Apple (NASDAQ:AAPL) is rumored to be working on a "cheaper" iPhone.
Nokia (NYSE:NOK) released information this morning that their Q4 shipments were radically ahead of projections, and the stock is up 15% pre-market.
RIMM may be sandbagging, as I wrote on yesterday.
The underlying problem for Apple is that the company has stopped innovating. Love him or hate him (I'm in the latter camp for those who don't know better) Steve Jobs was one of those guys who could make teens scream and then buy all the crap he produced, irrespective of how good it really was (like, for instance, not understanding RF well enough to design an antenna that would not be de-tuned by simply holding your phone!) But Jobs is dead, iOS is dated and Cook doesn't have that "zing" that Jobs did, which means that now Apple is an operating company instead of an innovation factory.
There are many who claim that Apple is not a "one-man" company. Baloney. Apple was always a one-man company.
Most firms that pull off the sort of "flash and jizz" game that Apple has are -- it's just reality.
But now that's gone and (literally) eaten by worms -- and this always happens; it's the inevitable reality associated with the world we live in.
Here's the bottom line: Once you start to cannibalize your margins and market share begins to slip, as is happening with Apple, the honeymoon is over.
I don't expect this to have an instant effect on the stock price in a severely-negative fashion, as the "fanboi-fu" is strong with this company. But Apple has had that before, and then imploded -- and will again.
Apple's Cook is said to be meeting with China Mobile's chairman and is spiking the stock this morning. Yeah, ok. This sort of thing is like Herbalife (NYSE:HLF), where you need to find more suckers customers on a continual basis -- or else. The problem with that sort of "spread the mess" customer-seeking game is margins -- doubling your penetration sounds good but if you do it with half the gross product margin your gross is the same but your overhead has gone up -- and may have doubled! That's not parity, it's a net loss. And worse is the fact that this rock we live on is finite.
RIMM and Nokia, ironically, along with Samsung (OTC:SSNLF), may be right in the "sweet spot" to capitalize on this. Much of the time in business you don't need to be the best, you just need to be there to pick up the pieces when your competition blows its own brains out. There are plenty of people who hate the linkage with iTunes that comes with Apple products, but like the products themselves, as just one example.
Everyone on Wall Street wants to talk about ecosystem, but what they're really talking about is a walled garden -- and the wall has razor wire and broken bottles embedded in the top. It's a prison, which appeals greatly to Wall Street types but it only works for consumers so long as the illusion of free choice and beauty persists. If and when the pretty vines and flowers covering the wall start to wilt a bit, and people realize that they're imprisoned instead of being served up utopia, you've got trouble on your hands.
Interesting times are coming in this space. The "personal computer" has been said to be dying on the vine, and that may be true, but I believe that many of the firms in the personal electronics space have overplayed their hand, much as Facebook (NASDAQ:FB) is doing, and despite the 50% move in the latter's stock price over the last few months the people who made it "great", teens, are going elsewhere -- they got pushed too hard, there are too many ads, too many fake "likes" that these folks know are fake, and once the customer realizes that your "walled garden" is a prison he or she is likely to look for a means of revolt -- which is going to go right to your bottom line.