Something is Up Apple’s Sleve

So it appears that Apple has declared a vacation blackout for the last week of January and first few weeks of Februrary. Then AT&T announces they have cut the price of the iPhone 3GS in half. Perhaps this is a total coincidence, but it does seem oddly timed. Regardless, this is shaping up to be an interesting few weeks ahead.

Apple Predictions

A market research analyst gave some predictions on Apple today. Here are some highlights:

  • 95% chance of iPhone on Verizon, expected in March
  • 90% chance of iTunes Cloud Service
  • 5th Generation iPhone with “near-field communications” (NFC) capability

Will we see these predictions come through? Happy new year!

Apple Music Events: They’re Not Just for iPods Anymore

Apple recently hosted their yearly “music event”. As expected, they introduced new iPods. However, this particular event had a lot of little nuggets of tantalizing information. Now that I’ve had some time to digest it all, I’ll be writing a series of articles on these nuggets. However, I thought I’d quickly touch on a few topics.

Steve Wozniak was in attendance. Steve Jobs seemed genuinely surprised and delighted. Does this have any significance? When was the last time Woz attended any official Apple events?

It’s interesting that Apple introduced printing into the upcoming iOS 4.2 update for November. My guess is they got enough complaints about the iPad not being able to print, especially from business users, that they added it into this update. I felt that by not including printing originally, Apple was trying to make a point that the iPad was in many ways a replacement for paper. Perhaps the world just isn’t quite ready for that yet.

Steve Jobs made it a point to emphasize that an iPod Touch is an iPhone without a contract. Why would he do this? If he was simply trying to make clear that the iPod Touch is an iPhone without the phone, it seemed like overkill. It also seemed like he slowed down and wanted to really drive this point home. Was Steve taking a jab at AT&T? Or was he swinging at the entire wireless industry? Or perhaps he was foreshadowing something else altogether.

Apple finally revived the Apple TV at this event. Which is somewhat interesting because Apple calls this their yearly music event. Everything else discussed at this event was music related, yet the Apple TV is obviously geared towards movies and TV shows. It simply could be the fact that this was good timing for Apple to release an updated Apple TV prior to the holiday shopping season. But it could also be a sign that Apple has finally figured out how they want to position the Apple TV. And maybe they feel the mainstream market is now ready to receive the Apple TV in earnest. The next few weeks and months should tell if Apple is really ready to take the Apple TV out of “hobby” status.

Steve Jobs also took a subtle swipe at competing devices. While discussing what consumers have taught them about the Apple TV thus far, he said, “They don’t want a computer on their TV. They have computers. They go to their widescreen TVs for entertainment, not to have another computer. This is a hard one for people in the computer industry to understand. But it’s really easy for consumers to understand. They get it.” This is a good point that I believe has relevance beyond the home media market.

When Netflix announced their app for the iPhone a few months back, I was a little surprised that Apple allowed it, since it seemed to compete with their iTunes movie service. So you can imagine my surprise when Apple themselves announced Netflix support in the Apple TV. Suddenly it seems Apple is very cozy with Netflix. What could this mean?

Finally, there seems to be some tension between Apple and Facebook over Apple’s new Ping social network. I noticed during Steve Job’s speech that Ping showed that you could log in with your Facebook ID. I even mentioned to my wife that this was a great move on Apple’s part. Yet the next day I read reports that this feature was not available. Sure enough, this feature was not available, even though it still mentioned FaceBook on Apple’s web site. Something interesting is going on behind the scenes and I can’t wait to find out what that is.

So stay tuned as I tackle some of these topics in more depth very soon.

Antenna-Gate Heating Up

Just the fact that it has been given a “-gate” moniker shows that the publicity regarding the alleged antenna flaw with the new iPhone 4 has reached widespread proportions. Already this week has been hot and heavy with iPhone 4 antenna-related news and today seems especially heavy.

It all started on Monday with Consumer Reports stating they can’t recommend the iPhone 4, even though it is their highest rated smartphone, because their testing shows there is a reception problem. This started off a renewed wave of interest in the story and the next few days were full of articles and bloggings giving opinions, suggested fixes, speculation on the possible problem, as well as conspiracy theories. On Tuesday Consumer Reports stated that they believed Apple should fix the problem for free, which then triggered outcries for Apple to recall the iPhone 4. There were even bookies giving odds on the probability of Apple actually doing a recall.

Today’s news is that an Apple engineer warned of a possible problem with the antenna early in the design phase. As well, reports are that current shipments of the iPhone are delayed possibly due to Apple deploying a manufacturing fix for the problem. Other reports are that iOS 4.01 may be released today, containing the signal strength indicator fix that Apple has promised. Finally, Apple has called a press conference for 10AM Pacific Time Friday morning. This of course, is just sending the press into a frenzy as they try to guess what might be talked about at this press conference.

As much as has been made of this problem, based on my reading I believe that there may actually be a problem – but at the same time it is likely being blown out of proportion.

Firstly, while there are many reports of the problem, there seem to be just as many people who are not reporting any problems. Of course, with the sheer volume of iPhones sold, even a small percentage of problematic phones could be a very large number. So the question is how many iPhones are actually affected? It will be interesting to find out the answer, if we ever do.

Consumer Reports’ testing seems to prove there is a significant signal loss, which they believe could cause dropped calls, if the phone is held in a certain way. Consumer Reports tested 3 different iPhones, which they claim they bought all in New York City, albeit at different stores. Of course, if those 3 phones were made in the same factory, then it could be that they found a flaw coming from a manufacturing flaw in a particular factory. It will be interesting to hear how Apple responds to Consumer Reports’ claims.

Finally, even with all the bad publicity, Apple is still selling the phones like hotcakes. Apple’s stock has taken a small hit, but many analysts are claiming that this is simply an opportunity for investors to get in on Apple stock while the price is down. There is the saying that “there is no bad publicity” and as long as Apple deals with the situation correctly, perhaps that saying will hold true this time as well.

Ya Think?

An article on states that if Apple starts selling the iPhone on Verizon, it could damage the momentum Google has built up for the Android devices.

I’ve said in the past (here and here) that even just a rumor that an iPhone would be available on a particular network could be enough to damage or short-circuit any momentum competing smartphones generate. Obviously, if the iPhone were to be released on a particular network, it would likely dominate that carrier’s smartphone sales while pent-up demand was filled. But the real proof in the pudding would be head-to-head sales after the initial sales surge. Given the power of Apple’s marketing machine right now, it would be hard to predict any outcome other than Apple coming out on top.

Hell Has Frozen Over; Pigs Have Taken Flight

Apple … “I’d shut it down and give the money back to the shareholders.” – Michael Dell, October 6, 1997

“Apple is already dead.” – Microsoft CTO Nathan Myhrvold, June 6, 1997

May 26, 2010: Apple passes Microsoft to become the most valuable technology company in the United States – something completely unfathomable ten to fifteen years ago. The New York Times has called it “the end of an era and the beginning of the next one“.

Now to be fair, the valuations are calculated by Wall Street “market capitalization”, which can be considered a fairly arbitrary measure. Regardless, the symbolism of this event can not be missed: it is yet another sign that we are in a transition in the technology world. The “old world” of technology marked by companies such as Dell and Microsoft, is giving way to the new world of technology led by Apple. If you aren’t already preparing yourself for the new world of technology, let this be a wake up call!

Just for fun, let’s take a look at the market capitalization of the companies involved in the quotes above:

  • Dell : $26 Billion
  • Microsoft: $219 Billion
  • Apple: $222 Billion

In fact, Apple could purchase Dell outright with just the cash reserves it has on hand today – and still have about $20 billion left over!

Don’t Forget the Wii

With all the talk about the iPad and the iPhone, it is easy to forget another technology device that shook up the established markets just a few short years ago. An article I recently read reminded me of this fact. The Wii, rather than catering to the traditional “gamer”, created a device that would appeal to the mainstream. Similar to the way so-called experts downplayed the iPhone and are downplaying the iPad, many gamers chided the Wii’s relatively weaker graphic capabilities and simplified controllers. Of course, their viewpoints were narrowly focused and didn’t take into account that the Wii would redefine the gaming market. The rules of the Old World don’t apply in the New World. The following quote from the article, “Is casual gaming destroying the traditional gaming market?”, sums this up:

The big videogame console makers and developers catered to performance-oriented customers who demanded more and better and who were repeat buyers. Then in 2006, Nintendo’s inexpensive Wii console came along, emphasizing accessible game play over elaborate scripts and point harvesting. So far, Nintendo has sold 28 million units of the Wii in the U.S., while Microsoft (MSFT) has sold just 19.4 million Xbox 360s and Sony (SNE) 11.7 million Playstation 3s—despite both launching before the Wii.

The parallels between the Wii and the iPhone (and it seems with the iPad) are almost eerie. New World technology shakes up the Old World markets and most of the people who are experts in the Old World seem completely caught off guard.

Less is More

I just read an article that nicely sums up why, regardless of what the technocratic elite believe, the iPad will be a huge hit with mainstream users. It’s the KISS theory – Keep it Simple Stupid. It doesn’t matter how powerful a tech device is – if it is not simple, people won’t be able to harness that power. The iPhone changed the world not just because how powerful it was, but because it was the first smartphone that an average person could pick up and understand how to use almost immediately.

Hey, I get it. The fact that non-technical users are being empowered to use technology with little need for assistance is very threatening to many of those who make a living from or pride themselves on their technology knowledge. To those I say: “Welcome to the New World. Adapt and Survive.”

Speaking of Strikeouts …

As I mentioned in part 3 of my iPad series of articles, many commentators were downplaying the iPhone prior to its introduction. I stumbled upon this article from 2007, titled “Apple should pull the plug on the iPhone“. It is a classic example of the type of old world thinking that still predominates the technology industry today. After the runaway success of the iPhone this article reads like a parody. It includes such gems as:

“It’s the loyalists who keep promoting this device as if it is going to be anything other than another phone in a crowded market.”

“…the mobile handset business. This is not an emerging business. In fact it’s gone so far that it’s in the process of consolidation with probably two players dominating everything,”

“During this phase of a market margins are incredibly thin so that the small fry cannot compete without losing a lot of money.”

“As for advertising and expensive marketing this is nothing like Apple has ever stepped into. It’s a buzz saw waiting to chop up newbies.”

“… phones go in and out of style so fast that unless Apple has half a dozen variants in the pipeline, its phone, even if immediately successful, will be passé within 3 months.”

“…its survival in the computer business relies on good margins. Those margins cannot exist in the mobile handset business for more than 15 minutes.”

“If it’s smart it will call the iPhone a “reference design” and pass it to some suckers to build with someone else’s marketing budget.”

(This last comment is very interesting in light of what Google is trying to do with the Android.)

Apple’s track record since the return of Steve Jobs has been to introduce revolutionary devices into stagnant markets. This author assumed that the iPhone was just going to be another me-too phone. He failed to have the foresight that the iPhone was going to change the rules of the how the game was played. The iPhone was such a breakthrough device that it completely transformed the cell phone market. Now, this same author is writing articles such as “Apple’s iPad is far from revolutionary“, with the same type of logic that he used with the iPhone article referenced above. I guess some people will never learn.

Apple iPad – Home Run or Strikeout? Part 3: Criticism

If you have been following the coverage of the iPad announcement, you will have noticed quite a bit of negative commentary regarding the iPad – along with the positive reviews to be sure. Some people are surprised by this, considering all the hype leading up to the iPad introduction. Certainly, many more people now pay attention to the tech market than they did when the iPhone was introduced. They likely don’t recall the same type of negative press that the iPhone received 3 years ago. Now, as then, most of the negative remarks seem to be coming from people who are not the apparent target market of the new device or who simply don’t get what the new device, in this case the iPad, represents.

I’ll admit that as the iPad was being introduced, I was disappointed that it would not run Mac OS X applications. I was hoping the iPad would be a hybrid Touch OS/Mac OS X device. That was the technical user in me doing the thinking. But as I kept listening and began to grasp what the iPad could do and how people will make use of it, I realized that this was not a real issue at all.

The first thing to understand is that the iPad is not going to be a suitable replacement for many users’ desktop or laptop computers. It should be pretty clear that the iPad is a new type of device. While it is a computer, it is not a “general purpose” computer like we know today, but rather more of an “appliance”, as I described in my previous article. For most users, the iPad will do everything they need and a lot of what they want. But for other users, especially highly technical users, the iPad can not (at least not yet) do everything they need and want.

Now keep in mind that these types of users are not the target market of the iPad. However, they are the ones complaining the loudest about the iPad. Because users who are more technically-inclined are also more likely to write articles or post complaints on the Internet, it seems to slant a lot of the coverage of the iPad in a negative fashion.

The same thing happened with the iPhone. A lot of commentators downplayed the iPhone and many technical users focused on perceived flaws of the phone. Of course, none of that mattered as the mainstream public fell in love with the device and the rest is history. It seems very likely that the same thing is going to happen with the iPad, especially considering that the new device already has the momentum of the iPhone, iPod Touch, and the Apple App store to begin with.

Ironically, many of the technical users who are complaining about the iPad simply don’t get what the iPad can represent to them. These users appear to have the perception that Apple is trying to convince them to replace their existing computers with iPads. As I explained above, this isn’t the case. And by taking this attitude, they are blinding themselves to a very important idea. The iPad can be a great augmentation to their existing technology – if not for themselves, for their families. Consider a household with a general purpose computer for the more technical needs of a family and then a few iPads for the rest. The iPads can be picked up for quick use, satisfying the Internet needs and other digital media functions that most average users need a computer for. I predict that even highly technical users will begin to appreciate the iPad for those impulsive computing needs where their desktop or even laptop is not convenient or accessible.

For example, my wife and I for years have talked about some sort of computing device that would live in our kitchen. We often have wished we could look up recipes while in the middle of meal-making. While a laptop can sort of fill in that need, it is not an ideal device to have in a kitchen environment. Aside from the risk of spilling food or liquid on an expensive device, the keyboard and mouse interface is simply not convenient when your hands are busy preparing food. Consider an iPad that is mounted on some sort of arm and/or protected in a food-proof case similar to what is available for iPhones. This could be exactly the device we’ve been waiting for. Certainly I am a highly technical user. I’m not considering replacing my laptop with an iPad. However, I can certainly see myself using an iPad in many situations, such as the one I describe in the kitchen.

Finally, there are those users who are going to resist change for any reason and fight tooth-and-nail against it. While I don’t agree with their viewpoints, I can understand that many people feel threatened by change and also the idea that much of the knowledge they posses in the current computing environment may be made irrelevant by new advancements. I could write a great deal about this, but instead I direct you to this article that sums up my thoughts on the topic almost exactly. The author basically lays down an argument that the “old world” of computing (i.e. computers as we know them today) are giving way to a “new world” of computing (in which he basically describes my idea of appliance computing). I especially like the way he describes that new world computers are focused on the 80% of the 80/20 rule. This is precisely why the iPad will be successful. The 80% will love the device, no matter how much the 20% complain about it. I highly encourage you to read this article.

So bottom line, if you hear or read negative comments about the iPad, keep in mind the viewpoint of the commentator. Are they a technical user who fits the above profile I describe? If so, take what they say with a grain of salt. While it is often a good idea to listen to people who have more knowledge about a particular topic, in this situation their old world 20% viewpoint may not be relevant if you are a new world 80% user.

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