• Newsletter Issue #558

    August 9th, 2010


    After weeks and weeks of remarks by tech pundits claiming to be knowledgeable about the goings on at Apple, Inc., the truth came out at last: Apple isn’t giving up on Macs. The platform continues to grow. When a new Mac or related product comes out, Apple can get just by with just a press release and a few brief interview opportunities with a product manager.

    Already, most of the new iMacs have been tested and reviewed, except for a few custom configurations. The Mac Pro doesn’t ship till later this month, but tests will be available soon thereafter.

    The other interesting product was one that was presaged courtesy of a patent filing, the Magic Trackpad. As you might expect, I’m extremely curious about that new gadget’s possibilities, so on The Tech Night Owl LIVE Saturday night, Macworld Senior Editor Dan Frakes discussed low-cost accessories for Macs, including the new Magic Trackpad. He also explained why he is seriously considering moving from a Mac Pro to a fancy, new iMac.

    You’ll also heard about the latest test reports on Apple’s current gear from Macworld Lab Director Jim Galbraith.

    And, cutting-edge commentator Daniel Eran Dilger, from Roughly Drafted Magazine, detailed the known and notorious security lapses of the Android OS, and even answered the question whether it’s time for Steve Ballmer to leave Microsoft.

    This week on our other show, The Paracast, co-host Christopher O’Brien presents long-time field investigator Philip J. Imbrogno, author of a number of paranormal books including his latest, “Files From the Edge: A Paranormal Investigator?s Explorations into High Strangeness.”

    Coming August 15: Co-host Christopher O’Brien presents Leslie Kean, cofounder of the Coalition for Freedom of Information, and author of “UFOs: Generals, Pilots and Government Officials Go On the Record.”

    Coming August 22: Co-host Christopher O’Brien presents a rare interview with Louis Jarvis, focusing on such topics as comparative prophesy, how some possible religious miracles can be looked at in a paranormal context, and conspiracies about a New World Order.

    Now Shipping! The Official Paracast T-Shirt. We’re taking orders direct from our new Official Paracast Store, where you can place your order and pay with a major credit card or PayPal. The shirts come in white, 100% cotton, and feature The Paracast logo on the front. The rear emblem states: “Separating Signal From Noise.” We’ve also added a selection of additional special custom-imprinted merchandise for fans of our show.


    It’s fair to say that the media and industry analysts just don’t get Apple. They keep wanting to pigeonhole the company into the same category as other tech giants, not understanding that they are dealing with a firm that doesn’t play by those rules.

    So, for example, you expect that as a company gets extremely large, sales growth will max out, maybe even flatten. But that situation hasn’t so far applied to Apple, at least not yet.

    Of course, part of that is simply due to the fact that the market shares of the Mac and the iPhone still retain minority status. How the iPad will fare against forthcoming competition isn’t obvious yet, though it certainly has a huge head start.

    Indeed, even with the iPod, the revenue curve has grown even while sales have flagged, largely because the iPod touch still has plenty of room to expand. It may well be that this trend will continue, unless Apple can make the lower priced models more compelling.

    Or it may just be that most of the people who would buy an iPod have one already, so a higher percentage of new sales will involve replacements. Even then, many people — myself included — have opted to use the iPhone as a proper iPod replacement, and I’m sure Apple isn’t complaining.

    In any case, what this means is that there’s so much room to grow that it may be years before Apple’s sales curve begins to come down to Earth. Obviously if it continued at a 35% or higher rate year after year, it wouldn’t be long before Apple basically owned all of the manufacturing facilities on the planet, or needed to in order to build enough product, and that’s an absurd prospect.

    At the same time, Steve Jobs and crew have a nasty habit of marching to different drummers. They don’t do what all the other companies and media analysts say they should be doing. They claim to be in the business because they love their customers and only what to deliver compelling gadgets that people will embrace with a passion, but that also means record profits.

    Of course, that’s happened with the iPod, which so overwhelms the digital media player business that no competitor comes close. When people want such a device, the iPod comes first to mind.

    With the iPad, Apple has already taken control of naming, since many of the competitors evidently plan to use the word “Pad” in their branding. So from RIM, we’ll have a BlackPad, which seems a rather lame label for a supposed killer device. I suppose we can expect an HPPad or PalmPad from HP, a WindowsPad, and so on and so forth.

    When it comes to the iPhone, the latest surveys show that this manufactured Antennagate scandal at best provided only a short-term impact to Apple. Sure, they have to kick in some $170 million or so to cover the costs of providing free cases, but that’s chump change for a company the size of Apple. It’s also good PR and may, in the end, entice more people to buy an iPhone 4. After all, how many Android OS alternatives, which have similar “Death Grip” issues, come with a free case?

    On the long haul, it also seems that the worst ills suffered by the iPhone were not due to any innate design shortcoming, but resulted from the well-known problems with AT&T’s network.

    Speaking of AT&T, they are already quoted as saying they do not anticipate any material impact to their success when the exclusive for the iPhone ends. That may be a reflection of wishful thinking, perhaps the result of the fact that, at least in the short-term, iPhone customers will still be tied to AT&T because of the two-year contracts they’ve signed. It’s not economical to leave, since the price of termination has increased.

    On the long haul, AT&T would be best advised to understand why people don’t like their service, and invest what’s necessary to upgrade the network. Maybe their executives believe that the rising sales of Android OS devices will ultimately make up the difference. But it’s obvious that AT&T would want to retain as much of the iPhone business as possible, and minimize customer desertions to Verizon Wireless or any other carrier that will make a deal with Apple.

    As far Apple is concerned, you just know their moves won’t necessarily be the obvious ones.


    This weekend came confirmation that Mark Papermaster, the head of Apple’s iPod and iPhone division, is gone. He’s replaced by Bob Mansfield, who worked in the Mac division.

    Now Papermaster’s arrival at Apple in 2009 was controversial because his former employer, IBM, sued over fears he might reveal trade secrets to Apple. While that complaint was settled, it may have unfortunately hurt Papermaster’s relationship with his new employer.

    Now some members of the media are assuming that Papermaster’s departure is due to the problems with the iPhone 4’s controversial external antenna system, or perhaps Apple’s failure to realize there was a problem. Perhaps that’s true, but it’s also important to note that Papermaster wasn’t present during the rollout of the iPhone 4 in June, while Mansfield was, so perhaps an exit plan was already in the works.

    I suppose it’s fair to suggest that Apple realized there were serious defects in the new iPhone before the product came out, and there is that “buck stops here” concept that would place blame on the executive in charge of the division. At the same time, Steve Jobs obviously put his stamp of approval on the ccretive and engineering decisions, so it’s not as if he bears no responsibilty for what happened.

    Besides, why should anyone be fired? If what Jobs said at that emergency media event a few weeks back is true, the iPhone 4 is working precisely as it’s supposed to work. There is no design flaw, and if you don’t like it, you can get your money back, or at least accept a free case for your trouble.

    Unfortunately, unless someone in the know spills the beans, you might never know the real reason’s behind Papermaster’s departure, whether he was fired, or left voluntary as the result of the iPhone 4 issues or something altogether different. No doubt there are terms in his contract with Apple that cover situations such as this, and they’d also stipulate that neither party would say anything in public, so speculate away.

    Indeed, it may also be true that Steve Jobs decided he needed a sacrificial lamb to demonstrate to customers and stockholders that the company had full control over the Antennagate affair, and was going the extra mile to make sure there were no future issues. And, yes, there also is a published report that Papermaster had gotten on the wrong side of Jobs over a number of issues.

    Assuming Papermaster had a decent golden parachute, perhaps he will be able to gracefully retire to the Bahamas without worrying about where or when his next paycheck will arrive. Big corporations do that.

    I suppose if you’re looking for evidence of the true impact of this episode, you might see what happens after the September 30th deadline for the current free iPhone 4 case promotion expires. Will the program be renewed, or will there be some new hardware or software update designed to make the product work better in marginal reception conditions?

    Some rumors suggest that the iPhone 5 will arrive shortly after the start of 2011, six months ahead of schedule, sporting a more traditional antenna setup. I suppose that’s possible, but it might happen for reasons other than the perceived problems with the current model.

    You see, the competition, primarily the Android OS, and now even BlackBerry, are moving faster to get a leg up on Apple. With new models coming out every few weeks, Apple is no longer in a position to rest on its laurels and deliver upgrades once a year. That ship has sailed.

    If Apple wants to keep up, they might have to issue lesser upgrades every six months, if only to demonstrate that they can truly innovate faster. Yes, the changes may not be as drastic, and it’s still possible that iOS updates will come but once a year, but the perceptions of the press and the public can be critical to the product’s future success.

    I mean, few are clamoring for more frequent Mac updates, and having a reference operating system release every two years or so seems quite reasonable. But mobile gadgets are going to require far more R&D cash, and Apple is surely able to take care of business.

    Now if there’s no iPhone 5 to introduce 2011, you can say I was wrong. But I have no problem with that. In the end, the iPhone 4 may continue to sell in record numbers. As I write this column, the wait time is still three weeks at Apple’s online store, and finding one at any local dealer remains hit or miss.

    Besides, Apple is not disposed to change things for the sake of change. They usually only release a new product when there are compelling new features to hype, not just because a few months have gone by and the public is bored.

    On the other hand, maybe Papermaster is even now at work on his autobiography, “Why I Was Stabbed in the Back By Apple,” but I don’t believe that possibility for even a second, even if the idea is thoroughly amusing.


    The Tech Night Owl Newsletter is a weekly information service of Making The Impossible, Inc.

    Publisher/Editor: Gene Steinberg
    Managing Editor: Grayson Steinberg
    Marketing and Public Relations: Barbara Kaplan
    Business Development: Gil James Bavel
    Worldwide Licensing: Sharon Jarvis

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    2 Responses to “Newsletter Issue #558”

    1. SteveP says:

      Why, Gene, it seems that hundreds, if not thousands, of people “in the know” have already “spilled the beans”. 🙂
      Isn’t that what “news” and blogging have become?
      The bigger problem is that people BELIEVE it! (Or, really, the problem is more WHY people believe things.)

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