iPhone falls from the Apple Tree

Apple (AAPL) did a dirty and stuck it to the early adopters. The moral of the story is "Never believe the hype". When this product was launched the media went crazy. Apple PR and IR just kicked back and watched the fireworks. Now that everyone has finished their cigarette it seems so disappointing.

Apple made a difficult product decision ignoring the ramifications for the Apple brand. This residual ill will could impact other product lines simply because people are annoyed and want to bite back. Whatever happened to the plans to roll out the iPhone in Europe or was everything decided on US Domestic experiences? Harvard B School professors please start researching the case studies.

The stock dropped dramatically because the fairy tale valuations from the iPhone turned out to be illusory. I do not recall Apple giving any specific number guidance that was driven by iPhone expectations. They did happily include in the last conference call the hype comments that must have came from marketing. (Would you like to have a quiet and private drink with the finance guys and see what they were really thinking when the iPhone rocket took off)

Apple does have have multiple product lines in multiple markets. Was iPhone really warranting the huge share price increases. While a lot of people are mad at Steve Jobs there are a lot of investors who got what was coming to them. If enough of the market spits out their bite of Apple the value investors may become interested.

The iPhone debacle raises an interesting question for early adopters. These are the shock troops in marketing who rush out to buy your product at premium margins and get the wheel rolling. Any observer of military history will tell you that most of the casualties in a battle occur in the first wave of assault troops. Has Steve Jobs sacrificed the first wave? Does he have reinforcements that will save the battle? What happens when the next set of products are announced?

The next conference call will be a barn burner. Call transcript to be found on www.seekingalpha.com