Apple is often criticized for relying so much on the iPhone, as it makes up 70 percent of the company’s revenue. That criticism seems odd, though, considering that even lesser product lines can also spell doom for the company. It’s doom opportunities all the way down.
Writing for CNBC, Keris Lahiff brings us the bad news.
“Apple skeptic says company ‘in trouble’ ahead of HomePod launch.” (Tip o’ the antlers to @designheretic.)
Is that right? Let us look at the company’s quarterly results announced last week:
“Apple Q1 2018 earnings: Record revenue, beating the estimates.”
This certainly does sound devastating. How many more record quarters can the company endure? Time for Tim Cook to step down and return to the sea from whence he came.
“I do think they’re in trouble. I think they’re making a huge mistake,” [Boris] Schlossberg, managing director of [BK Asset Management’s] FX strategy told CNBC’s “Trading Nation” on Tuesday.
Just one? Seems like maybe Schlossberg isn’t using his imagination. A clever person could find Apple mistakes in anything from Face ID to the discontinuation of iPod socks.
The huge mistake Schlossberg sees is selling the HomePod for $349.
Schlossberg’s concerns over Apple pricing resurfaced ahead of the launch of its Siri-connected artificial-intelligence home device, the HomePod. With a $349 price tag, its latest product is far more expensive than its major competitors, including Amazon’s Alexa-equipped Echo or Google’s Home Mini.
The HomePod was certainly never going to sell in volumes like the Amazon Echo has, if you can call moving Echos at slightly more than cost “selling” them. But who’s going to buy a $349 HomePod when a $100 Echo is just as good?
“Nobody is going to buy it at the price that they’re putting it out right now because the functionality of those products is just nowhere near as great as it needs to be relative to the price difference,” said Schlossberg.
They’re all the same! These are commodity goods like computers and smartphones and cars and wine and human beings!
Nnkay. But as a craaaazy thought experiment, let’s ask someone who’s actually used a HomePod, like David Pogue.
…Apple has tried to differentiate the HomePod, and justify its high price ($350), by giving it better sound than any competitor — and in that, it has succeeded.
So how is the HomePod doing?
“HomePod inventory tightening.”
We don’t know how many Apple made, but it seems like it’s not doing terribly. But the point isn’t to compete on volume with Amazon. Why would Apple want to do that? The two companies are playing entirely different games. Cheap Echos are designed to get you into and keep you in the Amazon ecosystem. The point is to make money on Prime subscriptions. Apple’s take is the opposite. As Ben Thompson points out, Apple Music exists to sell iPhones and HomePods.
Of course, not all analysts think Apple is “in trouble”, just the one who, through a completely random choice that was probably determined by rolling some D&D dice or something, happened to be put into the headline and was featured on a CNBC show. Statisticians are at a loss to explain how it’s always the analyst who thinks Apple is about to go out of business who gets all the completely random attention.
Max Wolff, chief economist at The Phoenix Group, is cognizant of weaker iPhone sales trends but does not expect those issues to come into focus as soon as this quarter. Instead, he sees Apple still in a position of strength.
Ah, the largest tech company with a vast horde of cash is possibly in a position of strength instead of “in trouble”. Fascinating. The Macalope looks forward to seeing which of these analysts turns out to be right.
In addition to being a mythical beast, the Macalope is not an employee of Macworld. As a result, the Macalope is always free to criticize any media organization. Even ours.