Tuesday, July 24, 2007

Apple loses $7b on 2 day’s work

With its Q2 results, AT&T reported that it activated 146,000 new iPhones in Q2 (i.e. on June 29 and 30). Since some had guessed Apple sold 500,000 iPhones in the opening weekend, this is much less than analysts were expecting. This burst the bubble in Apple stock, and it fell $8.81 (6%) on Tuesday — killing $7 billion of market cap.

There are problems using these numbers — either way. Retailers don’t have their FY end on Dec. 31 but on Jan. 15 or 31 because it’s misleading (to everyone) to have a reporting period break in the middle of a busy selling season (i.e. Christmas). Also, some Macfanatics have noted that Apple/AT&T had activation problems which might have delayed users from activating phones that bought on iPhone day.

The other news that hurt stock prices is that a Canadian stock analyst said sales had fallen off since opening weekend due to lousy performance on AT&T’s EDGE network.

We’ll find out in the next few months what the actual sales were. In the meantime, speculation is rampant that a 3G phone is coming in 2007 — which is sure to Osborne the original iPhone.

What I find scarier is Apple’s patent application for a charger that is locked to a particular phone or iPod. New Scientist calls it DRM for AC adaptors. But most others see it as a way to kill third party adaptor sales.

If Apple is going to try that hard to shut down the (relatively small) third party accessory market, it seems to me that they’re reverting to the old Apple of the mid-80s which tried to prevent or discourage any third party hardware sales — printers, hard disks, monitors. Companies thrive by nurturing their business ecosystems, not by killing them. Sometimes I’ve praised Apple for being open, or defended them for legitimately being closed: this is neither, and (if implemented in a product) sure to piss off loyal customers.

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