So I missed the Apple earnings report live but it received plenty of coverage.
Best quarter ever, tons of Macs sold, tons of iPhones sold – Kudos Apple!
You have to hand it to Apple at the way they strategise their product launches to receive maximum effect. Amazing quarterly results one day which boosts stock price, followed through the very next day with significant product releases that ensure the next quarter builds on the previous.
However, there was one comment made during the earnings call by Tim Cook, Apples COO, which has kicked off the rumour mill and that related to forewarning of an abnormal increase in air freight charges for the coming quarter….
“The air freight is not related to the iPhone so these are unrelated topics. But, generally speaking the air freight is planned to get enough units in to the channel in time for the holidays and is necessary for that reason.”
“It’s more than normal so you’re correct that in general we spend more in freight in Q1. However, this increase is larger than usual. I’m sorry I can’t be specific on the product but it’s an abnormal sequential increase.”
A company the size of Apple having to warn about abnormal air freight charges? They must be expecting some huge costs.
The issue is that I would doubt it’s for any existing product that they need to ship for the holidays. Apples fulfilment operation is tuned to perfection and runs like a well oiled machine. They’ve known well in advance the forecasts for how many Macs, iPods and iPhones they need for the Christmas period (hate calling it “the holiday season”) and these units have already been ordered. manufactured and shipped from China on huge cargo ships. The cheapest way to distribute, but the slowest. Shipping by sea is the only way to distribute existing product lines.
No, Airfreight is only needed on new products, just manufactured and dispatched directly from the factories in China. If a new MacBook Pro is developed and released and you buy one of the first models of the production line, it’s air freighted direct from China to your door at considerable expense.
So this reference must be to a new, as yet unannounced product.
But the question is what?
I think there are two options….
1 – Apple is just about to announce the new Apple tablet device and is expecting huge demand. The tablet itself is most likely relatively small, so the only way it would rack up huge airfreight costs would be if they shipped large volumes of the device. With the pent up demand, I can well envision this scenario.
However, option 2 is more intriguing!
2 – For Apple to be worried about air freight costs, I have to speculate that the new product has intrinsic high shipping costs associated with it, probably due to its size and weight, or to special handling requirements. My speculation is that we’re looking at something potentially extremely large and heavy. Something much bigger that even the biggest 27″ iMacs or even 30″ Cinema Displays.
I’m figuring a 42″ flat panel LCD Apple TV in time for Christmas.
OK, I’m hoping for a 42″ or even a 50″ flat panel LCD Apple TV in time for Christmas.
Can you imagine how expensive it would be to air freight these things over from China? If they are ready to start full scale production, it would take months to bring them to market on a slow boat from China, they really would have to take the cost hit to ship them by air to hit the Christmas market.
Fall back position is that they miss Christmas but there’s another event quite soon after where the full Apple TV panel would make a considerable splash. After all, Apple is a consumer electronics company now, so when better to launch a full Apple TV but around the 7th January – the date of the 2010 International CES show. I’m not saying Apple would launch it there, Apple being Apple would probably launch it the same week and still grab all the attention away from CES – how very Apple like.
Just one final thing that I saw a couple of days ago that’s been gnawing at me and that’s a tweet posted by Kevin Rose before the comment on the air freight at the earnings call…
Omg just met a drunk girl from apple “no apple tablet coming… well, we wouldn’t call it a tablet” haha leak!!
Obviously, no way of validating that comment but it makes the hair stand up on the back of my neck!
Oh, and the Apple iTablet….
I’d expect to see it announced the day following the next stellar earnings call from Apple 🙂