What the iPhone Nano means for the iPhone

Just a few hours ago, JP Morgan analyst Kevin Chang reported that Apple plans to release a Nano version of the all-mighty iPhone. A little over a week has passed since the iPhone was unleashed on the public, and despite a 700,000 unit weekend, this news is only one thing for Apple’s 3Q: bad.

Apple’s sales performance has somewhat relied on the ability to keep information out of the consumer’s hands. A “leak” of this proportion must make for one unhappy Steve. Think about it, with the news that the iPhone Nano (priced at $300) will launch in the fourth quarter of this year (a measely 3-4 months away), what consumer in his or her right mind wouldn’t summon every drop of whatever patience has gotten them this far to hang on until then?

Investors may be disappointed come 3Q earnings season, as consumers back off from papa iPhone in anticipation of the nano version. Further, even though gross margins (reported in excess of 50%) might make for some sparkling earnings figures, with the release of the margin information, one must assume that the market has already built that sparkle into the stock price (hence the 5% jump last week).

That being said, it should be noted that the above usage of the word “bad” must be taken in its relative meaning. Chang is right to suggest that this release will actually drive profits by fiscal year end. If the stock takes a dip at 3Q earnings, it is probably a good time to buy, because when 4Q rolls around, its headed in the only direction it seems to be able to go, up.

Even so, tonight Steve goes to bed tonight with a sad puppy dog face.

-Jake Levine 

 

A Rumor a Day Keeps the Apple Away

On May 16th at around noon Engadget, one of the hottest Tech blogs, released an exclusive Apple internal memo announcing 5 month delays for both the iPhone and the latest version of Apple’s operating system, Leopard. Within minutes, the following happened to Apple’s stock:

$4 BILLION dropped off AAPL’s market cap immediately as investors hurried to beat the impending sell-off. The stock dipped 2.3% at volumes of over 2 million shares traded in just a few minutes. Just another night on the Street right? Not exactly, you see there is a slight problem with this tiny tumble: the announcement was falsified.

Disgruntled Apple employee? Microsoft saboteur? Jack Bauer? An AAPL investor who sold his shares last summer for $50? Who knows? Someone hacked Apple’s internal memo system and someone else (a “reliable” source, claims Engadget) sent it straight over to Engadget. It was Christmas/Chanukah for some investors who were able to buy into the stock at the discounted price of 103.42 (it closed earlier that day at 107.34). Meanwhile, many others took part in a $4 billion tumble.

Four hundred years ago in England, a substantial canal system helped the country become the world’s earliest industrial economy. Information and therefore capital could travel cross-country faster than in any other place in the world. Today, the speed of information and capital is as fast as the human ability to make and vocalize decisions. This has provided the developed world with a level of productivity that could never have been imagined just one century ago, not to mention four. Along with this improvement in speed has come a vast expansion in the diversity of media, moving from letters sealed with a wax emblem and carried by hand to emails, voicemails, faxes, and blogs with virtual signatures carried over fiber-optic cable that would have proven most useful half a millennium ago tied to a cleat.

The Apple memo was retracted within two hours, but the damage had already been done. The speed with which information travels and large scale capital transactions are made is staggering, but the recent demonstration of the power of the blog is even more so. The reaction shows that Engadget is as much a world-mover as CNN or ABC ever were, and combined with the latest M&A activity in the online ad market giving much the same indication, traditional media giants better watch out. Online news sources have a vast and confident readership that have one characteristic that differentiates them from the TV, Newspaper, and Radio audiences: they are more specialized than ever. It would be a rare thing for a non-tech geek (or what we call in the business: n00bs) to peruse Engadget.com on a daily basis, and sure, their readership might not reach the millions of viewers CNN and ABC receives every night, the Engadget.com nerd community is much more likely to turn that information into some kind of use-value. The entire technology industry eyes Engadget.com closely, and while the information is limited in range, its depth is unparalleled in the traditional media.

What will this mean for the media world in general? An shift of this magnitude in an industry that sinks its tentacles into every aspect of life, business and personal, will have dramatic consequences for the near future. Are websites like Engadget.com the end of this sprint towards media diversification? Or will we see a new revolution join the ranks of bloggers who have marched forward incessantly in the past few years? Who knows, maybe Twitter is the next Vogue. Journalism is changing, and with it, the world.