Believing Failed Industry Analysis

August 27th, 2015

If you can believe what some industry analysts have been saying, Apple should now be playing third fiddle in the smartphone wars. Android and Windows Phone would be ahead of iOS. Apple would, I suppose, be destined to fall back into niche status.

Have you looked at the Windows Phone and BlackBerry market shares lately? Have you noticed how Microsoft is quickly unraveling the failed Nokia handset division purchase? Have you noticed how thousands of brand new Microsoft employees are being consigned to the unemployment lines?

So do you believe those predictions?

There’s one more. IDC, part of IDG, which used to sponsor the now-discontinued Macworld Expo, and, some time back, consigned Macworld magazine to digital, claims that Android will continue to gain share against iOS. But have you noticed that Android’s share is stagnant or falling slightly in the U.S. and elsewhere compared to iOS? That’s hardly gaining share. It goes back to the theory that Android, being open and partly open source, is destined to devour Apple.

The problem is that Apple continues to sell more and more iPhones. The decision to build smartphones with larger displays, including the 5.5-inch iPhone 6 Plus phablet, was genius, or just logical. Some suggest Steve Jobs would never had allowed Apple to build an iPhone with a display that exceeded four inches, but the end result is that Samsung’s high-end Galaxy handsets are struggling. On a per-model basis, Apple dominates the high-end of the market, and Macs dominate the high-end PC space. What’s the most popular thin and light note-book? If you said MacBook Air, you’d be correct.

Sure, Apple doesn’t sell $600 note-books, or $200 smartphones. They cede that market to bottom feeders who struggle to make profits in segments where profits are hard to come by.

Now the big problem with these well-connected industry analysis firms is that their pronouncements are taken seriously. They are quoted without question and never asked “show me how accurate you really are.” The articles about them basically quote, or summarize, press releases without actually exploring the track records to see how previous predictions have fared.

When it comes to Apple, they don’t always do so well. Both Gartner and IDC routinely post quarterly PC sales estimates. Apple is almost always undercounted. But they are also preliminary estimates, so you don’t expect them to be perfect. Still, the tendency to report lower results than are actually achieved is troubling. Sure, all this comes a few weeks ahead of the release of Apple’s own financials, so the real figures are soon known. But not until the incorrect figures get plenty of coverage.

If you can believe what industry analysts have said, the iPhone would have been a huge failure. True, some tend to overestimate sales figures nowadays, which has the added consequence of tanking Apple’s stock price when the actual revenue is lower despite hitting record levels. But the usual approach has been one of counting Apple down and out and overly dependent on one product for success.

True, I suppose it would be nice to see iPads selling more than they do. Maybe the rumored iPad Pro, the multitasking enhancements in iOS 9, and greater emphasis, with the help of IBM, towards business sales, will improve the numbers. But when you see surveys of iPad’s sales, they are swamped with figures for products that barely compete. I’m referring to those $50-100 junk tablets sold at Walmart and other retailers. They hardly rate above toys, and are thus only good for reading and watching YouTube and Netflix — if that. On a broad scale, they are tablets, but can anyone really claim, with a straight face, that a $49.99 7-inch RCA tablet, with 8GB storage and a .3 megapixel front camera, in any way competes with an iPad mini?

Well, I suppose Gartner and IDC believe they do, because such products are considered to be in the very same category as the iPad. Adding these toys to the mix essentially puts Apple’s tablet in a poor light even though they cater to very different audiences.

Now I suppose older customers might be impressed with the RCA brand, a major American manufacturer more than 30 years ago. It was sold off in 1986, and the trademark is licensed these days to a number of companies depending on the product. Today, RCA is usually synonymous with low-end gear.

But when people read about Apple’s prospects, they do not normally consider such matters. They are seldom informed that most industry analysts are frequently wrong in their assessments, particularly when it comes to Apple.

Don’t forget that, when Apple’s stock was tanking in 2013, there were calls for Tim Cook’s head. They continued to claim that he was unsuited to the job, and did not have anything approaching the vision of his predecessor. Apple was therefore in deep trouble.

At least Cook had the smarts to reveal some basics about iPhone sales in China, earlier this week, after Apple’s stock was hit due to concerns about the state of that country’s economy. Some tech pundits claimed that Cook violated an obscure SEC rule as a result, as if just making what appears to be a truthful statement is wrong. Maybe, maybe not.

Of course, you can also suggest Cook was exaggerating to keep the stock price from dropping any further. There’s no evidence of that, but actual sales figures won’t be known till late October, when the financials for Apple’s September quarter are released.

Unless Cook has more to say at September’s iPhone event.

Meantime, don’t expect industry analysts to say, “sorry we goofed.” They are never wrong, even when they are.

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One Response to “Believing Failed Industry Analysis”

  1. JPO says:

    ANALyst (see how I emphasized ANAL?) do this solely to short AAPL on the downside, and then load up on the upside. Rinse and repeat. It’s criminal, but no one is going to stop them.

    Tools of there trade:
    negative news
    ratings based upon misconceptions and erroneous info
    high frequency trading
    selling uncovered calls

    We can make the markets much more fairer to the common person, though this would impact the rich talking heads and investment bankers. We can’t affect their millions in bonuses and billions in profits.

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