July 23rd, 2008
What is the "product transition" Apple alluded to?
During Apple’s Q3 2008 Earnings conference call with analysts, Apple’s Peter Oppenheimer (CFO) and Tim Cooke (COO) both mentioned a “product transition” that Apple is preparing for that will cut profit margins to help shut out rivals.
Both executives punted on several analyst questions for more “color” on the mysterious transition with the familiar refrain that they don’t comment on unannounced products.
Some hints can be found by reading the tea leaves though.
Apple announced that gross margin was 34.8 percent in Q3 2008 – down from 36.9 percent in the year-ago quarter. Apple also stated that it expects gross margin to drop to 31.5 percent in the July-to-September quarter, eventually settling at about 30 percent during Apple’s fiscal 2009.
Apple also released conservative guidance for Q4 2008 of earnings of US$1.00 per share and revenue of US$7.8 billion compared to Reuters estimates of US$1.25 per share on US$8.3 billion in revenue.
So what does this mean? Obviously lower margin products are coming, but will they be entirely new products or lower prices on existing products?
Piper Jaffrey’s Gene Munster thinks there’s “an 80% chance Apple will introduce redesigned MacBooks and possibly new MacBook Pros at lower price points” and “slightly redesigned iPods” including “lower-cost touch-based iPods.”
The MacBook and MacBook Pro are due for updates, as is the Mac mini. Cheaper and/or faster versions of the MacBook Air aren’t out of the question. iPods could easily go all-flash and all-touch, perhaps keeping one HDD-based classic model for music hoarders. The iTablet has been rumored forever. A Product Red iPhone?
Some of my favorite theories on the “product transition:”
MacBook touch – “Think MacBook screen, possibly a bit smaller, in glass with iPhone-like, but fuller-featured Multi-Touch. Gesture library. Full Mac OS X.”
The Cloud – “Automatic sync over the air. For music, apps… not just calendars and bookmarks.”
What about you? Chime in…
Jason D. O'Grady is the editor of PowerPage.org, which has been publishing daily mobile technology news since December 1995. For disclosures on Jason's industry affiliations, click here or to view Jason's full profile click here.
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