Apple Inc. (NASDAQ: AAPL) today released the following statement after market close at http://www.apple.com/ :
Apple Statement
PR Newswire - April 12, 2007 4:30 PM ET
"iPhone has already passed several of its required certification tests and is on schedule to ship in late June as planned. We can't wait until customers get their hands (and fingers) on it and experience what a revolutionary and magical product it is. However, iPhone contains the most sophisticated software ever shipped on a mobile device, and finishing it on time has not come without a price -- we had to borrow some key software engineering and QA resources from our Mac OS(R) X team, and as a result we will not be able to release Leopard at our Worldwide Developers Conference in early June as planned. While Leopard's features will be complete by then, we cannot deliver the quality release that we and our customers expect from us. We now plan to show our developers a near final version of Leopard at the conference, give them a beta copy to take home so they can do their final testing, and ship Leopard in October. We think it will be well worth the wait. Life often presents tradeoffs, and in this case we're sure we've made the right ones."
Bottomline:
Apple made a decision to ship iPhone on schedule in late June - a potentially disruptive innovation that could shake up the mobile cellphone industry - at the cost of delaying the often touted Leopard operating system - an operating system that was going to rival the latest Windows Vista and bring in incremental new revenue from existing Mac customers and new customers.
Why would Apple go all out swinging for the fences and delay Leopard?
1. Apple believes iPhone will create a much bigger marketshare and revenue in 2007, and hence had a higher release priority than Leopard
2. Apple simply did not have enough manpower to do both - release iPhone and Leopard on time
3. Apple possibly believes that Leopard may not create enough incremental revenue compared to iPhone's revenue
4. Apple thinks that the on-time quality release of iPhone will also help Apple's stock price in 2007
5. Apple does not think that delaying Leopard until October will adversely impact Apple 2007 revenues and stock price
What could have Apple done differently? Is this the appropriate tradeoff? What if Apple released Leopard on time and delayed iPhone? Apple had sure revenue with Leopard; however, iPhone could be a huge hit or a huge miss. In this particular instance, Apple is betting big on the new iPhone innovation, potential new revenue, 1 million plus registrations at AT&T for the iPhone, and looking to hit a grand slam. Could Apple have benefited from Apple India software operations which it later decided to withdraw?
For now, Apple shares were down in the after market, and can quite possibly react negatively in tomorrow's trading. However, if you are a betting man, and if you believe in Apple's iPhone, this could potentially be a smart buying opportunity.
Apple Inc. is one of the top 20 Innovators of The Innovation Index.
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