• Newsletter Issue #845

    February 8th, 2016


    I’ve written about 4K TV, a lot. Despite my interest, I don’t own a 4K set, but I’ve seen them at the local consumer electronics sections in Sam’s Club and on my occasional visits to Best Buy. Certainly if I had a large enough master bedroom, and a budget for a very large screen set, I might look into the possibilities — when the technology settles down.

    Well, on this weekend’s episode of The Tech Night Owl LIVE, we presented noted industry analyst Stephen Baker, Vice President for Industry Analysis at the NPD Group. He provided an extensive discussion about the arrival of 4K TVs, their success so far in the marketplace, Will enhanced color features, such as the Ultra HD Premium standard, continue to push sales? What about the lack of 4K content? Stephen also discussed flattening sales of iPhones and other smartphones, and whether one key reason is the longer upgrade cycle.

    Stephen is one of my favorite people, but he clearly represents industry players. What this means is that he will present their point of view and approach. With 4K sets occupying the higher end of the market, they are taking a larger percentage of industry profits. There are also cheaper 4K sets, sometimes not much more costly than a regular 1080p set. So as customers upgrade early generation flat panel gear, this is what they’ll buy, even if the visible benefits are little to none.

    And that’s the main problem with 4K. Consider that, with a 55-inch Ultra HD set, you need to be no more than eight feet away to see the enhanced resolution. With a smaller picture, or if you set any further from the set, the difference isn’t visible. So what good is it? Well, if you have a seven-year-old set, there are other improvements in picture quality you can detect. Also, as the new enhanced color and contrast features, collectively being branded as Ultra HD Premium, appear on more models, you will see a genuine 4K advantage regardless of display size.

    We also presented commentator and talk show host Kirk McElhearn, also known as Macworld’s “iTunes Guy.” He offered a change-of-pace discussion about the technology of dealing with autoimmune diseases. The discussion moved to why iPad sales are falling, and have fallen for several years. Is it much, again, about the fact that people who buy them see no reason to upgrade? Kirk went to explain that the older iPad actually works fine other than some possible performance issues with games and other software. He also cited an article, from tech columnist Jason Snell, about the rise of Chrome-books against iPads at budget-conscious school systems. And what about competition from cheap competitors, such as a $50 tablet from Amazon? What about Apple buying BMW? Are we serious?

    I’ll have more to say on the subject of refresh cycles in the next column.

    On this week’s episode of our other radio show, The Paracast: The Paracast explores cutting-edge theories about the paranormal with Eric Ouellet, author of “Illuminations: The UFO Experience as a Parapsychological Event.” In this book, Dr. Ouellet asks the compelling question, “What if UFO experiences are the result of large-scale, unconscious, psychic forces?” According to the promotional notes for the book: “In Illuminations, sociologist Eric Ouellet offers a novel approach to a phenomenon that has thus far resisted all other efforts to explain it, be it as extraterrestrial craft, time travelers, secret government projects, or natural phenomena.” The author is a professor of Defense Studies at the Royal Military College of Canada, and at the Canadian Forces College (Canada’s Joint Staff and War College). He has a Ph.D. in sociology from York University (Toronto, Canada).


    On occasion, I’ve read articles suggesting that Apple deliberately wants to make its gear obsolete, as soon as possible, so you’ll rush to buy the latest and greatest. Certainly the upgrade cycle is an important way of doing business. A company cannot always depend on attracting enough new customers, but selling more gear to existing customers — or services — keeps the business going in grand style.

    Now with Apple, the upgrade message has been mixed. If you have an older Mac, from 2007 to 2009, you can still install OS X El Capitan and get pretty decent performance. There are some hardware features that won’t work, such as Metal graphics support, and we already knew that the Handoff feature of Continuity was a non-starter on older hardware. It’s not that Apple will hold back new features because older gear, long out of warranty, isn’t supported. That equipment still otherwise works, however, which is a change.

    The same holds true for the iPhone and the iPad. iOS 9 supports the same gear as iOS 8. Not with the same features, and I wouldn’t shout about performance with the oldest models. But it does show in unusual commitment, although some might suggest that tepid performance may force customers to replace their iPhones, if that’s the hope.

    But it’s still true that the incentive to upgrade to the latest and greatest is no longer quite as compelling. Apple made a huge argument with the iPhone 6 and the iPhone 6 Plus. Those aching for iPhones with larger screens had their needs satisfied at long last, and that fed loads of demand. That demand appeared to continue unabated with the successor models, the iPhone 6s, and the iPhone 6S Plus. After stellar sales in the September quarter, with 13 million units sold the first weekend, Apple seemed to be walking on water.

    Economic headwinds in the December quarter, particularly in China, didn’t exactly help keep the growth going at the original rate. Sales hit a record, but just barely. The situation is expected to worsen at least for the current quarter, so is that the beginning of the iPhone’s alleged downfall?

    Or just a temporary speed bump?

    As a practical matter, it’s had a great run, and Apple still manages to earn the vast majority of profits in the smartphone industry. That is not expected to change. So is it mostly due to matters of economic struggles around the world, a lack of interest in the newest iPhone, product saturation, or the fact that people don’t feel as compelled to upgrade as they used to be?

    Starting in 2007, each iPhone release was a revelation. Loads of glorious new features and enhancements. But a point may have been reached where your existing iPhone, or whatever device you’re using, is good enough to meet your needs and the differences or improvements just aren’t so important. Besides, it’s not that the wireless carriers have necessarily  helped the situation.

    You see, when T-Mobile began it’s “un-carrier” marketing scheme in the U.S. and the rest of the major American carriers followed suit, the new practice unbundled the purchase of a mobile handset from your wireless service. Up till then, the usual service plan would require you to pay an upfront down payment for your handset — sometimes it was free for cheap or older models — with the requirement that you keep the deal for two years. If you wanted to go elsewhere, you’d need to pay an early termination fee.

    But after the two years expired, the price for service didn’t change. Might as well upgrade to a new phone and start it all over again. Nowadays, you buy the phone outright. Or you agree to some sort of rental or time purchase agreement. You can upgrade the phone every so often for the same monthly price, usually 12, 18 or 24 months, and just keep going. Or when your phone is paid off, the bill goes down accordingly. Suddenly you are paying less, and you have to make the decision whether to get a new phone or keep the old one working for as long as you can.

    Yes, I realize the pricing structures vary around the world.

    Indeed, just compare the things that change “everything” in the iPhone 6s/6s Plus? 3D Touch? I suppose. The improved camera, with the ability to shoot 4K videos, sure. If you own an iPhone 5s, the larger sizes enough may be compelling, the rest not so much. As iPhones get better, Apple is clearly running out of tantalizing things to add. It’s not that the technology doesn’t work and all, but the value proposition of these features in one’s day-to-day lifestyle is questionable, and perhaps if the existing iPhone is still working well, and the bill from the wireless carrier is suddenly reduced by $25-$35 after the thing is paid off, there will be a great incentive to stick with what they have.

    The iPad’s sales have fallen for months, and it’s not at all clear when the bottom will be reached. I have no doubt that Tim Cook is right that customer satisfaction is off the charts, but specifically what does an iPad Air 2 that an iPad 3 cannot accomplish; all right the former is much thinner and lighter. That’s a question not easily answered. iOS 9’s new multitasking features favor the newest models, but how many customers even care.

    Although Apple might want you to consider the iPad as a laptop replacement, it’s a consumption device for most users, and operates clumsily when trying to emulate some of the functionality of a MacBook. It’s possible future hardware and software enhancements, along with the work of other developers, will change that. But whether it’ll fuel an amazing upgrade cycle isn’t certain. Last year, the arrival of the iPad Pro, with productivity written all over it, didn’t exactly halt the sales decline; they were down by 25%. So it might well have been worse.

    Apple is staying in the tablet game for the long haul, and maybe a new refresh cycle and expanded business use will mean greater success. As it is the iPad still remains a business large enough to be the envy of most companies.

    But this is Apple.

    Long refresh cycles are common with personal computers too. This year’s Mac and last year’s are not so different. Slightly faster, slightly more frames per second on games, so it’s a big yawn. Force Touch is a necessity on the Apple Watch, but on a MacBook Pro? I’ve tried it on a Magic Trackpad II and color me unimpressed. Maybe it’ll catch on, but is it compelling enough to convince you to take a perfectly good Mac and buy a new one?

    Indeed, the most recent compelling product change of any note on Macs was adding 5K on 27-inch iMac, with a 4K model on the 21.5 inch model. Retina displays exist on MacBooks and MacBook Pros, and perhaps adding the feature on a MacBook Air — without seriously altering the price — will help fuel some upgrades. The arrival of the slim, trim MacBook last year certainly attracted sales, but nobody knows how much.

    But people who have personal computers are just delighted to keep the ones they have as long as possible. They are more reliable, too, so the incentive to change isn’t there. Another reason why Apple allowed El Capitan to run on those older Macs.

    One key point mentioned in the quarterly conference call with financial analysts last month is Apple’s increasing reliance on its services business. That’s a sign that things are changing. But so long as Apple can continue to produce products and services its customers love, it shouldn’t matter. Except to those who felt Apple’s sales numbers would forever grow at faster and faster rates into the stratosphere.


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

    Publisher/Editor: Gene Steinberg
    Managing Editor: Grayson Steinberg
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