Analysts say the craziest things

It is not true that becoming a Wall Street analyst drives you insane. Most of them were insane long before they graduated from college, got a house in Greenwich, CT, and went to work writing ridiculous stuff about Apple. Correlation is not always causation, people.

Two angles of dumb

Every six months, Piper Jaffray’s Gene Munster takes time off from praying and offering ritual sacrifices to the old gods in return for an Apple television and instead bugs a whole bunch of high school kids. Once again, the results are Apple-friendly.

“Survey: More Teens Are Buying iPhones, And Craving An iWatch” (It’s Forbes so no link).

Which is useful information, because now we can gauge how teens react to things about which they know nothing. Turns out they crave things about which they know nothing!

The survey, which questioned approximately 7,500 teens across the U.S., found that 61% owned an iPhone …

Well, let’s be careful here: 61 percent of the teens surveyed said they owned an iPhone. But Piper Jaffray doesn’t survey all teens. They only survey upper-income and middle-income teens. They do survey more middle-income teens, but that’s probably just to adjust for population.

Gene Munster and crew are either unconcerned about what lower-income kids like or are just scared to visit their schools. Maybe that’s a good thing. Those kids have it hard enough without Gene Munster badgering them as to whether they’re “really interested,” “super interested,” or “ZOMG SO INTERESTED” in a $3500 Apple television set.

So, do teens love Apple products? Sure. Why wouldn’t they? They probably also love Galaxy S4s, popular movies, pizza, and other teen stereotypes.

But do 61 percent of them own an iPhone? Probably not, when Piper Jaffray has conveniently cut out the demographic least likely to own the product made by Apple, its former investment banking client.

Munster expects Apple to sell 5-10 million iWatches in the first year of shipments.

That seems reasonable. Yoyodyne Propulsion Systems shipped about that many oscillation overthrusters in its first year, too, so, yeah.

Other brands the survey concluded that teens love are Nike, Hollister, Coach, and Forever 21. Which, the Macalope hates to tell you, teens, is an unachievable goal—one day you will get old and gross. Sorry.

Now, while this can’t be considered conclusive evidence that 61 percent of teens in the U.S. own an iPhone, the Macalope wouldn’t be surprised to find out that Apple’s products are popular with teens. So, a year ago when goofball marketing firms looking to get their name in the press were saying things like “Teens are telling us Apple is done” because what they really like is the Surface … well, the horny one didn’t really take that seriously, either.

You know what? Just leave the kids alone for crying out loud.

Highs and lows

Seriously, what does one have to do to get one of those sweet gigs being an Apple analyst at a Wall Street firm? Because making bad speculations for good money sounds pretty awesome.

Let’s start with this one:

“JP Morgan sees Apple further eating away at Windows PC market with sub-$1000 iOS notebook”

Any time you see a rumor about Apple moving down the cost scale to compete with low-margin devices you should really pause and reflect on, oh, the entirety of Apple history.

Analyst Rod Hall sees Apple adding a keyboard and mouse centric user interface to its iOS platform within the next 12 months, while also keeping the touch friendly functionality of the operating system.

Because the Surface has been such a smash success.

This new, more full-featured version of iOS, which he refers to as “iAnywhere,” would cannibalize sales of the MacBook Air, but also traditional Windows PCs that thrive in the price range between $500 and $1,000, he said.

So, Apple would forego sales of its higher margin product in order to get into that sweet, low-margin PC business. OK, it might do that—if it thought that’s where all the growth was going to be. And maybe that’s true. But the problem with analysts is that they look at a market and try to jam devices into gaps in it. That’s not how you design a great product.

Just slapping a mouse and keyboard on an iOS devices isn’t it either. What the heck are you going to do with a mouse on iOS? And you can’t fit a full-sized keyboard on a 10-inch iPad, so you’d have to change the screen size. Well, that’s a whole can of worms. And those worms are each holding a tiny can full of other worms. It’s worms all the way down, really.

That’s not to say it’s impossible, but there’s a host of considerations that don’t fit on a spreadsheet.

So, one analyst says Apple’s moving down the price scale. Interesting. The Macalope wonders if we can find another one who says Apple’s moving up the price scale?

Enter KGI analyst Ming-Chi Kuo.

“Apple to sell two sizes of iWatch with flexible AMOLED displays this fall, prices to reach ‘thousands of dollars’”

Apple devices cost too much!

Yes, that’s right, you heard it from Ming-Chi Kuo first: The iWatch will cost thousands of dollars.

One of the major differences between Apple’s smartwatch and those from rivals will be looks. Unlike current designs from the likes of Samsung and LG, Kuo predicts the iWatch casing and band will come in a variety of materials.

Because Apple always offers a dizzying array of device optioooooooonswhat?

As such, the most expensive model in the lineup will carry a price tag of several thousand dollars, as much as a luxury brand mechanical watch.

iWatch: the Xserve of watches. Yeah, that’ll sell well.

Does this make any sense? A multi-thousand-dollar fancy-pants watch is the next big revenue engine for a company whose shtick is making mass-market consumer devices aimed at pleasing the most people possible?

No, it does not. So what do pundits do? Why, run with it, of course.

Premature speculation

Over at The Motley Fool, Jamal Carnette declares:

“$1,000 iWatch? You Can’t Be Serious, Apple” (no link because there is no way Carnette can be serious about this crap, but tip o’ the antlers to Tangent Worlds).

Is it customary in financial circles to ask people if they’re serious about things they haven’t actually said? Is that a thing?

Recently, KGI Securities analyst and in-the-know Apple source Ming Chi Kuo sent Apple fans into hysteria with the announcement of the long-awaited smartwatch.

Analysts are magical creatures that can “announce” products that don’t exist by just pulling things out of their butts.

Many analysts were scratching their heads wondering how Apple plans to sell smartwatches at $1,000. In short, many fear Apple is pricing itself out of a lucrative and undefined market.

With an imaginary product offered at fictionally high prices!

Is Apple too worried about margins?

Oh, yeah, that must be it. The dopes at Apple—you know, dopes like Tim Cook, those kinds of dopes—think they can magically improve margins by just selling stuff at exorbitant prices. That sounds plausible. Now you’re making sense.

Looking at Apple’s gross margins over the last few years tells a not-too compelling story for the tech behemoth.

Carnette then provides a chart featuring Apple’s huge plummet in margin from 47 percent to 38 percent … a chart that happens to have the bottom of the vertical axis cut off at 36 percent. You know, to make it look super dramatic.

Somewhere a single tear fell down Edward Tufte’s face, though he did not know why.

… this exciting new announcement/product from Apple …

[looks around for announcement/product from Apple, does not find, falls out of chair onto floor, lays there like a beached whale, questions bad life choices that led to reading this article, sobs quietly to self]

… appears to be a repeat of the iPhone 5c.

The iPhone 5c: The “c” stands for “failure!”

On the surface, these two launches appear to have nothing in common.

Inasmuch as one of them is an actual launch and the other is a piece of fiction, yes, that would tend to differentiate them.

Historically, Apple has been able to enjoy premium pricing with its products – although that has moderated in recent times – but asking Apple fans to pay nearly three times Samsung’s MSRP of its Galaxy Gear smartwatch may be asking too much in an undefined market.

On the other hand, have you seen the Galaxy Gear? Yeesh.

It’s important not to get ahead of ourselves with rampant iWatch speculation.

600 words of flipping tables about made-up iWatch pricing, on the other hand, is perfectly fine.

Although Ming Chi Kuo has been accurate in the past, this is all still speculation.

Bringing that up in the last paragraph is just responsible journalism. Much like flying off the handle on a rumor started by one analyst.

Just another day at the office for technology punditry.

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