Schadenfreude ala Apple
September 8, 2007
Ask Bill Gates, Rupert Murdoch or anyone who’s dared to stick their neck out on Survivor, and they’ll tell you being at the top is a dangerous place. As often happens in technology, industry and reality TV, the higher you dare to reach, the more people will want to see you fall. Judging by the flurry of negative reports published this week about Apple, Steve Jobs must be doing something VERY right. The sheer number of “analysis” by so-called experts, dealing with the iPhone price cut has reached deafening proportions, and almost all of them take pot shots at my favorite computer company.
How bad can it be? That’s what I asked when the usual suspects published their typical bullshit about Apple following the “Beat Goes On” special event on Wednesday. TheStreet.com’s Scott Moritz was back in classic Apple bashing form with this whopper:
“The move will add more evidence to the speculation that the iPhone, while causing quite a buzz, may not be selling as rapidly as some optimists had expected.”
Lest he forget, the only “optimist” that said Apple would sell more iPhones than were expected was Mortiz himself. A fact that he’s never actually admitted to or apologized for. TheStreet.com was just getting started however, as this piece from Marek Fuchs proved:
“Now, if you can name a product in the annals of commerce that was introduced to great fanfare and shortly afterward had its price slashed to ribbons where that worked out to be a good thing, well, do let me know.”
I hate to break the news to you Marek, but there are plenty of examples of similar price slashing, and one even comes from the cell phone industry. The ultra-popular Motorola Razr dropped more than 1/3 in price within the first six months of its debut, and although the iPhone dropped faster, I suspect it’s simply because the iPhone was ten times more anticipated (and sold ten times better) than the Razr.
I’m pleased to write that it wasn’t all doom and gloom for Apple this week however. In an enlightend piece from NYT piece on Friday, Saul Hansell cuts through the crap and actually discovers the real reason for the iPhone price cut:
“The central rule of technology is that the unit price drops sharply with volume. If Apple sold more than it hoped, then it would achieve scale faster and would be able to drop prices sooner. Apple’s introduction of the iPod Touch, using many of the same parts as the iPhone, gives it an even bigger checkbook to brandish in Taiwan to secure good supplies at good prices.”
Hansell aside, it’s a sad state of affairs that outsiders like John Gruber and myself, have a clearer picture of what’s going on here than the people that write for Wall Street’s largest publications. Apple set the iPhone’s launch price high because they knew gadget lust would be ridiculous. It’s the basic law of supply and demand, and Apple played it perfectly. They knew that people would bitch about the price of the iPhone prior to launch, but that hundreds of thousands would pay it just the same.
With the successful launch of the iPhone, Jobs was able to reduce the iPhone’s entry price to levels below any similarly equipped smart phone on the market. These new price levels virtually guarantee Apple a very merry Christmas buying season. Despite this clear and agressive strategy, all Mortiz, and others such as Dvorak and Robinson can come up with is “The iPhone is DOOMED!”. This second rate analysis is almost as funny as Britney Spear’s supposed come back.
So all you so-called “experts”, do me a favor and keep publishing those Apple hit pieces. Your collective efforts drove AAPL down far enough that I could pick up more shares that will eventually, inevitably rise to $150 and help pad my retirement. Steve and I thank you.
UPDATE: Gruber thinks Mortiz is shorting Apple stock, and I agree 100%. He’s got another tissue of lies masquerading as factual reporting today. Moritz says that “Optimists had figured the price cut and product shuffle, while sudden, was part of a bigger plan to make way for a higher priced 3G iPhone on the eve of the holiday buying season.” Wanna take a bet as to whom the “Optimists” are in this scenario? Can’t be Apple or any real customer base, because no one has ever said that 3G would be available on the iPhone this year or even next. That leaves one person… Scott Mortiz. Break out your duck boots people, we’re knee deep in bullshit.