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New iPhone Will Jumpstart Demand for Wireless Broadband
It was over a decade ago when I got my first broadband connection — by today’s comparison a very slow DSL connection from my then-local provider, Verizon Communications, which went by the name of Bell Atlantic. At $60 a month (not including the cost of the modem), the service, which got around 256 Kbps on a good day (vs. top speed of up to 640 kbps), was really a novelty.
With the exception of many who worked in New York’s Silicon Alley, not many cared about the expensive, always-on connection. Being a broadband nerd of sorts, I couldn’t care less about the price tag; I couldn’t wait to pay more to get more bandwidth.
I am reminded of that moment — of that thrill — of experiencing the web without delays, thanks to the new iPhone and its ability to connect to the 3G network. I already can’t wait for AT&T to upgrade their network from HSDPA to HSPA to HSPA+ to LTE so we can get faster and faster broadband.
For now, the best we can get on the iPhone 3G is HSDPA, which has a theoretical download speed of between 400 and 700 Kbps, though Apple on it site says it’s going to be 2.4x the speed of EDGE - about 100 Kbps. Still, I am going to go out on the limb and mark July 11 down as a red-letter day for 3G wireless.
Don’t get me wrong — it isn’t the day 3G wireless was first introduced in the U.S. Neither is iPhone the first 3G phone. I have had 3G phones, USB and PC Card modems for a while now. It isn’t the first time I have used 3G broadband; I am on old hand at using EVDO to connect my laptop to the web, or at connecting my Nokia e61 to a 3G network whenever I am in Europe, or using the Nokia N95 to snap-and-share photos and videos via one of the life-streaming services.
Yet this is the first time that a 3G connection on a non-computer device actually feels like a broadband connection. “This device is a true game-changer. Why? The immediacy of the data at your fingertips is huge. Imagine, looking up anything, anywhere,” is how AT&T Mobility CEO Ralph de la Vega told me in a chat earlier this year. In the U.S. especially, the iPhone is going to have a major impact, mostly because are a PC-centric society constantly search for web-like experiences. (So far, most of the carriers have made their money off 3G computer connections. I am wondering how the iPhone impacts (or not) 3G usage in Europe.)
I received the new iPhone 3G on Friday, and since then I have been tinkering around it — a lot. My first (and perhaps lasting) impression: The 3G speed is quite addictive and it doesn’t take long to slowly start switching your daily compute tasks to this device instead of reaching for your computer.
A lot of that is because the iPhone has a generous screen and is very easy to use, but more importantly it has a more than adequate browser, making it an ideal candidate for being a “cloud client.” All that was missing was a fast-enough connection that helped “off-source” some (or, in the case of others, many) tasks from their computers.
The briskness with which I can surf web pages means it has become easy to keep and eye on this and our other network blogs. The email shows up in the inbox as quickly as on my desktop. NetNewsWire’s iPhone App has already become my preferred way to read RSS. Its ability to sync with the desktop client over the web only adds to its utility. Facebook on the iPhone is almost infinitely more usable than its web counterpart. (John Markoff is marveling at the pocket-sized experience as well.)
Truphone’s new iPhone app makes it easy to place VoIP calls on the iPhone, thereby making it less necessary for me to fire up the old computer to call mom. It sure would be nice to see a Skype client for iPhone. I am sure that over a period of time other habits will form — including watching YouTube videos - which just got bearable, thanks to a faster connection.
More importantly, 3G has freed me up from thinking about the availability of a Wi-Fi connection. Of course, if everyone else gets into the same habit, as I suspect they will, this is going to put some stress on AT&T’s 3G Network.
Going back to the early days of broadband, the thrill of doing mundane web tasks faster and without tying up a phone line didn’t seem as great in the beginning, but acted as a spark for the broadband revolution. It wasn’t till Shawn Fanning unleashed Napster that broadband demand took off, eventually leading to innovations like Skype, YouTube & Facebook.
I think that from that perspective, the iPhone 3G is going to provide a similar spark for wireless broadband. Just like touch and big screens are becoming increasingly commonplace in high-end phones, over the next 12 months I wouldn’t be surprised to find mobile device makers focusing heavily on the Internet, all while waiting for the elusive killer app, which none has seen just yet. Despite the tight control of carriers on wireless spectrum, this could be the start of a new wireless wave.
Photo of iPhone & Safari courtesy of Apple.
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Which Mac Notebook Is For You? Take Our Poll
Apple has introduced new versions of it notebooks — Macbook & Macbook Pro — with a little more speed, more hard drive and memory, but the same price. Tell me you are as underwhelmed as me by this announcement. These speed bumps are business as usual in the PC business, thanks to Moore’s Law.
The new MBPs have a trackpad with Multi-Touch gesture support similar to that of the Macbook Air, but that’s all. I was hoping for a redesign of Macbook Pro. And the new notebooks use Intel Core Duo 2 Penryn processors, which makes me wonder: Will the new machines run cooler? (Frankly I will settle for cool enough for mobile computing.) And will they have better battery life, as suggested by Intel’s claims of energy efficiency?
Why Apple Needs Movie Rentals
The Financial Times reports that Apple is close to announcing a deal with FOX that will allow the Cupertino, Calif.-based computer and consumer electronics giant to offer movies for “rent” via its iTunes store sometime in 2008. Other Hollywood studios are also said to be negotiating with Apple, the report says.
The rumor is being viewed by some as a way to revive the flagging Apple TV platform. The reality is that Apple needs to beef up its video offerings if it wants to continue the iPod cash machine humming. The best clue is the easy-to-rip-and-transfer-to-iPod capabilities that may be built into future FOX DVD offerings.
Apple will also for the first time extend its FairPlay digital rights management system beyond its own products. A digital file protected by FairPlay will be included in new Fox DVD releases, enabling film content to be transferred or “ripped” from the disc to a computer and video iPod.
A quick visit to the Apple’s iPod website shows that with the exception of low end iPod shuffle, every iPod is video capable. The big money makers for Apple are its new iPod Touch and iPhone devices. Shaw Wu of American Technology Research in a note to his clients estimated that iPod sales for the current quarter will be about 25 million.
“It’s looking like Apple’s most optimistic guidance in eight quarters is turning out to be conservative after all. Our recent checks with supply-chain sources lead us to believe Apple is positioned to deliver upside.” (via Bloomberg)
With 5 million iPhones expected to be sold, Apple at the end of fourth quarter 2007 will have between 5-and-10 million widescreen devices. This is a market that will be looking to fill their new acquisitions with content. Sure, there is a lot of video content for sale at the iTunes Store - television shows for example - but movies are in short supply. As Liz writes over on NewTeeVee
Compared to the six million songs it has in stock, iTunes has about 500 movies and 550 television shows. In October, Apple said it had sold over three billion songs, over two million movies, and 100 million TV shows.
Sure Disney and some other studios offer movies for download, but high prices have kept the buyers away. At $2.99 a pop, the rental business makes more sense. Say if you travel a lot, then filling your device with two or three movies you want to watch before leaving home is still cheaper than paying the airlines for a limited selection of movies, or watching the standard fare.
There is another reason why I don’t think this deal is about Apple TV and the living room - at least not yet. I have been buying TV shows - Numbers, CSI and Psych (before NBC pulled the plug) - and an occasional movie from Apple iTunes. While these were great to watch on my Macbook Pro’s 15.4 inch screen, the experience was mediocre at best when watching the shows my LCD TV via Apple TV. Unless Apple increases the quality drastically, many of the new HDTV owners will find the experience of watching videos on their big screens lagging.
For studios this is not a bad deal. As I have written in the past, DVD business is slumping, and these rentals can help compensate for the lost DVD revenues. More importantly, if someone likes a movie as a rental, they can buy the higher quality (or HD) versions of their DVDs.
Related Posts from NewTeeVee
Photo courtesy: Apple Inc.
The Amazing Rise of WebKit Mobile
The Google Android SDK, released yesterday, confirmed what had been long been rumored: Google’s mobile platform uses WebKit, an open source browser engine . “We have been working on our mobile implementation of WebKit for quite some time,” someone from the Android team wrote on The Surfing Safari, the official blog of the WebKit community.
Given how much Google has helped Firefox, its choice of WebKit strikes me as hugely significant for the browser market. Such an endorsement is only going to increase the importance of WebKit’s growing presence in the mobile ecosystem.
WebKit is an open source web browser engine. WebKit is also the name of the Mac OS X system framework version of the engine that’s used by Safari, Dashboard, Mail, and many other OS X applications. WebKit’s HTML and JavaScript code began as a branch of the KHTML and KJS libraries from KDE.
Even though Opera is still the mobile browser to beat, WebKit-based browsers are fast becoming a common presence in some of the newer mobile platforms. In addition to Google’s Android, WebKit has found a home inside the Apple iPhone platform as well as the Nokia-backed Symbian S60 phones, such as the N and E Series devices.
If you take the total number of the N and E Series phones and iPhones, my back-of-the-envelope (and highly unscientific) estimates put the number of handsets using WebKit-based browsers at over 30 million.
In the desktop domain, the growing popularity of Mac OS X computers has resulted in the WebKit-based Safari grabbing between 3 and 5 percent of the total browser market share, thereby making it the third most popular browser after Microsoft Internet Explorer and Mozilla Firefox.
The real opportunity for WebKit seems to be in the mobile world, where no browser has been able to establish an IE-like hegemony. Sam Sidler, who has been working on the open source Camino browser, in a recent essay wrote,
Mobile browsing is still very much in its infancy, but innovation on the mobile platform is moving faster than ever. What you are able to do today on your cell phone (surf the Web, view digital media) isn’t anywhere near what you’ll be doing in five years
The growing popularity of WebKit, according to some of my browser guru sources, is due to the fact that it’s easier to code for compared with other browser engines. It also has a well-organized and smaller code base, which is easier to manage. Finally, it is quite fast and renders faster, which makes it attractive to developers.
More importantly, however, WebKit has a smaller footprint, which means it has less memory and CPU requirements and as such, is ideal for the mobile environments. Apple’s (and now Google’s) mobile ambitions have prompted the company to devote a lot of resources to WebKit, turning it into a viable mobile platform. In comparison, IE Challenger, Firefox and its Gecko engine are only getting started in their mobile efforts. They’ll have to cover a lot of ground before they even catch up with WebKit.
For Investors (so far) Apple Better Than Google
Remember when Apple’s (AAPL) stock topped the $100 mark, powered by another stellar earnings report? It was only six months ago. Judging from the rapturous reaction in the aftermarket today to Apple’s most recent earnings report, the stock is close to racing past the $200 mark.
Apple closed active trading Monday at $174.36. Following release of its fiscal fourth-quarter results, it shot up as high as $187.76. After market trading can be volatile, but it can often, if not always, be a good gauge of how the stock will fare in official trading the next day. It’s a pretty safe bet Apple shareholders will have a pretty good day Tuesday.
Apple has turned into one of those superstar stocks that seem incapable of disappointing investors. Just add money and watch your returns grow. The last big superstar stock in the tech firmament was Google (GOOG). But Apple seems to be in a higher class of supernova than even Google.
Ever since Google’s first day of trading back in the summer of 2004, Apple’s stock has outperformed Google so that, as of the close of trade Monday, an investor who bought Apple in the stock market on Aug. 19, 2004 would have made twice as much as an investor who invested the same money in Google shares.
A lot of people have been talking about how Google’s shares have started to rally again after trading in range of $400 a share and $500 a share for months. In the last two months, Google’s stock has risen 27% to an all-time high of $658.49. In that same period Apple has risen 33%. Remember, that’s after Google’s post-earnings rise and before Apple’s.
So when will Apple see a slowdown the way Google’s did earlier this year? It depends. There really isn’t a lot in Apple’s business operations to suggest a dramatic slowdown in its business. As the earnings call showed, iPods and iPhones are spurring Mac sales, which are likely to spur more upgrades, whether to Leopard or to future generations of iPods and iPhones, and so on.
I think any danger to Apple’s stock is more likely to come from investors themselves. Once a stock is labeled a sure bet to rise, the speculators come running. The top graph above shows Apple’s P/E ratio creeping higher in recent months. Speculation could drive Apple’s price much higher in the near term but add downward volatility longer term. A stock split would only add to speculative volatility.
On the other hand, there is the value of historical perspective can provide. Apple has had Microsoft on the run in key areas. So has Google. But if you compare both those stocks to Microsoft since the 1980s, you get the sense that both of them have a long way to run.
Now that’s a lot of catching up to do.
(Apple) Stock Hacking & the power of DisInformaton
If you’re tired of the old cliché that information is power, here’s a new one: Disinformation is every bit as powerful.
That much we know from the mischievous email that was apparently sent out to Apple employees and that - naturally - quickly found its way into the tech-news cycle via the respected and highly trafficked tech site Engadget. The terse email said simply that the iPhone would be delayed to October from June and that the OS X Leopard operating software would not be released until January.
(Apple declined to offer any comment beyond reiterating that the email “wasn’t authentic” and that both the iPhone and Leopard are on track as previously announced.)
That was enough to cause Apple’s stock to tumble 5% from its morning high.
It took only seven minutes for Apple to fall to its intraday low of $103.42 from $108.83. Apple was trading below $105 for only two minutes, but in those two minutes more than 2.2 million shares were traded.
In the volatile 23 minutes of turmoil between the minute the disinformation hit the stock market at 8:55 PST and Apple’s announcement that the initial email “is fake and did not come from Apple,” nearly 15 million shares changed hands. That’s 60% of Apple’s normal volume in well under a half hour. That’s also an awful lot money lost for some investors - and gained for others - all of it because of a lie.
There are two things about this that are interesting: The practice itself, seeding the stock market with deceptive news that moves prices, is usually reserved for over-the-counter stocks, where a frantic post on a hyperactive message board can cause illiquid stocks to rise or fall five or 10 percent in less than a day.
But Apple, with an average trading volume of 25 million shares a day, is no penny stock. And yet, given all the hype that has surrounded the iPhone since January you’d have to think long and hard to come up with a piece of fake-news that would cause, in a matter of seconds, more investors (and Apple fanboys) to lose control of their anal sphincter muscles than this rumor did.**
The other notable twist is in how the fake news was spread. It seems someone figured out how to send an email to Apple employees around the world, putting the familiar “Bullet News” in the from line (for Apple’s sake, one hopes this is not as simple as sending an email to “everyone@apple.com”).
A week ago, I noted how backdated stock options, and look into who may have profited from shorting the stock ahead of the news.
And there is also already debate about how Engadget handled the news. Some say it just ran with what an Apple employee sent in; others say it could have benefited from double-checking with Apple. But let’s not forget that only 11 days ago, the New York Post, the country’s 13th oldest newspaper, ran the rapidly discredited news of a Microsoft-Yahoo merger. That fake news drove Yahoo’s stock up 19%, and most of those gains have since eroded away. The SEC has its work cut out for it.
But what really stands out for me in this bizarre but fascinating episode is that Apple investors were taken by a technological goof that could have happened a decade ago but that in 2007 is like being sold the Eiffel Tower. If the irrational hopes surrounding the iPhone had not gotten so overheated, this would never have happened.
Hat tip to Paul Kedroksy for coming up with the phrase, Stock Hackers
Will iPhone spark wireless wars?
Roy, a doorman for my apartment building, stopped me this morning to chit chat. Knowing my affection for all new mobile phones, I wasn’t surprised that he asked to play around with my Nokia N95. “Are you going to buy the iPhone?” he asked, seeking a second opinion since he has already made up his mind and is going to buy an iPhone.
Though he doesn’t have an iPod right now, he thinks an iPhone would give him two devices in one, despite the high price tag. He is seemingly undeterred by the questionable battery life. (One of the reasons why I have a more wait-and-see attitude towards this Apple device.) He isn’t the only one - as the interest in iPhone seems to be on an upswing.
Even if you disregard the rumors and fan sites - the population at large seems to have a considerable interest in the iPhone, indicated by the total search volume for keyword “iPhone.” According to Hitwise, a research group that tracks Internet traffic trends, iPhone related searches represent over 0.002% of total Internet searches per week for past three weeks, with iPhone release date and price being the specific information folks are looking for. (In comparison, MySpace was the #1 query and had 1.16% of the total search volume.) Just as an unscientific indicator the search volume is a good indicator of increasing commercial appeal of the device.
The big question, however, is how does iPhone impact the wireless market at large — and whether it will result in a market share shift, putting AT&T at an advantage.
AT&T is betting big on this device and is hoping to pull ahead of its rivals by riding the iPhone express. AT&T and Apple are going to be launching a big media blitz to promote the iPhone, and according to UBS Research, it will be a major reason why AT&T will be able to add approximately 2.8 million gross postpaid subscribers in the third and fourth quarters of 2007.
If Apple’s guidance of 10 million units in 18 months hits the target, UBS estimates that 2 million iPhones will be sold in the U.S. in the first six months of the launch. That works out to about 18% of AT&T’s post-paid additions and upgrades, UBS estimates. But these 2 million will have to come from somewhere - probably switchers from other wireless services.
At the end of Q1 2007, there were about 170 million postpaid wireless subscribers in the U.S., with Verizon the largest carrier (56 million) with AT&T at #2 with about 51 million, followed by Sprint (41 million) and T-Mobile bringing up the rear at 22 million. (These numbers don’t reflect wholesale and prepaid customers.)
So 2 million units don’t mean much in market share — a little 1.1% market share gain for AT&T in the first six months, but it is the residual impact that might cause the big upheaval in the wireless market.
There are some who believe that since iPhone isn’t going to get as much subsidy as other devices, AT&T can pass those subsidies to even further subsidize non-Apple phones, and making its service more attractive. That would be one way to capture the increased foot traffic to AT&T stores.
Will Verizon and Sprint take this lying down? Of course not, and will launch their own price subsidies, discount plans or whatever it takes to hang on to their subscribers. And whatever happens, consumers will come out ahead — nothing wrong with that. And even if Roy doesn’t end up buying the iPhone, he still might get a good deal somewhere else.
Photos by Niall Kennedy via Flickr.
Wall Street stumped, surprised by Internet Cos
ANALYSIS (Q1 2007 Earnings Season): Internet companies are playing a game of stump the analysts. And they’re winning.
For the second straight quarter, the research desks on Wall Street have significantly and pretty consistently fallen short in their earnings estimates.
This is no small matter for analysts. Their job is to query the company, talk to its customers and crunch its numbers to distill it all into a single number: an EPS forecast that, if short by a penny or two is no big deal. But a forecast off by 23 cents, as happened with Apple this quarter - well, that can cost clients money. And clients hate to lose money.
Take a look at the graph below. With the exception of Yahoo - whose earnings were among the few tech giants to disappoint Wall Street this quarter - all of their net profits came in at least 9% ahead of the consensus of analyst estimates.
The biggest surprise of all - in every sense of the word - belonged to Amazon, whose 26 cents a share profit was 11 cents, or 69%, above the 15 cents the Street had been forecasting. Most analysts had given up hope that Amazon’s profit margins would ever rebound, with some arguing the company was no different from an old-fashioned bookseller.
Boy were they wrong. Amazon’s net profit more than doubled while its ever-scrutinized operating margin expanded thanks to some spending discipline. Piper Jaffray downgraded Amazon’s stock a day before its blowout earnings. Amazon’s stock rallied 40% in the next two days.
Even Microsoft, which many had assumed was aging into a steady machine of predictable profits, took the Street by surprise Thursday. All of the 34 analyst forecasts were calling for EPS in a narrow range from 45 cents to 47 cents. Microsoft’s number came in three cents ahead the highest of all those forecasts.
Nor is this parade of surprises a one-quarter aberration. In January, when the same companies were reporting earnings for the fourth-quarter of 2006, it was Yahoo who had the biggest surprise. Apple followed closely behind. All of the others had surprises that were at least 9% above the consensus.
What’s going on? Most of these companies were easier to predict a year ago, when the surprises were much more modest. Did they suddenly become harder to read?
Part of the disconnect is due to analysts, who were probably inclined to paint the tech sector with a broad brush, one that foresaw a market slowdown. A slumping housing market was expected to spill over into the economy at large. Overall profit growth this year was expected to be half the 14% rate of 2006.
Within that mindset, most analyst expected some tech giants to come up short: One or two might surprise to the upside, but surely not all of them. But companies like Amazon, Microsoft and eBay, under pressure for years to rein in spending while ensuring past spending would translate into present growth, were starting to deliver.
All of this is good for contrarians and for spectators like us in the press. Aside from Yahoo, these companies have in aggregate several tens of billions of new dollars in their stocks that weren’t there a couple of weeks ago.
But it makes life tough for analysts. Having resuscitated their reputations after the excessive antics of Blodget, Grubman et al, they are now facing a new crisis: Relevancy. If they don’t get a better handle on earnings of the biggest tech names, it won’t be hard to forecast the impact on their own income.
Steve Jobs, saved by the rising stock
Thursday will mark a red-letter day for Apple: For the first time its stock will rise above $100 a share, a tenfold increase in a little more than three years. Think about that: If Google had risen that much since its IPO, it would be trading at $850.
Apple’s stock was trading at $102 in aftermarket trading Wednesday, a 7% surge above its formal closing price of $95.35. Unless something big happens overnight, Apple’s stock is likely to see a similar jump Thursday.
And why not? The company posted a net profit of 87 cents a share. That’s 85% above the 47 cents a share in the year-ago quarter and 36% above the consensus forecasts among analysts. This is a textbook case in a blowout earnings report and reason to wonder why analysts bother with Apple estimates.
Unfortunately, the success will also probably keep CEO Steve Jobs from facing deeper scrutiny for the company’s backdating scandal, an omission of clarity that could cause harm far beyond Cupertino.
The future looks just as bright. Sales for Mac products were up 36% year over year, substantially faster growth than in iPods and iTunes, which were up 25%. Apple is successfully broadening away from dependence on music products, a trend likely to strengthen later this quarter with the introduction of the iPhone.
The report caps a week that will probably be remembered as a milestone in the apotheosis of Steve Jobs. Looking past Apple’s earnings and its stock price, it’s getting harder and harder to pretend that Jobs didn’t violate securities law in the options-backdating scandal facing the company.
The SEC filed civil charges this week against Apple’s former CFO Fred Anderson, who has settled with regulators, and its former general counsel Nancy Heinen. Then Anderson, who might just as soon put the episode behind him, took the extraordinary step of issuing a public statement saying Jobs misled him on board decisions on options and that Jobs knew about the risk of a backdating charge.
Mark McQueen, CEO of Wellington Financial, a firm that manages $400 million, summed it up well on his blog
“When was the last time in recent memory that a corporate scandal led to very serious charges being brought against the CFO and General Counsel, but not against the CEO? … It’s curious that a former Apple CFO pointing fingers isn’t sufficient for the Securities Exchange Commission to proceed against Steve Jobs.”
Anderson’s version of events actually makes sense, given Jobs’ reputation as a control freak and his instrumental role in using options to lure in talent after he returned to Apple. But Jobs is unlikely to face any action from the SEC, even though Anderson’s statement is begging for a deeper probe.
Why? Ask any attorney who has left the SEC’s enforcement division in the past few years. They’ll tell you the department is well-intentioned and talented, but criminally understaffed and toothless. They took on Anderson and Heinen to set a high-profile example in the options scandal, which involves more than 100 companies.
But they didn’t take on Jobs. And the Justice Department, which may be looking into the Apple as well, is unlikely to either. He has become, more than any American businessman, an icon of success. It’s like throwing the golden goose under the train. There would be a massive revolt among Apple shareholders.
It was a similar case with Mark Hurd, who accomplished the near impossible by turning around H-P. When it became clear he was involved in the pretexting scandal, ethicists suggested he should step down. Shareholders said he shouldn’t, and they won.
I like Steve Jobs. As a consumer, I’m grateful for his achievements at both Pixar and Apple. But I’m troubled by the very real possibility he participated in options fraud and is being treated as above the law. Otherwise, regulators are sending a disturbing message to tech executives: As long as your stock is soaring higher, you can dabble in whatever scandals. If we ever get back in a bubble - when all stocks are surging, not just the deserving ones like Apple - that thinking will cause a lot of accounting messes.
An open, clean investigation would prevent this: If Jobs is innocent, the debate is over. If not, he makes amends while shareholder support will keep him as CEO. Either way, this image of Steve Jobs as above the law, a toxic one for the stock market, would go away.
Why Apple shifted coders to iPhone
Anyone looking for proof of the strategic importance of iPhone to Apple doesn’t have to look beyond Apple’s press release page — the company is delaying the next version of its Operating System, code-named Leopard, by four months, and instead shifting resources to iPhone, now slated for late June 2007 release.
The press release issued by Apple points to a weak link in Steve Jobs’ grand design for global digital domination: not enough minions.
However, iPhone contains the most sophisticated software ever shipped on a mobile device, and finishing it on time has not come without a price — we had to borrow some key software engineering and QA resources from our Mac OS X team, and as a result we will not be able to release Leopard at our Worldwide Developers Conference in early June as planned.
The future of Apple is devices. Non-computing consumer electronic type devices are much less powerful than traditional computers, and need programmers who are thrifty in their code and skillful enough to squeeze the very last pico-hertz of performance out of lower-power embedded processors.
It is even more important in the mobile phone world, where poorly written code could simply negate the best efforts of hardware engineers. Apple doesn’t want to do that — it has a beautiful device, with an elegant user interface. However, lethargic applications and poor battery life could destroy user experience and chill the demand for even the hottest phone on the market. Apple historically has been home to coders who squeezed every drop out of those low-powered Motorola chips.
Typically, OS upgrades have provided a financial boost to the company’s profit margins, but this shuffle indicated that Apple is glad to forego those profits and instead opt for its next big cash cow - iPhone.
Now we can smirk, and point to the fact, Apple did drop Computer from its name after all.
PS: This delay should stop those Vista-delay jokes, because those who live in glass houses don’t throw stones.
Photo by Niall Kennedy via Flickr.
EMI & Apple say no DRM for you
Apple and EMI announced this morning their decision to sell digital music downloads without digital rights management via Apple’s iTunes store. Apple will sell higher quality songs (256 kbps) for $1.29 a song without DRM though consumers are free to choose lower priced DRM tracks. Album prices remain unchanged.
This is a strategic move that puts Apple’s rivals - rival services such as Napster, Microsoft, and other major record labels on a weak footing - giving Jobs the upper hand in this high-stakes game of poker.
The announcement, follows up on Steve Jobs’ open letter published back on February 6, 2007. The legal problems in Europe and constant criticism of its DRM policies (including not licensing it to others) prompted the unusual move - the open letter. In his letter, he outlined that the problem was not Apple, but the record labels who wanted their music wrapped up in DRM.
Imagine a world where every online store sells DRM-free music encoded in open licensable formats. In such a world, any player can play music purchased from any store, and any store can sell music which is playable on all players. This is clearly the best alternative for consumers, and Apple would embrace it in a heartbeat. If the big four music companies would license Apple their music without the requirement that it be protected with a DRM, we would switch to selling only DRM-free music on our iTunes store. [Steve Jobs]
Well, EMI bought into this vision, and in many ways Jobs called the record industry’s bluff. Basically, now the other labels - Sony, BMG and Universal - have to embrace DRM free music or else have their hypocrisy exposed. If the other majors follow EMI’s lead, then Apple might have turned on the heat on some of its rivals say, Napster or Rhapsody, who would have to follow suit or else become monthly subscription services.
Hypebot, an excellent blog that tracks the digital music business says it best, “EMI’s move along with the many indie labels who have been offering DRM free tracks for months may have finally opened the digital floodgates.”
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Apple TV… heard but not seen
Months of waiting for the AppleTV is over. The device, which I believe is going to act as rocket fuel for the independent video community, and some day put the likes of TiVo on the defensive, has finally started to ship. A privileged few, such as Wall Street Journal’s Walt Mossberg, had a chance to play around and review the unit.
…our verdict is that it’s a beautifully designed, easy-to-use product that should be very attractive to people with widescreen TV sets and lots of music, videos, and photos stored on computers. It has some notable limitations, but we really liked it. It is classic Apple: simple and elegant.
The NewTeeVee gang wanted one quite badly, so we decided to charge our Mastercard, except Apple wasn’t willing to take our money - at least today.
Our extended friend network fanned out through Silicon Valley, looking for the device, but couldn’t find a single on in any Apple store. Even the company store in Cupertino hadn’t received any AppleTV boxes. It won’t be till Friday when you can walk into an Apple store and buy one.
The non-availability of devices on the day of the launch in Apple’s retail stores does bring up the question: Apple had all these months to get all its ducks in a row, and rake in the big bucks on the “opening weekend.” Well, that clearly didn’t happen. Why not?
Our theory is that as Apple keeps adding more products to its portfolio, we are going to see more delays, and more technical snafus. Such challenges are commonplace for large consumer electronics companies (and handset makers.) Apple, however is going to get a crash course in CE reality, as it transforms away from being just a computer company with handful of product lines. It has to overcome these challenges inorder to keep the early adopters - who give a nice little bump to its revenues - happy. We know the NTV gang is a little disappointed today.
Photos by Niall Kennedy