Much Ado About Nothing

This morning, the New York Times published an article entitled "Apple Moves to Tighten Control of App Store".

The company has told some applications developers, including Sony, that they can no longer sell content, like e-books, within their apps, or let customers have access to purchases they have made outside the App Store.

Apple rejected Sony’s iPhone application, which would have let people buy and read e-books bought from the Sony Reader Store.

Apple told Sony that from now on, all in-app purchases would have to go through Apple, said Steve Haber, president of Sony’s digital reading division.

Am I missing something? From reading the article, my understanding is that Sony tried to submit an app to the store that would allow in-app purchases. The Kindle or Nook apps, for instance, currently do not allow this either. When users click the various "store" links within these apps, it redirects the user to Safari. In other words, no ebook apps currently allow in-app purchases. It is my understanding that this has always been Apple's policy. Nothing has changed. Why is the New York Times feigning ignorance on this? Or are they really just that, ignorant.

The writers of the article, Claire Cain Miller and Miguel Helft go on to say:

The move could affect companies like Amazon.com and others that sell e-book readers that compete with Apple’s iPad tablet and offer free mobile apps so customers can read their e-book purchases on other devices. An iPad owner, for instance, has not needed to own a Kindle to read Kindle books bought from Amazon.

That may now change.

No, it will not.

Why have so many bloggers followed along with this incorrect narrative this morning? This is just Apple enforcing th same policy they always have had and Sony probably whining to the Times because they want special treatment.

Too Much Hardware Choice

Yesterday, I wrote "Crazy Prediction: Verizon iPhone Will Dramatically Hurt Android." I largely commented on two articles written by Marco Arment and Watts Martin. Marco has written a follow-up article today called "Too Much Hardware Choice". If this topic interests you, then you need to read his follow-up.

Again, I think Marco is 100% correct.

After Years Of Waiting, Verizon FINALLY Gets The iPhone

At an event in New York City today which kicked off at 11 am EST, executives from Verizon took stage and announced, before the tech/apple community press, that they will begin selling a CDMA variant of the iPhone 4.

Many press were invited to this event. The invites made the news as they were sent out last Thursday. MG Siegler of Techcrunch even noted that Jon Oliver from the daily show was there. Press in attendance reported that the voice-over announcer for the event was John Hodgman of Daily Show fame (and PC Guy from the Apple commercials). Andy Ihnatko reported that, at one point, John Oliver stood up and screamed "Fuck yeah!" to the stage.

As reported by Engadget:

10:56AM Whoa. John Oliver just screamed "F*ck yeah! Thank you!" -- Apparently he's doing a bit. Wait, he's doing it again. "Oh thank god! Thank you!" Ha!

COO of Apple, Tim Cook, too the stage with Verizon executive Lowell Macadam, and jointly announced the iPhone 4 coming to Verizon. The phone will be available in 16GB models for $199.99, and $299.99 for 32 GB devices (both with a 2 year contract). Unlike AT&T, there will also be a Wi-Fi hotspot feature where you can connect up to 5 devices. The device will go on sale February 10, but existing Verizon customers will be able to pre-order starting February 3.

On notable drawback is one that many people have always stated is true with CDMA devices. When you receive a phone call, your data will drop. Tim Cook ood questions from the press in regards to why they didn't release the phone as an LTE phone. Cook said, "Two reasons -- the first gen LTW chipsets force design changes we wouldn't make. And Verizon customers told us they want the iPhone now. I can't tell you the number of times we've been asked 'when will it work on Verizon'". He did say the CDMA phone was non-exclusive to Verizon. Hmm..Sprint maybe in the future too?

One other notable feature: No pre-installed Verizon "crapps" to muck up your phone. This phone will be just like an AT&T phone, but on Verizon (with the slight CDMA drawback & wifi hotspot bonus).

It only took 3.5 years, but it's finally here.

Apple Quarterly Financial Results

From Apple:

CUPERTINO, California—October 18, 2010—Apple® today announced financial results for its fiscal 2010 fourth quarter ended September 25, 2010. The Company posted record revenue of $20.34 billion and net quarterly profit of $4.31 billion, or $4.64 per diluted share. These results compare to revenue of $12.21 billion and net quarterly profit of $2.53 billion, or $2.77 per diluted share, in the year-ago quarter. Gross margin was 36.9 percent compared to 41.8 percent in the year-ago quarter. International sales accounted for 57 percent of the quarter’s revenue.

Apple sold 3.89 million Macs during the quarter, a 27 percent unit increase over the year-ago quarter. The Company sold 14.1 million iPhones in the quarter, representing 91 percent unit growth over the year-ago quarter. Apple sold 9.05 million iPods during the quarter, representing an 11 percent unit decline from the year-ago quarter. The Company also sold 4.19 million iPads during the quarter.

“We are blown away to report over $20 billion in revenue and over $4 billion in after-tax earnings—both all-time records for Apple,” said Steve Jobs, Apple’s CEO. “iPhone sales of 14.1 million were up 91 percent year-over-year, handily beating the 12.1 million phones RIM sold in their most recent quarter. We still have a few surprises left for the remainder of this calendar year.”

“We’re thrilled with the performance and strength of our business, generating almost $5.7 billion in cash flow from operations during the quarter,” said Peter Oppenheimer, Apple’s CFO. “Looking ahead to the first fiscal quarter of 2011, we expect revenue of about $23 billion and we expect diluted earnings per share of about $4.80.”

Apple will provide live streaming of its Q4 2010 financial results conference call beginning at 2:00 p.m. PDT on October 18, 2010 at www.apple.com/quicktime/qtv/earningsq410/. This webcast will also be available for replay for approximately two weeks thereafter.

You don’t need to look any further than Apple’s stock price over the past several months to know that they’re on a roll. A year ago, the stock price was at about $190 a share. Today, it closed at $317.93 a share — an all-time high. In fact, they’ve hit several all-time highs this month alone. Their market cap is quickly approach $300 billion. And now the company has just announced their Q4 earnings. And once again — boom.

Just as with last quarter, Apple easily beat the earnings estimates. The company posted $20.34 billion in revenue and $4.31 billion in profit — both new records for Apple. EPS was $4.64 (Wall Street consensus had been $4.06 and Apple’s guidance had been $3.44). A year ago, Apple posted revenue of $12.21 billion with a profit of $2.53 billion ($2.77 EPS). All that said, gross margin did drop a bit, to 36.9 percent down from 41.8 percent a year ago.

The key product numbers: 3.89 million Macs during the quarter, 14.1 million iPhones, 9.05 million iPods, and 4.19 million iPads. Aside from iPods, each of those is a new record for the company. The number of iPhones sold is probably the most amazing stat there.

On the conference call, Steve Jobs was bragging about the iPhone and commenting about the tablet market:

"We've now passed RIM, and I don't see them catching up with us." They must now leave their comfort zone, and will be a challenge for them to get developers to embrace their platform. What about Google? Activating 200,000 Android devices per day, and 90,000 apps in App store. Apple activated about 275,000 iOS devices per day over past 30 days, with peak around 300,0000 on some of those days. With 300,000 apps on App Store. No solid data for Android phone shipments. Google loves to characterize Android as open, and iOS and iPhone as closed. We find this a bit disingenuous. First thing most of us think as open is Windows. Unlike Windows, where most PCs have same UI and run the same apps, Android is fragmented. Many Android OEMs install proprietary UIs."

"Tweetdeck contends that it has to deal with over 100 versions of Android, and over 200 handsets. Makes this much more complicated. And this is for handsets that have been shipped less than 12 months ago. Compare this with iPhone, with 2 versions to test against. Amazon, Verizon, and Vodafone have all created their own app stores. "This is going to be a mess for both users and developers."

"Open doesn't always win. Look at PlaysForSure Microsoft music system. Even Microsoft dumped this in favor of Apple's approach, screwing OEMs. And Google's integrated Nexus One flopped. Open versus closed is a smokescreen. What matters more is what's best for the customers. Users want devices to "just work" and believe integrated will trump fragmented every time."

"I'd like to comment on avalanche of tablets poised to enter the market. It appears to be just a handful of credible entrants, not an avalanche. Nearly all use 7-inch screen. One thinks this would offer 70% of benefits of 10-inch screen. But it's only 45% as large as the iPhone's 10-inch screen. If you cut iPad screen in half, that's what you're looking at. Not enough for good tablet apps. You'd also need to include sandpaper so people could make their fingers smaller."

"Even Google is telling tablet companies to wait for new release of Android next year. What does it mean when software supplier says not to use software for tablets, and you ignore them and use it anyway? New tablets won't have any apps. And competitors having a hard time coming close to pricing, even with cheaper, smaller screens. These new tablets will be DOA: Dead on arrival. Sounds like lots of fun ahead."

What if the iPad were a PC?

Philip Elmer-DeWitt on a report by Deutsche Bank’s Chris Whitmore:

Exclude the iPad, and Apple’s PC sales grew 24% year-over-year. Include them, and Apple’s unit sales soared roughly 250%. By comparison, Hewlett-Packard grew 3% year-over-year and Dell units fell 5%.

When the iPad is part of the mix, Apple’s share of the U.S. PC market is about 25%. That makes it the market leader, having gained a remarkable 18 points in the space of two quarters.

John Gruber comments:

Like I just said, there’s no way Microsoft and Intel aren’t taking this seriously.

He's right.

Intel, Microsoft, and the Curious Case of the iPad

Brook Crothers:

“That tablet thing? Yeah, we’ll get back to you on that.” That’s a crude but fairly accurate encapsulation of the attitude Microsoft, Intel, and Advanced Micro Devices have toward the iPad and the tablet market in general.

Why the cavalier attitude? Before I defer to the opinion of an IDC analyst I interviewed (below), here’s one pretty obvious reason I’ll put forward. All three companies look at their revenue streams — traditional PC hardware and software on laptops, desktops, and servers — and come to the conclusion that the tablet is a marginal market. A deceptively accurate conclusion, because at this point in time — and even 12 months out — the tablet is marginal compared with the gargantuan laptop, desktop, and server markets.

John Gruber had some interesting thoughts on this, and rebutted with this comment:

An interesting take, but I disagree. I think Microsoft and Intel are both taking the iPad’s success extremely seriously. It may be a small market, as of today, but the trend line is heading north at a very steep angle. I think it’s a case where you can’t take what Microsoft and Intel say about it at face value. Intel has no processor to power an iPad-class devic. Microsoft has no OS to run an iPad-class device. Most worrying for these companies may not be the iPad itself, but the fact that iPad competitors — scant though they are, as of today — aren’t running Intel processors or Microsoft software.

Additionally, I think that as more Android driven tablets come out over the next year, they will still be 1-2 years off before they begin to catch up to the feature-set that the iPad launched with in April. And in that time Apple will have released the second version of the iPad, further raising the bar of what they will need to achieve to meet expectations that users have come to expect from the iPad. And even then? I'm sorry, but if I can't get Simplenote, Dropbox, Netflix, Osfoora, Reeder, Instapaper, Flipboard, Deliveries, Airvideo, Kindle, Elements, New York Times, Angry Birrds, Epicurious, Pandora, NPR, Scorecenter, and MLB At Bat all on this mythical Android tablet? Then you have not yet begun to compete with the iPad.

The Social Network: My Review

This past weekend my wife and I went to see The Social Network at our local movie threatre in our neighborhood. Being a huge fan of Aaron Sorkin (The West Wing, Sports Night & Studio 60) I had high hopes for this movie. I've loved all of Sorkin's previous work as someone who appreciates when a movie or tv show doesn't stoop to the lowest common denominator in order to try to get ratings. Sorkin is unapologetic in his use of witty dialog that forces the audience to pay attention to keep up with the film. I knew this wouldn't be an episode of The Jersey Shore (which, by the way, is clear evidence that the human race is doomed to idiocracy).

Now, before I go any further... Have you seen The Social Network yet? If not, go see it now. Do not read any further. Go ahead. I'll wait.

Okay, back now? Good. Let us continue.

As a movie, by itself, disconnected from reality? Fantastic. Amazing. Phenominally good. Aaron Sorkin at his best. I want to watch it again. I will buy this movie immediately when it comes out instead of ripping it from a DVD I got from Netflix in the mail. Oops, did I just type that out loud? Anyway, go see this movie. It is worth it.

Like any Sorkin screenplay, this film's dialogue was endlessly witty. As an asshole-in-training myself, I greatly appreciated the intellectual wit that Sorkin portrayed Zuckerberg's character as possessing throughout the film. In my opinion, the most hilarious, stand-out line of the film was when Zuckerberg's character refers to the two rich douchey Winklevoss twins as the "Winklevii". Yes, quirky geek humor, but I loved it.

I also loved how, throughout the film, the story would cut from the past to the future legal testimony of Zuckerberg and the two parties who were suing him. The back and forth time travel from the past events, as they were happening to the testimony served as a nice way to narrate certain parts of the film in order to tell the history as it was portrayed to happen over a several year period.

Now, all of that being said....the film was grossly inaccurate. I love Aaron Sorkin's work but major parts of the storyline were incorrect and most of the inaccuracies came about because of Sorkin's inherent biases. Rather than try to explain these inaccuracies and Sorkin's biases, I will let Lawrence Lessig someone else whom I greatly admire, do so for me:

Sorkin vs. Zuckerberg

...But as a story about Facebook, it is deeply, deeply flawed. As I watched the film, and considered what it missed, it struck me that there was more than a hint of self-congratulatory contempt in the motives behind how this story was told. Imagine a jester from King George III’s court, charged in 1790 with writing a comedy about the new American Republic. That comedy would show the new Republic through the eyes of the old. It would dress up the story with familiar figures-an aristocracy, or a wannabe aristocracy, with grand estates, but none remotely as grand as in England. The message would be, “Fear not, there’s no reason to go. The new world is silly at best, deeply degenerate, at worst.”

Not every account of a new world suffers like this. Alexis de Tocqueville showed the old world there was more here than there. But Sorkin is no Tocqueville. Indeed, he simply hasn’t a clue to the real secret sauce in the story he is trying to tell. And the ramifications of this misunderstanding go well beyond the multiplex....

I recommend you read the rest of his piece, in its entirety for the full rebuttal to the premise of The Social Network's story. That being said, please do see the movie too. Both the movie, and Lessig's article, are worth seeing and reading.

And finally, if you've gotten this far and still haven't went and seen the movie (despite my earlier advice) here is the trailer:

HP to kill Windows 7 Tablet Project

According to Techcrunch:

Hewlett-Packard has killed off it’s much ballyhooed Windows 7 tablet computer, says a source who’s been briefed on the matter.

The device was first unveiled by Microsoft CEO Steve Ballmer at CES 2010 in January and was supposed to hit the market in mid 2010. But our source tells us that HP is not satisfied with Windows 7 as a tablet operating system and has terminated the project (something CrunchGear mentioned months ago).

HP may also be abandoning Intel-based hardware for it’s slate lineup simply because it’s too power hungry. That would also rule out Windows 7 as an operating system.

So what will HP use as an operating system? Look for Google-powered devices, which have already been announced. And HP really does seem determined to make a go of the Palm WebOS. They said how important it was to them yesterday, and they will likely experiment with porting it to a slate-type device.

Will WebOS emerge as a successful operating system for tablet devices? That seems very unlikely given the dominance of the closed Apple OS and the likely success of the open Android and Chrome operating systems from Google. To get traction from third party developers with WebOS HP will need to sell a lot of units. And it’s not clear what they’d gain from all that effort, anyway. HP knows how to build and sell hardware, not operating systems.

Lets see....JooJoo tablet? Dead. Microsoft Courier? Dead. HP Slate with Windows 7? Dead. And the assumed WebOS alternative for the HP Slate? Given that they only acquired Palm yesterday, they'll be lucky to ship something by late Q4 2010, probably Q1 or Q2 2011...right about the time that the iPad 2nd Gen comes out. Apple, yet again, has a huge lead on everyone else with a new product category.