June 13th, 2008
Why is the market hammering Apple?
After a bit of a bump following CEO Steve Jobs’ keynote address at Apple’s developer conference, the company’s stock has been taking a beating. It was down almost 4 percent on Thursday. On Friday morning, it’s still heading lower. What is up?
It’s a bit bewildering, especially with the seemingly upbeat news from WWDC. However, it shows that there are at least two sides to any announcement.
Here’s list of the “culprits” or at least ones that I can see:
Jobs looked thin. According to Apple PR Jobs was hit by a “common bug” in recent weeks and he is taking antibiotics. However, the market believes that Apple rides on Steve’s back.
Henry Blodget reflected this concern in a number of posts this week in the Silicon Alley Insider.
We hope Steve is in great shape. We also know that the mere discussion of this topic seems inappropriate to many readers, and we apologize for that. We regard Steve Jobs’ health as a significant issue for Apple’s business.
I join with a prayer for his complete and full recovery. At the same time, it appears to me that Apple is in the best shape it’s been in a decade. He can take a rest, no?
Certainly, Apple has hardware and software products in the development pipeline that will span the next few years. In addition, the company appears set to tear down the barriers to its platforms in markets such as medium-sized business and government. Mac sales are setting records. Apple owns markets. Wow.
From what I understand, the stock market is a forward-looking indicator over a time span of perhaps 6 months. Whatever Steve Jobs’ health — and yes, he’s a genius and we wish him only well — Apple’s prospects appear only strong for the year ahead.
Disappointments in iPhone hardware features. The major features of the forthcoming iPhone 3G — real GPS location, black plastic rear panel and 3G support — were exactly what were expected. However, there were a blizzard of rumored features that many expected, such as remote video chat, a better camera and cut-and-paste capabilities. My colleague Jason O’Grady has his own list of missing features.
Yet, there’s a difference between a wish list for features and blaming Apple for not including features that were somehow “expected” in rumors. Come on!
Besides, I don’t understand the concept of a mobile device that’s supposed to replace everything else, such as a real digital camera, a laptop, a radio, and a video recorder. What about stopping bullets? As the very-analog Mr. Natural said: “At home or at work, get the right tool for the job!”
iPhone price drop. $199. ‘Nuff said. Yet some say that Apple is losing a potential money stream from carriers.
It appears that with 250K+ developers ready to churn out applications for iPhone 2.0 devices, and with the encouragement of a lower entry price, Apple expects more revenue from its new iPhone App Store and MobileMe service.
iPhone competition. This week several phones from Samsung were either announced, the Ominia, or shipped, the Instinct. So, the sky must be falling — there are other phones that look similar to the iPhone.
However, just as with the iPod, users understand that Apple offers a different value proposition than an ordinary phone or music player or computer. In the case of the iPhone and iPod Touch, Apple products are all about integration of technology on the handheld side, the back-end service and the hub computer software. It’s more than the individual parts of great hardware, usable technology, refined interface, and robust Internet services — it’s how it all works and works together. With the new software, there is a platform native applications and not just Web services.
Oh, and an iPhone can be had for $199 and $299.
Disappointments over waiting. Unlike Apple’s usual launches for Macs, which mostly appear on shelves the day of announcement, the iPhone 3G won’t be available for a few weeks. And some believe that the market will cool and demand will fizzle.
No way. If anything, demand will grow over the summer as people catch apps like MLB videos on the iPhone.
No doubt, Apple might like to wait even longer to give developers a chance to finish up applications. But the company wants to hit the back to school sales and that means a July release.
David Morgenstern has covered the Mac market and other technology segments for 20 years. See his full profile and disclosure of his industry affiliations.
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