Apple Bred A Secret New Cat

MoD argued last year that Apple was getting so big that perhaps it was unable to really surprise the tech media any longer. And while that maybe true for the iPhone and iPad, Apple still has a trick or two in their super secret HQ.

MoD would love to link to any rumor sites story prior to today on OS X Mountain Lion, but they don’t exist. Not a single site had the codename/product name right. Now, some of the rumor sites did accurately guess some of the features, namely iChat becoming Messages, further iCloud integration, and a Notification application for OS X. However, no rumor site came close to predicting an OS X update being released this summer.

While the update has a number of interesting features, here’s an excellent recap of the features by MacWorld writer Jason Snell. There are several items about OS X Mountain Lion that are interesting about the future of Apple.

OS X Mountain Lion looks like a great update and while Apple didn’t announce a price for its’ newest cat a price figure of $19.99 seems logical, certainly no more than Lion’s cost of $29.99. With so much hardware revenue, Apple seems almost disinterested in OS update revenue.  Apple is more interested in folks upgrading their OS to the latest version. Microsoft cannot be happy about this trend from Apple, and is going to have to be very careful about how it pitches OS costs for both tablets and PCs that use the “same” version of Windows.

Apple instead of a media event to release the new software invited a half dozen of the most influential tech media for a personal media event at Apple HQ. John Gruber over at Daring Fireball has a great description of his personal media event. Apple seems focused on releasing new initiatives when they are ready, but also not abusing their media event buzz. iPad 3 will get the next media event slot in March, but Apple didn’t want to wait to launch the developer release of OS X Mountain Lion. It was ready to go, and now developers have time to be ready for WWDC and a summer launch. Also, despite just a handful of media members getting an early preview the news was all over the tech blogs by 10am that morning. In a Twitter universe the right 3 tech bloggers have the same impact as 200 media members.

Tim Cook recently discussed the iPhone Halo where Apple had 180 million iPhone users who were now also potential Mac and iPad customers. With that ever increasing population in mind, Apple is going to make OS X as user friendly as possible to the iPhone base. iCloud is being developed as the bridge to make a for a seamless user experience.  Apple wants users to have the same experience of accessing their key data across the two platforms without thinking about it.

OS X is going to get yearly updated for the near future. Instead of de-emphasizing OS X, Apple is going to expend a lot of energy to make sure that the OS X is in sync feature and capability wise with its’ multi-touch twin iOS who will be getting an upgrade to version 6.0 this summer. In addition, this yearly update indicates that Apple has expanded their OS development team to support annual upgrades to both OS X and iOS. Perhaps, a clear sign that Apple recognizes that it is a $120+ billion a year company, and has to have the resources to act like one.

Speaking of iOS 6, iOS 6 could easily get the same special invite media request treatment. March is going be all iPad 3 all the time. So instead of a second full blown media event in a short time frame, media members are given iPads 3/iPhones running iOS 6.0 for a week under embargo. Apple could then stealth announce iOS 6 later in April. WWDC in June will feature app demos of both new OSes and probably OS X and iOS versions of apps in data harmony thanks to iCloud.

iCloud features and abilities have only just started. iCloud is going to be a huge future part of the next gen releases of iOS and OS X. Apple is “all in” in terms of internet storage/internet data. Competing products should be wary since Apple is going to bake this functionality into everything they do.

Pay attention to the iCloud version of the Save files window. This extremely simplified look could be an early glimpse into a simplified Finder for OS X. A full screen file management application for new users. The old Finder would still be there for veteran users but new users may be given a whole new graphical way of managing files.  Here’s the new iCloud Open/Save screen image from Pocketlint

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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.

How Big Could the iPhone US Market Reach?

It’s been long argued by Mac supporters that Android’s apparent “victory” in the smartphone wars is more of issue of availability/carrier access than some compelling product decision by buyers.  This argument started in 2009 and reached a fever pitch in 2010 with Android phones becoming available from a variety of vendors across all US carriers.

Recent US smartphone data from NPD post the launch of the new iPhone 4s/4 on AT&T, Verizon, and Sprint at least from Q4 2011 supports that view.

Android’s success as the chart shows seemed to be unstoppable mainly while eating away at RIM’s market share. Apple dips in Q4 2010 while Android surges behind a number of successful Android devices at both Sprint and Verizon. However, the first major change occurs in Q1 2011 with the six month old iPhone 4 now available on Verizon. But Android does not suffer any losses due to the the continued attack on RIM. Q3 2011 looks like the biggest argument for Android’s dominance, but it’s looking now that it was simply due to iPhone purchasers on AT&T, Verizon, and even Sprint sitting on the sidelines waiting on the new device.

The first two months of Q4 2011 indicate that Apple has almost tied Android while still leaving one major carrier (T-Mobile) to Android.

Based on carrier data, we know that the iPhone dominates AT&T smartphone sales at an 80% clip. And a significant number of those sales are iPhone users upgrading. In Q4 2011, the iPhone now represents 55% of the smartphone sales at Verizon. That Verizon number could only increase year over year as the iPhone population on Verizon becomes more entrenched. The iPhone’s loyalty number is a ridiculously high 84%. Sprint’s numbers are unknown at this time. Based on Apple’s 37 million iPhones sales, it would not be a surprise if Apple beat Android on Sprint as well.

Now, Q2 will see a number of premium Android devices enter the market, and the WinFin Nokia Lumia series will be available with a huge marketing push by Microsoft as the Redmond Pony desperately tries to be become relevant in the smartphone race. In addition, the iPhone may see a reduction of Q2 2011 sales especially if rumors target a summer June-July launch of the iPhone 5. Apple has now learned the hard way that iPhone launch rumors are mainstream news impacting average consumer behavior and not just the fodder for technology blogs.

Imagine though a iPhone 5 launch in July on all 4 US carriers with iPhone 4s/4 available on the big 3 at reduced prices. While the majority of iPhone sales are the new model, Apple was able to get a 11%  sales lift from iPhone 4/3Gs sales, and $0 contract 3GS was only available on AT&T.

Presuming a summer launch scenario across all 4 carriers, an iPhone US market share of 60% percent by the end of the year is very possible, virtually flipping the relative percentages of Android’s record high of Q3 2011.

Apple’s 2012 Bigger than 2011??

First I apologize for the inactivity but after the October iPhone announcement everything just stopped news wise.

But 2012 is just getting going.

Apple just posted an unreal December 2011 Quarter blowing out all predicted numbers and showing growth across all products lines not named iPod (iPod numbers are being cannibalized by Apple’s power twins of  iPad and iPhone).

4 amazing numbers stand out: $46 Billion in revenue, 37 million iPhones, 15 million iPads, 5.2 million Macs.

As incredible as those numbers were the results were generated by a product line up that was relatively unchanged from 2010. 2012 though could see some significant changes to all 3 product lines and a 4th big ticket product if the Apple Flat Panel TV rumors prove accurate.

iPad for 2012: March should see the arrival of the Retina Display iPad 3. The iPad 3 will be the flagship tablet the entire industry will have to chase. Apple’s buying power and supplier access could easily mean that the supply of these high resolution displays are denied to other manufacturers, or  that Apple is going to get a price per unit cost that the rest of their competitors won’t be able to match. In addition, Apple is likely to continue producing the iPad 2 in at least some limited configuration at a cheaper price point just like the iPhone 4 8GB is available for $99. So, Apple will likely continue to produce the 16 GB iPad 2, and price the device for $399 further putting pressure on competitors. Back to the iPad 3, in addition to processor and graphics improvements expect to see at a minimum a 3G chip set supporting GSM/CDMA, so Apple can simplify their production and inventory supply. Also expect Sprint to get access to the 3G iPad.  4G LTE capability is a great unknown. Both AT&T and Verizon would prefer Apple include LTE support, but LTE is right now predominantly a US feature with serious battery consequences (less of an issue for the iPad). Regardless iPad 3 and iPad 2 stand an excellent chance of increasing and extending the iPad’s sales numbers. The biggest threat to the iPad right now appears to be Windows 8 tablets that won’t appear until late Q3. However, these tablets are total vaporware with no specs, features, limitations, or prices. In particular, it’s unclear what software (since it won’t be able to run the large inventory of Wintel software) would be available for any ARM based Windows 8 tablet since there are already rumors that Intel based tablets won’t come near to the iPad price point.

iPhone for 2012: A redesigned iPhone 5 is coming this year, the only question is a July or October launch date. It’s unclear if the recent October launch was an anomaly or the new SOP for Apple. We know that Apple will continue to build and sell the iPhone 4 at $0 with contract, iPhone 4s at $99 with contract. We know that Verizon and AT&T will want LTE capability in the device, and there’s a strong chance that Apple will add T-Mobile and support for as many Chinese carriers as possible (adding carriers is making a huge difference in market share versus Android). The biggest issue sure to generate significant rumor traffic will be the new design and new dimensions. The burning question will be screen size for the iPhone 5. Android phones are all 4 inches and larger now. Could a bigger screen iPhone also lead to a bigger screen iPod Touch? I think a move to a bigger screen makes sense but Apple will avoid creating a monster phone. I think a new home button configuration previously rumored is a strong possibility which provides more navigation options. Will it have NFC to turn the iPhone into a digital wallet? Apple including this feature on their iPhone could take phone payments mainstream so will the other parties involved agree to Apple’s demands mainly companies like Visa, Amex, Paypal, etc. Apple’s not going to do a mobile digital wallet without control over the user experience.

Mac for 2012: A 15 inch MacBook Air seems like a certainty. A bigger screen MacBook Air would be a natural expansion of the lineup, look for that new machine the same time that Apple updates the processor/graphics on the 11/13 inch models. The other big update should be a completely redesigned MacBook Pro. Expect the DVD drive to be eliminated, it won’t be MacBook Air thin, but expect some reduction in weight and thickness. The big selling feature for pro users will be Retina high resolution displays. Those new displays will provide differentiation from the Air and a compelling upgrade feature. Intel’s new Ivy Bridge platform in April/May would be the ideal new processors for the new Macbook Pros. These updates could drive higher sales of Apple’s laptop business which represents 70% of Mac sales.

iMac update for 2012? If Apple can make it thinner and lighter they will. If display technology allows, a redesign is possible.Retina iMacs?? Possibly. Apple also could make a solid state/conventional drive combo standard to improve performance.  Beyond those kind of tweaks along with the obvious process/graphics upgrades, the current form factor is ideal.

Mac Mini? New processors and graphics. No other changes will probably occur. Mac Mini is probably not in danger of being cancelled this year. Unless…

Updated Mac Pro or  whole new class of Mac? Apple could launch a new class of desktop device that has powerful graphics and scales up to use higher end processors, and expandable ram. Space for two drives, one solid state and one traditional, instead of PCI slots in the chassis the device now relies upon multiple Thunderbolt ports to provide those expansion options. Priced right this headless iMac could find a market, and Apple could offer a high performance version that works for a pro market. Or we could simply see the current Mac Pro updated later in the year when the right processors become available. It’s entirely possible that in a  year or two that the iMac is the only desktop left in the Mac lineup.

Apple Branded Flat Panel TV: The ultimate rumor and wildcard for Apple in 2012. It’s all unsupported speculation but why would Apple even attack this market. Well the flat panel TV market worldwide for 2012 should represent nearly 250 million units old sold. So there’s a huge potential market. In addition, any Apple product in this space would be considered a premium product due to feature set and likely fetch an ASP of at least $1000. So even if Apple was only able to replicate their Apple TV device sales of 1.4 million, Apple would still be adding nearly $1.5 billion to the bottom line each quarter. The market annually is huge, but the upgrade cycle for users is long so any TV move will be a long play, establishing Apple as a player/brand as display technology progresses. If Apple was only able to garner 2% or 3% of the worldwide market that would still represent a significant revenue stream. The potential market opportunity is significant.

The End of Apple’s Ability to Surprise?

Is it possible that the effort needed by Apple’s supply chain has ended any ability for Apple to release a surprise product?

It certainly looks that way.

Five years ago, Apple was a much smaller company in terms of the number of products it develops and ships. Sure there were the varieties of iPods and Macs but that was it. The last existing product lineups that had genuine surprises from Apple were probably the MacBook Air and iPad Nano (replacing the very popular iPod Mini).

Can Apple still spring a surprise of a product that has not been sent to production? Sure, it can show a product/final prototype like the original iPhone or iPad and then announce sales in 60 days. That type of product can still be a surprise. The alleged new Mac product line could be that kind of surprise like the old Apple. An integrated Apple branded TV could be that next kind of surprise, unveiled then launched 60 to 90 days later.

But for the next gen  iPad/iPhone/and even the MacBooks, Apple is shipping in such large quantities that the supply chain/development process has to involve so many moving parts/third party vendors that keeping total secrecy is going to be nigh impossible.

For the iPhone in particular, Apple looks like it’s going to need upwards of 20 million phones a quarter maybe as many as 10 million a month, and cannot logistically pull off shutting down volume of an older version and ramping up production of a new iphone without word of those changes spreading throughout contacts in Taiwan/China. In addition, as the iPhone 4S launch taught us, spare parts are going to leak out prior to the unveiling. The supply chain will have to start sending out various repair parts samples before launch. The repair business for these products has become too big and too important. If there is a big screen iPhone 5 coming next year, our first concrete sign will be replacement back cover or a replacement LCD unit.

For the iPad 3, the production of that many retina display quality LCD panels is not going to go unnoticed. We also can guess based on the recent iPhone 4s launch that Apple is going to keep the iPad 2 in production at a lower price point even after the iPad 3 launches (Apple didn’t do that for the iPad 2 launch, and sales numbers for the original iPad product reflected the ramp down and ramp up problems). Two production lines churning out different iPad versions is going to create some noise, enough that news sites/analysts are going to be able to track down the impact.

Mac volume especially for the MacBook lineup is getting close to that kind of volume. Mac volume if current growth trends continue will be over 5 million a quarter, and already sees the impact of customers delaying purchases waiting for the hardware refresh. For the recent MacBook Air launch, Apple was able to build up inventory before release due to the coordination of launching the MacBook Air with OS X Lion. Again, in these kinds of volumes, the scaling back of production and the ramping up of the new product line is going to create noise.

Apple cannot do the “prototype unveiling/product launches 60 days” with the iPad or iPhone or risk hurting sales for almost 2 quarters due to the demand drop in the quarter right after the announcement and then the inability to meet the pent up demand in the following quarter after launch. That potential problem is only going to increase as the installed base (upgrade base) continues to get larger and larger. The analysts all thought that iPad sales were slowing down in February-March (calendar Q1) when it was more a case of customers waiting on the new product and then not enough iPad 2 inventory to meet that demand in calendar Q2 (April thru June). Apple may in the future have to pre-announce a price drop (letting customers know a new model is coming) and take the hit in margin something it has been reluctant to do especially for the iPhone. But a price drop prior to the announcement and mass availability of the new iPhone 5 could keep sales going of the all iPhone variants with no real dip seen at launch.

More Questions After iPhone Event

Where is the text input mode for Siri?

Great point already brought up by Paul Miller at this is my next (old Engadget writers soon forming their new site http://www.verge.com ). This mode seems to be a natural addition for both the iPhone and iPad versions of Siri. The old version of Siri had a text input mode, so it would be odd if it’s disappeared with the new version.

Where is Siri for Macs?

This assistant feature looks incredibly powerful, and the natural next question is when does Apple release a Siri application for the Mac where the digital concierge feature could be even more important? Could we have to wait to see Siri for Mac until it’s fully integrated into the next version of OS X? Numerous blogs (Paul Miller again at this is my next ) have linked to this famous Apple video of the potential future of computing from the late 80s. It may now be close at hand.

Does Siri work on iPads?

We were not shown Siri for the iPad. The iPad2 has the A5 processor, so it would seem obvious to that an iPad version of Siri is out there. These kinds of voice commands could really expand the iPad’s use for a lot of customers.

What does Siri look like for education?

Siri looks like the worst nightmare for online education with the ability to grab answers for almost any type of question. But imagine instead a reversed Siri assistant that is providing a learning experience using the web, able to respond to questions and able to check answers. Free form education navigated by the learner.

Where were the announcements about a new Chinese carrier for the iPhone, isn’t Apple making a huge push into China?

Sprint was added as was a new Japanese carrier. This leaves China as the only major market with only one carrier for the iPhone. India has two GSM carriers but there are also two large CDMA Indian carriers expected to get the iPhone at some point.

So let’s review the major Chinese carriers and their cellular networks.

China Mobile – TD-SCDMA network- Chinese proprietary version of CDMA technology. Apple will probably have to build a unique separate version of the iPhone for China Mobile. Right now, unlocked unofficial iPhone customers use China Mobile’s older 2G EDGE network. China Mobile has over 600 million customers so there’s enough of a economic rationale to create a stand alone phone. In addition, China Mobile is planning a proprietary version of LTE, so Apple will have to create a unique 4g iPhone down the road as well. It’s probably early 2012 until Apple will have a China Mobile only iPhone ready.

China Telecom – another carrier using CDMA, but it is very similar to the CDMA standard used by Verizon/Sprint. Rumored to be close to signing a deal with Apple.

China Unicom – GSM network – Current vendor of the iPhone 3gs/4.  130 million customers. 4g LTE plans are unknown at this time.

What does the iPhone lineup tell us about the future of the iPad lineup when the iPad 3 is released?

That Apple, unlike with the original iPad which Apple stopped producing, is more than likely to keep the iPad 2 in production and lower the price. Apple instead won’ t ramp down iPad 2 production, it will now have a lower price offering while ramping up a production line for iPad 3.