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The Strange Math of Apple's Alleged Massive iPhone 5 Order Cuts

samzenpus posted about a year ago | from the looking-at-the-numbers dept.

IOS 298

zacharye writes "The Sunday evening Wall Street Journal article claiming that Apple had cut its iPhone 5 display orders drastically for the March quarter made quite a splash. The way WSJ wrote its piece seemed to support the original Nikkei claim about Apple cutting its iPhone 5 display orders in half from the originally planned order of 65 million units. This would be a massive adjustment. But Apple uses the same new display type for both iPhone 5 and the latest iPod touch. Neither WSJ nor Nikkei addressed this, however — both seemed to be referring to just iPhone 5 displays. The math just doesn't add up."

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298 comments

Market manipulation? (5, Insightful)

Dupple (1016592) | about a year ago | (#42582183)

Someone is getting rich out of this

Re:Market manipulation? (1)

alen (225700) | about a year ago | (#42582283)

most likely yes, but don't expect trumpets when apple announces earnings.

they had a nice run,
i still like the iphone 5 better than the S3

but at this point hardware is a commodity. the software runs on both iOS and android

Re:Market manipulation? (4, Interesting)

tripleevenfall (1990004) | about a year ago | (#42583189)

I think part of this is a function of android getting better, and the user experience being a lot better than it used to be.

But - I think this says more about the iPhone 5 than anything else. The 5 didn't really bring much to make Apple fans feel like they had to upgrade. An extra row of icons? Nobody cares about that. LTE is nice, but given the pervasiveness of wifi and the fact that most people are dealing with data caps, it didn't drive sales.

After 5ish years, someone is finally pushing Apple in the mobile space. They'll have to begin innovating again.

Competition is a good thing.

Re:Market manipulation? (1)

tripleevenfall (1990004) | about a year ago | (#42583201)

Apart from that, the iPhone 5 is six months old now, which means the 5s is not far away. May as well wait for the new one to come out and either catch the 5s, or get the 5 after the price drops.

Re:Market manipulation? (-1, Troll)

Anonymous Coward | about a year ago | (#42583451)

Umm... iOS has never had a single issue of malware in the wild. There also hasn't been a successful jailbreak of iOS 6 on any device newer than 2010.

Android is a festering petri dish of malware with no assurances that a game from a store is going to slurp up contacts, photos, and use a phone as a spam machine. (Yes, there is a permissions request dialog, but lets be real... how many users that are not as sophisticated as /. readers actually bother looking at those. iOS prompts explicitly for perms on first use, same with BlackBerries.)

Apple has a good thing going. One hundred percent security is an impressive feat in the mobile market.

Re:Market manipulation? (3, Interesting)

schlesinm (934723) | about a year ago | (#42582383)

Someone is getting rich out of this

And the SEC is starting to investigate [wsj.com]

Re:Market manipulation? (3, Informative)

harperska (1376103) | about a year ago | (#42582525)

Except that is an article from 2010 about possible insider trading, not about the alleged market manipulation by driving down the stock price through rumors and FUD like seemed to start happening in 2012.

Re:Market manipulation? (1)

schlesinm (934723) | about a year ago | (#42583065)

Except that is an article from 2010 about possible insider trading, not about the alleged market manipulation by driving down the stock price through rumors and FUD like seemed to start happening in 2012.

The article explicitly talks about insider trading by market manipulation of channel checks.

Re:Market manipulation? (4, Funny)

girlintraining (1395911) | about a year ago | (#42583529)

Except that is an article from 2010 about possible insider trading, not about the alleged market manipulation by driving down the stock price through rumors and FUD like seemed to start happening in 2012.

Yes, last time they used a spoon. This time they're using a fork. However you're what's for dinner so does it really matter?

Re:Market manipulation? (0)

Anonymous Coward | about a year ago | (#42583375)

That link is from 2010 ... starting lol.

Re:Market manipulation? (4, Interesting)

UnknowingFool (672806) | about a year ago | (#42582545)

Or someone not using common sense. BGR points out that the best estimates of Q4 sales is 52M iPhones (during a holiday season). The original estimate of 65M for Q1 is being halved. First of all who put out the original estimate (certainly not Apple)? Second of all, whoever put the original estimates forgot that sales of consumer electronics most likely drop after the holidays. So lack of common sense.

Re:Market manipulation? (3, Funny)

AmiMoJo (196126) | about a year ago | (#42583505)

BGR points out that the best estimates of Q4 sales is 52M iPhones

No wonder they dropped "think different" from their marketing.

Re:Market manipulation? (4, Interesting)

phantomfive (622387) | about a year ago | (#42582855)

Usually the Wall Street Journal gets it accurate when it speculates on Apple, so unless they're trying to throw away their reputation and score a quick buck, probably not.

Re:Market manipulation? (3, Insightful)

NatasRevol (731260) | about a year ago | (#42582883)

Then why have they changed the story several times since last night?

Including removing the 65M number.

Re:Market manipulation? (1)

phantomfive (622387) | about a year ago | (#42583125)

What newspaper doesn't post a preliminary story online before it's ready?

Re:Market manipulation? (4, Insightful)

NatasRevol (731260) | about a year ago | (#42583285)

Having worked in a newsroom and posted news stories online, I'll state that no good ones do.

Re:Market manipulation? (0)

phantomfive (622387) | about a year ago | (#42583377)

Pretty sure you didn't work in the newsroom of a good one. NYTimes does it, for example.

Re:Market manipulation? (2)

NatasRevol (731260) | about a year ago | (#42583411)

That doesn't make the NYTimes good. Or the practice good.

WTF, do you think doing live copyediting is a good thing?

Re:Market manipulation? (1)

phantomfive (622387) | about a year ago | (#42583531)

No, I think that the Wall Street Journal is usually right when they have a scoop on Apple. Also, I think it's unlikely that they are willing to trade some reputation now for a quick profit.

Can you really think of no other reason they might change their article after it is posted? Saying, "they changed the article therefore they are trying to manipulate the market" is a non sequitur.

Re:Market manipulation? (2)

NatasRevol (731260) | about a year ago | (#42583579)

I never said they did that. I just said it's bad journalism. Especially when they're removing the most damning part of the rumor.

so? apple is still selling less product (1, Flamebait)

alen (225700) | about a year ago | (#42582217)

i rarely see ipod touches these days in NYC because iphones are so cheap. still means apple is not going to grow sales enough to keep the stock going up.

stocks go up on growth. apple needs at least 20% revenue/profit growth to move the stock.
in the US more than 50% of people have smartphones. the only people who don't have them are privacy nuts and old people. even my mom knows an ipad 5 is coming soon.
apple's profits are in the $50 billion range.
law of large numbers

who else is left to buy an iphone 5? not the people in developing markets who can't afford them
same with Mac's. Nice computers, but anyone willing to spend $2000 on a laptop already has one. and the ipad is making a traditional computer something you rarely use at home

this is the genius of Google's latest nexus phone. why compete with apple where they will lose when they can grab market share where apple can't go?

Re:so? apple is still selling less product (0)

Anonymous Coward | about a year ago | (#42582335)

Man, you're all over the place here. What exactly is your point.

Re:so? apple is still selling less product (0)

Anonymous Coward | about a year ago | (#42582457)

it's a troll. Perhaps a bit too subtle for my taste.

Re:so? apple is still selling less product (3, Insightful)

camcorder (759720) | about a year ago | (#42582361)

Stocks go up on profit. And profit does not grow only with revenue. You can also deduct spendings. That's how big businesses work. They spend enormously for marketing, branding, hire unnecessary amount of people, to build a brand. Once they think their product/service in saturation they start cost cutting. Because you need to give dividends to keep your stocks up and these dividends rely on profit.

Unfortunately most of the time these cost cuts are not based on R&D to invent a new method to decrease costs of production or increase the efficiency; which would take time and also uncertain. Remember high-earning managers don't like to wait (their time is money), and their stress level can't endure uncertainty of that level and they go the easiest way of cost-cutting; which is called mass lay off. They know human can increase their efficiency automatically when they are afraid of something, for this case losing their jobs (not steve). They know remaining workers will work twice to secure their places, instead of criticising the bad management etc. And exploit this fact every now and then.

Re:so? apple is still selling less product (0)

Anonymous Coward | about a year ago | (#42582751)

Stocks go up on profit.

"The Market" bases its price of a stock on future earning potential (in theory. In reality its all a huge popularity contest judged by robots). If profit remains constant, so does the price.

Re:so? apple is still selling less product (3, Informative)

samkass (174571) | about a year ago | (#42582915)

Stocks go up on profit. And profit does not grow only with revenue. You can also deduct spendings. That's how big businesses work. They spend enormously for marketing, branding, hire unnecessary amount of people, to build a brand.

Not sure if you're talking about Apple or competition. Apple spends way less on marketing, offers no incentives, than, say, Samsung, which has has virtually bought their market share dollar-for-sale. http://www.asymco.com/2012/12/05/the-mystery-of-samsung-electronics-sga/ [asymco.com]

Re:so? apple is still selling less product (0)

Anonymous Coward | about a year ago | (#42582547)

Yes, that's right only privacy nuts and old people.

Re:so? apple is still selling less product (5, Insightful)

ArcadeMan (2766669) | about a year ago | (#42582551)

iPhones are so cheap? Are you insane?

iPhone 5 is what, around $200 with a 2-years contract in the USA? But these monthly fees are likely to be around $50 or more, so $200+(24x$50)=$1400 at the least.
iPod touch 5th generation is $300. That's less than a quarter of the cost. There's free wi-fi everywhere in NYC so iPod touch + VoIP = free calls.

And if people are too stupid to include their monthly fees in the cost of their iPhone, too bad. You can't fix stupid.

Re:so? apple is still selling less product (3, Informative)

alen (225700) | about a year ago | (#42582583)

$199 on contract in the US
Galaxy S3 is also $199 and $149 at some stores depending on where the sale it
wal mart has the iphone 5 at $119

for single people its $90 a month for the carrier bill. for most of us on family plans we pay a lot less. i went to the new mobile share plan with AT&T. 4 smart phones will run me in the $200 range for unlimited minutes and texts and 10GB of data. and that's before my in laws kick in their part of the bill

everyone has a cell phone these days. i don't know a single person doing the wifi for free calls thing

Re:so? apple is still selling less product (3, Interesting)

dc29A (636871) | about a year ago | (#42582755)

for single people its $90 a month for the carrier bill

Holy shit, that's a lot of money for cellphone service.

Re:so? apple is still selling less product (2)

SJHillman (1966756) | about a year ago | (#42582831)

$199 down is putting it more realistically. The rest of the money comes out of the higher monthly cost of contracts. Getting a phone cheaper by signing up for a contract is no different than getting a loan... you pay it all back eventually, with interest.

Re:so? apple is still selling less product (1)

NatasRevol (731260) | about a year ago | (#42582903)

If only you could get a discount for paying full price for *any* phone.

Unfortunately, that's not possible in the US.

Re:so? apple is still selling less product (0)

Anonymous Coward | about a year ago | (#42582939)

It is on T-Mobile.

Re:so? apple is still selling less product (3)

NatasRevol (731260) | about a year ago | (#42583019)

Try living in the Western half of the US, having T-Mobile, and going on a road trip.

http://www.t-mobile.com/coverage/pcc.aspx/ [t-mobile.com]

Re:so? apple is still selling less product (0)

Anonymous Coward | about a year ago | (#42583475)

Ok? I have T-Mobile, live in So-Cal, and never had coverage problems in the trips I've taken.
The voice/messaging coverage is the same as the other carriers for the most part. Note the coverage maps are pretty skewed; Verizon and ATT intentionally 'blend in' multiple service types to give the impression their 4G/LTE data coverage is all-encompassing, when it's not.

And as far as 'paying full price for any phone', carriers nowadays allow you to bring in your own phone and add it to the network. T-Mobile, MobilePCS, ATT, and Verizon all allow this.
So... what exactly was your point?

Try a prepaid MVNO (1)

tepples (727027) | about a year ago | (#42582985)

If only you could get a discount for paying full price for *any* phone.

Unfortunately, that's not possible in the US.

It's been possible since the first prepaid carrier offered a smartphone. By now, Virgin Mobile USA (a Sprint MVNO) offers the iPhone 4S with 1200 minutes, 2.5 GB/mo of 3G data, and unlimited EDGE data for about $40 per month. See if your favorite carrier offers prepaid plans.

Re:so? apple is still selling less product (1)

funwithBSD (245349) | about a year ago | (#42582987)

No, it is more like the Gillette model: Lower the price of the razor, stick them for the blade.

Which is why a safety razor costs around $35. but the blades cost as little as 5 cents.

Re:so? apple is still selling less product (0)

Anonymous Coward | about a year ago | (#42582687)

I've never met a person who does the wi-fi thing you mentioned. The iPhone 5 can be had for south of $150 and I know plenty of people who went for the 4S for $99.

Recurring fee gap between flip phone and iPhone (1)

tepples (727027) | about a year ago | (#42582885)

I've never met a person who does the wi-fi thing you mentioned.

Even if you're out of range of Wi-Fi, you can still make calls on a dumbphone. U.S. carriers tend charge a far larger recurring fee for a smartphone than for a dumbphone. For example, dumbphone plans on Virgin Mobile (a Sprint MVNO) start at $5 per month. Until this gap closes, some people will still carry a dumbphone and a 4" tablet (iPod touch, Galaxy Player, etc.) to save on the recurring fee.

Re:Recurring fee gap between flip phone and iPhone (1)

Kufat (563166) | about a year ago | (#42583575)

For example, dumbphone plans on Virgin Mobile (a Sprint MVNO) start at $5 per month

Virgin Mobile's $5 plan seems to be gone. The cheapest payLo plan I see is $20/mo.

Ting is one of the better Sprint MVNO choices for light users and especially families of light users; they have a $6/line/month charge and buckets [ting.com] based on usage. You can share buckets on multiple lines on the same account, bring your own devices (subject to restrictions), and there are no surcharges for smartphones. They also have voice and text (but not data) roaming to VZW, unlike the Sprint-owned VM USA and Boost.

Re:so? apple is still selling less product (3, Interesting)

realityimpaired (1668397) | about a year ago | (#42582861)

iPhone 5 is what, around $200 with a 2-years contract in the USA? But these monthly fees are likely to be around $50 or more, so $200+(24x$50)=$1400 at the least.
iPod touch 5th generation is $300. That's less than a quarter of the cost. There's free wi-fi everywhere in NYC so iPod touch + VoIP = free calls.

And if people are too stupid to include their monthly fees in the cost of their iPhone, too bad. You can't fix stupid.

You need to compare what you would pay otherwise for the service contract, rather than taking the entire cost of the monthly service. If you're actually in an area where it's feasible to go without an actual phone service, good for you. If you're not, then there's an inherent cost in having a cell phone, which needs to be considered. It's the difference in cost that's the issue.

Case in point, if you're already paying that $50/mo for another phone, and don't plan on switching to another carrier any time soon, then that service contract doesn't need to be considered beyond "what will it cost me to break the contract if a better deal comes along?" And even then, it's really more of a question of "how much do I stand to save if I cancel and go with this other plan, amortized over the period of the contract" than it is an actual base consideration. In that case, the relative cost of the phone is actually $200.

What I don't understand, however, is why people need to spend large amounts of money on the latest and greatest phone in the first place. When the phone is so expensive you need to sign your soul away for a prolonged contract in order to subsidize it, perhaps you should be considering alternative options. Smart phones do not have to be that expensive, and there's no reason you *need* the newest and greatest phone. You can get a Galaxy S2 for $300 at retail, and it's got plenty of grunt for just about everything you could throw at it. It's not the S3, but you really don't sacrifice much, and it's a significantly less expensive option, especially when you consider the obligations of the contract. For me, the freedom to go wherever I want is more important, and I am quite happy with my less expensive Android phone.

Dumbphone costs an order of magnitude less (1)

tepples (727027) | about a year ago | (#42583029)

If you're actually in an area where it's feasible to go without an actual phone service, good for you. If you're not, then there's an inherent cost in having a cell phone, which needs to be considered. It's the difference in cost that's the issue.

Case in point, if you're already paying that $50/mo for another phone

Which I'm not. I carry a $5/mo flip phone for those few calls I can't make on a land line, which are mostly to arrange rides and the like.

Re:so? apple is still selling less product (0)

Anonymous Coward | about a year ago | (#42583545)

are you retarded? why are you using a 3rd party cell phone contract to figure out a price?? go by the msrp.

the msrp of a iphone 5 is 800$ though I'm sure the telecommunication giants get a very substantial bulk discount.

Re:so? apple is still selling less product (3, Insightful)

devleopard (317515) | about a year ago | (#42583369)

I'd love to experience the genius of Google's latest Nexus phone, if only they had enough sense to manage their stock and have one for me to buy.

Stocks (1)

Anonymous Coward | about a year ago | (#42582239)

Stocks went SO CLOSE to dipping below 500. Lowest I can see is 500.13 USD.

Re:Stocks (1)

Anonymous Coward | about a year ago | (#42582315)

498.51 is the recent intraday low.

-- MyLongNickname

Re:Stocks (0)

Anonymous Coward | about a year ago | (#42582375)

I am thinking that your ownership of apple stock is creating bias. I do not trust your judgement.

Re:Stocks (0)

Anonymous Coward | about a year ago | (#42582429)

stop talking to yourself

Re:Stocks (1)

Anonymous Coward | about a year ago | (#42582803)

stop responding to yourself.

I don't know about Nikkei, but (-1, Troll)

Anonymous Coward | about a year ago | (#42582271)

...anyone who takes anything seriously from the WSJ anymore is an idiot.

BGR Report is Useless (2)

aaarrrgggh (9205) | about a year ago | (#42582285)

If Apple had previously ordered 65MM 4" screens their total iPhone sales would be about 50MM iPhone 5's, 20MM 4/4S (plus 10MM iPod touch units). Quite frankly, that is impossible territory there for the December quarter, but filling the channel and a subsequent draw-down as they move more to a 6-month update cycle could possibly explain a "50% drop in screen orders."

Quite frankly, crap like this makes me want to get out of the stock market altogether. (Which is exactly what it is intended to do.)

Re:BGR Report is Useless (2, Interesting)

Anonymous Coward | about a year ago | (#42582433)

If your reason for getting out of the market is information asymmetry, you are right. You and I have a lot less information than managers in the companies and those with access to those managers.

Despite this, I stay in the market and have done well. I have two undergrad degrees in Finance and an MBA. Basically, I take a very simple strategy -- I invest almost exclusively in index funds and diversify geographically. index funds have the advantage of very low management fees and I track the market as a whole. Since I am more limited in my information, i don't try to pick winners and losers. those who do it full time and have more information have already adjusted the price for this info. And since I am not churning my portfolio and giving a broker a lot of money, I will do better than the average investor. I won't hit home runs, but I also won't hit into the retirement ending double play. And when I am talking about retirement, I am looking for the (relatively) safer choice.

- MyLongNickName

Apple the largest Company (1)

tuppe666 (904118) | about a year ago | (#42582459)

Quite frankly, crap like this makes me want to get out of the stock market altogether.

Like every other Apple shareholder that is why the value of 13 Dells market cap got wiped off Apples Market cap in three months. I notice Apple shares continue to plunge..currently hugging just above 500. Its also why you see less people singing Apples praises here.

In reference to spin. "Apple's orders for iPhone 5 screens for the January-March quarter...dropped to roughly half" and "The latest model comes with a longer, four-inch screen compared with the 3.5-inch screens used in all previous iPhone models.". There is no wiggle room there.

Re:Apple the largest Company (0)

Anonymous Coward | about a year ago | (#42582611)

Which doesn't really make all that much sense. What has Apple actually done to cause such a stock drop? They're still making money hand over first, and they're still growing their overall market share (even if it is by around 1% or so) so it's not as though they've had some kind of terrible quarter.

The only two logical conclusions are that the stock price bubbled up higher than it actually should have and now it's settling to where it should be, in which case the market behaved in a rather stupid manner for a stretch of time, or the market is behaving irrationally now and Apple's stock is being undervalued.

Re:Apple the largest Company (3, Interesting)

Missing.Matter (1845576) | about a year ago | (#42582921)

Which doesn't really make all that much sense. What has Apple actually done to cause such a stock drop?

It's not what they've done, it's what they haven't done, and what others have done.

Investors have this perception of Apple as an innovator, creating new markets where none existed, and this perception is built into the stock's valuation. With the iPhone 5, Apple released not a new innovative product, but yet another incremental iteration of the iPhone. Then they did it again with the iPad mini and iPad 4. All the while, you have headlines like Android surpassing iPhone market share, Samsung selling more Galaxy phones than iPhone. The iPad mini was perhaps the worst of the bunch, where Apple was perceived as following Google's lead into smaller tablets, especially when Steve Jobs was quoted as saying they would never do such a thing. Right or wrong, this perception is not good for the narrative that Apple is a leader and can magically create markets where none existed before.

Perhaps the decline has everything to do with the Jobs RDF wearing off. Perhaps it has everything to do with Apple's first mover advantage in smartphones wearing off. Maybe it's just the competition heating up, or a combination of these and other factors. But what's clear is that Apple is no longer in a position to dominate the smartphone and tablet markets on their own, which is a real problem for them, since their massive profits are *largely* derived from iPhone sales.

I don't think it's a coincidence that AAPL hit an all time high the day the iPhone 5 was released, and has been in a steep decline since then.

Re:Apple the largest Company (0)

Anonymous Coward | about a year ago | (#42582977)

Which doesn't really make all that much sense. What has Apple actually done to cause such a stock drop?

Exactly.

Or rather, wrong question. What has Apple actually done to keep their stock so high?

Or, as a statement, they've done nothing, and thus their stock is dropping. Everyone else is doing the innovating now. Apple's playing catch-up, they don't know how to deal with direct competition (something proven repeatedly in their history, right down to Jobs throwing a spaz fit when Google had the unmitigated gall to dare compete with the iPhone), and they're desperate to abuse the patent system to prevent anyone from stopping them.

A drop in Apple's stock doesn't have to be due to active decisions on Apple's part. They're not some Chosen Company who somehow deserves endless stock growth by divine birthright. If their entire business is based on "innovation" and they slack off on that, they're going to suffer.

Re:Apple the largest Company (3, Informative)

NatasRevol (731260) | about a year ago | (#42583455)

You're an idiot. Their stock is near an all time low when you actually look at the right metric, PE which stands for price (per share) relative to earning (per share). It's a clear measure of what investors are willing to pay for earnings. And in spite of greater (earning and revenue) growth than any other large cap company in the last 10 years, somehow Apple's earnings are the least valuable.

Re:BGR Report is Useless (2)

NatasRevol (731260) | about a year ago | (#42582907)

Actually, a much better explanation for Apple cutting orders (from one supplier) by 50% would be because they have a second supplier.

Manipulation (1)

whisper_jeff (680366) | about a year ago | (#42582345)

The math adds up once you view it through the lense of stock market manipulation. I suspect the source of the rumour will match up rather nicely with someone who made an enormous amount of money shorting Apple today.

Re:Manipulation (1)

dave562 (969951) | about a year ago | (#42582501)

There are a lot of people short AAPL. The stock has had a good run but the fundamentals are against them. They cannot defend their price points anymore. Look no further than iPhones in Walmart for the handwriting on the wall.

Re:Manipulation (1)

Time_Ngler (564671) | about a year ago | (#42582793)

They have a P/E under 12, and a huge amount of cash. What fundamentals are you talking about?

Re:Manipulation (1)

NatasRevol (731260) | about a year ago | (#42582943)

The 'fundamentals' of growth that's less than 100% YOY.

That's considered bad, but only for Apple. And only on Wall Street.

Re:Manipulation (1)

BasilBrush (643681) | about a year ago | (#42583253)

The 'fundamentals' of growth that's less than 100% YOY.

Given that Apple revenue and profits are in double digit growth, that's an imaginary fundamental. Wishful thinking on your part rather than reality.

I bet you wished you had a pony too.

Re:Manipulation (1)

dave562 (969951) | about a year ago | (#42583041)

The shrinking market for their products and the pressures on their margins. The company itself is fine. However it has been valued based on its ability to generate abnormally high profits and lots of volume. This article is an example of Apple purchasing fewer displays because they do not forecast as strong of a demand for their products as previously expected. There was an article last year about Samsung jacking up the price of the processors. Look for more of the same in the future. Fewer sales, fewer upgrades, reduced profit per unit. Just look at the release cycles. They are becoming shorter and shorter.

There are also macroeconomic pressures at play. The economy is heading for some rough waters ahead.

Re:Manipulation (1)

BasilBrush (643681) | about a year ago | (#42583307)

The shrinking market for their products

Neither the smartphone market nor the tablet market is shrinking.

The PC market is shrinking, but that's largely because of Apple's iPad. But within that market Macs are still in growth. With lots of room for moregrowth as their new customers come from the 90% who currently have Windows PCs.

Re:Manipulation (1)

Anonymous Coward | about a year ago | (#42582821)

They cannot defend their price points anymore. Look no further than iPhones in Walmart for the handwriting on the wall.

Spoken like a person who doesn't realize people have been dropping several times the cost of an iPhone on televisions from Walmart for the past decade or so.

Protip: The teenage Internet angst against Walmart doesn't quite match up with the reality - they sell the same shit every other store sells, usually cheaper by virtue of their goliath purchasing power.

Re:Manipulation (0)

Anonymous Coward | about a year ago | (#42583373)

With Walmart, Apple is trying to sell products "to the rest of them". The non hipsters who are familiar with the Apple name but they do not follow the company, release dates or software versions or what the company is doing and they do not care either. Apple took this step to maintain sales volumes on their now commodity level products. Samsung did not market to exclusiveness, Apple needs to be non exclusive to reach the rest of them too.

Everything with Apple is a balance. Extract the most from popularity and hipness as they can and balance the flow around and through the walled garden for maximum profit. Think extremes. If they felt blocking ALL music not specifically bought from iTMS would make them money, they would do it. At any point in the future, if they felt they could get more money from allowing people to play any music on their device, they would allow it. Once Apple feels "renting" music like a Rhapsody subscription does instead of only selling it like they do now, they will enable renting. That is why they take services and function away and why they add additional functions over time. Balance the profit and money potential. Their decisions have NOTHING to do with you having flexibility or giving YOU more options and freedom with the devices.

Re:Manipulation (1)

fuzznutz (789413) | about a year ago | (#42583535)

Spoken like a person who doesn't realize people have been dropping several times the cost of an iPhone on televisions from Walmart for the past decade or so.

Spoken like a person who doesn't understand the difference between price and cost.

An iPhone 5 retails for $650 - $950 depending on the model without the monthly subsidy of a contract. That is the COST regardless of the "under contract" PRICE Walmart sells it. I don't see many $3,000 TVs flying off the shelves at Walmart. People dropping that kind of dough tend to buy their TVs elsewhere.

Re:Manipulation (1)

tgibbs (83782) | about a year ago | (#42583477)

iPhones in Walmart are selling with a contract, which means that Apple is still making a healthy profit on them.

All math is strange when you're speculating (2)

js3 (319268) | about a year ago | (#42582357)

why is BGR even trying to do math on something it has no numbers on?

Re:All math is strange when you're speculating (0)

Anonymous Coward | about a year ago | (#42583133)

Because it's BGR, and they're terrible. You can't really even call them a "news" service. More like an opinion blog with a lot of monkeys at typewriters.

Shift to IGZO screen (0)

Anonymous Coward | about a year ago | (#42582497)

I suspect they just finish their talk with Sharp to shift from Sharp/LG's old screen to IGZO.

Apple (4, Insightful)

the eric conspiracy (20178) | about a year ago | (#42582511)

Apple has serious competition now. Back when they were the only game in town they could do as they pleased.

But fat margins and high market share rarely last. And when margins and market share come down so does the stock.

A company whose primary product is a smart phone has the highest market capitalization in history? That smacks of Tulips [wikipedia.org]. You know it can't last.

Re:Apple (1)

the computer guy nex (916959) | about a year ago | (#42582651)

Apple has serious competition now. Back when they were the only game in town they could do as they pleased

The iPhone marketshare right now is highest in Apple history with >53% of the US market. They were never the 'only game in town'.

http://bgr.com/2012/12/21/apple-market-share-u-s-262731/ [bgr.com]

Re:Apple (0)

sexconker (1179573) | about a year ago | (#42583093)

Apple has serious competition now. Back when they were the only game in town they could do as they pleased

The iPhone marketshare right now is highest in Apple history with >53% of the US market. They were never the 'only game in town'.

http://bgr.com/2012/12/21/apple-market-share-u-s-262731/ [bgr.com]

Apple sells iPhones outside of the US. What is their global marketshare?
(Hint: It's lower than you want it to be, and it's falling.)

Re:Apple (1)

BasilBrush (643681) | about a year ago | (#42583543)

Apple sells iPhones outside of the US. What is their global marketshare?
(Hint: It's lower than you want it to be, and it's falling.)

That isn't down to any underperformance on Apple's part. iPhone sales continue to have two digit YoY growth. It's simply that the ultra cheap market is Android, and the third world has lots of people in it. Apple does not and doesn't need to serve the ultra cheap market. There's no profit in it. That's why there's only Apple and Samsung that are making profit in the smartphone business. And Apple's making more of it than Samsung.

The GPs point is good. In the top end market which exists in the US, the iPhone's market share has never been higher, and is in fact larger than all other smartphones added together.

Re:Apple (1)

UnknowingFool (672806) | about a year ago | (#42582657)

Don't confuse primary product with only product. Without the iPhone or iPad, Apple would still be very profitable. Yes they make a great deal of money on the iPhone which is actually more revenue than ALL of Microsoft. So their market cap is somewhat justified.

The analogy to tulips doesn't make sense here. The tulip situation was based on pure speculation of a market. The main difference is Apple makes real revenue on products not speculative revenue.

No Apple wouldn't (1)

tuppe666 (904118) | about a year ago | (#42582787)

Without the iPhone or iPad, Apple would still be very profitable

...no it wouldn't what a load of rubbish,its profits would take a massive dive instantly. Most of their profits come from the iPhone. Secondly without the iPhone/iPad is Apple relevant.

Re:No Apple wouldn't (1)

the computer guy nex (916959) | about a year ago | (#42582875)

Without the iPhone or iPad, Apple would still be very profitable

...no it wouldn't what a load of rubbish,its profits would take a massive dive instantly. Most of their profits come from the iPhone. Secondly without the iPhone/iPad is Apple relevant.

You are confusing profit margin with profit.

Re:No Apple wouldn't (1)

UnknowingFool (672806) | about a year ago | (#42582969)

Apple makes about 30+% margin on their computers. This has not changed since Jobs came back. Without the iPhone, Apple would still be profitable.

Re:No Apple wouldn't (1)

Missing.Matter (1845576) | about a year ago | (#42583293)

Yes, you are correct. But what I believe the poster was trying to say is that while Apple would be profitable, in the sense they make more money then they spend, they would not be as profitable, in the sense that they do not make as much total profits. As you point out, the iPhone alone brings in more revenue than all of Microsoft, but this goes to show that Apple is not diversified. Without iPhone/iPad, Apple is back to where they were in 2007. Mac hasn't grown much since then, they've all but killed their enterprise efforts, and iPod is no longer what is once was.

There's now talk of a less expensive iPhone coming out. This is what the original poster you replied to is referencing as margins coming down. Apple was once able to charge $600 for an iPhone on contract, because they were the only game in town. Now everywhere you look there's competition, and it's not clear their current strategy, which earned them the high market valuation, is sustainable. Thus you see their valuation receeding.

Re:Apple (1)

Anonymous Coward | about a year ago | (#42583017)

Apple has serious competition now. Back when they were the only game in town they could do as they pleased.

But fat margins and high market share rarely last. [...]You know it can't last.

Apple has never been the only game in town (well, okay, there were a few months in 1977) but Apple has never played the market share game. They have always played the high-margin game. It is well aware that the iPhone's brief position of market-share plurality was a fluke, and it is perfectly happy to cede the low end of the market to Asian OEMs making Android clones.

Apple has played this game before. It watched as IBM made a big splash, only to be under cut by Compaq's compatible clones...which were in turn undercut by Leading Edge and CompuAdd and Packard Bell-NEC and so on. All gone now. But guess who's still in the PC business after thirty-five years?

The pundits will wring their hands (and Slashdotters will gloat) over Apple's shrinking market share, but Apple has known all along that it can't have both high profits and high share, and it knows that of the two, high profits are the way to go.

Re:Apple (1)

Mitreya (579078) | about a year ago | (#42583053)

Apple has serious competition now. Back when they were the only game in town they could do as they pleased.

Apple does not have enough competition for some reason.

Ever try to buy a non-Apple equivalent of MacBook Air? an iPod touch substitute?

Re:Apple (0)

Anonymous Coward | about a year ago | (#42583243)

Microsoft proved that it's possible to establish and hold a monopoly in a very fast changing market. Apple could have done the same, but they got too greedy. This, is just more of the same old, same old.

Shift attention and confuse... (1)

Anonymous Coward | about a year ago | (#42582555)

The article seems to suggest that the Iphone 5 sales weren't that bad, so the cut in display orders wouldn't make sense because the Ipod Touch uses the same screen.

So what are the Ipod touch numbers? I have no idea what they are, but I could see the Ipod Touch losing huge marketshare with all the tablets and smartphones being tossed about, Maybe this is an attempt to hid the fact that one of Apple's cashcows has finally fallen?

Or maybe the Ipod Touch sales are still very high, and the cut in display orders info isn't really that dramatic - or maybe the cut is spread out among a few months and Nikkei got its info mixed up.

There's not enough info to know, and barely enough for the brave to make gambles on.

iPod touch is a 4" tablet (1)

tepples (727027) | about a year ago | (#42582933)

but I could see the Ipod Touch losing huge marketshare with all the tablets and smartphones being tossed about

Technically, a "tablet" and a "PDA" are the same thing in different sizes, making iPod touch a 4" tablet. But perhaps you're right that some people who would have bought a 4" tablet are buying a 7" tablet (Kindle Fire and Nexus 7) or Apple's own 8" tablet (iPad mini) instead.

More likely explanations (4, Interesting)

Chuckstar (799005) | about a year ago | (#42582629)

It's unlikely Apple completely blew the estimated sales for iPhone 5 in the March quarter by that much. The most likely explanation is that the rumor is just wrong. Next most likely is that the 5S is coming soon and gets a slightly tweeked screen. Maybe even just a slightly different part from the same supplier. Whoever leaked the info saw the partial cancellation, but isn't aware of the replacement order. And, remember, even if 5S isn't coming until the next quarter, Foxconn might have to start taking delivery of screens this quarter, in order to ramp up production and build launch inventory.

Re:More likely explanations (1)

Anonymous Coward | about a year ago | (#42583539)

The most likely explanation is that the rumor is just wrong

Or... perhaps Apple is switching suppliers. This rumor came from a "channel check". The supplier that provided the info would have no knowledge of the order book at a different company.

Remember all the rumor recently about Apple "bailing out" Sharp? They are on of the very few manufacturers that (theoretically at least) can make retina-density displays. If such an investment had taken place, you would expect Apple to start sourcing from them as soon as possible.

Lead Up To New Product (0)

Anonymous Coward | about a year ago | (#42582645)

This usually happens when there are shenanigans or when the producer is anticipating new product releases in their pipeline are about to come out. I am in favor of claiming a bit of both at this point.

Not just screens (0)

Anonymous Coward | about a year ago | (#42582667)

The article clearly states that orders for other components are also being cut. The screens were just an example. I think one of Apples big problems are there are many people, like me, that would never buy an iPhone (unless some miracle happens and apple tears down their walls, gives control back to the user, and stops suing everybody for stupid patents). It is also difficult for them to keep trying to sell new phones with incremental updates to their current users.

 

Re: Not just screens (0)

Rational (1990) | about a year ago | (#42582931)

" I think one of Apples big problems are there are many people, like me, that would never buy an iPhone"

Apple have dealt with haters their entire history; it's not like "someone who would never buy their product unless they turn into a completely different company" is a new problem for them.

And frankly, letting haters hate and continuing being true to themselves has proven to be the soundest policy so far, or at least for the last dozen years or so.

It is an Apple patent. (4, Funny)

140Mandak262Jamuna (970587) | about a year ago | (#42582715)

Most people thought Apple patented rounded rectangles. But in reality they have patented all roundings including rounded numbers. So that explains the difference.

We don't know what's going on (0)

Anonymous Coward | about a year ago | (#42582927)

Apple is a very secretive company, and we really don't know what's going on. The pundits in the WSJ think they do, but they really don't know either. They're just pulling bits and pieces from various places, slapping them together and making assertions, (even when the assertion is made in the form of a question), without knowing if they have all the pieces.

Sign of the times (3, Insightful)

TheSkepticalOptimist (898384) | about a year ago | (#42583365)

I've said before that the world's love affair with Apple is slowly eroding, and so it seems iPhone 5 orders are not quite what Apple was expecting. 2013 is going to be a very tough year for Apple and coming out with cheap iPhone mini's or doing minor revamps of existing products are not going to cut it. Unless Apple does something truly innovative with iOS and iPhone in general, this slow erosion of their market will pick up speed.

Cutting back screen orders because they want to introduce a new product does not make any sense, why place an order so large in the first place? Is Apple so completely out of touch they don't even have a firm release cycle for future products when they ship a new product? Like they didn't know the 5S release cycle when they shipped the iPhone 5? I would be dumping Apple stock if this is their emerging trend, release a product with ridiculous expectations on sales, cross their fingers, and when the sales don't reach their inflated estimates dump the product and rush a new version to market???

Nothing about this speaks of a company that is being run properly.

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