Apple Talk Weekly: Apple's market-cap shuffle
Apple releases $999 Thunderbolt-free iMacBefore getting your hopes up, this new iMac is effectively a kiosk unit, with less RAM and no Thunderbolt port. It's also only for education buyers, so it's probably not something you're in the market for. Still, it's a sub-$1,000 iMac that comes in $200 less than Apple currently charges for its entry-level model. Apple updates recycling program to include iPhone, iPad buybacksAn update to Apple's reuse and recycling program that's a result of a partnership with PowerON means people with old iPhones, iPads, and Macs can get money back for their old stuff. Don't expect cash though--Apple is doling out gift cards that can be used in its retail stores or online stores. Apple disk assistant app lets you make your own Lion recovery toolApple's new software tool lets you turn an ordinary blank drive (including a hard drive or USB stick) into a recovery image of your system. Apple is offering it as a backup in case you can't start your computer with Lion's built-in recovery drive partition, or you've just popped a new hard drive in your system without Mac OS X on it.Legal news of the weekApple gets injunction against Samsung's Galaxy tablet in EuropeThis preliminary injunction, which went in Apple's favor this week, means Samsung can't sell its Galaxy Tab 10.1 in all of Europe, except the Netherlands. A hearing scheduled for later this month will let Samsung fight the action. Apple and Samsung are embroiled in similar legal battles with each other in the U.S., both with lawsuits and with complaints to the U.S. International Trade Commission. (Note: Apple filed a similar suit against Motorola in the EU over the design of Motorola's Xoom tablet).Prosecutors file charges in prototype iPhone caseRemember the iPhone 4 that was left in the bar and wound up on Gizmodo months before Apple took the wraps off it at last year's WWDC? The San Mateo County District Attorney's office this week filed criminal charges against two men who were involved in the alleged theft and subsequent sale of that device.An arraignment has been scheduled for later this month. The outside of the fake Apple store in Kunming, China.BirdAbroadApple sued for Fast Boot patentA lawsuit from entity Operating System Solutions takes aim at Apple's Mac OS X for violating a patent it owns for quickly booting up an OS. What's interesting about that patent is that it was originally owned by LG, which supplies Apple with components it uses in its electronics. The patent changed hands in 2008 as part of a reissuing. Apple, others sued over e-book price fixingApple was named along with a handful of major book publishers like the Penguin Group and Simon & Schuster in a lawsuit saying those companies "colluded to increase prices" on popular books by using an "agency model" versus the traditional wholesale model. 22 more fake Apple stores found in ChinaFollowing an investigation, 22 additional local Chinese retailers were found to be selling goods under Apple's banner without permission to do so. The finding comes after international attention on counterfeit Apple stores made waves last month. The key thing here is that this was just one city within the country. A similar crackdown in another part of the country found an additional crop of stores.Rumors of the week: September iPod event, iCloud phonesA report by Japanese tech news site Kodawarisan made waves this week, claiming Apple planned to announce a new lineup of iPods at an event on September 7. That date's not all that hard to believe, considering it's around the same time the company takes the wraps off that line of devices. The report was later rebuffed by Apple tracker Jim Dalrymple, who, citing anonymous sources, said there's no event or phone launch planned for that date. AllThingsD's Kara Swisher later weighed in as well, once again reiterating the outlet's claims that Apple plans to debut the new device in October.The invite to last year's Apple music event, where the company unwrapped new iPods.AppleThe day before all this, a separate report by Apple news site Apple 'N' Apps claimed Apple would be taking the wraps off a new phone that would drop some of the storage, instead making use of iCloud's storage features to stash away and access data. Between the two, the so-called "iCloud iPhone" is the far more interesting rumor. iPods now play second fiddle to the iPhone both in terms of sales and buzz. The prospect that Apple is somehow working on a second tier of iPhone has been kicking around for years, though it's of special interest now that Google's Android platform has made considerable gains--in part because it's available in different form factors.In this case, the paid storage aspect of iCloud, mixed with a device with little on-board memory could provide an additional way for Apple to make money after a user buys the hardware. The big blocker? Short of what Apple's recently done with itsTV show streaming, iCloud is not a streaming service for things like movies and music--the items that can really take up space on these devices. And how would this work with apps, some of which can take up room? Those are all things that would need to be answered with such a device. Patent of the week: Projectors in your gadgets for a shared displayAn Apple patent applicationthat surfaced this week offered the tantalizing prospect of not only putting projectors in gadgets like phones, tablets, and notebooks to display content on nearby walls or presentation surfaces, but also giving those devices a way to talk with each other to make a big, shared workspace. Apple's multidevice projector patent promises to blend screens from multiple devices into one.USPTOIn the patent this is depicted with images of phones and computers blasting out images of scatter plots and pie charts, but the same technology could also theoretically be used to let you stitch together those projections into a nice big wide screen, perfect for watching movies, or, say, putting nine iPhones together to see photos in their native resolution. Reader question of the weekCNET reader Michael S. asks:Hi Josh, I enjoy reading your work on CNET.In regards to cloud computing, I have been busy digitizing my CD collection, and on my iPod Touch I'm at about 24GB of music in my iTunes library. Thus, going on what you wrote, it's going to cost me a chunk of change to put that on the cloud, right? As you can probably tell I'm no Apple--or for that matter PC--black belt, but as I understood the promo launch Steve Jobs did, I upload my music, they convert it to 256(Kbps) quality, and it's goodbye CDs. Now I understand it to mean basically it's going to cost me $100 a year. Am I missing something? AppleA: OK, here's the thing about storage on iCloud: if you've purchased anything from Apple, it doesn't get counted. And anytime you want to go redownload that music on another device attached to your account, you can do it free of charge. Considering your library is made up of non-iTunes purchases, what you're going to need is the upcoming iTunes Match service. For $24.99 a year, Apple will scan your library (all 24 gigs of it), then cross-reference that music with what's in its iTunes Store library. If it finds a match, you effectively own a cloud license of that track for as long as you're paying Apple for the Match service, meaning you can download and use the high-quality version of it on other devices just as if you had bought it through Apple. Anything else that's not included in that match goes against your regular iCloud storage. So if you plan on storing a copy for safe keeping and it ends up being more than 5GB, you'll need to upgrade to one of Apple's paid storage plans.One other caveat with iTunes Match is that it's limited to 25,000 songs, meaning if you have a library bigger than that in terms of song volume, only 25,000 songs of that library will get indexed. Note: If you have any of your own questions that you'd like to see answered in this weekly column, use the e-mail link right below this article. If I can't get to your question, I might pass it on to my colleagues over at MacFixIt, who run MacFixIt Answers.
Microsoft on iTunes in 2003- 'We were smoked'
Microsoft on iTunes in 2003: 'We were smoked'
One of the most interesting follow-ups comes from Groklaw, which dug up some e-mails placed into the public record a few years ago during an antitrust case against Microsoft. (These materials have been a treasure trove of interesting and sometimes-embarrassing internal communications, including then-Windows chief Jim Allchin's 2004 admission that he would have bought a Mac over a Windows PC at that time.) Almost immediately after Apple launched the iTunes Music Store in April 2003, Microsoft Chairman Bill Gates sent an e-mail to a bunch of folks in the Windows Media and MSN groups praising Steve Jobs' ability to get "a better licensing deal than anybody else has gotten for music." He continued, "We need some plan to prove that even though Jobs has us a bit flat-footed again, we move quick, and both match and do stuff better." Allchin added his opinion in a follow-up e-mail: "We were smoked."A bit of historyAt the time, the major record labels had built a couple of music stores, as well as online-delivery platforms Pressplay and MusicNet, which were almost universally panned for their lack of usability. Initially, songs purchased through the services couldn't be burned to CD or transferred to any portable device. Other online music stores were similarly hampered. By the time Jobs struck his iTunes Music Store deal, the labels had loosened these restrictions only slightly, and they still required users to pay a subscription fee for a limited number of downloads or streams. Jobs was able to get consistent (99 cent) single-song download pricing, unlimited CD burning, and--critically--unlimited transfers to the iPod. As Allchin asks, "How did they [Apple] get the music companies to go along?" Jobs' personal magnetism, as well as status as a Hollywood insider through his founding of Pixar Animation Studios, probably had some effect. But more importantly, the iTunes Music Store was originally Mac-only. The Mac had less than 5 percent market share at the time, so content owners probably figured that allowing single-song downloads into such a small market would provide a good test bed for Apple's FairPlay DRM system and pricing model. By the time Apple was ready to launch the Windows version of iTunes in October 2003, Apple had sold 13 million songs through the service, outpacing all other music stores, despite the Mac's small market share. In other words, FairPlay and the consistently priced single-song downloads worked. Almost seven years later, the iTunes Store is the largest music retailer in the United States, online or offline, and most of the stores based on the Windows Media Platform (including MSN Music) are out of business or have moved to selling unrestricted MP3 files. Getting back to Dick Brass's criticism of Microsoft, I find it fascinating that top Microsoft executives were aware almost immediately of the threat the iTunes Music Store posed to the whole Windows Media ecosystem, but Microsoft was still unable to stop it. This matches what I've seen time and time again in my last 10 years following the company. Microsoft has some smart executives who can quickly and correctly assess market changes and opportunities. Often, they come up with a good strategy to capitalize on those changes. But somewhere between strategy and execution, the thread is lost. Windows Media and Zune are most relevant to this blog, but you can see it elsewhere: online advertising, search, and mobile phones, to name three obvious examples.
One of the most interesting follow-ups comes from Groklaw, which dug up some e-mails placed into the public record a few years ago during an antitrust case against Microsoft. (These materials have been a treasure trove of interesting and sometimes-embarrassing internal communications, including then-Windows chief Jim Allchin's 2004 admission that he would have bought a Mac over a Windows PC at that time.) Almost immediately after Apple launched the iTunes Music Store in April 2003, Microsoft Chairman Bill Gates sent an e-mail to a bunch of folks in the Windows Media and MSN groups praising Steve Jobs' ability to get "a better licensing deal than anybody else has gotten for music." He continued, "We need some plan to prove that even though Jobs has us a bit flat-footed again, we move quick, and both match and do stuff better." Allchin added his opinion in a follow-up e-mail: "We were smoked."A bit of historyAt the time, the major record labels had built a couple of music stores, as well as online-delivery platforms Pressplay and MusicNet, which were almost universally panned for their lack of usability. Initially, songs purchased through the services couldn't be burned to CD or transferred to any portable device. Other online music stores were similarly hampered. By the time Jobs struck his iTunes Music Store deal, the labels had loosened these restrictions only slightly, and they still required users to pay a subscription fee for a limited number of downloads or streams. Jobs was able to get consistent (99 cent) single-song download pricing, unlimited CD burning, and--critically--unlimited transfers to the iPod. As Allchin asks, "How did they [Apple] get the music companies to go along?" Jobs' personal magnetism, as well as status as a Hollywood insider through his founding of Pixar Animation Studios, probably had some effect. But more importantly, the iTunes Music Store was originally Mac-only. The Mac had less than 5 percent market share at the time, so content owners probably figured that allowing single-song downloads into such a small market would provide a good test bed for Apple's FairPlay DRM system and pricing model. By the time Apple was ready to launch the Windows version of iTunes in October 2003, Apple had sold 13 million songs through the service, outpacing all other music stores, despite the Mac's small market share. In other words, FairPlay and the consistently priced single-song downloads worked. Almost seven years later, the iTunes Store is the largest music retailer in the United States, online or offline, and most of the stores based on the Windows Media Platform (including MSN Music) are out of business or have moved to selling unrestricted MP3 files. Getting back to Dick Brass's criticism of Microsoft, I find it fascinating that top Microsoft executives were aware almost immediately of the threat the iTunes Music Store posed to the whole Windows Media ecosystem, but Microsoft was still unable to stop it. This matches what I've seen time and time again in my last 10 years following the company. Microsoft has some smart executives who can quickly and correctly assess market changes and opportunities. Often, they come up with a good strategy to capitalize on those changes. But somewhere between strategy and execution, the thread is lost. Windows Media and Zune are most relevant to this blog, but you can see it elsewhere: online advertising, search, and mobile phones, to name three obvious examples.
Apple's set-top box cure- A TiVo acquisition
Apple's set-top box cure: A TiVo acquisition
Apple is reportedly in talks with cable manufacturers to make set-top boxes that would sort of reinvent TV, but there's an easier and more obvious route for Apple to take: buy TiVo.The Wall Street Journal has chimed in on Apple's set-top box plans for two consecutive days. The first story highlighted how Apple is in talks with cable operators to be set-top box partners. Today, the set-top box market is dominated by Motorola Mobility, now owned by Google, and Cisco via its Scientific Atlanta acquisition years ago. If these reports are true -- and frankly they could just be a diversion to take focus off of an iTV -- Apple has decided that if it can't beat the content-cable establishment, it'll join them, with a few new icons and the familiar iOS interface. Bernstein Research analyst Carlos Kirjner said in a research note:Ever since Walter Isaacson's biography of Steve Jobs was published, speculation has swirled over how Apple might re-invent the pay TV business. Today's reporting by the WSJ suggests that Apple is now exploring the possibility of cooperating with the incumbent ecosystem, a departure from previous speculation that Apple might produce its own television and/or license content directly from studios. While the release of a potential set-top box is consistent with our long-held belief that a modified set-top box was a more likely path for the company than an Apple television, possible cooperation with the cable operators does appear to represent a scaled back set of ambitions for Apple, from complete re-invention to something like cooperation. And that's if they can reach a deal at all. If you can't beat 'em, join 'em.The big question here is whether Apple would really get into a low-margin set-top box business. Kirjner noted that even if Apple sold 50 million set-top boxes (a sum that's a bit nuts) in 2014, it would amount to 5 percent of revenue. If you boosted iTunes sales, there would be more return, but iTunes is only 3 percent of revenue. In other words, Apple's set-top box route is a lot of headaches for an iOS halo effect.What's a shorter route to TV set-top box utopia? Just buy TiVo.Alfred Fried & Co. analyst Rich Tullo floated the TiVo idea in a research note. His reasons for arguing that Apple should buy TiVo go like this:Apple could acquire TiVo for $1.5 billion to $2 billion. Apple could reverse engineer set-top boxes for $500 million, or buy TiVo, which would probably sue Apple anyway. The TiVo box would become an iBox. TiVo has valuable intellectual property for Apple. Cable companies already have deals with TiVo. TiVo has been selling set-top boxes in the aftermarket, and Apple could provide support with its genius bars in its retail stores. Manufacturing costs would go down for these set-top boxes because of Apple's massive supply chain. Tullo said one wrinkle in the Apple-TiVo argument boils down to an intellectual-property lawsuit with Verizon starting September 12. If TiVo wins a settlement, Motorola and Cisco are likely to settle. A global IP settlement would make TiVo worth even more to Apple. Bottom line: If Apple is seriously considering the set-top box market, it has to be looking at TiVo. An acquisition is the best and quickest way toward upending Google-Motorola in the living room.
Apple is reportedly in talks with cable manufacturers to make set-top boxes that would sort of reinvent TV, but there's an easier and more obvious route for Apple to take: buy TiVo.The Wall Street Journal has chimed in on Apple's set-top box plans for two consecutive days. The first story highlighted how Apple is in talks with cable operators to be set-top box partners. Today, the set-top box market is dominated by Motorola Mobility, now owned by Google, and Cisco via its Scientific Atlanta acquisition years ago. If these reports are true -- and frankly they could just be a diversion to take focus off of an iTV -- Apple has decided that if it can't beat the content-cable establishment, it'll join them, with a few new icons and the familiar iOS interface. Bernstein Research analyst Carlos Kirjner said in a research note:Ever since Walter Isaacson's biography of Steve Jobs was published, speculation has swirled over how Apple might re-invent the pay TV business. Today's reporting by the WSJ suggests that Apple is now exploring the possibility of cooperating with the incumbent ecosystem, a departure from previous speculation that Apple might produce its own television and/or license content directly from studios. While the release of a potential set-top box is consistent with our long-held belief that a modified set-top box was a more likely path for the company than an Apple television, possible cooperation with the cable operators does appear to represent a scaled back set of ambitions for Apple, from complete re-invention to something like cooperation. And that's if they can reach a deal at all. If you can't beat 'em, join 'em.The big question here is whether Apple would really get into a low-margin set-top box business. Kirjner noted that even if Apple sold 50 million set-top boxes (a sum that's a bit nuts) in 2014, it would amount to 5 percent of revenue. If you boosted iTunes sales, there would be more return, but iTunes is only 3 percent of revenue. In other words, Apple's set-top box route is a lot of headaches for an iOS halo effect.What's a shorter route to TV set-top box utopia? Just buy TiVo.Alfred Fried & Co. analyst Rich Tullo floated the TiVo idea in a research note. His reasons for arguing that Apple should buy TiVo go like this:Apple could acquire TiVo for $1.5 billion to $2 billion. Apple could reverse engineer set-top boxes for $500 million, or buy TiVo, which would probably sue Apple anyway. The TiVo box would become an iBox. TiVo has valuable intellectual property for Apple. Cable companies already have deals with TiVo. TiVo has been selling set-top boxes in the aftermarket, and Apple could provide support with its genius bars in its retail stores. Manufacturing costs would go down for these set-top boxes because of Apple's massive supply chain. Tullo said one wrinkle in the Apple-TiVo argument boils down to an intellectual-property lawsuit with Verizon starting September 12. If TiVo wins a settlement, Motorola and Cisco are likely to settle. A global IP settlement would make TiVo worth even more to Apple. Bottom line: If Apple is seriously considering the set-top box market, it has to be looking at TiVo. An acquisition is the best and quickest way toward upending Google-Motorola in the living room.
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