The iPhone Nano Saga |
What a merry ride JP Morgan -- and a gullible media -- took Apple (AAPL) investors on yesterday! It started Monday afternoon when Reuters picked up a report from a Taiwan-based analyst for JP Morgan named Kevin Chang. Chang had come across a patent Apple filed last November 1 for a phone with an iPod-like clickwheel, put it together with some information he had gleaned from unnamed sources in Apple's supply channel and issued a report to JP Morgan subscribers dated Sunday, July 8, predicting that Apple would release a low-cost, Nano-sized iPhone before the end of the year and might ultimately sell 30 to 40 million of them.
Several Apple blogs had picked up on the Apple patent when it was first published by the U.S. Patent Office last Thursday, including Gizmodo and the Unofficial Apple Weblog (tuaw.com). "Now this is interesting," wrote tuaw on July 5. "Could it be a low-cost sibling for the iPhone?" But speculation on an Apple blog is one thing. A report issued by a JP Morgan analyst -- and retailed by Reuters -- is quite another. By Tuesday morning, the media echo chamber had picked up the faint signal from Taiwan and amplified it into something real enough to shake the market. "Apple is planning a much cheaper and Nano-based iPhone which is reported to be priced at around $300 or lower," reported Product Reviews Net in a typical posting. "Analysts (sic) agree Apple bringing iPhone nano next," was the headline on MyiTablet. Forbes.com went to far as to name the supplier likely to build the device's metal casing -- a Taiwanese company called Catcher. Some of the more savvy Apple watchers couched their reports in skepticism. "So a guy heard from a guy who heard from another guy who thinks Apple may turn the iPod Nano into a phone," was how Salon put it. "And then Reuters wrote about it. And now I will too." Gizmodo tried to have it both ways, filing the report in their "Department of Duh": A cheaper, iPhone Nano predicted by JP Morgan. The proof? A "conversation" and a patent filing we posted last week. What a tremendous circle jerk of sourcing. I believe it, only because it is too obvious. (link) But these subtleties were lost on the Apple day traders, who wasted no time covering their shorts and bidding the stock up. "Mere whiff of iPhone plans sends Apple shares higher," was how TheStreet.com put it. By close of market Tuesday, the stock was up 1.5%, having traded as high a 134.5 during the day, a new all-time record. Then that afternoon, in a rare display of internecine second-guessing, JP Morgan New York office issued a second report on the iPhone Nano. Signed by Bill Shope, Elizabeth Borbolla, and Vlad Rom, this one advised the company's subscribers to ignore their Taiwanese colleague's predictions. While a smaller and cheaper iPhone was probably inevitable, they wrote, "We believe a near-term launch would be unusual and highly risky." They added that Chang's sources had yet to be corroborated and ran counter to Apple's historical approach of waiting until a new device becomes truly necessary for the market. Noting that Apple files patents for all kinds of technologies -- sometimes just to head off competition -- JP Morgan's answer to JP Morgan's prediction was, basically, "nevermind." It was all over but the unreeling. Even as overseas wire services continued to promulgate Chang prediction, domestic blogs and news sources began, one by one, to update and withdraw their earlier reports. Gizmodo, which greeted the original claim as almost too obvious to comment on, now issued a "Told you." And tuaw.com, which had the fake scoop a week before JP Morgan, was all over the retraction like a cheap suit, photographing the second report page by page and posting the JPEGs here for all to see. There are many reasons why the iPhone nano might not come out as soon as was suggested, but the above rationale from JPM's NYC office is not one of them. If they remembered their Apple history, they'd recall that the iPod nano replaced the iPod mini at the peak of that product's success, after barely a year. Obviously I'm not saying that a cheaper iPhone will replace the current model - it would complement it - but to say that Apple only introduce new devices when its "truly necessary" is a meaningless statement. Its for Apple, not those dopes at JPM, to decide when the market is ready for its products, and JPM has proven they have absolutely no credibility with regard to predicting Apple's success or product cycle thus far. Bill Shope and Kevin Change, our latter-day Cheech & Chong, and just as stoned out of their heads. |