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Mr. Osborne, Call for You…

July 25, 2012

Apple has been a company that’s carefully balanced mystery with unadulterated adoration to keep the product line flowing these past few years.  They’re a company that typically understands the customer base so loyal to them that they’re repeat buyers for almost every new technology.  But balancing that with the higher volumer of regular people gets hard, as evidenced by this report in The Register about the earnings call.

Frothing speculation about devices also suppressed demand for the iPhone, according to both Cook and CFO Oppenheimer.

“Our weekly iPhone sales continue to be impacted by rumors and speculation regarding new products,” said Oppenheimer – after being pushed to explain the 25 per cent drop in sales for the product from 35.1 million in Q2 to 26 million this quarter.

He said that the transition to the next raft of products – ie, the anticipated launch of the iPhone 5 in September was “driving most of the decline.”

Mmm.  The CEO made some comments about not trying to change the philosophy of being mysterious about the product roadmap and yet still blamed being mysterious for encouraging people to speculate for them.  The free press that Apple has gotten over the recent years has been a boon to driving day-one momentum for their products… until it hurts them in current sales.

When new things are on the horizon, it often means that old things fall by the wayside.  This is especially true in a business model like Apple’s that looks to skim the cream off the top of the consumer base as opposed to building a tiered product line that anyone can access.  So now that a global slowing on the old stuff is affecting the bottom line in a visible way, Apple has to make a choice on changing strategy or surging ahead.

Anyone who reads this blog enough knows that I’m not a fan of changing strategies that make you successful.  Apple is doing just fine, and one quarter of off numbers shouldn’t cause a panic.  And I don’t think the management there will react that way.  But it is a warning that the team should heed.  They’ll have to keep an eye on numbers that might indicate a general slowing in other areas, and watch for other indications that the bloom is off the rose.

Likely, though… this is Apple.  Another successful product means another cycle of leading buyers and renewd confidence in their success.  It’d only be another story if the product fails to excite.

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