Why the iPhone Won't Kill Apple

You go two steps into a mild economic slowdown with Apple predicting a softening of sales and analysts all around are crying "the sky is falling" or the iPhone will kill Apple. Sometimes I get real tired of the nonsense that people write.

First of all, unlike other consumer products such as the XBox, Apple could halt production today, sell off the remaining supply, and walk away from the iPhone and probably generate a profit, or at worst, a negligible loss. That is a great position for Apple to be in. If the iPhone were to suddenly become a disaster, it might hurt the stock short term but it wouldn't take the company down. And Apple doesn't need to dominate the market either. With the way that they have structured the iPhone transaction, they could be very profitable with only a small slice of the market.

Second, Apple has a range of options to respond to market conditions. They could drop the price to the fire sale level and dilute the iPhone brand (never happen) or simply reduce manufacturing orders for now as they gauge demand. In addition, Apple can do what it did during the last downturn - innovate. By continuing to drive value by adding features and functionality to the iPhone, they build demand for it, even if some of that demand is pent up until disposable incomes or discretionary dollars are available. One thing is certain, Apple is not acting like a company whose sales are desperately low.

Third, Apple has a host of delivery channels for the iPhone that have yet to be explored. The business market has not fully embraced it for a number of reasons that I won't go into here. But suffice to say, solving just a few of those issues could open up significant demand in the business sector without having to compromise the device. 

Apple hasn't fully explored its Best Buy relationship either which could realize significant bump in sales just from having the iPhone on display but with iTunes activation, the buying process is simplified. And there are a bunch of high street retailers that Apple could chose from to sell the iPhone.

The international market is barely tapped potential. The release of a 3G model would be a boon to the international market, which has much more density in 3G coverage than in the US. Sometimes, it's a detail like this that can move a product from being a "cool device" to a "must-have device". 

Fourth, the release of the SDK (software development kit) should provide a wealth of third party applications that provide tremendous functionality or entertainment value. While other smart phones can already do this, none have been able to do it with the panache and interface of the iPhone.

Fifth, it's the only device out there that does the music and movie stuff right. Competitive offerings typically are a hodgepodge of services and features that don't work seamlessly together. Most of these boiled down to nothing more than schemes to line the pockets of the wireless providers. Remember the $2.50 song download that could only be done on the phone, not synced from a computer, and the quality of the song was lower than the $0.99 version from iTunes? 

Because of all these things, I don't have any long term doubt about the iPhone even though there might be some short-term softness in demand. However, I think we'll all be surprised when Apple announces their next quarter's results.

Apple + Sony + Yahoo = Merger Schmerger

The blogsphere is all abuzz about Apple buying out Yahoo or Sony as potential targets to spend its warchest of $18 billion or whatever it is now.

Pure bunk I say.

I have yet to see anyone present a viable case where Apple would receive real value for any of those acquisitions. Both of these companies would endure a tremendous amount of culture clashing and probably would end up being worth less than the sum of their parts.

Don't believe me? Go to Yahoo!'s website and see if it reflects the clean minimalism that Apple loves to portray. Not even close. And it's too far away from Apple's core business to make sense. 

The same goes for Sony, although their US website is pretty clean with nice flash. But Sony's business is so diversified that I think it would choke Apple's creativity to work through the multi-layered corporate structure at Sony.

I'm going to go out on a limb here and suggest that Apple's acquisitions tend to be small companies where they can integrate a product or technology seamlessly into the ecosystem that they are building. That has been Apple's strategy since Steve Jobs came back in 1997. It's more than selling a computer or iPod. It's about a total user experience that pulls the pieces together in a transparent fashion.

Witness Apple's deal with AT&T and the iPhone, then Starbucks, and then those two companies band together to provide valuable Wi-Fi across the country that increases the value proposition of owning an iPhone. It's this kind of thinking that is providing unique and valuable services to customers today as opposed to a hodge-podge of products and services that require a lot of tinkering on the customer side to get to work. And a pile of gobblely-gook to explain.

Right now, Apple can use it's flush bank account to fund research and innovation through an economic downturn, exactly what they did last time. What could the next version of OS X, the next iPhone, or the next digital device do to bring more customers to their base? 

Apple is smart to stick to their guns and buy companies that add value to their core offerings. So let's end this merger talk and continue to root for a decent Exchange client for the iPhone.

iPhone for Business and Microsoft Exchange

I'm sitting down to catch a few rays from the tube last night and an iPhone ad comes on. Nothing unusual there. But what caught my attention was that the content being showed on the iPhone was directed at business users, not the consumer. I believe it was the "All These Years" ad but after seeing it today, somehow it looked different to me.

But in any case - I was struck at how this ad was really directed at the suits and how much of the recent iPhone developments are a perfect trifecta pointing at exactly that.

First, you have AT&T creating a new iPhone add-on service plan for corporate accounts. 

Second, the impending release of the SDK has business written all over it. In my mind, Apple would want to release the SDK with a lot of fanfare. Not fanfare in touting all the technical details but by trotting out new applications that they or third parties have developed. I'm betting that Microsoft Exchange connectivity will be one of them (and no Ethel, using IMAP is not an option for far too many users so let's not get into that argument). IBM is not hiding the fact that it's working on a Lotus Notes client for the iPhone and there have been others who are chomping at the bit to do the same.

Third, in preparation for the onslaught, Apple releases a premium model that business users with a lot of disposable income or flush expense accounts will pick up. That extra storage space is not only good for all those movie rentals from iTunes, but forms a great sandbox spot for third-party applications and user storage space to reside. It also makes a great profit generating machine when the 8 GB models are sold out and some buyers will willingly pony up an additional $100 even though they hadn't planned on doing so.

If this is truly the case, and that before the end of February we will see this kind of business connectivity, I would surmise that Apple has way underestimated it's next quarter results. No wonder the iPhone supply is considered volatile right now.

I know a lot of salespeople in the company I work for would gladly front the cash to buy their own iPhone if true Exchange capability (ok, at least email and events) were part of the package. I did without Exchange support. But I wanted to buy before the rush.

For the record, I have no insider information and everything concerning knowledge of Apple's and other entities' activities are freely available on the Internet or pure speculation on my part. I do own stocks in APPL so I prefer to be bullish. 

Macworld - the Aftermath

Okay, so a bunch of my predictions were off. I did hit the idea of the Slim Book (now known as the MacBook Air) although rumors of that were all over the blogsphere. But my guess was right that Apple would come up with an elegant solution and game changing idea to leave optical disks behind.

And Apple certainly retooled it's AppleTV to support HD downloads like I imagined although I still wished that it had a digital tuner and could work as a DVR. I would gladly pay $299 for such a unit. But the call on iTunes HD was right on.

The rest of the hardware in terms of MacBooks and MacBook Pros fell off the wagon - no updates to those. Nor anything in regards to the hardware of the iPhone or iPods. But this is the opening gates of 2008 and there are months to go where product refreshes and updates can make a huge difference.

One thing that Apple is probably going to make a big splash over is the SDK (software development kit) for the iPhone. I'm betting with the release of the SDK, there will be a bunch of critical software releases, either by Apple or by other software developers.

The one release I'm hoping for is the ability to synchronize with Microsoft Exchange in a secure way. I think that this will have a huge impact on business purchases and could blow the next quarter out. It will probably require a whole different Mail and Calendar application because I doubt that Apple will change their Mail application and iCal. This has been their approach because Exchange in some ways, competes with Apple's own server mail offerings.

I don't know any details but I've heard rumblings that a solution is being worked on but I'm not sure if by Apple or Microsoft. And I don't know when.

Either way, I hope very soon to be pleasantly surprised.

My Macworld Predictions

Here are my realistic expectations for MacWorld. These are speculative only. Don't make stock buying decisions or wait on purchasing an Apple product because of these. Only Apple really knows what they're going to do.

iPhone
No 3G yet. Not until AT&T gets better coverage. Fact is, iPhone browsing works very well compared to other phones because it has a fast processor to render the web pages. I would expect announcements regarding third party application and possibly, Microsoft ActiveSync licensing which would speed up adoption amongst business users as a response to the overwhelming request for better Exchange support. Watch for a sizable bump in flash storage, and new features enabled as the device evolves. Maybe even something like an iChat client.

MacBook Pro
New processors - maybe the new 45 NM Penryns for faster processing, longer battery life, cooler operation. Same case. Perhas an additional feature here or there but mostly evolutionary. A built-in flash drive to speed up boots and to extend battery life would be great.

MacBook
I'm thinking evolutionary improvements here. Expect the new LCD screens. With the move for the iMac to aluminum and glass to be more environmentally friendly, the case of the MacBooks really are a sore thumb. An aluminum keyboard surface so you will have a white/aluminum or black/aluminum look would be very cool.

Slim Book
I know a lot of people are talking about a flash driven, no optical drive notebook for $1,500. A flash drive that would work in conjunction with RAM to reduce hard disk swapping for extended battery life (and hard drive life too) and for faster booting is more plausible. But flash only? No way.

We are at the cusp where optical drives can be dropped just as similar to the time when Apple dropped the floppy disk for the iMac. I'm betting that most of us don't use an optical drive for daily usage anymore. With being able to download most applications you buy or movies, having a low usage device take up so much internal space doesn't make sense anymore. Plus, it's one more mechanical thing that can go wrong which increases the cost of warranties and servicing.

I would expect it to be part of the MacBook Pro line which is typically purchased by the more experienced and affluent user who would gladly trade the additional cost of an external DVD drive for better aesthetics. Look of amazement by those around the conference table when you pull out your ultra-thin notebook compared to the bricks and anchors

iTunes
Here's wishing for HD video content that would look nice on my 42" LCD.

AppleTV
Needs an update to drive adoption. Maybe HD content from iTunes will help. Also, if it could record from TV like a DVR it would be a lot more meaningful device. But, keep it at $299 and put a Blu-ray player in it (I prefer HD but Disney's stuff is on Blu-ray) and it would fly off the shelves. Or make it a Blu-ray/HD combo for $399. Now you're talking long lines at the checkout counter.

The AppleTV then becomes a device that drives iTunes, iPod, and Mac adoption. Sort of a tail-wagging the dog thing like what the iPod did.

iPod
Bigger flash memory in the iPod touch with similar third party application support as the iPhone. I would think iChat with voice support over Wi-Fi would be great, but don't expect it.

Besides these products from Apple, look to see Microsoft Office being officially announced, as well as some other application that takes advantage of Leopard technologies.

Well, that's my prediction list. Now we'll just have to wait and see.

What Do You Want in Entourage 2008?

The feature set in Entourage 2008 is done. All we're waiting for is the announcement and to get our grubby virtual fingers on the feature list.

But it won't stop my from ruffling my feathers which I need to do from time to time as I get frustrated as the lone Entourage user among over 400 Outlook users.

Out of Office - you know how many times I come back from a trip and forget that out of office is on, only to be questioned by a customer or another user as to my status? Let me turn it on or off from Entourae and warn me when it's on.

Entourage Today - is there a simple way that I can see my InBox, appointments, and tasks in a single view. And let me add new tasks with one click. And while you're at it, make sure the tasks sync with Exchange too.

Faster Syncing - is there a better way to sync so that it doesn't have to check all my subfolders all the time? Maybe the universal version will just work better for this. I don't know.

Better certificate handling - why do I have keep clicking through root certificate errors when my PC brethren launch and load without any problems?

Display Fonts! I have to set my fonts articifically large so that Outlook users see them at human oriented sizes? If I set my fonts to 10pts, only a Vulcan can read it, or someone with a magnifying glass. I know there is a difference between Mac and PC screen resolution rates. Can't we just all get along?

HTML Display - you know how many times I get an email that looks great in Outlook but looks crappy in Entourage? Or I can't use the forward function to send an HTML email as it came to me (you have to forward as an attachment). Maybe they have this licked with the new rendering engine - I hope so!

Word formatting - no, I don't want to use Word to format my emails - but if it works great as a universal version, I can live with it. But for now, when others use Word to format their signature in Outlook, I get extra spaces between the lines. And the messages I receive don't always turn out right. All we ask is the Word and Entourage people have lunch together with their PC counterparts. Maybe a napkin agreement can put an end to this.

Stationery - I don't use stationery because it just takes up unnecessary bandwidth although once in a while, for a special occasion, it would be nice to use it. Or when someone sends me an email from Outlook with stationery, I wish it would not only look right, but when I reply to the email, it doesn't go all funky.

Colors. You know, Entourage is pretty plain looking. Although I prefer understated looks, Entourge could use a little more blush and lipstick. I actually don't mind the bolder separator bars in Outlook. Maybe add some Leopard looking pizzazz (just not spotted fur themes OK?). I'm sure you can do it tastefully without making it appear tawdry.

iCal syncing options. I need something to protect Entourage from wiping out all it's entries when you delete the synced calender in iCal. Happened to me once. And now I'm getting 4 or five copies of the same event as well. Finally, I just shut the thing off because it was a pain to manage.

Resource management - when I want to reserve a meeting room that is setup as a calendar, it works great doing it in Outlook. Doesn't work too well in Entourage. And if you set the meeting up from the meeting room calendar, your own calendar doesn't reflect the meeting.

Meeting notices - okay - when i get a meeting notice, I would like to know what my calendar looks like before accepting or declining meeting. Maybe they don't need that on Mars but here on Earth, we can't be in two or three places at once. If someone wants to double or triple book a time slot, well, they can do that. But most of us prefer to maintain saner schedules.

Well - what would you like to see in Entourage 2008 or in a service pack? And please, no cussin'. Keep your remarks intelligent, concise, and to the point. The better our responses, the more Microsoft is likely to pay attention to our needs.

iPhone Disrupting Internet Explorer?

A number of years back, I wrote for another website that in the corporate space, one of Apple's biggest problems is the many browser-based client software requires ActiveX and Internet Explorer. This effectively shuts out the Mac as a desktop client because those apps simply won't work unless something like Citrix or virtual technology is used. So much for browser clients being truly agnostic.

And Microsoft likes it that way because it makes Microsoft money. It keeps businesses buying PC's with Windows installed. It keeps developers buying Microsoft development tools. And allows Microsoft to control the computing industry to suit its own goals. Any company in this position would likely do the same thing.

So the only way for a competitor to change this is to come up with disruptive technology. And the iPhone is exactly that.

The iPhone is a consumer device. But many stock brokers, doctors, insurance agents, realtors, corporate executives are going to buy this device. They will want this to be their primary device. They will show it to their friends. They will pull it out at meetings. They will want to access the same browser-based applications as they do on their PC because it comes with a full fledged browser. And they will be disappointed when they find out it won't work. And they will complain loudly.

And the smart software companies will respond. The dumb ones will die out or be marginalized.

As a backhanded move, Apple released Safari on Windows. I doubt that Apple thought that millions of web users will switch like they did with Firefox. Instead, it gave Apple an easy response to web application developers to make their web sites and browser client applications iPhone friendly. Which turns into Mac friendly. Which means more Macs sold in the corporate space without Apple having to launch a full frontal assault on their Redmond friendlies.

It also means that more websites and developers will embrace open standards, or at least be forced out of lock-in relationships. Which brings competition and innovation. Which plays right into Apple's hands.

Can you imagine a $250 iPhone in a year's time? There are people in multiple industries thinking of that very same prospect now and losing sleep over it.