I know it's not the point of the article, but imagine making a business deal where you have to sell 2m units per month just to break even. Their margins must be razor thin
[I]"Oh no, they're selling more Apple Watches than the entire competition has done for a whole year. I'm so disappointed. Our projections were that everyone should have an Apple Watch by Christmas. Then a new product category could be introduced by January."[/I]
so ASE break even is 24 Million watches annual, for an entirely new product? Not only were ASE overly ambitious, i doubt they will remain a supplier leaking out info like this
Leaking out info? It's an earnings report! It's not a leak, it's a mandatory thing for any publicly traded company. Yeesh
As for Cook, hey Tim, if you're so worried about analysts looking too much into reports like these from your suppliers, maybe your should release actual sales numbers instead of cooking your books by burying those figures under headphones and adapter cables. Fact is the enemy of speculation. That's fine if sales didn't get off to a great start for one reason or another. Sales of the original iPhone sucked until Steve himself admitted the misstep and dropped the price substantially. I think history and AAPL stock numbers clearly illustrate how that worked out, so why the lack of honesty? Come clean, admit what everyone but diehard fanboys already know, and do better. The August Best Buy launch is a great step, keep it up. We don't expect you or Apple to be perfect, we just expect you to try harder than anyone else, and be HONEST about it, not treat us like idiot children.
I know it's not the point of the article, but imagine making a business deal where you have to sell 2m units per month just to break even. Their margins must be razor thin
It may seem so, yet some products cannot be made in smaller quantities due to the cost of firing up some equipment. I have no idea of how many chips fit on a die or other minimum quantity steps may be involved.
However if we break this down at 20 business days per month, with a 24 hour shift day, you only come up with maybe 10,000 per hour. Not a high number for that kind of fabrication. Now if it's too expensive to start up production after a weekend shut down, and you need to run around the clock 24/7, the number comes down to 300 or less, chips per hour. That's a terribly small number to keep production operating.
I'm in between. On the one hand I do not recall Apple to have stated BS in a quarterly call and I I believe when they say it did well that it did well. And not because of artificially low internal expectations but because it really did well. Also, not disclosing the specific numbers reminds me of the ATV where they did not do this for some time as well and left it under the "protective umbrella" of "other sales". On the other hand this is exactly where I'm frowning upon. The ATV was declared a hobby multiple times (even if it wasn't.). The watch was introduced with much fanfare and lots of marketing to establish this luxury category product. And as was mentioned here before, I don't buy it that they don't want to have the competition k ow how well it did. In the end what could the competition do with such kind of information? For the time being the only explanation ruin I can come up with is that because they hire a lot of people who can give realistic estimates and projections the sales are indeed healthy and above their expectations but that for any analyst or pseudo professional expert the sales are abysmal. So they will wait with disclosing the numbers until it's "wow" all around. Maybe.
As for Cook, hey Tim, if you're so worried about analysts looking too much into reports like these from your suppliers, maybe your should release actual sales numbers instead of cooking your books by burying those figures under headphones and adapter cables. Fact is the enemy of speculation. That's fine if sales didn't get off to a great start for one reason or another. Sales of the original iPhone sucked until Steve himself admitted the misstep and dropped the price substantially. I think history and AAPL stock numbers clearly illustrate how that worked out, so why the lack of honesty? Come clean, admit what everyone but diehard fanboys already know, and do better. The August Best Buy launch is a great step, keep it up. We don't expect you or Apple to be perfect, we just expect you to try harder than anyone else, and be HONEST about it, not treat us like idiot children.
It's not about honesty, it's about not informing your competition with info they need to better compete. Everyone but you seem to know Apple is more open with information then Samsung and the rest... so quite being an idiot child.
I'm in between. On the one hand I do not recall Apple to have stated BS in a quarterly call and I I believe when they say it did well that it did well. And not because of artificially low internal expectations but because it really did well. Also, not disclosing the specific numbers reminds me of the ATV where they did not do this for some time as well and left it under the "protective umbrella" of "other sales". On the other hand this is exactly where I'm frowning upon. The ATV was declared a hobby multiple times (even if it wasn't.). The watch was introduced with much fanfare and lots of marketing to establish this luxury category product. And as was mentioned here before, I don't buy it that they don't want to have the competition k ow how well it did. In the end what could the competition do with such kind of information?
Because you don't know how valuable the sales number is to Apple's competitors doesn't make it any less valuable. Apple knows, and even I can guess, but that granular of reporting is not required by law. However, every word they speak, and ever thing they publish during a earning report must be totally factually accurate and not misleading in any way. It's federal law.
Apple wasn't hyping the watch. They were creating a luxury category and needed the buy-in from the top luxury-goods mavins. This Christmas season sales will be telling whether Apple was successful in establishing the ?watch as a Luxury brand in a slightly expanded luxury watch category.
Do you really think anyone seriously considers the Apple Watch to be a piece of "fine" jewelry? It's a nice watch, but it most definitely does not scream "luxury". And why on Earth would Apple want to go after the luxury category anyway? They are a consumer electronics company. If their primary motivation in creating the Watch was to break into the luxury goods market, they need to reexamine priorities ASAP. That screams vanity and ego, not smart business.
I feel Apple is seen by most of the public as an "affordable luxury". It may be out of reach by some people, but generally still affordable. It's extremely important to Apple's long term success to not let its products fall into the commodity product category where price becomes the greater driver of sales. I believe the Apple watch is one of the most visible ways Apple is attempting to lift itself away from that category. So, numbers, by themselves, is not as important as the effect the ?watch can make.
I don't think anyone considers Apple to be "affordable luxury" as you state. It's not out of reach. You can get a free iPhone, maybe not the latest model, but you can get an earlier generation for free. I see plenty of people who definitely can't afford anything "luxury" talking away on their iPhones. Neither the perception that it is a luxury good, nor the price, drives Apple's iPhone sales. A better user experience and mindshare does. iPhone is to "smart phones" as Kleenex is to tissues. The average consumer wants an iPhone because the general perception is that it's the best product, not a luxury good. It has a bit of status, for sure, but it's no Prada bag. If you are right that fashion and a desire to be a luxury goods brand is driving Apple decision making, I see a very bumpy road ahead.
It's not about honesty, it's about not informing your competition with info they need to better compete. Everyone but you seem to know Apple is more open with information then Samsung and the rest... so quite being an idiot child.
Give me a break. What can a competitor possibly learn from announcing sales numbers other than the fact that it's not a market worth pursuing? Seriously. That was pure spin. Apple is under no obligation to announce sales numbers, but let's be real. If they had blown the doors off and sold 10 million units in the first week, they would have been shouting it with glee from every roof top, competition be damned.
As for Cook, hey Tim, if you're so worried about analysts looking too much into reports like these from your suppliers, maybe your should release actual sales numbers instead of cooking your books by burying those figures under headphones and adapter cables. Fact is the enemy of speculation. That's fine if sales didn't get off to a great start for one reason or another. Sales of the original iPhone sucked until Steve himself admitted the misstep and dropped the price substantially. I think history and AAPL stock numbers clearly illustrate how that worked out, so why the lack of honesty? Come clean, admit what everyone but diehard fanboys already know, and do better. The August Best Buy launch is a great step, keep it up. We don't expect you or Apple to be perfect, we just expect you to try harder than anyone else, and be HONEST about it, not treat us like idiot children.
By remaining silent, Apple has denied Android Wear manufacturers and Samsung a target number.
Before the Apple Watch launched the analysts were saying Apple wouldn't sell enough to have any effect on the overall income of Apple. Now they are using poor sales as a way to drive down the stock value. Did these analysts really think that Apple would be able to sell 2 million watches a month when all of the other manufacturers sold about 3/4 million in the whole year?
Some thoughts on this: [LIST=1] [*] The S1 chip package consists of quite a few discreet chips from different vendors, many of which are new for the Apple Watch -- any of with could be in short supply [*] It looks like the Apple APU and the SRAM are combined into a flip chip with one on top and the other on the bottom -- could be yield problems [*] The packaging process of the S1 chip by ASE could have yield issues. [*] Finally, the article or analyst doesn't state (or know) if ASE is the [B][I][COLOR=blue] only [/COLOR][/I][/B] company packaging S1 chips [*] [/LIST]
It would be unlike Apple to not have multiple sources available for key components and processes for a key new product -- in the event of yield or manufacturing issues. Tim has said that it is meaningless to try and determine sales from a few supply points.
The staggered rollout of the Apple Watch to new markets suggests that there is still a supply constraint.
As for Cook, hey Tim, if you're so worried about analysts looking too much into reports like these from your suppliers, maybe your should release actual sales numbers instead of cooking your books by burying those figures under headphones and adapter cables. Fact is the enemy of speculation. That's fine if sales didn't get off to a great start for one reason or another. Sales of the original iPhone sucked until Steve himself admitted the misstep and dropped the price substantially. I think history and AAPL stock numbers clearly illustrate how that worked out, so why the lack of honesty? Come clean, admit what everyone but diehard fanboys already know, and do better. The August Best Buy launch is a great step, keep it up. We don't expect you or Apple to be perfect, we just expect you to try harder than anyone else, and be HONEST about it, not treat us like idiot children.
Cooking the books? Can you show me the law or regulation that requires Cook break out ?Watch sales? Also you do know the term "cooking the books" implies fraudulent activity? Are you suggesting Tim Cook is committing fraud and knowingly misstating Apple's financials?
Leaking out info? It's an earnings report! It's not a leak, it's a mandatory thing for any publicly traded company. Yeesh
And they're required to name the customer and that customers product? Somehow I doubt that. i would imagine Apple has some strict confidentiality agreements with all their suppliers and that would include what they can disclose in financial filings or on earnings calls.
so ASE break even is 24 Million watches annual, for an entirely new product? Not only were ASE overly ambitious, i doubt they will remain a supplier leaking out info like this
Maybe their break even point would have been lower without the greed that often accompanies contracts with Apple. Has anyone looked into their recent financial activities especially executive compensations.
By remaining silent, Apple has denied Android Wear manufacturers and Samsung a target number.
They don't care much about Android Wear, except perhaps a bit at the low end. Android Wear is no competition: it doesn't work properly with iOS, and Apple Watch doesn't work with Android. Any numbers Apple could publish are useless to Android Wear.
Apple is aiming the Watch at the profitable luxury timepiece market, which Samsung et al. have absolutely no hope of ever cracking.
Not one watch manufacturer in that market has a shipping product at this point, and right now, they have no idea how - or whether at all - to respond to Apple's onslaught. THEY need sales data, especially a breakdown of models, to see where the luxury smartwatch market is headed.
Apple are the ONLY ONES with any data at all, and they aren't giving it to anyone until they themselves have figured out how the market works.
Do you really think anyone seriously considers the Apple Watch to be a piece of "fine" jewelry? It's a nice watch, but it most definitely does not scream "luxury". And why on Earth would Apple want to go after the luxury category anyway? They are a consumer electronics company. If their primary motivation in creating the Watch was to break into the luxury goods market, they need to reexamine priorities ASAP. That screams vanity and ego, not smart business.
To answer your first question: OF COURSE people consider the Apple Watch a piece of fine jewellery.
This qualifier is literally the only difference between spending $400, $1200, or $17,000 on an otherwise identical product!
If you think Apple is still purely a consumer electronics company, then you really haven't been paying attention.
As to why - because the high end is where the profits are.
Comments
I know it's not the point of the article, but imagine making a business deal where you have to sell 2m units per month just to break even. Their margins must be razor thin
Whiners...
Leaking out info? It's an earnings report! It's not a leak, it's a mandatory thing for any publicly traded company. Yeesh
Crap in one hand, WSJ story in the other. Which smells worse?.
There's a difference?
I know it's not the point of the article, but imagine making a business deal where you have to sell 2m units per month just to break even. Their margins must be razor thin
It may seem so, yet some products cannot be made in smaller quantities due to the cost of firing up some equipment. I have no idea of how many chips fit on a die or other minimum quantity steps may be involved.
However if we break this down at 20 business days per month, with a 24 hour shift day, you only come up with maybe 10,000 per hour. Not a high number for that kind of fabrication. Now if it's too expensive to start up production after a weekend shut down, and you need to run around the clock 24/7, the number comes down to 300 or less, chips per hour. That's a terribly small number to keep production operating.
For the time being the only explanation ruin I can come up with is that because they hire a lot of people who can give realistic estimates and projections the sales are indeed healthy and above their expectations but that for any analyst or pseudo professional expert the sales are abysmal. So they will wait with disclosing the numbers until it's "wow" all around. Maybe.
As for Cook, hey Tim, if you're so worried about analysts looking too much into reports like these from your suppliers, maybe your should release actual sales numbers instead of cooking your books by burying those figures under headphones and adapter cables. Fact is the enemy of speculation. That's fine if sales didn't get off to a great start for one reason or another. Sales of the original iPhone sucked until Steve himself admitted the misstep and dropped the price substantially. I think history and AAPL stock numbers clearly illustrate how that worked out, so why the lack of honesty? Come clean, admit what everyone but diehard fanboys already know, and do better. The August Best Buy launch is a great step, keep it up. We don't expect you or Apple to be perfect, we just expect you to try harder than anyone else, and be HONEST about it, not treat us like idiot children.
It's not about honesty, it's about not informing your competition with info they need to better compete. Everyone but you seem to know Apple is more open with information then Samsung and the rest... so quite being an idiot child.
I'm in between. On the one hand I do not recall Apple to have stated BS in a quarterly call and I I believe when they say it did well that it did well. And not because of artificially low internal expectations but because it really did well. Also, not disclosing the specific numbers reminds me of the ATV where they did not do this for some time as well and left it under the "protective umbrella" of "other sales". On the other hand this is exactly where I'm frowning upon. The ATV was declared a hobby multiple times (even if it wasn't.). The watch was introduced with much fanfare and lots of marketing to establish this luxury category product. And as was mentioned here before, I don't buy it that they don't want to have the competition k ow how well it did. In the end what could the competition do with such kind of information?
Because you don't know how valuable the sales number is to Apple's competitors doesn't make it any less valuable. Apple knows, and even I can guess, but that granular of reporting is not required by law. However, every word they speak, and ever thing they publish during a earning report must be totally factually accurate and not misleading in any way. It's federal law.
Apple wasn't hyping the watch. They were creating a luxury category and needed the buy-in from the top luxury-goods mavins. This Christmas season sales will be telling whether Apple was successful in establishing the ?watch as a Luxury brand in a slightly expanded luxury watch category.
Do you really think anyone seriously considers the Apple Watch to be a piece of "fine" jewelry? It's a nice watch, but it most definitely does not scream "luxury". And why on Earth would Apple want to go after the luxury category anyway? They are a consumer electronics company. If their primary motivation in creating the Watch was to break into the luxury goods market, they need to reexamine priorities ASAP. That screams vanity and ego, not smart business.
I feel Apple is seen by most of the public as an "affordable luxury". It may be out of reach by some people, but generally still affordable. It's extremely important to Apple's long term success to not let its products fall into the commodity product category where price becomes the greater driver of sales. I believe the Apple watch is one of the most visible ways Apple is attempting to lift itself away from that category. So, numbers, by themselves, is not as important as the effect the ?watch can make.
I don't think anyone considers Apple to be "affordable luxury" as you state. It's not out of reach. You can get a free iPhone, maybe not the latest model, but you can get an earlier generation for free. I see plenty of people who definitely can't afford anything "luxury" talking away on their iPhones. Neither the perception that it is a luxury good, nor the price, drives Apple's iPhone sales. A better user experience and mindshare does. iPhone is to "smart phones" as Kleenex is to tissues. The average consumer wants an iPhone because the general perception is that it's the best product, not a luxury good. It has a bit of status, for sure, but it's no Prada bag. If you are right that fashion and a desire to be a luxury goods brand is driving Apple decision making, I see a very bumpy road ahead.
It's not about honesty, it's about not informing your competition with info they need to better compete. Everyone but you seem to know Apple is more open with information then Samsung and the rest... so quite being an idiot child.
Give me a break. What can a competitor possibly learn from announcing sales numbers other than the fact that it's not a market worth pursuing? Seriously. That was pure spin. Apple is under no obligation to announce sales numbers, but let's be real. If they had blown the doors off and sold 10 million units in the first week, they would have been shouting it with glee from every roof top, competition be damned.
As for Cook, hey Tim, if you're so worried about analysts looking too much into reports like these from your suppliers, maybe your should release actual sales numbers instead of cooking your books by burying those figures under headphones and adapter cables. Fact is the enemy of speculation. That's fine if sales didn't get off to a great start for one reason or another. Sales of the original iPhone sucked until Steve himself admitted the misstep and dropped the price substantially. I think history and AAPL stock numbers clearly illustrate how that worked out, so why the lack of honesty? Come clean, admit what everyone but diehard fanboys already know, and do better. The August Best Buy launch is a great step, keep it up. We don't expect you or Apple to be perfect, we just expect you to try harder than anyone else, and be HONEST about it, not treat us like idiot children.
By remaining silent, Apple has denied Android Wear manufacturers and Samsung a target number.
Mmm ...
Some thoughts on this:
[LIST=1]
[*] The S1 chip package consists of quite a few discreet chips from different vendors, many of which are new for the Apple Watch -- any of with could be in short supply
[*] It looks like the Apple APU and the SRAM are combined into a flip chip with one on top and the other on the bottom -- could be yield problems
[*] The packaging process of the S1 chip by ASE could have yield issues.
[*] Finally, the article or analyst doesn't state (or know) if ASE is the [B][I][COLOR=blue] only [/COLOR][/I][/B] company packaging S1 chips
[*]
[/LIST]
[IMG ALT=""]http://forums.appleinsider.com/content/type/61/id/61353/width/500/height/1000[/IMG] [IMG ALT=""]http://forums.appleinsider.com/content/type/61/id/61421/width/500/height/1000[/IMG]
It would be unlike Apple to not have multiple sources available for key components and processes for a key new product -- in the event of yield or manufacturing issues. Tim has said that it is meaningless to try and determine sales from a few supply points.
The staggered rollout of the Apple Watch to new markets suggests that there is still a supply constraint.
Cooking the books? Can you show me the law or regulation that requires Cook break out ?Watch sales? Also you do know the term "cooking the books" implies fraudulent activity? Are you suggesting Tim Cook is committing fraud and knowingly misstating Apple's financials?
And they're required to name the customer and that customers product? Somehow I doubt that. i would imagine Apple has some strict confidentiality agreements with all their suppliers and that would include what they can disclose in financial filings or on earnings calls.
Maybe their break even point would have been lower without the greed that often accompanies contracts with Apple. Has anyone looked into their recent financial activities especially executive compensations.
They don't care much about Android Wear, except perhaps a bit at the low end. Android Wear is no competition: it doesn't work properly with iOS, and Apple Watch doesn't work with Android. Any numbers Apple could publish are useless to Android Wear.
Apple is aiming the Watch at the profitable luxury timepiece market, which Samsung et al. have absolutely no hope of ever cracking.
Not one watch manufacturer in that market has a shipping product at this point, and right now, they have no idea how - or whether at all - to respond to Apple's onslaught. THEY need sales data, especially a breakdown of models, to see where the luxury smartwatch market is headed.
Apple are the ONLY ONES with any data at all, and they aren't giving it to anyone until they themselves have figured out how the market works.
To answer your first question: OF COURSE people consider the Apple Watch a piece of fine jewellery.
This qualifier is literally the only difference between spending $400, $1200, or $17,000 on an otherwise identical product!
If you think Apple is still purely a consumer electronics company, then you really haven't been paying attention.
As to why - because the high end is where the profits are.