Analysts and attention seekers alike are actively discussing the coming earnings release for Apple (AAPL). The iPhone sales figure is the largest point of contention, and I want to shed some light on why the estimate reductions are wrong, by looking at it with common sense.
Normal People Don't Wait 7 Months for a New Phone
They just don't.
But first, no, most people do not know that the iPhone 5 will be released this fall or what it may or may not contain. Most people do not read "this stuff" and do not talk about when the next AAPL product is due. My mother, my wife's "BFF's", my cousins, those kids-school-parents types of friends -- you know, normal people. If you actually ask them, they have no idea when the iPhone 5 is coming.
If you're reading this, then you know it. And I know because we read stuff like this and surely other popular AAPL rumor boards / sites / forums.
To the heart of it, to suggest that people are putting off a new phone purchase because they "know" the iPhone 5 is coming is more wall street ignorance of main street. It is suggesting that most would go a whole summer of good times, family photos and vacation memories with an old iPhone... or worse, a bad android device. No, the average person isn't waiting through the summer for the iPhone 5 when the 4S is pretty awesome (and the 4 ain't bad). People who play that game, never buy a phone.
Most of the chatter from analysts is about low iPhone numbers for this June ending quarter because of the push-off effect. So, for these in-the-know iPhone buying folks who are going based on last year's October launch, analysts are saying people will wait through May then June then July then August then September then October then November, and likely probably into December (given how fast it will sell out), just for "the next" iPhone? Shame on you for forcing me to write such a silly run-on sentence to illustrate how long 7 months is.
Jason Schwarz wrote a great article attacking the supply chain metrics, for those who want to live and die by the insider traders banking on China leads. Also, as he and others have noted, there's the mere 8 month lifespan of the iPhone 4S compared to the 12 months of the iPhone 4. There's plenty of other common sense reasoning out there.
The iPhone 5 visits in September
I wasn't writing anywhere at the time, but I did, in my little tiny circle of the world, predict that: 1) the iPhone 4S was not going to be a "5". 2) AAPL was not behind on releasing the 4S but was intentionally moving the iPhone launch date into the fall. 3) AAPL intended keep the iPhone launch in the fall going forward.
None of that is rocket science. A whole lot of normal people figured it out on their own. It didn't make any sense to keep the iPhone launch in the summer, a mere 3 months after the fanfare of the newest iPad. Keep people interested in Apple all year round. Still, so many analysts didn't get it and still don't.
Let's talk about October.
I've got a good hunch that Cook and team figured out having the new-iPhone-is-coming slowdown sitting in its own quarter is a bad thing. Given his willingness to discuss and use some cash, I am hopeful he's somewhat more investor-friendly and stock-interested than Jobs.
The "new iPad" was released March 7, 2012. Splitting the year in half and releasing the iPhone 5 on or about September 7th would put the company on the cycle of having major release every 6 months. It just makes common sense.
Along with more back to school timing (school kids love their smart phones), AAPL can push out any iPhone 5's they can pre-produce in the September ending quarter. This would significantly help level out the iPhone numbers quarter to quarter. It also gives them about a month longer to get their backlog in order in time to fill the all-important holiday orders. (It's entirely possible that last year's October launch was bumped a month from September due to Jobs' quickly deteriorating condition that had to have occurred earlier in the summer, before the phone went into production.)
In case you didn't get it during the article, I'm a big AAPL bull. I'll also accept the "fanboy" moniker because, yes, I like products that work well and work well together.
Still, religious cult-like opinions aside, there's going to be a good number of vocal analysts who've been wrong before and will be wrong again - and they don't seem to mind.