Apple’s second quarter 2008 earnings proved to be a huge blowout, though Wall Street reacted negatively to company’s conservative outlook. Well, they are almost always wrong on Apple – which is clearly a sentiment driven company.
Nevertheless, the highlight of the quarterly earnings was the supercharged Mac sales. The numbers match-up with recent reports that Apple was leaping up the US PC-sales charts. Revenues for the quarter were up 38%, highest since 2005 despite slowing iPod sales and scant iPhone sales.
Peter Oppenheimer, Apple CFO was conservative in his outlook for the September 2008 quarter giving many reasons, including “a future product transition.” Analysts from Technology Business Research think that “Product transition” is Apple-speak for cool new stuff. I concur. So what could be on menu?
TBR believes Apple will refresh its notebooks with the latest Intel Centrino 2 processors, which will improve performance and increase battery life. We think the company will do more than update internals, however. In addition to a redesign, TBR believes Apple will add TV tuners and may introduce a larger screen MacBook. To maintain the necessary product differentiation, Apple will probably use quad-core processors for the new MacBook Pros. iMac desktop PCs are not likely to get a dramatic overhaul, but Apple will probably beef them up.
What that means: Apple is going to do more than fine this coming quarter. Not only iPhone sales will goose up their revenues, the new products could add ore oomph to the company bottom line. The big cloud on Apple: Steve Jobs health.
I am dubious when anyone mentions TV tuning, partly because I’ve tested the superbly engineered eyeTV system a number of times over the years as they’ve improved their hardware and software, and it’s clear that tuning is not a simple problem.
With over-the-air broadcasts, you have to tie in a programming guide, a schedule, the variability of signal reception, and the ability of a recording device like an Apple TV to be tasked potentially with decoding and playing back MPEG4 high-def video at the same time as it’s supposed to be reading and recording native DTV broadcasts, and that’s with a single tuner. Two tuners may be de rigeur today, too.
While there’s a CableCard requirement for terrestrial cable, in practice that’s been hard to get, although it’s apparently improving. Apple doesn’t like to have slots in its products, because it can’t control that experience. So the idea that Apple TV would interface with Cable TV systems seems tricky. Likewise the IPTV systems that AT&T and Verizon have deployed.
For satellite, there’s zero requirement for CableCard, and there’s no assurance that anything will change. Apple might partner with one satellite TV provider, but then what about the customers of the other(s)?
For analog inputs, such as the composite or even component outputs of DVRs and satellite receivers, you then have the complication of either requiring an IR blaster or coordinating recordings or some other nonsense. Apple doesn’t like ugly stuff, so running a cable with an IR blaster that might not always work seems unlikely. And Apple doesn’t like to rely on or support third-party add-ons in their initial releases.
I may be wrong about all of the above; Apple might have a unique approach to tuning. But just as Jobs didn’t release a phone until he could control everything he thought was important, TV tuning seems to be in the same boat. So much is out of his control.
If Apple is smart, they will produce a cheap device that tethers the user to a fee based cloud service like the mobile me.
Om, my theory is that if Apple is going to take down margin, that puts some of the Apple magic/mojo on the line. They are only going to do that for something inspired.
What about reinventing the set-top box experience in the same way they re-invented the mobile phone?
That would be a logical rev of the Apple TV, you can imagine the mass adoption price point, and I am guessing the cost of goods sold would be beefy, accounting for lower margins.
Plus, I think that if they are going to continue to grow iPod, they need to fuel demand for the iPod touch, and it is now a remote for the Apple TV and shares media libraries with it.
How far of a reach is it to imagine apps that are hybrids between of the two (ATV/iPod), and built using the iPhone SDK and integrated with App Store?
Food for thought.
Cheers,
Mark
Does anyone know if there is going to be such a thing as Apple TV? When is Apple going to do what MSFT has failed to do so far: Get in your living room?
It is a product “transition”, so my speculation is a new Macbook Air, aggressive pricing between iPhone and Macbook. Macbook Touch is probably unlikely because OSX is not optimized for it yet (most of software dev was focusing on iPhone). Since Apple TV is also in subscription accounting method, new introduction will not impact gross margin immediately. Based on the news that Apple boosts order of High Density Interconnect (HDI) PCB for laptops, they might re-position Macbook Air to the netbook-like category which will decrease gross margin but open new front of market.
I think they will switch all macbooks to SSD.
This would be a costly transition, but will increase Apple’s share of the laptop market bigtime.
Look for Apple to start the migration to hardware that can leverage the advantages of the new OS in 2009. That means quad core for the MBP and BlueRay as an option, if not standard. The easily replaceable/swappable laptop battery compartment image that has been “leaked” leads me to believe quad cores are coming.
When? My guess is August 19, 2008.
An iTouch with GPS and VOIP would be a killer product. Especially with a larger screen and day long battery power. Many people use the iPhone more as a surfing platform — via WiFi — than as a phone.
The PC hardware has caught up and passed the Apple notebooks.
“Product Transition” for me would ideally mean:
1) Apple tablet pc – they already understand touchscreens so I don’t see why it can’t scale
2) A real Apple TV – LCD with a built-in Mac mini and a Wii-like remote would be a killer convergence device
My only worry now is that I was planning on upgrading my 2 year-old Macbook Pro soon but it looks like I better wait.
I’m guessing a $499 netbook product (which I call iPad for convenience) that uses MobileMe to share data and expands iTunes to include digital books. The iPad will run iPhone apps and most importantly, you will be able to use the iPad to author iPhone and iPad apps.
The audacity of the value proposition will enable Apple to finally retire support for the PowerPC and the Carbon API. It will wreak havoc among the Wintel crowd who have squeezed all the margin they can out of their architecture. Anyone who says Apple relies on premium pricing hasn’t listened to Oppenheimer and hasn’t paid attention to Apple’s $199 iPhone or $49 iPod.
I blogged about the projected hardware and software specs for this unit, plus my rationale for the pricing at http://connectme.typepad.com