• Newsletter Issue #661

    July 30th, 2012


    It’s rare for Apple to miss expectations for earnings. But the perceived “miss” in iPhone sales reported by Apple was actually the failure to match Wall Street’s possibly inflated expectations. Apple still sold 26 million iPhones, an increase of 28% over last year. But it wasn’t enough as far as the financial community was concerned, so Apple’s stock took a brief drubbing Thursday, before regaining a good part of that decrease on Friday.

    You can argue that iPhone sales were hurt by the fragile state of the economy in Europe, and the possibility that some customers are waiting on the sidelines for an iPhone 5, which is expected by fall. But that may go against the logic of the situation, that customers who want a smartphone would be willing to wait four to six months for an expected new model. I can see that happening perhaps with a new car, which is a far more significant purchase. But a smartphone? Is the iPhone 4s so bad that potential customers ache for its successor? I’ll have more to say on that topic later in this issue.

    On on this week’s episode of The Tech Night Owl LIVE, we present noted industry analyst Stephen Baker, of the NPD Group, to review the hits and misses in Apple’s earnings report for the June quarter. He’ll also talk about ongoing industry trends in the mobile, PC and TV markets.

    Baker, by the way, is skeptical about the theory that lots of customers didn’t buy iPhones in expectation of a better iPhone 5 this fall.

    We also present a show regular, cutting-edge commentator Daniel Eran Dilger, of Roughly Drafted Magazine and AppleInsider, who will deliver a reality check about the meaning behind Apple’s earnings, especially the supposed “miss” in iPhone sales. He’ll also continue his discussion about the ongoing mobile and PC platform wars.

    You’ll also learn about a new Internet telephone service, “a phone company in a box,” from Nelson Hudes, who represents NetTALK.com, which recently introduced a Wi-Fi version of their VoIP phone device.

    On this week’s episode of our other radio show, The Paracast: Gene and Chris present Rosemary Ellen Guiley, who recently released a fascinating book, “Ouija Gone Wild,” co-authored with Rick Fisher, which examines the mind-bending history of the spooky Ouija talking board. You’ll hear “shocking true stories” about this curious device, which is often sold as a toy or for entertainment, and whether it really has the potential to contact beings from “the other side.”

    Now Shipping! The Official Paracast T-Shirt — Now with New Design! 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 huge selection of additional special custom-imprinted merchandise for fans of our show, along with a redesigned storefront.


    Over the past few days, I’ve read the early Mountain Lion chatter on online message boards, including Apple’s own support discussions. With millions of Mac users already using OS 10.8 — one report suggested the number exceeded 3% of the Mac user base after the first two days — it’s quite clear that some people are going to encounter problems. The key is whether there is a trend towards serious, repeatable bugs that may indicate potential troubles with Mountain Lion that Apple will need to address in the first maintenance update.

    After installing Mountain Lion on a late 2009 27-inch iMac, and a 2010 17-inch MacBook Pro, I can tell you that my upgrade experiences have been quite smooth. I can think of only two problems after the installation, one of which appears to have been encountered by others.

    The first involved high resource use by Mountain Lion on the iMac, which slowed down performance noticeably. Using Apple’s Activity Monitor app, which is found in the Utilities folder, to see what was going wrong, I encountered a process called ABAssistantService hogging the CPU. This process was evidently caused by Contacts constantly polling iCloud for updates.

    It took a little while to reach that conclusion, with a little help from my friends. But after I found it, I logged out of iCloud, accepting all the warnings about the dire fate of the online version of my contact list. While I understand the need for those warnings, I suspect many of you will be scared off and not bother. I also deleted all the AddressBook preference files on my iMac. After reconnecting with iCloud, I launched Contacts and checked the list over quickly to make sure nothing had been changed or deleted.

    One thing I noticed right away: One particular address, which I kept trying to update, stopped reverting to a previous version. The iMac suddenly seemed to run a whole lot faster, and a look at Activity Monitor indicated no runaway processes were stealing CPU capacity or memory.

    This particular problem hasn’t recurred. My solution may also help resolve situations where Contacts doesn’t update properly, or insists on displaying duplicates of some of your contacts.

    The second problem is one that I’ve seen on Apple’s support site, where App Store puts up an endless Waiting message when you try to install a software update. After putting up with this message for over an hour, where a printer driver update was pending, I decided to restart the iMac. Predictably, the restart process was blocked with a message that App Store hadn’t finished doing the update.

    My solution was simple enough: I force quit App Store, and restarted. The next time I ran Software Update, and clicked Install in the Mac App Store, the printer driver update downloaded and installed normally. So that’s a workable solution — and a restart may not even be necessary — if you encounter a stalled update. This issue, minor in the scheme of things to be sure, seems obvious enough for Apple to address soon. I wouldn’t predict what will appear in the expected 8.0.1 update, but this seems a good candidate.

    The other Mountain Lion problems I’ve read about seem all over the map. Some are reporting the usual Wi-Fi or Internet access issues, others are complaining of problems downloading the installer, or redeeming one of Apple’s free Mountain Lion update coupons. These coupons are available for those of you who bought Macs on or after June 11th, and before Apple could preload 10.8 on new Macs. But that appears to be an issue best resolved with Apple support directly.

    On the whole, Mountain Lion shipped in pretty good form. The number of confirmed bugs I have found in my online travels aren’t terribly high or necessarily significant. Another involves getting Google’s Calendar to sync with Apple’s updated Calendar. This sort of syncing issue seems to be fairly common, and maybe part of it involves ongoing issues with iCloud.

    When it comes to stability, my Macs have actually worked quite well. I cannot remember when an application has quit. I had a similar experience with Lion, and I use a number of apps that consume a fair amount of system resources, the result of doing post production on my two radio shows. But OS X has, overall, become far more stable as Apple has continued to work in clearing out bugs. I do not, for example, recall seeing a kernel panic in years, although they were fairly common in the early days.

    Now it’s quite true that some critics are attacking Apple for not changing OS X enough. Mountain Lion, despite the iOS-inspired flourishes and extra gestures for your trackpad, still makes a Mac look and work like a Mac. The fundamentals of a point and click graphical interface are mostly left intact, so even Snow Leopard users won’t find a tough learning curve when upgrading to 10.8.

    There are suggestions that the iOS-ification of OS X will continue, though. In a few years, you won’t see much difference between OS X and the iOS. But that doesn’t appear to be Apple’s goal for now. It will be up to the market to decide how traditional PCs fare against mobile gear. Certainly, if and when PC sales become far less significant, the situation may change. But I don’t think Microsoft’s efforts to enforce a sea change with Windows 8 and Metro will serve as the pathway to the next generation of personal computing. PC+? Poppycock!


    When Steve Jobs first unveiled the original iPhone, it was done at a Macworld Expo keynote, on January 9, 2007. But the iPhone didn’t actually ship until nearly six months later, at the end of June. This gave prospective customers fair warning to prepare for buying their first iPhone.

    The media was certainly skeptical. At the time, the standard by which all smartphones were judged was the RIM BlackBerry, which featured a tiny touch keyboard. This was the plaything of the savvy executive, so how could Apple possibly compete, particularly with a virtual keyboard?

    To be sure, Jobs said he’d be happy if the iPhone could get just 1% of the mobile handset market by the end of 2008. It was far more when the sales figures were tallied, but few believed it would be possible in those early days. Of course, once the iPhone became a huge success, smartphones began to closely resemble Apple’s contribution to the market, and the courts are still deciding if those resemblances are a tad too close.

    Now I do understand why Apple customers may have been happy to wait months for the first iPhone. But once the product was in the hands of tens of millions of users, it’s a big question how long most people would wait for a successor. That decision, in large part, is dictated by your carrier if you bought a subsidized iPhone with the standard two-year contract. Sometimes the carrier will relent, and let you upgrade to a new model earlier, to fuel sales and renewals, so long as they aren’t too early, since it reduces customer churn.

    While I realize some of you are willing to endure hefty early termination fees to buy a new smartphone, most will wait till their contracts allow for an easy upgrade without a penalty. But that doesn’t mean you are forced to buy a new model. Assuming your existing handset is in good condition, nothing stops you from waiting a few months until the right model comes along. So if your contract was up in April, the beginning of Apple’s June quarter, is it possible some of you preferred to wait for the successor to the iPhone 4s before upgrading?

    The larger question, however, is how many of you made that decision. While I suppose waiting a couple of months makes sense — particularly when the release date of the new model is fairly certain, at least according to the media — four to six months seems a bit much. Anyone in that situation would no doubt be using an iPhone 3GS or someone else’s smartphone. An iPhone 4s would be a compelling upgrade when it comes to performance and, to some, the Siri personal assistant.

    At the same time, Apple CEO Tim Cook suggested, during last week’s conference call with financial analysts, that customers were holding back for a later model. Maybe, but I think most iPhone users simply don’t pay attention to media speculation about the next version until they are getting ready to make a purchase. If that’s the case, there would have to have been other reasons why the iPhone didn’t perform quite as well as some expected — or hoped for.

    The other reason appears to be tepid economic conditions in Europe, where the iPhone receives a fair number of sales. That would seem a far more reasonable cause, although I suppose a small number of potential buyers were new model fence-setters.

    It stands to reason, either way, that iPhone sales for the September quarter will be even lower, though I suppose it’s always possible Apple will amaze and surprise us with an iPhone 5 release in September rather than October.

    I wouldn’t presume to predict what Apple might do, or whether it make sense to get the iPhone 5 out as soon as possible to boost sales. That move would require having a sufficient number of new iPhones on hand to meet initial demand. While Apple tends to be back-ordered during the early days of an iPhone or iPad release, being too backed up may hurt sales more than just leaving the existing model in production for a while longer.


    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
    Worldwide Licensing: Sharon Jarvis

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    8 Responses to “Newsletter Issue #661”

    1. […] Continue Reading… Related Posts: Assumptions (or Delusions) About the Next MacBook Pro […]

    2. Shock Me says:

      I think the big question is whether users coming off their iPhone 4 contracts are willing to wait the extra months with so many high-spec Android offerings around. I suspect the iPhone 4s will take a beating in August and September. But if Apple announces in mid-September the damage should be limited.

      • @Shock Me, The question is whether those “high-spec Android offerings” deliver any value beyond what you get with an iPhone. Real value, not just a larger screen and wretched 3D.


        • Shock Me says:

          @Gene Steinberg,

          I suspect that Android is good enough on the newer phones that people might not want to wait for Apple to ship LTE and larger screen.

          • @Shock Me, Existing iPhone customers, according to surveys, expect to buy a new iPhone by a very large margin. They do not perceive Android as good enough. Besides, if one’s current iPhone is working properly, and the iPhone 4s isn’t it for them, there is nothing to prevent them from just waiting until something better comes along.


            • Shock Me says:

              @Gene Steinberg, Well, in the US, the fact that your payment doesn’t go down after two years might prompt people to keep replacing phones according to the plan schedule. Others considering a jump to Android won’t do so until AFTER the new iPhone features are announced. For Apple’s sake one hopes those new features convince their customers to stay.

    3. Steve Zerby says:

      I’ve got an iPhone 3GS and I opted to bypass the 4S and wait for the next one. The timing of my contract has been awkward. I got my 3GS when it was released. I was not eligible for upgrade when the 4 was released. Had I bee it would have jumped at the 4. By the time the 4S arrived, I was eligible, but by then there were already rumors of the 5, in fact the 4S was a big disappointment to many who believed the 5 was on deck. So I just decided to hold on till the 5 comes out. I expect there are many who hit the same decision points if they bought a 3GS at release.

    4. Sean says:

      Gene, regarding iPhone sales last Q, Verizon and AT&T both admitted they were pushing 4G phones all quarter. Yet the iPhone was still their best seller. Imagine if they had promoted the iPhone?

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