"Don't worry, the fans don't start booing until July." -- Earl Weaver
Fear, uncertainty and doubt seem de rigeur for market analysis with today's Apple [AAPL] iPhone scare story scattering estimates like confetti in confirmation of what we knew already: smartphone sales are slowing while consumers watch the world unravel and await the next edition of Cupertino's smartphone story. It's smoke and mirrors, people, here's why:
[ABOVE: Back in time, the first iPhone sold at O2 in the UK way back in 2007. Things will look pretty much the same when the new model ships later this year.]
Driving a Wedge
In a story currently dancing at the top of the world's front page, the Google/Android-owned Google News "Product" declares "Apple 'cut iPhone production by 20pc", citing a bunch of estimates from Wedge Partners analyst, Brian Blair. Cause of concern? Estimates which include estimated build numbers for iPhones that don't even exist yet.
That last point's a big deal: there's been expectation throughout the year Apple would introduce new breed iPhones early in order to fight those Android copy cats (aka: advocates of openness). We're in July now and there's been no iPhone 5S, no iPhone 6, no iPhone mini as Apple slows its release schedules. This means it's reasonably safe to think the analyst's original figures (now revised) once included estimates for new phone production.
In other words the reduced build estimates don't necessarily reflect any slowdown in sales, but could perhaps factor in revision to an incorrect earlier analysis. Though that doesn't merit a big news item.
Ah, but speculation is rife as analysts and market forecasters attempt to weave a legend under which their client's investments might continue to grow as the world's most profitable company sinks down the plughole of innovation (reading one), or prepares to launch the biggest product blitz in its corporate history (reading two).
You see, every claim, conjecture or consensus understanding is open to question. It's an extended All Fool's Day for Apple analysis, as up becomes down, left turns to right and the world regards almost anything connected with US corporate/government concerns through a PRISM that looks increasingly dark.
[ABOVE: Just a rerun, but a chance to take a look inside an iPhone factory. One day we might see what happens inside a Samsung factory. Maybe.]
What's coming really
We know what's coming along, of course:
We have Apple set to fall this Fall, with a series of product releases likely including new iPads, a new breed iPhone and a more affordable (BUT NOT CHEAP) iPhone model….This entire ecosystem to be bonded together through the aegis of the up and coming Jony Ive-designed iOS 7 release. Which some people like, don't like, say they don't like, or think it might make them look clever by pretending not to like. You know -- no more than the usual FUD that passes for analysis and opinion in our post celebrity phone hacking age. Though at least the new iOS will be consistently available across most of the active Apple ecosystem.
So, returning to the numbers game (aka this iPhone production slashed tale), what's this Blair boy got to share with us? Are you ready? Got your mind focused and your rhetoric prepared? Here it is:
"We believe Apple’s prior production forecast for the iPhone was in the 115-120 million range for the June to December period. However, we believe in recent weeks that Apple has trimmed forecasts for its iPhone to the 90 – 100 million unit range. We believe this number includes production for all iPhone models, including the forthcoming 5S, the 5, the 4S, as well as the low-cost iPhone. Our expectation for the low cost iPhone continues to be that Apple will repurpose the iPhone 4 with a plastic backing that will allow the handset to sell at a retail price below $250. As we head into earnings season in the coming weeks, we expect these lowered unit forecasts (along with the same from Samsung on the S4) to create an overhang for key smartphone suppliers like Qualcomm (QCOM) and Broadcom (BRCM)." Source
What evidence does the analyst offer us for his point of view? Well, he cites lower than anticipated numbers from Samsung and HTC, speculating this slow down has also impacted Apple.
What's really coming
Look, if we skip the hyperbole, there's two obvious factors negatively impacting economic growth across the planet, both of which will be hitting the consumer electronics industries:
- Continued economic and political uncertainty
- Expectation of new smartphones models.
There's no reason to expect Apple -- or anyone else -- to be immune to these forces. The true test of their impact will be when new models begin to ship and the subsequent arrival of a slew of competing gadgets from other manufacturers. Of course, 21st Century news entertainment demands a constant conversation, meaning that while we wait for the facts we get to entertain ourselves with speculation, rumor and superstition. In today's firmament of tech superstition, as Omar Devone Little puts it in The Wire: "It's all in the game, yo, it's all in the game."
Analyst Blair's estimates simply deliver another handy headline to feed the world's voracious appetite for news entertainment.
It's all in the game.
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