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  • About Apple’s Forthcoming Financials: Just Ignore the Analysts

    July 15th, 2009

    For a once-beleaguered company, the amount of attention that will be focused on Apple’s quarterly financials next week will likely come close to matching that for a statement about health care or national security from the president. That may seem surprising, but it’s true. Nearly everything that happens with Apple these days is fodder for extensive coverage.

    Certainly estimates of how well Apple will do are all over the map. Some suggest that Mac sales must be lower than last year, before the worst of the economic crunch hit. If you go along with that proposition, then the only issue is how much sales have dipped.

    The reality appears to be pointing in a different direction, and some analysts are even revising their forecasts as a result. For one thing, early reports from the retail front indicate that Apple’s sales actually rose beginning in May, perhaps coinciding with the beginning of their annual “back to school” bash. The reduced prices for Mac note-books first announced at the WWDC also boosted demand.

    Indeed, right now Apple is quoting 7–10 business days delay for popular models for both the 13-inch and 15-inch versions of the MacBook Pro. For a company that was suffering from reduced demand, that would seem to be quite surprising.

    More recently an analyst predicting a roughly three percent drop in Mac sales is now admitting that outlook may have been far too conservative. If that’s the case, it could be that Mac sales actually improved in the past quarter over the same period in 2008. Indeed, one estimate of the Mac retail market share in the U.S. shows it rose to 8.7% in the last quarter. Don’t ask about Dell. Another estimate pinned Apple’s share at 7.6%, which makes you wonder just how accurate those surveys are supposed to be.

    But it seems nobody is suggesting that the iPod sales are flat or slightly improved. Virtually every estimate of the situation suggests the iPod’s day in the sun has ended, and it’s all downhill from here. The question is how far downhill. Reduced sales may surely be true for the standard models, although I think the iPod shuffle is such a casual purchase it ought to help prop up the rest of the product line to some degree. But the real star is the iPod touch, which may make up for the difference of the other models. While it would seem to me that an iPhone would be a better purchase, not everyone wants to combine an iPod with a smartphone. There is the extra cost of buying even a basic voice and data plan from a wireless carrier for example, or perhaps switching to a provider that you really don’t like.

    No, I’m not avoiding mention of AT&T. However, that’s not the only potential villain. I do not know anything about the quality of the other carriers with whom Apple has partnered, so it’s quite possible one or more are also on your “to be avoided” list.

    The other consideration is storage space. While the iPhone and iPod touch both top out at 32GB, when the new versions of the latter are introduced, you can expect storage capacity to double. I wonder how many people are even going to seriously consider an iPod classic when there’s, say, a 64GB iPod touch available. Yes, I realize a few of you have music and video libraries that exceed 64GB, but I am sure those numbers are small. Besides, Apple makes it fairly convenient to download the stuff that you really want for your travels and leave the rest at home, so unless you’re spending the next year on an island away from your home computer, taking a subset of a massive library with you shouldn’t be so big a deal.

    The long and short of it is that the iPod might do somewhat better than anyone has a right to expect. If not, perhaps Apple will make more significant changes when the lineup is refreshed, which will probably happen in August or September.

    When it comes to the iPhone, I found it rather amusing when I read an article touting the initial sales of a new BlackBerry model at less than half what Apple sold during a single weekend when it released the iPhone 3G and, more recently, the iPhone 3GS. The article ignored that news completely and, instead, pointed to the original weekend when the first-generation iPhone went on sale, and tried to demonstrate that the BlackBerry was doing just as well or better. They forget, of course, that the BlackBerry has been available for years, whereas the iPhone just completed its second year on the market. So there you go.

    While some industry analysts know what they’re doing, others are clearly as dumb as sticks, or they’re on the payrolls of certain companies and thus they don’t have any concept of honesty and integrity.

    If the past is a guide, Apple will do better than most of these people expect, or are willing to predict. That, of course, means that absolutely nothing has changed.



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