Posts tagged Apple
Tim Cook is going to have an interesting day today. The CEO of Apple will be testifying before the U.S. Senate Permanent Subcommittee on Investigations, which would love to know how Apple has managed to avoid paying billions of taxes. Given the loopholes in U.S. corporate tax laws, Cook might save himself a lot of stress and just hold up a mirror in response to the senators’ questions.
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An 18-month congressional investigation turned up evidence that Apple is a major-league tax avoider, the New York Times reports — one that allegedly sheltered billions of dollars from taxation by moving the money through a web of subsidiaries, some of which had no employees and claimed to be exempt from taxes. Apple CEO Tim Cook will testify before the Senate Permanent Subcommittee on Investigations tomorrow; Apple has released an advance copy of his testimony.
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Guest author Derek Brown is a technology executive and analyst who blogs at One Blind Squirrel.
Android, it seems, is the worm that eats away at Apple’s core.
According to Gartner, Android-based handsets outsold iOS-based handsets 4-to-1 on a worldwide basis in the first quarter of 2013, up from a ratio of about 2.5-to-1 in the same period of 2012. As such, Android accounted for 74% of global smartphone sales last quarter, up from 57% in the first quarter of 2012, while iOS accounted for just 18%, down from approximately 23% last year.
Apple’s Strengths Irrelevant Going Forward
Apple bulls/fans (and even some critics) will likely race to highlight such defenses as:
- Apple didn’t have a major new release last quarter.
- Tablet sales should be weighed in this discussion.
- The installed base of iOS devices should be taken into account.
- Developers still generate more revenue through iOS than Android.
- Apple continues to generate the majority of the industry’s profit.
Blah. Blah. Blah.
Those points are all very true. Unfortunately for Apple, though, they’re also largely irrelevant going forward, given the alarming rate at which consumers worldwide are speaking with their wallets and selecting Android handsets over iOS handsets. With just a few more quarters like this, coupled with the cumulative effect of similar sales data over the past 2-3 years and the likely coming wave of Android-based tablets, it is a given (to me, anyway) that Android will be soon be effectively ubiquitous around the globe.
In the world of technology platforms, ubiquity matters (a lot) when developers, manufacturers, etc., are considering future products/solutions.
The Mobile Battle Is Over – And Google Won
And, so, I will reiterate the view I’ve held for some time now: The mobile battle that Apple started, first with the launch of iPod in 2001 and then moved into hyperdrive with the introduction of iPhone and iPad in 2007 and 2010, respectively, is over (or, will be over shortly), and Google/Android is the victor.
Make no mistake, Apple will clearly continue to play a prominent role in the industry and maintain leadership in some respects. It will also continue to boast a large installed base and a substantial number of loyalists and devotees. But the company’s days of dominance, let alone an effective monopolist, are behind it.
Apple’s Success Was A Once-In-A-Generation Fluke
Pundits, analysts and investors need to wrap their heads around one simple notion: Apple’s product cycle and performance between 2001-2012 was a once-in-a-generation event. In my view, no company in history has had (or, likely, will soon have agin) so many successive “grand slams” as did Apple with iPod, iTunes, Mac, iOS, iPhone and, finally, iPad. The company’s hardware, software and “it-just-works” approach to integration absolutely annihilated existing competition and ignited massive new markets in which Apple had a multiyear near-monopoly and from which Apple was able to generate once-in-a-generation revenue growth and profitability.
As unfair as it may be, the inevitable comparisons to those days will not look good for Apple for some time. The hard reality is that the company’s future — even under the best of circumstances — will likely reflect diminished influence and declining revenue (perhaps substantially so), with the prospect of shrinking margins to boot.
Apple Stuck At Ground Zero In The Cloud
To make matters worse for Apple, I think the company is poorly positioned for the battleground of tomorrow: Web (or cloud) services that function like utilities — seamlessly, across all devices, across all operating systems, all the time — at low or no incremental cost.
As I discussed in a previous post, Welcome to Google’s Playground, Apple, the increasing importance of Web services substantially diminishes the value of Apple’s closed-loop hardware/software core, while simultaneously highlighting the strengths of Google’s business. Web services are Google’s lifeblood, and the company prints money, either directly or indirectly, from use of many of these cloud-based services, even if those services are accessed via an Apple device (e.g., Maps or Gmail for iOS).
Apple, on the other hand, is almost at ground zero and, as a result, may be forced to spend big to acquire services that have proven themselves in the hands of consumers at scale.
Fun days for Apple, I know. But, hey, at least it’s not Dell!
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We’re still weeks away from Apple’s World Wide Developers Conference (WWDC) on June 10-14, but one thing’s for sure: Plenty of iPhone and iPad users are hoping for a fresh design and a more open, customizable experience.
Last week, ReadWrite asked our esteemed readers what you’re hoping to see in iOS 7. The two biggest take-aways:
- ReadWrite readers want iOS to be more customizable.
- ReadWrite readers would really like Android-style widgets on their iPhone and iPads.
(Before we go any further, though, let’s be totally clear: These results are not statistically representative of iOS users generally, but they do illuminate what many ReadWrite readers would like to see in iOS7.)
Make iOS More Customizable
When asked if iOS should open up and become more customizable, almost two thirds (64%) of respondents said Yes. Just 28% – less than a third – thought Apple should retain its strict, top-down control because this is how the company ensures a bulletproof user experience.
That justification might be historically true, but it’s becoming harder for Apple to ignore just how effectively Google is managing to catch up in terms of Android’s UX design, while not sacrificing the flexibility Android has traditionally granted its users. For years, Apple fans could laugh off Android as a rusty, imperfect copycat with a lot of growing to do. And they were mostly right.
But grown it has, and now Android is a more potent competitor to iOS than ever. With its chief competitor offering a far more customizable experience, Apple faces growing pressure to loosen its grip on iOS and give more control to its users. There’s no guarantee that Apple will do that (and even if it does, the changes will no doubt be gradual), but the user demand seems clear.
No Wonder Jailbreaking iOS Is So Popular
This desire for greater control is exhibited in the growing popularity of jailbreaking - the unauthorized removal of Apple’s limits on how people can use iOS. Even though there is no jailbreak available for the latest version of iOS, there are at least 30 million jailbroken iOS devices, according to Cydia creator Jay Freeman’s website (Cydia is the “alternative to Apple’s app store for ‘jailbroken devices’ “). Granted, that’s a small percentage of the more than 500 million iOS devices Apple has sold to date, but the demand appears to be growing. When the evasi0n jailbreak tool for iOS 6 launched earlier this year, it was so popular that not only did people trying to access crash the site hosting it, but they crashed the Cydia app store and caused performance issues that lasted for days. With 7 million devices cracked in four days, evasi0n was the most popular iOS jailbreaking tool yet.
Typically, when we write about the jailbreaking phenomenon here on ReadWrite, the chorus from Android-loving commenters is consistent: Google’s mobile OS has been able to do XYZ for years, you doofus. Get a clue. Switch to Android. Snark aside, these folks have a point. Many of reasons people jailbreak their iPhones and iPads are indeed features that come natively on Android, or are at least a Google Play app download away.
In our survey, ReadWrite asked readers to list the features they’d most like to see in iOS 7. The second most-used word in the responses was “customization.” Other popular requests included improvements to iOS’s multitasking, quicker access to settings, multiple user profiles and improvements to the Notification Center.
Give Us Widgets Or Give Us Death!
Overall, the most commonly requested feature was the inclusion of widgets on the home screen. The use of icons displaying live data has long been familiar to users of other operating systems and has even found its way into at least one iOS 7 preview mockup. Apparently, lots of iOS users are sick of looking at the Weather app icon and seeing the same sun that’s been shining since the iPhone first launched in 2007.
In total, 734 people responded to our survey. Are these just a bunch of Android fans flooding our Poll Daddy widget with pro-Google sentiment? Hardly. Not only did we give Android die-hards a chance to reveal themselves in the first question, but 61% of responses were made from iOS devices. Another 13% came from Mac computers.
Anything else you’re dying to see in iOS 7 when it’s announced next month? Let us know in the comments.
- Why Jailbreaking iOS 6 Is Popular Enough To Break Cydia
- Why Apple Really Needs To Kill It With iOS 7
- Apple’s iOS Design Changes Threaten To Delay The Next iPhone
- Will Apple’s New Design Changes Kill The Luster Steve Jobs Loved?
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At some point, Apple is widely expected to release a miniature computer for your wrist. Assuming the rumors pan out, you, dear geek, are going to hate whatever is released — because it’s not going to do many of the things that you think such a device should do.
Your favorite tech blogs will reaffirm your skepticism by releasing scathing reports about how underwhelming Apple’s newest gadget is, at least when compared against the hype they created about what Apple’s newest gadget should have been. Apple will be doomed, yet again. Tim Cook’s got to go! Cue the sad trombone.
Ignore all of that. An Apple watch, if it is released, is going to be a big deal. Here’s why.
Fear Our Vapor!
In basketball, the mere presence of a strong defender is often enough to alter a shot and create a miss. In tech, the mere presence of a rumored Apple product is enough to alter a category and create a flurry of press releases.
No one knows what an Apple-branded watch will look like. No one knows what it’ll do. We don’t even know for sure that Apple is ever going to release a watch. At best, we’re in “where there’s smoke” territory based on ever-popular “industry sources” and a single leaked patent application.
Leading up to the release of the iPhone, similar rumors surfaced and, as usual, pundits and competitors scoffed. Here, for instance, is Palm CEO Ed Colligan scoffing his company into obsolescence:
We’ve learned and struggled for a few years here figuring out how to make a decent phone. PC guys are not going to just figure this out. They’re not going to just walk in.
Six years later, Apple’s competitors rarely scoff, at least not as openly. Instead, they scurry to make reactionary (and premature) product announcements that exist primarily to counter a rumor mill that Apple largely ignores.
“We’ve been preparing the watch product for so long,” Samsung Mobile executive vice president Lee Young Hee told Bloomberg. “We are preparing products for the future, and the watch is definitely one of them.”
For so long!
Samsung has to react, though. It’s been stung by accusations (not to mention legal judgments) that its R&D department is based in Cupertino. Thus the rush to claim that a smartwatch is in the pipeline prior to any official Apple announcement: “We couldn’t have copied Apple, we told you about our product over a year ago!”
Microsoft Corp. is working on designs for a touch-enabled watch device, executives at suppliers said, potentially joining rivals like Apple Inc. in working on a new class of computing products.
Microsoft also has to react. “Not reacting” is the only way to explain how they could have fallen so far behind in the mobile space and they can’t afford to get left behind yet again. Steve Ballmer’s got to go! Wah-waaaah.
A smart-watch can include a wristband, a base, and a flip up portion. The base can be coupled to the wristband and include a housing, a processor, a wireless transceiver, and a tactile user interface. The wireless transceiver can be configured to connect to a wireless network. The tactile user interface can be configured to provide interaction between a user and the smart-watch. The flip up portion can be displaceable between an open position exposing the base and a closed position concealing the base. Further, the flip up portion can include: a top display exposed when the flip up portion is in the closed position, and an inside display opposite the top display. The inside display can be concealed when the flip up portion is in the closed position and be exposed when the flip up portion is in the open position.
Google’s clearly in a better position than Samsung and Microsoft (and Apple, for that matter) in that it’s already demoing wearable computing. But Google Glass is far from a guaranteed winner — we may all be cross-eyed this time next year — and prepping a watch, even as a backup, seems like a smart way for the company to hedge its bets.
What A Coincidence
Now, raise your hand if you think it’s a coincidence that we’re just now learning about all these smartwatches just as rumors of an “iWatch” started to heat up. No takers?
The mere specter of an Apple watch — summoned by the ritualistic voodoo of rumors and speculation — spooked Apple’s competitors into action. Clearly, they’re not quite as cocky as they used to be. (Or, as in the case of Palm, as in business as they used to be.)
There’s a lot of talk these days about Apple having died with Steve Jobs, but I sure don’t see Google Glass spurring similarly reactionary competitive product announcements. By that standard, at least, Apple’s in pretty good shape.
That said, Apple remains Apple. It’ll release the watch it’ll release, when it releases it. If, uh, it releases one at all. Which brings us back to why I think Apple is, in fact, going to launch a smartwatch.
First and foremost, a watch isn’t much of a stretch for Apple from a product standpoint, especially if you’re expecting a wrist-borne iPod rather than an offshoot of the iPhone or iPad.
IPod sales are declining, yes, but the brand remains iconic. It won’t surprise me at all if Apple simply calls this thing an iPod Watch. (Consider that Apple used to sell a square iPod Nano that everyone treated like a watch.) Similar to the Apple TV, an iPod Watch could run an offshoot of iOS, but not full-fledged iPhone apps.
The Watch Built for Homer
Neither Apple nor Google seems likely to release a watch that looks anything like what we’ve seen in the paperwork they’ve filed. That doesn’t mean there aren’t clues in their patents to what they might one day ship.
Google’s watch description sounds an awful lot like what it’s now demoing as Google Glass. It’s futuristic, it’s full of gee-whiz wonderments and augmented reality, and it’ll probably do your dishes for you — or maybe advertise local maid services as soon as it Big Brothers that you’re washing your own dishes.
That pretty much sums up Google and, let’s face it, most of Apple’s competitors: “If nothing else, a device can always do more.”
Would-be iPod killers had FM radios and Bluetooth music sharing and gigantic cup holders and anything else some consumer once said he’d like to have in a survey or on a web forum, once, somewhere. Would-be iPhone killers had hardware keyboards and 3D screens and styluses and a bunch of other junk no one wanted until, eventually, they just gave in and became “essentially iPhones” with an “all sizes and prices fits all” mentality.
But what about Apple?
The current landscape for smartwatches is, thus far, fairly niche-based: Athletes and, well, athletes wear them. Sometimes.
But look at us. We aren’t athletes. We don’t spend a lot of our time counting our steps and monitoring our heartbeats, so we’re not going to buy a device that exists to do those things.
Pebble has seen some success with its Kickstarter campaign for a multi-purpose, e-paper smartwatch, but who knows if the company is equipped to compete over the longer term. More likely, its offering will serve as a proof-of-concept for the big guys.
That leaves a lot of wrist real-estate for Apple, especially given that most of us aren’t even wearing dumb watches anymore. Who needs something that only tells the time, especially when our smartphones do that so well?
Glance and Go
Think about iOS notifications for a moment. (Yes, they suck hard. But that’s a discussion for another day.) If the entire point of a notification is to increase efficiency by providing an opportunity to ignore the things that we’d rather ignore, why should we have to get our phone out to make that decision?
Wouldn’t it be better to glance down at our wrist? To leave the phone in our pocket until we really need it?
More importantly, wouldn’t Apple want us to glance at a device made by Apple, running software sold via Apple’s App Store, and linked to services controlled by Apple?
This is the part where the geeks get indignant and demand that Apple release something that is more than just an accessory, but I don’t see any reason to believe that Apple will (or needs to) introduce something more than that.
Tied to an iPhone, an iPad, and your Apple TV, a smartwatch adds value to Apple’s existing hardware ecosystem and, most importantly, it won’t exist as an “either/or” proposition for consumers.
We’ll simply buy all of the above if we want the full Apple experience.
Apple’s Extended Family
Consider that iPhone accessories alone are a multi-billion-dollar industry.
Even with the understanding that most of that money goes to the accessory makers, it’s clear that Apple plays the accessory game better than just about any other company. Anyway, the mind-share that such exposure buys makes up for any lack of revenue.
When Apple introduced the second generation iPad, it also developed a magnet-based mechanism that paved the way for the Smart Cover and countless knock-offs that line store shelves today. With a watch, the strap is the case: Expect Apple to design (and patent) an easily removable “Smart Strap” that clicks on and off. Now imagine countless booths at next year’s CES, lined with iPod Watch straps and accessories.
Software developers won’t be left out: An SDK will be released and they’ll rush to create added value widgets that extend the functionality of their iPhone and iPad apps.
Apple’s watch may not transform us into latter-day Dick Tracys, but developers and accessory makers will stick with Apple and extend the brand in spite of all the crap they’ll have to put up with along the way. Because they’re going to follow the money.
Billions of dollars a year is a pretty easy trail to follow.
Apple Wins Again
In the end, Apple will release a product that looks great and works like it’s supposed to, even if it’s not exactly what we expect, or think we want, out of a smartwatch. And we’ll buy it.
The peripheral market for accessories will quickly materialize, at which point the competition, left dumbfounded, will be forced to go back to the drawing board in an effort to mimic Apple’s vision of wrist-based computing. In a few years, you’ll either be wearing Apple’s smart watch, or something remarkably similar to Apple’s smart watch.
Not long after that, some anonymous commenter sporting a Samsung Galaxy W will feel clever and point out that Apple didn’t really do anything all that revolutionary.
Just you watch.
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In my day, boys and girls, we downloaded songs onto our desktop computer. For free. Often illegally. Then we burned them onto CDs late into the night.
iTunes changed all that. iTunes required that we actually pay for our music. It corralled us into accepting copyright-restricted digital content, while doing its best to force us onto pricey Apple hardware. It foolishly mashed together audio library management tools with a music download service with online payments and computer/mobile device synching – only to somehow grow even more bloated as the years went by. Yet here it is, ten years later, and iTunes towers above all its competitors.
No surprise, then, that Apple is formally celebrating “A Decade of iTunes” with an interactive timeline that is equal parts sales promotion and rare look back.
With the possible exception of Windows Vista, probably no software application from a large company has incurred such vigorous and ongoing public scorn as iTunes. Unlike Vista, however, iTunes continues to grow, evolve and continue its semi-secret though highly successful mission of transforming Apple from anemic, also-ran PC maker to its current position as the world’s largest technology and media company.
It was (technically) on April 28, 2003, when Apple launched the iTunes Music Store. The store contained 200,000 songs, all priced at $.99 each. On that same day, Apple announced its third-generation iPod, weighing less than “two CDs” and able to hold 7,500 songs. From those meager beginnings, content delivery, the music, film and software industries – and Apple’s fortunes – were all soon to be profoundly changed.
Ten years ago, Apple’s share price was $6.66. Today it hovers around $400 (down from more than $700, but still). Recall, if you can, the many Borders and Blockbuster Video stores that dotted the American landscape. iTunes essentially enabled us to buy easily digital content for the first time, and taught us that digital content could be worth paying for.
iTunes Begat iPhone
iTunes helped make Apple relevant once again. It enabled the expansion of Steve Jobs’ “digital hub” strategy, guiding Apple from failing computer maker to consumer electronics behemoth. That much is generally accepted. Just as importantly, however, iTunes enabled the iPhone.
The single biggest reason for Apple’s meteoric rise over the last decade is the iPhone. Realizing that the rise of “cell phones” could harm Apple’s portable iTunes media players (the iPod), Apple teamed with Motorola to create the much derided Rokr E1 phone in 2005. The hardware was disappointing and users complained that the device could hold just 100 iTunes songs.
Two years later, however, Apple introduced its own device. The iPhone was the shocking evolution of iTunes and iPod, and Apple’s work with Motorola. The point is, no iTunes, likely no iPhone and no iPad – the products that currently contribute more than 60% of Apple’s valuation.
Yet even the much-improved iTunes 11 still collects scorn, even from the Apple faithful.
This represents a misunderstanding of the platform’s roles. At the initial launch of the iPhone, Steve Jobs noted the importance of iTunes to the “revolutionary” new device:
The (iPhone) automatically syncs to your PC or Mac right through iTunes. And iTunes is gonna sync all of your media onto your iPhone: Your music, your audio books, podcasts, movies, TV shows, music videos. But it also syncs a ton of data: Your contacts, your calendars and your photos, which you can get on your iPod today, your notes, your bookmarks from your Web browser, your email accounts, your whole email set-up. All that stuff can be moved over to your iPhone completely automatically. It’s really nice. And we do it through iTunes. Again, you go to iTunes and you set it up. Just like you’d set up an iPod or an Apple TV. And you set up what you want synced to your iPhone. And it’s just like an iPod. Charge and sync. So sync with iTunes.
Apple Loves iTunes – Even If You Don’t
iTunes simultaneously serves as Apple’s payments platform, media library app, and digital media storefront – for music, books, apps, podcasts and video. It powers the popular App Store. It is an app for purchasing content on the iPhone and iPad – though not for playing that content. On the Mac, iTunes is (still) both music and video library management layer, music player – though not video player – payments provider and media storefront.
No wonder even long-time Apple users complain of feature bloat and a confusing user interface.
Apple’s interactive iTunes timeline, meanwhile, focuses almost exclusively on music. Maybe Apple isn’t ready to accept that iTunes has transformed the company from computer hardware maker to a global digital media concern. But consider these numbers:
- 40 billion apps downloaded
- 25 billion songs sold
- More than 15,000 songs downloaded every minute
- 1 billion courses downloaded on iTunes U
- More than 100 million books on the connected iBookstore
- Available in more than 115 countries
- 45% of the video on demand market in the U.S.
iTunes has also delivered tremendous value to content owners, publishers and app developers. According to Apple analyst Horace Dediu, iTunes generated more than $24 billion in revenues for content owners (media and app developers) in the past five years.
No matter what you may think of it personally, iTunes has been essential to Apple’s success. Expect it to continue to pushing the company forward, in all its messy, bloated glory.
Images courtesy of Apple.
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Apple reported its first profit decline in over a decade and bluntly admitted that its growth is slowing. It was, indeed, a strange but not wholly unexpected change of pace for the wildly successful Cupertino company.
Despite that bad news, the stock market barely hiccupped. As of writing, Apple shares were virtually unchanged in after-hours trading from their close of $406.13 — a level roughly 42% below their peak just seven months ago. Which means that these diminished expectations are, for now, Apple’s new normal.
The Humbling Of Apple
In the January-March quarter, Apple generated $43.6 billion in revenue with a profit of $9.5 billion, compared to $39.2 billion and $11.6 billion a year ago. Profits might be down by a not-insignificant 18%, but the numbers still beat out quarterly estimates of between $41 and $43 billion in revenue. For next quarter, Apple set the bar low, with an expected $33.5 to $35.5 billion in revenue.
Apple also set new records for March quarter sales of the iPhone and iPad, for what it’s worth.
While Apple quarterly calls — like Apple launch events, Apple ads and the Apple ethos — tend to err on the side of smug, today’s tone was muted. As Apple’s boomtown empire of the last decade begins to look like a gilded age, CEO Tim Cook and CFO Peter Oppenheimer maintained a cautious optimism. Cook expressed frustration over Apple’s ongoing stock swoon and noted that 2012′s “exceptional success” makes year-to-year comparisons “difficult.”
Other notable numbers from this quarter:
- 37.4 million iPhones sold, up from 35.1 million during Q2 2012
- 19.5 million iPads sold, up from 11.8 million a year ago
- iPad sales more than doubled in China and Japan
- Mac sales contracted, with just under 4 million sold – a slight dip from a year ago
- 5.6 million iPods sold (down from 2012′s numbers), but Apple commands 70% of the MP3 player market
- Apple made $5.2 billion from retail stores and expects to open 30 new stores this year
- The company holds $144.7 billion in cash (up from $137 billion in December 2012)
Still, Apple Is Apple
Of course, even at its humblest, Apple couldn’t resist an opportunity to tout iOS as a more secure ecosystem than Android, which has fallen victim to some high profile malware incidents in the last year.
As for what’s next — and how the company will continue to grow — Cook cited the strength of Apple’s ecosystem and “exciting new product categories” for the company’s bright outlook. Cook also turned an eye to untapped overseas markets, which could play a major role if the company plans for another growth spurt: “China has an unusual number of potential firsttime smartphone owners,” Cook said. “That’s not lost on us.”
Similarly, Cook touted the possibility of “an exciting new product category,” although of course without even hinting at details or a timeframe. So feel free to believe that he meant the iWatch, or an iTV, or, well, iAnything.
Apple also boosted its dividend by 15% and announced a new stock buyback program that aims to return $100 billion to shareholders by 2015, in part by taking some existing Apple shares out of circulation to boost stockholders’ holdings.
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It ain’t easy being Apple – for once, anyway.
Today, Apple will report its fiscal Q2 2013 earnings today at 2 p.m. PDT. Analysts widely expect the Cupertino company to post its first year-over-year decline in earnings in the last decade. But has Apple really begun its fall from grace, or is the house that Jobs built just falling short of its own impossible standards?
Here’s why Apple has been missing the mark in 2013.
Apple has fallen victim to its own success, plain and simple. The company’s been on top for so long, we just don’t remember things being any other way. Apple’s market and mind share are the stuff of legend, but they show signs of waning for the first time in… well, almost ever in Internet years. While any other company in the universe would be perfectly content being the world’s former most valuable corporate entity, for Apple and its stockholders, second best just won’t cut it.
Last quarter, in spite of a $13.1 billion profit, unhappy shareholders punished the company for failing to meet revenue expectations with a 10% share price plummet - AAPL‘s biggest nosedive in years. As Q2 wraps, Apple investors and acolytes alike are still itching to hit the panic button. Arguably it’s not because Apple’s near-future profitability poses any real cause for alarm – perhaps we just don’t remember how this whole thing goes for companies that aren’t Apple.
No Tricks Up Its Sleeve?
Really, what could the company that brought little white earbuds into ubiquity wow us with next? The iPad Mini, Apple’s latest mobile innovation – or iteration – is an exercise in practicality, a version of a revolutionary device with its ambition, processing power and pixel density scaled back and its price tag slashed. The iPhone 5, while slick, is old hat at this point.
At this juncture in consumer tech, we’re pleased to see the gadgets we own refined, but all anyone really wants is a revolution. And look at Google just over the Silicon fence: with Google Glass, we’re looking to see our devices pushed beyond their evolution into something borderline crazy but undeniably intriguing.
Unfortunately, reinventing the wheel isn’t easy – even for Apple, a company with a track record of doing exactly that.
The Competition Gains Ground
As competitors like Samsung gain more and more traction with a heterogenous army of Android alternatives (like the hotly anticipated Galaxy S4), Apple is wasting more time than ever looking over its shoulder – and building the fortifications of the Mac and iOS walled gardens ever-higher.
In the U.S. last quarter, Apple remained top dog with 38% of smartphone market share versus Samsung’s 21%, but globally the story is quite different, with Apple trailing by most metrics. With Apple shares trading at 40% less than September 2012′s booming highs, the company is at low tide for the moment.
On today’s call, Jobs successor Tim Cook might have to pull a literal rabbit out of his proverbial hat to meet expectations. From its products to its profits, Apple likes to think of itself as an exception to every industry rule – and usually it is. Unfortunately for Cook and company, with tenacious competitors chipping away and iPhone sales still dragging in Q2 2013, Apple just might be exceptional to a fault.
Stay tuned tomorrow for Apple’s Q2 2013 earnings report, which we’ll be reporting here at ReadWrite as it unfolds.
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It’s getting harder to make a dent in the mobile app market, especially for Apple and Google. While it’s easy to point to the billions being paid to app developers, the reality is that Apple’s and Google’s 30% cut on such revenue is a rounding error. Given Apple’s struggle to fend off Google, and the comparative peanuts it makes on mobile app sales, it may be time for Apple to give even more revenue back to developers to encourage a continued “iOS-first” policy.
Apple CEO Tim Cook crowed at an investor conference earlier this year that Apple had paid $8 billion to developers since the App Store’s launch. While this may sound impressive, that equates to around $3.4 billion to Apple over five years, or about $170 million per quarter.
Sound like a lot? It’s not.
The $170 Million Rounding Error
After all, just last quarter Apple notched $54.4 billion in revenues, nearly $31 billion coming from sales of the iPhone alone. $170 million in mobile app sales? Apple makes 3X that amount in the first day of a quarter.
Not that app sales are immaterial to Apple’s business. On the contrary, apps make Apple’s hardware more appealing. As beautiful as Apple’s devices are, few would bother to buy them if they didn’t come with a massive app ecosystem.
So apps matter to Apple. It’s just the app revenue that really doesn’t matter. Not even with the overall mobile app market blossoming to $25 billion in 2013, according to ABI Research. That’s not where the real money is.
The Mobile App Economy
At least, not for Apple. But developers? They could use that money.
Even as app sales boom, generating revenue from mobile apps is something of a bust for developers, and it’s getting worse. According to a VisionMobile report, 35% of mobile app developers “live below the app poverty line,” in that they don’t make enough money from app development to sustain themselves. Furthermore, research firm research2guidance recently released data indicating a 27% drop in average revenues per paid app, from $26,720 in 2011 to $19,560 in 2012.
That drop in top-line revenue is already hard to swallow, but becomes even more so for iOS developers, given how pricey they are to create relative to other platforms:
Hey, Apple, Can You Spare A Dime?
As such, and given Android’s continued market share domination, it may be time for Apple to further encourage developers to stick with it by dropping its App Store cut. While dropping its share from 30% to 20%, 10%, or 0% won’t hurt Apple’s revenue profile, it could go a long way toward keeping developers’ pockets full.
Of course, Google could (and likely would) simply follow suit. After all, Google, like Apple, doesn’t rely on app revenue, instead monetizing mobile through advertising.
But by moving first, Apple would not only generate goodwill, but it would reinforce developers’ preference for iOS, as a recent Appcelerator and IDC survey shows:
Apple, in other words, doesn’t need to win over developers, so much as it needs to give developers a bit more incentive to keep it top platform for them. As volumes start to shrink relative to Android, letting developers keep a bigger chunk of their App Store haul could go a long way toward encouraging developer loyalty.
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Reports yesterday that Apple had inserted itself into the world of publishing censorship have turned out to be completely inaccurate. Apple didn’t ban the sale of a comic; the comic’s distributor app did — though apparently only to pre-empt the Apple ban it anticipated.
The kerfuffle centered on the banning of the sale of issue 12 of Image Comic’s Saga comic series within the iOS version of ComiXology’s app.
On Tuesday, the creator of the series, Brian K. Vaughan, released a statement indicating that Apple would be banning sales of Saga #12 in the popular ComiXology app and any other third-party comic app due to depicted sexual scenes.
“Unfortunately, because of two postage stamp-sized images of gay sex, Apple is banning tomorrow’s SAGA #12 from being sold through any iOS apps,” Vaughan said in a statement posted at Image.
News of this move stirred a lot of observers on the Internet, including me, to lambast Apple for blocking the sale of third-party material when Apple offers the exact same comic directly within its own iBook app. This would have been the first time Apple curated independent media sold through an app, even though, according to the App Store Review Guidelines, independent books and music are not supposed to be curated:
We view Apps different than books or songs, which we do not curate. If you want to criticize a religion, write a book. If you want to describe sex, write a book or a song, or create a medical App. It can get complicated, but we have decided to not allow certain kinds of content in the App Store.
The whole thing seemed odd when I first posted about it yesterday, but the whole thing was completely wrong, and my story incorrect: it turns out Apple had absolutely nothing to do with blocking Saga #12… it was all on ComiXology.
“As a partner of Apple, we have an obligation to respect its policies for apps and the books offered in apps. Based on our understanding of those policies, we believed that Saga #12 could not be made available in our app, and so we did not release it today,” ComiXology CEO David Steinberger blogged yesterday afternoon.
“Given this, it should be clear that Apple did not reject Saga #12,” he emphasized.
The comic, which anyone could still purchase on ComiXology’s web site and then sync to an iOS device, was restored to the in-app catalog yesterday.
ComiXology’s move to preemptively block the sale was their way of anticipating a decision from Apple that would have done the same thing later. But Apple, ComiXology learned, had no intention of censoring the comic issue.
Because the Saga series is intended for mature readers and has depicted graphic scenes of violence and sex before, many speculated that ComiXology (and before, inaccurately, Apple) has an issue with the portrayal of same-sex activities in two panels of Saga #12. This is a charge Steinberger denies.
“We did not interpret the content in question as involving any particular sexual orientation, and frankly that would have been a completely irrelevant consideration under any circumstance,” Steinberger wrote.
It is still not entirely clear what it was about Saga #12 that made it stand out as a potential problem, but one thing is clear: content distributors like ComiXology and Apple definitely need to get their acts together.
ComiXology can be accused of having an overabundance of caution, but there was something in the Apple policies that faked them out. Perhaps Apple, which has not publicly commented on this matter, could come out with clearer policies on content, if that is indeed the problem.
Hopefully, the policy will continue to be what it seems: that for all of the app content that Apple does curate, they have to date not curated content that’s independent of apps.
This can be confusing, because it means that publishers like Playboy will have to keep the naughty stuff to itself within its own Newsstand app, but third-party movies, books and music with explicit material can still be sold through apps, including Apple’s.
For this particular incident, Apple is off the hook. But somewhere there was a miscommunication, which needs to be fixed.
Image courtesy of Shutterstock
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