Apple angst vs. Apple reality

“It’s open season on Apple these days. The stock is in a tailspin. Worries abound. The iPod market is saturated. The consumer wallet is pinched. It all adds up to an ugly stock chart. But it’s time for a reality check here,” Larry Dignan blogs for ZDNet. “Is all this angst really warranted?”

Dignan reports, “Of all the concerns about Apple, fears about market saturation and the iPod are the most on target. Everyone has an iPod and some folks have three.”

MacDailyNews Take: That last sentence can easily be disproved: Apple has sold approximately 140 million iPods to date. There are currently over 6.7 billion people on earth. Over 300 million are in the U.S. alone. The fact is: 2.1% of the world has an Apple iPod (it’s actually even less that that as many iPod owners have purchased more than one iPod). Let’s say, very conservatively, that 750 million of the 6.7 billion people on earth can afford an iPod and have the infrastructure available to support such a device: that’s still only 18.7% market saturation.

Dignan continues, “Apple’s outlook for the March quarter left a little to be desired, but the company has a history of being conservative. Underpromise and overdeliver is the mantra. Meanwhile, HP delivered a strong quarter that included big gains in notebook PCs. That bodes well for Apple’s refreshed MacBook line-up. Simply put, Mac momentum may be enough to offset any weakness elsewhere.”

“Handicapping whether Apple can hit the 10 million mark for iPhone units is a bit academic. Aside from a few Wall Street analysts, who have fancy spreadsheet models based on 10 million iPhones sold, no one cares if Apple sells 9 million or 10 million units. It’s a successful launch by any metric you use,” Dignan writes. “iPhone worrywarts need to relax a bit.”

“Let’s face it, Macworld 2008 couldn’t have lived up to the iPhone juiced 2007 version. But it would be foolish to fret about the MacBook Air’s demand yet. Apple has a nice cycle going with its MacBooks. Apple dominates Amazon’s best seller list, Best Buy is ramping up its Mac shelfspace and the MacBook Air has been well received,” Dignan writes.

“Add it up and there are reasons to worry about Apple, but let’s not get too overwrought about it. The next two quarters will tell the tale. Stay tuned,” Dignan writes.

Much more in the full article here.

Stay tuned. How perfectly appropriate!

Except for that bit of “everyone has an iPod” goofiness, Dignan is right on target.

Most analysts still haven’t even come close to grasping the iPhone’s impact on Apple. They continually underestimate the future potential of Apple’s Mac business. They fail to grasp that iPod is being transformed into a mobile computing platform. They ignore Apple TV (but they won’t be able to for much longer). They miss so much about Apple, so often, it makes us wonder just what the heck they’re analyzing! Are analysts supposed to simply analyze companies or do they really exist in order to attempt to move stock prices one way or another?

We suspect that – in order to move stock prices in a desired direction – some analysts “play dumb” and provide angst or hope based on half-formed analyses that sound perfectly plausible to those who are relatively unfamiliar with the company in question, but sound like pure idiocy to those who follow the company closely.

32 Comments

  1. We love to make new customers money

    here you go …. get in

    Wall Street knows this so they pump and dump us like crazy

    but you will make money as long as you hold till we kick a few more companies asses

  2. Wait until the iPhone SDK comes out, and once new apps for the iPhone start appearing. Then the true potential of the iPhone will be exposed, and analysts who keep saying that the iPhone is just a consumer toy will have to eat their shoes. Apple’s brilliant move of putting OS X into the iPhone will show just how powerful this palm-held computer really is, particularly when the business-specific apps start to appear.

  3. Why can’t this ZDNet moron just come out and say it? Microsoft’s magnificent Zune has clearly disrupted Apple’s I-Pod business.

    You might even say the whole I-Pod and I-Tunes debacle has been derailed by Redmond’s clever and soon to be ubiquitous Zune. Zune Marketplace certainly fills in the blanks for I-Tunes many shortcomings. Analysts know this, and consumers are waking up to Apple’s proprietary, plug-and-pray disaster.

    One by one smart consumers are discovering it doesn’t have to be this way. The market isn’t saturated—which is good because there’s plenty of room for the superior Zune to overtake those dumpy I-Pods. Upward and onward, Microsoft, and congrats on a job well done!

    Your potential. Our passion.™

  4. as much as i don’t want to piss on the parade:

    – iphone: only sold in 4 countries after 8 month on the market, no new countries, because no other carriers want to go with the revenue-sharing model, sdk delayed

    – appl tv: will not take off until there is a decent selection to rent from (360 titles won’t make it apple!)

    – macbook air: beautiful, an fantastic piece of engeneering, but too expensive for what it can do

    – time capsule: wonderful product but probably not a million-seller

    – no dividends: in uncertan times investors look for companies who share their earnings with their stockholders.

    so i think, aapl is tanking for a reason. let’s hope the quarter results in april will proove me wrong.

  5. Churn-obsessed traders are driving down AAPL stock until, of course, they decide to drive it back up. The lemmings that religiously follow their advice will lose their shirts, as they always do.
    Simple solution:
    Either invest in the stock of a few companies you know VERY well, or invest in broad stock market indexes–preferably both!

  6. This MDN logic assumes that everyone in the world wants an ipod AND can AFFORD and ipod. The market is saturated already. Throw the fact that the iphone is overpriced and not gonna reach 10m in sales and you’ll understand why the stock has tanked.

  7. Not everybody that can afford one, wants one. Believe it or not, their is people that don’t like music that much. Also, folks that might like music but don’t use computer (older generations). So as far as public that might want one, they probably already have one. So I do agree with the market saturation statement.

    The good news is that iPods, however well made, still don’t last forever. Particularly their batteries, and people do not know or want to go through the hassle of exchanging them. Also, once you bought an iPod, I see very little evidence that people might replace it with an alternative non Apple product.

    Now I see the Apple TV getting a lot bigger.

  8. Another thing about the iPhone, or I-Phone as ZT likes to say, is that Apple is raking in cash from ATT’s rate plan revenue stream, in addition to the hardware sales aspect. I don’t think that is taken into consideration by so-called analysts very often, though my guess is most Apple watchers on this site knows this already. I bought more shares last week, caught a falling knife apparently, but I’ve been a shareholder since 1999 and have not been disappointed. AAPL will recover over time on the strength of notebook, iPhone and software sales growth.

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