The Macalope Weekly: Magical thinking

Phablets are still in the minority, but Apple must make one! Microsoft’s CEO search continues, but don’t worry—it’ll find its magical candidate some day soon and all will be well. Besides, everyone loves Microsoft.

Phablet or bust

Writing for the Motley Fool, Sam Mattera jumps on the burgeoning “APPLE MUST MAKE A PHABLET THIS YEAR OR DIE” bandwagon.

“Apple’s Most Important Product of 2014” (tip o’ the antlers to Jim Miles)

An Apple-made smartwatch, a big iPad, maybe even a full-featured TV set could debut at Apple stores later this year.

Or, maybe nothing. Who knows!

But while these products could all add to Apple’s bottom-line, none will be as important as a larger-screen iPhone.

Which we know because we can just make up what these devices will be like and, with complete fictional accuracy, project what their sales will be, then carry the one and make sure the number comes out to less than we imagine the sales of this other fictional device will be.

It’s easy.

Mattera doesn’t show his math, which is a shame because that would have been pretty funny, but he does tell us that the phablet market is huge.

The market for phablets is huge

See? Right there.

It is getting bigger. But you know what’s still hugerer? The market for smaller phones. IDC says that phablets made up 20 percent of the market in the third quarter (which is, of course, the low-water mark for the iPhone, which—as everyone keeps reminding us—is not giganto-sized). So, clearly, the biggest product for Apple in 2014 is the current size of iPhone.

Many of these phablets are cheap devices (around $200) manufactured by Chinese companies.

Oh, so much of this huge market is driven by cheap devices. The kind of devices that Apple will never make.

There’s a hole in this logic so big you could shove a phablet through it.

Assuming Apple does something similar with its own phablet, it should help the company to raise its gross margin, and average iPhone selling price. Both figures have fallen dramatically in recent quarters, much to the detriment of Apple shareholders. In fact, on Thursday, Wells Fargo downgraded Apple shares partially on gross margin concerns.

One firm downgraded Apple because of margin concerns on a product that doesn’t exist yet. A whole bunch of others maintained their rating, of course, but let’s not focus on that. The Macalope knows about impostor syndrome, that thing where, when you get successful, you ignore all the people cheering and can only hear that one person booing you because you yourself can’t believe your success. What’s it called when you project that on someone else?

How’s that going?

Meanwhile, Microsoft’s CEO search is entering its fifth month and how’s that going?

(We ask because we care.)

Weeeeeeell, not so great.

“Ford’s Alan Mulally rules himself out of Microsoft CEO job”

Speculation over Microsoft’s next CEO has intensified in recent weeks, but Ford’s Alan Mulally has finally confirmed he will not be leaving the automotive company in favor of Microsoft.

That might be the reason for this:

“Microsoft CEO Selection Unlikely to Come in January, as Candidate List Contracts and Expands”

What was widely considered the lead candidate has now taken a pass on the job to spend more time with his job that’s not so fraught with daddy issues.

“This is a Gates search, even though the board is very involved,” said one source with knowledge of the situation. “But nothing is going to happen without him, especially since he will be much more involved in the company going forward.”

Soooo, the guy who picked the other guy is the guy to please in the search for a new guy to replace the other guy who was unable to lead the company successfully.

Certainly no way that could go wrong. Everyone at Redmond back to work! Nothing but blue skies ahead! Keep working hard on what you’re working on! It’s not like new CEOs ever shake things up and make certain divisions irrelevant or anything!

[Sound of 40,000 resumes being updated.]

Gates’s involvement in this process is probably why some board members had been pushing to remove him as chairman back in October. That was apparently a non-starter as Gates is apparently as intractable as something that is very hard to remove from something else, like a tick from a hound dog or Wilford Brimley’s hand from Donald Moffat’s face in The Thing.

Anyhoo, the Macalope certainly wishes everyone in Redmond good luck. Finding a unicorn in the pile of dung that is corporate America may sound hard but, remember, you only need one unicorn.

Our dumb discourse

For the low, low fee of just $499, Forrester Research analyst Tracy Stokes will explain to you “Why Microsoft Trumps Apple In The Battle For Consumer Mindshare” (tip o’ the antlers to Srini Addepalli):

In a surprise upset, Microsoft trumped Apple and Samsung in the TRUE brand rankings. In fact, Microsoft was the only brand in the survey to achieve the coveted trailblazer status – indicating that the Microsoft brand is “at the forefront of brand building with a unique and distinct brand identity that sets it apart from other brands”.

Well … congratulations to Microsoft! The Macalope doesn’t really know how this happened, but facts—or, in this case, a series of questions and criteria made up by an analyst and asked of 4,551 online adults in the U.S.—don’t lie.

Forrester doesn’t reveal much of anything about how the survey was conducted unless you hand over enough to buy an iPad and, let’s face it, the Macalope would much rather have the iPad. But some outlets have seen the details (tip o’ the antlers to Michael Rasmussen) and Microsoft apparently pulled out the win by appealing to a broader age group.

While Microsoft had high rankings among all demographic groups, Apple and Samsung did well in younger demographics.

Ah, well, that explains it. Grandma loves Windows 8. There’s no denying that. Just try to get that Surface out of her hands! Because, sadly, grandma has been dead for six months and rigor has set in. You really shouldn’t keep her in the La-Z-Boy like that. It’s a health hazard.

But …

Waiiiit a second. Because the Macalope distinctly remembers being told throughout 2013 that Apple was a brand for the Matlock set because youngsters all want Surfaces:

“Apple has done a great job of embracing Gen X and older [Millennials], but I don’t think they are connecting with Millennial kids. [They’re] all about Surface tablets/laptops and Galaxy.”

The Macalope is not a professional analyst type with the market research and the 100-percent science (some settling may occur, box may only contain 25-percent science by volume) and the actual job with the health care, but even he knows these two stories don’t add up.

So, which is it, market research firms? Is Apple only hot (or not) with the kids? If only there were some way we could make these researchers fight it out. Like in a duck pond. Not to watch, just to keep them from doing stupid, contradictory market research for five minutes.

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