I like analysts, I think they provide a good look at the overall performance of the mobile market and provide detailed information on how different phone makers and operating systems are competing against one another. I love reports from IDC, comScore, Nielsen and others. It’s the financial analysts that are really pushing my buttons these days.
Every morning I wake up to a new report about the Apple iTV and how it’s launching in the near future (it probably won’t), or to a fresh report that iPhone 5 is going to sell a gazillion units. Or, worse, that some-odd-percentage of the U.S. population isn’t interested in 4G LTE. Really? You, as mobile consumers, are not interested in data networks that do nothing but provide a much better end-user experience? I call BS.
That survey, by the way, only covered 0.01% of the U.S. It’s not the survey sizes that bother me, though. I know how margin of error works and even a 0.01% survey of the U.S. makes sense to some people. I’m bothered by the obvious and absolutely inane statements that are often wrong. Analysts write these reports, often about Apple, to make headlines. It works, too. I cover the stories because I know our readers are interested in mobile stats and I’d cover the story if someone said Google was making an Android-powered spaceship that will pull in $100 billion in profits, no matter how little I believed it. Apple’s an exciting company to follow both as a reader and as a journalist.
It’s just that these predictions are often random stabs in the dark. Look at the analysts who said that Apple’s iPhone 5 will launch in October, for example. Maybe they’re right, but they conflict with nearly every report on the Internet that suggests otherwise. Peter Misek from Jefferies & Co is a frequent headline maker. He suggests that the iTV and the iPad mini are already in production but only ever cites supply partners. Then another analyst will come out and try to stifle those rumors. Today, for example, Pacific Crest’s Andy Hargreaves said he spoke with Apple SVP of Internet Software and Services, Eddy Cue, who told him that the Siri-powered TV isn’t coming anytime soon. Hargreaves said the company ran into issues with cable company partnerships. So, who’s right? I don’t know. Probably neither of them, ultimately. I’m guessing Hargreaves took the obvious route; Apple is definitely going to struggle with cable companies, but what’s stopping it from creating a TV that’s powered by Siri and works with any other cable box? Revisiting Misek’s statement: why would Apple begin production of its TVs if it doesn’t have partnerships in place? I feel like we’re all playing a giant game of telephone.
What about FBR Capital Markets analyst Craig Berger? He recently said that he believes the iPhone 5 will generate $144 billion in revenue over its lifetime and that Apple will sell 250 million units. Piper Jaffrey analyst Gene Munster, who is probably the most cited Apple analyst, said he expects Apple to sell between 5 million and 10 million iPhone units in September alone. Get this, though: Apple only sold a total of 85 million iPhones in the United States between its launch and the second quarter of this year. That includes every iPhone model. Berger essentially believes the iPhone 5, on a global scale, will triple that figure. 250 million units. That’s almost one iPhone 5 for everyone in the United States. With Windows Phone 8 and Android 4.1 hitting the market, I find that hard to believe. Who knows, though? Berger said a lot of the growth will come in China, where the iPhone has yet to make a debut on the largest carrier, China Mobile.
Berger’s point seemingly fails to take a different argument into consideration, however. Apple recently lost market share in China; it now has a 10% share in the market, down from 19%, according to IDC. Why did it lose market share? Frost & Sullivan analyst Jayesh Easwaramony said a few months back that Apple’s iPhone is too expensive in the country, where consumers tend to spend 70% of their monthly salary on a new smartphone. The iPhone 4S costs more than twice the average salary, however, which is why local firms such as ZTE and Huawei are eating up the market. So, ultimately, won’t the iPhone 5 continue to struggle in China if the iPhone 4S can’t even take off?
Getting back to my original point, though: We never know who the “sources” on the supply chain that financial analysts cite are. Is it some random Foxconn worker who has Misek on speed dial? Or what about Ming-Chi Kuo from KGI Securities? He often seems to peg dates that have already been reported on by blogs. Kuo, for example, said the iPhone 5 and the iPad mini will launch in September after The Wall Street Journal and Reuters reported the story. So did he call someone or did he read the newspaper and draft up a quick report? I don’t know.
The problem in my book is that nobody ever goes back and revisits the analyst predictions. They’re obviously bringing in revenue by publishing reports and, worse, they report on obvious topics.
I don’t know the solution. I was chatting with fellow journalists on Twitter recently and we’ve decided it’s an endless, painful loop that we’re constantly stuck in. Analysts will never stop making obscene predictions for Apple. We won’t stop reporting on them because, ultimately, who knows which analyst is right? It’s now the most valuable company in the world, we can’t simply ignore reports that are focused on it. You deserve to read the news, and it’s our job to bring it to you.