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  • Apple and the Great Product Demand Game

    February 4th, 2008

    All right, is the iPhone still extremely popular, or is demand declining? What about the iPod and the Mac, or even the Apple TV, which is due for a software revision shortly?

    If you believe some of the stories you’ve read, Apple is cutting back on production of the first two, increasing production on the third, and the jury is still out on the forth. Is that why their stock price is, relatively speaking, depressed these days?

    Or is Wall Street still looking for those missing iPhones, numbering over one million last I heard? Well, I suspect if they would just survey cities around the world where Apple isn’t doing business with a local carrier, they’ll find plenty. They could also examine the offerings at eBay and elsewhere to see how many people are selling unlocked iPhones. They might find some needed illumination. But that would require work, and it’s a lot easier just to repeat the same old nonsense.

    When it comes to iPhone production, I’ve heard it both ways. First 50% less, than 50% more, but that’s something that’s going to vary over time, as Apple adjusts its inventory to meet the actual demand for the product, not what analysts think it might be. Sure, they can do surveys, but the largest dealer is Apple itself, and they won’t talk to these people beyond their quarterly financials. In other words, it’s a wasted effort, and just consulting AT&T would give them only a partial picture that is not apt to represent the complete trends in iPhone’s sales.

    I suppose you could also add iPhone sales figures to the iPod line, since it’s basically an iPod touch with a built-in cell phone. Apple, of course, doesn’t do that. But if you leave the iPod separate, the next question is whether the last quarter’s sales, with only a small increase in the number of units sold, indicates a trend. Sure, a lot fewer iPods will be sold this quarter, since that’s a highly-seasonal product. But how will things fare compared to last year?

    In other words, are standalone digital music players an endangered species? Perhaps. I gather that Microsoft has begun to shave the price off the Zune, which isn’t something they’d be apt to do if the thing were selling at decent levels. But don’t count something like an iPhone in that category, as it’s very common for mobile phones to get cheaper over time. Remember what the Motorola RAZR cost when it first came out, which put it in close range to the iPhone today? Now you can get a RAZR for next to nothing with the standard two-year service agreement from one of the major wireless carriers.

    However, I do agree that the iPod cannot live long and prosper in its present form and, by talking of a new Wi-Fi mobile platform, Apple knows that too. The iPod touch is but the first of a new generation of gadgets that will, ultimately, supplant the original iPod except at the very low end of the line. It may not happen this year, or the next, but the handwriting is on the wall in big letters.

    What is going to separate the winners from the losers is the ability to morph the product into an expanded portable device that doesn’t just play music, but lets you go online to check your email or browse your favorite sites. Here Apple’s wonderful touch screen technology handles the job extremely well. Yes, other companies have touch screens too, but how easy are they to use by regular people without following written directions?

    Indeed, that’s a major advantage to the iPhone and iPod touch. When I first spent extended face time with the former, I didn’t bother to read the tiny pamphlet that came with the unit, nor the extended electronic manual Apple offers online. Yes, I had read a portion of the latter months ago, but didn’t think much about it as I just played with the iPhone. Within a short time, I mastered most of the basics of manipulating screens and typing text with a touch screen.

    Of course, I suppose I had the advantage of never using a BlackBerry, and never wanting to use one, thank you.

    As to Mac demand, unconfirmed reports say it’s way off the charts, and there are growing suggestions that sales may double by 2011. But consider how sales have expanded to the present 2.3 million level per quarter in the space of a couple of years from way less than a million for the same period?

    Indeed, Mac sales have already more than doubled a whole lot quicker than those estimates demonstrate? Can Apple continue to grow their market share so fast over the next couple of years? What about reports that almost a third of the people planning to buy a new personal computer in the next few months — either desktop or note-book — have Macs at the top of their shopping lists? That has to count for something, if you can believe in surveys that is. After all, the surveyors didn’t do very well predicting the results in the New Hampshire Democratic primary, as you recall.

    In any case, I’m inclined to take all these reports about demand and production with a grain of salt. Yes, such industry analysts as the NPD Group can keep tabs on retail sales up to a point, but beyond that, only Apple’s quarterly results will paint the whole picture.



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