So, now it is CNET taking swipes at yours truly for having the audacity to doubt all things Apple (AAPL). This one is priceless…..lets delve into it..
First the post. If you do not mind name calling and bizarre analogies, read it.
So, lets address it….
The first seven paragraphs dissect and mock the following sentence of mine. “The latest estimates have “unlocked” iPhones costing Apple over $1 billion in lost revenue the next 3 years.”
He then says “Wow! $1 billion sounds like a lot. How did you come up with that number, Todd?” He then cherry picks sentences from the post to make the math seem impossible.
Where did the number come from? Apparently he has never heard of these little publications called the New York Times, or CNN or MSN Money? Too bad because had he even attempted to read them, he would have found the sources of the numbers and save a whole lot of typing and embarrassment. It is unfortunate but he based the whole article (rant) on the flawed assumption I made the number up.
Let’s move on:
He then says. “Just the other day the lovely and talented Tom Krazit pointed to a report indicating there are 400,000 unlocked iPhones in China alone. Why does Apple not have a deal in China? Because it’s trying to do something craaaazy like negotiate one of them sweet revenue sharing schemes, that’s why.”
Well, or maybe China mobile has figured they can put 400,000 iPhones on their network without paying Apple a dime, why negotiate a deal and start paying them now? US companies have been complaining about Chinese technological piracy for decades…is Apple the next to chime in?
Then he moves on to question (mock) my thought that Apple’s cutting back on component orders can only mean sales are going to slow. Timing is everything in life and had he waited 2 more days to post, he would have again saved himself the inevitable embarrassment of this being affirmed on Thursday. To quote: “Apple has slashed its 2008 NAND order forecast significantly and has informed suppliers that its demand growth will slow in 2008.” OUCH…
I know this is getting redundant but let’s go to the next one:
He then goes into some wandering diatribe about Research in Motion (RIMM) or Google (GOOG) coming out with new products somehow does not matter or should be dismissed? I can’t figure out what the point was. Does he really think that RIMM coming out with a touch screen phone or a Google product will not increase competition in the space? He gets into a whole bunch of melodrama claiming Jobs “ought not get out of bed” due to the competition.
Again, while I don’t get that I do think if you are under the impression that either of the two competitors adding products to the mix will not affect sales, well, time to go back to Econ 101.
Market share:
Not satisfied he goes into another well conceived deception. I have repeatedly said that RIMM is the clear leader in smart phone sales with Apple being #2. He trots out a “global” market share report that says Nokia (NOK) is #1, RIMM #2 and Apple #3, as of this proves anything. Here is the thing. Apple is not really a “global” seller yet of the phones. All of my statement have taken that into account and in my earlier posts on the iPhone, Apple had not sold a single phone internationally.
What to think? Let just go to “Apple Insider“. “The iPhone’s 28 percent share placed it second in the US market behind only RIM’s with 41 percent share, and well ahead of Palm, whose 9 percent share placed it a distant third. Case closed? Like I said, Apple is #2 to RIMM. Comparing Apple sales that until recently were only in the US would have been unfair. The irony here is that had I done a post that claimed Apple was a distant third in market share, I am sure his response would have been to attack me for an unfair comparison. I can see it now, “How can Mr. Sullivan have the audacity to compare Apple to global players when they do not even sell phones globally!!”
Maybe he has some study of smartphone sales in Jakarta he wants to trot out to try to prove me wrong?
He then ends with this one: “Exclusivity is a condition for the revenue sharing agreement. That’s how Apple gets the revenue sharing. You can’t say Apple’s somehow foregoing $1 billion in revenue sharing that it could never possibly get.”
ERRR wrong answer. All cell providers have revenue share agreements. They have them with software developers, providers, wireless companies etc.. it is the way the industry functions. It is the degree of the revenue share that dictates the exclusivity in Apple’s case.
It is the unlocked phones that are the forgone revenue (currently estimated at over 25% of all iPhones sold). The argument is that were the exclusive agreements not there, many more phones would be sold, and even at lower revenue share, the profits would be greater (a smaller piece of a much, much larger pie thing). Oh yea.. .the 25%? It is not my number. I gave you the link this time so you do not have to do any work to look it up or run the risk of another train wreck post .
One last thing… he has not mentioned in any of his “posts” that my call before the first phone was sold on the need to drop the price of it was DEAD ON….
Let’s remember together Mac, “drop the price to $299 and you will have something, a $599 phone will not sell no matter what it does” (May, 2007). Aren’t there rumors out there that this is exactly what is happening now after the $200 price drop some 90 days after its debut??
Better luck next time kiddo…
Disclosure (“none” means no position):Sold Apple July $280 calls in January, None in others
↑ Grab this Headline Animator
Visit the ValuePlays Bookstore for Great Investing Books