Why Wall Street Didn't Like Job's WWDC Apple Leopard Keynote

Yesterday, Apple (AAPL) checked off the second in its hat trick of events for the month of June, and it was rewarded with the volatility in Apple stock we promised a few weeks ago. Prior to Steve Jobs' keynote, the stock was over $126. After the keynote, the stock closed just above $120. The issue? Steve's didn't really announce much.

Oh, I know, Jobs presented a lot of cool features and eye-catching visuals. In fact, I was pleased to see one of our predictions did get announced: Apple's new Leopard OS will bring a new Finder and user user interface to the Mac that uses much more transparency and overlaying of active data, much like HD-DVD or Blu-ray menus. A great example: "Stacks", a feature where many files are stacked into one icon in the doc. Click on a stack, and you get either a "fan" or a grid of documents from the stack to choose from (shown above). There's no new window here -- it's just one of those transparent overlays that says, "don't stop what you're doing, but make a choice." The interface ends up being visually simpler, but makes things easier to find.

But despite the introduction of a few new features like Stacks and Quick Look (another transparent non-window feature), much of the rest of the keynote was centered on features that have already been announced. This wasn't a mistake. It wasn't because Jobs didn't have anything to announce or say about Leopard. And, in my opinion, it wasn't because there aren't new knock-your-socks-off features in Leopard that we still haven't heard about. Why would Jobs do such a thing?

It was because Leopard isn't shipping for another four months.

Now, Apple is giving away feature complete copies of Leopard to all the developers at WWDC, so they are going to get the full story on the disks they receive under a very strict NDA. But the public won't see any Leopard bits until October. If Jobs had described everything that consumers were going to get in October, how exciting would the Leopard launch be? Answer: about as exciting as the Windows Vista launch. Ouch.

I'll dissect some of the notable surprises that Jobs did announce -- things like Safari 3.0 for Windows and the new gaming developers -- in the days ahead. And I'll publish our full analysis of the financial impact of the WWDC announcements and what they mean for Apple's business as part of our June Analyzing Apple report, which should be out next week. But the most important aspect of the keynote from my point of view is that Jobs returned to his closed-mouth self. Despite this being a Leopard showcase, he kept the unshipped product hidden behind the curtain. That showed discipline. It showed strategy.

Sun Tzu says in The Art of War, "Let your plans be dark and impenetrable as night, and when you move, fall like a thunderbolt." It's equally good advice for marketers -- and Jobs proved yesterday that he hasn't forgotten it.

AAPL 1-day chart

Comments

[ET:]

IMO, what happened yesterday was brilliant; it just went over most everyone's head - especially yours. Secondly, you failed to dissect anything so I'll help you. My first suggestion to you is relearn the lessons taught to us with Virgil's The Aeneid and the myth of the “Trojan Horse”.

Job’s is a master marketer, and yesterday he showed tremendous tact and restraint in the delivery of his strategy. The Safari browser is a “Trojan Horse”. Although it serves more than one purpose (greater functionality and reliability than that of Explorer or Firefox), it only serves one master, Apple. The truth is (especially writers like you) most everybody didn't know what they were really looking at. If, for any reason, there’s an issue with Safari working on XP and Vista, Microsoft will have serious problems; I believe the move in chess is called a trap.

Furthermore, EA and ID are releasing titles for Apple. Wake up! This is huge. This is entrée into a previously unattainable market segment with tremendous revenue possibilities. In fact, Apple has not been able to participate with the gaming segment for quite some time. One of the biggest obstacles for PC guys (gamers = males 10-30 yrs. old) when deciding to switch to Mac are games - or the lack of them. Not anymore. This opens up new revenue possibilities. Gaming is what also drives personal computers to reach new speeds and visual technologies (if you learn how to listen to engineers you’ll find this confirmed – but wait, you don’t listen to anyone other than you.

As to the change in styling’s, graphics, etc. I can't even go into this. Your commentary is like a pair of brown shoes with a tuxedo.

As to the iPhone, well, the decision to let programmers participate with the iPhone(without fully giving away the keys to the kingdom) is a $0.00 cost product development methodology by Apple that can be leveraged for insight and innovation within the developer community.

Now, about the stock; here are the facts. Last year during WWDC 2006, this is actually what happened during the five day period.

Prior to WWDC 2006, Apple traded at $67.21.

Day 1 of WWDC 2006: $64.78
Day 2 of WWDC 2006: $63.59
Day 3 of WWDC 2006: $64.07
Day 4 of WWDC 2006: $63.65
Day 5 of WWDC 2006: $63.94 

The following information is from the 5 day trading period following WWDC 2006:

Day 1 after WWDC 2006: $63.94
Day 2 after WWDC 2006: $66.45
Day 3 after WWDC 2006: $67.98
Day 4 after WWDC 2006: $67.59.
Day 5 after WWDC 2006: $67.91 

Of particular interest is that during the WWDC week AAPL introduced the iPod NANO, iPod Shuffle and Itunes 7 and its new features.

WWDC 2007 

Friday: $124.49

WWDC week: Monday’s trading ended with the stock around $120.12 and there’s still Tuesday, Wednesday, Thursday, and Friday to go.

Too many times writers like yourself get stuck staring at "the finger" rather than what the fingers pointing to and too many times you've built your opportunities off of someone else's work. What becomes so damn disheartening is that you're more times than not you're grossly incorrect. As a man, not a writer, you may wish to learn to pay attention to the message and not the messenger.

2007 Jun 12 07:48 AM

[sbz:]

SeekingAlpha is home to many fools who enjoy flaunting their imprudence, I understand. But, in your critiquing of Carl Howe, step back for a second and compare him to the majority of other participants around here. Carl is always analytical, always "right on target", and always fair in his assessments. While I agree this is one of his more vague posts, be easy. He said he was going to dissect some of these occurrences in the coming days. Check his other posts, he’s always very detailed.
Howe is the best AAPL analysts that I’ve seen contribute on SeekingAlpha. Call me a fanboy, call me a fool, but that’s my $0.02.

2007 Jun 12 11:03 AM

[John Scott:]

Carl, perhaps e.t. was just having a bad day; don't let it ruin yours. He makes a couple of good points, but they sort of get lost in the pit bull style, don't they?

2007 Jun 12 11:45 AM

[ET:]

I'm sorry for being so aggressive with my response to the article and making it personal. You guys are right. I stand corrected.

2007 Jun 12 02:03 PM

[Carl Howe:]

No worries, guys. Half the fun is that everyone interprets these events differently and puts their money on what they believe to be true. And truth be told, ET's commentary is far below the worst I've had thrown at me.

Regarding gaming, Apple has gone hot and cold on gaming over the years. We'll see if it pans out this time. I used to analyze gaming, so I know the territory. Only problem: it's never driven any significant revenue for Apple -- yet. I look forward to being proven wrong on overlooking that.

I completely buy your point that Jobs was underplaying his hand yesterday, and in fact, that's the point of the article.

So I think we agree more than we disagree. I just need to get some better looking shoes to go with my tux. ;-)
Carl

2007 Jun 12 02:45 PM

[jmmx:]

- Market Reaction -- IMHO

Come on market - this is the WW <i>Developers Conference - not a consumer show. This is serious business for these folks. They go there to learn.

So Jobs played it close to the chest and the market took and overdue correction. Some shareholders want to take some profits. No problem. No big deal.

Assuming the iPhone does not crash horribly (functionality wise) the future is up up up.

IMHO

JMMX

2007 Jun 12 03:12 PM