The lack of an iPhone5 was the right move for Apple ($AAPL)

I think I understand the new iPhone and Tuesday's lack of fan fare by Apple [stckqut]aapl[/stckqut].  It wasn't because Steve Jobs was literally on his death bed but rather because they could reasonably assume that Steve wasn't going to be around next Spring/Summer.  Granted that they should have decreased expectations for a new iPhone5 and especially silenced the members of the board that set the wrong expectation (can Gore be trusted on anything these days?).

Apple is doing great right now:

  • more than holding its own in the phone market (yes, Android sells more but all phones are compared to the iPhone and together iPhone/Android are destroying everyone else),
  • no significant challengers to the iPad or iPod,
  • Mac sales are higher than ever
  • over $75B in assets

It is reasonable to assume that Apple has the iPhone5 nearly done but maybe could not have the supply of product that would be required for its delivery. They would need more phones in inventory than ever produced by any company. The last thing the non-Jobs era Apple needed was to not be able to thrill everyone on delivery so being a bit more cautious was likely a wise move. Apple could not afford a supply problem going into the holiday season and they couldn’t ‘pre-announce’ a new phone as that will destroy sales of their current phones.

Apple didn't need an amazing event this time, they needed to execute on a slightly better product and they definitely did it.  The 4S is arguably better than any phone on the market today and definitely good enough that no one is going to say, "I will never buy that slow and ugly thing.”  iOS5 is definitely an improvement and Android is going to have a hard time leapfrogging it - especially for tablets.

I continue to be bullish on Apple at least for everyone but day-traders. My last review of the company was on August 29 and I still think they are setup to achieve a great long-term stock price.  As a disclaimer that I fully state elsewhere on this site, at any time I may be long Apple.

What this sets up is a very strong event next Spring.  It could bring the iPad3 and the iPhone5 which will dominate electronics sales for the spring.  Also, it means that the amazing number of 4 owners will be very near their 2 year contracts and itching to buy a new phone without a lot of pain to the carriers (an iPhone5 now would cause a lot of pain to VZW and ATT as they dealt with upgrade requests for contracts with only 8-16 months covered).

In the spring, a strong announcement on a cool set of devices will significantly bounce the stock price of Apple. It will mean that Apple is surviving without its iconic CEO. It will mean that Apple learned from Jobs to "think different."

Of course, this will also mean that Apple has lost its luster if they have a lackluster event next Spring – if that happens then the stock will plummet.

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