According to a new report by Asymco this week, Apple is currently investing in both equipment (and machinery) at a rate which is considered particularly abnormal than what the company has done in this regard in the past.
Noting that by watching this trend he can effectively “assess approximately when and for which products [this] investment [is] allocated,” Asymco’s Horace Dediu highlights that Apple’s quarterly spend on PP&E by line time moving into the second quarter of this year appears to show exponential growth of the firm’s investments in machinery, equipment and internal-use software.
The question is: What is Apple investing so much in this production for? — The Apple television, new Macs, the next-generation iPhone, a “smaller” 7-inch iPad? … None of the above?
The graph above shows Apple’s current investment trends in machinery, equipment, and internal-use software, for the period December 2005 to December 2011, and moving into early this year.
As you can see, towards the end of the graph there is a notable and altogether striking difference in Apple’s investment trend compared to previous quarters. Stripping out the part shown in yellow and overlaying this with the following quarter’s iOS shipments yield, Dediu then offers up the following graph …
This, he says, appears to show there “there is [a] significant acceleration into the second quarter.”
“The increase in M&E is the highest for any quarter to date. Some of that is undoubtedly in service of the new iPad but some must also be the initial ramp-up for the new iPhone,” he writes.
Logic says that as demand for Apple’s products continues to rise so will its investment in production and machinery. However, the argument is that, (despite the launch of the highly anticipated fourth-generation iPhone, the iPhone 4S which followed last year, and the newly-introduced “Retina” display-boasting iPad), Apple’s investment in production has never exceeded the 1,500 Million mark.
That is, until this quarter.
The sheer size of this reported investment could suggest the company is gearing up to launch a new class of product, just as it did with the introduction of the iPhone in 2007 and iPad in 2010.
That said, it’s totally plausible that such investment in production could also be needed for a revamp to the firm’s entire product line. In this case scenario, such a jump in investment would make a lot of sense.