Calling Dick Tracy: Will Apple Really Launch An iWatch? Very Doubtful

dicktracyFrom my Forbes.com blog The New Persuaders:

Even in a holiday week, the Apple rumors continue–and today, it’s that the company may produce a smart watch in the first half of next year.

Yes, another techie watch, the bane of the technology industry nearly since the dawn of the microchip. Here’s why I’m not betting on seeing an iWatch anytime soon:

* We all already carry a watch. It’s called a cell phone. And in case you hadn’t noticed, it can tell you the time–more reliably than you can make a call on it, in fact.

* Even Apple would have trouble making a watch with a screen look fashionable enough to wear all the time. Seriously, half the population will never wear anything like this, and I’m betting that even most of the male half would look askance.

* Anything with a screen that would fit on your wrist is too small to do the vast majority of stuff you can do on a smartphone. Don’t even think about anything resembling a keyboard, and Siri isn’t nearly there when it comes to voice commands for a wide variety of applications. The screen also would be too small to run ads on, which, come to think of it, might be a plus for Apple as a way to stick it to Google.

* Apple supposedly isn’t designing this thing. According to the report, Intel would design the watch and Apple would produce it. Sorry, no. Only in the Bizarro universe would this kind of thing happen.

All this is not to say that Apple won’t move into wearable computing at some point. …

Read the rest of the post at The New Persuaders.

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The Mythical iTV: Steve Jobs’ Marketing Magic Is Still Alive And Well At Apple

From my Forbes.com blog The New Persuaders:

Image representing Steve Jobs as depicted in C...

Image via CrunchBase

Another day, another rumor that an Apple television may be coming.

Another recycled rumor, in fact. The Wall Street Journal reported this morning that China’s Foxconn, a major Apple supplier, is helping Apple test some prototypes for a large-screen television set. That follows similar (OK, identical) rumors a couple of days ago, last August, last May, and last December saying that Apple was enlisting Chinese suppliers to create an Apple TV set.

No surprise here, given that Apple CEO Tim Cook managed to stoke the fires of speculation last week by saying the company has “intense interest” in television. Of course, Cook himself said the very same thing last May, too.

So don’t hold your breath for an Apple TV that goes beyond the current Apple TV hockey puck. Even longtime Apple television forecaster Gene Munster at Piper Jaffray now says it won’t come before next November. And even then, it’s debatable how important a product it will be, since it’s widely assumed that Apple can’t add much to the current TV experience without deals to get access to live TV shows, or at least win the right to revamp the TV user interface to encompass the full range of pay-TV and Internet content available today. And those deals are nowhere in sight just yet.

But the new flurries of interest in the mythical machine point up something that should reassure Apple investors, at least: Apple cofounder Steve Jobs’ famous marketing magic is still at work at the company more than a year after his death.

Some investors have been worried about whether Cook, by all accounts an ace operations guy but not a showman like Jobs (as no one else really is, honestly), can keep Apple’s brand as blindingly shiny as it has been for so many years now. It’s time to give Cook credit for faithfully following Jobs’ playbook: Let fans wax on about how desirable a new Apple product will be, building demand to a fever pitch so that whatever comes out is guaranteed to get unparalleled attention. Indeed, a recent survey says they’re already willing to pay considerably more for an Apple TV–whatever it turns out to be.

No, Cook doesn’t yet deserve to be considered a master marketer like Jobs. But he’s off to a pretty good start.

Sorry, But Tim Cook Didn’t Just Announce An Apple TV Set

From my Forbes.com blog The New Persuaders:

Apple CEO Tim Cook doesn’t do many interviews, so it’s understandable why not one but two “exclusive” interviews this week excited plenty of interest among fans curious to know where one of the world’s most valuable companies is going next. In particular, a lot of people picked up on Cook’s comment to NBC’s Brian Willams in an interview airing tonight that television is now an “area of intense interest.”

Sound familiar? It should. Back in May at the AllThingsD D10 conference, he said television is “an intense area of interest to us.” In other words, nearly seven months later, he’s saying precisely the same thing, and no more.

That’s not the only reason to avoid getting hot and bothered about a possible Apple television. An Apple TV set presents a thorny problem for Apple, one that still has no obvious answers.

Some TV people in the know whom I’ve talked to recently say that Apple is indeed working on a television. However, it’s clear that Apple could easily have produced a television by now if Cook and his team felt that they could offer one that would provide a different, compelling enough experience to command a typical Apple premium price. Apple already makes the Apple TV streaming device, it sells monitors, adding a TV tuner would be easy, its iTunes Store and software would be a much better interface for finding TV shows, and it has developed a number of technologies in the past year or so that make it easy to shuttle video from iPads, iPhones, and Macs to a TV screen.

The fact that they still haven’t come out with a TV set is a clear sign that they haven’t cracked it, despite the late Steve Jobs’ crowing before he died that he had done just that. Indeed, many other people in the TV and tech industries can’t see why Apple would sell anything close to a television set, because it fits so poorly with Apple’s business model, its cost structure, the increasingly mobile trajectory of its product line, and even the layout of its retail stores.

In any case, an Apple TV set isn’t coming soon. Gene Munster, the Piper Jaffray analyst who has been predicting an Apple television since 2009, now says it won’t come out before November 2013–that’s right, almost a year from now.

The main problem is this: Unlike the other industries Apple has disrupted, in particular music and wireless communications, the TV business isn’t broken. TV studios and pay-TV operators are doing just fine, thank you. They have no intention of letting Apple into their henhouse, even if Apple is willing to pay the many billions of dollars it would take to get access to live TV content.

Lately, the betting seems to be on Apple making a settop box that would meld live TV for existing pay-TV subscribers with iTunes content under a more intuitive user interface, but it seems that the TV powers that be are wary even of that small step. So it’s tough to see how Apple can offer much unique in a TV set.

The only thing we know for sure is that whatever Apple comes out with in the TV realm, it won’t be what many people are expecting–because many people are expecting and hoping that TV will revolutionize the medium. Viewer demand and Apple innovation notwithstanding, that’s not going to happen anytime soon.

Will The iPad Mini Kill Off All Of Apple’s Other Tablets?

From my Forbes.com blog The New Persuaders:

When Apple’s iPad mini debuted on Oct. 23, reviews were generally positive but a bit muted: What, no Retina display? And why is it so expensive?

But now, after a week or two of playing with it, some of the most prominent reviewers of Apple gear are never going back. Never going back, that is, to their bigger iPads.

From SplatF’s Dan Frommer:

My take after spending a bunch of the weekend with the iPad mini: This is the real iPad… The best thing about the iPad mini is its weight — it’s almost effortless to use, and that’s a big difference. … I feel more confident holding the iPad mini, which means I’m more likely to use it in more places — the whole point of an iPad.

From The Verge’s Joshua Topolsky:

There’s no tablet in this size range that’s as beautifully constructed, works as flawlessly, or has such an incredible software selection. … The iPad mini hasn’t wrapped up the “cheapest tablet” market by any stretch of the imagination. But the “best small tablet” market? Consider it captured.

From Daring Fireball’s John Gruber:

If the Mini had a retina display, I’d switch from the iPad 3 in a heartbeat. As it stands, I’m going to switch anyway. Going non-retina is a particularly bitter pill for me, but I like the iPad Mini’s size and weight so much that I’m going to swallow it.

From The Wirecutter’s Seamus Bellamy and Brian Lam:

The iPad mini is the best tablet to get and lets be honest, it’s way better than the full sized iPad for nearly everyone. I’d even go so far as to say that the full sized iPad is plain obscene after using the mini. … This isn’t just jive talk. I put my iPad on ebay (pls. bid but not too high because you should really buy a mini) and ordered a fully loaded iPad mini for myself.

I understand their attitudes completely. I don’t own an iPad (yet), but I have checked out both pretty extensively. I also have been trying out both Samsung’s full-size Galaxy tablet and Google’s Nexus 7 seven-inch tablet for several months. They’re not as slick as the iPads, but they suffice to provide a sense of the difference between the two models.

And the difference in user experience is huge, even more than you’d think from the difference in weight and size. Once I started using the Nexus 7, I virtually stopped using the Galaxy, largely because the Nexus 7 is so much easier to use. It’s easier to hold in one hand and way easier to transport without fear of dropping it. It slips into a laptop bag or even a jacket pocket easily enough that you don’t have to think twice about taking it outside the house. The iPad mini will enjoy all those advantages as well.

Taken together, the experts’ and my experiences with the smaller tablets makes me wonder if the full-sized iPads will soon be extinct. OK, not extinct but perhaps an endangered species. Already, it appears, they’re headed for eBay.

Honestly, I don’t believe people will completely stop buying the larger iPads. One look at that gorgeous Retina display, and it’s all over for no small number of people. Plus, watching videos on anything but your chest in bed is a bit cramped on a smaller tablet. And full-sized iPads, already increasingly replacements for laptop personal computers, likely will continue to benefit from that switch.

But it’s considerably less cramped on the iPad mini thanks to its larger display area compared with seven-inch rivals. And when Apple comes out with an iPad mini with a Retina display? Could be lights out for the bigger iPads.

Apple seems smart enough to figure out how to make plenty of money on, well, whatever it produces, so I’m sure it will make a lot of money on iPad minis. And even if the iPad mini cannibalizes the full-size iPads to some extent, it’s better for Apple to do the cannibalizing rather than watch rivals simply take the business away.

But a lower price is a lower price. So it will be interesting to see if that lower price on iPad minis will prompt enough more people to go for an Apple tablet to make up for any lost sales of much more expensive big iPads. Given bearish investors lately, not to mention people wondering if the company has peaked, Apple had better hope so.

Apple CEO Tim Cook Is Blowing Smoke When He Dismisses Rival 7-Inch Tablets

Apple Introduces iPad Mini... and some new com...

Apple’s iPad mini

From my Forbes.com blog The New Persuaders:

As a company that way more often than not comes out with superior products, Apple rarely appears defensive. Today was an exception.

On Apple’s fourth-quarter earnings call, CEO Tim Cook took repeated potshots at small tablets of the kind that–yes–Apple itself just debuted. The iPad mini is clearly aimed at blunting the appeal of seven-inch tablets such as Google’s Nexus 7 and Amazon.com’s Kindle Fire.

While I think Cook is probably right that the iPad will continue to dominate tablets, and even that it continues to make the best ones, his overenthusiastic criticism of seven-inch tablets struck me as surprisingly defensive. Saying Apple didn’t set out to build a “small, cheap tablet,” he called the competitors “compromised” products. “We would never make a seven-inch tablet,” he sniffed.

Why not? Because they’re too small, he said. The iPad mini is almost an inch larger, which means a 30% larger screen and 50% larger viewing area. I’ll grant that that is noticeable, and appealing.

But c’mon. These are all tablets you can hold in one hand, and acting as if the iPad mini is something utterly unique–”in a whole different league,” as he put it–comes off more than a bit desperate. Apple is clearly playing catch-up here, and trying to position the iPad mini as nothing like the Nexus 7 or Kindle Fire only serves to make us realize that Apple actually does feel threatened by these devices that beat it to what has turned out to be a real market. …

Read the complete post at The New Persuaders.

Why Didn’t Apple Sell More iPads In Q4?

Image representing iPad as depicted in CrunchBase

Image via CrunchBase

From my Forbes.com blog The New Persuaders:

In a fiscal fourth quarter that slightly missed profit expectations, Apple reported one figure that looks especially worrisome: It sold only 14 million iPads.

You’re thinking, of course, are you crazy? Fourteen million, up 26% from a year ago ($7.5 billion worth of them), is a problem? Yes–because it’s at least 1 million below expectations already reduced by analysts who figured that if 100 million iPads were sold so far, as Apple announced at the iPad mini event, their 17.5 million fourth-quarter estimate was too high.

Update: After rising a fraction of 1% in initial after-hours trading, Apple’s shares moved up and down before flattening after the analyst call started. Shares had fallen 1% today, to $609.54.

There are a number of possible reasons iPad sales fell even shorter than expected. Here are some, pending comments on the analyst call currently underway, during which I’ll be updating this post–and there are a lot of questions on iPads:

* Cannibalization: This is the concern raised by some analysts: People who couldn’t quite justify $400 and up for a regular iPad were waiting for the iPad mini, which starts at $329. No one really knows how many people did this, but it seems likely some did. Update: Apple CEO Tim Cook essentially confirmed not cannibalization but delayed purchases thanks to iPad mini rumors.

* Shortages: When the iPad mini came out with a minimum price of $329, analysts wondered why it wasn’t closer to the other seven-inch tablets from Google and Amazon.com, whose base prices range from $159 to $199. It turns out that some components for the device are in short supply, so it didn’t make sense to price them lower and create demand Apple couldn’t fulfill. But perhaps the shortages affected current iPads as well?

* Consumer saturation: Well, I doubt it, since lower price points, the undeniable appeal of tablets to consumers, and the fact that  a lot of people still don’t have them all mean the iPad probably isn’t limited by demand. But it’s something to think about, given that 100 million have been sold already, very quickly.

And the most interesting possibility:

* Competition: Could Google’s Nexus 7, Amazon.com’s Kindle Fire, and other, full-size Android and Windows tablets finally hitting iPad sales? The market research numbers show millions of those devices have sold, so it’s a distinct possibility, especially ahead of the lower-cost iPad mini.

They’re still far below iPad sales. But it doesn’t take an Apple Genius to see that the arrival of at least decent rival tablets could be presenting real competition for the first time. That’s perhaps the most worrisome possibility if only because it seems the most likely–if not in the last quarter, at least in future quarters.

Here’s more from the analyst call: Apple is saying that it exceeded its own expectations for iPad sales. So assuming it’s not blowing smoke, maybe analysts just got ahead of themselves. Also, Apple says it had 3.4 million iPads in channel inventory in the quarter, or its target four weeks of inventory, so that’s potentially a factor in sales numbers. …

Read the complete post, with more from Tim Cook on the analyst call, at The New Persuaders.

Apple Leaves Gaping Price Hole Between iPad Mini And Rival Tablets

From my Forbes.com blog The New Persuaders:

Let’s just get it over with at the outset and concede that Apple’s just-introduced iPad mini will be a holiday hit, selling millions of units to people who know they can’t go wrong giving a gift of a new Apple product.

And at a starting price of $329, that gift-giving isn’t a budget buster for many people. Let’s face it: Apple has yet another great-selling product on its hands, this time in the palm of ours.

And yet, I wonder if Apple just punted a chance to grind its rivals in smaller tablets, chiefly Google’s Nexus 7 and Amazon.com’s Kindle Fire, into the dust. The Nexus 7 starts at $199, the Kindle Fire even lower at $159. But Google also may release a new Nexus 7 model next week at an Android event, potentially dropping the price of the current low-end model to just $99.

OK, so let’s get something else over with. By all early reports so far, the iPad mini is better than either of those two existing devices. It feels better, it looks better, it’s lighter, it’s thinner, it even still has a noticeably larger screen and especially viewing area than the Nexus 7 or Kindle Fire. Not least, it has Apple’s App Store, with apps that fit the tablet form factor rather than plastering smartphone apps onto a bigger screen.

So yeah, millions of people will love it.

But millions of other people will be hearing a lot about the Nexus 7 and the Kindle Fire, too, and Google and Amazon.com have a huge incentive to advertise the heck out of them. Honestly, if you don’t do a side-by-side comparison, which is tough to do, you may pick up a Nexus 7 or a Kindle Fire and say, “Hey, this looks pretty good. Why do I need to spend an extra $130, or even more?”

That’s why it’s surprising that Apple, whose CEO Tim Cook has talked about not leaving a significant price umbrella for Apple products, did just that with the iPad mini.

Read the complete post at The New Persuaders.

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