With so much press speculation about a double-dip recession being imminent, I cannot help getting sucked in by headlines that may offer a clue on what’s to come economically. Such was the case today when I saw the headline “Is Apple Fearful of a Consumer Slowdown?”
That headline actually scared me. After all, if Apple is scared of the short-term economic prospects, certainly investors will be spooked and the stock market will tumble (again).
What I expected to see when I read the associated article was some information about how Apple executives are viewing the short-term economic situation. There was nothing of the sort. What I did see, but didn’t expect to, was a tie-in with Apple’s supplier and competitive strategies.
You see, the article did not cite any sources within Apple regarding the electronic device manufacturer’s take on a possible economic slowdown. It merely said that a third party analyst reported that “has slashed orders to its Asian suppliers of iPad parts by 25%.”
While outsiders have interpreted this to mean a variety of things – including the possibility that consumers are hunkering down in the face of a bad economy – one of the industry experts thinks that it’s merely a matter of Apple’s supplier and competitive strategies being deployed – an observation he calls the “bad-ass competitor hypothesis.”
So, what is the “bad-ass competitor hypothesis?”
The article describes it as “Apple purposefully over order[ing] parts to lock out competitors. Then late in the quarter they scale back knowing it’s too late for rivals to react and too bad for suppliers who wouldn’t dare mutter a bad word about their sugar daddy.”
While very few people know whether or not this is true, it’s undeniably interesting. It if is a tactic being used by Apple, it’s a good example of procurement being deployed in a strategic way: to keep competitors at a disadvantage.
I hope that, if Apple’s order reduction is true, it is because of this competitive strategy instead of a recognition of softening consumer buying power. I also would love it if such reason for the order reduction became public knowledge so that investors could rest easier.
The last thing anyone’s stock portfolio needs is a good business strategy to be misinterpreted as a harbinger of more economic struggles.