• Newsletter Issue #664

    August 20th, 2012


    So do you have problems with Apple Mail? In a sense, all email clients I’ve ever used are buggy in some fashion. Microsoft’s Entourage and Outlook for the Mac are sometimes barely usable, or so slow that you might become real frustrated if you have large mailboxes to handle. I’ve tried Mozilla Thunderbird, but it doesn’t feel right, and that’s a highly subjective reaction.

    For me, Mail is just about perfect. It’s fast, efficient, and reasonably predictable. I say reasonably, because Apple made a curious change in Mountain Lion to account organization. With previous versions, you could drag an email account to a different location in the app’s preferences. That’s no longer possible, and thus, when making a change or adding an account, the pecking order is altered. Yes, you can still rearrange the order of your accounts from the Mailboxes sidebar in the app’s window, but why should this step be necessary?

    Of course, with Outlook 2011 for the Mac, you can only reorder accounts by changing the descriptive names, since they are, other than your “Default” account, sorted alphabetically. Apple’s inscrutable sort logic appears to place iCloud first, followed by MobileMe, if you still have an address with a mac.com or me.com domain. The sequence is followed by Google, AOL; other email services follow.

    Or at least that’s the way accounts line up on my computers. You cannot change the order of your accounts in the iOS, and there’s no indication that unfortunate oversight will be remedied in iOS 6. Or at least it’s not being discussed.

    Meantime, on this week’s episode of The Tech Night Owl LIVE, we present Susie Ochs, Executive Editor of Mac|Life, with a news and views update in the Apple universe.

    You’ll also hear from John Martellaro, Senior Editor, Analysis & Reviews for The Mac Observer, who will cover the possibilities for a small version of the iPad, a potential replacement for Apple Mail, the fallout of Apple’s ongoing “thermonuclear patent war,” and what you might see in the iPhone 5.

    Bob “Dr. Mac” LeVitus will cover Apple news, his experiences with OS X Mountain Lion, and speculate about the possibilities of an iPad version of Microsoft Office.

    On this week’s episode of our other radio show, The Paracast: Gene and Chris present paranormal writer Marie D. Jones, co-author (with Larry Flaxman) of “This Book is From the Future: A Journey Through Portals, Relativity, Worm Holes, and Other Adventures in Time Travel.” Explore thought-provoking possibilities about traveling through time, using warp drive, and jumping through worm holes to speed across the galaxy.

    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.


    This week, some online pundits speculated about the possible pricing for Microsoft’s ARM-based Surface, which will run Windows 8 RT. This is the model that appears to be most directly competitive with the iPad, at least based on the preliminary specs that, a little over two months from the alleged release date, still remain preliminary.

    One story had it that Microsoft was hot for market share, and thus would sell this 10.6-inch tablet for $199, to compete with the Amazon Kindle Fire and the Google Nexus 7. But that’s not a story that I can take seriously.

    Just consider the bill of materials. Amazon and Google are selling their 7-inch models with little or no profit. The Surface, assuming it is as represented, will cost a whole lot more to build. It’s not just the 10.6-inch display, but providing a cover with built-in keyboard. Sure, I suppose it’s possible Microsoft would consider taking a $100-$200 loss on every unit sold to build market share, but I’m skeptical.

    Don’t forget that the 32GB Surface would be roughly the equivalent of a 32GB new iPad, which lists for $599. Add roughly $100 for a case with integrated keyboard, and you can see a logical price point for the Surface RT, at least when compared to an iPad.

    The larger question, however, is whether Microsoft really intends to produce such a beast, and whether it will show up as promised around the same time as Windows 8, on October 26, 2012. At this point in time, the Surface tablets ought to be in the early stages of a production ramp. So all the specs would be known, and Microsoft would have a glimmer of an idea as to what the prices will be.

    More to the point, you’d think the media would be allowed more than 10 seconds to try one out rather than depend on a buggy and limited access demo to prove the product isn’t vapor. There’s little reason to assume that the Surface was anything more than a design concept presented as a wake up call to Windows OEMs who have announced tablets that are one step below garbage.

    I can see Microsoft’s desperation here. Apple dominates the tablet market with a close to 70% market share years after Microsoft and their OEMs tried and failed to make a dent. That is probably a huge reason why so many members of the media didn’t take Apple seriously when the first iPad appeared. Oh, it was just a bloated iPod touch, so why should anyone care?

    In passing, I suspect Apple may have been surprised at the iPad’s rapid take off, and the ease with which they got control of the nascent market. All the contenders are just copying Apple’s playbook, and some a little too closely, witness those intellectual property lawsuits. But I’m not about to predict the outcome of those legal cases. Judges and juries can be mighty unpredictable, and what seems to be a slam-dunk to an outsider may end quite differently. Well, before the appeals.

    Now if the Surface truly ends up as a real product, I suspect distribution will remain limited. Microsoft has only said it would be offered online and via their limited roster of retail stores. If early reviews are tepid — as they are for Windows 8 — there may not be enough interest to fuel expanded production.

    Or maybe Microsoft agreed not to devote too many resources to market the Surface out of respect for OEMs. However, since Microsoft double-crossed PlaysForSure partners with the Zune, a highly successful Surface launch wouldn’t deter them.

    But all this remains speculative. Microsoft has given no reason for anyone to accept the Surface as more than a preliminary and highly incomplete prototype. True, announcements may be made in the next few weeks that will invalidate that theory. But until that happens, if it happens, I find it curious that the media is again giving Microsoft a pass.You see article after article about the impact of the Surface, and the possible price points. But 10 seconds facetime doesn’t demonstrate anything, so why the rush? It would make more sense to challenge Microsoft to prove the Surface is nothing more than just more vapor? It’s not as if Microsoft hasn’t pulled such stunts in the past.

    On a practical level, giving Apple solid competition is a good thing. It keeps the company on its toes, and ensures better mobile gear. Despite my concerns about the security of the platform, it is obvious that Android is a real competitor. Yes, Apple earns more profits than handset makers who mostly build Android gear, but, with tens of millions of users out there, you have to take Android seriously.

    Microsoft? A real Surface tablet at an affordable price would be a start. But I’m not holding my breath.


    So first there was an Apple TV, a compact set top box used to store and watch video content, mostly from your iTunes account. The second generation ditched the regular hard drive and replaced it with a tiny amount of Flash storage to contain a streamed video buffer, the OS and some apps. But at $99, it couldn’t miss. Apple even sold a few million of them.

    The 2012 model, moving from 720p to 1080p — close to Blue-ray in actual picture quality — has reportedly resulted in even higher sales, some 1.3 million in the last quarter. The Apple TV as it is now, perhaps enhanced with some more video services, could become a reasonably hot ticket for the holiday season, where it may be a great stocking stuffer.

    But the real question is where Apple plans to take its hobby. That’s been the subject of lots of rumors in recent months. With that outspoken statement from the late Steve Jobs, that he had “cracked” the secret of building the best TV interface ever, as quoted in Walter Isaacson’s official bio, the media decided Apple wanted to build a real TV set.

    In recent months, there have been rumors that Apple was sampling parts for the new set. Just this week, it was reported that the product was already in production, with expected pricing in the $1,250 range. Assuming that’s for a 50-inch model, it would make it competitive with existing gear.

    Yes, I suppose a TV set with the Apple logo on it would, by the very nature of its existence, garner decent sales. But you wonder how Apple can make a difference in a highly saturated market where existing manufacturers continue to struggle to make profits. Would a unique interface be sufficient to take sales away from Samsung, LG, Panasonic, Sony and even low-end leader VIZIO?

    But Apple could deliver everything but the TV setup screens in an Apple TV set top box, perhaps with an expanded feature set that would include a TV/movie subscription option. So why build the whole widget?

    Could Apple deliver a noticeably superior picture when compared to existing models? Possibly, but new technologies, such as OLED, are notoriously expensive. A 50-inch OLED would cost considerably more than the best LCD flat panels. I suppose Apple could offer an LCD with improved viewing angles, richer blacks, better display of action scenes — in short, addressing the well-known shortcomings of LCD when compared to plasma. Perhaps the audio system could be improved. Not in the league of a $4,999 Bose TV, but something better than what most other TV makers offer. That would also make an Apple smart TV a potential success.

    But what if Apple merely intends to improve the set top box instead?

    This week, no less than the Wall Street Journal came up with a credible-sounding report claiming that Apple was busy negotiating deals not with the entertainment companies, but with the cable providers. So, if you are a subscriber to Time Warner, Cox, Comcast, perhaps even the satellite services, you could use an Apple TV in place of the service’s own set top box.

    This happens to be an idea I’ve thought about for a while, and suggested in these columns and on the radio show on several occasions. Having a major newspaper vindicate my theory is heartening, although it doesn’t mean the story is necessarily true. It could be that Apple has contacted the cable companies, but that nothing has come of those discussions yet. Maybe the story is being floated as a trial balloon.

    An added wrinkle is the follow-up story in the WSJ stating that Apple planned on blurring the distinction between live TV and the cloud. So when you store a show with a souped up Apple TV’s DVR record button, the actual show would reside on Apple’s servers, ready for streaming to your TV set. If you used the cable service’s own broadband network, all that the streaming content wouldn’t count against possible bandwidth caps.

    Now I don’t know if this theory will actually come to pass. It is an interesting alternative to building a separate subscription TV service, or even a TV set. But that wouldn’t necessarily stop Apple from doing both. Offer an Apple TV set top box that is compatible with cable and satellite services to existing TV owners. And offer an Apple “Smart” TV for those who want a new set built the Apple way.

    Or maybe none of this is true, but so long as people complain about cable and satellite services, expensive bundles with loads of useless channels, and especially those usually nasty set top boxes, the hope for an Apple solution will continue to fuel the discussion.


    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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    11 Responses to “Newsletter Issue #664”

    1. Don says:

      “I suppose it’s possible Microsoft would consider taking a $100-$200 loss on every unit sold to build market share, but I’m skeptical.”

      On this point I think it’s highly possible. A decade ago Microsoft sold XBoxes and lost $125 per unit to gain market dominance. They lost BILLIONS on the XBox while bragging about their sales numbers and not profits. And don’t forget their 50%+ failure rate on the XBox, too.

      So I see no reason why MS wouldn’t be willing to lose $300 or more per Surface sold and selling only “a few million” in the coming year. With the huge amount of money they expect (falsely?) to make on Win8 from OEMs, losing a mere 300 million (“mere” to them!) would be nothing as long as they could get units out.

      Remember, after more than a decade making tablets, they’ve been a dismal failure in this area. How much have they lost on R&D? Nobody but their bean counters knows. Losing a few hundred million to be players in the game is simply a viable strategy for them.

      • @Don, Isn’t the definition of insanity doing the same thing over and over again and hoping for a different result?


        • David says:

          @Gene Steinberg,

          But Microsoft wouldn’t be expecting a different result. They would be expecting the same thing as happened in the console market:

          The Xbox looked like a 3rd place loser when it came out, behind PS3 in graphics and Wii in both controller technology and price.

          Fast forward a few years and Xbox dominates console gaming by a wide margin.

          Microsoft got there by heavily subsidizing the hardware (I remember a lot of deals where I could’ve gotten a free Xbox just by signing up for internet or cell phone service) and pouring even more money into Xbox Live. Now with Kinect they can claim leadership in the user interface department too.

          Replace PS3 & Wii with iPad & Android and it becomes clear where Microsoft thinks they can get.

          • @David, The failed Nokia Lumia 900 smartphone was $100 cheaper than the iPhone 4s (price has since been cut further). But it still failed.


            • Steve says:

              @Gene Steinberg,

              Both Lumia and XBox are interesting comparisons to the Surface. A smartphone is closer to a tablet device than a game console, but it was only with XBox/XBox 360 that Microsoft produced both hardware and software (like Surface).

              One big advantage the XBox had over the Lumia is that it launched in a similar window as its direct competitors (PS2/Gamecube for XBox, PS3/Wii for XBox 360). The Surface is certainly not going to have that going for it.

              The Lumia hardware was only so-so compared to the iPhone and other smartphones, and a $99 price point isn’t all that much of a draw over entrenched competition at $199. If the Surface price is only so-so (for example $100 cheaper), its prospects will be dim just like the Lumia.

              This is Microsoft’s last, best chance at the tablet market. $199 would make waves, just not sure that’s even a feasible possibility.

    2. Chark says:

      Is this the same media that is still taking Obama-Biden seriously? That would explain a lot!

    3. Peter says:

      Don’t forget that the 32GB Surface would be roughly the equivalent of a 32GB new iPad, which lists for $599.

      And guesses of iPad cost are around $310. Microsoft has plenty of wiggle room there.

      That said, I could believe Microsoft will go with a $499 price for Surface. This gives it’s partners a chance to compete on price but still gives Microsoft an okay margin.

    4. mcdruid says:

      The Surface RT tablet is more of a competitor with the iPad 2 at $399. Granted the RT has more memory, but I’d bet that their OS is bigger – maybe much bigger, so the 32 GB will not be much of an advantage.

      That being said, Microsoft may try to subsidize the price to sell under cost. Until they get the antitrust suit for bundling.

      • @mcdruid, So long as Microsoft seems to be assuring OEMs that they will keep production of the Surface limited, I don’t think that you can expect aggressive pricing. Microsoft doesn’t want to seriously alienate the companies who license Windows for their products. Remember, the Surface is just a design point according to Steve Ballmer.


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