Apple iPad Pricing

If Apple is sincere in its stated belief that iPad is the future of personal computing (i.e., “PCs aretrucks”), Apple’s relatively low pricing strategy makes great sense.  Setting up an established base of users can create a virtuous circle of application development to defend against an assault by an alternative future.  And setting such a base up quickly makes sense if establishing that defensive wall is the goal.

I say "relatively" low pricing strategy as I know iPad prices are not low.  But they are lower than one might expect of Apple.  This is a company that still wants to make sure it makes money when it sells something and so maintains healthy unit profit margins.

To balance these competing goals (margin and scale), Apple must keep its prices realistic and this has resulted in a pace of advancement that is likely slower than what Apple is actually capable of (iPads could probably run macOS if they had to).  But that is fine if advancement isn’t necessary to grow the market or, put alternatively, if the market can be grown more quickly through price than with specifications.

iBook

If Apple decides to make a notebook form iOS device, the iBook name is waiting (the last iBook was in 2006).  Aside from the iMac, the name fits perfectly with the MacBook, iPhone, and iPad naming conventions.

iPads already support trackpad like cursor control (and I guess some iPhones do too?).  And iPad Pros seem focused on keyboard support.  So offering a better keyboard and a trackpad experience is not a big jump.

I wonder what will be the catalyst (nominal or real) for something like this.  Office is already available.  Screen size is already there.  Maybe an issue with the ergonomics of touch on a vertical screen?

iPhone SE backorder

I ordered an iPhone SE on May 26. Apple estimated it would take about 2-3 weeks for delivery (that is around June 14).

I figured that, as has been typical for Apple, 2-3 weeks was a conservative estimate and the phone would arrive well before that. Instead, the delivery window hasn't shifted at all.  In fact the estimate for the earliest delivery date is now 3 weeks from the order date and the outside date has shifted to 4 weeks...

A few questions:

1) were sales completely underestimated? It seems clear that original estimates were low (given that the phones immediately went on backorder upon release).  But now it seems that estimates continue to remain wrong?
2) why are they still backordered? Is it supply and not demand?  Has demand increased and so made even revised sales expectations too low? Or is supply somehow constrained as Apple gears up for iPhone 7 (if there even will be a major change to an iPhone 7).
3) why were sales so underestimated in the beginning and, perhaps, now?
4) will up-to-date iPhones henceforth come in 3 sizes (4, 4.7, and 5.5 inches)?
5) will Apple change the launch cycles for iPhones and iPads to Spring and Fall, respectively?  I think this would better match gift cycles (it is cumbersome to gift an iPhone because of carrier subscriptions and so moving away from holiday makes sense).

All in all, the pessimism around Apple seems odd if even a phone that is cosmetically identical to the 4 year old iPhone 5 can sell out for weeks (and perhaps months).

Perhaps a small product portfolio and growth are not at odds?

This DaringFireball post made me think a little bit about the recurring (2015, 2014, 2013, 2012) theme of "Apple is too dependent on a single product".

There's no doubt that Apple's results and future are closely tied to the iPhone's continued success.  But I also think it is important to think about how much that concentration on iPhone has created the success.

Gruber's comment about Apple's rapid and enormous growth (i.e., both its rate as well as its rate in the face of its large size) highlighted, again, the importance of having a small suite of products (the fabled: "We can put all of our products on the table you're sitting at").  It's not news that the sharp focus allows Apple to break the mold of low-return device sales.  My small question of the day is whether, beyond customer satisfaction, the only way to manage a giant company (at least by market cap) successfully is to have a narrow portfolio of products?  I'm distinguishing between a complex company and a complicated product mix.  There can be a lot of activity (a complex company) that supports the sale of those products but, to make sure efforts are coordinated, the products (and thus goals) must be few.

And the portfolio is even smaller than it may appear.  The criticisms of "iPad is a just a big iPhone" and insight that AppleTV is just a display-less iPhone also mean that the products have significant overlap.  Which means that the supporting underlying activity for each is largely complementary.

And, as I write this, I realize it may be captured in the Asymco post I just linked to - from 2010 (of course Asymco figured this out a long time ago).  Oil companies (the title is "Apple vs. Exxon-Mobil") are another example of giant complicated companies with small portfolios.

can't delete Apple Music?

Why does this Wired author assert that "You can't delete" Apple Music?  If Brian Barrett means "you can't go back to the old Music App", he's pretty wrong.  If he means you can't delete the Music App period, he's right but that has always been the case.  And I'm pretty sure he means the former as he seems to be lamenting the change from the old Music app.

For those who don't want Apple Music (I didn't - I was spooked by the lost songs/mixed up metadata problems and didn't think it likely I would use Connect), and who want to revert back to the old pre-Apple Music app, do the following:

1) go to settings>general>restrictions and scroll down to "Apple Music Connect".  Deselect Apple Music Connect and enable restrictions.
2) go to settings>music and deselect "Show Apple Music".
3) if you use iTunes Match, leave "iCloud Music Library" enabled to keep playlists synced and all music available on your devices.

And now you are back to your pre-Apple Music app.  No Connect.  No "New".  No "For You".  Just Music, playlists, and radio.  Just like before.

Is it a little inconvenient?  Absolutely - I needed to write a set of instructions.  Is it difficult?  Not really, the instructions had two (maybe three) steps.

tablet doom and gloom

There's been a lot of concern about declining year-on-year tablet, including iPad, sales.  I think the definition of the relevant market needs closer examination.

For traditional business measures ("will this business line increase sales this period vs the relevant prior period?"), these metrics (total unit sales, revenues, etc.) are correct.

But, for trying to predict the relevance and permanence of a sector ("are tablets a flash in the pan or are they a device with staying power?"), these are NOT the right metrics.

Regarding reduced year-on-year sales, tablets, and the iPad in particular, had huge initial sales because they answered the unmet demands for many people and there had never been a solution prior to iPad's release.  The dramatic improvements from iPad1, to iPad2, to iPad retina, and iPad Mini, all led to meaningful sales even to those who previously purchased earlier generations.  But, as many have pointed out, iPads are durable and capable devices so upgrades are less frequent, especially as incremental improvements have been less dramatic (iPad Air 2 v iPad Air 1 is a sharp example).

None of this means that the second meaning of market (the user base) is adversely impacted.  I'd bet that many iPad1s are still going strong and relatively useful.  iPad2s are definitely still useful (noting that they continue to be sold as the base iPad Mini!).  So, in terms of a growing user base, tablets look healthy.  Apple's own comment that most buyers are new suggests that this is the case (and helps to explain why, atypically for Apple, it continues to sell 3 year old hardware in the tablet space unlike any other).

I think we are close to the point of seeing what normal replacement cycles look like on iPad and should think more about household durables (washing machines and televisions) than phones or even computers.  It's probably a five year cycle and so will start seeing some meaningful growth in a few years as the pig of those first few huge years moves through the python.

Apple Watch sales expectations - UPDATED 1

I’ve revised my thoughts on how Apple Watch will sell.  My initial thoughts were that it would do okay but people would hold out for a next generation.  I think this is largely right but that I ignored a second set of buyers and so ended up underestimating sales for the first generation.  For many buyers, they will see the limited set of apps, unknown use-case, etc. and so defer.  However, I think a second set of buyers will snap this up – gift givers for whom these issues really aren't that important (because they don't need to use the watch).

There hasn’t really been an easy Apple gift for a while.  iPods and then iPads fit the bill as a gift but both markets saturated pretty quickly; how many of each can someone really use – especially as there weren’t big changes after a while?  iPhones are a tough gift as they either impose a subscription obligation or have a very high price tag (two years of service as part of the gift?).  Looking at Apple Watch, the wide price points make it a perfect “Dads and Grads” type gift and one that has more cultural resonance than iPods or iPads ever did.  As a luxury/signifier gift, the limited and uncertain functionality should not be a handicap.  Watches remain a common commemorative/notable gift and they are clearly not selected for functionality or practicality.

As a result, I suspect May and June sales are going to be far higher than expected at launch and that we will see unbelievable holiday sales in 2015 and 2016 (assuming a thinner version is launched in time for holiday 2016).  I'm going to guess 6 to 10m watches in May + June (and one week of April) but that 80% will be small Sports for a $400 average selling price.

UPDATE: Given the substantially delayed shipping times, I think a lot of potential gift givers will fall away as the shipping dates will miss graduation.  At the same time, the heavy load on the online store (which can handle probably 4m sales based on iPhone releases) suggests that there was a LOT of demand.  The store regularly crashed for me when checking order status (placing the order was fine though).  Finally, the significant shipping delays suggest there won't be much supply (if any) on hand in stores, further reducing sales.  So I think we are at the low end of 6m for the first quarter of release but only because of constrained supply.

UPDATE: iOS app privacy

How does a Google or Microsoft iOS app know that I have other Google or Microsoft apps installed on my iOS device?  For example, if I download and install Chrome (after having, perhaps Google Maps installed and myself logged in), I am greeted with to offer to sign in - and Chrome already knows my Google ID.  Similarly, if I download Word, log-in, and then download Excel, Excel already knows my Microsoft ID.

This is surprising as it means the apps have access to both a list of my existing apps (I think this is okay but not ideal) as well as my user ID (huh?).  Is it possible for me to write an app that can: (i) determine a user's Google ID; and (ii) ask the user to log in and thus give me credentials?  (i) alone seems bad, (ii) is very bad.

Also, noting that I do not even need to provide a password to confirm to Chrome that I am myself, is there some serious security lapse here?

All very odd

UPDATE: Is this related?  http://appleinsider.com/articles/15/06/24/apple-expanding-user-privacy-will-prevent-ios-apps-from-seeing-other-installed-apps.  It's not completely the same (as this seems narrower than knowing my Google ID and Microsoft ID).  But perhaps part of the same framework?

Apple and high defensibility

There are lots of reasonable questions about iPad's growth and future.  Nevertheless, this article makes a nice argument that Apple has enough of a lead in the space and, more importantly, a sustainable advantage in processors, to continue to earn profits and improve the product without obvious near-term risks or competition in its high end space.  This is a direct result of Apple's vertical integration and, as a corollary, having a proprietary source of supply for chips.  Whether or not there is some enormous use case of the iPad is still somewhat unknown (to be clear, it is a big business even if people have difficulty articulating exactly why it is better than alternative formats), at least there is time for Apple, its customers, and its developers to figure it out.

Even more interestingly, the article notes that this processor independence makes a strong case for AppleTV and AppleWatch.  In brief, as Apple works to bring general computing to different places, it can stake out a high and differentiated ground using hardware (processor) and software (OSX/iOS) advantages unlike anyone else.  It is not the idea of vertical integration as a defensive strategy that is interesting; it is the fact that no one else seems to be trying this (at least successfully).

iPhone 6 and one-handed typing

Why would one-handed mode on a large-screen iPhone require a crazy re-sizing scheme?  Wouldn’t it just be a small variation of the iPad’s shrink-and-split keyboard where the iPhone keyboard would shrink to match the size of the regular iPhone keyboard and shift to one side or the other?  It could even use the same trigger (a slide of the screen once engaged) or just default to shrunk and shifted.

iPad Mini Pricing

A fun data point to help think about the reasonableness of the iPad Mini's pricing.  The original iPod Mini (4GB, 1.67 inch grayscale 138x110 screen, 8 hour battery life, 3.6 oz) was sold through February 2005 for $249(!).  And people bought it like crazy.  It was expensive but people found a way to justify its purchase.  I suspect plenty of people will find a way to justify the purchase of the iPad Mini.

iPad Mini

A few not-so-special thoughts on the iPad Mini that put in writing what I would say if someone were to ask whether to buy it:

1) It is really an iPad 2.  Same processor (noting, as anticipated, that the 32nm process allows Apple to stick to the 10 hour battery life specification that they have chosen to be a fundamental iPad feature), same memory, same resolution (but not PPI), etc.  And an iPad 2 is only $70 more.  So if one doesn't own an iPad and is price sensitive, he should just buy a 2 (noting that it may not get supported up to iOS 7 as iPad2 was not given Siri).
2) It's a bit pricey compared to Androids (both branded and unbranded) and iPad 2.
3) But, if one already has an iPad and is looking to add another, the Mini starts getting more attractive vs. a 2 (Siri, better camera).  Especially if "another" means an "auxiliary" iPad - one that is picked up because the other is being used or that is taken on the road, etc.  The distinguishing physical features (weight, size) tied to the same overall experience (iOS 6 with no compromises) might make this the device of choice for out-of-the-house use.
4) This is especially the case for those with a first-generation iPad and a second (iPad 2 or New iPad).  For those who can't quite justify buying a third full-size iPad when the iPad 2 works just fine, the slightly lower price with changed physical attributes could be enough to make this worth buying.
5) I imagine that the $329 price is strong evidence that Google and Amazon sell their tablets at cost based on Apple's 30-40% profit margin target.  This isn't really relevant to a purchase decision other than to suggest that the lower price of the Nexus and Fire shouldn't be seen as a sign of significantly worse quality.  This is #2 stated otherwise and might push a buyer towards one of those two.
6) I suspect that there will be some interesting education pricing (maybe $300) but that the iPod Touch made the $299 price almost impossible to use. So look for reduced prices for the Touch and Mini in 6-9 months.  Meaning that there's no rush to buy a Mini here - especially with an A5 that will be two generations behind an assumed A7 in 12 months or less.
7) I have thought that the product introduction cycle for iPad and iPhone was backwards - although both are suitable gifts, because of the carrier hassles, iPad makes a better gift.  And thus Apple would be better served with fall introductions than spring.  Perhaps the iPad 4th gen introduction is a sign that iPads will now get updated in the fall and phones will transition to the spring.  Now is exactly the right time to make this switch.  The next phone will likely retain the 5's design and so development time is slightly easier (one less major change to manage).  Fall 2013 iPad has a natural design direction (thinner and lighter as the current is heavier and thicker than the 2) and so has a good selling proposition.  Six month upgrade cycles are so fast as to upset purchasers (note those who have asked to return their third-gens because the fourth came out) and perpetually delay purchases.  I note this in the context of an iPad Mini purchase because one should not hold out for an iPad fifth gen in spring 2013 if the choice is between Mini now or fifth gen later.

My takeaway from my advice to myself:
- We have a first-gen that is getting laggy;
- We take the iPad with us all the time and it can be a little burdensome (it has a heavy case);
- We haven't been spoiled with the retina iPad's display (only have an iPad 2 and the first-gen);
- We won't buy a new full-size iPad until it gets thinner and lighter; and
- $329 is not great but still better than $399 for another 2.

So we will buy one for Christmas and strip down the old iPad so it runs a little faster as a pure web + iTunes machine.  Like our old iPhone 3Gs.

A last thought: the iPad 2 may have been retained to do something similar with the MacBooks: create a retina line and a non-retina line as Apple transitions to all-Retina over time.  The continued presence of the 2 without highlighting it as the "base" iPad is weird.

USB-Lightning Cables

The apparently imminent launch of the iPad Mini (or whatever it will be called) could help to explain why USB-Lightning cables continue to be in short supply.  Given the choice between selling them in retail and as a constraint on sales of a new iPad form factor, I guess it makes sense to make sure they are allocated first to the iPad Mini (although margins must approach 100% on the cable, cash margin of the iPad Mini sale is still higher at about $60-75).  There were plenty of cables available before the launch of iPhone 5 (I got mine in two days) and now it's on backorder.  That doesn't usually happen with Apple's supply chain.

Amazon Phone and Instant Video

The longer Amazon goes without releasing an instant video app for iPhone, the more likely it seems that an Amazon phone is imminent.  If it were far away, it wouldn't make sense to hold off issuing.  And there is no technical reason not to release (as there is an app for the iPad).  So, my only explanation (I'm sure there are others) for no iPhone version is that Amazon wants to have as complete a differentiated feature list as possible.

I think (I could check but am too lazy) that Kindle books also followed the same pattern (Amazon proprietary device first, app version later).

UPDATE: I was clearly wrong.

"We got a great deal on sandpaper"

Some have suggested that a 7.85" iPad is difficult to introduce because of Jobs's memorable quip regarding sandpaper and smaller tablets.  I don't think this would really stop Apple from releasing a 7.85" version if they think the market will embrace it.  But, as a nice break from the Jobs era and as a memorable line, they could simply start off the intro by saying "we got a great deal on some sandpaper...".  I think including a square in every box would be going a little too far but would be awesome.

More seriously, I had been wondering why Apple didn't promote the improved specs of the iPad 2 with the 32nm process.  It occurs to me that, by keeping the improved battery life as a silent feature, they would be able to use the new chip in an iPad mini (which will likely have a disproportionately smaller battery than iPad) and so maintain their 10 hour use standard for iPad easily.  If they had promoted the 12+ hours life, it would make the battery life of the mini seem like a letdown (and, of course, would have highlighted the lower life of the iPad 3rd gen).

touch and hover

Hover was a great innovation on the computer - to provide contextual information with a short lag (to avoid mental overload or distraction) nicely matches normal human interaction of hesitation indicating uncertainty (and thus suggesting more information is needed).  Adding hover to touch would be a great innovation for touch screens and make screens more information rich without requiring more real estate.  I'm not sure if it would work best as a literal hover (where a fingertip that is close but not touching is registered as a hover) or  something more prosaic (a three finger touch or similar).  But hover really is missing from iOS and would be valuable. And easier to use than iPhoto's help button (which has the information overload problem).  I wonder how Office will handle this.

crazy iPad stuff

As the iPad already seems to do nearly everything most users need of it, it's hard to think of obvious features to add.  But there are plenty of wacky ones that would be great:
1. e-ink smart cover.  There seemed to be a time when some cared about the use of the iPad as an ebook and its use in sunlight.  Given the exorbitant price for covers (leather smartcover - $70!), couldn't it make sense to have an e-ink cover?  If amazon can sell a kindle for $79, it seems credible that a cover can come in at a reasonable price as a lot of the work would be handled by the iPad itself.  And, as a way to present infrequently updated information, it could even handle some of the widget issues.
2. video-in.  iPad has a great screen that can pull in data from lots of sources.  But all of those sources need to be on-board or, at best, stream from something else using a wifi network.  I'd like to see iPad to iPad streaming so a single video can be played simultaneously on two screens using bluetooth or some sort of parallel ad hoc wifi.  Or, even better, add the ability to allow hardware connections to use the iPad as an auxiliary screen - parents would love this in the car.
3. waterproof.  As tough as the iPad is, we still take great care to keep it from getting wet.  Reading in the bath, using in the kitchen, taking to the beach - all of these work much better if the enclosure is water resistant (I'm assuming water resistance covers sand as well).

kindle killer

How's this for a Kindle Fire Killer?  A fully iPad/iOS compatible tablet computer, 9.7" screen, 16GB, 10 hours battery-life (100+ hour standby).  $300.  Name brand manufacturer (Apple, actually).

AppleTV

If I understand this right, AppleTV now streams/redownloads video as well as audio previously purchased from iTunes.  Which means that (setting bandwidth issues aside), when traveling, I can just bring my AppleTV and plug it into a hotel TV and have my entire (to the extent iTunes purchased) video library available.  I currently use the iPad as a video library but even with 64g, the library is limited.  Too bad hotel bandwidth makes this more hypothetical than useful for now.

Kindle Fire comparisons

I think a lot of the reviews and analysis of the Kindle Fire are missing a key comparison.  Although the iPad, GalaxyTabs, and Xooms of the world are relevant, equally relevant (and perhaps more so) is the iPod Touch.

Like the Touch, there's no cellular connectivity.  Like the entry-level Touch, it is 8GB.  Like earlier generation Touches (which sold fine), it lacks a microphone, camera, etc.  And its screen is far bigger.

And so, for a lot of people who wanted apps (games) and media (movies/TV), the Fire will be an attractive alternative.  I don't think this matters much for Apple today.  Perhaps with a deeper pool of users built on this first Fire, a larger Fire will present a real alternative to the iPad.  At the same time, so long as the Fire concentrates on being a delivery system for Amazon-sourced content (and so leaves off features that work for apps but not for content - such as a front-facing camera), they may simply co-exist peacefully (and, by further fragmenting Android and, in any event, "unconcentrating" it, make it harder for an Android competitor to the iPad to succeed).