Apple Introduces Mysterious Transition 1.0
by John Paczkowski
Posted on July 22, 2008 at 8:51 AM PT
What sort of product innovation would compel Apple to forecast a nearly five percent drop in gross profit margin for its next quarter? That’s a question the Mac faithful are asking themselves today after the company’s quarterly conference call with investors Monday. According to Chief Financial Officer Peter Oppenheimer, Apple (AAPL) is reining in its estimates for the final quarter of the 2008 fiscal year because of a “future product transition.”
Just what that transition may be, Oppenheimer would not say, though he did offer that it will involve “state-of-the-art new products that our competitors just aren’t going to be able to match.” Later in the call, Apple Chief Operating Officer Tim Cook elaborated a bit. “One of the investments we make is to introduce new products that initially cost more because they deliver an entirely new level of value to the customer,” Cook said. “Then we ride the cost curves down with value engineering and volume manufacturing, leaving us far head of our competitors. We have some of these types of investments in front of us that I can’t discuss.”
So again, what are these mysterious investments? Updates to the MacBook and the iPod, most likely. Both lines are due for refreshing. “We believe Apple is readying new iPods and new portables that will apply downward margin pressure in the September quarter and into FY 09,” Piper Jaffray (PJC) analyst Gene Munster wrote in a research note to clients. “We believe there is an 80 percent chance Apple will introduce redesigned MacBooks and possibly new MacBook Pros at lower price points. Specifically, Apple may re-enter the $999 price point (currently $1099)with the MacBook, or test the $1,799 price point with the MacBook Pro (currently $1999). In addition, we expect slightly redesigned iPods in the September quarter, with lower-cost touch-based iPods for the holiday season. We believe Apple is getting slightly more aggressive with its pricing; but overall, the company is not diverting from its strategy of premium pricing.”
Comments
Maybe they are going to transition back to the PowerPC.
(just kidding)
Posted by Mac Beach at July 22nd, 2008 at 7:15 pm