Consumer Slowdown is Bad for Apple
Apple’s price cut on the iPhone means the phone is not selling the way they had hoped. I believe this can be attributed to slowing consumer discretionary spending, which will really hurt Apple. The company does not usually cut prices this drastically – just look at its iPod line and you will see that not only were iPods hard to come by due to high demand when they first came out, but the prices were not lowered till at least a year after the release. This price cut on iPhone reiterates my concern about slowing consumer spending – either that or the phone sucks.
Bottom line – I recommend selling some AAPL if you have not done so already. I sold mine this morning at the $145 level.
– Faisal Laljee
Full Disclosure: I do not own AAPL but my position change anytime without notice.
Hi Faisal,
While I agree whole heartedly with the slowing consumer, I just think that price point was a bit nuts for the average American. I blogged about this today:
http://fundmyfund.blogspot.com/2007/09/apple-aapl-comments.html
I think of the iPhone as the printer hardware vs ink cartridge model in the long run – the money Apple will be getting from the subscriptions is the key here. I wouldn’t mind a pullback in the shares of Apple though. And yes the consumer is slowing but when the phone costs as much as mid level desk top computers its a bit over the top.
Last, for a nation that loves texting I think the iPhone is tough to use for that purpose.
Hey folks,
I agree with the assessment overall (insanely high pricing for consumer phone), but also I feel that the deal with ATT limits the potential upside (ie. if I could buy one and stay with VZ, I would jump on it.)
-b