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Has The Apple Rumour Mill Gone Too Far?

Gordon Kelly


Has The Apple Rumour Mill Gone Too Far?

"One more thing…"

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.


July 29, 2012, 4:24 pm

Part of the problem Apple have with the "Osborne effect" is that they fix their prices for the lifetime of the product. A Macbook or an iPhone bought 11.9 months after release is exactly the same price as on the day of release.

This means that instead of the price gradually lowering during the life of the product keeping sales up (like almost every other product!) as people go "I could get the new one when release, but the older one is cheaper" they instead go "why pay full price for something that's superseded shortly?"

I know a number of people who have held off buying Apple products for that exact reason!

Take a look at something like the Galaxy Note, for example, which was released with a huge £599 (or thereabouts) price tag. It's now £398 on Amazon SIM-free while the iPhone 4S is still the same ~£500 it was at release.

When Apple releases a new product, it almost always costs the same as the product it replaces, with the older model reducing in price. Why pay full price when the new model is out soon?

tl;dr version: Apples pricing policy is to blame for their lack/slowing of sales near to refresh time just as much as the hype engine.


July 29, 2012, 7:28 pm

Or simply competition from Android is beoming fierce and people are not holding out for Apple products... I'm certainly not.

I can see the Nexus 7 taking a huge chiunk out of iPad sales. Next quarter will tell us more.


July 30, 2012, 12:03 am

I think there was a time, during the Job's era, when Apple's secrecy worked in its favour. The iPhone & iPad launches were better because we didn't know most of the details.

However, now it seems each "Special" event is about a new, slightly improved model like the iPhone 4S or iPad 3 - and what's exciting about that?

The great thing about Apple was when it launched products that redefined their market, like the original iPhone and iPad. I'm just wondering if Apple - post Jobs - still has that ability, or will it now be about refreshing old designs, adding slightly new features each year?


July 31, 2012, 6:28 pm

This is a really good point. The flip side is fixing prices means people don't simply wait 3-4 months to get things cheaper, they are mentally prepared for paying the full price until it gets very close to the next model.

There is a lot of benefit to Apple's approach, but I think for the first time it is starting to feel some of the downsides too.


July 31, 2012, 6:29 pm

True, though iOS marketshare just rose against Android in last month's figure. That said I think the Nexus 7 and all post-Nexus 7 Android tablets will be significantly more appealing than what went before - the bar has been raised. Whether Apple responds with a 7in iPad (and at what price) remains to be seen.


July 31, 2012, 6:31 pm

They certainly seem to be in the Intel 'tick/tock' approach of new design one year then modification of it the next. Whether that is sustainable or it feels the need to switch we don't know. If it did radically reinvent the iPhone each year then I suspect accessory makers, particularly cases, charging stands, etc would suffer. At present they at least know they are getting two years worth of safety (probably 3 with previous generations now regularly used as entry level models).

iPhone 5 then 5S? I'd think so.


July 31, 2012, 7:07 pm

I agree with all of the above, the fact Apple is seen as the best of the best in terms of Design must be hard to keep up on a yearly basis by a company. Look at the dissapointed customers when the 4S came out. The only thing it didn't have that the rumours had talked about was the redesign in shape and size. It still ended up being a huge seller.

My only concern is I think Apple seem to concentrate on functionality a little too much with IOS, the standard icon grid layout is starting to look really dated. Google's approach seems to be more focused on the look and feel.

I guess if apple started to look at changing it though to what customers want I can see Google suing apple for patent/copyright issues. Your IOS screen supports widgets you stole that idea...

As an Ipad 1, Ipad 3, 2011 Macbook pro, iphone 4s, user I love my Apple products but they're not perfect. I also have Samsung Galaxy S2. (S3 arriving this week).

I love my Notification center capablilites in android, and its a shame I rely on a jailbreak to get something as simple as SBSettings.

My only issue with android is the time it takes for updates to arrive after Google releases new versions. The time also hypes everything up so by the time I do get the update I'm disappointed. So that is where IOS has Android beat, IOS 6 will still be available on the 3GS! I doubt the next version Android will be release for S2, we're lucky Jelly Bean will be according to the rumour mill.


July 31, 2012, 7:58 pm

RE Gordon: Isn't the recent relative rise in iDevice sales due to the questionable sales bans on the Android competition over the past few months?

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