Apple teases with mysterious ‘product transition’
The biggest mystery to come out of Apple’s Q3 earnings conference call Monday — besides the state of Steve Jobs’ health — was the “future product transition” that CFO Peter Oppenheimer mentioned as one of the three reasons he expects the company’s gross margins to fall from 34.1% to 31.5% over the next three months.
For a company that doesn’t talk about future products, Apple spent a lot of time Monday talking about this one. Oppenheimer mentioned this product transition at least four times during the call, hinting at “state-of-the-art products at pricepoints our competitors can’t match” and adding coyly — and illogically — that he couldn’t talk about it.
So, of course, that set off a round of overnight speculation. See, for example, here.
Could it be a revamped Apple TV? No, that’s a product that sells in numbers too small to account for the hundreds of millions of dollars it takes to do that kind of damage to Apple’s gross margins.
Could it be the long-awaited tablet Mac? No, that would be a new product, not a product transition.
Could it be a revamped iPod line, with iPod touch-like controls and solid state drives to replace the old hard drives? That’s more likely. After all, Oppenheimer warned of the same kind of product transition costs at this time last year, and what came out of it was the iPod touch.
Could it have something to do with the MacBook line? That’s what Piper Jaffray’s Gene Munster suggested in a note to clients Tuesday morning. Overhauls of the MacBook and MacBook Pro are overdue, he pointed out, and delivering them just before school starts — perhaps at prices starting at $999 — would make a lot of sense.
On the other hand, Apple (AAPL) is a company that thrives on dropping hints and then clamming up, letting fevered speculation do the work of softening up the market.
Maybe that’s what Peter Oppenheimer — taking a lesson from his CEO — was really up to.
There is a mistake in the Apple outlook. Apple expects at least $500 million increase next quarter but the number was $1 EPS. Is there a mistake with this number? It should be larger than $1 EPS outlook for almost $8 billion earnings. Wall Street expected a $1 billion to $1.5 billion increase next quarter which is an extremely high number. But Apple’s outlook doesn’t matter because they always issue a low number then beat it.
http://www.sports–today.blogspot.com
It will be this:
http://tinyurl.com/29×5uf
Tablet mac and an iMac docking station. Can’t wait.
“at a price our competitors cannot match”. Hmmmmm, If they started selling OSX to other computer makers, this is something others could not match since it is a proprietary product. It would negatively effect Mac hardware sales in the short run but should improve profitability and revenue in the long run. The incremental cost of producing another copy of OSX is nil and the profit is incredible. Other major operatiing systems seem to have had major problems lately and now is a good time for Apple to challenge them directly. Apple is a very different company than it was when the first cloning took place. They are a very strong company with other hot hardware products like the iPhone and iPods to take up the slack. They can still compete favorably in the computer business with their great computer products that are very competitively priced now. I have felt that this has been Steve’s plan all along. Converting Macs to Intel chips is just part of that well thought out plan. This could be huge!
Steve has never been one to favor low margin products so I feel that dropping prices on existing hot selling computers would be way out of character. He has no logical reason to do that. This sounds like a major transition rather than just a price cutting exercise as many have suggested on the web. This is the time for an agile company like Apple to strike a blow to the bloated giant by going into a head on battle for the OS title. Remember the 1984 super bowl commercial where IBM was the giant? Well, that giant has fallen and a new one has taken its place. This has been Steve’s dream all along and he might want to do it before his time runs out.
Many options…
1. Touch and app store across the entire iPod line-up.
2. Obviously a MacBook/Pro revamp with more “touchy” features and flash memory options.
3. Mac Mini revamp with real video options, more media hub features or…
4. Apple TV revamp with complete app store compatibility and iPhone OS, making it a perfect casual gaming, websurfing, email, light computing hub. Of course the iPod touch and iPhone function as wii-style controllers.
5. Mini-MacPro—yea, dream on. I’d love one, but I doubt they will do it.
6. iPod Slate with a nice 6 inch touch screen.
It’s obviously going to be the iSphere. It will replace every Apple product including Steve himself. It’s a grapefruit-sized hovering translucent white plastic ball that you place your hands on and it plays iTunes visuals directly into your brain. It backs up your soul to your Airdisk, it presents Keynote speeches, and it doubles as a bouncy glowing cat toy. It’ll be the only item available at the Apple Store, and it’ll be free. All you need to do is think about wanting one, and it will appear in your house. In fact, it’s already in your house, hiding under your sofa, pulsating, waiting…
The new, unnamed product will continue to have “technologies and features that others can’t match,” according to the CFO.
Amazon and TiVo announced an alliance this week. It’s do-or-die for the Apple TV.
Jobs has said that he wants Apple to be the “hub” of the digital home. The Apple TV is that hub. Upgrading it with DVR capacity–without increasing the price–would outflank the Amazon TiVo product before it can get market-share.
Selling a great number of these upgraded Apple TV without a price increase would certainly result in a lower margin this quarter.
Given the downward guidance on margins, I think that the so-called “future product transition” will have something to do with a big mass-market product like the iPhone or iPod, and not with computers or the Apple TV. I’m thinking of the iPhone myself, and I think that Apple will make a move to 1) tweak hardware and/or software in order to get China Mobile on board; 2) insure that Android isn’t this decade’s version of Mac vs. Windows, with Google winning the war much like Microsoft did earlier in the Operating System war with Apple, and 3) establish carrier independence, by creating phones that work regardless on the carrier technology.
I don’t know if it’s too soon to be expecting anything from Apple’s April acquisition of PA Semiconductor, but you never know with Apple.
Product transition = Shift apple to be more focus on Software because it always been the software as Steve Jobs always say, maybe and maybe and I hope and I wish Mac OS on non-apple hardware. That will give them a beat on revenue in the Short term.
I’m calling it now…
The New introduction in their product line will be a touchscreen iMac like the HP TouchSmart.
Is steve jobs an apple product? Could his departure itself be the product transition?
I want a mid-tower system that fits between the iMac and Mac Pro. I want it to have a single quad-core Penryn processor (and later, a Nehalem). I want the RAM to be expandable, and the CPU, hard disk, and video card to be replaceable. Stick in a mid-tower-sized Mac Pro case, and I’ll buy it in an instant. This huge gap between the non-expandable, “what it is now is all it ever will be” iMacs and MacBooks, and the expandable but workstation-class, overkill-for-most-people Mac Pro is ridiculous. Give me what I want!
May be Everybody will be working on Mac in all offices, IT Departments and Research centers… instead of MS. I think this is the bigger area where Mac wants to focus now…
And I believe it will be totally diffent world, may be this will not be the way we will need to enter our comments…on the blog..
They’re trying to guard against irrational exuberance. You’ve still got a price-earnings ratio close to double the stock market’s historical norms, and a major recession/depression coming up. Conservative guidance at this point is honest guidance.
Product transitions? New laptops are due, Apple desperately needs a headless mid-range desktop model which could be a risk for them, and no doubt Steve will want the entire iPod line to go solid state and touch screen sooner rather than later.
I wish Apple would introduce some middle ground between the iMac and the Mac Pro. A product more powerful than an iMac that’s expandable, but not as beefy as the MacPro. With in-store configurations there’s a $1000 difference between the top of the line iMac and the cheapest MacPro. (As far as I know, the 3.06GHz iMac and the single Quad core MacPro are only available online, which closes the gap.)
Maybe A is going to make a better peanut butter that can be eaten without a spoon…the “i-nut”…whooo cares? Meanwhile, well grounded humans of the working world have our own jobs, families, and goals to focus upon rather than unctuously fawning over tabloid crap.
d_st, ny, ny - yeah, its got nothing to with Jobs, you sound like you were in apple and not in the Macintosh team :) just kidding; and as far as dropping prices go, it has not changed even now. with the new iPhone, the reduction in price is recovered by adding the additional $10 on the data plan with a 2 year contract - from buyer perspective. Technically new iPhone users are paying more.
May be the new product has something to do with :
http://blogs.eweek.com/applewatch/content/iphone/iphone_3g_windows_95_only_better.html
Apple is a great company and they will continue to win over the MS market. It’s not that much of a loss for such a large company.
Don’t ever short this company’s stocks!
You can find Free iPhone Wallpapers at http://www.mobilejacz.com
d_st,
Q4 will not include Xmas sales since this is based on Apple’s reporting year, not the calendar year. Also, App Store revenues will not have much of an impact if any on earning since they make up such a small piece of the pie. Remember back to school sales include a free ipod touch which will bring down margins slightly as well.
I agree stock price is looking like a bargain today, just wanted to clarify some of your comments.
Consumers buy Apple products because they continuously come out with new products not because of Steve Jobs. Steve Jobs is a great CEO but he won’t be the CEO forever. Jobs used to be a bad CEO in the past when he wouldn’t drop Mac prices and the company lost market share resulting in his resignation. But Jobs returned and created the iPod which revived Apple. The products make Apple not Jobs.
If you short Apple, you’re looking for a death wish. Apple is a solid company with new products coming out. The revenues are continuing to grow. The low-balled outlook concern will only last a few weeks. Steve Jobs health gossips do not mean anything unless Apple makes an annoucement.
Check out this blog: http://www.sports–today.blogspot.com
The new product shift may have something to do with Eve, Apple’s female robot creation in the movie Wall-E. On second thought, maybe not………….
This is going to be a touchscreen notebook computer…
The market is going to go crazy for this product and it is using the existing technology from the iPhone and iPod and making it useful on a higher resolution device. The applications that will come out of this are going to be revolutionary.
i think a desktop full size multi touch mac is on the way
The biggest garbage earnings report of the year. Apple becomes the 3rd computer company in the US. Apple’s revenues are highest in history. Then they low-ball guidance. How can Q4 be so low with back-to-school sales, Christmas sales, the sold-out iPhone being reported in Q4, App Store Revenues and 50 more countries launching the 3G iPhone. Also, new versions of iPods and Laptops will be coming. Apple stock is going to be extremely cheap. What kind of strategy is this? Do the Apple insiders want to lower the stock price so they can buy at a lower price?
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Silicon Valley veterans like to joke that Steve Jobs must be surrounded by a reality distortion field; if you get too close to him, you start to believe what he's saying. Thanks to the success of the iPod, the launch of the iPhone and the renewed interest in the Mac, Apple has made believers out of millions of customers - and made a lot of investors rich. But Philip Elmer-DeWitt believes that an ounce of skepticism never hurts when writing about the company. He should know. He's been covering Apple - and watching Steve Jobs operate - since 1982, first for Time Magazine, then for Business 2.0, and now for Fortune.
I’d agree with what Mike Cleveland, OH : July 22, 2008 11:05 am