There is something deeply fishy with these reports.
A Shift from 17 to 13 million is a huge alteration -- and not the kind of screw-up we've ever seen from Tim Cook. I can only imagine two possible explanations:
1. the report is complete BS spread by someone selling AAPL short.
2. they actually will update the iPad this quarter... something I highly doubt (they rarely deviate from their product release cycle that much, and would gain little as the iPad 2 is still selling well).
It could simply be the impending world-wide double-dip recession -- combined with next year's release of an iPad3. Maybe Apple is foreseeing a sales dropoff as people rein in their wallets, and with an iPad3 coming out, Apple doesn't want get too much inventory built up.
I think the report may be overblown, but I do think there is a rational (non-apocalyptic) explanation for it, if it's true.
Less than a month ago, rumor sites reported that Apple increased their expected iPad 2 orders from 12 to 18. A new report says that the orders are dropping from 18 to 12.
Sounds to me like nothing changed.
Just some crap from people jerking Apples stock price around to get support for their puts and gets.
Unless they have a pricing theory which is different from every other manufacturing company on earth, they set their prices based on demand every single time for every single product.
They do have a different pricing theory, which is why they consistently have the highest profit margins in the industry. They cut prices for previous generations of technologies, or if lower component costs and economies of scale allows them to do so while maintaining margins.
"Premium" brands generally don't cut prices due to demand, otherwise they'd be in the same race-to-the-bottom as all their cheap competitors.
My point is that pricing is somewhat of a black art, and can be based on many things, including (but not limited to) demand.
Think about it!
Pricing theory is intended to answer the question: At what price will we maximize total profits?
Demand varies depending upon price. Could be a huge demand, even with a huge price. could be a tiny demand, no matter how low the price. That affects the curve. Normally, the higher the price, the lower the demand, and vice versa.
Without considering demand, normal pricing practices are not possible. There is a price/demand curve, which is carefully considered.
If others are anything like me, there is no decline in desire to buy an iPad 2. There is a decline in the ability of my wallet to pay for it, due to the sucky economy. A price reduction won't help.
So, yea, I guess there is a decline in "demand" (depending on how you define that term) - but not due to people not wanting the device, rather it's a money issue. I will buy one eventually, it's just going to take longer than it would have in a good economy.
So, yea, I guess there is a decline in "demand" (depending on how you define that term) - but not due to people not wanting the device, rather it's a money issue.
The manner in which the word "demand" is used in pricing theory is in line with your guess. It is not the same as the word "desire".
For example, we might all "desire" an iPad2, but if it were priced at $10,000, "demand" would almost certainly be reduced, and if it were priced at $10, demand would almost certainly increase.
Was hoping I'd finally see it with iOS 5 but I have my doubts.
Need to be able to log in and check my email, calendar, address book, iTunes playlists and Safari bookmarks and my wife needs to be able to do the same when she uses it. Same for guests.
I agree 100%. Other than having no cash right now, the lack of this one feature has kept me from buying an iPad. It's the one device I'd let the kids play with, but only if they had their own user account so I could prevent them from buying or deleting things, and screwing up the settings.
They do have a different pricing theory, which is why they consistently have the highest profit margins in the industry. They cut prices for previous generations of technologies, or if lower component costs and economies of scale allows them to do so while maintaining margins.
"Premium" brands generally don't cut prices due to demand, otherwise they'd be in the same race-to-the-bottom as all their cheap competitors.
Pretty much every company uses the same theory, which is that there exists a price point which will maximize total profits.
Premium brands realize that cutting prices will not maximize total profits, given the elasticity specific to the product in question. Crappy brands realize that raising prices will not maximize total profits, given the elasticity specific to the product in question.
Lower component costs do not result in lower selling prices unless the pricing change will maximize total profits. Your statement seems to depend on an assumption that a company will price things at a level lower than that which would maximize total profits, if, for example, the margin remains unchanged. Such a situation is rare, given that every company seeks to maximize total profits, and few would care that the margin is higher than it was prior to the cost reduction.
But if you disagree, tell me how Apple's theory is different from every other manufacturing company's. Do they not seek to maximize total profits?
So the analysts' expectations were just too high and in light of 9.25m sales, 13m seems a more reasonable number. Apple themselves may not have cut back anything but they easily could have if they themselves had higher projections.
Right now, the iPad is still an accessory device and requires computer ownership so has a limited market. After iOS 5, it can be given as a gift to elderly family members who may not own a computer or it can be used by some to finally replace a netbook. I expect iOS 5 will have a significant impact on Q4 sales.
It doesn't make sense to me. Why would Apple cut the price of their iPad AND lower the number of units being produced That feels like a sellout?
Have you actually seen a lower prices on iPad? If there was any truth to that part of the message we would obviously see it.
As to volume I wouldn't be surprised at all if there is a shift, but remember none of these numbers thrown about are confirmed. The biggest reason for a shift would be the European melt down which is real.
Quote:
I think iOS 5 will make the iPad sexy again. It will make the Post PC era truly happen (there will be no need to connect your iPad/iPhone/iPod (touch) to a computer ever again. Having said that, I am looking forward to the new iPod concepts.
IPods are another thing to consider, they may have a Touch replacement or an additional model coming that might impact iPad sales. Realize this is all speculation based on numbers with no solid grounding. I'm certain we will learn more as time goes on ( a couple of weeks). I still don't think we are out of the woods on changes to the iPad line up either.
For many people the iPad is a better device to have if the economy is tight. Especially with the arrival of iOS 5 and the weaning fro the tether. If money is tight but yet you need to keep connected then iPad is a good choice. There is really nothing like it for quick connection to networks (WiFi) and travel.
Quote:
Originally Posted by eksodos
Amazes me people think reports like this couldn't possibly credible. Europe is turmoil with consumer confidence falling through the floor. Do you think when people are worrying about debt, job security and making ends meet they are going to continue blowing money on high-end luxury products like the iPad and iPhone? The US is in awful shape too with consumers also feeling the pinch and confidence way down. So many people are cutting back on their spending, I believe it's impossible for Apple not take a hit from all this turmoil.
Anyone buying or holding onto Apple shares at current prices is a hell of lot braver than I am.
Comments
There is something deeply fishy with these reports.
A Shift from 17 to 13 million is a huge alteration -- and not the kind of screw-up we've ever seen from Tim Cook. I can only imagine two possible explanations:
1. the report is complete BS spread by someone selling AAPL short.
2. they actually will update the iPad this quarter... something I highly doubt (they rarely deviate from their product release cycle that much, and would gain little as the iPad 2 is still selling well).
It could simply be the impending world-wide double-dip recession -- combined with next year's release of an iPad3. Maybe Apple is foreseeing a sales dropoff as people rein in their wallets, and with an iPad3 coming out, Apple doesn't want get too much inventory built up.
I think the report may be overblown, but I do think there is a rational (non-apocalyptic) explanation for it, if it's true.
Sounds to me like nothing changed.
Just some crap from people jerking Apples stock price around to get support for their puts and gets.
Unless they have a pricing theory which is different from every other manufacturing company on earth, they set their prices based on demand every single time for every single product.
They do have a different pricing theory, which is why they consistently have the highest profit margins in the industry. They cut prices for previous generations of technologies, or if lower component costs and economies of scale allows them to do so while maintaining margins.
"Premium" brands generally don't cut prices due to demand, otherwise they'd be in the same race-to-the-bottom as all their cheap competitors.
My point is that pricing is somewhat of a black art, and can be based on many things, including (but not limited to) demand.
Think about it!
Pricing theory is intended to answer the question: At what price will we maximize total profits?
Demand varies depending upon price. Could be a huge demand, even with a huge price. could be a tiny demand, no matter how low the price. That affects the curve. Normally, the higher the price, the lower the demand, and vice versa.
Without considering demand, normal pricing practices are not possible. There is a price/demand curve, which is carefully considered.
So, yea, I guess there is a decline in "demand" (depending on how you define that term) - but not due to people not wanting the device, rather it's a money issue. I will buy one eventually, it's just going to take longer than it would have in a good economy.
So, yea, I guess there is a decline in "demand" (depending on how you define that term) - but not due to people not wanting the device, rather it's a money issue.
The manner in which the word "demand" is used in pricing theory is in line with your guess. It is not the same as the word "desire".
For example, we might all "desire" an iPad2, but if it were priced at $10,000, "demand" would almost certainly be reduced, and if it were priced at $10, demand would almost certainly increase.
... for Apple to add multiple users to the iPad.
Was hoping I'd finally see it with iOS 5 but I have my doubts.
Need to be able to log in and check my email, calendar, address book, iTunes playlists and Safari bookmarks and my wife needs to be able to do the same when she uses it. Same for guests.
I agree 100%. Other than having no cash right now, the lack of this one feature has kept me from buying an iPad. It's the one device I'd let the kids play with, but only if they had their own user account so I could prevent them from buying or deleting things, and screwing up the settings.
They do have a different pricing theory, which is why they consistently have the highest profit margins in the industry. They cut prices for previous generations of technologies, or if lower component costs and economies of scale allows them to do so while maintaining margins.
"Premium" brands generally don't cut prices due to demand, otherwise they'd be in the same race-to-the-bottom as all their cheap competitors.
Pretty much every company uses the same theory, which is that there exists a price point which will maximize total profits.
Premium brands realize that cutting prices will not maximize total profits, given the elasticity specific to the product in question. Crappy brands realize that raising prices will not maximize total profits, given the elasticity specific to the product in question.
Lower component costs do not result in lower selling prices unless the pricing change will maximize total profits. Your statement seems to depend on an assumption that a company will price things at a level lower than that which would maximize total profits, if, for example, the margin remains unchanged. Such a situation is rare, given that every company seeks to maximize total profits, and few would care that the margin is higher than it was prior to the cost reduction.
But if you disagree, tell me how Apple's theory is different from every other manufacturing company's. Do they not seek to maximize total profits?
the iPad 2 is still selling well).
Apparently they sold between 7 and 9 million units in Q2 and analysts projected they'd sell 12-14m in Q3 but actually sold 9.25m:
http://www.apple.com/pr/library/2011...r-Results.html
So the analysts' expectations were just too high and in light of 9.25m sales, 13m seems a more reasonable number. Apple themselves may not have cut back anything but they easily could have if they themselves had higher projections.
Right now, the iPad is still an accessory device and requires computer ownership so has a limited market. After iOS 5, it can be given as a gift to elderly family members who may not own a computer or it can be used by some to finally replace a netbook. I expect iOS 5 will have a significant impact on Q4 sales.
... Personally, I haven't touched my iPad 2 in over 2 months; I'm hoping iOS 5 changes this.
Whose fault is that? It still does everything you bought it for to start with.
How do you pump a stock by saying that their sales are declining?
Short and Distort I meant. AI should stop reporting on these scammers JP Morgan.
How do you pump a stock by saying that their sales are declining?
It's called shorting AAPL and it's something these "analysts", who are nothing but stock manipulators, have been doing for years.
Short and Distort I meant. AI should stop reporting on these scammers JP Morgan.
Actually, they should be investigated by the SEC.
I barely use mine at all, in fact only on saturdays...
...because M-F my wife has it. I only get it saturday 'cause i tech an early morning class that day and I can leave with it while she is still asleep.
Feel free to send yours to me. I will give it a good home where it is loved.
I also have a home open to unloved iPads. I use mind way to much.
It doesn't make sense to me. Why would Apple cut the price of their iPad AND lower the number of units being produced
Have you actually seen a lower prices on iPad? If there was any truth to that part of the message we would obviously see it.
As to volume I wouldn't be surprised at all if there is a shift, but remember none of these numbers thrown about are confirmed. The biggest reason for a shift would be the European melt down which is real.
I think iOS 5 will make the iPad sexy again. It will make the Post PC era truly happen (there will be no need to connect your iPad/iPhone/iPod (touch) to a computer ever again. Having said that, I am looking forward to the new iPod concepts.
IPods are another thing to consider, they may have a Touch replacement or an additional model coming that might impact iPad sales. Realize this is all speculation based on numbers with no solid grounding. I'm certain we will learn more as time goes on ( a couple of weeks). I still don't think we are out of the woods on changes to the iPad line up either.
If the price is really going down, I imagine it is because they know I recently bought one.
lol!
Amazes me people think reports like this couldn't possibly credible. Europe is turmoil with consumer confidence falling through the floor. Do you think when people are worrying about debt, job security and making ends meet they are going to continue blowing money on high-end luxury products like the iPad and iPhone? The US is in awful shape too with consumers also feeling the pinch and confidence way down. So many people are cutting back on their spending, I believe it's impossible for Apple not take a hit from all this turmoil.
Anyone buying or holding onto Apple shares at current prices is a hell of lot braver than I am.
Actually, they should be investigated by the SEC.
Spon on, Spam.