Monday, October 19, 2009

Gruber got trolled

And we all got another secret out of it.

Monday, October 5, 2009

Adobe is Bending

So, Flash still can't run on the iPhone, but a Flash-->App converter of some sort will allow Flash objects to become native apps. Apple gets 100% of the benefit of Flash without yielding a scintilla of control. Nice.

Friday, October 2, 2009

New iMacs Practically Guaranteed

Rumors today of a Mighty Mouse redesign, complete with FCC docs, means consequential iMac revisions are a certainty.

At this point, laptops dominate consumer sales, and peripherals are not in-box. The Mac Pro does have input devices included, but it sells in miniscule quantities, and to people who already have mice and keyboards they like. That leaves the iMac as Apple's only volume seller that needs to impress with its input devices.

As usual, some of the iMac rumors are fanciful. I do not really expect an iMac Bravia replacement, but the thoroughness of the (apparent) coming overhaul does point to some possible "one more thing"-worthy features. BluRay and no more chin? Not enough. Maybe the world will get that quad-core iMac with a real desktop CPU and GPU that every disappointed and frustrated Mac Pro owner (read: old PowerMac creative user) on earth really wanted.

Saturday, September 26, 2009

Third Wave Crashes: The End of AT&T lock-in

(Part I and II here.)

The Third Wave of iPods makes them true pods, multi-use "containers" for each of our growing digital "i"s. Apple's proven skill integrating software and hardware for "the rest of us" will turn the Nano from a music player into the equivalent of the "feature phone" of portable media players. A blessedly simple digital companion, without the risk and complexity of internet connectivity and 3rd party developer support, that is never a poor value (if also never "cheap.") a strategic wedge Apple can use to enter any relevant market that arises. Portable projectors are just one that come to mind.

Apple has proven they want the Touch to be a volume product on the low end, and on the cutting edge of processing and graphical power at the high end, at the risk of lowering profit margins. With the iMac rumored to shift markets to the high end, Apple has constructed a beautiful synergy. The Touch, in this generation or the next, becomes the ultimate companion to the Mac.

An obscure feature called Home on iPod, dropped from Panther development and buried in Apple's patent portfolio, sheds light on Apple's product strategy. The digital hub paradigm has ended, as consumer taste in computers has demonstrated a desire for ubiquitous computing, internet connectivity and media consumption, over fixed (or partially mobile) computing. As the iMac evolves, the television/home theater is the most similar product set still in demand. The evolved Touch most closely matches the "netbook", but cannot offer (for most) the still-necessary functionality of a full laptop.

So why do AT&T or Big Cable care?

If a user's Home folder becomes independent of a single Mac, the "computer room" disappears, as does the "family computer", and the combination of a Touch, iMac-TV, and the iTunes Store become the competition for a hodge-podge of Windows laptops, smartphones, cable boxes, and netbooks out there. Wherever one has a Touch, they have their entire computer, in a limited state. Add a Mac, and gaming, media, and "my desktop" act just like they do at home. (A rumored "tablet" would help make the Mobile Home a compelling replacement for any portable computer in the house.)

Finally, with the advent of 3G to WiFi bridges (like the MiFi), any Touch becomes ubiquitously connected, just like the iPhone. With a choice of "networks", like Skype, higher data capacity, and a far thinner case, why buy an iPhone? Watch for a mass abandonment of any device with "phone" in the title in the longer term, as a general purpose computer is much more useful. Phone calls will come with them.

Thus, the Third Wave of iPods has begun, and the creative destruction of the home theater, with the logic of OS X replacing the brainless flat-panel, is happening at the same time. Apple is ideally, perhaps uniquely, positioning itself to capitalize.

iMac Rumors and the Digital Hub (Part II)

(Part I is here)

The upcoming iMac is rumored to change dramatically. Instead of a laptop Core 2 Duo CPU, it may offer desktop (or even server) quad core processors. If Apple adds such substantial power, the GPU will probably come along. Snow Leopard leverages cores better, and offloads computation to compatible GPUs, so the rumored component choices are realistic projections.
In user-facing changes, the iMac will likely gain an SD slot and better remote, and, possibly, BluRay media playback. All of these changes point to home theater integration and improved "30 foot" usage, though not at the expense of the traditional method of "keyboard and mouse" desktop computing. It is not hard to envision the functionality of Apple TV becoming software, bundled with a range of 30-50in iMacs that replace the traditional television.

What of the "digital hub", never mind traditional and internet-based personal computing like word processing or social networking. E-mail is not something most people want friends or family to gather around on the couch. No one wants to spend computer money on a TV, and still not have a personal computer.

In the final article of the series, the Third Wave iPod meets the new iMac.

Entering The Third Wave of iPods

Understanding the iPod in 2009

2001-2007 History

The iPod began in 2001 as a $400 Mac-only novel package of software and hardware, expertly designed to play digital music on the go. At the time, few portable digital players sold, despite advantages like skipless playback and equal or greater song capacity. Start-ups and experienced companies alike were unable to properly explain the complicated innovation at hand. A higher-quality example, like the Diamond Rio PMP 300, was inscrutable and clumsy to link to one's computer. Consumers were mystified by the software that moved songs from the computer to the device, and and once they got outside, the simplicity of a Discman beat fiddling with inscrutable buttons every time.

Bringing technology to the "rest of us" by integrating rarified hardware with intuitive software is Apple's ultimate strength. Compared to the Mac, an MP3 player that "just works" was a simple mandate. The iTunes/Scroll Wheel tandem is well known, and once Apple took the iPod cross-platform, wisely abandoning what looked like a strategy to sell Macs, they dominated. Attempts to win back the market, even with much cheaper, but less elegant players, or more "fully featured" devices, failed. (The iTunes Store also contributed to "lock in", though that effect was vastly overrated, given how thoroughly the volume of pirated music dwarfs legal online music distribution.)

Over time, the iPod split into a range of differently sized and priced players, adding video playback and a handful of games, but the design and main goal of the product, to make consumption of portable music effortless, never changed. Even years-long requests for an FM radio were ignored.

2007 Revisions - The Start of Something Different

Apple did not deviate from their plan until 2007, which brought a new type of iPod, the Touch. It looked and acted nothing like any past iPod, offering a range of abilities wrapped in new hardware and software interfaces. Instead of purity of purpose, the Touch offered partial solutions to many problems.

Even in 2001, rumormongers speculated about the meaning of the name "iPod." A pod is a container that could hold anything. People associate the word with aliens or peas, maybe, but not music. Apple being arguably the most exacting, consistent, and effective corporation at marketing, surely meant a variety of "objects."As the screens and chips powering the iPod improved, adding photo browsing and video playback seemed a natural way to fill out the baggy moniker, without adding complexity. By the time the Touch arrived, classic and "nano" iPods could manage both.

The Touch was a true pod, but it shed all of the conventions and assumptions about the iPod. Instead of a scroll wheel, there was a touch screen and single button. "Music" was just one of ten possible choices. In a first, the most expensive iPod would offer less space for music than cheaper line-mates, deemphasizing that core use. The new king of iPods could not even play the simple games its predecessors had years earlier. Apple was warping the most successful consumer electronics brand line ever.

The Touch also sowed confusion, as it looked and acted just like another new product, the iPhone. Both had a best-in-class web browser, Safari, and various data-driven applications (Weather, Stocks, Currency Conversion, etc.), but only the iPhone was connected to the internet via the cellular network. To make these programs useful, the Touch used WiFi, something unavailable to most people unless they are at home, where they own a computer anyway. The Touch seemed an even more irrational product when Apple announced that new applications for the Touch/iPhone would be delivered only through Safari, and therefore become inaccessible outside of the range of WiFi.

2008 Revisions - Plans Drag On

This misshapen iPod line soldiered into 2008, now selling well but not growing as a business. What had been a high-end electronics product in an untapped sector had become a routine offering in a mostly saturated marketplace. Also problematic, in the eight years since releasing the original 5GB iPod, flash memory and hard disks had doubled in capacity five times over.

A music lover who once needed a top of the line player could use even the cheapest screenless Shuffle to carry hundreds of songs. The most devoted listener would be hard pressed to need the 160GB of space now offered in the top non-Touch iPod. The Nano was double the cost of the Shuffle, and its tiny screen made video playback mostly useless.

A card up Apple's sleeve, as we all know, was the Touch itself. Some of the reasons for the sudden appeal of the once incongruous iPod are obvious. Most importantly, the release of the iPhone OS 2.0 allowed developers to write full-fledged applications for the iPhone and Touch. (I won't repeat the App Store story here.) The Touch also got much thinner and more refined (somewhat the opposite of the clumsy iPhone 3G redesign.)

Apple did not publicize two other crucial changes, but both represent below-grade work for the Third Wave* of iPods. The Touch was given the option of adding a microphone and accepting audio in, not just playing songs. Now, an App that could transmit voice over WiFi could offer iPhone-ish telephony, though only near a hot spot. The processor of the second generation Touch was also silently increased in speed to 532Mhz, up from the 412Mhz found in the iPhone, iPhone 3G, and Touch 1.0, a tip off that Apple did not consider the Touch a hobbled iPhone or fancy iPod. The speed bumped 2G Touch is noticeably quicker in menu screens, and delivers higher frame rates in gameplay. Apple surely noticed a trend towards game purchases by Touch owners, and decided to help the "Funnest iPod Ever" campaign really resonate. After all, more speed doesn't hurt user opinion, especially if it's free and isn't advertised to existing customers.

2009 - The Third Wave and a Return to Growth

Early in the year, the Shuffle was redesigned. To the discontent of many, the early-2009 revision Shuffle went buttonless, and so could only be controlled with headphones that carry a chip licensed by Apple. Moreover, added capacity for the same price sounds purely positive, but it is a double-edged sword when you can't see it. With a large price gap between the mediocre 2008 Nano and the newly-hobbled Shuffle, the line had an uncharacteristic weakness, and it was self-inflicted. Why?

The 2G Shuffle was the true atypical iPod, an Apple product planning mistake. Easier to control in one's pocket than the Nano, and capable of holding plenty of music for an average outing, the tiny, durable Shuffle was too good. The supposed "fatal flaw", a screenless design, was, with a little iTunes wrangling and a relatively small number of songs to remember, unproblematic. I suspect the 2G Shuffle was cannibalizing Nano sales. To satisfy Apple's ambition for late 2009, the high-margin, high-ASP sales of the Nano could not wane.

Late year iPod revisions usually have Apple lowering prices and adding capacity to the traditional iPod, maintaining the business. Instead, 2009 brought the culmination of Apple's work to restart the iPod as a growing business, and make the product live up to its name. The changes to the Nano are here, and the revisions to the Touch here.

The shift from focused simplicity is most obvious in the Nano. The added features expand the iPod Nano into a multitude of new businesses. Consumer camcorder manufacturers, pedometer manufacturers, and portable media player manufacturers that made FM radio capability a selling point are all disrupted or ruined.

The stand-alone pedometer is hardly big game, but diluting the focus of the player even slightly is a signal event. Truly heretical is a new FM radio that allows time-shifting. Apple spent the best part of a decade refusing to add the function, and losing sales to less dogmatic companies. (In 2001, it was almost farcical to offer a $400 portable music player that didn't even have a radio.)

Taking on the fast growing "consumer video sharing" segment is Apple's true statement of purpose. Flip, the leader in "consumer video", dismissed the lower-quality Nano's camera. However, it was simplicity of video sharing, on the internet and in person, that was Flip Video's bread and butter. The traditional camcorder business model, to provide high-quality optics and recording, then use complex software to edit the result, was blown apart by Flip. The Nano is one tenth the volume of the Flip, Apple's software and hardware are of legendary quality, and the video quality deficiency will be solved by the same exponential improvements in transistors that originally made the single-use music player a relic. The protestations of Flip executives seem hypocritical or nonsensical, and the burgeoning "consumer video" market is Apple's to lose.

The Late 2009 Touch revision was also a Third Wave initiator. The low-end model is now $199, a price point no competitor can match. Sure, the oft-noted volume purchasing discounts on flash memory and shared iPhone compenentry lead to savings, but the Touch also faces no OS licensing charges, and the services of world-class software, user interface, and industrial design departments.

Volume sales of the Touch on the order of a classic iPod would be a massive growth engine for Apple. The company will have proven it can re-make the iPod from a declining business with shrinking margins into another major top-line contributor. Add on the less significant, but still worth mentioning, benefits of a rapid expansion of the iTunes Store (App, Video, Music, etc.) installed base.

More important, the higher-end Touch gained the internal hardware of the 3Gs iPhone, but remained the same price. These changes are lost on consumers, but adding power and sophistication not found outside flagship smartphones threatens countless businesses. Apple also subtly initiated the process of fragmenting their App Market.

The "iPod Touch 3Gs" sprawls into countless business sectors. Pure gaming portables like the PSP must reach for extremely high end components if they remain single-purpose devices and want to command premium prices. Adopting an nVidia or Intel solution, or a custom PS3/Cell derivative, could be a decisive edge, but at a fraction of the sales volume of an iPod, component costs would necessitate taking a loss upfront and recouping profit on games for some time. It is unclear if Sony can build such a device, or afford to subsidize two lines of hardware. Nintendo need not compete on graphics, but a touch screen or other novel control surface is no longer unique to the DSi.

The Touch 3Gs is so powerful and capacious, it could perform the work of an Apple TV, which should intimidate Netflix, Roku, XBox 360, and cable box DVRs. An inevitable camera will add video recording capability, increasing pressure on Flip. Note that none of the non-Flip devices are portable. Imagine bringing everything in your home media center with you besides the TV. Just a threadbare studio with bunny ears becomes a gaming and media suite with a single dock cable.

What of needing WiFi? Read on in my next article to find out how Apple plans to surf their Third Wave.

*The First Wave iPod was the initial two FireWire/"Deck of Cards" line, the dock connector began the Second Wave.

Wednesday, August 26, 2009

Why the iPhone Doesn't Allow "Multitasking"

iPhone dislikers everywhere claim the ability of a RIM or Palm device to "multitask" is a clear advantage. iPhone users know that the platform allows for background processes, but only when explicitly approved by Apple. The iPod, Phone, SMS, and Mail apps have some background ability, and Push Notification-capable apps sidestep the limitation somewhat.

The pitfalls of allowing apps to command system resources without being foregrounded are numerous, but perhaps the best example of why this is a problem can be found at the Blackberry App World. The THIRD most popular PAID application is Aerize Optimizer, a program specifically designed to de-gunk the memory of a Blackberry.

I think it a positive that iPhone users never have to run such a program, or even know what it would do. It is a huge hit with RIM fans though.

Tuesday, August 4, 2009

Achilles in Cupertino: Eric Schmidt's tenure on Apple's Board of Directors

When Apple appointed Eric Schmidt to its board in 2006, the news met with some skepticism, but also praise. Mostly, it sparked fervent speculation.

At the time, the move brought many positives. Schmidt was a good guy to have on your side simply because Google is a good company to have on your side. Apple and Google did not compete directly in any core business. Some relatively minor operations were actually complementary. Apple sells high-end computers, so the traffic sent to Google via contextual menu and Safari "search field" placement was not just market share, but a long row of luxury cars. The internet marketplace was much more competitive then, too, and Google wanted share badly.

More arcane or speculative positives were divined at the time, too. Perhaps Apple would leave .Mac and other online efforts behind, and link the Mac intimately with Google's world-leading back end of servers? Maybe the companies were feeling out a merger?

Yet, Eric Schmidt was at the helm of a rising giant, sprawling disruptively into business after business. The optimism about today's Google is enormous, but tempered compared to the messianic speculation about space elevators, Google Linux, and so on of that era. Google was entangling itself with so many different entities and sectors that having its CEO on any Board of Directors did feel somehow imprudent.

The appointment was problematic at a more basic level as well. Google is a company trying to change the paradigm of personal computing in a way that would alter, and possibly cripple, Apple. It is old hat now, and it was even then, but the obvious result of the rise of browser-delivered "services" that mimic "classically delivered" executables means almost no one needs a specific operating system and powerful computer to do what they want anymore. Apple's core business is selling the best way of these two last items, so, the conflict is obvious.

(As an aside, Google's innocuous corporate mission to "organize the world's information and make it universally accessible and useful" is a clever sleight, as the company considers anything information, like the way you use your mouse, or the fact that you read this.)

Concerns and plaudits aside, the job of Apple Director is amorphous enough to accommodate Al Gore, Bill Campbell, and Andrea Jung, so no one really makes perfect sense. (Indeed, Campbell's Intuit corporation has remarkably poor, oft-delayed Mac offerings.) The legal system and federal government make collusive additions to corporate boards a thorny road to travel, but Schmidt circa 2006 did not cross any clear boundary. A shareholder challenge of the addition of a director to a board is both difficult and esoteric, and, the controversy simply was not there.

By now, though, the conflicts are so obvious Gizmodo is right to rant about how long the Schmidt resignation took. I will not belabor the many overlapping agendas of both companies, but ask instead, why, really, did Schmidt stay as long as he did. Media-savvy and lawyer-stuffed, the company allowed the issue to raise antitrust issues that entangle a longtime director, Arthur Levinson. Apple is renown for secrecy, but it opened the books, unfolded the roadmap, and chatted about it with the CEO of a competitor for this long? It simply does not make sense.

I believe Apple and Schmidt are both blinded by rage, a seething anger at a shared enemy that has dealt both many blows over two decades: Microsoft. The Apple/Microsoft battles are well known even outside of technology and business. Steve Jobs was forced from Apple and spent time essentially in exile. The IBM PC/Wintel product was a horrid evolution of Jobs' original, and the world mired itself in it happily as NeXT bombed and Apple deteriorated.

Less well-known is that Schmidt's shares Apple and Jobs' arch-nemesis. Before Google, Schmidt led Novell, starting in 1997. While he did well for Novell, Microsoft was years into a massive attack on its main business that proved unstoppable. Novell's Netware was the dominant enterprise computing solution, and it ran on non-Wintel hardware. Microsoft leveraged Office and Windows to push adoption of its solution, Windows NT, and it was too late before Schmidt even started.

Before that slog, Schmidt already had good reason to hate Microsoft. Not only was he a long-time employee of rival Sun Microsystems, he was an early champion of Java, its main proponent in the company, setting corporate strategy around it as Chief Technology Officer. Microsoft was not yet a convicted monopolist, and used some of its most aggressive tactics in successfully thwarting Java. Netscape suffered less, really. If Sun had delivered a product twice as good, it would not have mattered, the field of play was not uneven, it was bought by the town, locked up, and guarded. Schmidt's baby was, like Quicktime, "knifed"

Just as Achilles went berserk with rage (metis) in The Iliad, or the soldiers of Vietnam became unhinged and went on rampages, reason was completely trumped by anger. While soldiers or heroes may lose control over minutes, seconds, or maybe hours, Schmidt, Apple and Jobs were gripped for months, perhaps years. The re-intrusion of reason, I predict, had nothing to do with any of those parties. The only participant who suffered and could see clearly, Google, probably forced the arrangement to end.

As an ending note, I am happy Schmidt is gone. His decades-long desire to put the application in the browser, and make the network the computer, or make a "web OS", is the resume of an enemy of Apple, too.

Thursday, July 23, 2009

Buried in a press release?

Apple cut the price on Final Cut Studio, and added a lot of stuff. Once upon a time, this kind of thing was MacWorld/Seybold fodder. It sold high-end Macs, and made Apple a player in the margin stuffed software business. (I'm looking at Adobe with both eyes.) Now, it is buried in a press release.

Even odder, Final Cut Server only moved to version 1.5. The initial product was a black eye for Apple, delayed and buggy, so you think they would want to move away from it more dramatically. (Don't give me that "version numbers only change on file format shifts" dogma either, that hasn't been true for years.)

These Final Cut Studio/Server upgrades smack of Snow Leopard-style "clear and hold" development. While there are new features, the sensible back-end improvements seem to have been done. Apple never mentions Grand Central outside of its 10.6 preview site, but releasing a new suite of pro applications that took no advantage of post-Leopard advances is so stupid as to be unimaginable. Or, is this release really a -.x-equivalent dud the company is trying to hide?

Tests of FCP6 and 7 on 10.5 and 10.6 will reveal the truth whenever Apple lets their new OS slip.

Monday, May 18, 2009

Really Joe?

Really? They will always win? Where were you ten years ago, besides holding a shovel full of dirt to throw on the Apple coffin?

The article

The Bondi Blue iMac didn't even have Firewire! That wonderful product had to be restarted with a paper clip, and was basically a PowerBook G3 with a tube monitor. Don't revise history. It was a striking design and a big seller, but it hardly represented the successful strategy of today's Apple. Garish designs trumping functionality? Not anymore. The iPhone is a featureless slab. The unibody laptops are all-function, no "book covers" or color choices, or handles.

The iPod is indeed a good product, you are right.

Microsoft bucking convention? Those four points you cite are indeed unconventional maneuvers, but for a partnering ("embrace and extend") company to succeed, it must necessarily set the status quo. David can't bring 99% people around to the slingshot until it's proven, and everyone's doing it. Apple tactics don't preclude succeeding with 10% of the market, while Microsoft would be hard pressed without 80%.

Then you go into the MSFT vs. AAPL argument. Well, it is important to remember that the former company paid a dividend and bought back shares, while Apple has been full-tilt the other direction. I'm not arguing for anything different from either company, but the comparison is asinine.

Stupid article!

Monday, May 4, 2009

I was wrong I guess, Apple's tablet is coming?

The likelihood of an Apple Tablet release has risen in the past few weeks. Development of the device has been "confirmed" by reputable Mac rumor sites, and reinforced by mainstream magazine and newspaper coverage. Apple Insider and Mac Rumors both issued reports describing hardware specifications, and BusinessWeek and the NY Times echoed those reports, adding that Apple was courting Verizon as a partner for the launch.

Until recently, I doubted that any "large iPhone"/sub-MacBook device with touch input was going to be released in any form. I thought the rumor was one of those too-juicy possibilities that seem never to come true, or go away. Now that outlets I trust are on the record predicting such a thing, I am willing to reconsider my position. I now ask, if a "tablet" is on the way, what should we expect from it, and is it likely to succeed?

The current consensus is that Apple is set to release an iPhone-alike, multi-touch input based device with a roughly 10in screen, priced to compete in the fast-growing "netbook" market. The product would be aimed at consumers who want portable access to internet services, like GOPHER, Friendster, Telnet, etc., without the cost or complexity of a traditional laptop. What exactly Apple will do to satisfy this segment is unknown.

Apple could be re-using the strategy that reinvigorated the Macintosh. The company has the same competitive advantages in industrial design and operating system software building a netbook as it did creating the MacBook. Using netbook industry standard components like the Intel Atom does not terminally limit Apple. An innovative form factor like a touch tablet, combined with a modified Mac OS X, would differentiate the product, rather than hardware specs, which would just match top-end Windows or Linux netbooks.

If Apple has such a thing in the works, I don't think it will be widely adopted. For general computing, the tablet form factor has never caught on. Using a computer that lies flat on a desk, or must be held with one hand and operated with the other, just doesn't work that well. Sure, Apple's multitouch solution could be great, and beat the styli of the past, but it must also be equal to a mouse and keyboard.

Or, the tablet could be more like Apple's consumer electronics products. Instead of Intel and AMD motherboard platforms, Apple could competitively source components, and tie them together with a more heavily modified build of OS X. The ARM CPU and third-party graphics processor in the iPhone would be a place to start, as OS X is ported already, and developers are on board. The resulting product would be, essentially, a scaled-up iPod Touch.

My concerns for such a product are numerous. It might still be too big to use comfortably and be another failed attempt to build a successful tablet. Assuming it is wonderful to use, like the iPhone, other problems emerge. The netbook is successful because it is cheap, and prices are so low because the hardware is commodified. The ARM/iPhone OS X tablet as imagined is being asked to do a lot more than the iPod Touch can manage for not much more money.

If Apple is planning to tie the tablet to a wireless provider and subsidize the upfront cost, it will substantially limit sales. A two-year contract is a much larger investment, and a barrier for minors and impulse buyers. Moreover, unlike a phone, the device is primarily intended for home use, where wi-fi is typically available and preferable. Making a significant monthly investment in a cellular internet option for a living room tablet will not make sense for much of the market.

The acquisition of PA Semi, and leaks about executive hirings (Mark Papermaster, Bob Drebin, Richard Teversham), all point to Apple developing the tablet in this manner, perhaps even designing a custom main GPU or CPU. Any further specialization of the hardware would exaggerate the benefits and downsides of the process, though. A speed or size advantage is useless if it is only developed and implemented at huge cost in a market so focused on cost.

So, I am past doubting that an Apple Tablet exists. I am more concerned now that it will be a bust.

Tuesday, April 14, 2009

Apple's Stock Considered

AAPL shares are currently on the rise, reaching the 120s after a market-tracking tumble to the 70s. Apple's valuation is still significantly below its 2007 peak of 202 and 2008 high in the 190s. Even after rising, it is still valued too pessimistically.

As is typical, earlier highs occurred before MacWorld San Francisco, when product improvement expectations are highest but facts are hard to come by. The most feverish hype was for the iPhone, of course, despite it being costly to develop, and so damaging to earnings, and facing a decent chance it would not succeed. Generally, the stock is prone to irrational pricing when investors are being prodded with press, which is almost always about non-Mac hardware debuts. This focus is misplaced. The core Macintosh personal computing business, OS and hardware both, are the real measure of the company's meaningful potential for growth.

While the market slid, Apple followed, and then some. Without price-pumping, press-fueling announcements, nothing could scatter the clouds of generalized negativity. As shares crossed "milestones" in price models, program trades and sales by quantitative investors served to pressure shares even lower. Never mind the wild speculation about "shorts" manipulating things, something that always seemed marginal to me.

Instead of stoking the fire of speculators who lust for new consumer non-core business scope expanding widgets, Apple has released a stream of Mac revisions, an iPhone OS X revision preview, and belatedly fixed the dates for WWDC. All of these moves are vital indicators, and all have gone barely noticed.

Most important, Apple has finally routinized Mac hardware development. Until very recently, almost every new Mac Apple announced would struggle out the door. Delays, sometimes lasting months, were routine. Constrained supplies of parts, or late-breaking design issues, were something Mac buyers planned for. Promised machines even dropped in speed before shipping (the G4 PowerMac), and sometimes simply never materialized (the "3.0Ghz G5.") When hardware shipped on time, it usually meant the Mac was stagnant technologically, an equally problematic situation for Apple (the anemic last generations of PowerBook G4.)

Today's Apple can revise an entire product segment, most recently the Mac Pro, iMac and Mac Mini desktop line, simultaneously, and deliver the products as promised. Even the most exotic top-end Macs are in production and available when released, once unheard of. (The XServe was revised and ready just weeks later as well.) I waited three months longer than promised for a Dual 800 Quicksilver G4, two months for a Sawtooth G4, and six weeks after a promised date with a Dual 2.0 G5. The problems were not entirely CPU supplier related, as the ship date of the first Intel MacBook Pro slid a month and a half, too.

Ignoring the smoothness of the Nehalem Mac Pro release is a mistake. Apple's software and hardware competence is on display and most strenuously challenged by the project of turning an eight core UNIX workstation into an intuitive tool for content creation. The latest hardware makes a G3->G4-sized transition, to new bus, core and memory architectures. What once felt like watching a trapeze artist work without a net, and was hyped to match, is now as undramatic as an AirPort firmware release.

Also under-considered was Apple's preview of iPhone OS 3.0. While iPhone hardware sends bloggers into orbit, software is somehow less compelling. The requisite "copy and paste hooray, and why did it take so long" articles hit the web, but little mention was made of most of the OS advances. Besides adding 1000 new APIs, Spotlight, Push Notifications, and other features, Apple revealed that the dock connector would be a functional interface for third party hardware.

This is huge news. The iPod "ecosystem" of hardware, speakers and so on that served the narrow mandates of the simple player, thoroughly cemented the dominance of the iPod. The fees from licensing and "Made for iPod" certification gave Apple more profit-heavy, reliable revenue streams. The iPhone has a similar, but much larger, opportunity, as it is able to run complex, custom software in tandem with external hardware. Seemingly on purpose, the glucose monitor demo Apple used to demonstrate this feature was fatally boring. Game pads, keyboards, printers, etc., a huge variety of devices across countless industries (retail, medical, logistics, etc.) have the potential to add to the iPhone-only feature list and give the platform even more momentum. Include 30% of all revenue derived from the apps required to drive this hardware, and the upside is even larger.

Apple also ended the uncertainty surrounding the development of OS X 10.6 by setting the dates for WWDC. The company did this later than usual. In the weeks after an announcement was expected, many Apple watchers posited that the operating system was meeting delays, and would slide to August or later, along with the conference. That has not come to pass, and June 8 is now the expected release date.

(I have previously written but reiterate here how vital OS X, particularly 10.6, is to Apple. The brains of the iPhone and Mac are Apple's most valuable asset. This release is particularly important as the future of computing lies in massively parallel multi-core hardware, and new technology in OS X.6 will unlock a far greater proportion of the power these chips offer. Already-shipped dual, quad and octo-core Macs are supposed to see meaningful to significant speed improvements without hardware changes.)

The market slide hit all securities, but Apple's drop was truly immense. The company has cash piled to the ceiling to use in the absence of operating credit markets, no leverage or debt, and evidently invested wisely enough through the Braeburn Capital fund the company set up to manage its money to avoid taking material losses. It has fixed the Mac business and is setting OS X up for the next decade of work inside the iPhone and Mac.

Concerns about consumer demand for "luxury" Macs are legitimate, but the Mac business as a whole has so many avenues for growth besides the home market. It is still miniscule by volume in the world, and below 10% of the US market. With Windows languishing, still not up to even older OS X standards, Apple has a clear field to continue to grow Mac sales. Daring Fireball had an apt analogy equating Wintel PCs to American cars in the 1970s; inferior and doomed to cede market share to Japanese models beyond the wildest nightmares of anyone in industry. Apple's stock takes none of that potential into account.

More thoughts on the Apple Tablet

Forget for a moment that the Apple Tablet is unlikely to be released. If all the rumors are true, what is the implied "lay of the land", and what product is expected to arrive?

Apple has said OS 10.6 will be a maintenance release of sorts. Unlike past feature-oriented releases, Snow Leopard should be viewed as the fortification of past advances, and the improvement of the infrastructure gluing those features together. The most radical change rumored is a UI revision called Marble, implying Apple views Aqua as infrastructure worth upgrading, instead of a stable end feature in itself.

A tablet release implies Apple has created an OS X variant that bridges the gap between the Mac and iPhone for users, and targets a unique hardware set. No tablet buyer would accept the access and sync limitations of the iPhone. File system manipulation is a must, as is a proper PIM, from Apple or a 3rd party. To provide this, the OS X Tablet would have to blend the interfaces of both Mac and iPhone, too. After the monumental work involved, this variant would have to be coded to run on a new processor, or, at least, a very different set of chips than any other Apple.

It seems unlikely that Apple could create an OS X Tablet variant while doing the work of Snow Leopard. Making a new OS X that also incorporates the work of 10.6 would mean rebuilding a jet while it flies, without blueprints for the new jet, or a fixed destination. If Apple pulled it off, then they accomplished something truly stupendous.

The Apple Tablet has also been rumored to be like a 7in or 10in iPhone.

If the tablet is very Mac-like, even 10in of screen would be a challenge to enjoy. No Mac ships with less than a 13in screen, and Jobs and Apple have been resistant to anything smaller. (The 12in PowerBook was never replaced, despite being quite popular.) Customer expectations, driven by scrupulous Apple brand management, mean a Mac must do certain things. For example, there has been strenuous advertising of HD content consumption and creation on Macs, and the rumored size of the Tablet precludes it from participating in either. No consumer Mac will be a go-to Final Cut Pro box, but a PC isn't a Mac if it can't make iMovies.

If the tablet is more like an iPhone, it will face more daunting challenges. Changing screen size and resolution means breaking or distorting all current iPhone apps. A clever trick would be to double the current screen exactly, and split apps into HD and SD versions. The latter would be upsampled iPhone apps, with the former providing sharper UI on the tablet and greater functionality. Such a solution still fragments the App Store market, and isn't too great a way to showcase what will be a massive amount of un-optimized application content.

If a tablet of any kind is released, it would arrive at a price point few are honestly considering. With iPhones at $200, and plan-less iPod Touch models at $300-$400, any Tablet would have to start at least $500, and even that is a very low estimate. Apple cannot afford to make the iPod Touch a bad deal, nor can it introduce a telephony platform that cannibalizes the sales of AT&T plans. Pricing must go higher than the $400 of the top-end iPod Touch.

At the introduction of a radically new device, custom and cutting edge parts are ordered in small quantities, driving up even something as likely to sell in quantity as the iPhone, which was released at $600. Precedent points to a tablet that cannot cost less than $600, then, as rumors have it being as different from earlier hardware as the iPhone was the iPod. Surely the hardware and development costs necessitate an iPhone 1.0-or-greater retail MSRP.

At $600 to $800, the mythical Apple Tablet begins to match Mac Mini and educational iMac pricing, but would represent a discount from the MacBook. Shifting sales away from an established but critically growth-dependent Mac platform is risky. That each move from Mac to Tablet/OS X results in less revenue at a lower margin with fewer upsell opportunities, and then requires more intensive, educational customer support, is problematic. If the Tablet is hobbled
to prevent this dynamic, it will flounder around, an overpriced gimmick.

If the tablet is made to exceed $1000, it would have to accommodate very broad, Mac-alike usage, and be compelling enough to operate as a stand-alone computer. The cheap netbooks of the past year have proven that consumers are adaptable creatures, and willing to sacrifice and learn for the sake of a compelling enough new form factor. If Apple has a tablet so capable it matches a MacBook Air, fits into a much smaller space, and can be delivered for $2000, I would be surprised. If such a device output to just a 10in screen, it would be truly misconceived. Any larger, and the Tablet becomes as cumbersome as a laptop, but without the functionality of a keyboard or speakers, and packaged so as to make it uncomfortable to sit at or use for long periods of time.

Sadly, the Apple Tablet strikes me as unlikely. Even if the company had the development capacity to create a 10.6 "signed-content touch Mac" variant of OS X, and 10.6 at the same time, the pricing and packaging of any Tablet device cannot be made attractive. Either Apple is offering giant iPods at a small premium, or crippled, barely-profitable Macs. Even the miracle scenario of a 7in tablet with USB and video out, App Store compatibility, non-iTunes PDA-alike data management software, all for $600, results in a niche product.

The Apple of today isn't trying to cover every base with esoteric hardware offerings. A new platform that can't deliver millions of sales is not worth pursuing. The Apple TV competes in, broadly considered, the set top box market, a realm worth billions. Just having a "hobby" there drives hundreds of thousands of sales. Moreover, developing for the living room has the benefit of educating Apple and preparing it for the long-anticipated, platform-defining battle to deliver all television content.

In contrast, tablets have been available for a decade or more in various forms, but have never sold in significant quantities. Indeed, it is not possible to learn the market for tablets, because there has never really been one. Creating a market is something the Apple II and Mac did, and both suffered for doing so. Second-wave Jobs products, like the iPod and iPhone, find markets that are poorly served and then do better. Only accessories risk first-mover status, and the last to be so bold was probably the first Airport card/WAP combo.

If someone can specify a plausible tablet price point, and describe a marketplace of at least 1m total, eventual customers, it would go a long way towards convincing me this rumor isn't utter noise.

Sunday, April 12, 2009

Jobs Behind the Curtain

The mythical Apple Multitouch Tablet took another step towards existing this week, gaining Apple Insider's "could be true" imprimatur.

I have a long history with AI, having first read it as MacNN Reality. It has changed hands and domains a few times since then, but the rumormongering has been relatively well informed regardless of who is at the helm. Any site making accurate predictions on the Mac Web is getting dirt from someone. A few years of quality means that someone is not leaving a trail, and AI has a proven reserve of not-fired insiders now, by my estimation.

I have long doubted the "Apple Tablet" rumor, and I continue to think it is off base. Now that AI is on record endorsing it, I must dig deeper.

As rumors go, the "Apple has a tablet in the labs coming soon" line has been around in one form or another for more than ten years. It persists because it has all the tropes that home-based die-hard rainbow-tattooed "Guy Kawasaki" pre-Copland ADB-using Mac zealots love. Its newest revival was inevitable.

The tablet is a form-factor no one has managed to sell in decades of trying, so the classic Apple "hardware and software integration" strengths should thrill upon arrival, featuring unprecedented innovations. Unlike, say, figuring out how to sell digital music, these are the works that inspire passion in Mac devotees.

The most electrifying part of the hardware rumors for longtime Mac devotees is the possibility of a new, exotic, and custom main processor. The best Apple products, and the most thrilling keynotes, have always centered on radical leaps in computing power wrung from Skunk Works-like research and development. Software is fun, and perhaps new user interface technology can move an Apple zealot's needle, but the moment a new paradigm is revealed is near-religious. The original Mac leapt past the PC and Apple II with 3.5in floppies and a screaming 680x0, the PowerPC crushed the Pentium, and the G4 with Velocity Engine brought "supercomputing to the masses." The PA Semi acquisition, and Intel-era loss of Mac CPU differentiation, have given the rejuvenated Apple Tablet rumor a sky-high interest quotient.

That arch-enemy Microsoft has spent billions to get nowhere to the drama. The iPhone 2 reveal will be huge, but the fragmented, juvenile smartphone market offers only iterative, sleepy Research In Motion as a foil. When Apple faces down an industry leader, Mac zealots lust for philosophical war. The GUI versus the command line, single-vendor hardware/software packaging versus the IBM PC/Wintel model, the new from the Other against the status quo from the hegemon.

Finally, "Steve Jobs is personally involved." While on hiatus, Jobs is contributing an unknown amount to Apple's strategic and operational plans, but he is of course obsessed with the Tablet. In the received lore of the Mac Web, the story of an Apple product team being taken over by Jobs and pushed to epic, era-defining works is cherished. That the Tablet is being developed this way is a certainty only in the hearts of the rumor obsessed, but that is all it takes.

But what do we really know? Jobs is hard to track down for the Wall Street Journal, so it is hard to believe anyone knows the specifics of his work on a single secret project. Tablet dimensions are only guesses. The parts of the iPhone told its tale, especially leaks about what became a German-sourced, highly innovative capacitive screen. A tablet would require an extraordinary version of such, and nothing has leaked of any substance. That DigiTimes says the production line is running does not count.

OS X for iPhone 3.0 was just revealed, and while it does a lot for the iPhone, only some Plist text describing "iProd X,Y" point to any development outside of the smartphone arena. Meanwhile, Tablet rumors hinge on an entire all-new "wing" of the OS coded to accommodate Mac-level usage, targeted at a wholly new CPU/hardware architecture, and ready soon. Difficult to believe, especially since the delta in quality between betas 1 and 2 of the OS is infinitesimal, not composed of the leaps found in past OS development.

Thus, I believe Apple Tablet expectations are off-base. The company would be foolish not to experiment with the idea, but the product as imminent, and meaning to compete with netbooks in price, sales volume and usage profile, represents the remotest of possibilities.

Wednesday, March 25, 2009

10.6 is the new OS 8

As I wrote earlier, the most important Apple product in the near-term pipeline is OS X 10.6. Speculation is ramping up about the look and feel, capabilities, and changes coming soon.

The release of Mac and iPhone variants of the OS is set for WWDC in June, according to the best guesses of Mac Rumors and Apple Insider. I see no reason to doubt that, though Apple is now late in announcing the exact date of the developer conference. It may be that progress is uneven, and the company is waiting to set a deadline (only speculation.) OS development is so complicated that a delay of a few months is almost assured. The "polish and enhance" mandate of Snow Leopard might make it especially susceptible to long slogs through legacy code, though the predicted end of PowerPC support lifts the burden of targeting that platform. All told, Apple may be planning on a WWDC preview, with a month-or-so-later ship date.

The last major OS revision and Mac platform shift was, of course, OS X. The move to the UNIX-based OS is without a doubt the most significant change in Mac software history. Snow Leopard is no such leap. The most similar past update to the Mac is the shipped Mac OS 8 (not Copland of course.) When that revision arrived, it represented a significant rework of the internals of System 7, came clad in a new but not-unfamiliar UI, and ended support for 680x0 (non PowerPC) Macs.

OS 8 was probably the relative peak of the original Macintosh, as XP compared far more favorably to OS 9 than Windows ME did to the earlier Mac OS. The same may hold true for Snow Leopard, shipped at the tail end of a disastrous Windows release cycle, with future OS X releases coming after Windows 7 (in theory.) Indeed, OS X has been shipping for almost ten years now. Is it becoming as dated as its predecessor? What comes after OS X?

Another possibility is that this revamp represents the start of a new, even better era, as MultiFinder and System 6.0.8 (or 7.something, when that OS finally worked) were the start of a sort-of second generation of the Mac. In this scenario, the OS is "rebuilt in flight", giving Apple a few more years to plan the next complete overhaul, but possibly leading the OS into a spiral of senescence from which it is unable to recover. Apple pushed Classic about as far as possible, and it would be best to avoid being in that risky and desperate a position.

Dumbest article ever?

This article breaks new ground for stupid Apple commentary. I am trying my hardest to lower the bar for pundits with this blog, but I doubt I'll ever hit these lows.

That an Apple tablet is coming is far from a foregone conclusion. If it does exist, we don't know what it looks like or costs, or even if it would be marketed as a Mac or an iPod-something. That's not a problem for Mr. Moritz, though, who calls this non-existent product a failure already.

I have no inside information, but my predictions are as follows. Apple will never release anything like a tablet, because the form factor is designed for stylii, and Apple is pushing touch. Any non-iPhone-sized touch device is unlikely. Furthermore, the Mac will never be sold as a laptop for less than $700. No netbook Mac is coming! The "consumer hit" Moritz describes is only replacing sales of laptops, not generating new sales itself, so it is useless, or worse, to Apple.

The state of the Wintel consumer laptop today is a direct consequence of the failings of Vista. If a PC laptop running Vista was a compelling product, it would sell for $1000+ like a real laptop. Such a thing cannot be built, as nobody wants Vista, especially in the low-end, hobbled incarnation found on low-end PCs. Don't believe the Linux hype either, as the standard netbook purchase is not the $200 generic option, but the $400 model from a name brand running XP. By dint of age that OS runs on what is now very cheap hardware.

Fixing the OS won't fix the problem, because expectations have been forever shifted. The "digital hub" vision of a muscular computer (almost a server, really) powering one's ever-more-computationally-intense "lifestyle", was the (very profitable) holy grail for Steve Jobs, Bill Gates, and the entire industry. Now, only Apple continues to compete for the many-cycle user. Indeed, who would have thought any popular computer in 2009 would struggle with video editing?

Tuesday, March 24, 2009

Quarterly Mac sales numbers are irrelevant

The recession has Mac pundits frantically calculating the impact of a down economy on Apple's sales. Many project static or declining Mac sales, with cheap netbooks gaining market share quickly. Surely Apple's Waterloo has arrived? Hardly.

The technology industry is almost entirely divided into two types of company, those that make standards, and those that have to follow them. Typically, leaders risk only market share with poor implementation, while followers face an existential threat if they fail to conform.

The pre-"Jobs 2" Apple was the rarest breed, a company that knew it was too small to dictate terms to the industry, but was determined not to try to adhere to the acknowledged industry standard. To survive at all it was thought the Mac had to hold on to standard-bearer status, or relevance, in niches (graphics, publishing, education) and build consumer and corporate market share from a beachhead.

The strategy was impossible to execute. Apple had uniquely expensive R&D overhead (OS, hardware, Claris), and, with less sales volume, could not get equal component pricing. The Mac had a flawed cost structure that no technical edge could overcome. Every quarter of decline represented a trend towards Wintel standardization, and every lost sale pushed the Mac farther from price parity. A recession in this scenario would indeed be dangerous, speeding up market share losses as buyers focused on cost, making the Mac even pricier, and eventually killing it and Apple. (Cool looking Windows PCs coming from Cupertino with Apple badges may have persisted. Yuck.)

The Apple of today faces a far different market. Partial standardization (on Intel) has allowed Apple to direct still-costly R&D towards moving the user-facing platform forward, driving improvements in OS X. That is far different from the old mandate that Apple spend richly to match the competition, or else face a cataclysmic shortfall. The risk that a single misstep in hardware would lower sales and threaten the relevance of the platform has also been lifted. Software availability is no longer completely contingent on rising Mac market share.

So, while sales of "luxury" items may decline, and Mac sales numbers might even fall year-over-year, the consequences are no longer existentially dire should that occur. It is the idea that a Mac works a certain way, not structural costs, keeping Apple out of the netbook market.

Sunday, March 15, 2009

Considering the Shuffle 3.0

Apple's new iPod Shuffle is the most controversial iPod since CmdrTaco preferred the Nomad Jukebox. The reviews are not mixed, either, but downright negative.

The recipe for a thumbs-down is the same every time, too. Nobody minds when electronics get smaller, but this shrink of the Shuffle has cost too much usability, say pundits. Moving the buttons off the player and onto the headphone cord is bad, because you cannot use anything besides the included Apple earbuds. The new controls are hard to use unless you're standing still, but the device is designed for every situation besides that.

Outside of the Great Headphone Debacle, reviewers note that the player is way easy to lose, the "colors" are boring, the clip is not as strong as before, and the old dock was preferable to the new headphone-to-USB cord.

Pluses are hard to come by, but increased capacity always plays well, and VoiceOver liberates the Shuffle from its old single-playlist cap in a cool way.

But these reviews miss the broader intent of the Shuffle 3. Like all Shuffles before it, the hardware was not designed to meet Apple's typical brief. The Macintosh, the iPod and iPod Mini/Nano have prosumer market positioning. If you pay a premium, Apple's best-in-class hardware and software interface will deliver the best available listening/computing experience.

The Shuffle 1 was a defensive product. Apple's desire to own digital music distribution to all consumers meant AAC/FairPlay hardware had to address the entire market, or risk losing the battle over DRM standards to Microsoft. Though the true goal, profit, lay in high-end sales, the 50% market share of flash players meant the segment could not be ignored. Also, disk-based iPods crash when they are used during exercise, which was beginning to weigh on the perceived reliability of the iPod. The Shuffle was therefore only an ideal second MP3 player. All of the reviews at the time considered it in isolation, though, and thought it was dead-on-arrival for lacking a screen.

The Shuffle 3 is also defensive, but a more subtle maneuver.

The recession has accelerated the decline of the stand-alone MP3 player. The mass-market for these players seems to be around a thousand songs to choose from between syncs, especially with the Genius and other features making it easier to sync "the right 1000" each time. Since even the 8GB Nano allows for 2000 songs, that base is covered. The Nano is so small, though, that non-music features, like gaming, notes, or calendaring, are hard to implement well. Since the music industry has given up on DRM, the Music Store is also no longer a value-adding feature, either.

Thus, the trend towards multipurpose devices like the iPhone makes the Nano a Cadillac in a world of sidecars. The Shuffle 2 does everything the Nano does except require you to look at it, an act reserved for the iPhone these days, so naturally customers opted for the low-margin Shuffle when they went looking for a music player.

This is a rather destructive trend for Apple's profit margins. The Shuffle 3 takes away the universal headphone compatibility, no-look controls, and panache of the Shuffle 2, once again restricting those features to the Nano.

So what do you get? Nothing less than a new Apple interface, here in beta. VoiceOver is a big shift, and Apple is using the new Shuffle as a testbed for mainstream user interaction with spoken interfaces. The iPod Touch with a two-way spoken interface is Apple's end goal, so they never have to put a volume control on it. As a nice bonus, the Shuffle pushes the sophistication and technological edge of the Mac, too, installing "smooth human" in all languages when synced with a Mac, instead of the "clunky Scandinavian-inflected robot" gone AWOL from the depths of Windows.

Tuesday, March 10, 2009

Hegemony and verve

People who reading this blog probably agree with the following few statements:

* Microsoft dominated consumer and business computing from 1995-2005. They set standards and had first crack at any given media or software market. If something was not Windows-only, it was at least compatible with the relevant Microsoft offering.
Apple was marginalized in that time period, and often had to adjust its offerings to accommodate de facto standards in the wider market. Mac support was an afterthought for most companies, and keeping the Mac viable was Apple's burden.

* Microsoft is large and complacent, and attained dominance through imitation, relentless bullying, and business acumen.

* Apple made it in thin times by being fundamentally innovative and differentiated, and succeeds today, on a huge scale, for the same reasons.

* Microsoft is seen as uncool, a version behind, and so oriented to corporate needs they necessarily are not "the new."

* Apple is perceived as a hip alternative to the status quo.

Apple started its comeback with either the iMac or iPod. Certainly, the dot-com crash took the wind out of the Bondi-colored recovery, so start with the latter. Apple initially played defense, releasing a player and media store Mac-first, and for some while, Mac-only. This guaranteed Mac compatibility with a music player, and the projected (and eventual) standard in DRM. (Both areas were contended [poorly] by Microsoft, too.)

The iPhone was Apple on offense. Smartphones were a business-driven niche. Limited Mac-compatible options did not damage the platform all that much. Apple's offering was not Mac-related, but instead a move to compete in a new market. That it would be innovative was taken for granted. Apple delivered a product that met expectations, and has become a hegemon.

With the recent media attention focused on the Palm Pre, Apple may be in danger of losing its pole position. All that is required to push Apple from alternative to mediocre mainstream would be such a loss. Palm is a tiny company that may pack a gigantic mindshare punch. Apple should eliminate them any way they can.

iPod Touch Tablet or Netbook?

The Mac web is being flooded with "Apple is building a netbook" rumors on a daily basis. Some claim a MacBook Cheap is coming, others a tablet-sized iPhone/iPod Touch variant. Neither makes much sense.

A "MacNetBook" isn't coming. A super-cheap OS X laptop is detrimental for too many reasons. Cannibalization of profitable, full-freight Mac Mini and MacBook sales seems inevitable, and Apple hates that. The netbook price point means a MacNetBook would have a mediocre screen, no GPU, and a dated or sub-notebook class CPU. It would be a cruddy computing experience, sullying a Mac brand Apple has intentionally positioned as the opposite. Finally, creating a slow, cheap general purpose computer means supporting it with software and OS updates, and Apple hardly needs another platform worth of development work.

The iPod Tablet isn't coming either. Such a device dodges cannibalization, Mac brand confusion, and "new platform" issues, but adds a host of other problems. The iPhone, iPhone 3G, and iPod Touch 1 and 2 have all had the same screen size, touch keyboard layout, and input hardware design. Making a "giant iPod Touch" splits Apple's carefully-tended, homogenous offering in a number of ways.

All of the user learning that has made the touch keyboard a successful alternative to hard keys is gone, as all Tablet users would learn a larger, different soft keyboard. Switching between iPhone thumb input and whatever the tablet requires is as drastic as switching from any other platform, even if both are now OS X-based. A tablet with a hard keyboard is the alternative, but can anyone imagine an Apple OS X Kindle-alike formfactor being released?

App development would be complicated by a new form factor, and the simplicity of the "it works if you can see the App Store" model would be lost. Never mind that users will not tolerate a "more expensive iPod" that has fewer available Apps, certainly at first if not forever, as the market for such a device is way smaller than the multi-million per quarter Touch venue.

Finally, a tablet with the strictures of the iPhone/Touch offering is not as palatable for those who see the openness of other offerings in the price range. It is one thing to trade a Razr for the iPhone with App Store. A netbook switcher confronted with no USB, no disk drive, and the constraints of the rest of the iPhone OS X scheme would have some reason to complain.

So why the rumors? Apple is working on a true iPhone/iPod Touch 2, such a thing is a certainty, and that work is probably generating a lot of speculation. Along with future Mac development, this work is likely coalescing around the most important Apple product right now, OS X 10.6. Once 10.6 is out, Apple will have their next base platform in place, with all the right accommodations for a range of cross-compatible iPhone 2 offerings, and a range of (GPU-heavy) Macs. A Tablet sprung from the last days of the PPC/Intel/Classic mishmash of Leopard is massively unlikely.

Thursday, March 5, 2009

Tip for Google: How to destroy Twitter

When visitors are logged in, pop up a "say" button next to the search field. Send relevant gMail/chat notifications when people say "@google_user".

Overnight Twitter will be second-place in tweet volume.

Radical proposal / The quieted "Quadra"

Apple should use a tiny fraction of its cash to buy Palm. For just under $800m (of a reported $35b), Palm is extremely cheap. What to do after a purchase is also a quandary.

Acquiring Palm makes sense for a number of reasons. Patents are great to have, and Palm is one of the earliest movers in the handheld computer industry. Lawsuits are already flying over the Pre's iPhone-alike gestures after all, surely Palm's intellectual property hoard is being undervalued. Not relevant to handheld IP, but remember that Palm bought Be Inc. a while back too, representing another relevant pile of research and patents. On a potentially sappy note, reuniting Apple with Jon Rubenstein, who managed to get shambling, desiccated Palm to produce the Treo Pro and Pre, would be a positive, if he is amenable to a return. Finally, taking over Palm eliminates any possibility of the wily competitor producing a really unpleasant surprise.

Apple could go a few different ways with Palm post-acquisition.

They could invest in Palm but leave it separate, producing phones for non-AT&T networks. (Is that eventuality is covered in the exclusivity agreement?) This is obviously unlikely. In some ways a sustaining infusion of cash, and perhaps software (OS X iPhone "licensing" allows for platform diversification without hurting the brand or lessening platform control) mirrors Microsoft's earlier move when Jobs returned, though on a grander scale.

Apple could shut Palm down, unwind its operations, and absorb the best parts of its personnel and technology.

Apple could allow Palm to operate independently for the most part, like FileMaker, and when it went bankrupt as it is on track to do, unwind it in court.

(Jobs is still angry about being under 3Ghz all these years and paradigm shifts later.)

The quieted Quadra

All new Mac desktops
revamped in secret, revealed
in silence by release

The days of Quadras
or the fx blowing the
doors off are long gone.

Where is my midrange
quad-core desktop? You know which...
fit under the screen

Sunday, February 22, 2009

Who is Ralph de la Vega?

And why does he want to destroy his own company's competitive advantage? (See pullquote in red on left.)

Wednesday, February 18, 2009

What is Apple?

Some facts:
Last quarter:
Apple Retail same-store sales were down 17% year-over-year, with foot traffic overall down 1.8%
Apple sold 71% of Macs as laptops, the highest ratio ever.
Mac sales were the second-highest ever, and only barely not tops. The Mac traditionally isn't strongest in this quarter, so it is a definite net positive.

In general:
Apple controls the world's largest music store, bigger than Wal-Mart, and can ensure the digital music market operates as-needed by the iPod.  It is top-three in the mutating "video market", though that is harder to quantify. The DVD sales/rental market is huge, but Apple has purchasable and rentable movies and TV for television, computer or mobile consumption selling in significant quantity. The Apple [on] TV is a "hobby", but also a statement of interest, alongside Mac and iPod/iPhone media distribution.

Apple has a larger Leopard Mac installed base than any console manufacturer, outside of perhaps the Nintendo DS. Apple's consumer home installed base is smaller than the total Leopard number, but surely rivals any console manufacturer. Apple's Mac "consoles" are far higher-margin, and are likely to be internet-connected, buying, creating, and running media and applications. 

Much as iPhone application and internet use dwarfs other smartphones, making each iPhone a more valuable target for developers, Mac connectivity, power, and interoperability gives Apple home productivity and entertainment footholds as yet undetected by competitors. The PlayStation 3 is a comical island, the XBox 360 the proprietary G5 Apple used to ship running a tragicomic OS, and the Wii a clever use of limited resources meeting genuine success, but not a competitor to a netbook, let alone a Mac, as a personal computer.

Apple has the largest "Application store", again a huge platform for developers, and all other smartphone platforms are rushing to catch up. Apple's advantage here may be more reminiscent of Microsoft's early moves in the personal computing industry to own the platform with the broadest hardware and software compatibility. Market forces crushed anyone else, including the Apple of the era. Owning that layer, here the function of OS X iPhone  combined with the App Store, may mean no other platform gains developer momentum. Hardware, like a keyboard or a given niche feature, will differentiate marginal competitors, but the main personal mobile device and platform could become Apple's.

So Apple is what sort of company? They own and operate methods of distributing paid and free content to every consumer entertainment venue besides movie theaters. They are therefore like a multinational radio station, music store, television channel, and 2nd run movie studio, agnostic about (and uninvested in creating) what it is playing. Apple is also a high technology company building electronics and operating systems that serve as the venues for consumer consumption of distributed digital content. (When the content includes signed code, like the App Store, Apple plays the same roles but constrains the types of content to protect its control.)

So Apple is a multinational media conglomerate without a creative or production department, a major mobile consumer electronics and telecommunications player, and the owner of the world's most sophisticated, best selling, industry-defining "convergence platform." 

The Mac playing iTunes from the Music Store is performing a computation and presentation of digital media, in this case for entertainment, for one or many, but that same Mac allowing for the creation of a Pages document is doing the same fundamental operation. The iPhone Apps are games, notepads, or even a musical instrument. The iPhone "Contents" are videos and music licensed from someone. Play the Ocarina or an Ocarina.mp3 out of the speakers and the rigid conceptual barrier between "living room" and "office" on the Mac dissolves into "iPhone."

Thursday, February 12, 2009

Apple Store Decor: Revelator and Reifier of Unarticulated Corporate Strategy

The Apple Store is about to get a major redesign. Already, iPhone and iPod Touch sales real estate has shifted.  The takeaway is that the emphasis has become software. This on the heels of reported Apple Store anti-loitering efforts.

The net effect of the conjecture about pushing higher throughput, and the merchandise redesign, point to Apple's next annus mirabilis. 

The iPod was a music player that became an ecosystem. Hardware was what could be sold around Apple's brilliant, focused design. The dock connector, and Pixo's OS, gave peripheral makers a broad canvas to work from, and sales volume took care of the rest. The limitations of the software meant iPod Games were a hobby.

The iPhone began life as smartphone but will become a platform. Hardware ecosystem compatibility largely intact, as it shares (all but the FireWire charging pin of) the iPod line, it is software that will drive the iPhone (and iPod Touch) to palm-space dominance. Become the Windows, the lingua franca, of the new personal computing device space, and hardware becomes less deterministic of purchase choice. 

People fell for the Mac-only iPod 1.0 because Mac users had few options, and are self-nominating aesthetes of personal technology. FireWire, compact design, and a cutting-edge hard disk gave that market what it wanted. Once the 3G iPod with Dock Connector arrived for all computing platforms, Apple was picked as a dying breed, the "vertical integrator" in an infant market about to be stampeded by a rush of horizontal device makers coalescing around a platform. As with the Macintosh and the WinTel PC, hardware would necessarily emerge that met any and every market demand, and do so most efficiently.

But music players are not PCs. They are very simple devices, and early volume sales drove Apple into the catbird seat when purchasing components. Apple also had hardware design prowess among the best (Sony?) in the category. The market demands everyone was trying to meet were better matched by the iPod maker at lower cost. A software platform cannot dissolve the hold of a vertical integrator in even commodity technology segments without price or feature superiority. 

(Aside: The content of the personal music/media player industry simultaneously collapsed in price and mushroomed in availability, guaranteeing that all platforms, inferior or superior, could not leverage themselves with exclusive "walled garden" material. The role of the iTunes Music Store in cementing iPod dominance is overstated. While a non-iPod-compatible dominant form of content in tandem with the end of "piracy" could drive Apple out, the iTMS did not keep Apple dominant.)

The iPhone is Apple's combination of the Mac, WinTel and iPod strategies. Apple offered the iPhone 1.0  as a "new paradigm" cellular/smartphone. iPhone OS X was a leap beyond Symbian and other "environments" as large as the Mac was from DOS. The hardware was also a generational advance, featuring few buttons, minimal branding, and matte tones where the opposite had been the norm. Like the early iPod, the Lisa, the Mac 128k, and many other Apple first stabs, the iPhone sold moderately, and was a useful educational experience for Apple. 

The iPhone 3G/OS 2.0 marked a strategy shift. To expand the iPhone beyond the Mac-alike initial market of Apple and smartphone early-adopters, Apple repeated the maneuvers of the once-triumphant PC cloners, as well as its own past work with the iPod. 

To match the inevitable cloners, Apple dropped iPhone pricing to commodity levels by sharing components with the iPod line, and negotiating a carrier subsidy from AT&T. "Smartphone" segment profit margins thus came under pressure, where they had been relatively fat before. High-end vertical phone/software integrations like the Treo and BlackBerry no longer merited high-end prices. Cloning an iPhone would not yield a lower price, if it were possible. Horizontal integrators, with hardware designed to run Microsoft or "Symbian" software, also faced price pressure, and the difficulty of matching the polish of an integrated solution from any of the vertical players.

The iPhone market position at this juncture is "the best smartphone in the largest selling price category for such phones, with the most capable and varied software." The redesign of Apple's retail stores represent a move to shift the iPhone/iPod Touch from a best in class device into a definitional consumer electronics reference platform, something far more valuable. This is the Wintel portion of Apple's hybrid strategy.
The Apple Stores mean first-party product offerings can be sold at retail in lockstep with corporate strategy, surrounded by unilaterally controlled third party offerings. Contrast this with a typical retail/manufacturer arrangement, in which one works to produce its best attempt at what will sell, and the other tries to create a venue that sells most efficiently.

The first iteration pushed Apple's hardware/software integration panache, with iMovie or Final Cut on kitted-out demo Pro machines, or colorful iHardware for kids and adults alike to experience in the flesh. Unremarked, but an obvious goal was to offer a haven for the "round pegs in the square holes." Long-time Mac users otherwise unable to browse software and hardware peripherals (i.e. POS material pushing 5 PDAs, 5 digital cameras, shelves of software and books, etc.) with any consistency in a Windows-dominated consumer electronics world had their new home. These customers happened to be wealthier than average, most in professions, where an expensive computer, either emphasizing digital media or print document workflow, was advantageous.

Apple even streamed Jobs' keynotes into "theaters" at the back of many stores. Cambridgeside Apple Store did not advertise, but provided seating for thirty or so people each time I went. I arrived an hour early and had a chair, but the store was eventually standing-room only and packed with cheering Mac zealots. (These broadcasts were predated by the satellite downlinks and pizza parties offered with even less promotion by Apple corporate offices.) The move of the event from an obscure corporate setting to mall retail mirrors Apple's corporate strategic shift in that time.

Store 2.0 heralded the addition of the iPod as a major product category. The "rollout night" for the 4-button 3G iPod, featuring then-unusual entryway placard announcements, is a useful milestone. The shift of Apple Retail from Mac torchbearer to consumer electronics platform showroom was partway finished.

Post-1.0 stores have iMacs, PowerBooks, and iBooks running on capacious tables. Each is a vertical solution to the question of how best to accommodate consumer usage of computers. The past division of retail by machine function (music, movies, games) was almost entirely replaced. 

OS X, now the default operating system on all Macs, was sold unobtrusively. Marketing highlighted "UNIX foundations", with plenty of plumbing for complex functions, regular updates, and good security, all made "lickable" and easy to use by Apple's inherent design savvy. 

Depending on the user's needs, the PowerBook, iMac, or iBook might be appropriate, but all were Macs. The PowerMac became a halo product of sorts, demonstrating the high-end media software and peripherals a Mac could theoretically handle, but in a fairly small section. Costly, then unusual and impressive 23in, then 30in, then two of the latter flat panels, sold in tiny numbers, cemented PowerMac cachet and Mac functional credibility. 

Hardware and design differentiated Apple products in all classes of product, but none more so than the iMac, MacBook and MBPro, and iPod, and those products dominated the floor.

Mac computer accessories and software, already made easier to shop for by a burgeoning internet, were minimized to allow the iPod ecosystem habitat in its optimal environment. The iPod was positioned as a music player with a minimalist feature set. Color, photo browsing, contacts, on-the-go playlists, and other requested features were added, but Apple carefully kept Mac functions (i.e. word processing, even of a short note) out. Notably, even the music sold by Apple required computer-based iTunes software as an intermediary between content and iPod.

Accessories like boomboxes, Mac input devices, printers and scanners, software, and laptop cases were all given less prominent space than primary Mac or iPod hardware, and iTunes promotional material. Thus, Apple Store 2.0 made the Mac and iPod a platform for digital media sales and the personal application of consumer-patterned computing features. The iPhone, introduced midway into the era of Store 2.0, was positioned as a media consumption device tied to the Mac for such operations, like an iPod, but also a participant in the most common communications functions, like email, web browsing, telephony, and SMS messaging.

The rumored Apple Store 3 is Apple's move to make the iPod/Mac divide inconsequential, replaced by a focus on OS X (as application vector) as the Apple differentiator. The iPhone tables that focus on applications are meant to do what the 2.0 "Mac table" did. Push technical details and rigid usage to the background, and present the product as a platform supporting user whims and desires. The iPod Touch and Mac will be presented as a unified environment divided by form factor. Where iPod hardware was a category-defending ecosystem, software will be the flora and fauna that lures new phone and palm-space hardware buyers as well as converts to the Mac. Apple wants "OS X users" computing on all its form factors so as to cement OS X as the de facto standard, the Windows, of today. The network is not the computer, as Sun wished, but rather the "back office" server and managed computers. The userland operating system "is the computer" for most, and Apple's stores are moving to reflect the strategic aim of seamless OS X across end user devices.

Wednesday, February 11, 2009

My life in the bush of ghosts

Discordant, unpredictable, arrhythmic. The market is all of these and more. Fits of lunacy, groupthink, input from reality-divorced quantitative analyses, the whims of the rich and powerful, the competing interests of hundreds of banks and institutions, thousands of brokers, and thousands upon thousands of retail bankers, stock analysts, and automatic trading, all add up to the morass known as the public stock market.

A banker friend of mine explained that stock markets occupy perhaps 1% of global capital, and the rest is bonds and other market vehicles. The Dow average, not alone among popular indicies but easy to cite here, is the product of thirty companies, each buffeted by millions of forces every day. Some events are cut and dried. Say a meteor hits Wal-Mart headquarters and eliminates the entire executive suite, among hundreds of others of managers. The reaction is simple: sell. This hypothetical is pure bad news for the top-down retailer, given that it just lost the entire top of the company. Wal-Mart plunges accordingly, say, and its market cap dives proportionally.

Rarely, of course, is bad news so obvious or so one-sided. Perhaps Wal-Mart loses a dispute with Colgate, and is forced to split its shelves between Crest and the upstart, instead of retaining monopsonic control over the toothpaste market. Such a development is not so obviously deleterious, and some could argue that abandoning the monopsony-as-price-cudgel strategy might even lead to greater sales. More toothpaste choice, albeit at worse margins, could go against forecasts and lead to a spike in high-end paste choices among otherwise low-margin, once Crest-loyal customers who now enjoy a greater selection at reasonably similar prices. Wal-Mart shares might go down a bit as some sell, seeing the slipping control of sales layout as a profit-destroying anti-Wal-Mart nightmare. When profit numbers come in and toothpaste is a bright spot, the stock might adjust accordingly. Indeed, shares may go up seemingly against type, ahead of earnings, as savvier investors see the silver lining of variety where the pro-Crest faction saw only less control over Crest prices.

But what to think of the current public stock market. That 1% of capital sloshing around seemingly without reason.

Apple computer is massively undervalued by any measure besides the "stockpile your food and guns, the US is going primitive" extreme. Apple trades at a forward P/E closer to commodity producers, and is growing faster than any startup by revenue or year-over-year (besides Google), including a laundry list of tiny companies dwarfed by Apple. Apple is "growing like a startup" with revenue like a major industrial player. While luxury goods are going to drop in sales in a recession, small business, education, and a number of other Apple markets are primed to grow. Add in a mature, 20m+ iPod/quarter sellthrough to guarantee low prices on bulk memory deals, and the iPhone 3G, and the stock seems positively staid. Never mind the rumors of $99 iPhones and an iPod-alike iPhone line that hits every reasonable price point.

I may look stupid in three months, or even one month, but I am iterating/reiterating a strong buy on Apple. 100 is not high from 80, it's low from $225, my price target.

Tuesday, February 10, 2009

Regarding the Kindle and "Did Apple Blow It?"

No. Apple, and even in some headlines, "Steve Jobs", did not "blow it" by failing to enter the hardware eBook space.

The sales fire stoked by the Kindle is a small controlled burn by consumer electronics standards. Sales of 500,000 are excellent, but not for an Apple device. Even 500,000 sales in one weekend would be "disappointing" for "analysts", so Apple probably didn't want to get stung by what would be spun as witheringly weak sales reports no matter how much eBook share they grabbed. Why couldn't Apple sell 1m eBook readers if they did a great job? Sure, they could, eventually. The industry now is too young, younger than the pre-iPod MP3 player market, for sure, and definitely younger than the pre-iPhone smartphone market, to deliver those numbers.

Also, the Kindle comes with 3G service included. Apple's entangling alliances in that field are well known, but I will say it anyway: an Apple eBook content network driven over Sprint's network would not play well with AT&T, on whom Apple relies for its, er, "other" 3G project. Why not bundle 3G with the iPhone or iPod Touch, or even our mythical reader? Even if such a move were obviously rational, Apple hasn't shown any desire to go in that direction, preferring the subsidy/carrier model. They don't seem to want to switch. An iPod Touch or MacBook Air with 3G is the most radical I can see Apple getting. Certainly, a new paradigm of connectivity ("it's included!") is not best rolled out as part of a new paradigm of product, at least, for Apple. Amazon seems OK with offering a doubly unusual package, and seeing how it sells.

The Kindle also does one thing really well - process and display free and not-free text. It does a good job negotiating DRM issues with the latter, via What the Kindle isn't is a software platform. It doesn't run an OS with anything like the chops of OS X. Who knows what is hacked up to operate it, but it isn't able to go beyond "what it takes to make the Amazon Kindle tick", end of story. Apple has far greater aspirations for its hardware and software. The "Classics" app, which comes with public domain books and allows for dressy reading on the iPhone, encompasses the Kindle's mission and then some, and the device also makes phone calls, plays music, and offers a few hundred thousand other applications or features. Apple's target market is that which is encompassed by a palm-sized OS X machine constrained to signed applications and a branded network. The putative Apple Kindle-sized device with physical keyboard, and iPod shuffle-sized "page" buttons, takes a once-elegant, pocketable iPod/iPhone device, and makes it far less interesting to most of the market. Yes, a small segment of the market may buy the Apple device instead of a Kindle to accompany their smartphone, but Apple's current offering captures most of those customers, and does not sacrifice dozens of other markets.

So, to all of those who wish Apple was out front in eBooks, please turn to the Nomad Jukebox for a good representation of the last pre-iPod stab at mobile music, and then envision the best Kindle 3 you can. Both were or are, respectively, cannon fodder for the palm platform of universals, not vertical niches, that Apple is building. Will we someday see an iPhone with a bigger screen and a narrower market target? Sure. It certainly won't be sold as an eBook reader first, and everything else later, no matter how many Kindles Amazon sells.

Wednesday, February 4, 2009

Does Apple spend too much on ads?

That is the question posed, and affirmed, here. The reasoning is that Vista "dug its own grave", and Apple is piling on advertising OS X on Macs, and doing so for the sake of ego.

Does anyone remember when Windows ME "dug its own grave" crushing dominance, or Windows 3.1 turning people away from the more-advanced Mac OS because "it's what everyone is buying"? There were other reasons for the Mac's slide, but Apple's ads then were not effective in the least. Bewildering Performa variants and a muddled message, and the mainstream consumer forgot the product. PCs were it. The I'm a PC ads, the Seinfeld ads, even the Zune, is convincing when fatted with a marketing department as rich as Microsoft's. A deafening silence in response would be cataclysmic, on the iPod/iPhone front a seeming retreat, and for the Mac a sign of "another luxury good losing momentum", not the platform resurgent it is now.

Jobs wanted 10% of the market when he returned to Apple, and he said so explicitly in the Think Different era ("if we can convince 5 more people out of a hundred", when Mac share was less 5% than 2%.) Apple is there by certain measures, sure, but Jobs wanted to use the perquisites of 10% share, not achieve it and slide back.

Tuesday, February 3, 2009

Still Misunderstanding Apple

A recent hosanna slung Apple's way by the NY Times demonstrates how badly most understand Apple's current relevance.

Apple is a leader and innovator in its various markets, but not because, as the Times says in its final paragraph, "Apple is...willing to draw colorful juxtapositions with its rivals." It got to where it is by being, by living, its strategy devoutly. The Mac was a colorful juxtaposition to the IBM PC when it was released, and though the dominant company has changed, it remains exactly what it was when released. It is an operating environment unique to its hardware with an emphasis on graphics running only on proprietary hardware in an especially thoughtful and elegant physical enclosure. (Please spare me the Hackintosh, it is irrelevant at the very least to Apple's marketing.)

The iPod is not a colorful juxtaposition, and it has never been sold as such. The iPhone is a unique offering, and really a "hardware and software" proposition like the Mac, but it is portrayed as the first incarnation of what will be the dominant offering, like the iPod in the beginning. The Mac, though, was always an "alternative", though I suspect Apple hemmed the message in at first to spare the Apple II, and then stuck with it when the Mac was not "the iPod" of personal computers. Apple has assumed a brash, anti-establishment image with people older than the iPod because it primarily sold the Mac in a period of corporate and market decline, but it is wrong to assume that it wants or still adopts that mantle.


The Mac is more pleasurable to surf with than Linux, as verified by the computer literate community. All of the surveyed must be real computer nerds to run the boxes they do, and the boxes are all generalized PC hardware configurations. Win2k still beating Linux is one thing, but a newer, closed, actively hostile OS? A consumer condemnation, even in the face of the "netbook phenomenon." I use quotes because the disposable, under-capable computer is no place to look for the future, let alone phenomena.

Saturday, January 31, 2009

Ditch the Product Reform of Jobs II - Think Sim City for Jobs III

I think iMacs are going to get evolved up to spec for another six months. Upon Jobs' return, he will bring with him a one hundred twenty foot scroll detailing all necessary hardware changes for four years going forward.

The product scheme started in 1997 (and continued to this day), is ill-fitting. The famous de-Performafying of Apple, into a seller of a four-part grid of products, no longer works. The idea of computer market segments (desktops and laptops) addressed with call-and-response models (MacBook and iMac, [Air and Mini], 17in and Mac Pro) and consumer products called i-something, with some networking gear and random peripherals, is outmoded. 

Think like Maxis for the restoration of Jobs. A new split: industrial, commercial and residential.

The remaining iProducts are all Residential. This includes iWork, iLife, iMovie, i-everything, and the MacBook. The Airport Express and Time Capsule, too. And Bento for fun.

The commercial products. The MacBook Pro/Air, Mac Pro, the 24in LED and 30in display, and the Airport Extreme. Final Cut Studio, FileMaker, iWork Pro [think of a Mac Write Pro Pages that drops the pretense of competing with InDesign, but really takes on Word.]

The industrial products are Xanything and server-anything. XServe, XSAN, etc. Final Cut Server, etc.

A focus on these three going forward yields livingroom iMac 42s that look like TVs with dock connectors, a fusion of i-hub stuff that keeps all the media and files in a home cloud, and makes the iMac the ONLY Mac. It is Mac, and it is the center of the hub, and it is Residential.

The Mac Pro can split into a many-model range that can take 100% of the over-1200 market, and has the virtualization and management hooks (in hardware and software) that let Apple into the business market, without getting confusing, or even making people think of them as "Macs." Mac Pros are OS X Workstations, with different performance emphasised, and cost profiles that need not step around any residential-model price/performance comparisons, because the other hardware differences (6 USB ports? quad cores? redundant power supply?) set them apart prima facie.

Industrial products are kept current to assist the commercial market drive. I have little to say, though I know the Mac Mini is used like an Apple blade these days, 4 up in 1U. The demand for a real industrial push is there. Even Cisco is doing it.