patrick.net

FYI: The Kindle does let you lend out books to friends for 14 days....it's been doing this for a couple mos I think - through Amazon or something. Also you can get the Kindle app on ipad. I have to download it. Thus far I'd only used the iBooks or the B&N e-readers. Eventually other e-download services will have to complete with that. Also, libraries already have a download collection. Mine does. You "borrow" the e-file for the usual lending frame, which at my library is 21 days. I also "borrow" / download audio books to my MP3 player.

E-readers will take over completely eventually. I understand the resistance to them. I've collected a library for years that is literally falling out of shelving in both our studies, our LR and our guest room. There is a kind of comfort from being surrounded by the books that you love or have learned from. Every year, I have to go through them, donating the ones that aren't being touched or no longer resonate with me....now I don't have to do that with my e-library. I'm telling you that once e-readers take hold....printed books are going to be like CD's are to music.

FWIW, the ipad does do a fabulous job of highlighting (you use the touch screen technology to do a whole set of pp at once, just a word or just a line....you can use different colors & you can edit the highlights OFF). It has a SUPER fast search function....there are options to search within the text itself....or if there is a topic you want more info on....you link instantly to search google. If you actually are in an Apple store...or maybe Walmart, you should test the ipad and flip through a book on their iBooks application - you might get the flicker argument then. I could go on but I know I can't convert a Kindle lover ;)

No, I don't get the "flicker" argument because that's not how people actually read books. If you're demoing something, you might flip through pages randomly, but if you're actually reading you don't do that.

Hence, that minor delay in refresh is completely outweighed by not having a backlight, being able to read in the sun, being light enough and durable enough to throw in your bag without a second thought, and, of course, never having to pay for anything no matter where you go.

Reading a book on an ipad is a lot like watching a movie on an ipad. Yeah, it works in a pinch, but why would I want to do that when there is a vastly superior device available for accomplishing the same task?

Kevin says

f you’re demoing something, you might flip through pages randomly, but if you’re actually reading you don’t do that.

or unless you download texts, transcripts or reference books as a student or professional might.
Kevin says

never having to pay for anything no matter where you go.

Not sure exactly what you mean by that? Once books are downloaded, they are in your library. You don't have to be on-line to read them. Totally mobile - always accessible. I don't even have the 3G version of the iPad. I have the cheap-o version...so I can pick up wireless in my home or my hotel for free but I'm not accessing internet on the road like with the iPhone. But, again, to read a downloaded book...you don't have to be on-line at all.

***Anyway, the great irony here is that if you scroll back to my original post on this, I mentioned that the iPad might be a fad and that I only found it useful as an E-reader. I guess you & others, as well as Apple who doesn't market it heavily as an E-reader, think I'm wrong. I swear: I gave the Kindle a test drive. To each his own! It's not like I have stock in APPL or anything ;)

I would assume the ipad would be much faster at highlighting and searching. But not compared with a kindle. The kindle would be dog slow there. Until it gets some kind of touch functionality (which would only be useful for highlighting) it's not great for a student as far as I can tell. I do like how it has *NOTHING* else on it. So I don't get distracted, not even an easily reachable clock!

I thought the whole 14 day lending thing was lame. It should be lent until it's returned or I pull it back from whoever I lent it to. 14 days? I can take more time than that to read a book. When I lend books now, I lend them with the intention of getting them back in 6 months or more, not 14 days!

Since you gave it a try, I can't bug you too much artistsoul! It was one of the few devices I like. I'm all over tech, but rarely use any of it! Itouch, Kindle, Wii, Logitech 890 remote. Those are the only products I stump for!

thunderlips11 says

AAPL is going to face margin compression. Steve has learned a lot of things, like the importance of marketing, and always did things well like user-friendliness. However, one thing he has not learned is to sell on volume to dominate, and the importance of third-party software and hardware choices - he tries to keep too much in-house, and restrict the user and developers too much.

Apple was enormously successful during the two periods in their history where they persued a tightly in house, integrated development model. During the period where they persued an open model, they got crushed.

I suspect they'd be perfectly happy with only 5% of the market if it means it's the 5% with the best margins.

AAPL depends on Samsung and LG for the A4 Chip in the iPhone and the Retina Display. These are also the next two of the top three phone vendors, behind Nokia. As Smart Phones begin to get cheaper and sell in volume, the costs of many components will rise. Rather than absorb the costs, Samsung and LG and others will pass along cost increases of components to their customers, especially Apple. This will hurt iPhone margins.

Not necessarily. The core iphone market is the same as the core mac market for the most part over the long run, and that's a demographic that seems happy to pay more for apple products.

The smartphone market isn't even close to saturated yet. In 10 years, every mobile will be a smartphone.

Also, iPhones are more fragmented than Androids. 85% of Androids are 2.x and up. The Android OS does not require a backup before a major OS upgrade — iPhone OS does.

That's not really relevant to Apple's stock price, unless you're going to use that argument to say that apple is going to sell fewer iphones in the future.

I fully expect android to be the leading smartphone platform for the next decade, but Apple will still be the most profitable phone maker by far. They will do this because of the way the products are marketed. I can get an excellent android phone from any one of a dozen handset manufacturers. I can only get an iphone from apple.

In fairness, I am an APPL basher, so take that into account.
Like Netflix, I think APPL does have a lot of things going for it as a business. However, look at the run up. Is it going up another 100% anytime soon? Probably not even 30%.

30% is within the realm of possibility, but 100% is unlikely unless we have a comparable amount of inflation in the US. The only companies worth over $500B are in the oil business.

Jobs ought to be acquiring Yahoo! or Twitter or Hulu to advance his idea of HTML5 Flash Replacement and to dominate the new web war that is coming between competitors.

How on earth would buying a has-been web portal with no technological prowess and shrinking user reach, or an also-ran communication platform help them?

How would this benefit Apple's core strength, hardware design?

Despite what you may have read in the press, Apple's competitors are not service providers or software companies. Not Microsoft, not Google, not Facebook, and not anyone like them. Apple's competitors are Nokia, Sony, Motorola, HTC, and to a lesser extent LG and Samsung. You can also lump PC vendors together, but Apple doesn't seem to care that much about the PC market anymore.

Apple is in the business of selling high quality, well designed hardware directly to consumers. They only participate in businesses that further that goal. iTunes exists to make it easier to use ipods. The app store exists to make iphones and ipads more useful. That's all there is to it.

Apple has a boatload of cash. OR, pay a dividend and disburse the profit to the shareholders.

You won't see companies paying dividends until their stock prices start to stagnate.

Kevin says

but Apple doesn’t seem to care that much about the PC market anymore

well, they do -- they sold 13.6M Macs (average of ~$1300) last year -- but they've given up on any discontinuity or creative destruction in that area.

Apple basically bet the company on the Lisa and Mac products in 1981-84. Both failed, but somehow the Mac resuscitated itself in 1986 thanks to its ~5 year lead on Windows in the DTP and GUI areas.

Apple made a similar bet in 1997-2001 with OS X.

It doesn't really have to make these charges at the market any more. They have millions of happy customers and cleared $14B -- about what Walmart does -- making the machines and software that they want to use.

The Win32 lock on software ISVs is clearly over now.

I think Apple has reached critical mass now to not have to worry about its future. PCs have hit a plateau now and the current technology is going to be good enough for the rest of the decade if not longer.

My last tower Mac buy was 4 years ago and I have zero pressure to upgrade. My last laptop was 2 years ago and if anything laptops have gotten worse since then.

I might build a Sandy Bridge box next year but this more for hobbying that present need.

Troy says

Kevin says

but Apple doesn’t seem to care that much about the PC market anymore

well, they do — they sold 13.6M Macs (average of ~$1300) last year — but they’ve given up on any discontinuity or creative destruction in that area.

No, they really don't. By "PC market" I mean the things that have defined personal computers for the last 20+ years. User-serviceable parts, relatively open and flexible operating systems, and a highly decentralized software ecosystem.

Apple may still care about the laptop/netbook form factor, but what they're offering in that space is increasingly looking like an ipad with a keyboard stuck to it.

Yes, they still sell macs, but they do not care to continue investing in this market. They will continue to make incremental hardware upgrades to keep up with whatever comes out, but that's it.

Apple is, so far, the only PC-era company to fully embrace the mobile world (the "post-PC era", to use the cliche). The market leaders in that space are Apple, and various mobile phone manufacturers. The PC makers are nowhere to be found, and only a handful of CE types (Sony and Toshiba) have managed to see any success in both. (similarly, Google is a leader here in software, and Microsoft still can't seem to figure out what they're doing).

I think Apple has reached critical mass now to not have to worry about its future. PCs have hit a plateau now and the current technology is going to be good enough for the rest of the decade if not longer.

Every company, especially technology companies, need to worry about their future. IBM worries about the future of integrators and consultants as SaaS takes off. Oracle worries about the future of business software as cloud computing replaces on premise offerings. Microsoft worries about the irrelevance of windows as mobile and the web take over. Google worries about losing ad revenue as the 'appification' of the web makes search less useful.

Apple's primary concerns should be the increasingly good quality of devices being made by other companies. They also should be worried that some of the best devices coming out are made by companies that are also their suppliers. Relying on LG for your touch screen and Samsung for your storage doesn't seem like the best move when those companies are among your biggest smartphone competitors.

My last tower Mac buy was 4 years ago and I have zero pressure to upgrade. My last laptop was 2 years ago and if anything laptops have gotten worse since then.
I might build a Sandy Bridge box next year but this more for hobbying that present need.

Exactly my point. If people aren't buying PCs, why would a company in the business of selling hardware spend a lot of time worrying about it?

Mobile device lifetimes are around a year or so now, so it's the best hardware market to be in. Eventually this will become like the PC market, with people only bothering to upgrade every 2 years, then every 5. Margins will get compressed, and you'll be able to buy a high quality mobile phone for under $100 without any sort of contract.

Kevin says

Exactly my point. If people aren’t buying PCs, why would a company in the business of selling hardware spend a lot of time worrying about it?

To serve peoples' needs. What Apple is avoiding is the middle of the market, probably because their economies of scale fade out much above $1000, and the economies of prosumer stuff don't kick in until $2000+.

Apple had $22B in Mac revenue last year, the Mac division is knocking on the door of the Fortune 100 all by itself. It can easily double this this decade, and there's few other mfgs you can say that about.

User-serviceable parts, relatively open and flexible operating systems, and a highly decentralized software ecosystem

this is just buzzword bullshit, btw. Many PC users -- the geeks -- desire these things, but many others don't. My mom barely knows what the desktop metaphor is.

Troy says

Kevin says

Exactly my point. If people aren’t buying PCs, why would a company in the business of selling hardware spend a lot of time worrying about it?

To serve peoples’ needs. What Apple is avoiding is the middle of the market, probably because their economies of scale fade out much above $1000, and the economies of prosumer stuff don’t kick in until $2000+.
Apple had $22B in Mac revenue last year, the Mac division is knocking on the door of the Fortune 100 all by itself. It can easily double this this decade, and there’s few other mfgs you can say that about.

You really need to stop equating revenue with "cares". Apple hasn't done anything interesting with the mac since 2006. Yes, people buy them -- but the company is clearly not spending a lot of time or effort investing in PCs any more.

Apple's public statements about PCs clearly indicate that, as a company (and jobs in particular), they view the PC era as coming to a close and are not focusing on it any longer.

User-serviceable parts, relatively open and flexible operating systems, and a highly decentralized software ecosystem
this is just buzzword bullshit, btw. Many PC users — the geeks — desire these things, but many others don’t. My mom barely knows what the desktop metaphor is.

No, that's exactly what has defined the personal computer since the 1980s. Anything else has classically been considered "consumer electronics".

A mobile phone is not a personal computer. A tablet is not a personal computer. These devices are much closer to video game consoles than they are to personal computers.

The personal computer is, slowly but surely, on its way out, and the future of computing wil not be desktop metaphors or looking at spec sheets when buying new devices. Just like nobody but techies gives a shit what processor their playstation runs, nobody is going to care what processor their phone has.

Apple was the first PC company to really embrace this shift, and they've done extraordinarily well from it. For a while it looked like Dell and HP were starting to see what was happening, but they both chickened out when short term profits were impacted.

Kevin says

Apple hasn’t done anything interesting with the mac since 2006.

? Moving to x86 wasn't that interesting for me. I'm not really sure what is required to be "interesting" in this space. . . Intel is doing all the heavy lifting now.

Apple’s public statements about PCs clearly indicate that, as a company (and jobs in particular), they view the PC era as coming to a close and are not focusing on it any longer.

They care -- everyone at Apple actually has to USE Macs for many hours every day -- but clearly the low-hanging fruit has all been taken. There are only incremental gains to be had, and at any rate trying to out-Intel Intel is a tough challenge even for today's Apple.

Kevin says

that’s exactly what has defined the personal computer since the 1980s. Anything else has classically been considered “consumer electronics”.

No, that's what made IBM clones the dominant PC platform, but I remember seeing and using other platforms that were still PCs. You're engaging in pars pro toto thinking here.

My Mac Iicx lacked all that jazz about being "open" and it was still a PC. Same thing with the Amiga. Japan had several non-DOS that were also PCs -- Sharp's X68000, Fujitsu FM-TOWNS, and NEC's PC-98 platform.

There were the closed microcomputers that failed to be PCs -- they were called 'home computers' if they were cheap and 'workstations' if they were expensive.

Apple could theoretically throw a lot of money at developing a new non-x86 architecture (much like the AIM days), but it can see Intel's roadmap and I don't think there's much daylight above where Intel's going for that investment to be worthwhile. So Apple just has to wait for its OEMs to do interesting stuff, and/or prod them in various directions it wants its platform to go in.

Apple's not going to sacrifice its iOS biz effort for chasing OS X market share so it is fair to say it's put the Mac on the back burner. It cares about the PC market about as much as it needs to. It didn't have to make a Mac OS X App Store, but it did. That shows renewed investment in the non-mobile space.

Some of the doubters at least motivated me to put on some stop sell orders.

If it keeps moving up, I'll move my stops up.

thunderlips11 says

Apple doesn’t make hardware.

And GM doesn't make cars. They just pay unions to do it.

Apple is in the business of selling hardware. They design it, they select every part. No, they don't actually operate the factories that do final assembly -- yet. As soon as those factories are entirely machines, though, they certainly will.

thunderlips11 says

Well, Droids run on Google powered OS. Google is Apple’s competitor - not Samsung and Nokia. They are just making the hardware along with a half-dozen other large players. But they also make most of the hardware for iPhones too. It’s a complicated relationship, but at heart it’s the OS that drives iPhones, so Google is the main opponent.

Nope. And Microsoft isn't the competitor to the Mac -- Dell, HP, Lenovo, etc. are.

thunderlips11 says

Contrary to prior expectations, Android is growing fast and the biggest bite on market share is coming from iPhones, and to a slightly lesser extent Blackberry. Expect future earnings statements to be more muted, and not be exceeded by much or very often.

The smartphone market is growing too fast for that to happen. Android will absolutely be the dominant smartphone platform, but Apple will be the largest smartphone maker. My guess is that the iphone will, long term, be about 10% of the market, and the remaining 90% of the market will be split by several dozen companies.

thunderlips11 says

Apple needs content to survive. The only thing that can keep Apple dominant - either in value or volume - is good apps and content.

Why do they sell so many PCs? There is pretty much nothing available on a Mac that isn't available on a windows PC.

Apple targets a very specific audience, and they're very good at it.

You can argue that the relative prowess of mobile vendors and google is greater than that of PC vendors and microsoft, of course, but I still believe that apple will be the largest smartphone maker a decade from now.

thunderlips11 says

As Android becomes the dominant phone, more developers will spurn iPhones altogether as the margins are lower for themselves, and who wants to spend months developing a product that can be rejected for any reason, no matter how obscure or frivolous? There is no such risk for Android Apps.

All development, including mobile, is moving to the web. The web is platform neutral. There will be nothing on Android that isn't on iOS, and vice versa.

Apple will sell lots of iphones because they will have better looking, more reliable, and better marketed devices than nokia, rim, samsung, lg, motorola, etc.

thunderlips11 says

That’s why Apple must buy Yahoo and/or others. Apple has always been weak in the business world outside of the Art Department. Yahoo! Finance is much better than Goggle Finance. It gives Apple a starting base to compete with Google on their own turf. Steve has the Cash to do so. Putting a camera on both sides of an iPad won’t help much with the bottom line.

Yahoo would be an absolutely stupid acquisition. They have no noteworthy technology or content partnerships that Apple doesn't already have access to.

Wow, this thread has been a total geekfest.
To see where this is headed, take a look at the upcoming crop of tablets. They have HDMI out and support bluetooth keyboards.
Kevin, I've been enjoying the back and forth between you and other folks. To add further, the latest smartphones also have the HDMI out and take keyboard input. I was reading an Amazon review of a mobile keyboard, and a college kid talked about hooking up his smartphone so he doesn't have to lug his laptop to class for note taking. I'm guessing that a smartphone will be the only computer that my kids need when they hit high school. None of this family "timesharing" on the home PC :-) Certainly, this is where the majority world will be heading(?); I'll give netbooks a shot in the first world with our legacy infrastructure.
There's been a bit of discussion about whether Apple is in the hardware business -- Samsung manufactures the A4 right? Who needs who in the the fabless world? With Apple's acquisition of Intrinsity (not to mention talent acquired when they bought PA Semi) , I think its fair to say they are at least in hardware value add space (license core, add mojo, run faster with less power). Will be interesting to see what follows the A4...
I still think the Intel, Nokia, MeeGo triumvirate shouldn't be counted out. They'll be building a full mobile stack for Linux based applications. Meanwhile the mobile VM app space will be getting more powerful -- I suppose they'll meet somewhere in the middle (or clouds/webification rules and obviate the need for MeeGo ... and Intel is left in the power frugal wake of ARMs race). Interesting times.

MeeGo has little chance of success, because they're making the same mistake as Microsoft -- trying to cram concepts designed for desktop PCs into mobile phones.

The linux kernel is certainly fine for mobiles, though. It does very well in android phones.

Nokia lacks software prowess, and as such they're either going to switch to android, or die.

Intel is in an interesting position. They will continue to do fine due to server sales, which all of these "cloud" service providers are going to keep buying up.

But breaking into mobile is going to be very hard. ARM is just as entrenched on mobile as x86 is on the desktop.

And, once again, yes -- Apple makes hardware. They do not do final assembly, and they don't make most parts, but they make hardware. The more of this stuff that becomes automated, the more they will do.

I would tend to agree that apple does not make hardware, they design pretty cases for it. Although this can be said for most companies these days. They take prebuilt components and make something out of them.

I disagree that they are at the whim of Samsung. Companies like that make contracts and they understand that they must keep their partners happy or they'll leave. In the short run they could "short" Apple on the a4 chip, but once that happens, Apple is going to short them all of their business. You don't shoot your customers in the foot. If you're doing lowest cost and not thinking of the future and don't mind screwing over customers, you do. But large companies like Samsung can't operate like that. They'll also charge a little extra because they factor this in as well.

There are MP3 players out there that sell for $9, there are apple clones that sell for $60 but they aren't killing Apples music business. Microsoft has been trying for years and haven't made great inroads. Others have too. It's about the finished product. Easy of use, who else uses it, from hardware to software to getting your music. This is where apple does a good job, although Android is doing a good job here too.

As far as paying extra for apple hardware, while it looks expensive, once you've taken a Dell, or HP laptop and spec'd it out to the same specs as an apple laptop, the apple product is generally cheaper. Dell and HP make laptops with uneven pricing models. They give you tons of ram, but to upgrade the CPU is an arm and a leg. Or the CPU is super fast but comes with almost no ram. Now ram is insanely expensive. Apple just comes with a decent, well rounded machine.

More and more applications are going web only, including financial applications. Specific games are still application based and require specific hardware to run. But programming in HTML5, java or whatnot is far easier than C++ for each type of hardware you wish to support. It allows rapid development and lends itself to the web. Many applications on Apple are nothing more than a redirect to a web based interface.

thunderlips11 says

Kevin says

And GM doesn’t make cars. They just pay unions to do it.

No, Apple really doesn’t make hardware.

By your definition, *NOBODY* makes hardware. LG doesn't make displays, they just glue together glass made by owens to controllers made by marvell.

Sorry, but designing hardware is *THE MOST IMPORTANT* aspect of "making hardware". Everything else is going to be done by machines.

There is a world of difference between "final assembly" and "making things", and yet you consider the people doing final assembly to be "making". That's wrong. Apple makes macs, iphones, ipads, etc. They make them by hiring companies to assemble parts they selected and/or designed and put them into hardware enclosures that they designed. Just like GM pays unions to assemble parts that they selected and/or designed and put them into hardware enclosures that they designed. It's exactly the same thing.

Kevin says

Nope. And Microsoft isn’t the competitor to the Mac — Dell, HP, Lenovo, etc. are.

MS is the competitor to Mac. I would never get a Mac because I use a lot of prop financial software which isn’t made for MacOS. Nor am I going to spend more money on a computer, just to spend more money on an emulator to hopefully be able to use it. Also, I enjoy building my own machines and mix-matching parts. I’m constantly surprised by how many people are into overclocking and hacking their machines. And I play a lot of niche strategy games like War in the Pacific that will never be ported to Mac, too low volume to be profitable for the small developers.

Nothing that you said has any bearing on who apple's competitors are. People choose between buying one of several computers. Nobody buys "windows". They buy Dell or HP or Sony or Apple.

The same companies who make Apple components make Android OS based phones. They will always choose to sell their products first. If there is a component crunch, Samsung won’t delay it’s own products to rush out components for iPhones. They will pass along costs to the customer, too, eating away margins. Those components, like the Samsung A4 chip, are absolutely vital to the iPhone. Without it, Apple would have to reengineer the iPhone design to work with a new chip.

You mean like they're already doing with their recent acquisitions?

What you have described is true of *ALL* mobile phone manufacturers. Samsung also gets parts from other suppliers. They aren't even using their own NFC chips, which they are the market leaders in producing, inside of the Nexus S.

Android’s OS competes with iPhoneOS, however, the manufacturers that make Apple iPhone parts are also making competing phones, all of which have a sales volume that makes them key competitors.

And nobody buys, and very few people even install, android or iOS. They go to the store and they buy a phone. They buy a phone based on how it works and what it does. Just like virtually nobody knows the difference between "Dell" and "Windows", virtually nobody knows the difference between "Android" and "Samsung". Nor do they care. They do care about that "with Google" logo on the back, which indicates that the thing supports the Google services that they want to use.

In short, Apple depends on it’s competitors to make its own phones. This won’t play out well in the long term for Apple.

There's little reason to believe that it won't. There are many companies that make flash, many companies that make displays, many companies that make processors. Apple can source components from a lot of other companies if the ones they currently do business with prove problematic over the long run.

You can argue that the relative prowess of mobile vendors and google is greater than that of PC vendors and microsoft, of course, but I still believe that apple will be the largest smartphone maker a decade from now.

Apple is already 3rd in the Smartphone market, behind Android in 2nd, and it happened over the summer.

Again, smartphone maker, not OS vendor. Android *will* be the most popular OS (in the US, it probably already is). Symbian is dying rapidly.

Apple is second only to Nokia in smartphone sales worldwide, and that gap is closing rapidly.

Again, Apple is not competing with "Android". They are competing with Nokia, RIM, Motorola, etc.

Today, there are 300,000 Droid phones activated daily in the US.

That's actually the global number (and it's low), but that's beside the point. I am not disputing that Android is popular or that it will grow in popularity. I'm telling you that the iphone will be the best selling phone. Android is not a phone. The nexus S is a phone. The droid pro is a phone. the blackberry bold is a phone. the n97 is a phone.

More OS sold = more developers = more apps = more desirability for the dominant App. Jobs is making the same mistake again by going for unit price over volume. It’s part of his mentality, he can’t shake it and nobody is strong enough on the Board to change direction by standing up to Jobs.

Yeah, it's been such a huge mistake to take that approach. I mean, shit, Apple would have been way better off going for a market share based approach like Dell, right?

Apple's approach has led them to become the world's largest technology company. How on earth can you argue that this was a bad decision?

Same reason you can’t buy most financial software or video games for the Mac (or Linux), it is a low volume seller. Emulators are great, but they seldom run complex software reliably and in the case w/ Macs, are an additional expense, and intimidate non-nerd users - the kind who buy Macs because “They just work”.

I'm a mac user and have never found an interesting piece of software that wasn't available. Of course, every single app that I use today is web based, so it doesn't even matter anyway.

Video games are a really poor comparison. Gaming on PCs -- period -- is a very small market, and the games that actually move significant volumes (The sims, WoW, etc.) -- are multi platform.

Yahoo would be an absolutely stupid acquisition. They have no noteworthy technology or content partnerships that Apple doesn’t already have access to.

They have millions of email users, and Yahoo! Finance kicks the bejeesus out of Google Finance. Apple can work Yahoo! Finance into a free app include with an iPhone to try to get the business user and small investor onboard.

Yeah, because "business users" are going to buy iphones because it has a shitty financial news aggregator app! That'd be a great way to spend $10bn.

Apple has to do something with $50+B in cash. Give it back to the investors or make an acquisition. They have to battle Google at this point.

No, they really don't. The biggest threat to Apple right now is that hardware vendors will finally start producing quality phones. I'm a die-hard android user, but when I compare the iphone's hardware to what I can get in android phones, it's a joke. Between the Nexus One and the Nexus S, the *only* good hardware running android was laden with shitty software made by OEMs who don't know what they're doing. On verizon, you can't get a good android phone today.

As you say…

All development, including mobile, is moving to the web. The web is platform neutral. There will be nothing on Android that isn’t on iOS, and vice versa.

Disagree. Developers like flash because once they spend months developing an App, they don’t have to get approval from Apple to sell it.

Flash? Seriously? Have you even tried to use flash on any phone? I have a Nexus S in front of me right now, and flash runs like absolute shit.

The pros of the app store grossly outweigh the cons. In particular, billing options and the fact that there are only 3 hardware configurations to deal with make it very developer friendly.

They can sell it anywhere, anytime, to any user. Never have to fear rejection.
The web also likes Flash and is far from HTML5 compliant. HTML5 depends on a proprietary codec for Flash Replacement with Video. Free for now to attract users, but will it be later? And is HTML5 actually better than Flash? Results are inconclusive:

Yeah, because flash doesn't use a "proprietary codec" for video. Do you even realize that "flash video" is just a shitty predecessor of the *same*"proprietary" H264 codec that is commonly used for HTML5 video?

By the way, YouTube's HTML5 videos all use an open, freely distributable codec. http://www.webmproject.org/

HTML5 video is, yes, hands down, better than flash video, particularly on mobile.

Jobs is right, and flash is garbage. If there is any single thing that I'd ever point to as something I was disappointed with google doing, supporting flash would be it.

I wish this Flash conflict would come to some resolution. There are still far too many sites I go to which I cannot view due to lack of Flash. Jobs attempting to force it's early demise, doesn't seem to be having that much impact to me.

AAPL hit $325, moved up my standing stop sell order.

Had several friends ask me "so I'm getting an iPad for someone for Christmas, which one should I buy". One of them is a long-time Apple hater.

There is no resolution. Flash is simply to inefficient to run on these devices. I have a Nexus S -- far more powerful than an iphone 4 or ipad in terms of processing power, and with the same amount of RAM -- and watching flash video drains the battery faster than playing angry birds.

It also performs like absolute crap. Its a bit better than it was on my droid, but its still atrocious.

Getting an ipad this christmas seems silly given that it's inevitable that a new one will come out in February.

I am holding on to my AAPL as well for now. Probably sell a bit to get myself an iPad ver2 in a few months.
On 2nd thought, I will sell either RIG or TIF instead.

jobcat says

I am holding on to my AAPL as well for now

APPL is definitely still a hold. The debate, I assumed, was whether it was still a strong buy.

Yeah I've been debating doubling down myself. I had some cash back when it was at $250 and thought about it, but it went elswhere.

Early January if it takes a dip.......

Nokia lacks software prowess, and as such they’re either going to switch to android, or die.
The proverbial pee in the pants. Sorry, I couldn't resist.
BTW, this entry was posted using a Nokia N810 tablet (it uses a TI OMAP processor and runs a linux based OS. With Flash support. And it came out in 2008, no less). Any apps on this are free as well (as they are just ports of Linux programs). Okay, I lied, I didn't post from the Nokia but could have (stupid stylus :-)

I also had bought heavy on ARMH which makes the chips used in lots of small devices among other things iPhones. This turned out to be an even more rapid riser than AAPL. I'm guessing the Verizon and MS announcements meant people thought ARM chips would soon be in nearly every crevice not just a bunch more iPhones and it took off. I had a tight trailing stop % on it and ended up selling out of it near the close today at over a 40% profit in 3 months. Still just holding AAPL haven't averaged in for more.

Vicente says

I also had bought heavy on ARMH which makes the chips used in lots of small devices among other things iPhones

Arm doesn't make (and by "make", I mean "sell or manufacture") processors. They design processors and sell the rights to make those processors to companies like Qualcomm ("Snapdragon"), Samsung ("Hummingbird"), NVIDIA ("Tegra" / "Denver"), Apple ("A4") and others.

This is in contrast to the x86 world, where there are basically two manufacturers (Intel and AMD), and one of those companies holds most of the IP.

To understand why ARM is so valuable, consider this:

- 98% of mobile devices sold this year will run on ARM architecture.
- Intel's Sandy Bridge, the thing that was supposed to bring x86 to mobiles, costs 5x as much and uses 10x as much power for equivalent performance. In other words, it's not going to happen.
- ARM licenses are such that you pay once per device. This means that there's very little reason to use any other architecture once you're using ARM. You use ARM cores, ARM FPUs, etc. Anything else would just make the hardware more expensive.
- ARM's only significant expense is R&D. Their profit margins are impossibly high.

The obvious potential downside is that the industry could have a massive shift to another architecture. This is unlikely for several reasons:

1. There is no real competition. IBM and Motorola have mostly abandoned this area. PowerPC is hardly being used anywhere anymore (Wii?), and it's not anywhere near as efficient. x86 will be impossible to scale down in terms of power requirements. Sparc, etc. are about maximizing performance, not performance per watt.

2. It would require a massive porting effort for most apps. All iOS apps would need to be recompiled (think the mac power PC -> intel transition and fat binaries). Most android and symbian apps would be in the same position.

3. Hardware vendors love the current arena. Yes, everyone is beholden to ARM Inc, but they're being benevolent dictators for now. There is healthy competition between chip makers, which keeps prices low.

So, yeah, for the next 5 years at least I wouldn't bet against ARMH.

AMD could possibly compete here with their new processors being sub 1 watt @ 1ghz and fully x86 compatible with a graphics processor to boot. While it might consume more power than the arm processor, it should get the same work done in the same amount of energy via being more efficient. Although AMD booted their CEO and it's looking like it's because he didn't chase their market aggressively enough.

The main issue with arm is that everyone takes their arm licensed tech and makes the chips and adds onto them, such as Tegra, but that knowledge doesn't flow backwards, so it creates fractions in the architecture on a going forward basis. Each Arm processor can thus become something completely different. At some point, one company (possibly nvidia) will hold enough market share, with enough additional hardware added onto the arm processor that coders will have to either write for arm + nvida or just give up the arm market and write code for nvidia combination. ARM only code could work on both, but it would be so inefficient compared with someone who wrote a native nvidia app with all the goodness nvidia added.

It should be an interesting couple of years though. I would personally like to see an x86 chip in the market + android or linux on it!

As a side note, Apple (as previously mentioned) bought Intrinsity. The folks at Intrinsity take standard ARM cores and optimize them for speed and performance. Guess who's going to have the fastest, lowest power mobile chips? YMMV as some people don't think much of Intrinsity's technology and the Apple purchase.
It's also important to note that most ARM based SoCs contain multiple processors - that is, not multiple ARM cores (coming soon, though - see OMAP4), but special purpose processors like DSPs and hardware accelerators. This adds a bit more programming complexity, but the tradeoff it that workloads get farmed out to the most appropriate subsystem. This translates into a more power efficient solution and is why x86 will have a hard time in the mobile space. Their best bet is in the tablet arena where they can bring their apps with them.

EBGuy says

Their best bet is in the tablet arena where they can bring their apps with them.

? Windows and tablets Do Not Mix.

The power of the 30-year PC-DOS/Win32 legacy is finally coming to an end.

Apple threw a Tabula Rasa bomb into the market last year.

pkennedy says

AMD could possibly compete here with their new processors being sub 1 watt @ 1ghz and fully x86 compatible with a graphics processor to boo

x86 is NOT a benefit in the mobile world. No mobile OS today is running native code on x86. iOS, android, symbian, all have the majority of their software on ARM cores. x86 requires a recompile, and possibly code changes to run.

The only reason to run x86 on mobile is so that you can run windows on mobile, but windows was never designed for mobile devices, and that is why it continually fails to work on these systems.

pkennedy says

Each Arm processor can thus become something completely different. At some point, one company (possibly nvidia) will hold enough market share, with enough additional hardware added onto the arm processor that coders will have to either write for arm + nvida or just give up the arm market and write code for nvidia combination.

Unlikely. I was very disappointed that A9 allows vendors to choose an FPU implementation, but you still don't need to modify code generally.

There is some room for divergence at the GPU level, since not all GPUs support the same extensions, but if you stick strictly with openGL ES, you won't have this issue either.

pkennedy says

It should be an interesting couple of years though. I would personally like to see an x86 chip in the market + android or linux on it!

Why? There are no real advantages of x86 over ARM other than compatibility with code compiled for x86. Since none of that code is useful on mobile, why would you want inherently less efficient processors?

A real RISC competitor would be nice, of course. But for now I think the situation with ARM is infinitely better than the x86 situation ever was.

EBGuy says

Guess who’s going to have the fastest, lowest power mobile chips?

Samsung. The proof is in the benchmarks. NVIDIA has a chance here, but that depends entirely on what happens with Denver. The Tegra2 is a piece of shit compared to the orion or OMAP4 because of the lack of NEON, but NVIDIA does still make the best GPUs. My understanding is that the GPU guys are in charge now, and the Tegra3/4 will be Cortex-A15 based, so I have high hopes

Now, the thing is, Apple still doesn't make their chips. They take ARM designs, tweak them a bit, and hand them off to LG or Samsung to make them. That's why those companies will likely always have the edge.

EBGuy says

Their best bet is in the tablet arena where they can bring their apps with them.

Again, no. You can not take an app designed to be used with a keyboard and mouse and try to use it with fingers and a virtual keyboard. It just doesn't work. Microsoft has been trying it for 15 years, and nobody cares.

The tablet market will belong to the same companies that the smartphone market belongs to. As we're seeing with some of the recently demoed tablet apps from Apple and Google, the trend is very much towards full productivity software on these devices. I won't be at all surprised if ten or twenty years from now every personal computer is a tablet, with a small niche market of docking solutions for creative industries (design, programming, journalism) that need larger screens and/or physical keyboards to do their work.

Kevin said:I won’t be at all surprised if ten or twenty years from now every personal computer is a tablet, with a small niche market of docking solutions for creative industries (design, programming, journalism) that need larger screens and/or physical keyboards to do their work.
And that is the one area where I could see x86 having a chance. I'm not sure x86 has really made a ago at the tablet market at the price points it demands. Clayton Christensen has argued that the licensed IP model for processing cores,etc. is disruptive; it looks like the market may be proving him right. They certainly are scaring the heck out of the x86 camp. As I noted on another thread, there are companies that think low power ARMs can make in roads in the server market. Did anyone notice that Microsoft announced that it will support Windows 8 on ARM chips? That, I did not expect.

Kevin said:Samsung. The proof is in the benchmarks.
And might that be because of the Intrinsity optimizations applied to the ARM core? I'm being somewhat rhetorical, but I truly don't know if there might be other reasons. In my very limited understanding of this business, it's the foundry that has the ARM license (in this case, Samsung). Now that Apple owns Intrinsity, it will be interesting to see if others (whoever manufactures the Apple chips) also have access to the optimized core for their own use. This is in reference to the next gen of ARM based products.

EBGuy says

And that is the one area where I could see x86 having a chance. I’m not sure x86 has really made a ago at the tablet market at the price points it demands.

Why? A9 is outperforming Oak Trail on most benchmarks already, and early tests of A15 are outperforming Sandy Bridge, at half the power and less than a quarter of the cost. Why would you want x86 when the alternative is superior in every possible dimension? It makes no sense whatsoever, unless you have a bunch of hand tuned assembly that you just can't port.

EBGuy says

And might that be because of the Intrinsity optimizations applied to the ARM core?

Intrinsity can not be given sole credit for the optimizations. It was a joint venture between Samsung and Intrinsity. The A4 (Apple / Intrinsity's design) is a weaker processor than Hummingbird (Samsung's design).

The primary advantage that Apple got by buying Intrinsity and PA semi was leverage over Samsung to continue to make its processors at reasonable prices. Notice how Samsung is conspicuously absent in the matrix of who's suing who in the mobile industry?

Samsung makes the A4, and will likely make the A5, because it will be difficult for Apple to go to another manufacturer without Samsung's side of the hummingbird IP. That might change when Apple switches to a cortex A-15 based chip, but that won't be until the iphone 6 at the earliest.

Tomorrow should be interesting.... Apple will probably crash in the AM on the Steve Jobs health worries... Just how bad? 10-20% haircut possible.. Then if earnings aren't absolutely AMAZING... Then look out, another 10% haircut is possible.. total 20-30% loss! I was really considering selling some of my position soon... oh well, guess I'll hold on now.

I don't think AAPL will crash at all.

Though this exact event is why I advised a friend who wanted to lighten his AAPL position to just sell with a market limit order instead of a trailing stop (which is the normal way to get out of a position).

Thanks to Steve's stupid pancreas, it was always possible that one could wake up with AAPL cut in half, running your stops and then having the damn thing bounce back.

Futes are going to be fun to watch tonight. I miss firing up TOS and watching zillions of dollars change hands overnight.

Hmmm yes, I'm sitting here this evening waffling on what to do with my stops. Previously set at a simple trailing stop $335. Hmmm, adjust down for more room to bounce, or just let it bail? Decisions, decisions.

I think they'll have soiid earnings, which will offset the impact of the Jobs news.

Long term, though, I'm skeptical about Apple's prospects without Jobs. I would say that 75% of their value is derived from his leadership.

And.... I'm out. Stops were tripped at the open.

Seems rising just fine after the initial reaction. Now I'm bummed. Oh well, on to the next trade.

Los Angeles Renter says

Tomorrow should be interesting…. Apple will probably crash in the AM on the Steve Jobs health worries… Just how bad? 10-20% haircut possible.. Then if earnings aren’t absolutely AMAZING… Then look out, another 10% haircut is possible.. total 20-30% loss! I was really considering selling some of my position soon… oh well, guess I’ll hold on now.

Well, i'm glad I was wrong.. I guess jobs departure from Apple is already priced in... Good to know!

SF ace says

file this under why you should never set up stops. I knew Apple is good when my freakin nanny bought an Ipad. Incredible.
I had a chance to visit Hong Kong and Singapore last month and Apple products are absolute hits. It’s just incredible everyone that had a Nokia two years ago are all converted to Iphone 4, for $799 no less.
I don’t know the technical details like Kevin, but Apple just passes the eye test. Samsung is a distant second.

I'm not sure I follow. My comments about Samsung was with regards to their components, not their finished products. Their finished products are pretty mediocre in most fields, and I honestly wouldn't pick them out of a crowd. I certainly wouldn't call them a 'distant second'. In the smartphone (and soon, tablet) space, in terms of overall quality, I would put Nokia as second best in terms of design, but their software is garbage. Motorola would be my vote for third.

Where Samsung shines is in their semiconductor (SoC's, DRAM, NAND) and display panel businesses. Where do you think Apple gets their parts from? Samsung desperately wants to move up the value chain, and they're having modest success with it, but if they keep fucking with their customers the way that they've done with the Galaxy S line, or jumping the gun and producing mediocre products like the Galaxy Tab, their chances are slim.

I am still in AAPL. Wanted to buy more on the dip, but missed my limit order by $1.
On to the next one, indeed.

Now I see AAPL has been slumping a bit the last few days. Hmmm, the excitement is gone I guess. Now I don't feel so bad about bouncing out.

Options expiration tomorrow. Market maker conspiracies? I'm a believer; I finally started writing covered calls (on another tech, not Apple). Don't fight The Man. Tomorrow should be fun as I haven't closed out my position yet...