Apple and Rumors – The iPhone is Coming! The iPhone is Coming!
As noted in a previous post, Apple is a company where the best information doesn’t come from Management, but from the “Apple ecosystem” (a/k/a the “Rumor Mill”) on the Internet. As I’ve witnessed first-hand, the difference between the Apple ecosystem and a standard rumor mill is that many of the commenters are really smart, really passionate and do an amazing amount of forensic homework to augment their knowledge base. Today happened to be one of those days when the Apple ecosystem is cranked up in high gear, with both analysts and bloggers alike interpreting new information concerning the iPhone (which, believe it or not, relate not just to iPhone v1.0 but v2.0 as well!). How many companies can generate buzz around a next generation product release when the first generation hasn’t even hit the shelves? I can think of only one - Apple.
I haven’t written about Apple since they released their (blowout) earnings October 18th. But the investigative eye of Information Arbitrage never strays far. On November 14th, with Apple trading at $85 a share, someone whispered to the Chinese-language Commercial Times, that Foxxconn, Apple’s third party assembler, received an order for 12 million units of the “new” iPhone. This little tidbit was all that was required to set the Apple cyber-olympics in motion. It has been some time since I’ve seen this much froth around a pending product announcement. As of this writing, Apple is now trading just shy of $89 after-hours, a new all-time high that reflects excitement not just around the first iPhone release, but the SECOND iPhone in the pipeline.
From Wired:
I love technology analysts and the tales they tell about Apple. The company doesn’t show its preliminary products to anyone, least of all people who are likely to go talk about it in the media in detail.
But plenty in the media do pay attention to what analysts have to say about unannounced Apple products, which is why the Internet has been abuzz today with rumors that Apple is already at work on — hold your breath now – the SECOND iPhone. While the first is still but a twinkle in the eye of a Foxconn executive’s eye, the rumor crowd is already over the yet-to-be-confirmed-as-existing initial iPhone. They want to know how Apple can follow on its unrealized success.
From the Mac Observer:
American Technology Research analyst Shaw Wu on Monday issued a report detailing his belief that Apple is working on a second iTunes cell phone, as well as his thoughts on sales of the new red iPod nano. Of the second cell phone, he wrote: “We are picking up that AAPL is working on a second in-house iTunes cell phone that will also feature ‘messaging’ capabilities. We believe it will focus initially on mobile IM as opposed to e-mail. From our understanding, it will leverage off existing iChat software that runs on Macs. We believe this product is AAPL’s ‘smart phone’ and could be branded as ‘iChat mobile.’”
From MR.WAVETHEORY- Broadcom as chip supplier:
The BNP Paribas reported also had a bill of materials for the iPhone. It looks like the beneficiaries will include Broadcom Corporation (Nasdaq BRCM), Infineon Technologies AG (ADR) (NYSE IFX), Intel Corporation (Nasdaq INTC), and Micron Technology, Inc. (NYSE MU).
AND CNBC had a report saying that that the iPhone went into production and that Steve Jobs will annouce it at MacWorld in January. It just keeps on getting better.
The Apple Ecosphere and Mainstream Media – Reflexivity in Action
It is not fair to characterize the “Apple ecosphere” as a purely online phenomenon. What has been happening is that the Internet dialogue has been influencing the Wall Street analyst and MSM journalist communities, which in turn has been influencing the blogosphere, and back and forth. It is this reflexive nature between MSM (and Wall Street analysts) and the blogosphere that has both deepened story discovery and enriched story commentary, and this is vividly on display with the latest iPhone speculation. This phenomenon is further amplified by the fact that the Internet-based Apple enthusiasts have appeared to convert a legion of Apple followers on Wall Street and in MSM into drooling pro-Apple zealots, which is both humorous and interesting.
From Newsfactor.com:
Apple, of course, has pulled more than one rabbit out of its hat in the past few years, and could well do so again. According to Jupiter’s Michael Gartenberg, “There’s still an opening.”
Greengart added that, if nothing else, it’s fun to watch a company that has, in his words, “a history of astonishing innovation.”
“Occasionally they surprise you,” he said.
John C. Dvorak of PC Magazine had a theory about this biased “Apple love” dating back to October 2005:
Apple and Journalistic Bias – They’ve Got the Goods
The reason for this is that today’s newspaper and magazine tech writers know little about computers and are all Mac users. It’s a fact.
This is why when Microsoft actually does have a good idea, people look to trash it out of hand. With 90 percent of the mainstream writers being Mac users, what would you expect?
The top columnists in the news and business magazines fit this model too. The technology writers fit this model. The tech writers and tech columnists for the New York Times, the Wall Street Journal, Newsweek, and Fortune are all Mac users. I could list them by name, but I’d hate to leave one out. Maybe I’ll blog them by name. I could list 50.
Readers should thus not be surprised by the overcoverage of Apple Computer (search). Every time Steve Jobs (search) sneezes, there is a collective chorus of “Gesundheit” from tech writers pounding away on their Macs.
Notwithstanding Mr. Dvorak’s wet blanket, Apple’s product development and marketing teams together with Steve Job’s PR brilliance has cast a halo around everything Apple does. And this slew of praise and accolades is nice, but is most importantly backed up by the one thing that really matters: operating and stock market performance. The minute Apple trips you can be sure a legion of followers will jump off the bandwagon. Like the reflexivity embodied by the relationship between MSM and the blogosphere, I think it is Apple’s cool and relevant products that generate sales that spur profits and a rising stock price that is evidence of another reflexive relationship, one between the Company’s product development and marketing geniuses and the investment community.
Apple’s iPhone – Why so Hot?
Cell phones have been around quite a while. So what is it about Apple’s pending entrant that has caused such a ruckus? Is it that current offerings in the market just suck, or that Apple has some magic in store?
Is it the unlocking? From The Unofficial Apple Weblog:
Considering Apple’s strengths - making great hardware and software - in light of their past failures in working with Motorola in this space, it seems entirely plausible for the company to aim for the stands on their third time at bat. By both developing and - this is the key - selling the iPhone all on their own, Apple not only gets to design everything their way, but they get to sell it to a much broader audience by offering it as an unlocked device through their own retail stores, rather than as a subsidized tool to force customers to either sign or break contracts, depending on their circumstances. This means Apple gets to flex their engineering muscles and rake 100% of their own profits - not a bad prospect for a company who is used to working solo in the hardware department, and by now is probably feeling the heat from sexy music handsets like Verizon’s Chocolate.
And some comments:
2. Well I certainly hope it’s true. Not that I’m eager to get one of these phones necessarily but it’s high time mobile phone manufacturers started
selling unlocked phones anyway. It’s just a huge scam that the carriers have with locking us in to their system, and at times locking functions of those
phones too. Personally there isn’t a phone out there that would sway me from using the carrier I have to another. That seems absurd to me. But I believe
its time consumers should be able to choose whatever phone they want and use whichever carrier they want. It’s a big scam that needs to be broken. If
Apple start selling their own unlocked phone you can be sure that it will have an effect on the rest of the industry.
Posted at 2:29PM on Nov 18th 2006 by Tom
24. Kudos to Apple if they sell the iPhone unlocked. Hopefully this starts a trend that the cell phone carriers will be unable to stop.
The US mobile phone market has really been a mopolists paradise. Why do you think European telecom firms have been buying into this market while no U.S. telecom firm has shown any interest in Europe?
Who says government regulation never does any good? The euro mobile phone market is more consumer friendly because the governments imposed a single standard (GSM) and banned anti-consumer practices like locked phones and nonportable phone numbers.
Posted at 7:57PM on Nov 18th 2006 by tundraboy
And even with Apple’s unprecedented success with the iPod, iMac, etc., doubters still abound.
From BetaNews :
But don’t expect smartphone manufacturers to worry about Apple encroaching on their turf. At a gathering with reporters last Thursday, Palm CEO Ed Colligan dismissed the Cupertino company, saying making phones is not that easy.
“We’ve learned and struggled for a few years here figuring out how to make a decent phone,” the San Jose Mercury News quoted him as saying. “PC guys are not going to just figure this out. They’re not going to just walk in.”
Do these guys have any idea who they’re dealing with? Steve Jobs must be licking his chops at the prospect of getting guys like this to eat their words.
You Just Don’t Mess With Apple and Steve – Karma is a Boomerang, Remember?
Remember the story of another guy who dissed Apple -Michael Dell. These fighting words were uttered back in 1997 and 2001. Woe be to those who mess with Apple and Steve – and boy, is Michael chewing on those words today.
ORLANDO, Florida —When it comes to the state of Apple Computer, everyone has an opinion.
And at the Gartner Symposium and ITxpo97 here today, the CEO of competitor Dell Computer added his voice to the chorus when asked what could be done to fix the Mac maker. His solution was a drastic one.
“What would I do? I’d shut it down and give the money back to the shareholders,” Michael Dell said before a crowd of several thousand IT executives.
Ha, ha! Who’s laughing now, Mr. Supply Chain? How’s that iDell selling, anyway?
From BusinessWeek – April 16, 2001
Q: What is the future of Apple Computer?
A: Silicon Graphics.
Q: That bad?
A: Maybe it’s a little bit different. But if you look at proprietary computer companies, whether it’s Digital or Silicon Graphics (SGI ) or Apple (AAPL), I think the fates are all relatively similar. We know how the movie ends. It’s just a question of what happens in the middle. Apple has a very little customer base. If you look at the economics, it has been extremely hard for Apple to get a return on its R&D with a shrinking volume base. It’s not to say that Apple’s products aren’t innovative or cool, but the economic factors here are so overwhelming, it’s very hard for them to swim against that tide.
Q: If you were running Apple, is there anything you could do to change that?
A: I would never take that job.
Wow! I guess things like “innovation” and “cool” mean a little more now than they did then, huh, Michael? Haven’t heard those words used with reference to Dell – ever.
Never one to pass up a golden opportunity, an emboldened Steve Jobs sent a little reminder to his colleagues back in January of this year.
‘Team, it turned out that Michael Dell wasn’t perfect at predicting the future. Based on today’s stock market close, Apple is worth more than Dell.
Stocks go up and down, and things may be different tomorrow, but I thought it was worth a moment of reflection today. Steve.’”
And for those of us who like charts, take a look at the comparative analysis of AAPL vs. DELL over the past 5 years. Needless to say, Apple has kicked Dell’s a** all over the block. So who’s the tough guy now? Cupertino Cool vs. Austin Anal? I think we now know how THIS movie ends.
And This Just In
From EETimes:
PortalPlayer Inc., the media processor company that famously lost a key socket in the next-generation iPod nano earlier this year, has secured an applications processor design win in the forthcoming iPhone from Apple Computer Inc., according to a Wall Street research analyst.
Consistent with previous speculation, Nvidia Corp.‹which is poised to acquire PortalPlayer in a $357 million deal announced earlier this month has seen its graphics processor designed into next-generation video iPods due out next year, according to Chris Caso, an analyst with Friedman, Billings, Ramsey & Co. Inc. (FBR).
In a research note published Tuesday (Nov. 21), Caso wrote that FBR believes that Nvidia’s acquisition of PortalPlayer “gives it an inside track at providing an integrated applications / video processor in a future video iPod for 2008.” FBR expects combined Nvidia-PortalPlayer music player revenue of $280 million in 2007, following the close of the acquisition, “with the potential for further revenue from an enhanced Apple relationship in the future,” according to the note.
And the beat goes on.
Conclusion
At the end of the day there are two numbers that matter - $75.5 billion and $56.5 billion. These happen to be the market caps of Apple and Dell. This is not a war of words it is a war of platforms, driven by innovative products, compelling marketing campaigns and customer engagement. It doesn’t take a rocket scientist to see who is winning in today’s environment. The iPhone is simply the coup de grace of a series of moves that has led Apple to the point it’s at – one where they are in complete synch with their addressable market, which has a seemingly insatiable desire for their products. It is quite a testament to the Company, its Management and its employees, considering its dark days were not so long ago. They’re hot and being recognized for it – the onus is clearly on them to keep it up. It won’t be easy, but so far they are clearly up to the task.
