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).

 

It should come as no surprise to anyone reading this that the market share bottlerocket jammed up Android’s ass would cool down once Apple made its iPhone 4 available on Verizon’s network, despite the fact that a new Android phone is released every other day. It may have taken a bit longer than I predicted, but Android’s growth has finally capped: it recorded its first market share fall-off this past quarter. The iPhone was up 12 and a half percentage points while sad sacks Nokia, BlackBerry and Windows Mobile OS’s continued to hemorrhage share.

People will no doubt be jumping on the “fluke” bandwagon, stating that iPhone 4 could never sustain this kind of growth. The fact that a year-old smartphone is handing Android its ass alone is worth a chuckle. Even if there is the customary fall-off in adopters prior to the release of the iPhone 5 does happen, Google may want to take a look at the slope of the BlackBerry downswing to get a sense of what iPhone 5 + iOS 5 + both major carriers is going to do to its share.

I’m sure it was nice while it lasted.

 

Observe the haymaker-inducing smirk.

Apple is a company that brings out the worst in some people.  Whether they be fanboy-bashers or CEOs of bloated software juggernauts, there’s something about Steve’s condescending little smirk that drives people absolutely batshit.  I get it.  I really do.  For most of these individuals, the knowledge that I work with a superior OS is satisfaction enough.  But for a select few, the magnitude of their assholery cannot be dismissed by that melodic C Major chord.  These are the members of Douchebag’s Row.  This series is designed to honor those who, through word and/or deed, have distinguished themselves as something more than mere assholes.

Let’s begin, shall we?

In TMA’s informal query – or the factual equivalent of the average analyst’s survey – Wall Street criminals rank 1/2 notch above pedophiles on the “most loathsome creatures on the planet” list. And much like pedophiles, many Street analysts no longer get to do the thing they love the most because it’s thoroughly illegal. Take the case of Henry Blodget.

Young Henry made a name for himself pre dot-com by predicting that Amazon would reach $400 a share. According to an article in Forbes, that prediction alone landed him a gig at the now-beloved Merrill Lynch, where he proceeded to spew prognostications for internet start-ups that were all over the map. He predicted big things for eToys, only to have them fold 3 years later. His “stopped clock analysis” continued garnering attention despite its pretty dismal track record. Leading up to the dot-com bubble burst, not everyone was chalking up Henry’s schizophrenic recommendations to the fact that he didn’t know what he was talking about. Turns out Blodget didn’t necessarily believe everything he was saying publicly about the companies and that’s kind of a no-no. The Securities and Exchange Commission got a whiff of Merrill’s – and Blodget’s – “inconsistencies” and launched an investigation. In 2003, Merrill settled with the State of New York for $100 million. The SEC fined Blodget $4 million and banned him from the securities industry for life. From the SEC’s press release:

“Blodget, of New York City, issued fraudulent research under Merrill Lynch’s name, as well as research in which he expressed views that were inconsistent with privately expressed negative views. Blodget’s conduct constituted violations of the federal securities laws and NASD and NYSE rules, which require that, among other things, published research reports have a reasonable basis, present a fair picture of the investment risks and benefits, and not make exaggerated or unwarranted claims.”

Understandably Blodget doesn’t talk a lot about the settlement. And he gets a little annoyed when he’s forced to. I’m sure he thinks he did nothing wrong. If you shell out multiple millions in order to not have to go to trial, not only are you guilty, you’re probably guilty of 500 times more shit than you’ve been accused of. Did you want exoneration? Then you should have gone to trial. GUILTY.

After the SEC told Blodget that he couldn’t get a job talking up the value of something worthless and profiting from it, he no doubt spent a lot of time thinking about what kind of gig would allow him to take his finely-honed fomenting skill and make money with it. Where else could one use a background in technology to disingenuously misdirect people and profit from it? I’ll leave my readers to reconcile the SEC directive that Blodget be “banned from the securities industry” with Blodget’s current title of “Co-Founder, CEO, and Editor in Chief of The Business Insider, a blog about internet business trends”.

So what pearls of wisdom has Henry bestowed upon the technology community? Most recently, he’s been butchering the “OMG Android will so crush iOS any day now” riff  worse than the intro to “Smoke on the Water” at an Intro to Electric Guitar class. But Blodget persists, despite the fact that several smart people have made rational arguments as to why the claim is little more than rhetorical masturbation. In his own words, here are some of the precocious one’s most valuable gems:

About the aforementioned Android market share: “As we’ve said before, Apple is fighting a very similar war to the one it fought–and lost–in the 1990s…Importantly, it’s not a question of which platform is “better.” (This is irrelevant.) It’s a question of which platform everyone else uses.”

On “Locationgate”: “Apple built a system into your iPhone that secretly tracks and records everywhere you go.  This system records your exact location and the exact time you were there–down to the second…Please explain, with a straight face, how that could possibly be a ‘mistake.’”

Henry Blodget is a valuable lesson to all of you career-minded individuals who have been dealt a setback – say, a $4 million fine – that challenges you to reinvent your most valuable asset. One day Blodget was fellating value onto something worthless to make money off idiots who took his advice; now Blodget is fellating value onto something worthless to make money off pageviews from people who want to tell him how much of an idiot he is. Now that is making a silk purse out of sows’ ears.

So it is my distinct pleasure to welcome Henry McKelvey Blodget to Douchebag’s Row. Although he is its youngest member, he has provided us with one of the earliest examples of why we currently hate traders slightly more than lawyers. Equal parts dishonest broker and spin doctor, Blodget has shown us that the mantle of douchebaggery can be carried proudly by my generation.

 

Stop me if you’ve heard this one before: Google’s Android OS for mobile devices will doom Apple’s iOS soon. Witness the impending savage brutality:

The analyst’s conclusion: Android will overtake iOS by July of this year. Looks pretty obvious from this graph, right? Not really.

 

1. Where did you people learn statistics?

Wanna hear something awesome? I will be a millionaire by the the time I retire and I have the statistics to prove it. You see: I found $100 bill on the street today. If you assume that I will find $100 on the street every day for *cough* *ahem* *cough* years, and allow for compounding at a modest interest rate, I will be a millionaire around 65. Screw the IRA!

Distimo used the February-March 2011 month-to-month data to project the June numbers. I know this because they say so in their write-up. Taking month-to-month growth of an app ecosystem and extending a line from it is as meaningless an exercise as taking any 2 short-term data points and extending a trend line from the segment formed. And speaking of drawing…

 

2. Where did you people learn to draw?

Maybe it’s me, but do you see the line come off a little “flat” for iOS in March and get a little goosed for Android around mid April? You guys know something we don’t? Wanna let us in on it?

 

3. Try looking up “ringtones” in the Android Market.

Wanna guess how many of these apps are conduits for pirated, copyright/trademark-violating properties? If you guessed “a shit-ton”, you’d be correct. People used to joke about how many fart apps were in the App Store. The Android Market wishes it had apps as valuable as the worst fart app ever put up. Distimo does note that Android now has more free apps than the App Store. Nothing screams “make money here!” to app developers as effectively as having more stuff not worth paying for in your market.

 

4. So I guess the iPad doesn’t count now?

We’re comparing OS markets, but we’re leaving out devices that make up part of the market ecosystem. I guess if you want a graph that fits well in landscape orientation, you have to cut some corners. Like not drawing our lines straight. Or making that ziggy line on the y-axis between 50,000 and 100,000 on a graph that spans 0 to 400,000. Hallmarks of a company that should be taken seriously.

 

If you’re banking on Android overtaking iOS in the near future, you’d feel a lot better if you sought out analysis that actually makes sense, as opposed to getting it from another no-name firm with zero track record looking to make a quick buck by using shitty statistics poorly.

 

I remember my first generation iPhone, newly minted from Apple for the super-reasonable price of $599. I marveled at Apple’s native apps, messed around with some pre-SDK web apps. The iPhone was obviously so much better than anything before it, its shortcomings were camouflaged by a backdrop of Apple ease-of-use. Having every third call drop in the metro NYC area was a small price to pay for privilege of having access to the next generation of mobile computing.

Every iteration of iOS came with some set of features that distracted me just enough from the reality that my carrier sucked. First came native apps, then cut and paste, then multitasking. Even as AT&T’s network continued to burn while Ralph de la Vega played his violin and asserted that the data-hogging iPhone’s users were the reason; even as tethering and MMS remained absent while every other smart (and dumb) phone user laughed at me, I stayed loyal to Apple, which meant being tied to AT&T. When the legitimate Verizon iPhone rumors surfaced, it took about 14 nanoseconds for this particular AT&T customer to make the decision to switch. There are some memories I’ll always cherish, though:

Remember that time I dictated 3 pages of inspired prose into Dragon Dictate and your network – without my moving an inch – passed me from 3G to EDGE and I lost it all?

How about that time I was on vacation and couldn’t get to a computer and you dropped 5 consecutive calls to the bank, then choked on the purchase of their 12 MB banking app that would have saved me a hunker of a late fee on my credit card?

Or the times you were showing me 2 or 3 bars, but couldn’t complete a phone call for 20 minutes at the train station, right before my battery ran out?

Yea, good times. It’s with a heavy heart that I take delivery of my new Verizon iPhone 4. Yes, I know there will probably be an iPhone 5 in half a year. I don’t care. When you do manage to find a decent connection on the mean streets of Manhattan, you don’t even have the faster data rate you brag about. I’m sick of knitting every 3rd word of a conversation into a sentence and habitually jamming my finger in my ear to have the best chance of doing so. My new iPhone and I have many more good times to look forward to. Don’t think of my defection as a snub, Ralph. I’ll be one less data burden dragging down your otherwise super-robust 3G network. So in the end this is really a win-win.

 

If you want an indication of how obsessed the tech media is with Apple, take a look at some of the things they pick up as news. Apparently, Apple has been seeding a new type of screw, dubbed the “Pentalobe”, into its hardware, ostensibly to deter people from messing around with the guts of the iPhones and MacBook Airs. Keeping people from monkeying with Apple’s user experience is not exactly a new development, but it you look at how eagerly an iFixIt video bitching about the issue was picked up, you’d think it was. To give you a flavor for the latest scathing controversy, and to give into my temptation to send-up this retardery, I’ll excerpt a piece written by the Register with my comments. Trust me when I say it’s a par hole.

“And now, says Wiens (owner of iFixit), iPhones are getting (non-standard hardware) too – a “diabolical” move, he says, because pentalobe screwdrivers are few and far better (sic), though he has managed to source some and will sell you one, and a pair of replacement philips screws, for $10.”
Good to see that someone is making money on this diabolica.
Wait a minute…

“…pentalobe tools, which have been creeping into the Apple product line since 2009…but didn’t become widely used until the new Air debuted in 2010. Now the iPhone 4 has them, it seems highly likely that so will the upcoming iPad 2, and probably future Macs as well.”
So the screw’s been out there for 2 years. And they won’t come to Macs. Apple has Knowledge Base entries on how to upgrade various components in Mac. There’s a conspicuous lack of such documentation for iPhones.
“Wiens beef with this is that the use of obscure screws makes Apple’s machines less easy to repair. That, in turn, reduces the hardware’s longevity, ensuring that more machines will end up in landfill.”
Less easy for iFixit – who probably makes 20% less than Apple but still a metric shitload of money – to repair. And lack of access to screw that’s been available for 2 years (and one which Wiens will sell you for almost no outrageous markup) is what will put Apple products in landfills.
“In fact, Apple machines – Macs particularly – (which the screws are not in) are notoriously long-lived, with owners passing them on to friends and relatives after new models have been bought. But eventually they will be binned and recycling will be harder (unless they’re not used in Macs, which, again, they are not).”

“Botched upgrades can lead to costly technical support, but other firms seem less concerned with this risk. Most of Apple’s rivals don’t feel the need to block tinkering to such an extent – Wiens maintains Apple has adopted pentalobe specifically to stop its gadgets being opened.”
Or maybe it’s because Applecare is approximately a billion times more comprehensive than the bullshit warrantees that come with your Toshiba? Maybe Apple doesn’t want to be saddled with repairs that users – and iFixit – shouldn’t have been attempting in the first place? Maybe Apple should just tamper-protect their screw holes so that any attempt to unseat them will invalidate the warranty/Applecare coverage. How would that solution sit with your business model, iBitchIt?

“Apple clearly thinks its kit shouldn’t be opened or changed in any way that doesn’t involve its mediation. While it continues to think that way, there will be plenty of people, like Wiens and like the coders dedicated to ‘jailbreaking’ iOS, to opening its products – physically as well as metaphorically.”
You forgot the “making a metric shitload of money doing it” part. They always forget that part.
 

Free shit will buy you all kinds of goodwill. Why do you think they give you toasters when you open checking accounts? Apparently Google is looking to cash in a chunk of it by announcing that they will be phasing out support for H.264 in its Chrome browsers and throwing its development muscle behind WebM, a codec they bought with OnM last year. Ars Technica’s Peter Bright lays out a number of reasons why this is bad for the Open Web, and a minor consistency problem Google seems to have with their application of “freedom”:

“At the very least, there appears to be a significant inconsistency between the company’s actions regarding video support, and the rest of its browser. If it’s going remove features for poorly-articulated ideological reasons, it would surely make sense to apply that ideology consistently.”

That would include removing support for Flash, MP3, AAC and H.264 support for its Android devices – to name a few. Or Google could just admit this is an attempt to stymie the use of HTML5 <video> with H.264, a transition from Flash that looked likely to consummate before Google’s announcement. And what alternatives do web developers have? They could continue to use Flash for the foreseeable future – which is far and away more encumbered than H.264 – or they could encode their video twice for current Flash via H.264 (shockingly, Adobe’s Flash has yet to support WebM. Must be tracking the same development schedule as a usable mobile Flash) and once for HTML 5 (WebM) users. Suffice it to say Google’s announcement all but guarantees the former. Guess which encoding is also trumpeted by Google as the primary advantage of their mobile devices over iOS devices?

And I’m sure the timing of the announcement: basically simultaneous with the Verizon iPhone. You know, the thing that will crush Android’s market share in the U.S? Anyone who thinks Google’s announcement to ditch H.264 is about the “Open Web” and not about making a power play against Apple’s mobile devices has their head up their ass.

 

Someone finally did the legwork to test TMA’s hypothesis about Android’s competitiveness on a multi-carrier network in the U.S (shout outs to (gulp) Silicon Alley Insider for their original graphic and asymco’s addition of iPhone data). For every Android phone on AT&T’s network today, there are 15 iPhones. Fifteen. AT&T also carriers eight flavors of Android phone versus Apple’s two (the 3GS and 4).

What do you think is going to happen to Android’s 7 million units on Verizon?

 

Pre-orders for existing Verizon (i.e. former Android) customers start February 3. Mass-defection from AT&T begins February 10.

 

Happy New Year to the TMA readership. My resolution: 2560 x 1440.

/boom-tish. Try the Salisbury steak.

With a new year, writers across the land feel compelled to make a bunch of baseless predictions and tech is no exception. I came across some from Google employee Tim Bray in his “ongoing” blog. I didn’t find any of the prognostications in “Year-end View of the Mobile Market” particularly insightful or interesting, but they do speak volumes about how Google thinks. Mercifully, Bray does prepare readers for how patently obvious many of his predictions are. I’ve taken up the challenge of summarizing each of his “things that seem obvious” in 5 words or less. You can click through to see how I did.

In 2011, the smartphone market will/be/continue to (OK, I cheated a bit):

  • Sell a lot of phones
  • Further squeeze “dumb” phone sales
  • Apple, Android > RIM, Nokia, Microsoft
  • Windows 7 Phones: Verdict Unclear

Then he says something about a $500 contract free phone being less than a $199 phone with a contract and wonders when someone will offer financing. Like they have for appliances. Really.

So what are Bray’s not-so-obvious things?

  • The major barrier for tablets replacing laptops? “High-speed low-friction text input”. Translation: the opposite of Android’s touchscreen input.
  • “I’m increasingly coming to think that people buy phones based on the quality and volume of old-fashioned advertising put behind the products. Not coincidentally, not only are the iPhones and iPad excellent devices, they have what is to my eye probably the best advertising in the mobile industry.” Ladies and gentlemen: our first moneyball. The difference between Apple’s and Android’s relative success is marketing. You can see this theory expanded on over at Paul Thurrott’s SuperSite.
  • Apple is going to do a 7″ device. That’s certainly not so obvious. In fact, that’s about 3 colors of the rainbow into Fantasyland. Why will Apple do a 7″ device? “(It) still fits in one hand and you can use for four hours in a row sitting up.” Does Bray mean you can’t use an iPad sitting up for 4 hours? I certainly can. Does he mean having a device that can be extended at arm’s length for 4 hours? Try doing that holding nothing. He concludes emphatically with “This argument is over“, and by the italics you can tell he means it. They should bring Bray in for closing arguments. He could be a Mariano Rivera-esque consultant to defense attorneys. James Spader’s character in Boston Legal just peed his pants a little.

But Bray is at his most compelling in the section titled “Apple vs. Android”, where he pits the advertising powerhouse in Cupertino against the Open Source champions in Mountain View. Who wins?

“I think Apple will sell a ton of devices because they’re good, and superbly marketed. I think a bunch of people will sell a ton of Android devices because they’re good and there are so many options for different needs and networks and price-points.” Emphasis mine

Both are good devices, but that goddamn marketing - those fucking unicorn tears – that’s what lands Apple those insanely high margins EVEN THOUGH THEY’RE ON ONE CARRIER IN THE U.S.!

Let me break it down for you, Tim. The difference – that most obvious of obvious factors you allude to but don’t quite concede – is Verizon. Here’s an illustration of Verizon’s current smartphone unit sales, a period of time I like to call “Before iOS” or “BiOS”, or as you’ll come to remember them: the Salad Years.

This is what will happen at “Zero Hour”, which is immediately after the iPhone becomes available on Verizon. This is also the beginning of “In the year of our Jobs” or “AiOS”.

Finally, once most people are able to rid themselves of their existing contracts and avoid cancellation fees, the landscape should be pretty-well stabilized. Until the iPhone 5…

To wrap up the piece, Bray waxes optimistic about future of the Android platform”

“And there’s nothing fundamental in Android that would get in the way of a industrial-design and user-experience rock-star team, whether at Google or one of the handset makers…”,

And there’s nothing fundamental in the way of my becoming the next Justin Bieber. I can inflect my speaking voice in a way that qualifies as singing, even though I’m not something you’d pay to listen to – or stick around for long if it were free. I have a blog, so there’s really minimal distance between, say, an entry in Douchebag’s Row and some hit single that makes sane people claw at their eyes. I can play chopsticks on the piano, so I am musically inclined – fundamentally. Everything between here and the Top 10 is details.

“…testing the hypothesis that these things are central to Apple’s success.”

Testing the hypothesis that something besides the snappy songs in those ads are what make Apple the most valuable brand in the technology sector. Because – you know – they’re engineers. They need to test all hypotheses, no matter how unlikely.

I’m picturing the Android team’s faces when smartphone unit sales are announced for the first and second quarter of 2011. The genuine looks of befuddlement will be the best part.