Applesauce: All Things Apple
January 27, 2013

Applesauce: All Things Apple – January 27, 2013

Boy, has it ever been an interesting week for Apple.

It began with rumors flying that they’d be releasing not one, not two, but THREE iPhones this year. This, in and of itself is crazy enough, but to add to the insanity, these people also claimed one of these iPhones would be nearly five inches in size.

Analysts and reporters almost immediately called this rumor out as bunk, saying Apple wouldn’t release a five-inch iPhone this year, nor could we expect them to release three iPhones in a six month span.

(Also of note, this “iPhone Math” rumor made no mention of that cheap iPhone that keeps popping up in the rumor mill.)

Later on in the week, Apple held their earnings call for the first fiscal quarter of the year, also known as the holiday quarter. Revenues were up, they brought in record profits, managed to beat many expectations in iPhone sales, and how did the stock market respond?

By selling their shares and slashing Apple’s market cap by as much as $50 billion, leaving the company as the second most valuable company once again by the end of the week.

This led many Apple watchers to claim that the stock market means almost nothing when it comes to the health and performance of a company, which may be true.

By the time the week was over, all that was left to be discussed was how inaccurate and terrible the new jOBS clip is and how Apple cut ties with a supplier because they were hiring underage workers.

The iPhone rumors, by the way, remain relatively uninteresting.

So this is the Apple of 2013, is it?

The company that was until recently the most valuable company in the world, releasing “exciting and innovative” products and bringing in crazy profits, an unstoppable force that was revolutionizing the way we thought about computing, has somehow been dethroned.

Or has it?

The trouble with being quiet, with “doubling down” on secrecy is that many begin to form an opinion about the health and performance of a company based on perception. The uninformed look to things like stock price to judge a company, and when they see a 50-point drop in one day, concern arises.

The perception of Apple at this point is that they’ve finally fallen. The company that once soared to great new heights has finally realized their wings are waxen and must now fall back to reality.

Consumers want a five-inch phone, by the way, and they don’t want to pay what it’s worth (subsidies). To ignore this only means that your company is doomed to failure. All those rules, all those restrictions have finally caught up with Apple as enough users have finally amassed to raise the loud call “Enough already! Come on, Apple!”

As far as stock is concerned, the past five years have been a spectacle. Like a bet that was never supposed to work, but just kept winning. Now it’s time to return home, to tab out and quit gambling away the rent.

The thing is, it’s incredibly easy to judge a company by a headline, and no other company (well, maybe now Samsung) is more frequently judged by headlines than Apple. Every year, with every new product release, journalists write headlines about how Apple has failed to excite, how innovation is dead in Cupertino, and how this might be the last time we ever see a new iPhone.

Then the boring and dull iPad or iPhone is released and the headlines suddenly change. On paper, an iPhone 5 is a modest (yet not insignificant) bump from previous models, but when you hold the thing and use it for a day, you know there’s a huge difference.

The point is this:

Though Apple released some pretty great numbers during their earnings call, they weren’t good enough for Apple’s investors. In their minds, they’ve seen flat growth…not a poor performing company, merely flat growth.

Not a reduction of growth, flat growth– for the first time.

Headlines are then filled with words like “disappointing” or “failed to meet expectations” or “weak.”

And for all the “missed expectations” and “disappointing numbers,” Apple still performed very well.

But this is what you expect to hear from an Apple apologist, someone who feels the need to stick up for Apple when the big bad stock world picks on them and starts saying they prefer Samsung.

The thing is, I don’t think this supposed “free fall” will last for very long at all. Apple needs to tread carefully this year, for sure. After five years, their competition is finally giving them a run for their money, a fact that has always been inevitable. Phones are getting better. We’re finally moving away from lagging navigation and clunky interfaces. Tablets are shipping with some impressive specs. The software isn’t sophisticated enough to really take advantage of these quad-core processors and multiple gigs of RAM, but it’s been done: These specs have been packed into a case and shipped.

It will be interesting to see what Apple releases this year and how they do so, but the game isn’t over, far from it. And Apple has yet to fall from grace, has yet to release a crappy product, has yet to have relinquished the throne.

Because we can talk about speeds and feeds all day long, but until we get the product in our hands, until we get some time to understand the story, we’re just making guesses.

But enough of the heavy stuff, let’s talk about child labor.

Likely feeling they needed to give us some “good news” to counter those positive and positively poorly received quarterly numbers, Apple also released their supplier responsibility progress report.

Yet another complaint of Apple has been the way some of their suppliers overseas treat their employees. Who could ever forget the Foxconn suicides and reports of underage employees working impossibly long shifts just to deliver the latest iPhone on time?

One area where the tired and shortsighted “Steve Jobs never would have done this!” argument is actually correct is in the way Apple now treats their suppliers. Tim Cook has given Apple at least the semblance of a company with a heart, taking many extra steps to audit their suppliers and enforce a set of guidelines concerning labor conditions, fair wages, same working hours and zero child labor.

In the latest supplier progress report, Apple has a chance to show off their muscle as they tell a tale about sticking up for the little kid.

Apple begins the story by mentioning that they found zero cases of underage labor in their final assembly plants, but decided to go even further, looking for any case where kid hands touched any component of any of their products.

According to the report, Apple’s auditors found 74 cases of children under the age of 16 working for one of their suppliers. Guangdong Real Faith Pingzhou Electronics Co., Ltd. (PZ), according to Apple’s report, produces a “circuit board component” used by Apple as well as many other companies. As this is in direct opposition to their Code of Conduct, Apple said they took their business elsewhere, looking to other suppliers for their circuit boards.

Chasing the trail even further, Apple found that these underage workers had been referred by one labor agency in particular.

The agency in question had a deal going on with the parents of these children, working with them to forge documents and get them into these factories.

Apple reported the agency to the provincial governments, which resulted in a fine and the suspension of their business license.

“The children were returned to their families, and PZ was required to pay expenses to facilitate their successful return,” reads the report.

“In addition, the company that subcontracted its work to PZ was prompted by our findings to audit its other subcontractors for underage labor violations — proving that one discovery can have far-reaching impact.”

In fact, according to Apple’s report, they simply don’t play around when they find underage workers.

The company goes far beyond wanting only those over the age of 16 to build their products, they want every company to follow suit.

According to the report, Apple’s auditors aren’t only looking for underage workers; they’re also looking for workers who may have at one point worked while underage. An employee who had their 16th birthday just before audit time is just as serious a penalty in Apple’s eyes.

Should the auditors find underage workers in the factories, Apple then demands “immediate corrective action” from their suppliers.

In their own words, “immediate corrective action” means:

“Suppliers must return underage workers to school and finance their education at a school chosen by the family. In addition, the children must continue to receive income matching what they received when they were employed. We also follow up regularly to ensure that the children remain in school and that the suppliers continue to uphold their financial commitment.”

In other words: If you hire an underage worker, you’ll be paying them for years, even if they never work another day in the factory.

That’s some serious business. Good on Apple.

iPhone rumors: The Road Thus Far

Was it really only this week that the “iPhone Math” rumors became a thing? Not only were they dismissed pretty quickly, they also seemed just crazy enough to be some sort of joke, some prank played on Apple fans to see if we’re really paying attention. In the great tradition set out for us in Applesauces past, let’s spend a few parting moments contemplating some wild-assed rumors and how far reaching they may be. For starters, the “iPhone Math” rumors debuted this week when the China Times ran a story which cited inside sources as saying Apple would release two new phones this summer, including the iPhone 5S and another new iPhone during the holiday season. Little was said about this holiday special other than that it could have a 12-megapixel camera. Oh, and the second summer iPhone? The China Times claimed it would be called the iPhone Math (which may have been a poor translation for iPhone +) and would measure a whopping five inches. Sheer crazy stupid. DigiTimes, of course, had also claimed Apple would make such a large phone a few months ago, but once they saw the backlash the China Times received over this insane rumor, DT took a step back, removing their claims of an oversized iPhone. DigiTimes does believe Apple will release two new phones this summer — the expected and likely inevitable 5S, and that cheaper one everyone’s talking about. During the earnings call, Tim Cook gave what might be considered some pretty suggestive comments about these rumors, stressing once more that they “put a lot of thinking into screen size,” saying he believes they picked the right one. Cook also kind of/sort of addressed the cheap iPhone rumor, comparing it to the iPod of old, saying: “We can put the Apple brand on a lot of things and sell a lot more stuff, but that’s not what we’re here for. We want to make only the best products…. I think we’ve had a great track record here on iPod, doing different products at different price points, and getting a reasonable share for doing that.” As it stands, it appears as if Apple very well may release a cheap iPhone, the 5S may have a 12-megapixel camera, and the iPhone Math is nothing but a prototype, at best. And yet, as I was out with some normal, everyday, run of the mill (but incredibly nice) friends of mine this weekend, some of them began discussing the next iPhone and what we can expect from it. One person said it was going to be five inches. (We can blame iPhone Math for that.) Another person said they had heard Apple was going to give the 6 a complete miss and go to iPhone 7. (Not sure where that one came from.) A third person said they heard Apple simply wasn’t going to update the iPhone and was going to sell the 5 for another year. Point is, it’s early on, and most of these rumors have yet to prove themselves amongst the mill. So far, it looks like we can expect a Low-Cost-Not-Cheap iPhone along with the expected and improved iPhone 5. As for iPads, Rene Ritchie of iMore claims the next batch will arrive this October with the 9.7-inch taking on the styling cues of the mini and the mini 2 possibly arriving with a Retina screen. For what it’s worth, Ritchie also believes in the five-inch iPhone, but claims it may never make it to market.

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