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  • Welcome to the Silly Season: Spring 2009 Edition

    May 5th, 2009

    It’s fair to say that there’s not a whole lot of news is coming out of Cupertino, CA these days from Apple. There weren’t any new product introductions in April, and there may be another vast wasteland between now and the WWDC in June. That’s where most of you no doubt expect a firm release date for Snow Leopard and the next iPhone.

    Sure, there may be some software updates, such as the recent firmware fix to address freezing and other issues involving iMacs equipped with the Radeon HD 4850 graphics processor. There are even suggestions that Apple is readying a 10.5.7 update, but don’t expect anything official until it happens — if it happens.

    Without much solid information to go on, beyond Microsoft beginning its planned layoff of 5,000 employees of course, rumors and speculation are front and center. Certainly some of the rumors make a lot of sense, but a few more don’t survive the logic test.

    Take Twitter — please! Seriously, it’s a fun place if you can get into the rhythm of writing regular 140 character blogs or diary entries about yourself and post them for the edification of anyone who decides to follow you. We use it, actually, but avoid some of the more tasteless topics, such as recent bathroom or dental visits.

    Now there’s a story that suggests Apple is in heavy negotiations to acquire the fast-growing socializing network, founded in 2006, for $700 million. This comes after other rumors suggested that Google was also after Twitter. If Apple inks such a deal, the transaction would be made official around the time of the WWDC.

    However, it’s fair to say that, despite the massive hype, Twitter has not yet been shown to be a profit-making company. They are still paying for their server farms out of venture capital. True, there are tens of millions of users, including notables from the world of politics and show business. Indeed, it has become the place to be — but how are they going to monetize this service?

    Sure, Apple has plenty of spare cash, so buying up Twitter would, to them, be a drop in the bucket. The larger question is how it would be integrated into their existing products and services and whether it could yield some positive cash flow for the company and its shareholders. If that’s not possible, buying a company like Twitter wouldn’t make one bit of sense.

    I’m not saying it won’t or can’t happen. Stranger things have occurred, but a social network would seem a better fit for Google, Yahoo! or even Face-book. Am I wrong? More to the point, it would seem to me that Twitter would work best as a value-added service to an existing social network, one that would enhance the overall value. That way the core Twitter service doesn’t have to deliver financial benefits of itself, but integrating it with other services might bring more visitors and hence encourage advertisers to pay higher fees.

    So Apple and Twitter doesn’t pass the smell test, at least to me. Maybe it will happen, or maybe Apple is just talking about some sort of loose partnership rather than an outright purchase. We’ll see.

    The other rumor afoot now is that Apple is poised to address flat sales of new Macs by cutting prices. Yes, I can see this as a possibility, assuming Apple is willing to sacrifice short-term profits in the hope that volume will make up for the difference. But I’m skeptical about the long-term strategy, since restoring prices to their former levels might end up hurting future sales. Remember, this is a company that doesn’t look at its business strictly on the basis of one or two quarters.

    A sensible possibility might just involve making available a 17-inch version of the iMac for the consumer market. Since the low-end 20-inch model costs $1,199, you’d think that Apple could offer the smaller edition for $200 or $300 less. That would put it into closer contention with mainstream PC hardware.

    Some are suggesting that Apple ought to make a bigger push to move the iMac, maybe even find a way to reduce the price some without hurting the standard equipment. Again, this is a questionable move, because it goes against the grain for a company that won’t sacrifice short-term profits in the hope of moving more product.

    Remember, also, that we’ll probably soon see those standard back-to-school specials for students, where they can get a free iPod along with a new Mac. That can certainly boost sales, particularly if the economy stabilizes over the coming months. It wouldn’t involve anything unique, since that simply reflects an ongoing marketing strategy.

    Yes, I’d like to see cheaper Apple hardware, but as they say themselves when confronted with cheap PCs, what’s the good of paying less for a computer if it doesn’t do what you want? Apple can certainly remove standard features from their products, but that goes against their DNA. Moreover, whether or not it has iLife on it is irrelevant from a cost standpoint, since that simply involves a disk image used in manufacturing, and iLife represents a significant usability advantage for a Mac.

    Sure, you never know what Apple really plans to do, but if you’re going to speculate, it’s always best to try to do so with a least a modest grip on reality.



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