In the post iPod era the criticisms tended to focus on product choices (who needs a phone from Apple?) and design (the iPad is a toy with no obvious market). Wrong and wrong - as if anyone, especially competitors, needs reminding.
And Apple has, as a result of its belief in itself, become the world's most valuable company, has lifted design from a 'soft asset' afterthought to a operational imperative and has generally set the financial and technological tone for the rest of the known universe.
The capital markets have been nothing if not slavishly compliant in support. The stock has continued its inexorable rise from triumph to glory. For an investing culture in which 'the trend is your friend,'there has been no gainsaying the company's moves, even in the post-Steve era.
So, it was curious that the market's reaction to the launch of the iPad mini was less
servile than usual. In fact, the stock price dropped precipitously - over 5% - when the price was announced. Such is the power of the Apple stock that the stock drop in New York came as the price point was announced in California. And the market as a whole ended up losing over 200 points on the day.
There appear to be two concerns, one specific to Apple and one of a more generalized nature. The structural, market-based concern can be summarized as a belief that all good things come to an end and that reversion to the mean will out. Or, even more simply put, whatever goes up must come down - eventually.
Which leads to the Apple-specific question. The company has had a great run. One for the ages, literally. But there is a sense that it may be tempting fate. That the exorbitant pricing strategy will eventually bring it down and that, in this particular instance, the price of the mini was an act of hubris. An in-your-face declaration that Apple can charge what it wants when it wants because its fans are that besotted with its products. To the extent that they will starve - and let their families starve with them - in order to have whatever the latest magic may be.
Recent history tells us that Apple's management may be right. It may well be that the move to mobile and the need for a device bigger than a phone will continue to propel the iPad in what will undoubtedly be a series of sizes. But the markets, always superstitious despite their data-driven mien, are becoming sufficiently concerned that they are finally willing to put their money where their minds are. JL
Tim Bradshaw reports in the Financial Times:
The idea that Apple would launch a new iPad mini this autumn has been a near-certainty since July. Until this week, the big unknown has been how much it would cost.
Investors winced at the $329 price tag (£269 in the UK) when it was announced at Apple’s marketing event in San Jose on Tuesday. The Apple share price took a sharp swing lower when the iPad mini’s price was announced towards the end of the presentation.
Most analysts had predicted an entry price of around $249, closer to Apple’s nearest competitors.
Faced with cheaper alternatives in Amazon’s $159 Kindle Fire and Google’s $199 Nexus 7, in an era of so-called austerity, investors are unsure whether consumers will be ready to dig deeper in their wallets for Apple.
Apple is betting that production quality will give it an edge. While most rival tablets are made of plastic, the iPad range offers glass and aluminium.
During the event in the ornate California Theatre, Sir Jonathan Ive, Apple’s chief designer, highlighted the iPad mini’s “diamond-cut chamfer” edge between the screen and casing, and the “unibody” manufacturing.
“There is inherent loss in just reducing a product in size,” he said. “What we did was we went back to the very beginning and we took the time to design a product that was a concentration of, not a reduction of, the original.”
Given Apple’s larger array of apps and media content – a total of 35bn downloaded from the app store, although Google Play for Android is catching up at 25bn – many customers may be prepared to pay more.
“iPad mini commands a premium through brand and ecosystem. Consumers will pay to have a richer experience,” Carolina Milanesi, mobile analyst at Gartner, a technology research and advisory group, said on Twitter.
“The [original] iPad created the market at a price point that forced everyone to go to seven-inch and cheap. iPad mini comes in to be the premium offering of that.”
Gartner colleague Michael Gartenberg added: “Apple never races to the bottom.”
The iPad and iPhone have sealed Apple’s standing as the world’s most valuable tech company, but the group’s leadership will be challenged to live up to the vision of Steve Jobs.
The higher pricing will certainly help to preserve Apple’s sky-high margins. But how many of them will buy both the 10-inch and eight-inch iPads?
Apple risks eating into its own sales with the iPad mini. Mr Cook’s calculation may be that it is better for Apple to cannibalise itself than to risk letting Amazon or others do it.
But Apple investors have another concern ahead of this Thursday’s earnings release. Mr Cook’s announcement that Apple had sold 100m iPads implies 16m units shifted in the quarter ending in September, according to BTIG analyst Walter Piecyk, against Wall Street consensus estimates at 17.5m.
In the week of Microsoft’s Surface launch, the iPad now faces improving and cheaper competitors in ever-greater numbers. Even loyal Apple customers appear to have been holding off their iPad purchases in anticipation of the mini version. Analysts were already worried that iPhone 5 sales were constrained by the manufacturer Foxconn’s ability to produce the new smartphones fast enough.
With few Apple products left without an update, Mr Cook was right when he said on Tuesday that 2012 had been a “truly prolific year of innovation”. Nonetheless, with its shares down 12.6 per cent from September’s highs, investors appear to expect Apple to deliver its third successive earnings disappointment of the last 12 months.
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