January 20, 2013
Applesauce: All Things Apple – January 20, 2013
It’s 7 o’clock on the dot, I’m in my drop top, having some Applesauce.
iPhone orders slashed in halfsies…or not
There are many instances in this life where the tech press is quick to jump on a relative non-story and blow it out of proportion while the real world looks on and asks, “So wait, Google owns YouTube?”
Then, there are those increasingly rare moments in this life when this relationship works the other way. A headline is released, the general public makes hay where there’s little hay to be made, and the tech press quickly rise up to right the wrong.
This weekend, the Wall Street Journal ran a story wherein they cited another news source as saying that Apple had slashed their iPhone component orders “in half” amidst weak demand.
And the world went nuts.
Of course, when I say, “The world went nuts,” what I really mean is every Apple Doomsayer began to trot out their best-rehearsed apocalypse speeches. Stockholders couldn’t get rid of their shares fast enough. I imagine they felt a combined sense of despair and vindication: Despair because they lost on what they thought was a sure bet, vindication because, come on, everyone knew this was going to happen sooner or later.
There was something about the story that just didn’t ring true. I can’t think of a time in recent years where demand for an Apple product was suddenly cut in half, especially following a hot holiday shopping season.
Last we had heard, the iPhone, which had broken opening weekend records, was still topping the Christmas wish lists and flying off the shelves. Now, all of a sudden, Apple’s pulling the reigns back, saying they only expect to sell at least half of what they had predicted?
Making the matter worse, the Journal piece originally claimed Nikkei as saying Apple was slashing their 65 million unit order in half, putting it somewhere near 32.5 million. (That’s math.)
Later in the day, however, the Journal quietly took this part of the story out.
Well…that’s not entirely true.
They left the whole bit about orders being cut in half, but they took out the 65 million part, which actually made it worse.
It’s not that big of a deal to say, “Apple has scaled back on their component order from 65 million.”
But to say, “Apple has cut their order back in half” sounds terrible, no matter how large or small the number might be. In any situation, “In Half” is far worse.
It only took a few hours for analysts and journalists alike to acquaint themselves with Monday morning and a new week before we started hearing cries of foul over this piece.
The next day, several analysts began releasing reports detailing how each of their checks showed strong demand.
One such analyst, a Mr. Shawn Wu with Sterne Agee, even claimed that if Apple did go on a slashing spree and cut their orders in half, it’s only because they had streamlined their manufacturing process and had figured out a way to build these iPhone 5s more efficiently. This would be a significant win for Apple, as their latest iPhone, beautiful and powerful as it may be (and it is) apparently isn’t the easiest thing to build.
One more thing about “65 million” and “in half…”
NPD DisplaySearch, the firm that keeps a close eye on display makers and the companies who buy them, had a few figures of their own. According to NPD’s numbers, Apple may have cut their order from 19 million to between 11 and 14 million. Nowhere near “in half” and, suspiciously, no where near 65 million.
The new iPhone is great, sure, but will it (and the same-sized iPod Touch) have sold 65 million units in the first quarter?
An angry rant against the cheap plastic iPhone rumors
As the world was busy having a collective conniption over Apple slashing their order in half, some used the issue as a platform to sing their new favorite tune: “Look to Samsung, Apple, and sell cheap phones!”
(You can put that to whichever tune you see fit.)
These calls began to show up at the beginning of the year amidst rumors that Apple has been hard at work, building a cheaper iPhone made with cheaper components. Some even say this Value Pack iPhone might even ship with a back so transparent, you’ll literally be able to see just how much money you’re saving!
One day after the Wall Street Journal story sent Apple stock dipping below $500, an unlikely man stepped in front of a television camera and began offering up free advice on what Apple should be doing in the future.
John Sculley, former Apple and Pepsi CEO, said in an interview with Bloomberg Television late Tuesday evening that Apple needs to adapt to a “very different world” if they want to continue growing.
“As we go from $500 smartphones to even as low, for some companies, as $100 for a smartphone, you’ve got to dramatically rethink the supply chain and how you can make these products and do it profitably,” said Sculley in the interview.
Now, it’s not fair at all to completely dismiss the man who fired Steve Jobs, thereby sending Apple into a dizzying death spin for many years, allowing Microsoft to completely dominate the industry.
In the end, everything worked out well enough, and with products like the iPod, iPhone and iPad and movies like Toy Story, is it really worth it to ask “What if?”
On the other hand, if there was only one person no one at Apple would ever take advice from, not in a million years, it would probably be John Sculley…. or Steve Ballmer.
But I imagine the fine folks at Cupertino still believe Ballmer is mostly fictional.
Sculley is preaching a popular gospel these days. The cries for cheap iPhones aren’t new; Analysts and Apple watchers have been claiming that the company will— or should— release a tinker-toy version in order to bring in those customers who want a smartphone on a budget.
Because, you know, Apple is one of those companies who listens to focus groups.
Even Phil Schiller semi-went on record to head off this new batch of cheap iPhone rumors, telling a Chinese newspaper that even if Samsung outsells his company, they’re still proud of their 75% profit.
“Every product that Apple creates, we consider using only the best technology available,” said Schiller.
“This includes the production pipeline, the Retina display, the unibody design, to provide the best product to the market.”
Interestingly, Reuters later changed some of Schiller’s comments to reference a “cheaper, low-end product” as opposed to a cheap iPhone.
Apple very well could release a cheap iPhone with a transparent back. I thought they’d be daft to release an iPad mini, and look where we are today.
This is the company who has always made expensive products and soaked up all the profits. Their stuff is of the finest quality, it’s beautiful to look at, and it just works. Customers truly get what they pay for when they buy an iPhone.
Apple releasing a cheap iPhone makes as much sense as Facebook adding VoIP functionality to their Messenger for iOS app.
Which is to say, there’s an argument to be made that a cheaper iPhone could help them along in a world where they are no longer the long-shot leader…but I still don’t see it happening, no matter how much Sculley pleads.
A 2013 roadmap
Former CEOs aren’t the only ones guessing what Apple will do and/or doling out free and unsolicited advice. Just as it’s always been Analysts and Apple Watchers alike are busy making “educated guesses” about what the future holds for Apple.
(A brief aside: If this week’s commotion has taught us anything, it’s that analysts mostly work towards their own good. Their hand-in-hand relationship with investors was made quite apparent when Apple stock just so happened to close at $500 on Friday, the exact amount needed for those who sold APPL in the summer to earn millions. Interesting, no?)
Ming-Chi Kuo with KGI securities decided to have a little bit of fun with his predictions, turning the common and tired “Year End” lists into a “Year to Come” set of guesses.
There are few surprises in this list in terms of which items will be released. It isn’t at all out of the question to assume Apple will focus on their core lineup of products this year. Kuo agrees, making predictions for new or updated MacBook Pros, Apple TV hockey pucks, and iOS devices.
Kuo expects a minor update to the Apple TV in the next couple months, likely announced quietly with a “New” tag at Apple.com.
It’s hard to see such a small revision spurring Apple to roll out the red carpet for a full-blown press event.
Kuo’s predictions also call for new Macs in the second quarter, including a speedier Air and new Retina’d MacBook Pros. The analyst even goes so far as to say Apple will kill off the MBP as we know it, replacing it with the Slim-line, solid state drive only rMBP.
Kuo has used this 2013 roadmap to announce to the world that he is a proponent of 2 of the biggest Apple debates right now: Third quarter iPads and cheap iPhones.
According to the analyst, Cook and crew will continue with last year’s Third Quarter Free for All, releasing new iPads, iPhones and iPod Touch models all within a month or so from one another.
Looking back on it, the spring iPad launch and autumn iPhone launch allowed for a certain amount of balance in Apple news. iPads came early, Macs were released in the summer, then the phones in the fall.
Yet, it also makes a certain amount of sense to announce something great and new just weeks before people are planning to drop loads of cash on their friends and family in the name of the holidays.
This prediction is much more feasible than Kuo’s claims for this year’s iPhones.
Should Apple follow their tick-tock release cycle for the iPhone, 2013 should be the year of the iPhone 5S. Kuo accounts for the 5S, saying this new phone will have the latest A7 processor (likely unveiled weeks before at an iPad announcement) as well as an improved camera and fingerprint scanner embedded in the home button. (The scanner sounds a little too Android to me, but hey…these are only predictions.)
For those who don’t want to buy the iPhone 5S, Kuo claims the Cupertino company will also unveil a cheap, plastic version of the beautiful iPhone 5. This cheap plastic phone, says Kuo, will be thicker than the iPhone 5 we all know and love and will even be available in as many as 6 different colors.
Hold on right there.
Yet another angry rant against the cheap, plastic iPhone
When analysts and journalists first began calling on Apple to make a cheaper iPhone, the company unofficially responded by offering the previous year model at a lower price. Not looking to pay $199 for the latest and greatest? How about $99 for a phone that still beats the competition, even at a year old?
The iPhone 4, a great phone to this day, is now the “free” phone for anyone looking to enter into the Apple-sphere.
Hard to get much cheaper than free.
Plus, Apple has had 3 years of experience building this phone. They’ve got their efficiency down (one could assume) and they’re busy making all their profits from the millions of iPhone 5s they’re selling.
As proverbial icing on the proverbial cake, the iPhone 4 is a gorgeous phone, made with premium materials, not cheap, thick and colored plastic.
But yeah, Apple should develop yet another manufacturing line to produce cheap plasticky phones which assumedly have the same capabilities as their older phones, losing their profit margins in the process, just so they can compete with Samsung in emerging markets.
Sounds like a fantastic idea, guys.
Do me a quick solid, will you?
Visit Apple.com and click through those gray product tabs at the top of the page. If you click on Mac, then click MacBook Pro, you’ll be taken to a page with sub-tabs for Features, Design, Performance, OS X, Built-in Apps and Tech Specs.
Damn near anywhere you click on Apple’s website to learn more about their products, you’ll see these tabs roughly in this order. If “Design” isn’t listed behind “Features,” it’s listed first.
For better or worse (a debate for another time) design takes a top priority at Apple. It’s who they are. I’d be very surprised if Apple ever released another plastic iPhone again. The 3GS was the last plastic iPhone ever, and they only chose plastic in the 3G and 3GS because they hadn’t yet figured out how to get an antenna to work with a metal body. They could very well one day offer a “cheaper” iPhone, but it won’t be plastic. I also doubt they’ll make their customers choose between 2 new products, the main difference between them being price.
These kinds of rumors make me feel like I’m taking crazy pills.
Image Credit: Photos.com