Wednesday, February 23, 2011

Apple Rumors and Market Psychology 101

By now everyone knows about the infamous headline from the National Enquirer proclaiming Steve Jobs has 6 months to live.  This bit of sensationist reporting stemed the upward march by Apple shares last week and began the downward spiral into this week.

As if that wasn't enough, there were reports this week that the iPad 2 was to be delayed a couple of months and the iPhone 5 was also being delayed until September.

When will these rumors stop and when will Apple's stock stop reacting to these rumors?  It is a known fact the markets instinctively react to rumors.  The old adage "buy the rumor, sell the news" is still alive and well even in today's information age.  However, the market will not always react blindly to any rumor as it seems to do in the past few weeks.  Apple has had quite a run since September 2010 and many investors were waiting for the right time to book some gains.  With all these rumors abound in the market, this seemed like a good time to cash out.  However, to many investors, missing out on the next bull run can be just as painful as buying stocks at their top.  Many of the Apple bashers in the market are not actually short the stock, but investors who have missed the last Apple bull run.

Now down to specifics.  Regarding the health of Steve Jobs, The American Cancer Society responded that based on photographs "it is impossible to make an estimation of someone’s life expectancy".  Also, the fact that Steve Jobs attended the dinner with President Obama last Thursday helped alleviate some investor concerns.  Ipad 2's rumored delay was curtailed by Kara Swisher at All Things Digital, who reported that the iPad 2 would be unveiled March 2nd.  With these reports supposedly squashing the rumors, why is that the stock pummelled more than the overall market itself?

The answer is simple:  Although there were various reports countering the rumors, none of these reports definitively prove the rumor to be false.  What Apple needs is one of these rumors to be proven false, and then and only then would the market start lending less credence to market hearsay.  Let's start the countdown to the 2nd of March.

Thursday, February 17, 2011

Fake iPhones and Apple's Expansion in China

There's a epidemic sweeping China these days.  Tons of fake iPhones and iPhone wannabes are flooding the market.  The reason is obvious: the iPhone is a runaway success in China.  Demand is off the charts and supply is limited. 

With all these knock-offs and copycats, can Apple continue their blistering expansion in China?  Simple answer: Yes, Definitely.  To understand why this is so, you have to know what is happening in China and the mentality of the Chinese consumer.

China's economy grew by ten percent for 2010 and is expected to grow by another ten percent for 2011. There is a growing middle class with increased amounts of discretionary spending.  Chinese consumers have a huge appetite for Apple products, especially iPhones.  Apple has become a valued luxury item in China the same way they love their BMWs and their Louis Vuitton bags.  To them, the Apple name has become synonymous with "quality" and "expensive".  The funny thing is, in China, being equated with "expensive" is not necessarily a bad thing.  Chinese consumers love expensive, high quality goods, and many are willing to pay for them. 

This brings us back to the discussion of fake iPhones.  They look similar to the real iPhone, but once you hold one (video link) or use one (video link), it becomes very obvious that it is not an Apple product.  They cannot replicate the materials used in the real iPhone.  The touch screen looks and feels horrible.  Yes, there will be people who will buy these phones, just as there are people in the United States who will not buy Apple products because they think they are overpriced.  Also, there will always be people who don't like Apple and will never buy an Apple product.  But in China, Apple has become a status symbol.  For many in China's growing middle class, there can be no substitute for the real thing.  With an estimated 190 million urban households falling into this category, that's a lot of people.

Monday, February 14, 2011

UPDATE 2/14: Verizon iPhone Sales in NYC

Update of the Sales at the 5 Verizon stores in New York City.  The results and their contact numbers:

581 Broadway (212) 431-4613 : sold out
277 Canal Street (917) 237-1630 : sold out
134 West 34th Street (917) 351-8000 : 16gb sold out, 32gb available
139 5th Avenue (212) 780-7420 : Sold Out
859 Broadway (212) 206-7587 : Sold Out

The update was conducted on Monday February 14, 2011 at 4 pm.   The Verizon store at 134 West 34th Street said they only have a few 32gb iPhones left.

Sunday, February 13, 2011

UPDATE: Verizon iPhone Sales in NYC

Update of the Sales at the 5 Verizon stores in New York City.  The results and their contact numbers:

581 Broadway (212) 431-4613 : sold out
277 Canal Street (917) 237-1630 : sold out
134 West 34th Street (917) 351-8000 : 16gb sold out, 32gb available
139 5th Avenue (212) 780-7420 : 16gb and 32gb available
859 Broadway (212) 206-7587 : 16gb and 32gb available

The update was conducted on Sunday February 13, 2011 at 2:45pm.   The Verizon store at 139 5th Avenue said both 16gb and 32gb are only available in very limited quantities and can only hold a phone for pick-up for one hour.

Saturday, February 12, 2011

Verizon iPhone Store Sales In New York

A sampling of 5 Verizon stores in New York City revealed that the Verizon iPhone is selling, but is still available in many locations.  The results and their contact numbers:

581 Broadway (212) 431-4613 : 16gb and 32gb available
277 Canal Street (917) 237-1630 : sold out
134 West 34th Street (917) 351-8000 : 16gb sold out, 32gb available
139 5th Avenue (212) 780-7420 : 16gb and 32gb available
859 Broadway (212) 206-7587 : 16gb and 32gb available

The sampling was conducted on Saturday February 12, 2011 at 6pm.  The stores with available stock said the iPhones were selling well and might run out before the weekend is over.

Sunday, February 6, 2011

Hey Verizon! Announce iPhone Preorders in the Super Bowl!

Want to sock it to AT&T?  How about announcing the huge preorder numbers for the Verizon iPhone on a Superbowl commercial?  That would be the ultimate smackdown in the war for iPhone love.  I don't know if it would happen, but that would really be a touch of marketing mastery.

Saturday, February 5, 2011

Is an Apple TV set next? Patents may Indicate Yes.

Will Apple enter the business of television manufacturing?  There are valid arguments on both sides.  Those against it mainly argue that there are simply too many tv manufacturers and the margins for tv sales are too low, especially when compared to the margins Apple is accustomed to.  Proponents would counter by citing Apple's ability to simplify and beautify everything it makes, enabling it to stand out among the crowded tv market and allow Apple to charge higher prices, just like it does with its iPhones and Macs.  Also, an Apple television would be part of a larger Apple strategy, the total domination of home electronics. 

Gene Munster, an analyst with Piper Jaffray and long-time Apple bull, thinks Apple will come out with a tv in 2012.  After talking to some supply sources in Asia, he believes that the long-term supply agreements referenced by Apple COO Tim Cook during the Apple conference call in January includes screens for a television set.

But a more telling story might be the patents that Apple has filed for.  They recently filed applications for patents related to LCD tvs and tv remotes.  Granted, the filing of a patent doesn't prove the company will come out with a product, however it does show interest.

My take?  Sure, why not?  I can envision using my iPad to as a remote control for my tv.  I already use it to control Netflix and iTunes music via Airplay.  I can see Apple coming out with beautiful looking 42 inch tv set, their iMacs are already 27 inches (and if history is any indication, will get larger).

Would I buy one?  Maybe.  For me to pay a premium for a television, there has to be something special besides looking better than other tvs and connectivity with other Apple devices.  I want 3D without the stupid glasses.  Apple was granted a patent for this last year.  However, winning a patent doesn't mean they can actually manufacturer a product that works well.  We will just have to wait and see, but knowing Apple's history, I would not bet against them.