Jul 282011

After a wave of Japanese companies reported decidedly un-Apple earnings yesterday, Logitech, known mostly for their universal remotes and computer peripherals, announced a $29.6 million net loss versus $12 million in the black during the same quarter last year. What changed? Well, it’s probably really tough to piece it together. Let’s look at Logitech’s press release:

“Included in Logitech’s Q1 FY 2012 operating loss is a $34 million charge to cost of goods sold due to a planned price reduction on Logitech Revue with Google TV.”

I guess it’s not that tough to parse. GoogleTV single-handedly buried Logitech’s earnings. And their books weren’t the only thing stomped.

“In a separate announcement today, Logitech said that Chairman Guerrino De Luca has assumed the additional role of acting president and chief executive officer, succeeding departing CEO Gerald P. Quindlen.”

You probably remember De Luca as one of the more enthusiastic supporters of GoogleTV’s potential on the set-top. He probably  didn’t mean “potential to destroy my career”.

The good news is you can now get a Revue for the price of an AppleTV, although you may have to blow a bit of dust off the box.

 Posted by at 10:25 am
Jul 252011

Handicapping Apple products is now considered to be a national past time. Unfortunately for the overwhelming percentage of prognosticators, they don’t know how badly they suck at it. Because a new wave of asinine Apple product rumors roll in every new moon, it’s tough to dissipate the stink from the last one before the next is upon us. As much as I’d like to think tech bloggers and analysts are that stupid, it’s far more likely that the culprits are playing loyal enthusiasts (and the freetards who hate them) as part of the quest for the almighty pageview.

As someone utterly immune to and sometimes inspired to respond to such ridiculousness, I’ve decided to call out some of the latest rumors casting stinklines across the interwebs and drag them into the light of logic – well, my logic anyway – in the hopes that you, dear reader, will find the moronitude of said rumors to be self-evident.

A New iPhone to Address the Pre-Paid Market

Because I’m a U.S. consumer and purchase my phones with a fat brick of a contract that brings the up-front cost down, I’m not sensitive to the fact that most other countries don’t operate that way. The truth is that the pre-paid smartphone market is both growing – because more mobile phone purchases are smartphone purchases – and largely unexploited. This would appear to be an opportunity for someone like Apple to significantly grow their global market share – you know, that number that means a lot to Android users – by producing a lower-cost version of the iPhone.

The thing is: Apple already makes a lower-cost version of its current smartphone. Every generation of iPhone provides a buying opportunity for prior generation hardware. As of now, you can get an iPhone 3GS for around $450. That price will likely go down when the iPhone 5 is announced. So it’s entirely possible that Apple will make the 3GS more widely available as a cheaper alternative for the pre-paid phone crowd. But there are also some problems with thinking the 3GS is going to be Apple’s global pre-paid phone. First, it assumes that Apple will continue to produce them in mass quantities. It also assumes they’d be willing to drop the price of the phones below $300 or so. Both of those strike me as cutting into the possibility of it happening significantly, but I think the most biggest detriment to the argument is that the 3GS will be 2 generations removed from currency, which I don’t think would reflect well on the Apple brand. So why not the possibility of Apple releasing a “stripped down” version of the iPhone with – or about the same time as – the iPhone 5? No friggin’ way.

For this to be the case, there has to be failure on one of two axes that make successful Apple products: price and features. A”stripped down” version of the iPhone 5 is what? The iPhone 4? If that’s the case, there’s no way Apple offers it for below $300. Does it share the form factor of the iPhone 5 without some killer feature? It’d have to do without a shitload of killer features to bring the cost below $300, at which point it’d again reflect poorly on the brand.

Earth to pundits: Apple makes healthy margins on excellent hardware vertically integrated with a superior platform. While I’m sure the pre-paid market is a goldmine for some companies who can subsist on razor-thin margins, Apple is not – nor do they want to be – that company.  And speaking of non-margins…

The Apple-branded television

I honestly can’t understand the resilience of this one, but it’s an absolute zombie (a plodding Romero zombie, not the wicked-fast Return of the Living Dead kind). I tried taking apart an enthusiastic analyst; I even tried smug allegory. Apparently there are those who still believe in it, so I’m going to boil my objection down simply: what advantage does Apple gain by having a TV with an apple on it versus any TV hooked up to an AppleTV? Margin? If Apple releases a 42″ TV at an Apple margin, the cost of a Vizio + an AppleTV is guaranteed to be hundreds less. So what does Apple do then? Discontinue the set-top box? Not likely. For pundits who don’t “get it”, Apple’s success in studio and broadcast media is and will continue to consist of 9 parts media, 1 part hardware. The value of the hardware has already been captured in a set-top box; further integration would only add a cost barrier while decreasing consumer choice. The only way to add value to the proposition is to add content, which is where Apple will focus, but not by…

Purchasing Hulu

I’m inclined to think this one sprang from a collision of the “Google is rumored to be talking to someone, so Apple must be talking to them too” and the evergreen “Apple has so much cash; they have to spend it on something” streams. Aside from Apple already hosting a bunch of Hulu’s content, Apple already has a model for a streaming media relationships. Look at what Apple did to Netflix on the AppleTV. They managed to keep all of their content, but Netflix didn’t even get their splash screen on the AppleTV interface. That’s the kind of relationship Apple will have with Hulu, if it even has one. Personally, I don’t think Apple’s interest in a catalogue consisting of 90% decades-old TV shows and movies I’ve never heard of is that high.

Update: Macworld’s Dan Moren wrote an article on why Hulu would be an attractive partner for Apple. Even though I agree with very little of it, it does present the most compelling argument I’ve seen on the issue. The best part: Macworlder Chris Breen takes his coworker’s argument apart in the comments section.

So there’s the view from my comfortable naysayer’s perch about things I feel have little to no chance of happening despite the increasing number of articles appearing to the contrary. Comment are open to those who think I’ve grown too pessimistic about Apple’s ambitions (as well as to those pointing out my poor spelling and/or diction).

Jul 212011

Side note: if your presentation slides look like this, you should currently be unemployed.

It’s a well-known fact that the “formaldehydization” of Microsoft’s earnings come from quarterly tributes pulled from the company’s three milky teets: Windows, Office and Server. From this bounty, Microsoft has traditionally been able to fund the balance sheet black holes of Online Services and Entertainment & Devices. So while the company posted modest earnings that beat the Street’s expectations, there were also some interesting trouble spots which will be interesting to watch play out.

Windows 7 Still Faltering

Ruh roh Raggy! Bonus PPT tip: use full-year - as opposed to quarterly - revenue to make your company's numbers sing!

Even though Microsoft trumpets the number of total Windows 7 activations (currently over 400M) more ofter than Andy Rubin tweets Android’s, the fading polish of the Windows 7 launch is continuing to rear its ugly head. For the second consecutive quarter, Windows revenue is down year-over-year – to the tune of -2%.  Considering Windows 8 is supposed to drop in late 2011 the Fall of 2012, that leaves at least another 5-6 quarters of Windows 7 freefall. We all know that no one’s buying PC’s – and the majority of people sure as hell don’t upgrade their machines via Microsoft’s boxed OS’s. It’s going to be a long time before MSFT is going to get any real love from one of their chief contributors.

XBox-Kinect: the Hangover Quarter 2

After plateauing at $3.7 billion in revenue during the holiday season’s snatch-up of new model XBox’s and motion-sensing Kinect  peripherals, Microsoft saw its second consecutive drop off in revenue from Entertainment & Devices. But because the division sucked so hard last year, PowerPoint was still able to parlay that into a 30% YoY win.  No word on how much revenue was derived from royalty payments from HTC and other Android manufacturers.

Online Services Suck Less

Instead of losing billions in Q4 ’11, the other coin-suck, Online Services, only lost hundreds of millions of dollars. That’s equivalent to 15% less suckage YoY.

So while the 2 strongest legs of Microsoft’s business – Office and Server – continued to dutifully pump out cash for Redmond to burn, it looks like Windows isn’t doing so well – nor does it look rosy for the division in the near future. Hope that Windows 8 launch date doesn’t slip again!

 Posted by at 6:26 pm
Jul 212011

If you guessed Adobe, you win a prize. Yes, the house that Steve razed – everybody’s 2nd favorite target of mocking for their sheer incompetence and duplicity – has transitioned into Apple’s latest version of its operating system with a grace reminiscent of a vintage Jim Carrey skit. The list of problem programs include: Acrobat, Adobe Drive, Contribute, Dreamweaver, Fireworks, Flash Builder, Flash Catalyst, Flash Player, Illustrator, Lightroom, LiveCycle, Photoshop and Premiere Pro. So basically the entire company’s portfolio.

Mind you, Lion has been circulating in developer betas since February, so the only thing standing between you and perfectly-functioning versions of your Adobe bloatware is Adobe’s utter apathy. Seeing as they have yet to deliver a functional version of Flash to mobile devices, this should come as no surprise.

Thanks for continuing to make it easy to mock you, Shantanu.

Jul 192011

For what seems like the billionth consecutive quarter, Apple simultaneously destroyed estimates and blew up records, as reported in its quarterly earnings call. Your deets summarized below:

Let me paint a picture of the upcoming quarter for Apple’s competition:

-the iPhone is now on both major carriers

-the iPhone 5 is coming out this fall

-iOS 5 is coming out this fall

-Apple has HTC’s nutsack in a patent vise that will snugly fit all Android phone manufacturers – and probably Google themselves

-Apple led a contingent of buyers to swipe over 6,000 mobile technology patents out from under Google’s nose, further outflanking their IP portfolio

Reminds me of a bit of dialog from one of the best shows of all time, edited for the upcoming quarter:

“You know the sound of thunder, Larry?”
“Of course.”
“Can you imagine that sound if I asked you to?”
“Yes, I can, Mr. Jobs.”
“Your former CEO and me had this talk, and I told him to stick to advertising to avoid a dark result. But I didn’t say it in thunder.

“Larry: listen to the thunder.”

 Posted by at 5:17 pm
Jul 192011

Eric Schmidt has a tough time keeping his mouth shut. Not one to let an interview go by without a facepalm-inducing sound byte, the former CEO of Google had this to say about Android’s competition at Google’s Mobile Revolution conference in Tokyo:

“The big news in the past year has been the explosion of Google Android handsets and this means our competitors are responding. Because they are not responding with innovation, they’re responding with lawsuits.We have not done anything wrong and these lawsuits are just inspired by our success.”

This sounds suspiciously like what other iOS knock-off manufacturers have said when they’re caught dead-to-rights infringing on Apple’s intellectual property. Last week, HTC’s general counsel Grace Lei similarly wished for a world without patents when she said  “HTC is disappointed at Apple’s constant attempts at litigations instead of competing fairly in the market”. Maybe Eric is dating again?

I guess we’ll just see how badly the market punishes Apple for being such an unimaginative and litigious company when they reveal their earnings at 5 EST today. The Street has already savaged Cupertino with a devastating 5% boost in share price over the last week.

 Posted by at 3:45 pm
Jul 132011

To put it another way, Apple’s retail sales for the first quarter of 2011 accounted for 1/5 of all retail growth. In the pool of every dollar gained by all publicly-traded retailers year-over-year, Apple accounted for 20%. That is unbelievable. USA Today has the scoop.

Applying the same logic they used with the Zune and Windows Phone 7, Microsoft heard there were huge margins to be made in retail, so they’ve committing to building another 75 Microsoft stores within the next 2-3 years.

Jul 132011

In TMA’s other life, he’s put up a few buildings. And by “put up”, I mean “watched people put up”. When you deal with a structure that costs tens of millions of dollars to build, it’s easy to lose perspective. I remember coming across a line item for videoconferencing equipment – just the components, uninstalled mind you – coming in at over $200k. On top of the installation, you usually had to contract with some service that would extort some ridiculous monthly fee to facilitate your videoconferences. It was a sweet racket for someone, probably the same people who sold the toilet seats to the Pentagon.

As of Apple’s latest iOS 5 beta, videoconferencing gets downsized. Now FaceTime works with AirPlay, so for the cost of an AppleTV and the iPad you probably already own, you can make sure you employees aren’t working from home in their underwear. Or if they work in the sex industry, are.

 Posted by at 7:46 am
Jul 112011

Shorthand recap of last week’s Nortel patent bidding action: after 19 rounds, Apple, through some shrewd partnering midway through the process, held the winning bid for a portfolio of 6,000 patents being offered up by Nortel as part of their bankruptcy proceedings’ disposal of assets. The victory of the consortium led by Apple left Google, a company in much more desperate need of the IP to cover their Android exposure, looking pretty bush league, as the highlight of their bidding was their scrawling cutesy cryptic bids derived from mathematical constants. Guess that’s what happens when the grown-ups leave the CEO’s office.

Immediately after the conclusion of the bidding, and the pointing and laughing at Google subsided, the standard governmental rumbling of “we have to review this from the anti-competitive angle” started.  But in a shocking development (we are talking about government approval here), in the amount of time it took for the average Engadget commenter to formulate an “it’s not over yet, Fanboys” screed, the sale was approved by judges in the United States and Canada.

Google may want to start playing ball a little more seriously. The people who actually have to sell products in a competitive market don’t like you very much.

 Posted by at 4:02 pm
Jul 062011

When Amazon opened up shop for Android apps, I thought it was the future of the platform. Alas, not every developer is thrilled with the way Amazon is managing their shop. The indie developer of the popular physic puzzler Apparatus is pulling the game from Amazon after a short and forgettable stint. Some of the reasons are legit, but I found this introductory passage an amusing portal into the Android mindset:

One of the big differences between Amazon Appstore and Android Market is that Amazon sends each submitted app through a manual review process, much like Apple’s App Store. This gives the impression of a more serious app store, but whether or not it is actually needed for apps for the Android platform is a discussion in itself. In my opinion, the users should be educated about the very sophisticated permission system on Android instead. The user should learn to determine whether a permission should be required by an app, does a live wallpaper need access to your contacts, and if so why?

Translation: instead of developers having to submit to app review, we should educate consumers about permissions. OK, dude. I’m sure Amazon will get right on that PSA campaign for single moms and grandmothers about the processes they’re authorizing when they thoughtlessly click “OK” to whatever dialog box pops up on their screen. This is the quintessential difference between the iOS and Android. iOS asks “What’s best for the consumer?” as the most important question. Android asks “How can we knock off the iPhone well enough to leech personal information from suckers What’s easiest for the developer?”.

In closing:

Amazon Appstore is probably good for big companies with big budgets. If you have the money to buy 384 phones and tablets (which is currently the exact number of supported devices for Apparatus, according to the Android Market developer console), and if you have the resources to let the game go through a couple of months of pre-release testing, then Amazon Appstore is for you.

Hmm. 384 phones. But clearly Amazon’s onerous management style is the problem.

 Posted by at 9:55 am
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