Doomed, Doomed I Tell You

It’s quarterly results time for Apple and thanks goodness they’ve turned in a negative result for the first time for 13 years.

Revenues have dropped, iPhone sales are down, Mac sales are down, iPad sales are down.

About time too!

It had to happen.

No company can sustain the level of growth Apple have seen over the past 13 years. It was never a question of if Apple would ever stop growing revenues, more a question of when.

And it looks like that time is now.

So they are doomed then?

Well not really.

They made $10 billion profit last quarter on revenues of over $50 billion or as Jason Snell puts it over on sixcolors.com:

It was a bad quarter in which Apple made $10.5 billion in profit. That makes it Apple’s 10th most profitable quarter of all time—it’s just that Apple’s five previous financial quarters were all better. If you ignored Apple’s staggering calendar-year 2015, in which it made $54 billion in profit, it was actually pretty great. The last time Apple made less money in a quarter was only a year and a half ago. Seasonally speaking, it’s Apple’s third most profitable second quarter of all time. Unfortunately, 2015 was more profitable, as was 2012.

In fact, I’d highly recommend you take a look at the full article to get a sense of perspective on the numbers quoted (and assumed) from the recent earnings call. The summary is worth repeating:

So in other words, if you like profits and strong sales, Apple has that. They’re not not what they were last year—and that’s not a great sign for Wall Street. But don’t let someone tell you that Apple’s in trouble, or that it lost money, or that iPhone sales are cratering, because none of that is true. What is true is that after many years of growth, some of it staggeringly inflationary growth, Apple didn’t grow this quarter. If you’re an investor, that may be quite painful. If you’re a user of Apple’s products, it probably won’t affect you much at all.

Well said Jason.

Of course the stock will tank, but I’m glad the period of unsustainable growth is over – for now.

We’ve yet to see what effects the products in the pipeline for this year (and next) will do to Apple’s numbers.

  • The MacBook Pros and Mac Pro’s are due for a major refresh.
  • Apple TV will probably have a big update over the next 12 months with support for 4K and I would expect 4K content to make an appearance on the iTunes Store.
  • Apple Music (their first subscription service – my emphasis) is going from strength to strength as well as their services businesses overall.
  • The Apple Watch is due for an update in the next 12 months, with a new hardware specs and a revision to watchOS.
  • The iPhone will go through its usual refresh cycle in the Autumn with a new design and some extra features we didn’t know we needed.

And they are only the existing products we know about.

Plus we have the push into untapped markets such as India and further inroads into China.

We have announcements in a couple of months at WWDC and we have the as yet unannounced Apple Car – imagine what revenues that might generate.

Oh, and they are sitting on $233 billion in cash in the bank.

Doomed they are certainly not.

But I hope now that the growth has paused (quoting Tim Cook), the financial analysts will stop looking at Apple’s growth potential and focus more on the company as it is.

A company not reliant on producing blockbuster smash hit year after year (although I’m confident they’ll continue doing this), but a mature stable company with stellar products, a proven track record and a customer base of over a billion satisfied customers.

No longer a company on the brink of collapse like in the 90’s, but an amazing performer like no other.

They won’t of course, they’ll continue to look at Apple and wonder when they are going to fail. They wonder when the house of cards will all come tumbling down.

I know I’m not a financial analyst, but I just don’t get the pessimism from Wall Street – it boggles my mind.

For full disclosure, I do have a small amount of Apple stock which I obtained several years ago. Not enough to allow me to retire on, but it’s been interesting to follow the ups and downs of the stock price. These days I just let it sit there and see what happens!

Apple Event Reflections

I’m writing this on the morning of Tuesday 22nd March, 2016 – the morning following the Apple event at the Town Hall on the Apple Campus. Following these type of events, I’ll usually draft something on my thoughts, or what I found interesting about the announcements. However, it’s also the morning of the bombing in Brussels, where many people lost their lives. I was tempted not to write anything about the Apple event, out of respect, but then realised that not to do so is probably what the perpertrators of these evil acts want. To all those affected by the horrible events of this morning, my thoughts are with you, but we must carry on and not let them get the better of us.


 

So as I wrote yesterday, no suprises in what was announced last night – the iPhone SE, the 9.7″ iPad Pro and iOS 9.3 – oh, and some new Apple Watch straps.

The environmental piece and the CareKit initiatives were very interesting, very Apple. The way the Health initiatives are building are going to be huge for Apple in the medium to long term.

However, I think Liam stole the show – something about Apple and robotics gets me very interested. I’m sure they are investing heavily for certain internal projects.

As usual, there is a fair amount of “meh” about the event, but in some respects, knowing what was going to be released was actually of benefit – I felt zero let down after the event. I knew there would be no major announcements – it was the Town Hall to a select few numbers of people.

Harking back to previous events which had been kept in absolute secrecy, the rumour mill tends to go completely off the rails with all sorts of outlandish and fantastical rumours – rumours that Apple have no way of actually fulfilling. The fallout from these sorts of events, when Apple “fails to deliver”, is several magnitudes greater than the murmors of discontent eminating from last night’s event.

Personally I think that the two new products are stellar and address a significant part of the Apple customer base – those who want a smaller, cheaper iPhone and those for whom the 12″ iPad Pro is just too damn big.

We shall have to see if the new iPad Pro does anything to stimulate iPad sales.

And could I just ask, how do I get a ticket for the first event in Apple’s new campus?

Apple and the Cloud

Several news reports that Apple have signed a deal to move some of their cloud services to Google.

googlecloudplatform

According to the sources, Google executives have told partners that Apple is spending between $400 million and $600 million on Google Cloud Platform, although this couldn’t be independently confirmed. Also unclear is whether this range refers to an annual spending rate or a set amount of capacity.

This is interesting for several reasons:

  • Many people do not realise that Apple, despite a huge investment in their own iCloud infrastructure, is a customer of other Cloud service providers to deliver a wide range of Apple services. In this case, it’s being sugested that the move to Google was away from Amazon Web Services (AWS).
  • Apple are the second major player to move away from AWS in recent days – Dropbox have recently announced that they have migrated almost 90% of their data from AWS to their own proprietory solution – a mammoth task The Epic Story of Dropbox’s Exodus From the Amazon Cloud Empire

It may well be that Apple will also eventually migrate all of their data to their own rapidly expanding set of Datacenters, but it’s not a trivial task and requires years of planning and investment.

Whilst on the subject of Apple and the Cloud, I’ll go against the usual old tired moaning that Apple doesn’t get the Cloud, and is poor in its execution of Cloud services as “it’s not their core competency”.

I would agree with this stance (partially) back in the MobileMe days, but I think Apple are hugely underated as a player in the Cloud.

iTunes had 800 million accounts in 2014 (*) a 40% growth on the previous year. Let’s say they have 1 Billion accounts today. These will be a mixture of iOS users, Mac users and even a percentage of Windows users too.

It has recently been reported that there are 782 Million people on iCloud. (*)

These are not insignificant figures!

For each device owned, here are just some of the things Apple has to manage every day, at a scale that is just unimaginable:

  • The app stores servicing both Macs and iOS with well over a million apps available for instant download.
  • The installation of millions of apps everyday, including the commercial transactions surrounding the installation.
  • Backing up hundreds of millions of iOS devices with iCloud Backup.
  • Restoring millions of devices and re-downloading entire catalogues of Apps and Data.
  • Syncing an ever increasing amount of data between Macs, iOS devices and iCloud – Contacts, Calendar, Keychain, Mail, Notes, Reminders, iMessage and more. With iMessages alone, customer send 200,00 iMessages every second!
  • Managing a huge email system infrastucture.
  • iCloud Drive syncing.
  • App data syncing via iCloud.
  • Providing web based versions of the most of the core apps in iCloud.
  • Manage the syncing of huge Photos collections between iCloud, iOS and Mac for millions of photos every day.
  • Apple Music and its supporting services streaming and downloading millions of songs to millions of users.
  • Dictation in the Cloud
  • Millions of Siri requests every day
  • and more…

The list goes on… Here is a snapshot of all the various global Apple Services, Stores and iCloud as of this morning.

Cloud Services

And they are just the customer facing systems.

Yes, Apple web services are not perfect and some people do have horror stories.

But next time you have a few seconds delay in something syncing, just reflect at the sheer enormity of the task managing all this stuff on a global basis, to hundreds of millions of customers and devices.

And stop saying Apple don’t know how to do Cloud services.

They patently do!

(Except iCloud Drive, they need to beef up iCloud Drive)

Alternative Retina Display for Mac Pro?

As I previously mentioned, the iMac with 5K Retina Display is going back to Apple. Not because there is anything wrong with it, it’s a beautiful machine, but mainly because I wanted to keep my Mac Pro and I couldn’t justify (to myself anyway), the extra expense of a second powerful machine, just for the display.

However, once you’ve experienced a Retina display, it’s really hard to forget about it!

So in looking for possible alternatives, my eye was taken by the LG Flatron 31MU97 31″ True 4K 60Hz Professional WideScreen LED Monitor.
LG_Flatron_31MU97_31__True_4K_60Hz_Professional_WideScreen_LED_Monitor_-_Black__31MU97-B_

This is a true Cinema 4K display, with a native resolution of 4096 x 2160. The iMac 5K Retina Display is 5120 x 2880. These figures are significant.

Firstly, some words first about using these humongous resolutions in real life.

Yes, you can run these monitors at these incredible resolutions. It’s quite a buzz to play a 4K Ultra HD resolution at full size – and it looks awesome too.

However, in real life, you’re really not going to stick to these maximum resolutions, the on screen elements – menus, dialogue boxes, etc, are just too small.

The true power of these monitors is that it allows you to run in HiDPi mode, or in Apple’s parlance in Retina Mode.

In HiDPi, all the pixels available are used, but they “scale” the resolution to something more reasonable.

With a normal iMac or Apple Cinema Display, the optimum resolution for the 27” screen is 2560 x 1440. At this resolution, all the on screen elements are perfectly readable and correctly sized for the display.

With the iMac with Retina Display having exactly 4 times as many pixels as the 2560 x 1440 display, when in HiDPi mode, each point at a resolution of 2560 x 1440 is made up of exactly 4 pixels. As such, the crispness of the display needs to be seen to be believed. You can scale up the resolution and it still looks great, but the sweet spot is 2560 x 1440 HiDPi. The added benefit is that if you play 4K media it will be displayed in its true resolution.

So as the iMac was going back, I decided to throw caution to the wind and ordered the new LG Flatron 31MU97.

It arrived a couple of days ago and as the iMac isn’t going back until tomorrow, I was able to do some comparisons.

I discovered that at a certain optimal resolution, the LG Flatron 31MU97 is as eye popping as the iMac Retina.

The only problem is that the optimal resolution is 2048 x 1080 not 2560 x 1440

At 2048 x 1080, the LG also is able to use exactly 4 pixels per point making the display super crisp and gorgeous, just like the iMac display.

So what’s the problem?

2048 x 1080 HiDPi on a 31” monitor makes everything pretty damn large!

It’s usable, but realistically, you’d want a bit more screen real estate on such a large monitor.

But all is not lost, if you scale the display up to 2560 x 1350 HiDPi (same as the iMac but just slightly wider as it’s a 21:7 ratio display), it still looks pretty good.

Very good in fact.

If you’d never seen an iMac with 5K Retina Display, you’d be blown away by the quality of the LG 31MU97 at 2560 x 1350 HiDPi.

But it’s not as good as the iMac, very close, but not quite. Presumably due to the fact the scaling is not using an exact number of pixels for each point at this resolution.

Even so, I’d recommend it to anyone with a Mac Pro who wants to go with a Retina Display.  It’s still a Retina display in my eyes as you still can’t discern any visible pixels.

The LG 31MU97 is able to be driven at the full 4096 x 2160 resolution using DisplayPort rather than Thunderbolt, and it is VESA mountable. Not forgetting the fact that it’s half the price of an entry level iMac with Retina Display.

There is one issue in that the monitor is so new, the Mac Pro doesn’t appear to support the full resolution out of the box. However, due to some fantastic work by Stéphane Madru, the developer of the awesome SwitchResX, the full resolution is available by the addition of a small config file on the Mac Pro. You don’t need to purchase SwitchResX, it’s a simple text file that Stéphane has created.  This is documented over on the MacRumours forum.

So I’m a happy bunny again.

I can get my refund on the iMac and have a full blown 4K Retina display on my Mac Pro.

At least, until the next new thing comes along.

 

 

 

The Aftermath

It’s taken me a day to get over the disaster that was the live stream from the Apple event.

Absolutely inexcusable, especially as the event was hyped so much by Apple.

I was so miffed by the whole debacle, I think it has jaundiced my view of the overall event – hence the delay in posting some thoughts. But I think I’m nearly over it so here we go…

So the iPhone was nailed by the rumours following the leaks of the form factors – except no Sapphire! Always good to see the incremental improvements across the board – yay for 802.11ac. Double the transistors in the A8 and significant performance improvements across the board.

Both versions look absolutely gorgeous, and I think the larger screens are well overdue.

As did many people today, I undertook the mockup test and have no qualms about the larger screen. The mockup fitted just fine in my jeans front pocket.

I’ll be opting for the 128GB iPhone 6 Plus in Space Grey.

The larger size really doesn’t freak me out, unlike some people, and the benefits of the optical image stabilisation as well as the increase in battery life swayed it for me. I would rather they added a few millimetres to the thickness to add additional hours to the battery, but on such a large device, the thinness is probably needed.

Pay will be a world changer – no question.

As for the Watch…

It didn’t grab me!

I think the issue was I wasn’t expecting a watch, I’d thought Apple would have introduced an “off the wall” wearable concept.

24 hours later, I’m starting to get it.

It’s definitely positioned as a fashion item and is exceptionally photogenic.

Despite its apparent “chunkiness”, it seems to sit OK on the wrist, and doesn’t look as thick from several angles. Reports from the event seem to suggest it’s light and comfortable to wear (especially the sports edition).

They are definitely positioning it as a luxury item, and so well they might if it’s to partner with the iPhone.

Some of the applications shown did appear slightly “gimmicky” and of dubious necessity.

Great emphasis was made of the “Digital Crown” yet most of the live demo used gestures on screen.

But I think I get it now, and they’ve got another three months to refine the software, as well as give developers time to create additional 3rd party apps.

It might well be the first Apple product that I’ve never immediately lusted after – but I have a feeling its a slow burner.

Will I buy an Watch?

Ask me again in three months…

but probably!

PS The blog might need to go quiet over the next few days. I’ve been called away to foreign shores due to an illness in the family. Should be back to normal next week, or I may find the odd time to get online in the meantime.