Is the Sky Falling - or Has Apple Outgrown Macworld?

Where were you in January 2007 when you first learned that Apple (Nasdaq: AAPL) was going to release an iPhone? I remember very well where I was: sitting glumly at my desk looking through the window at the snow on the ground and wishing I was at the Macworld Expo in San Francisco. A fellow tech journalist called -- from the floor of the rival expo CES -- very excited about the news Steve Jobs had just announced. It was all that people were talking about, he told me. He too wished he had gone to Macworld.

Macworld Expo, produced by IDG, is an annual trade show and conference dedicated to Apple products. Macworld has become a ritual pilgrimage every year for reporters, industry analysts, Wall Street pundits and, of course, die-hard Apple fans. For some, it ranks right up there with the Super Bowl as an event to properly usher in the new year.

Apple has nurtured its prestige by using it as the occasion for key new product announcements, and CEO Steve Jobs has frequently been its celebrity keynote speaker.

All that is changing, though, and Macworld Expo will never be the same.

Apple has announced that the 2009 Macworld Expo, held at San Francisco's Moscone Center Jan. 5-9, will be the last one it attends. Instead of Steve Jobs, Philip Schiller, Apple's senior vice president of worldwide product marketing , will deliver the opening keynote address.

Jobs, who underwent surgery for cancer in 2004, has been the subject of rumors that he is seriously ill. His decision not to appear at Macworld will no doubt lend fuel to that speculation. In fact, at least one research firm just cut its rating for Apple in part due to concerns about the company's future without Jobs at the helm.

Oppenheimer downgraded the stock from "outperform" to "perform" on Wednesday -- and it suggested that Apple either disclose what was happening with Jobs or make a succession plan public.

That aside, what's one to make of the fact that Apple is abandoning Macworld altogether? The company offers a straightforward explanation: Trade shows have become a very minor part of how it reaches its customers. It has, in fact, been steadily scaling back on trade shows, including NAB, Macworld New York, Macworld Tokyo and Apple Expo in Paris.

At face value, this makes perfect sense.

Waste of Money?

Since Apple has found such success with its retail operation -- providing customers with the opportunity to touch, feel and experience its products any day of the week -- a trade show once a year in a location that's relatively inaccessible does seem backward, Gail Bower, president of Bower & Co. Consulting, told MacNewsWorld. Trade shows in general are becoming obsolete, she said, "and 'obsolete' and 'Apple' do not belong in the same sentence together."

There is a case to be made that a trade show delivers little or no return on investment to a company that already has an established voice and presence in the market.

"They are a huge waste of resources," Rob Frankel, author of The Revenge of Brand X: How to Build a Big Time Brand on the Web or Anywhere Else, told MacNewsWorld. "I don't have a problem with Apple's decision -- the company has clearly outgrown them. In fact, most of the time, I advise my budget-cutting clients to dump the trade shows first."

Apple Woes

While Cupertino may not be clipping coupons for office supplies yet, Apple is clearly feeling the impact of the recession as consumers scale back their purchases of nonessential goods. This week, Apple was on the receiving end of a steady supply of bad news: Goldman Sachs downgraded its stock from "buy" to "neutral," citing a poor selling environment; a Kaufman analyst expressed caution about the December quarter due to lower shuffle sell-through; and NPD Group reported that November sales of the iMac were down 38 percent, compared with 2007 sales for the month.

Ultimately, though, Apple's decision to cancel its participation in Macworld appears to be more about image and communication strategy than dollars and sense.

"There are far more efficient means to service customers and clients, especially after a company reaches certain growth milestones," Frankel said. "Apple is no longer a little brother brand. It's a major player -- and, as such, can and should call its own shots on its own terms."