What Does Apple's Stock Drop Say about the iPhone 4S Launch?
After months and months of hype, leaked information, rumors, speculation, and even another bungled bar room scene, Apple yesterday finally introduced its next generation smartphone, the iPhone 4S. It's not the iPhone 5 many were expecting, nor does it look any different than the iPhone 4, but it does sport several improvements underneath the hood, including the same dual-core A5 processor found in the iPad 2. So how did investors react?
Not real favorably. We won't make a mountain out of a mole hill here, but it's somewhat telling that Apple's stock dropped $2.10 after the iPhone 4S launch, though it was still worth $372.50, according to an AP report. As of this writing, Apple's stock is down about another $5. What gives?
AP quotes a portfolio manager for the Capital Advisors Growth fund as saying expectations are simply "unrealistic" for Apple product launches. That might be true, but it doesn't always play out that way either. After unveiling the iPad in 2010, Apple's stock rose $1.94, and it went up $7.10 (8.3 percent) after introducing the original iPhone in 2007.
The reality is people were expecting an iPhone 5 and they were introduced to a souped-up iPhone 4 instead, one that's decidedly better, but not really groundbreaking
"Sure seems to be much about nothing," MaximumPC.com reader 'jgrimoldy' posted in our own coverage of the iPhone 4S launch. "I wasn't aware that the slower processor in the iPhone 4 was the source of poor performance or much bitching. I don't know what I was really expecting, but this seems to be rather meh."
It seems investors feel the same way.
Image Credit: Apple
Comments
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Zoandar
October 06, 2011 at 9:04am
Maybe they decided at the last minute to save some of the vaporware iphone5 features so they can soon release the Jobs Memorial iphone, and ding all the 4S buyers yet again.
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Cache
October 05, 2011 at 5:04pm
I imagine with the passiing of Mr. Jobs, Apple's stock will only continue to fall.
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tetlecie
October 05, 2011 at 4:06pm
people expect to much, there is technology that already exist to be launch 5 years from, tech companies are only planning to out shine each other only by a thin line so they could keep making money, after all they get their parts from the same manufacturing companies.... i knew an iphone 5 would not come out the phone would have been to good, people would not have to buy a phone for a few years if they launch such a great looking phone with larger screen and 4G lte which is only found in a few areas so by the time 4G is almost everywhere a phone you bought 2 years ago will be well equipt (no need for a new phone) .... so apple will make some money now and a mint later rather than a mint now and no money later... What would you do?
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Bender2000
October 05, 2011 at 11:08am
If you remember, the Apple announcements right around CES were when their stock price was the highest, then it usually took a hit and rebounded in March, it happened throughout the 2000's. This is one of those moments. iPhone 4S is worth the upgrade from a 3GS, but with no LTE 4G its not worth breaking your iPhone 4 contract.
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TechLarry
October 05, 2011 at 10:13am
It was too much ramp-up to too little announcement. That was the main failure.
It should have been a simple web announcement release. "iPhone 4 updated, new carrier available".
Everyone would have been happy :)
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tomrippity
October 05, 2011 at 9:37am
makes me wonder if Steve knew they couldn't produce anything to meet expectations and thats why he left when he did... on a high note.
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ditchbeast
October 05, 2011 at 9:29am
I dont think thats a good way to look at this. All high level smartphones are built around similar specs for competitive pricing. It would only make sense to add features (Which drives up the price) if you can really innovate or else people wont buy the product. This is why its not durastically different - if you look at smartphone makers as a whole this is very clear. (They coulda changed the look in this case at least a bit to make it distinguishable)
What would be great innovation would be partnering with camera companies to intergrate their technologies directly (Such as the carl zeiss lense and nokia). You need to pull in an Exiting functionilty that already has a broad userbase to be able to innovate or stimulate a market via hardware. You need to take from other markets and this gets very tricky.
The bigger idea of whats happening is that these devices are considered consumption devices and whos going to win the smartphone and tablet wars are the companies that can bring cheap and thick services to these devices. Itunes integration, netflix services, movie streaming, game engines, NFC software, ebooks, shopping etc.
You shouldnt be looking so much in terms of hardware but start looking at company aquisitions this will be key moving forward it will hugely dictate success. Apple has alot of services to offer, the stock drop was to be expected, new CEO, new product in a shaky market but i suspect it will rebound.
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stradric
October 05, 2011 at 8:51am
I think people are starting to catch on to what many of us have known about Apple's business model since at least the iPod. Apple has always released products that were just shy of what the current state of tech is in order to release a new product a year later that has those features. It's not quite "designed obsolescence", but it's similar. They make a quality product with fashionable aesthetics, so people buy them up, and then next year, buy the new product that is only incrementally better.
The iPod had I don't know how many generations. There was an iPod Photo at one point (I own one, it's photo features are worthless, but the thing still works). Why didn't it play video? Well, so they could release the iPod video the year after. Then came the iPhone and iPod Touch. Why didn't they have a front facing camera? So they could make one a year later with a front-facing camera. Why didn't the iPad have a front facing camera? So they could release the iPad 2 with a front-facing camera.
It goes on and on. Now we have the iPhone 4S that has a better camera. You dropped the ball on that one Apple. Had the iPhone 4 had that 8mp camera, maybe those leaked pics of Blake Lively and Scarlett Johannson wouldn't be so shitty.
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LatiosXT
October 05, 2011 at 8:08am
And this is exactly what my co-worker was talking about. What else can Apple do? I know Apple seems to have a track record of "innovating" and "inventing" things, but the original iPhone was just a combination of existing technology made into a smaller package. As far as I can tell, there hasn't been any real breakthrough in technology that would seem to make sense for a mobile device (Yet). And before someone makes a comment, the iPhone 4S has no features new to cellphones. Maybe some improvements, but I think these are found elsewhere on lesser known products.
Also the kicker from another commentator on another website: There's no LTE support. And hasn't this technology been around for almost a year now?
I swear if Apple throws in LTE support in the actual iPhone 5 and calls it "the fastest phone ever", I'm going to laugh... then cry.
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