Apple Can Keep Secrets Even Without Steve Jobs

 |  About: Apple Inc. (AAPL)
by: Murphy Mac

It's been a while since a major Apple (NASDAQ:AAPL) event had big surprises. Much of yesterday's news at WWDC '09 was expected. But Apple proved that they still know how to keep secrets completely under wraps.

Here's a scorecard tallying assumed reactions for both investors and consumers regarding yesterday's announcements from Cupertino-based Apple, Inc.

New Macbooks

This was the biggest surprise. There was virtually no chatter on the rumor sites suggesting we'd see the extensive changes to the Macbook and Macbook Pro lines announced at the beginning of the keynote.

Buying an entry-level 15" Macbook Pro today versus yesterday results in savings of $300. Apple throws in a spec bump and previously unavailable SD card reader.

The 13" Macbooks got a bump too. More importantly, now the 13" unibodies are Macbook Pros.

Designating Pro status by size never made sense. Plenty of customers wanted Pro features in a small package. Now they have it. They get their Firewire back too, although Firewire 800 might not be what many users wanted.

The Macbook Air with SSD got a $700 price drop.

All things considered, the unexpected announcement was like Phil Schiller opening the keynote with a lead-off double. Maybe a triple.


Consumers: Can't complain about a 15% price reduction in a line that doesn't often reduce prices. The SD card reader will be useful for many users, though some would prefer a more versatile slot.

Investors: Wall Street has been calling for lower priced products. Notebooks are a critical component of Apple's Mac line and an unforeseen retooling this soon after the unibody launch has to be seen as a big plus.


The keynote went on to cover many more features of Snow Leopard, the next version of the OS X operating system, than Apple has released in public.

Snow Leopard began with an under the hood persona, and it has largely maintained that. Rather than emphasizing gee-whiz features like Dashboard and Time Machine the focus is on performance, streamlining, and utility.

Further, Apple is demonstrating once again how adept it is at leaving legacy components behind. This time it's pre-Intel (NASDAQ:INTC) Mac hardware that won't be riding along with the new OS. Microsoft (NASDAQ:MSFT) most certainly envies Apple's ability to drop support for legacy software and hardware cleanly. Windows 7 and its virtual XP should go a long way toward helping Microsoft cull old code from its own desktop OS. But Redmond still carries a heavy load of legacy support.

Until yesterday there was no launch date for Snow Leopard. Now we have one: September. But the big news was price. Snow Leopard will be around a hundred dollars less than previous upgrades, at $29. Microsoft is being somewhat aggressive in pricing Windows 7, making it a free upgrade for certain Vista products. Apple's pricing for Snow Leopard is no doubt partly in response to that situation.


Consumers: Fans will be excited to upgrade without shelling out a hundred bucks. Those who don't buy every upgrade will almost certainly buy this one.

Investors: Knowing the date of a major product release is better than speculating. Analysts have been harping on the importance of Apple products being more affordable, this helps. Those thinking about Windows 7 might save some money and try Snow Leopard instead. Apple's bread and butter is the hardware, losing some margin on the OS won't hurt too much, and they'll make some of it up in volume. There are many more users running OS X than there were in 2003. Exchange support could lead to some corporate sales, but Apple clearly hasn't devised an enterprise strategy yet.


The iPhone presentation covered many of the same things we saw several weeks ago at a special event introducing the next mobile OS. Cut and paste, horizontal keyboard, universal search, etc. There wasn't much of a wow factor there.

The new hardware had to deliver a few things that were heavily rumored, and it did. Faster cellular components, a better camera, video, a magnetometer, and higher capacities. There was virtually nothing that hadn't been discussed in the rumor mill for quite some time. They also threw in the Nike (NYSE:NKE) component and voice control. The processor information has yet to be revealed, though it's reported to be much faster than previous iPhone models.

There were, however, rumored features that didn't make it into this phone: Forward facing camera, FM transmitter or receiver, matte finish, OLED display, faster WiFi, etc. Some we'll see in the next iPhone, some we'll likely never see.


Consumers: It's not everything they wanted, but it's easily enough to keep the iPhone ball rolling. In the US, AT&T (NYSE:T) will need to deliver on the speed boost. Apple called their US carrier partner out on the carpet yesterday, letting the world know AT&T was behind the ball on tethering and MMS.

Investors: Wall Street should admire Apple's ability to prolong the lifecycle of a product. As they did with iPods, Apple is trickling out features in each iPhone release. Enough to make new versions compelling upgrades for fans and to draw customers from other phones and carriers. Many analysts would have liked to see a Verizon (NYSE:VZ) phone or an announcement on China carriers. Verizon would open the door to plenty of new customers. But the AT&T exclusive allows Apple to demand a healthy subsidy from AT&T. All that cash up front keeps the books looking good. And what about the Pre (PALM)? A certain demographic is going to go for it. But Apple served up formidable competition for the Pre yesterday, without requiring a mail-in rebate.

One More Thing

There wasn't "One More Thing". There was no Steve Jobs, no tablet, no iPhone nano, no netbook, no nonsense. Apple stuck with a solid formula that's been paying off for the better part of a decade.

Steve Jobs is expected back soon. If he returns in a reduced role or extends his leave, it's difficult to envision the prospects for Apple that were considered likely twelve to eighteen months ago: a massive sell-off. Apple has been putting the team on display at major events. No, none of them have the charisma of Jobs. Who does? Who has the backstory? Nobody.

But the team appears competent. They've advanced product roadmaps in a Jobsian manner. Look no further than the Laptop Hunter ads: Apple is clearly on Microsoft's radar, a sure sign that management is getting the job done. Apple appears ready to survive just about any Steve Jobs news.


Consumers: A Jobs appearance would have thrilled the fans. Hopefully it will come later. Nobody was really expecting a tablet or a netbook yesterday.

Investors: "One More Thing" from Steve Jobs would have given AAPL a notable boost yesterday, but the stock wasn't punished for his absence. It's likely that a tablet or some other netbook competitor is coming. The recent climb in share price can largely be attributed to iPhone success and deferred revenue recognition - but such a rapid and lengthy climb feels like something else is on the way. Selling the old iPhone for $99 should please some analysts. As an investor, I don't see it as much of a difference maker. China is coming soon, maybe even next month.


We got surprises yesterday. New Macbook and Macbook Pro pricing and features. A $29 major OS upgrade is on the way. And the new iPhone will ship sooner than many expected.

Apple proved they can still keep a product under wraps. Nobody knew the details of the new Macs - available the same day as the keynote. Which means other products in the pipeline could be well underway. Certainly there are more surprises to come.

With the Pre and Windows 7 Apple has plenty of motivation to keep moving forward. Yesterday's event was a clear demonstration of Apple's controlled, methodical march. Throw in the surprises and it was an obvious success.

Disclosure: Long Apple, Inc (AAPL), no position on AT&T (T)