The Lines Meme Seems Bogus

| About: Apple Inc. (AAPL)

Today Apple (NASDAQ:AAPL) woke up to another pre-market beating. Aside from UBS slightly lowering its price target to $700, the main issue seemed to be the lines at the Chinese stores for the introduction of the iPhone 5. Several reports - including Reuters and the WSJ - said that the lines were 1 (!!!) person long in Shanghai, and 2 persons in Beijing!

This was basically unbelievable. Sure, the iPhone could get a cold reception and all, but there's little reason to believe that it would turn into an all-out disaster. An explanation had to exist.

The explanation

During the introduction of the iPhone 4S in China, demand was so hot, that fights broke out among the crowd as Apple was not able to fulfill all demand.

Apple, trying to avoid a repeat, set up a new system. In this system, the iPhone 5 had to be pre-ordered online through a reservation system, and then the buyer would be notified of when to go to the store and get his phone. This explains the lack of lines at Apple stores, and indeed the same orderly system had already been used with success when the latest iPad was launched.

Evidence of the explanation

Indeed, there is evidence that the explanation above is correct. Why? Because the iPhone 5 was not just sold in Apple stores, but also in its partners' stores such as China Unicom (NYSE:CHU). And what would you know it, these partners didn't have the same reservation system as Apple - they were selling the iPhone traditionally. So guess what? There were lines. As many as 200 people stood outside a China Unicom store in Shanghai at midnight, for instance.


There is photographic evidence of lines in Taipei. One wouldn't expect Taiwan to have a liking for the iPhone and China to suddenly go cold on it.


The "lines" meme that's punishing Apple today is patently false, so Apple stock might yet recover from the associated losses.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.