iPhone 6 rumor rollup for the week ending July 19

Autumn splendor, iPhone cheap, September 6, and preventing delay

As the fall crawls closer, the iOSphere is obsessed with pinning down the exact date of the iPhone 6 announcement, which is a problem akin to knowing the exact location of an electron at any given instance.

The quality of date speculation varies widely, most of it no more than a cursory gloss on Apple CEO Tim Cook’s statement that new products would be announced “beginning in the fall.” So stock analysts solemnly assured us that mass production of the Next iPhone will start, like, soon. And one blogger has through the exercise of naked reason deduced that iPhone 6 will be announced on one of two days in September.

IPHONEYS: The iPhone 6 & iPhone 5S edition 

Also this week: Production of the iPhone cheap has already begun though it appears to lack any rational basis for its existence; and Apple prevented a delay in releasing the iPhone 6 by buying a chip plant, even though there’s no evidence that iPhone 6 is or might be delayed.

You read it here second.


“The iPhone 6 release date delay has been prevented as Apple bought its own chip maker to produce parts for the device.”

~ Tony Crammond, TheFullSignal.com, revealing the heretofore unknown threatened “delay” of the iPhone 6, without bothering to explain how the as-yet-unsubstantiated purchase would un-delay it.


iPhone 5S starts mass production at end of July, for autumn unveiling

The obsession with knowing the precise moment when a klaxon blares at a gigantic Foxconn assembly plant in Taiwan, signaling the start of mass production for the Next iPhone, continues.

In part, because it feeds the obsession with the precise date on which the Next iPhone will be announced.

This week’s contribution is from Jeffries Group stock analyst Peter Misek, whose most recent Note To Investors says the klaxon will sound at the end of July, according to Jay Yarrow’s post at BusinessInsider. 

“[Misek] says the new iPhone is likely to be released in either late September or early October,” Yarrow writes.

In other words … sometime during an almost five-week period in, yes, the fall.

But Misek doesn’t seem too certain, because according to Yarrow, he only “believes” mass production will start by month's end; and that the Next iPhone is only “likely”  to be announced in September or October.

This doesn’t exactly Advance the Field of iPhoneology. We actually know no more today about the announcement date than a reasonably intelligent person could have surmised about it the day after Apple announced iPhone 5S in September 2012  – that it is indeed likely that the Next iPhone will be announced in September or October 2013, and that therefore large-scale manufacturing will start sometime in the summer of 2013.

iPhone cheap has already started production….though why it has is another matter

In the same BusinessInsider post, analyst Misek also claims, according to Yarrow, that “Apple has already begun production of its lower-cost iPhone.”

Yarrow writes that Misek “believes [it] will sell for $300-$400, without a subsidy.”

Here’s the key point: “At that price, it's more a mid-tier phone, and ‘it will not be competitive in emerging markets,’ according to Misek.”

Which is a remarkable statement. The iOSphere’s Rumor Consensus has been, for months if not years, that Apple should or must create a cheap iPhone model. Because it must compete with the flood of cheap Android phones, especially in emerging markets such as China and India and Brazil, where there is the potential for huge unit sales.

So what is the point of Apple introducing a cheap iPhone to compete with cheap Android phones, if it won’t actually, you know, compete with them?

Apple doesn’t break out sales of the older, discounted iPhone models. But they offer an extremely viable lower-cost alternative to the flagship iPhone 5, which itself is such a good product that there’s no reason why it shouldn’t continue to sell well in the mid-tier market after the release of the Next iPhone.

Neither Misek nor Yarrow actually make a case for how Apple would benefit by introducing a cheaper iPhone model – segmenting different classes of buyers for different products -- since the lower-end of any market has not been a focus for Apple. Apple partially segmented the tablet space with the iPad mini, but it markets the mini (and it’s apparently bought) not as a “lower-cost iPad,” but as a “smaller iPad” that happens to have a lower price tag.

The iPhone is a handheld computer that also makes phone calls. So far, Apple hasn’t seen any compelling need to change the physical design or character of the phone, its capabilities, or the user experience for buyers whose primary purchase criteria is paying a minimum price for such a device.

iPhone 6 will be announced on September 6…no, wait! September 10!

Who says? Apple, apparently.

“Apple is strongly hinting that the release date for the iPad 5, iPad mini 2 and iPhone 6 is coming on or shortly after September 6th,” according to Phil Moore, in a post at StableyTimes (“a new kind of news”). 

Doubtless this will come as a surprise to many. But Moore has discerned Apple’s strong hinting behind various actions that remain otherwise opaque to those of lesser insight.

The first strong hint is that Apple is “offering a promo to college students which gives them a fifty dollar iTunes gift card with the purchase of an iPad or iPhone until that date.” (Details of the back-to-school offer, which is focused as much or more on the Mac as on iOS devices, are on Apple’s website.) 

According to Moore, similar Apple promotions in the past have “typically ended up coinciding with the launch of new generations of whichever of its mobile products were included in the deal. The offer is a way of blowing out remaining inventory of the new models in the interim.”

The surface plausibility of this reasoning just doesn’t bear up. You would have to place an inordinate value on a $50 gift certificate for music or videos to consider it worthwhile to invest, at Apple’s website, a minimum of $199 for the 16GB iPhone 5 model with a two-year contract, and then factoring in the cost of the contract itself. Spending $200+ to get $50 isn’t usually considered a bargain, especially when you can’t use the $50 as a discount for the $200. This promotion isn’t, by itself, going to “blow out” the current inventory of iPhone 5 units.

It makes more sense as one part of an overall move by Apple and its retail partners to make iPhone 5 a more compelling value for buyers during the June-August quarter, which has traditionally been softer for iPhone sales as at least some buyers hold off on a purchase in anticipation of the Next iPhone sometime in the autumn. And with this back-to-school offer, Apple offers its special “education pricing” for products, for qualified buyers.

But Moore doesn’t stop there. “The week of September 6th starts off with the Labor Day holiday, making it unlikely Apple will unveil the new iPad 5, iPad mini 2 and iPhone 6 during that week, but will instead allow the college offer to expire on the 6th and then introduce the new models the following Tuesday, September 10th,” he says, contradicting his initial assertion, and headline, that Apple would announce the iPhone 6 “on Sept 6th.”

The phony precision is a hallmark of the pseudo-reasoning prevalent in the iOSphere. Moore makes it sound as if some Deep Truth has been revealed when he observers that it’s unlikely Apple will announce the iPhone on a major holiday weekend. But what company ever makes major product introductions on a major holiday weekend?

Moore’s speculation, and it’s nothing more than that, is completely unfounded, as is so much other speculation about The Date. It’s likely that Apple will announce the Next iPhone in September simply because it usually announces new products about a year after the current model. Whether that happens on September 6 or 10 or 17 or 24 or some other date is pretty much irrelevant.

“iPhone 6 release date delay prevented”

That’s the astonishing headline for a post by Tony Crammond at a Website called TheFullSignal.

He gets right to the point.

“The iPhone 6 release date delay has been prevented as Apple bought its own chip maker to produce parts for the device,” he declares.

Late last week, a technology news website called SemiAccurate, claimed in an “exclusive” that “Apple has just done something that SemiAccurate has been expecting for months and entered the fab industry. No we are not joking, Apple just bought into a fab, and not in a trivial way either.” The rest of the account is available only to the site’s subscribers.

No one seems to know exactly what this alleged action really means. Except for Tony Crammond. First, there is no evidence whatever that the “iPhone 6” has been “delayed” or was in danger of being delayed. And there’s nothing in what’s been publicly posted about this alleged deal that shows this semiconductor manufacturer, whoever it may be, is or will be producing chips for the iPhone 6.

“This is undoubtedly a move by the Cupertino, Calif.-based company to become more autonomous in its handset production, cutting out manufacturing partners such as Samsung, Foxconn and Pegatron, with whom it has worked in the past,” Crammond explains. Samsung has been the principal maker of the processors used in Apple’s iOS devices. But Foxconn and Pegatron are assemblers. If Apple cuts them out, it will end up building iPhones by hand.

“Apple’s previous devices have been plagued by production issues, with third parties unable to keep up with demand and producing components that are below Apple’s exacting standards,” according to Crammond. This statement is simply a canard. Supply chain management is a blend of art and science. There are always “issues,” and the goal of SCM is to resolve the issues. The suggestion that Apple’s iOS products are “plagued” by low-quality components is simply false.

AppleInsider searched the HTML tags with the SemiAccurate webpost and concluded they “may reveal Apple's rumored mystery partner: United Microelectronics Corporation.” UMC is based in Taiwan, and trades on the New York Stock Exchange under the symbol UMC. Its market capitalization is about $5 billion, in part due to an overall decline in its stock price since early 2010, according to data from Google Finance.  Its 52-week stock price range is $1.75-2.44, and as of July 19 is trading at just above $2 per share.

But Brook Crothers at CNET says a “semiconductor industry source” says that the deal – which is far from finalized – may involve Globalfoundries, of Milpitas, Calif. The foundry and Apple are “kicking the tires” but “ ‘by no means’ is any firm deal imminent…,” writes Crothers.

“The source continued: ‘Globalfoundries and Samsung have the same technology foundation based on an IBM joint development agreement. So that gives [a possible deal] a little less risk if they're looking at a secondary option to offset [the current chip manufacturing] with Samsung.’”

But Apple has several options for “investing” in a chip plant (Globalfoundries has a relatively new plant in New York with “a lot of idle capacity,” according to CNET’s source). Here’s Crothers:  “Linley Gwennap, principal analyst of The Linley Group, doesn't see Apple owning capacity, however. ‘I don't see why Apple would buy a fab, but they might front some money to Globalfoundries to guarantee access,’ he told CNET.”

Another option is for Apple to invest in chip processes rather than physical manufacturing assets. “Piper Jaffray analyst Gene Munster thinks it makes more sense for the company to focus its efforts on developing chip processes instead of owning and operating a full-fledged factory,” writes Evan Niu, a contributor at TheFool.com.  (Niu owns Apple stock.) His post is headlined “Did Apple Buy Its Own Chip Plant or Not? The answer, apparently, is “no one knows.”

Longstanding rumors have pegged Taiwan Semiconductor Manufacturing Co. as Apple's most likely chipmaking partner. Just last month, The Wall Street Journal reported that after years of talks, Apple had finally inked a deal with TSMC to build mobile chips beginning in 2014.

Apple is spending yearly about as much if not more than Intel on capital, or almost as much as Microsoft, Amazon and Google combined. For Fiscal Year 2013 alone, Apple will spend just over $10 billion. Much of this spending is to buy equipment that is placed in the manufacturing and assembly plants of its supply chain partners. But apart from Asymoc’s Horace Dediu, this whole area of spending and intent is getting almost no attention from analysts and media.

John Cox covers wireless networking and mobile computing for Network World.http://twitter.com/johnwcoxnwwjohn_cox@nww.com



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