You would think that after Apple delivered fiscal first quarter record results -- we're talking $57.6 billion revenue and $13.1 billion net profit -- that investors would be happy. But, no-o-o! Apple shares sank more than 8.5 percent in after-hours trading last night. They are down about 8 percent in midday trading. That's what happens when perceptions about the future, rather than present performance, define a company.
But the problem is bigger than just Wall Street analyst or investor fear frenzy. There's an echo chamber bellowing this fine Tuesday, as bloggers and journalists stumble over one another to sound the loudest alarm. After seeing the headlines on Yahoo Finance -- like "New Apple looks like the old Microsoft", "Cure to what ails Apple can be found in the margins", or "How does Apple get its mojo back?" -- I realize someone needs to do a reality check. Geez Louise, Apple had a fantastic quarter. The apocalyptic reaction is nothing less than insanity.
Starting today, the new iPad Mini with Retina display is available to order from Apple's online store. The tablet was unveiled, alongside the bigger iPad Air (that launched November 1) and other products bearing the fruit logo, three weeks ago during a special Apple event.
Folks looking to purchase one today and get it as soon as possible should take into account the customary initial lead times. Apple lists the 16 GB and 32 GB Wi-Fi iPad Mini with Retina display as ready to ship in one to three business days (lower than its estimates for the new iPad Air -- five to seven business days). The 64 GB and 128 GB Wi-Fi as well as all cellular models are slated to ship in five to ten business days. This applies to both the Space Gray and Silver trims.
Google groupies make too much of third quarter tablet shipment estimates released yesterday. By IDC's reckoning, Apple's global share fell from 40.2 percent to 29.6 percent year over year. Meanwhile, Samsung soared from 12.4 percent to 20.4 percent share. The whole Android market grew at iPad's expense -- that's the popular contention smirked across the InterWebs. Yeah, right.
Apple apologists are quick to give the money rebuttal whenever market share tides turn against the products -- that the fruit-logo company earns more per device than rivals, sometimes all of them combined. The revenue rebuttal is exhausting for being so predictable but often also it's right and no truer than the tablet market. Q3 share numbers make lots of sense behind CEO Tim Cook's shocking decision to raise iPad mini 2 prices by $70 over the original -- that's about 22 percent. Profit share is his priority.
Apple's long-awaited iPad refresh is finally a reality. Apple's new full-size iPad, rebranded as the "iPad Air", starts at the usual $499 price. Apple also unveiled an iPad mini with retina display, with a higher starting price of $399 and retained the original iPad mini at $299. Finally, the aging iPad 2 was also retained with the price unchanged at $399. This essentially proves my theory that Apple's pricing strategy has nothing to do with a "price umbrella" and everything to do with margins.
Apple's primary business model is selling high-margin hardware, so this should come as no surprise. While many like to draw comparisons to the iPod, the limited set of "jobs to be done" allowed Apple to aggressively slash BOM costs, thereby allowing lower prices at higher margins. This approach is no longer viable for the iPhone/iPad because of broader use cases and competition from modular vendors. Based on this, let's take a look at the iPad product portfolio and gauge its impact on Apple's holiday quarter.
New iPads reveal much about Apple's current and long-term device dilemmas. Full-size iPad cannibalizes Mac sales, while mini does the same to the larger tablet. Those are the clear takeaways from yesterday's product launches.
CEO Tim Cook is no Steve Jobs, and perhaps that's a good thing. Where Jobs championed grammatically incorrect "think different" -- as a marketing and product development strategy -- Cook thinks differently, making fundamentally difficult branding and pricing decisions to preserve current and future Apple crops. There's great risk in the strategy and greater by doing nothing.
Yesterday was unquestionably the day of the tablet. Nokia unveiled the Lumia 2520, its first Windows RT 8.1 slate, Apple announced the iPad Air and iPad mini with Retina display, and Microsoft’s Surface 2 and Surface Pro 2 went on sale.
It was unfortunate timing for Microsoft. On a day when Steve Ballmer and co. would have hoped people would be talking about Surface, they were salivating over Apple instead. The fruit logo company inflicted more damage on Microsoft than just drawing focus for a day however.
It's only a matter of weeks since the last big Apple event at which the iPhone 5s and iPhone 5c were announced. Today we have another event to look forward to and while we're not absolutely certain of what's going to be unveiled, the clever money is on the iPad 5, a new iPad mini, new Mac and release details for Mavericks.
Who knows… maybe there'll even be "one more thing"!
When a big tech company live streams a launch event, we usually embed it here for readers to sit back and enjoy. Apple likes to make things difficult though. At last month’s iPhone event it didn’t bother providing a live stream, and you can only watch today’s iPad event if you’re one of the Apple faithful.
To be fair, the restrictions on today’s live stream should surprise no one. It’s exactly the same deal as the iPad reveal last year -- you need to be watching on Apple TV or using Safari 4 on Mac OS X 10.6 or later, or iOS 4.3 or later.
This week Microsoft rolled out two new video adverts -- one pitting Surface RT against the iPad, and the other putting the Acer Iconia W3 next to the iPad mini. The adverts follow the same format as previously with a side by side look at the features on offer.
Of course the comparisons aren’t fair. Microsoft picks areas where its tablet/operating system is strongest, and avoids the areas where it’s weakest -- apps and popularity, for example. It’s a lot like comparing apples with oranges (or, yes, lemons in the case of poorly selling Windows devices) and then pointing out that it’s easy to peel an orange, but you need to buy a separate peeler to accomplish the same task on an apple.
Rest in peace, iPad mini. Google killed you. The question then: Is it murder or manslaughter -- or justified homicide, putting the Apple tablet out of our misery?
Three days using the new Nexus 7, I can't imagine why Apple let Google, and partner ASUS, seize back-to-school buying with the tablet. I don't refer just to the instrument of destruction but the means. The 2013 edition is widely available through major US retailers, including Amazon and Best Buy. By all indications there is inventory to meet demand, not the typical supply shortages, although the 32GB WiFi model is unavailable this weekend from many retailers -- but Google Play is stocked.
According to YouGov's latest Tablet Tracker report there are more women owning tablets than men in the UK. The study says that in May, 52 percent of the country's touchscreen computers were in female hands, an increase of nine percent compared with the same time last year.
Over the same period, the share of tablets owned by men fell from 57 percent to 48 percent. There’s no equivalent report for female tablet ownership in the US, but I wouldn’t be surprised to see it following a similar trend. Tablets are ideal for women.
This week IDC released tablet market estimates and the figures are quite a bit off from my original Q1 estimate, but eerily similar to my revised estimate based on NPD's figures. Android tablets are poised to permanently steal the tablet market crown from the iPad, while Windows tablets continue to struggle. Let's take a deeper look at the figures.
Android now leads the tablet market, with a share of 56.5 percent, while the iPad's share falls below 40 percent. Windows tablets are still struggling, with a share below 4 percent and with struggling shipment figures, sell-through is always questionable.
So much for Apple's tablet reign that analysts stoutly stood by even just months ago. Android kicks ass, crushing iOS shipments during first quarter, according to IDC. Among the top four, the fruit-logo company posted the lowest year-over-year growth (65.3 percent), and considerably less than the overall market (142.4 percent). Meanwhile, the company's market share fell by 18.5 points to 39.6 percent.
Among tablet manufacturers, Apple is market leader, with the question being for how much longer. Samsung share rose 282.6 percent -- ASUS even more (350 percent). Strong Nexus 7 shipments pushed ASUS past Amazon to take third place. ASUS' challenge and opportunity could be Google I/O, where the tablet launched last year and new model is rumored for the event starting May 15. Challenge is maintaining shipments during product transition; opportunity is capitalizing on new sales.
Today's closing bell brings answer to a question oft-asked over the past two weeks: "Will Apple profits fall for the first time in about a decade?" Not since 2003, when the fruit-logo company recovered from economic woes that sapped global PC shipments everywhere, has profit receded. Now we know.
For fiscal Q2, Apple reported $43.6 billion revenue and net profits of $9.5 billion, or $10.06 a share. Gross margin: 37.5 percent. A year earlier, the company reported revenue of $39.2 billion and $11.6 billion net quarterly profit, or $12.30 per share.
What's wrong with Samsung? That's the question I asked in newsroom group chat today after seeing specs for Galaxy Note 8.0. Screen resolution diminishes the otherwise noteworthy feature list. Sorry, but 1280 by 800 is inadequate -- little more than matchup to Apple's iPad mini, which is similar size. For a company that makes such great-looking displays, lower-res is an endemic problem across Samsung's entire tablet line.
I really expected more from Galaxy Note 8.0, which as the same suggests has an 8-inch screen; iPad mini is 7.9. Samsung unveiled the tablet in February, and I wrote the news story. But in the rush of Mobile World Congress news didn't consider screen resolution, in part on possibility specs would change. The electronics giant has done it before, announcing one thing but shipping something slightly different months later.