iPhone Hysteria: Where Is Occam's Razor When You Need It?
Nobody but Apple and a handful of its suppliers has any inkling as to what's really going on with the supposed iPhone screen-order cuts. What I don't understand is how the least likely scenario is the one that seemed to take off the fastest -- that everyone else is doing fantastic, the iPhone is losing popularity and Apple over-ordered.
Jan 17, 2013 5:00 AM PT
When I saw the various reports that have been swirling around Apple create a perfect storm of stock-dropping backlash, I shrugged them off.
First, Apple was rumored to have reduced its orders for iPhone screens, maybe even as much as 42 percent. Add rumors surrounding an inexpensive new iPhone that Apple "must" create in order to compete in burgeoning markets, coupled with rising sales of big-screen Samsung smartphones, then shake that with a little Apple-has-lost-its-cool hysteria, and oh boy, Apple's stock has been a roller-coaster ride. Someone, somewhere must be screaming when they freaked out and sold stock only to see it rise the next day.
For the most part, I ignore Apple's stock price because I don't believe it ever reflects the reality of Apple's business or the company itself. At best, Apple's stock represents the distorted impressions seen by many people looking from many directions at a reflection of an Apple sitting in front of a carnival mirror. From one perspective, the Apple is short and wide, from another, tall and thin with a goofy stem.
Imagine trying to predict Apple's stock price based on watching the reactions of a bunch of people looking at that carnival-mirror image.
It seems a bit insane to me, I'm just saying. As a money-making tactic, this could work for some savvy investors -- but they aren't making money off of Apple's performance, they're making bets based on how they think people will react to what they see when the perspective shifts slightly.
If Apple were in a position of hardship such that its stock price might actually define its ability to innovate, create, and sell, then maybe talking stock would make sense -- but Apple has billions of dollars of cash in the bank. That's a lot of wiggle room.
We won't get close to actual numbers until Apple holds its quarterly earnings report with investors Jan. 23. In the meantime, I'm surprised at how volatile Apple's stock has been. Do people really believe that within a couple of short weeks, that the iPhone 5 can go from being the hottest device on the planet to being so uncool that teenagers no longer want it?
Do people really believe that Samsung's massive advertising campaign finally tipped the balance to Android? That Microsoft and Nokia will soon start kicking butt and taking names -- so much so that it will affect Apple's screen orders by the millions?
Just because Apple is in California doesn't mean the company is a huge movie star just one drunken driving charge away from a total system meltdown.
Furthermore, I'm having a hard time imagining that many people are ditching their old iPhone 4 or 3GS in favor of an Android phone. Oh it's happening all right, just in numbers that are insignificant. And they sure as heck aren't skipping an iPhone 5 just so they can bump Samsung phones together with each other.
Even if, after all of these years, you still don't trust Tim Cook's astounding supply-chain genius, it doesn't mean that some obscure changes to screen orders means anything significant at all. Some of the supply order changes could have come as suppliers produced higher yields. Some could have come simply from shifts in how and when Apple will manufacture iPhones and iPod touches.
First of all, nobody but Apple and a handful of its suppliers has any inkling as to what's really going on with the supposed iPhone screen-order cuts. What I don't understand is how the least likely scenario is the one that seemed to take off the fastest -- that everyone else is doing fantastic, the iPhone is losing popularity and Apple over-ordered. How about that something is wrong inside Apple's Cupertino headquarters? Really? Tim Cook might not be Steve Jobs, but he sure as heck isn't a CEO who's going to run a company into the ground in a matter of months.
So What's Going On?
There are lots of explanations, the least of which is a combination of better yields and changes to the product mix. If Apple is selling more iPhone 5 units than it expected -- and fewer iPhone 4 and 4S units -- a change would be expected. Or, how about this: Maybe Apple is reducing the number of iPhone 4S screens because it's going to start selling "old" iPhone 5 units at lower prices and use the iPhone 5 to compete on the low-end, with a jazzed up iPhone 5S on the high end.
Or maybe Apple is going to create a new screen size in order to create a new iPhone that will soon be ready for prime time.
If Apple cuts orders, personally, I'm far more likely to start thinking Apple has a new product in the pipeline than believe that sales fell off a cliff and took Apple by surprise.
So next week, Apple's official report for investors will likely push the Apple sky back up into the air. What won't it do? Reveal any new products.