Why iPhone 4 Flub Won't Dent Apple
Sometimes failure carries a stiff price.
If you're talking about BP, it means public contempt, investor rebellion and the increasing likely prospect of prosecution.
If, however, you're talking about Apple (and by association, its carrier partner AT&T), another standard applies. For these folks, it's pass Go and collect, well, a lot more than $200.
By now, you're likely familiar with the comedy of errors which attended the pre-ordering fiasco for the iPhone 4. After AT&T's servers failed on Tuesday to handle the crush of traffic, Apple cut things short as these two tech stalwarts got overwhelmed by the demand. To an outsider, it sure looked like amateur hour. How could they have been so unprepared? It looked even worse after reports circulated of glitches like credit cards getting charged multiple times and security lapses where customers could view other customer accounts
The only price to be paid was by the unfortunate Apple subordinates who doubled for into pinatas for an understandably peeved Steve Jobs. But while Apple's perfectionist-in-chief may be in a foul mood, it can't be too foul a mood. Any temporary embarrassment, notwithstanding, Jobs is still ooking at what is, perhaps, the biggest hit in his company's history.
On Wednesday, the company announced that more than 600,000 pre-orders had been placed for the iPhone 4. For its part, AT&T said that pre-orders for the iPhone 4 were 10 times greater than on the first day of pre-orders for the iPhone 3GS a year ago. Meanwhile, Best Buy said it is no longer accepting pre-orders, presumably because there's not enough inventory to satisfy demand. By any measure, all this is a harbinger of a spectacular reception for the iPhone 4.
Wall Street put 2 and 2 together, sending Apple's shares shot up more than $7 to close at $267.25. Meanwhile, Piper Jaffray analyst Gene Munster raised his price target on Apple to $348 from $330.
"We are now modeling for 9.5m iPhone units in the launch quarter (up from 8.5m previously) adding $610m (4%) in revenue and $0.12 to our June quarter EPS estimate. Apple sold 1m iPhone 3GS models in 3 days, so with 6 days of sales of the iPhone 4 in the June quarter, we believe the additional 1m units is achievable. We are also raising our September iPhone estimates from 9.0m to 9.5m." And he may be conservative, at that.
The irony is that if this were any other company, consumers would be beside themselves, demanding their money back and swearing never to return. But with Apple, we're talking about a company that can count on the mother of all Mulligans.Even with the iPhone 4 ship date again slipping, my guess is that few Apple loyalists are going to care very much about this episode three months - let along three weeks - from now. Once the product finally starts shipping, it'll be back to oohs and ahhs. My fellow nitpickers in the 4th Estate will be right to classify this episode as a monumental screw up by Apple, while the rank and file simply won't care. They love Apple technology. Jobs has had them leaping to their feet for years and if past is prologue, it will be little different this time around.