Apple enthusiasts talk about

Brian Hayashi — Wed, 23 Jul 2008 19:00:37 -0700

Apple enthusiasts talk about what could be happening with all of the fervor of a religious cult. While the iPod business is flat, meantime laptops are selling like crazy, 25 million apps were downloaded since iTunes began selling them, and to top it all off, Steve Jobs' health is in question for the first time I can remember.

I suppose the new development could center around the television. Apple TV has been a gleam in Cupertino's eye for almost 20 years now.

But I look to MobileMe and the iPhone for clues. MobileMe is Apple's flavor of cloud computing and feels like a trojan horse; something that is going to set something else up. As for the iPhone, Apple's free SDK feels like the best deal since Hypercard and like that old program, it requires an Apple to run.

With Apple contract manufacturer Asus doing a bangup job in a rapidly growing netbook category, I look to Apple to launch a low-cost netbook using the aforementioned Centrino 2. Today, Apple's architecture is being held up by having to support two legacy architectures: PowerPC and the Carbon API. If history is any indicator, a bold move into netbooks by Apple combined with a new OS X release would have the same effect that the launch of System 7 did many years ago: clearing the deck of the detritus of previous releases, and paving the way for a new era of profitability.

For years, Apple has had a fraction of the total PC market while the Wintel syndicate made bank. In the years since Windows 3.0 was launched, we've seen the PC manufacturers systematically squeeze every potential source of profitability until there is no margin left. How delicious the irony if Steve Jobs is able to turn the tables. Look at the experience/cost curve that drove the iPod to $49 and the iPhone down to $199: what if Jobs applies that same model to PCs?

The funny thing is that this kind of bold move wouldn't have been possible had Steve Jobs not spent years outside Apple with NeXT. A move like this would cement Steve Jobs' legacy while he is still hale and hearty enough to enjoy it.

(I discuss the potential hardware/software configuration, plus my rationale for what I believe to be the pricing, at http://www.connectmenetworks.com)

The Mac keeps driving Apple

IDG News Service — Wed, 23 Jul 2008 16:25:14 -0700

Some 48 hours removed from the light and heat of Apple's third-quarter earnings announcements, a couple of things deserver further examination. And no, I'm not talking about the "Did someone just cough? Sell! Sell! SELL!" mentality that seems to have gripped the investment community.

What still stands out about Apple's third-quarter performance--for me, at any rate--is just how well the company's Mac business did. In case you missed Monday's announcement, Apple said that it sold a little bit less than 2.5 million Macs during the three months ending in June. That's the most Macs Apple has sold in any quarter ever. And if it sounds like I'm repeating myself, that's because I am--this is the fourth time in the last five quarters that Apple has set a new standard for Mac sales.

Apple bested its Mac sales record without making too many radical changes to its product line. Yes, the just-completed quarter was the first full quarter in which the MacBook Air was on sale--the ultra-thin portable began shipping about a third of the way into Apple's second quarter. And that doubtlessly helped the company move 1.5 million laptops during the June quarter, a 37 percent gain from last year's portable shipments. Otherwise, apart from some chip changes to the MacBook and MacBook Pro lines as well as a similar processor bump to the iMac, Apple's Mac offerings didn't undergo any radical changes. That suggests to me that the company continues to reap the benefits from its switch to Intel-supplied chips and that its current lineup has struck a chord with consumers.

That's especially significant given the uncertain state of the economy right now. During Monday's conference call with analysts, Apple chief financial officer Peter Oppenheimer declined to comment on the current economic situation, saying he preferred to leave the forecasting to others. That's probably a sound strategy, though you don't exactly need to have a seat on the Federal Reserve board to conclude that people aren't exactly feeling bullish about the economy right now and, therefore, probably less inclined to spend money on pricey consumer items like computers. Still, that doesn't seem to be affecting Apple any, as Mac revenue grew 43 percent during the June quarter.

Given that, it's hard to make sense of the Wall Street-centered gasping over Apple's expected September performance. Oppenheimer, who's notorious for low-balling these sorts of things, told analysts that the company expects to see fourth-quarter revenue of $7.8 billion, a 25-percent improvement over the year-ago quarter's results. But because that predicted growth isn't as big as analysts wanted it to be--and because Apple is expecting flat earnings growth from a year ago--Apple's stock got pummeled earlier this week.

Of course, Oppenheimer mentioned something else about fourth-quarter expectations, which is the second thing that stood out for me from Monday's earnings announcement. Namely, the company expects a dip in gross margins because, among other factors, it's planning "a significant product transition."

The Internet is doubtlessly abuzz with speculation about just what constitutes a "significant product transition," and if I was foolhardy enough to talk about the state of the economy, I'm certainly not going to pass on the chance to add my two cent's worth of blather about potential products to the mix. Because Apple mentioned this product transition in the context of costs going up--in other words, it costs companies a little bit more to ramp up production of something new--I'm going to assume this is a transition from an existing product to something that's largely new, as opposed to something with just a few minor tweaks. The question remains, however, what exactly that might be.

I can venture two guesses. Fall is the perfect time for Apple to refresh its iPod lineup. Last September saw the company overhaul the iPod nano, rebrand the iPod classic, and introduce the iPod touch, for example. In September 2006, the iPod line underwent a similar reshuffling, as Apple also introduced feature-length movies to the iTunes Store. So it's not too ridiculous an assumption that another iPod-related move might be in the cards for this fall. Where Apple takes the iPod now that the touch essentially has all the capabilities of an iPhone save for the calling features--well, that requires more brainpower than I'm able to muster.

The other guess at what Apple might have cooking involves last week's Centrino 2 unveiling by Intel. My colleague James Galbraith already raised the possibility of these new chips--which offer better battery life, faster clock speeds, and improved graphics capabilities--finding their way into the Mac. So I don't think it's a leap of faith to conclude that Apple might have some new laptop offering in mind that not only incorporates the advances of the Centrino 2 but also more the environmentally-friendly objectives Apple has already rolled into some of its products.

That is just one man's guesses, though. I'm sure you have some ideas of your own.

More news, commentary, and predictions from The Industry Standard:

Prediction: Apple will ship 10 million iPhones in 2008
Prediction: 3G iPhone jailbroken within a week
Prediction: Apple hits 18% share of US computer market by end of year
Prediction: Apple's iTunes to displace Wal-Mart as largest music retailer in U.S.
Prediction: Apple opens a store in Second Life

The Industry Standard - The Mac keeps driving Apple - Comments

Apple enthusiasts talk about

The Mac keeps driving Apple