What's Happening at Apple: Trade Shows

By now, everyone knows that Apple (AAPL) is pulling out of MacWorld Expo after this year. More importantly, Steve Jobs won’t be delivering his annual keynote speech. Instead, Philip Schiller, Apple’s senior vice president of Worldwide Product Marketing, will deliver the keynote address. Following a year of rampant speculation on Steve Jobs’ health, it is quite worrisome to note that Philip Schiller also presented in Steve Jobs’ stead at Macworld Expo when Jobs had pancreatic cancer in 2004.

The health and continued presence of Steve Jobs aside, this is the first time that Apple’s shift away from trade show marketing has manifested itself to the general public. While unexpected to most, the decision to leave MacWorld Expo is not entirely out of character. Apple has been slowly pulling out of trade shows all year. Apple pulled out of the National Association of Broadcasters Conference in February, and it also pulled its appearance at Apple Expo in September.

Is this necessarily a poor decision? Apple’s brand cache has been created, and propped up in both its darkest and now brightest times by an enclave of true Mac enthusiasts. Tradeshows like MacWorld have been the cornerstone of this community for the last decade. Leaving MacWorld and taking away its yearly showcase risks alienating these fans. Could Apple be giving up a tremendous opportunity to create continued buy-in amongst its fans? Is Apple giving up on a key differentiator by declining to support the culture and community, which has its products?

Truth be told, I’m not so sure. Apple is a global brand now. The company doesn’t just reach towards a niche and disparate group of enthusiasts anymore. Now, the company also has its own set of retail locations around the nation and has the PR clout to run its own events for product releases. Blogs, news outlets, trade magazines and chronic Apple.com visitors all fawn over new Apple releases. Apple enthusiasts no longer have to make their annual pilgrimage to MacWorld, as the community is alive and well, and more decentralized than ever. If anything, Apple has more reach through other channels. Tradeshows are very expensive and Apple, being the headliner of any tradeshow it attends, likely spends much more than even the average tradeshow attendee, which can pay upwards of $20,000 for three days just to have a booth, not to mention the cost of designing and constructing its display. In an economy like this one, tradeshows are a prudent and effective way to cut costs quickly.

All-in-all, I see the move away from trade shows as a neutral to positive move for Apple. It shows fiscal responsibility, prudent planning, and a commitment to its long-standing strategy of doing everything it can to control the “Apple experience” from announcement to delivery. The real question is, “Where is Apple going from here?” And, as a corollary, can the company get there without Steve Jobs?

To find out more about what's happening at Apple regarding Steve Jobs click here, or to read out about who, if anyone, could replace Steve Jobs, click here.

Full Disclosure: Author was long shares of AAPL at the time of writing.

Comments

[Timeline St...:]

Dear Curious Investor,

You must be paid by the pound. Your 523 words (including wishy-washy disclosure), saying essentially the same thing that was flying across the AP lines within 30 minutes of the announcement, does not belie a great deal of deep strategic thinking on your part. And it took you nearly a week to write these words? I would say 'Incurious Investor' is more like it.

Here is why, in 217 words, this move is great for Apple:

1. Succession: For less than a 7% share price decrease, they put out news that implied the worst, did nothing to deny, and also used it as a platform for succession planning. The price dropped, partly rallied, and will be back to $95 this week. No harm done to shareholders but they got billions of value from it by NOT mentioning Jobs' health (he is almost certainly FINE by the way, according to the most trusted Apple reporters with the best inside sources.

2. Message control: Immediate thoughts that Apple had nothing to announce for Macworld, are exactly what a secretive tech company, knowing that head starts are life and death, would like you to think. They'll have something great for sure, and now nobody has any idea.

3. Underpromise but overdeliver: See #2. They have teed this up nicely. What's the downside? Everything negative has basically been priced in thanks to the unprobing echo chamber press.

4: Move to web-based product launches: What's a better keynote: (1) 5,000 hungover, slovenly, ill-bearded tech bloggers; or (2) the entire world? This move essentially comes down to that question. Apple will soon kick out product launches live on the web, streaming to millions of customers and potential customers.

In summary, time proves this is a strategic masterstroke by Apple.

2008 Dec 22 06:13 AM

[Tom B:]

I think the word is "cachet"; not cache.


I think it's just a cost thing. My expectation is that Jobs will give a non-MacWorld keynote "demo"-ing 10.6 shortly AFTER MWSF

2008 Dec 22 09:11 AM

[The Curious...:]

Timbo,

I don't know if maybe you're upset as you think I'm writing a negative piece on Apple. I'm not saying that at all. But, and maybe I didn't get this across very well, I feel that MacWorld Expo, in particular, is a very unique platform that Apple can use each year to reach adoring fans, the media, and the general public. Further, I don't think the recent decision to surprise shareholders with this news about Steve Jobs and MacWorld is the best way to go about such a strategic shift. While your points to the positive are very valid, even someone long Apple has to take pause and consider the downside. To that end, in the last of my three pieces on Apple, I do end up recommending the shares at these price levels.

Also, if you'd like to keep up to date on my postings, I'd suggest subscribing to my feed or simply visiting: thecuriousinvestor.com. I actually started this post series a week ago, but only joined Seeking Alpha this past weekend which explains the delay.

Tom B,

Thanks for the catch. I'll try to proof read better in the future. I, too, hope that this move is just a cost decision. We'll see in two weeks.

2008 Dec 22 09:29 AM

[Timeline St...:]

Hey Curious,

Thanks for the feedback. Perhaps I was a bit harsh on you but my simple point was the following.

For being such an interesting company with a history of triumph and failure, Apple receives very little thoughtful or insightful coverage. There is more probing analysis in an average article about Mariah Carey's love life than there is the typical article about Apple.

When covering Apple, it's important to think about the following:

*What's the obvious reason why they do or announce something?
*What could be hidden possibilities for such actions?
*Why do they keep a secret? What advantage does that bring?
*How will they use this development in the future?
*Who will lose from this deal?

Remember when they announced the iPod in 2001? (The Macworld is on YouTube if you want to watch it again). Everyone thought, big deal, Apple is now making something that competes with a CD player or a Walkman. They missed the big points: (1) Content delivery; (2) anchoring devices to iTunes and preferably to a Mac OS; (3) getting customers to buy into an inexpensive device as a way to get them to switch to Mac; (4) shifting into non-computer consumer electronics.

Same thing for iPhone. Try the exercise, I bet you could come up with 10 reasons why they want to develop a smartphone.

Apple doesn't do anything for no reason, and usually they have many reasons that are just under the surface that you can figure out if you just put yourself in their shoes.

Peace.

2008 Dec 22 10:35 AM

[Stephen Ros...:]

Apple is a smart phone company now. It is no longer about selling computers to geeks. It is about selling to the "in" and "wealthy".

2008 Dec 22 01:04 PM

[Tom B:]

the iPhone IS a computer. Not full functioned, mind you, but very well optimized for mobility and sense of place.


On Dec 22 01:04 PM Stephen Rosenman wrote:

> Apple is a smart phone company now. It is no longer about selling
> computers to geeks. It is about selling to the "in" and "wealthy".

2008 Dec 22 02:42 PM