It’s the week after Macworld | iWorld and some folks are trying to deposit inappropriate materials into our virtual punch bowl. First, iSuppli makes an “interesting” prediction about smartphone market share. Speaking of predictions, let’s take a look at Wall Street’s predictions for Apple’s quarterly results, which came out this week—that’s always good for a laugh. Finally, the iPad might have to share more of the market now, but be careful about who you say it’s sharing with.
Crystal bull gazing
The Macalope really doesn’t get the point of these projections that the analytical firms feel they need to come out with every so often. Well, other than as headline-grabbing link bait.
Oh, really? Wow. OK, well, the Macalope supposes that’s possible. Somewhat laughable, but possible.
iSuppli predicts that, by 2015, Android will have 58.1 percent, Windows Phone 9 With PlaysForSure Kinect Technologies for Workgroups will have 16.7 percent, and the iPhone will have 16.6 percent. Look at the projections and you’ll see the relentless climb of Android and Windows Phone as the iPhone stalls right now and starts to decline.
Yeah, that’s convenient when you’re making a three-year projection that you want to make headlines. Ah, and how the technology press loves a story like this!
As you can see from these predictions, however, Windows Phone is only besting iOS by a small margin. Even so, gaining a strong foothold in the market and stealing some share from Apple is certainly something to comment about, especially when you consider Windows Phone’s market share in 2011 was less than 2 percent.
Would be something to comment about. Would be, if it ever were to happen.
Did the conditional tense of the English language just up and die without the Macalope being informed of it?
Once again, the Macalope will take pains to point out that he really doesn’t care if the market share numbers do turn out to be exactly what iSuppli is projecting for Apple by 2015—or worse. As an iPhone user, it simply does not matter as long as apps continue to be written for the platform and sold at low, low prices—which they will, as iPhone users are the ones buying apps. As someone concerned about Apple’s continued existence it doesn’t matter, because even if the company is only garnering 16.6 percent of the market, it’ll still be garnering most of the profit.
Anyone remember profit? No? OK, moving right along.
Given the partnership between Nokia and Microsoft, the companies have the necessary resources to use in promoting and developing the Windows Phone platform.
It’s interesting how Microsoft and Nokia have “resources” while Apple, we’re left to imagine, has a couple of Space Food sticks, a monkey on a unicycle, and an LP of Get The Knack. Still, resources aren’t really what Microsoft and Nokia are lacking. What they’re lacking is a fricking time machine that will let them go back to 2007 when their phone would have been more easily able to carve out a niche in this market.
Personally, the Macalope thinks the Nokia hardware looks terrific and Windows Phone 7 is, believe it or not, his second-favorite smartphone operating system. So, he hopes Microkia (which sounds like a place to buy affordable Swedish furniture for doll houses) does manage to climb back into this game.
While iSuppli believes Microsoft and Apple will be duking it out for market share, the firm doesn’t believe Android’s market share will be greatly impacted.
Of course not. Android, you see, is too big to fail, so it will only ever go upwards. Well, except for last quarter when it appears that it might have gone down.
Other than that.
This, to the horny one, is completely bass-ackwards. How does it make sense that Microsoft is going to steal market share from the company with the highest customer satisfaction in the industry, particularly when it’s obvious that the company’s main target is Android?
The Macalope supposes that just as nobody back in the 1990s lost their job by recommending Microsoft, no analyst gets questioned by predicting Android will continue to gain market share. Eventually that’s going to get a little uncomfortable as these projections go further out and analysts have to start putting Android at more than 100 percent to make the line continue upwards.
Better safe than right
As the Macalope’s learned and smartly attired readers may remember, last quarter was a rare win for Wall Street analysts over the pajama-wearing, unshaven (even the ladies) and malodorous independent bloggers. But how’d it go this quarter? As is his wont, Philip Elmer-Dewitt brings us a look at how the estimating of Apple’s results went down.
Ah. So back to normal, then.
When the Macalope saw Elmer-Dewitt’s chart of the estimates just prior to the earnings call, he immediately assumed it was grouped with independent analysts at the top and Wall Street analysts at the bottom. But, no, it wasn’t (other than coincidentally). It was sorted by their estimates for revenue. Of course, Elmer-Dewitt is picking his analysts, so there are probably some independent analysts out there who routinely project a pox on Apple’s house, but nobody’s interested in those guys. Not even their spouses.
No, the real question is why the big brokerage houses—Barclays, Goldman Sachs, JP Morgan—continue to let these analysts “analyze” Apple. Or pudding.
OK, yes, they were more right than wrong last quarter. But should someone who’s batting .200 over the last year be in the Major Leagues? One analyst, Gabelli & Co.’s Hendi Susanto, thought Apple would miss its own guidance. That’s just nuts. That’s not being conservative, that’s an audacious bet against the company.
It seems a little odd that the Macalope would have to explain this to a bunch of Wall Street analysts, but this is about opportunity cost. If you tell someone that Apple is going to miss its guidance (Apple never misses its guidance), they might decide to take their money out of Apple and put it into something else they think will do better.
Of course, if they’re listening to Hendi Susanto, they’re probably crazy so they might take their money out of Apple and put it into a sock. Or simply light it on fire.
Being “conservative” doesn’t do your clients any good. Being right does.
And it’s not like these analysts couldn’t have seen this coming. Back in December Andy Zaky laid it all out.
If you look at the past two years as exhibited in this chart below, Apple has consistently beaten its revenue guidance by 12-18% every quarter. That means regardless of whatever Wall Street is doing or thinking, Apple continues to deliver the same type of beat on its guidance. Whether Apple meets or beats Wall Street expectations doesn’t really figure into Apple’s thought process.
The idea that eventually Apple will come crashing to the ground is probably true, at least on the geologic timescale. But to predict that its going to start to happen this quarter based on no deeper thought than “Gosh, their numbers are large” isn’t analysis, it’s superstition.
Saturday Special: A case of mistaken identity
Not that it was hard to call, but the Macalope would like to point out that he did, in fact, call this.
Wow. What? Android? All those crappy Galaxy Tabs Xooms and whatevers got 39 percent of the market? Is that right?
Actually, no, that’s not right.
Dozens of Android models distributed across multiple countries by numerous brands such as Amazon, Samsung, Asus and others have been driving volumes.
Does Amazon make an Android tablet?
It does not. Not to put to fine a point on this but, yes, let’s put a really fine point on this. The Kindle Fire is not an “Android” device.
We’ve been through this: Yes, the original code base came from Android, but legally Amazon can’t call it “Android” because it forked the operating system. That, of course, won’t stop companies like Strategy Analytics and serial jackbags (the Macalope buys names like this—jackbag, dinghole, jerkling—in bulk from a guy he knows at the Pejorative Outlet) like Don Reisinger from calling it “Android” like it’s all one big unified and happy family.
Regardless of the licensing issue, it’s debatable if it even makes sense in other regards to lump the Kindle Fire in with actual “Android” devices. The Macalope’s happy to have that argument, but it’s not “Android” and that’s only going to become more obvious as time goes on.