Archive for the ‘ iPad ’ Category

Final Pre WWDC Thoughts

What’s going to happen Monday at the only real tradeshow/conference that Apple actually attends?

Stone Cold Locks

1. iOS 6 – Not that this was actually in doubt, but the banners at WWDC confirm the announcement of the new OS. In addition, iOS 6 will feature the start of the de Google-ization of the standard iOS apps with Maps being the first to fall.

2. New MacBooks of some kind. There’s some confusion over this announcement with some analysts predicting new MacBook Pros current form factor and new MacBooks with a new thinner form factor. Both will be available in 13/15 inch sizes. I just don’t see Apple making their product lineup confusing by having 13 inch Macbook Air, Macbook, and MacBook Pro. So new Macbook Pros or MacBooks but not both. And the new “MacBooks” are thinner, lighter, no CD/DVD, and SSD only. These new MacBooks will offer an retina display on some models.

3. Mountain Lion Gold Master release to developers, and release in the next 30 days.

Very Likely

1. New Mac Pros in a new case featuring Thunderbolt and USB 3.0. Apple has not updated this machine and it’s due for an update. But Apple could do something unique here with a new type of Mac.

2. Retina Display iMac in a new case. The iMac has been untouched for over 2 years as well. Not a radical redesign, but lighter and thinner.

Potentially Game Changing/Stock Skyrocketing

Apple TV SDK – new Apple TV OS and the OS for the eventual Apple TV display. This could be game breaking, the third tier for the iOS market. A serious long play product for Apple but when you have 100 billion in cash, then you can afford some longer play strategic initiatives. We will see some of the control elements via Siri? We will see how Apple TV can/will work with existing video feeds such as cable boxes? We will get to see some imaginative Apple TV Apps/Games?

This could be an iPhone type announcement moment if Apple has something to disrupt the current TV industry. It could also be a definitive sign that Apple can continue to innovate post Steve. In addition, who introduces this new OS will be interesting to track. A major new product initiative at a keynote could set the stage for the start of the Tim Cook era.

Small iPad or Large iPod Touch

There’s been a lot of great chatter this week about the smaller iPad with strong comments from Apple heavy hitters John Gruber, and MG Siegler, and others.  This story has been rattling around for months now.

It was quiet on this front, until John Gruber on his weekly podcast with Dan Benjamin “The Talk Show” indicated that “What I do know is that they have one in the lab. A 7.85 inch iPad that runs at 1024×768. It’s just like the regular iPad shrunk down a bit.”   Now, Gruber was clear to mention that right now the product may never see the light of day.

Now Gruber’s test machine represents the Small iPad part of this discussion. Ever since this idea of a smaller tablet has been active, the key question has been small iPad or big iPod Touch. Gruber indicates that Apple is thinking a small iPad that is the same resolution as the iPad2. This accomplishes one main goal which is no further fragmentation of the iPad lineup with just two resolutions to support. Now, the icons are smaller on the screen as are the controls/virtual keyboard but this size certainly appears to be workable. MG Siegler argues that this smaller iPad would make a great ereader as well as running all the other software of the iPad. This smaller iPad would be comfortable to hold in one hand due to decrease in size and weight. In addition, Apple could produce this device for a sweet price point in the $249 to $299. Placing an iOS branded competitor at the Kindle Fire’s price point.

Now while Gruber is suggesting the smaller iPad, Odi Kosmatos on his blog makes a compelling argument for a 7 inch iPod Touch Maxi. Again to avoid fragmentation and assist developers in supporting a new device, Odi suggests that a 7 inch screen is really just four iPod Touch screens and by making the resolution 1920 x 1280, Apple can use the pixel scaling that they use for the retina displays. This is the same argument for a bigger screen iPhone supporting this resolution. The same argument applies for this device. It’s lighter, will be cheaper, and can be held in one hand comfortably for reading. Odi argues that instead of slightly smaller icon targets like the Small iPad, this device will actually have larger icons than the iPod touch.

So making a giant leaping that Apple will ship such a product, which product is more likely? The beginning of Odi’s argument contains the now famous Job’s quote that folks would need sandpaper to file down their fingers for the smaller screens. Course Apple has frequently denied or even criticized products that they have later created/supported as MG Siegler points out.

Apple could easily do nothing, and continue with the 9.7 inch device only. However, the loyalty impact of getting customers into the Apple ecosystem is not an easy force to ignore. If a cheaper device increases Apple’s sales and increases the Apple halo then Tim Cook has to consider it. Finally, the most compelling argument for such a device is the rationale of be your own cannibal. If you are going to lose iPad sales, then lose those sales to a different sized iPad. There’s room for multiple sizes of devices as the 5 inch Galaxy Tabphone is suggesting.

The most logical option for Apple is the 7.85 inch Mini iPad with a resolution of 1024 x 768 for now, with a future retina resolution version down the road. Once Apple is able to retire the 1024 x 720 resolution specification, Apple can upgrade the iPad Mini and still only support two resolutions support for the iPad. If you think about it, Apple will retire “new” sales of iPad 2 next year when Apple switches to an all retina screen iPad lineup in 2013. Later in the year, Apple could shift the iPad Mini to a retina screen display, and only officially support two resolutions.

Apple to Announce a Monster March 2012 Quarter?

So MoD is far from a financial analyst type guy, but it’s easy to put 2 and 2 together, or put 2 stories together.

Evidence Item 1

Apple due to increased foot traffic volume at their retail stores is allegedly modifying their scheduling rules to increase coverage on Fri/Sat/Sun and increasing the minimum hours for part time employees. If the foot traffic volume has continued to the point of requiring a change in staffing rules, then it seems reasonable to assume that Apple’s stores have continued their amazing numbers in this 1st calendar quarter of 2012. The new iPad has probably boosted that foot traffic.

Evidence Item 2

Cannacord Genuity Analyst Mike Walkley has published a note to investors indicating that the iPhone 4s has been the best selling smartphone the entire quarter on AT&T, Verizon and Sprint. Walkley based on his data believes that the iPhone 4S has been outselling all other smartphones combined on AT&T and Sprint and equal to the volume on Verizon.

So the evidence would indicate that Apple’s momentum is just continuing, what could this mean in terms of reported earnings for the quarter in late April?

Fortune’s Philip Elmer-Dewitt posted his first earnings estimates tracking chart, and right now the Wall Street Pros have Apple at $35.88 billion. The independent analysts like Horace Dediu, Robert Paul Leitao, Daniel Tello, and Andy Zaky  have Apple at $42.68 billion, or a difference of $6.8 billion. If the independent analysts are close to being right, Apple will have had a year over year increase of nearly 72%. For some perspective in  April 2010 Apple announced earnings of $13.5 billion, so Apple could in two years have potentially increased revenue nearly 200% in two years.

How does Apple get close to those numbers according to Horace Dediu?

  • 37 million iPhones
  • 12 million iPads
  • 4.7 million Macs
  • 7 million iPods

So it’s quite possible that Apple’s winter Quarter numbers could come close to matching the sales of their holiday quarter of 2011. Which begs the obvious question of what numbers Apple might hit for the rest of the calendar year.

AAPL hits $600, iPad (3) hits 3 Million, iPad (3) costs…

So some number topics to discuss.

First, AAPL just hit 600 today fresh off the announcement of a dividend and a repurchase of stock program. The stock shows no signs of slowing down and now that Apple has provided some answers on dispensing of their cash that issue is also resolved. The dividend also opens up AAPL to a whole new class of investor further increasing the interest in AAPL. Dec 31st 2011 AAPL was at 405, now it just went over 600. To quote Tim Cook “the pipeline is full”, new laptops are coming (Retina Screen MacBook Pros?), the new iPhone (5), and perhaps the iTV product.

Apple in their press release stated that they have sold 3 million iPads over the weekend. That number probably represents sales at all retail locations sales and pre-orders delivered on Thursday/Friday/Saturday. In terms of comparison, Apple was projected by analysts to have sold 1 million iPad 2 last year. Apple’s supply and manufacturing teams were ready for this launch with the kind of inventory numbers that were not available last year. In addition, Apple’s launching in more countries faster than ever with their best equipped/most standards compliant 3g/4g/LTE device ever. Apple was only able to sell slightly over 4 million iPads last year in their product version transition quarter. If Tim Cook has the supply chain able to ramp up quickly to provide significant inventory, it bodes well for Apple’s numbers all year long with a calendar full of potential new launches.

A couple of small notes. One, at the two Apple Stores I visited the stores had inventory save for 64GB LTE versions, or Apple’s highest margin product. Two, 4G LTE versions seems to be far more popular than their previous 3G counterparts. Still, not as popular as the WiFi only version but it looks like the percentage is narrowing and there’s significant margin/revenue there for Apple as well as making Apple very popular with Verizon and AT&T. Also, the rumors sourced from repair facilities receiving spare parts of the new iPad were all on target. When all the hype starts around the iPhone 5, this will be MoD’s benchmark for tracking this rumor. Also, as we have speculated before the supply chain for the iPhone may be so massive that Apple will really has no chance of unveiling a legit surprise. And it doesn’t need to, it’s far more important that Apple has 20 to 30 million iPhone 5s ready in the pipeline at launch.

So how did Apple add a Retina display, better camera, bigger battery, and better processor. iSuppli has done their usual thorough job at estimating the cost of the device and estimates that Apple is going to take a margin hit on the new device since it will cost 30% more than the iPad 2. The older iPad 2 WiFi according to their projections cost $245 while the new iPad 16 GB WiFi is $316. While it’s understandable that the new screen is going to cost Apple more, you have to wonder if iSuppli can accurately project what Apple is paying for solid state storage or what Apple is paying for the 5 MP camera parts (same camera part as the now 2 year old iPhone 4). And if the Retina display and LTE lead to a higher mix of 32 GB + models with LTE, then Apple can easily offset the costs with the higher margin versions.

Now, if we take the iSuppli data at face value, it presents a bigger problem for Apple’s competitors. Apple has better component buying power than any competitor save for Samsung, so hitting a lower price point on a similar equipped retina screen iPad is going to be difficult. But let’s say that for arguments sake a competitor can match Apple’s price point, same hardware overall specs. In order to have a significantly cheaper product than Apple, the competitor would probably need a $399 price point matching the iPad 2 price with higher specs to really dent Apple on price. Factoring in retail markup of about 10%, a manufacturer is going to have to survive on about 40 bucks or 10% margin on the product. Again, no one has been able to match Apple’s pricing on components to date (last year’s XOOM was more expensive than the iPad2 according to iSuppli), and the new display requirements may only increase that gap.

iPad Resolutionary Event Recap

It’s funny reading some of the comments about the event today. So many writers/tech bloggers completely missing the point of the event and Apple’s overall strategy.  So what should they be talking about?

1. Doubling the screen resolution while holding the line on price is absurd. According to iSuppli for the iPad 2 the screen is almost 38% of the total cost of the iPad 2. So for Apple to have “innovated” in their production and supply chain to source this new screen and not increase price is amazing. Sarcasm intended. If Apple is able to move the MacBook Pros to Retina type screens at the same price, media members would be going crazy with praise.

Tech folks should NOT underestimate the impact of this new screen. This screen update is equal to a brand new form factor design with a brand new operating system. It’s that big a selling point.

Also, Apple’s main competitors are all spec followers/spec junkies. Other than maybe Samsung, the competitors are going to have a incredibly hard time matching $499 with no contract and a Retina Display. It’s also going to be a problem for Windows tablets, but more on that later

2. The new iPad’s WLAN/Cellular data chipset with support for almost every communication standard is a clear sign of the capabilities of the upcoming iPhone 5. It will have LTE in the US. It will support every version of 3g GSM in Europe and elsewhere. The new iPhone could support T-Mobile if an agreement can be reached. It will support powerhouse carrier China Mobile’s proprietary LTE/CDMA standards. Basically, Android will have no carrier safe havens any longer. Both LTE and the new chipset are getting a test run in the new iPad before the global iPhone 5 launch.

3. iOS 6 was never mentioned once. It’s out there. It’s in development. Apple is a dual headed monster of hardware and software. We just got the hardware part. The software part is coming.

4. He’s not Steve, but in his own way Tim Cook did an excellent job handling the event today. Apple is featuring more of key executives like Eddy Cue, but Cook handled the bulk of the event.

5. Android tablets have to little to no momentum right now. Apple just moved the benchmark in hardware, and the tablet software market is only becoming more and more dominated by Apple.  Android tablets manufacturers seem to still be hoping that the carriers can sell devices with contracts. The tablet market though is very different than the smartphone market.

6. Apple probably has 6 months of free reign until the first Windows 8 ARM based tablets are released with Metro based (tablet/touchscreen) apps. Windows 8 tablets seem like the only thing that can stop the iPad juggernaut. We still have not seen a single estimated price of a 10 inch ARM or Intel tablet (and I suspect the Intel versions will be more expensive with perhaps worse battery life). Still the MS brand and MS Office are familiar safe places for corporations and could slow iPad adoption in the enterprise.

7. Horace Dediu on his podcast today talking about the keynote made an interesting suggestion. Rather than the alleged 7 inch device being an iPad Mini, it will be an iPod Touch HD or XL. The iPad will always be 9.7 inches/10 inches. But Apple to counter the cheaper small market, will instead market a new expanded iPod Touch. It will run iPhone not iPad apps. If Apple increases the screen size on the iPhone 5, then Apple will need to figure out a second resolution/size for iPhone apps, perhaps Apple can figure out to support a 3rd screen size/resolution as well. A $299 iPod Touch HD along with bigger screen regular iPod Touch (mirroring the screen format of the new iPhone)  at $199 would place great pressure at the low end. With the older generation iPad working as a $399 barrier at the other end. Seems unlikely, but Apple did not update the iPod Touch at all last year so Apple could take the product in a radical change of direction.

An Estimate of Apple in 2013

The stats around Apple keep getting higher and harder to absorb.

$47 Billion in revenue for a quarter, nearly $100 billion in cash, 37 million iPhones sold, Apple if you count the iPad is the largest PC vendor in the world, Apple is the world leader in smartphones sold, the list goes on and on. Can this amazing growth for Apple continue?

There’s an interesting cadre of independent (amateur) analysts that predict Apple’s quarterly numbers and therefore have to provide estimates on Apple’s sales numbers of iPhones, iPads, and Mac.

Routinely these independent analysts do a better job predicting Apple’s revenue numbers than the professional Wall Street Apple analysts. You’ve seen MoD reference Horace Dediu before with his great charts displaying Apple’s surge into the smartphone industry. Horace of asymco.com is one of these top independent analysts.

Well another member of this club is Daniel Tello who uses the nom de internet of Deagol. Recently, Deagol published a fascinating article about the potential growth of Apple’s products.

So based on the charts in the Deagol report (and he’s suggesting reasonable growth curves based on historical data factoring in both new customers and existing users upgrading hardware)  Apple  in 2013 could hit the following numbers;

Macs – 27 million for (presuming an ASP of $1250) $34 billion

iPhones – 180 million for (presuming an ASP of $600) $108  billion

iPads – 90 million for (presuming an ASP of $590)  $ 53 billion

iPods – the only product category that is in decline 25 million  for (presuming an ASP of $160) $ 4 billion

to get a potential total revenue count from these numbers, MoD added in an additional  8%  for  software, peripherals, iTunes Store, App Store, etc (that percentage comes from Apple’s most recent quarter) and Apple would post annual revenue in 2013 of $216 billion (nearly doubling revenue again from 2011) with a potential profit of over $61 billion.

iPad 3 Launch Thoughts

So it’s the world’s worst kept secret at this point that the iPad 3 will be announced on March 7th will availability to follow some time after that in a 9 to 10 day window.

What does the tech blogging world think they know?

1. Retina/High Resolution screen is a lock. Some bloggers are already downplaying this feature, but until we have a chance to see this new screen in action it’s going to be impossible to predict how big this feature could be.

2. Quad Core/Dual processor. Quad core processors will be appearing in Android devices throughout the rest of this year, but the iPad is an area where Apple has been forcing their competitors to play follow the leader. So MoD is betting Quad Core.

3. Vastly improved graphics processor.  And expect to hear some gaudy stats around this new graphics processor at the event.

4. LTE. So let’s get the obvious out of the way, Apple will utilize a chipset that combines GSM/CDMA. That combo iPad will be sold on Verizon/AT&T/Sprint. Now will this iPad 3 have LTE? MoD thinks offering LTE with the iPad is a great soft launch for the iPhone getting LTE later this summer.  So LTE iPad, yes.

5. iPad 2 will continue to be sold at a lower price. Expect it to be the WiFi only version with 16 GB of storage. $399 seems like an obvious price point.

What’s not going to happen?

1. No SD card slot. Just not going to happen.

2. No dedicated USB port.

3. Now the biggest rumor/story that is out in there, the 8 inch iPad or iPad Mini. Now is an 8 inch iPad a possibility? Definitely,  as we know from Jobs’ biography and the mass of articles written about the development of the iPad, Apple tried literally dozens of screen sizes and ratios (as well as screen resolutions) before settling on a 9.7 inch screen with a 4:3 ration. This smaller iPad rumor tends to make the rounds once every 3 months. Back in December,  MacRumors even went as far as to create some printable mockup of what a 7.85 inch iPad would look like.  Based on those printable mockups, an 8 inch iPad (which would only be slightly larger) seems like a very useable product. The resolution could be the same as the current iPad 2, reducing issues with product fragmentation. Icon size seems fine as does the virtual keyboard size.  So why won’t this product happen? Well the biggest issue would seem to be price point and where does it fit in with the current Apple product lineup. Presume that MoD is correct about some product pricing moving forward;

  • $399 iPad 2 16 GB
  • $499 iPad 3 16 GB
  • $199 iPod Touch 8 GB

Where exactly from a price point stand point does the iPad Mini fit? From just an iPad product standpoint, a $299 16 GB iPad Mini might be about right. Also, 3g for the smaller iPad Mini seems like an obvious optional feature. However, it creates problems for Apple with the iPod Touch in terms of pricing and feature set. iPod Touch maintains Apple’s portable non iPhone/non contract product. The iPad Mini is not going to be pocket portable, and a low price point will hurt the perceived overall value of the iPod Touch. Apple didn’t really update the iPod Touch in the fall so the future of the product is in doubt. Although, Apple might simply be waiting to update the iPod Touch with the new form factor of the iPhone 5. Still MoD just doesn’t see a niche for the Mini iPad, yet. The best argument against the iPad Mini for now, why take money off the table by offering a cheaper product? However, Apple’ s mantra “cannibalize your products before someone else does” could mean that Apple is preparing this product to counter future color LCD Kindles. And $299 iPad Mini v $199 Kindle Fire is very interesting customer decision.

Wildcard for iPad 3 Launch

Now Apple often plays a dangerous game with accessory companies by releasing their branded products such as the Smart Cover. Now, if there’s one area where accessory makers have not quite hit the right target it’s in the combo case/keyboard product to go with the iPad. Products like the Zagg Folio, this product from Brookstone, finally the laptop like Clamcase are all really close but no one has nailed it. In a recent discussion about ARM based laptops, Tim Cook indicated that he felt like innovation in the area of the iOS/iPad would soon meet the needs of folks wanting an ARM laptop. His statements cold be interpreted many ways but what if Apple at the iPad 3 launches the newest accessory some form of slide out keyboard smart case. Adds a keyboard but does not add the weight or bulk of the other current solutions. No one saw the magnetic Smart Covers coming, maybe Apple has a new high margin accessory ready to reveal.