Doubling Down on Stocks - Why Apple Updated iPad

Posted by movieman52 on October 24, 2012 05:30 pm 2

Apple has a problem - a good problem. They need to figure out how to keep posting amazing quarterly numbers.

The problem came from the cyclical style that Apple became known for when it comes to updating major products. My non tech buddies know that every September and October an iPhone will be released - so they refuse to buy a phone starting in April. This cycle starts to affect quarterly earnings and sales numbers. Currently, launch dates (more importantly the world wide launch dates) for Apple products coincide perfectly with quarterly earnings so that they are able to say “this is the best selling iPhone yet”. A feat that gets harder and harder to beat. Apple has 5 years of a normal upgrade cycles and nearly impossible to beat previous quarterly numbers. Now, Apple just set itself up to have the best quarter ever - in a quarter with its biggest competition, Surface.

This “surprise” update to the iPad kills the proverbial two birds by breaking update cycles and bringing the iPad up to par with current products. Apple took a high end tablet - a tablet that has seen little competition until Surface, and they outdated themselves when they gave the Lightning connector to the iPhone 5. In order to unify their products, to make more money from accessories, they did a true evolutionary upgrade. Do these upgrades - processor, camera, and dock connector - really justify an event in Spring time for the next gen iPad? Apple just threw a wrench in the rumor mill because the iPad now the upgrade cycle is up in the air. Now, that doubling down on secrecy seems even more prevalent.

Apple conditioned people to use the iPad before it came out, and conditioned people to know when it releases. People are worried that Apple products cannibalized their own products, but in reality, they need to keep beating their stock price. Is this something that is good for consumers? I think in this 7 month upgrade, it is a matter of stock price trumping consumer needs.

Apple updated their iPad, added a new iPad product, new iPod touches, new iPhone, and new computers - all in two months. They have had amazing numbers for the last few years, and now they have seen sales start to stagnate due to customers being conditioned to upgrade cycles. Now, they set themselves up to have “The best quarter yet”.