David Lentz

Apple Delays Leopard Launch in Favor of an iPhone Summer

I'm sorry Carl, I'm as big an Apple fan as the next guy, but every stock analyst's take on this that I have seen treats software revenue as being completely divorced from hardware revenue. At Apple, that's simply not the case, with the software and hardware being tightly integrated. That's the reason Apple can maintain the steady stream of repeat sales to its existing customers, because each new iteration of Macintoshes brings BOTH hardware and software advances that are tightly coupled to each other, making the decision to upgrade a no-brainer for anyone who has the coin to do so.

This delay in Leopard not only will impact software revenue -- it won't hurt Tiger sales much, as they are for all practical purposes nonexistent at this point in the OS X sales cycle, having been introduced in spring of 2005 -- but will also further delay a lot of hardware purchases, and there were already plenty of Macintosh owners sitting on the sidelines waiting for the next round of coupled hardware+software to upgrade to a better Mac. And with the popular hype being that Leopard will leave Vista in the dust (which I am sure is true, as Vista doesn't quite match up to Tiger, IMHO), this delay will lose a certain chunk of Windows potential switchers, who will quite reasonably opt for the system that is actually shipping vs one that isn't.

I have yet to see a financial analyst who has also factored in any sort of decline in Macintosh sales due to this delay in Leopard. Put a 10% drop in Mac sales (for lack of a better number) into the mix along with the loss of the software revenue, and then turn the crank.

Plus, there's every indication that iLife'07 and iWork'07 are both tightly integrated with Leopard, requiring some facilities available only in Leopard for optimal operation (or perhaps any operation at all?). So the loss of software revenue might well be closer to ALL of that billion a year in software revenue (assuming it lasted for a year, which thankfully, it will not). If the iPhone comes in at the lower end of expectations (and $500 is a LOT to pay for a phone), then we are looking at a no-growth situation in the revenue department, with a considerable expansion in the expenses side of the ledger, what with a lot more products to support and the massive capital expenditures under way in Cupertino.

I DO expect that Apple will ship Leopard before October, as only complete fools would set themselves a deadline that they didn't know with absolute certainty that they could make. Additionally, the Boot Camp beta that a lot of people are using under Tiger expires Sept 30, so Apple will be forced to either distribute a patch for Tiger to extend the beta, or have Leopard ready by then. My guess (and it's only a guess) is that they're aiming for a Labor Day shipment of Leopard.

It appears to me that the traditional advice of "sell in May and go away" was a bit late this year.