unable to process orders part of yesterday, with its site carrying a message attributing the errors to “strong demand for preorder devices.”

T-Mobile CEO John Legere apologized to customers on Twitter, saying “demand has been huge but we are on it.”

Michelle Mermelstein, a spokeswoman for Sprint, declined to comment on whether the Overland Park, Kansas-based company would have the iPhone 6 Plus in stores on Sept. 19.

The iPhone remains the most important piece of Apple’s business.

The handset accounted for about half of Apple’s $171 billion in revenue in its last fiscal year, and with sales of the iPad slowing, the company needs to keep the iPhone a blockbuster to maintain growth.

The handsets will initially be available in a limited set of markets — including the U.S., Australia, Canada, France, Germany, Hong Kong, Japan, Puerto Rico, Singapore and the U.K. – – for pre-order and shipping on Sept. 19, the company has said. China, one of Apple’s biggest markets, won’t get the new devices at first, though the company said it plans to have the phones in 115 countries by the end of the year.

Google Launches Android One In India

Android’s future lies not in expensive, feature-packed smartphones for the tech elite. Instead, it’s all about getting smartphones to the rest of the world.

Google today officially launched Android One, its initiative for cheap-yet-high quality smartphones for developing countries. The program is debuting in India with three cheap devices starting at around $105 off-contract, and the company is also planning to expand the program to Indonesia, the Philippines, and the rest of South Asia by the end of the year.

While high-end Android devices will be a mainstay among gadget geeks, there’s a much bigger opportunity for Google in focusing on the more than 5 billion people worldwide that currently don’t have smartphones. After getting its hooks into those potential consumers early, Google will likely be able to make them lifelong customers.

Cheap Android devices have already helped the platform dominate smartphone market share (85 percent of smartphones shipped in the second quarter ran Android, according to IDC), but with Android One, Google is aiming to bring some stability to the low-end market. It’s similar to Google’s Nexus line, which highlights what Android can do for higher-end phones (while still focusing on relatively inexpensive off-contract pricing).

Google says it’s working together with phone and component makers by sharing reference hardware designs, which could lead to cheaper devices with high-quality specs. Just like Nexus devices, Android One phones will get updates directly from Google, so users won’t be beholden to the whims of their carriers. The devices also include features that are particularly useful for the developing world, like dual SIM capabilities, expandable storage, FM radio, and removable batteries.

Android Wear is launching in India with phones from Micromax, Karbonn, and Spice. They all share similar specs: A 4.5-inch processor, 1 gigabyte of RAM, a quad-core processor, and a 5-megapixel camera.- the phones look fairly indistinguishable now. But you can expect phone makers to get more creative with their designs down the line. Google also revealed new partners for Android One, including Acer, Asus, HTC, Lenovo, and Qualcomm.

Google has also partnered with Airtel in India to offer free updates over cellular for the first six months. During that time, Airtel customers can also download up to 200 megabytes worth of apps for free every month.

Google also plans to launch an offline version of YouTube in India, which will let consumers rewatch videos without eating up their mobile data.

“Access for access’s sake is not enough,” wrote Google VP Sundar Pichai, who leads Android and Chrome, in a blog post today. “With Android One, we not only want to help people get online, we want to make sure that when they get there, they can tap into the wealth of information and knowledge the web holds for everyone.”

And of course, it also helps that all of those new web users will likely be dependent on Google’s services.