Apple is the undisputed king of hype, the ruler of rumour, the sultan of showmanship. Everything Apple does is carefully and painstakingly planned in order to generate the maximum possible brand and product awareness and it reaps the benefits…
This was once again shown in the company’s latest financial results. Officially now the world’s biggest company, Apple once again broke its own records: revenue for the third quarter in its financial year leapt 23 per cent over the same period 12 months ago hitting a whopping $35bn. Net income similarly jumped 21 per cent from a year earlier reaching $8.8bn. Between April and June 2012 Apple shipped 26 million iPhones (up 28 per cent), 17 million iPads (up 84 per cent) and four million Macs (up two per cent).
“We’re thrilled with record sales of 17 million iPads in the June quarter,” said Apple CEO Tim Cook. “We’ve also just updated the entire MacBook line, will release Mountain Lion tomorrow and will be launching iOS 6 this Fall. We are also really looking forward to the amazing new products we’ve got in the pipeline.”
Simultaneously Apple CFO Peter Oppenheimer declared the company will embark upon its three year $45bn share repurchase scheme – a way to invest some of its near $100bn cash reserves. He then added Apple expected revenue of “about $34 billion” in Q4.
…and it wasn’t good enough.
The undisputed king of hype, the ruler of rumour, the sultan of showmanship had talked itself into trouble: the results were incredible, but such is the carefully manufactured expectation around the brand they weren’t ”incredible enough”. Wall Street believed Apple should have sold 28-29 million iPhones not 26 million and revenue should have topped $37bn not $35bn. “Clearly it was a disappointment,” said Channing Smith, Co-Manager of Capital Advisors Growth Fund. Clearly.
Smith did have a point though: “We expected a lot of consumers will probably delay their [smartphone] upgrade and their purchases until the iPhone 5 comes out. We saw a similar trend occur last year with the iPhone 4S.”
The hype machine has done too good a job. Mainstream consumers, who usually have no clue about release schedules and next generation products, are too well drilled in Apple’s predictable annual updates. They know when new models are coming and they know to stop buying an ageing one. The problem for Apple is this is a double edged sword: if consumers were less bombarded by Apple rhetoric they may keep buying older products for longer, but then again they may not have already set aside money believing they need to buy a product they haven’t even seen yet.