The View from Mudsock Heights

My fellow OFB contributor and friend, Dennis Powell, manages to deal with political correctness and issues surrounding utilities and communication services in one highly amusing piece this week. Just the helicopters part alone makes the column worth your time.

The piece does remind those of us in the city about why we have it so good, even when it might not always seem so.

Last Minute Prediction

I think Netflix will be supported by the Apple TV and that the mysterious trackpad device that has been floating around this morning will be a potential way to interact with an iPhone OS driven Apple TV (that makes more sense than offering it as a competitor to the Magic Mouse).

Predictions for Tomorrow

Update: I have a longer story about AT&T and the iPhone HD up at OFB.

With Apple's big WWDC keynote tomorrow, I'll go ahead and throw out some predictions as usual. I think it is virtually assured we will hear of the next generation iPhone tomorrow, and I'm putting my money on “iPhone HD” for the name.

I am all but assured by those in the know that it will not be available for Verizon tomorrow, just AT&T. On the other hand, I believe that AT&T is moving up eligibility for its users — even for some or all who bought the iPhone 3GS last year — to upgrade to the new iPhone because a Verizon launch is coming relatively soon. I believe a Verizon launch early this autumn is likely and Ma Bell wants to get people tied into a long term commitment before rumors around Big Red's upcoming iPhone begin to appear too genuine.

What does extending customers out two years do for AT&T? It buys the teleco time to finish its LTE buildout. While LTE is the designated 4G upgrade from AT&T's present GSM/UTMS network, and not Verizon's CDMA2000 one, Verizon is still way ahead on launching LTE as it joins most of the rest of the world in following 3GPP.

While AT&T's 3G network has more life remaining in it, with its various HSPA upgrades still available, LTE will win if only by a marketing fiat. Don't misunderstand me — LTE is better than AT&T's HSPA network over the long term, but AT&T is right from a technical standpoint not to rush into LTE; not only are devices still not ready for it, but the capabilities for advances in its current network have not been exhausted yet. Put another way: the maximum abilities of HSPA exceed the minimum abilities of 4G technologies like LTE and WiMax. The current iPhone 3GS, with its HSDPA 7.2 support, can offer real world performance that is better than the reported speeds of Sprint's HTC Evo 4G, for example. But, consumer perception is that 4G is automatically better than 3G. Hence, AT&T needs to get as many enthusiasts locked in as possible while it awaits its own LTE network to light up about a year behind Verizon's.

I also think we'll see something else announced, especially since Jobs has promised not to disappoint people who have already seen his crown jewel thanks to the sleazy antics of Gizmodo. The next generation, cloud friendly Apple TV seems like a reasonable choice and could open the door to a prediction I made earlier this year. Such a relaunch might also make sense amidst a larger revision of MobileMe as a partially free service that is more tightly woven into Apple's iPhone OS devices much as Google's services are with Android phones. I think a reworking of MobileMe is almost mandatory if Apple is at all serious about cloud computing, given that for all of MobileMe's advantages, free services from Google, and competitively priced services from companies like Dropbox, best MobileMe in numerous areas.

Updated Mac Pros and Mac minis would also make sense, but I doubt they will get stage time. I think the main Mac mention of note, other than the requisite sales figures, will be some acknowledgement of Mac OS X 10.7, presented as something that is shaping up in exciting ways, but that will not be previewed until some future time. The key goal here will be to assure people that Apple has not forgotten about the Mac.

Privacy Policy

Steve Jobs on user control of application privacy at D8:

People want to know what is going on upfront plain and simple. Ask them what they want to do, make them tell you to stop asking…

Exactly.

How Not to Do Market Analysis

Nick Farrell of the Inquirer writes:

Where Steve Jobs made his mistake was that he marketed the Ipad as a utopian device that can do everything that all his other products can. This is dangerous for Apple because if the Ipad can be a laptop, an Iphone, a e-reader and a music player then you do not really need any of those devices.

Save for the laptop and the iPhone, that's precisely the point.

While no doubt Apple could be hurt if a bunch of people stop buying MacBook Pros and instead buy iPads, that's assuming too much. I think what may happen is where you see families buy fewer computers, but more iPads. For example, you might see each child get an iPad, instead of several children sharing a slightly more expensive MacBook. Overall, that's a big gain for Apple. (And, just like netbooks, don't expect the iPad to entirely kill off more powerful computers needed for things like making home movies or doing major photo touch up.)

Farrell really misses the point when he notes, “Jobs may as well forget launching an Apple version of a Kindle or a PSP, then.” Obviously, the iPad is intended as Apple's answer to the Kindle and one of Apple's competitors to the PSP (along with the iPod touch and iPhone). The idea that Apple would still want to launch single-use models seems to go against the whole convergence direction both Apple and the general industry are following. Note that Apple didn't launch a phone and a widescreen iPod and a small web surfing device back in 2007, either. It launched the iPhone to do all three.

The iPhone is secure because, as its name implies, it is a phone and the larger, heavier iPad is not. If anything, Apple has untapped opportunities to make the iPad and iPhone work together. The iPod touch may be harmed, but if Apple can get people to pick up a $500 or $600 iPad over a $200 iPod touch, I don't think they will lose much sleep over that.

HT: John Gruber

iPad 3G Teardown

Incase you were curious, the good folks at iFixit have already torn apart an iPad 3G to see what makes it tick. The 3G model is, in my estimation, the more interesting option of the two iPad lines. Not only does it come with 3G wireless when you need it with no time commitments required, it also has an apparently quite good GPS chip for use with navigation apps like Navigon (and anything else location aware you might want).

The iPad, Flash and Proprietary Integration

CNet blogger and Canonical COO Matt Asay wrote an opinion piece today in which he applauds an earlier piece at sister publication ZDNet alleging Apple to be on an increasingly proprietary path. The quoted ZDNet writer Jeff Foremski writes,

Since the introduction of the iPod, iPhone, and now the iPad, Apple is becoming less and less open, is using fewer standard components and chips, and far fewer Internet technologies common to Mac/PC desktop and laptop systems.

The iPhone and iPad, for example, don't support common Internet platforms such as Adobe Flash or Microsoft Silverlight. That means you cannot watch streaming video from Hulu, or Netflix.

And while iPhone chips are available from other manufacturers, the iPad runs only on the A4 processor—an Apple designed chip that no one else can buy.

Let's consider these claims. The Apple A4 processor that runs the iPad is based on the same ARM architecture pretty much everyone in the mobile space is focused on at the present time. While Apple certainly likes vertical integration — because it lowers its dependency on outside suppliers and drives down costs — to say that Apple is becoming proprietary because of an in-house chip design is absurd. An Apple A4 is compatible with other ARM processors. The iPad CPU does not make the iPad more or less compatible with other systems than the iPhone's chip; as a matter of fact, neither chip has any influence on Apple's devices being able to interoperate with competitors' devices.

Foremski's second claim that Asay quotes is that Apple is utilizing “far fewer internet technologies” (implied: “open internet technologies”). By this, he apparently means Adobe Flash and Microsoft Silverlight, neither of which are open nor standards. Only Adobe Flash is even a de facto standard, albeit one conspicuously missing from most mobile devices at present. And since when does omitting two plugins become equivalent to supporting “far fewer internet technologies”?

Foremski's other mutterings about Apple in the piece Asay links to are similarly bizarre for someone writing at a quasi-respectable tech media outlet. He suggests Apple came to the PC side, for example, by supporting USB. He fails to mention Apple helped drive the adoption of USB, with the original iMac making waves via its USB-only approach. He also suggests Apple made its “disk operating system files compatible with the PC world,” but fails to explain what he means by that. He can't mean that Apple finally supported reading PC-formatted disks (Apple has supported reading DOS/Windows-based disks for decades) nor that Apple has switched to Microsoft's formats for native disks (it hasn't).

As much of a pain as it may be that Apple is refusing to support Flash on the iPad and iPhone, the company is right in saying that it is pushing for something far more open than Flash. Call that decision whatever you'd like, just don't call it “being proprietary.” Asay, who is a smart chap, shows poor judgment in agreeing with Foremski on this.

Apple Targeting to Kill Ad Networks' Targeting?

Peter Kafka writes,

As I understand it, Apple is arguing that [iPhone and iPad] app makers can’t pass along information that incorporates each phone’s “unique device identifier” to ad networks and measurement companies.

This doesn’t expressly prohibit ad networks from selling ads, but it prevents them from selling targeted advertising, which is close to the same thing when it comes to mobile devices. The same problem would plague analytics companies, which might be able to compile very broad usage info about apps, but little else.

Nonsense. Your computer's web browser doesn't offer a unique hardware serial number to every web site either. Back in the late 90's when it looked like we were headed into such an invasive privacy situation with Intel's PSN (Processor Serial Number) system, people were rightly outraged and the system died a quick death.

An IP address, or in the case of an application in which a user logs into an online service (e.g. Facebook), the user's login and associated profile, are more than enough targeting data to create useful analytics. This seems to be a part of Apple's continued attempt to differentiate its practices from Google's. As Gruber observed recently,

I detected one other veiled insult against Google during the event — Jobs’s emphasis during the multitasking segment about how seriously Apple values the privacy of iPhone users, with regard to data and location information. In the way that the standard knock against Apple is that they maintain too much control over the App Store, the standard knock against Google is that they don’t value user privacy. Jobs’s message: You can trust Apple.

I expect Apple to continue to play up this theme as its war with Google escalates.

Selling Like Hot Cakes

Jim Dalrymple writes,

Piper Jaffray Senior Research Analyst, Gene Munster, on Saturday said he believes Apple sold between 600-700 thousand iPads on the first day. This includes the pre-orders that would have been coming in since March 12.

Something tells me he is likely to be right and that there is a very good chance we could see Apple's press release announcing the iPad hitting the million unit mark before the WiFi+3G version even starts to ship (hurry up already, Apple!).

The naysayers of the last few months will be backpedaling about the iPad's impending failure any time now. Twenty years down the road, I think the iPad will be remembered as the device that finally pried people away from the desktop computer user interface model pioneered in 1984 by the Apple Macintosh.

The iPad will define the tertium quid between the PDA/phone and the PC that has been trying to appear since the ill fated Network Computers of the 1990's.

iPad

The iPad goes on pre-order in less than twelve hours. Before it does, let me go on the record to say I think the device is going to be revolutionary and will more than likely run in scarce supply for the first few months. I fully expect this to be the first mass market success for a tablet computer.

I also believe that the iPad's best uses haven't been dreamt up yet and will come out of innovative app developers finding new ways to make use of its huge multitouch display and its non-legacy foundations. The more innovation we see on the app front, the more indispensable this device will become as a third major hardware front for Apple.

With that in mind, and with full disclosure that I am an AAPL shareholder, let me suggest that I think $250/share is not an unrealistic price target within the next three to six months.