AMITIAE - Monday 27 January 2014

Cassandra: Monday Comment - Q1 2014 Figures Imminent, Apple Still Doomed; Tim Cook on Apple and the NSA

apple and chopsticks


By Graham K. Rogers


I had a weekend away from Bangkok with students in a fairly cold Kanchanaburi staying at a couple of the hydro-electric dams up there. Part of the usual plan is for the teachers and students to have a frank discussion on Saturday evening. These sessions are liberally oiled with liquid refreshment.

BT As is their style, the students clink glasses at times, often when one of them has made a good point, either about a teacher, or more often about their own or friends' behaviour. On one occasion, a couple of the students were a bit far away from each other for the glasses to meet, so they both said, "Bluetooth, Bluetooth" which made me laugh out loud.

Th Bluetooth technology allows a contactless connection to be made between devices in reasonably close proximity and the students - being Electrical and Communication engineers - had hijacked the idea for this different purpose. Lovely touch.

My reports and photographs from the weekend are online:

In a few hours from the time I am writing this, Apple will announce its financial results for Q1, 2014. They are expected to be good, with predictions of record sales for the iPhone 5 models as well as iPads, and a few Macs thrown in for good measure. A useful chart of some of the predictions is available from Philip Elmer-DeWitt on Fortune. The consensus is said to be that sales will be reported as $58 billion for the quarter.

We should remember that Apple, usually conservative when it comes to financial matters, released a revised earnings estimate in September for the last quarter and when the report for that quarter was released Apple's own predictions were:

  • revenue between $55 billion and $58 billion
  • gross margin between 36.5 percent and 37.5 percent
  • operating expenses between $4.4 billion and $4.5 billion
  • other income/(expense) of $200 million
  • tax rate of 26.25 percent

So the average analyst is really betting on Apple's upper prediction. That sounds safe.

Of course, when the real figures are announced, the shares usually drop because, Apple has peaked; one of the estimated figures is lower than expected (like growth or sales of something); or one of the analysts fears Apple even when it is bearing gifts quarter after quarter. Of course it cannot last.

If only the analysts would apply the same standards to other companies like Amazon, with persistent losses (the potential is there), or Microsoft (constant, even though mundane).

Anyone who looks at Apple news, cannot have missed the news items on 30 years of Macs. The Apple site has a nice video; and the event allowed all those experts who have appeared in the last couple of years to drag out the superlatives from the collective thesaurus. I handled a Mac in 1985 and it was so different that I did not know what to do with it. Of course, if I knew then what I know now. . . .

Mac 30 years of Macs actually means that Apple is a little older as there were popular models before: Apple 1, Apple ][ and Lisa, with one or two of the features from these being used in the Macintosh. But the icons were all new and designed by Susan Kare: she is still in the business of design.

Throughout all the time that Macs have been used, Apple has been doomed. Even the mouse was criticised. John Dvorak saying that there was no evidence anyone would want a pointing device. Bill Gates did. Jonny Evans on ComputerWorld looks at Apple's 30 doomed years and gives us some of the highlights (or low-lights) of these predictions of failure. He notes (as does MacDaily News which gave me the link to this item) that Michael Dell was proved wrong about the imminent failure of Apple. As we have seen of late, it is Dell that is now in trouble and even flirted with the dangerous Carl Icahn who has been sniffing around Apple too.

One of the constant memes is that Apple cannot innovate any more. This comes from commentators who usually look at the outside of the latest iPhone, but when iFixit or AnandTech pull it to pieces a couple of weeks later, we learn just what good stuff is really inside. I also like to point out the innovations that Apple has brought to the industrial process. New tricks in the factories make for better economics which makes better profits. That is what Apple likes, not market share. If I read anything about Apple's market share, I usually yawn as it is not really relevant (zero would be of course).

On that note, Shane Cole reports on AppleInsider that Foxconn have completed assembly testing for sapphire glass screens that are expected to be used in the next iPhone. And news today covered by Jack Purcher on Patently Apple tells us that there is work starting on the A8 processor as Apple sorts out its supplier options.

I would also mention the number of erroneous predictions about the arrival of the iPhone 5s which ran from a May release, with every month after being predicted at some time or another. These guys don't know shit and yet major news sources accept their flaky predictions as if it were from the mouth of Tim Cook. When it does come from the mouth of Tim Cook (or Phil Schiller), that is when we know it is real.

The AppleInsider report also mentions sourcing of the new sapphire glass and that Apple "signed a $578 million deal with GT Advanced Technologies to open a sapphire manufacturing plant in Arizona". Is this for the next iPhone, or maybe the iWatch that Tim Cook has never mentioned either?

Tim Cook Tim Cook has been talking this week, but about Apple and PRISM: the NSA spying that has a lot of people worried and more (including me) annoyed with the arrogance of the US Government. The interview that Cook did this week with ABC is a bit short and has Craig Federighi and Bud Tribble (Apple software VP) as well, although in silent roles (in this video).

It covers the Mac Pro, 30 years of the Mac and the NSA. Cook's words on this have satisfied some people, but I am not sure. Cook said that the number one point was that the US needed "to be significantly more transparent". Good luck with that. The NSA have him tied in knots and there is a gag order on Apple. He also said that he would be pressing Congress for more transparency. Good luck with that too as that House seems to be avoiding its real responsibilities to the American people.

There is a link to the video in an item by Jordan Kahn on 9to5 Mac. The whole thing is under 4 minutes and deserved to be much longer. When asked about certain product predictions Cook answered "I can't tell you that" a number of times. The interview was much longer and there is a transcript of the whole session in an item by Sam Grobart on BusinessWeek

Graham K. Rogers teaches at the Faculty of Engineering, Mahidol University in Thailand where he is also Assistant Dean. He wrote in the Bangkok Post, Database supplement on IT subjects. For the last seven years of Database he wrote a column on Apple and Macs.



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