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  • Apple Discovers the World of Damage Control

    February 28th, 2008

    Consider that, relatively speaking, Apple’s stock has been down in the dumps of late. A lot of that isn’t due to any particularly bad news, just the illusion that bad news is on its way.

    Take the iPhone. Now, although this continues to be misquoted and misrepresented over and over again, Apple has said that it hopes to reach the 10 million unit sales milestone by the end of 2008. That’s not saying there will be 10 million sales this year; that’s the total sales since the product was first introduced in the summer of 2007. I just want to get that distinction out of the way before the wrong version is repeated all over again.

    Well, Apple’s chief operating officer, Tim Cook, took the bull by the horns at the Goldman Sachs Investment Symposium this week and reiterated Apple’s promise to reach the 10 million sales goal by the end of this year. Now this is no different from what Cook and other Apple executives have said all along. Unfortunately, Apple, though it usually meets its promises or comes pretty close these days, is still regarded with supreme suspicion, while Microsoft’s fanciful claims about products that are late, crippled or never reach the light of day, are usually accepted as gospel.

    What a strange world we live in.

    On the other hand, with the stock price dipping, Cook had to say something, and simply reiterating the promise was sufficient to drive that price point upward all over again. It doesn’t necessarily mean that it’ll reach $200 per share anytime soon, but if you’ve invested a ton of money in the company, you have to be pleased that things are finally improving at a decent clip.

    What Apple discovered here is that, when the naysayers get out of control, they have to act fast to control the fallout before pundits decide to make up their own fantasies about what’s really going on.

    A recent example is the case of the missing iPhones, where between one million and one-point-four million were somehow not accounted for by known activations. It doesn’t matter that the higher figure originated in the imaginative mind of one analyst. It was repeated over and over again, took a life of its own, and people started wondering if there were tons of boxes of unsold iPhones catching dust at warehouses and in dealer stock rooms.

    I wasn’t surprised to learn they were just plain wrong, although it’s definitely true that a fairly large number of iPhones were unlocked and used around the world with wireless companies that had no agreements with Apple and thus didn’t officially support the product.

    If you go on eBay at any time of the day, you’ll still find lots of these phones available, often at prices above list, simply because they remain in such high demand. Then again, if you want to save some money and just buy a refurbished model through authorized channels, good luck. Apple rarely has them in stock, and when they do, it seems they disappear from the price lists real quickly. No, I’m not just guessing. When I was considering whether to buy an iPhone, I checked those lists several times a day for a couple of weeks, and finally simply decided to bite the bullet and get a new one at the nearest AT&T company store.

    In case you haven’t heard, next week Apple will take the wraps off its long-awaited iPhone SDK. It’s widely believed that they were dragged kicking and screaming into creating a method for third-party developers to deliver officially-sanctioned products that supported all of most of the product’s features.

    Now maybe that was true. But Steve Jobs said even before the iPhone came out that they were looking into ways to deliver an SDK while still providing acceptable levels of security. When he announced a Web-based solution at WWDC, the skeptics pronounced it a bad solution, forgetting the original promise entirely.

    So did the proliferation of jailbreaking utilities finally force Apple to do another round of damage control and change its ways? I don’t think so. These authorized iPhone applications will most likely be distributed and installed by iTunes. Apple will get their cut off the top, so it’s going to be a cash cow for them. It strains logic to think they don’t want to mine every possible iPhone revenue stream. That’s definitely NOT their DNA.

    However, Apple’s penchant for event marketing and keeping things close to its vest otherwise can sometimes be a bad thing. When journalists and personal bloggers don’t get the answers they seek, they speculate, and sometimes that speculation is passed off as fact and repeated around the globe as if it’s gospel.

    So, from time to time, Apple needs to pick up the accumulated garbage and show what’s true and what isn’t. That usually settles things down for a while.

    At least until the next unconfirmed rumor is upon us.



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