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Summary:

Come Wednesday, it will be Apple’s turn to discuss its results for the first three months of 2009. But among the crowd of Apple watchers, the discussion has been simmering for months, with the tone shifting from pessimism about recession-whacked sales to cautious optimism — especially […]

nyc_14thapplestore1Come Wednesday, it will be Apple’s turn to discuss its results for the first three months of 2009. But among the crowd of Apple watchers, the discussion has been simmering for months, with the tone shifting from pessimism about recession-whacked sales to cautious optimism — especially as the stock has rebounded 58 percent and skeptical analysts have revised previously bearish outlooks.

While Apple is still feeling the weight of the bad economy, it’s also still holding the loyalty of cost-conscious consumers who continue to see value in its products. As encouraging as this last quarter may prove to be for investors, however, the bigger story for Apple is the three months that lay ahead. Not only will they be far more interesting, they could mark a significant turning point for the company and the markets it’s helping to reshape.Apple’s innovations this past quarter were largely incremental — upgraded iMacs, new iPhone software, a smaller iPod shuffle. This quarter, however, it’s expected to roll out initiatives that involve considerably more risk.

The iPhone is sure to see its stiffest competition to date from the soon-to-be-released BlackBerry Niagara, the Palm Pre and various Android devices. Leaks of the features on the next-generation iPhone suggest Apple could maintain an innovative edge over rivals, but any missteps could hurt its market share. The iPhone also faces an uncertain fate as Apple pushes to launch in China as early as June. Talks with China Unicom have dragged on for months, but a successful debut could add to Apple’s revenue growth for years.

Apple’s developer conference in June will offer a platform to unveil the Snow Leopard operating system and offer hints of the company’s strategy for responding to the increasing demand for netbooks. Rumors of a touchscreen device from Apple have been echoing louder recently as well.

All of these efforts are well timed. Not only are they aimed at markets where competition is rising (and in the case of computers, a silly but effective PR campaign by Microsoft), they may be unveiled just as consumer spending reaches a trough. There is precious little room for errors.

Normally, this would be little more than a tricky juggling act for Apple, but hitting all these moving targets in the midst of a major shift in leadership will make it a defining moment for the company. While the Wall Street Journal reported this week that Jobs still regularly reviews products and product plans (a report that was greeted with some skepticism), if and when he takes up the reins at Apple again, he’ll be returning to a company that has made several crucial strategic decisions during his absence.

In the meantime, the longer Apple can continue to execute without Steve Jobs’ day-to-day guidance, the less handwringing there is over how well the company will do under a new leadership. I’ve argued before that Apple will do fine without Jobs. But for the best insight into how successful Apple will be after his eventual departure, the first glimpses will come this quarter.

  1. I still say…lowering the price of their Mac systems to compete with PC would really level the playing field, I think.

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    1. Martin Kelly Sunday, April 19, 2009

      I don’t see BMW or Mercedes lowering their prices to the same level as base entry models from other companies. Apple is a quality brand and many are like me are happy to pay the extra for the quality, usability and fun that Apple products bring, not act as unpaid developers and support staff for Microshaft.

      Let those who want a cheap experience have one, let the rest of us do our own thing. Have aspirations for the best.

      Get a Mac, get a life

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      1. Cheap does not mean bad as open source would show. But my favouite comment is get a mac get a life.
        How does that mean anything lol? Think about it for a second. How is getting a mac vs pc vs linux box any different? They all do similar things (except mac’s and linux have less video game support, maybe that’s what you meant by get a life??).
        I think that the quality excuse is a bit silly, the only products I feel are worth a BIT of a premium is the macbooks, as they are made from a large block of aluminium.
        I have aspirations for the best too, that’s why I prefer the freedom of a PC where I can configure it to suit my needs, and if I had the money, faster than a mac ;).
        Have fun :)

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      2. The comparison with Mercedes is an apt one. While Mercedes produces some exceptional models, their cash cows are the low-end C series cars. These are overpriced budget models which compare poorly with other cars in the same class. Those who can’t afford the real thing buy them at a premium just for the logo. MacBooks are the same. Little more than glorified netbooks (in fact some $400 netbooks have higher specs), they appeal to simple minded logo chasers. It’s hilarious to hear Jobs say that he wouldn’t know how to make a $500 netbook. He’s already done it!

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  2. @Gadget Sleuth,

    In the segments where Apple competes, its pricing is pretty close to the competition in the Windows ecosystem. What I think you’re trying to say is that Apple should elect to compete in markets which contain more budget-conscious buyers and where margins are significantly slimmer, correct?

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  3. @Gadget Sleuth,

    In the segments where Apple competes, its pricing is pretty close to the competition in the Windows ecosystem. What I think you’re trying to say is that Apple should elect to compete in markets which contain more budget-conscious buyers and where margins are significantly slimmer, correct?

    Share
  4. Looking forward to Snow Leopard.

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  5. This next quarter is not likely to reveal any “tablet” device. Rather, Apple is very good at focusing media and customer attention on one major product at a time, with a secondary offering focused at a different market. Here is what the near-term future holds for Apple and it’s growing market of customers:

    April: New Final Cut Pro Studio suite. The timing matches the NAB and new Mac Pro tower introductions well. A boost for the hardware and SW cash cows for Apple, while giving professionals the tools which have pent up demand.

    June: WWDC will bring the iPhone 3G. Beyond the amazingly powerful iPhone 3.0 OS, Apple’s new iPhone HW will be stunning. It must be a major update in order to entice all those original 2-year iPhone owners to stay the course and upgrade, while dragging newbies to the platform.

    HW Features:
    - Thinner
    - 16GB and 32GB models
    - 5mp out-facing camera (still or video)
    - 3.2mp front-facing camera (still and video – mostly video for iChat AV)
    - Better battery life.
    - Faster processor
    - Faster video

    SW Features:
    - Video ability over the new 7.2Mbps 3G AT&T network.
    - Wildcard?…

    Dual cameras will be most impressive, and will be the feature people can sink their wallets into.

    iPhone touch: What is this? iPod touch turns into iPhone touch. It gains 3G, but one can only buy a dataplan for it. The killer feature? Apple includes their own VoIP application. Anywhere you are in 3G, phone capability is completely available.

    What separates iPhone touch from iPhone 3G? iPhone 3G has EDGE and 7.2Mbps speeds and network. iPhone touch cannot work in EDGE (as it does not contain EDGE ability), and it is governed to the old speeds of 3.6Mbps.

    Buyer can choose to – or not to – sign up for AT&T’s $30 a month dataplan. If you own and iPhone already, and buy an iPhone touch, each dataplan is only $20 a month.

    Non professionals will dive into this. It will be AT&T showing that yes, they buy into being only a pipe, and VoIP is the future of calls. $30 a month for VoIP!? Such a deal. It will rock the industry. Kids can now remove a $10 a month line from Verizon or T-Mobile, and quicky justify the $20 extra for iPhone touch.

    This will sell millions upon millions of iPhones to people dropping one line here and there off their family plans, while AT&T scoops them up.

    iPhone touch does not have video capability, nor does it sport the front-facing camera. It’s basically today’s iPhone, without Edge, but has the look and feel of the new iPhone 3G.

    This will be an amazing move only a few see coming, and “tablet” talk won’t even be relant.

    OS X Snow Leopard: Oh yeah, it will be released, showing off it’s new iPhone/OS X desktop merged interface (yes, in 2010, iPhone will be powerful enough to run a full desktop OS. mobile touch, and desktop OS when plugged into a monitor – no tablet required here).

    ~Mark

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    1. Keep dreaming about those hardware upgrades for the iPhone, Mark. People have been talking about the two camera thing since before the 3G iPhone came out and it’s still not going to happen. Who needs that?

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      1. A 3mp is silly for iChat, but it looks like video chat is getting incorporated. There was not a good reason in the past, and I frankly am not interested in the feature, but who knows!

        I think a tablet, or a slightly larger pro version would be great. With the new ARM processors, duplicating cores will essentially provide scalable processing. A 10 inch is starting to look like a great idea! The iPhone OS is going to become computer-like, and I am anticipating this for my next business…

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  6. This next quarter is not likely to reveal any “tablet” device. Rather, Apple is very good at focusing media and customer attention on one major product at a time, with a secondary offering focused at a different market. Here is what the near-term future holds for Apple and it’s growing market of customers:

    April: New Final Cut Pro Studio suite. The timing matches the NAB and new Mac Pro tower introductions well. A boost for the hardware and SW cash cows for Apple, while giving professionals the tools which have pent up demand.

    June: WWDC will bring the iPhone 3G. Beyond the amazingly powerful iPhone 3.0 OS, Apple’s new iPhone HW will be stunning. It must be a major update in order to entice all those original 2-year iPhone owners to stay the course and upgrade, while dragging newbies to the platform.

    HW Features:
    - Thinner
    - 16GB and 32GB models
    - 5mp out-facing camera (still or video)
    - 3.2mp front-facing camera (still and video – mostly video for iChat AV)
    - Better battery life.
    - Faster processor
    - Faster video

    SW Features:
    - Video ability over the new 7.2Mbps 3G AT&T network.
    - Wild-card?…

    Dual cameras will be most impressive, and will be the feature people can sink their wallets into.

    iPhone touch: What is this? iPod touch turns into iPhone touch. It gains 3G, but one can only buy a dataplan for it. The killer feature? Apple includes their own VoIP application. Anywhere you are in 3G, phone capability is completely available.

    What separates iPhone touch from iPhone 3G? iPhone 3G has EDGE and 7.2Mbps speeds and network. iPhone touch cannot work in EDGE (as it does not contain EDGE ability), and it is governed to the old speeds of 3.6Mbps.

    Buyer can choose to – or not to – sign up for AT&T’s $30 a month dataplan. If you own and iPhone already, and buy an iPhone touch, each dataplan is only $20 a month.

    Non professionals will dive into this. It will be AT&T showing that yes, they buy into being only a pipe, and VoIP is the future of calls. $30 a month for VoIP!? Such a deal. It will rock the industry. Kids can now remove a $10 a month line from Verizon or T-Mobile, and quicky justify the $20 extra for iPhone touch.

    This will sell millions upon millions of iPhones to people dropping one line here and there off their family plans, while AT&T scoops them up.

    iPhone touch does not have video capability, nor does it sport the front-facing camera. It’s basically today’s iPhone, without Edge, but has the look and feel of the new iPhone 3G.

    This will be an amazing move only a few see coming, and “tablet” talk won’t even be relevant.

    OS X Snow Leopard: Oh yeah, it will be released, showing off it’s new iPhone/OS X desktop merged interface (yes, in 2010, iPhone will be powerful enough to run a full desktop OS. mobile touch, and desktop OS when plugged into a monitor – no tablet required here).

    ~Mark

    Share
  7. Until the competition can create full complement of services like itunes, ipod, iphone, app store – apple will maintain a niche that is more profitable than any single store or device in the market. Apple has a low volume, high margin niche and will do well to concentrate on that market and not expand too far into the low end.

    If the competition does not come up with a similar ecosystem, they will be consigned to the low end, low profit, high volume market. It’s not bad if you can sustain it.

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  8. Apple is facing an industry leadership gap in one key area:
    http://ebooktest.blogspot.com/2009/04/another-ebook-sleeper-awakens.html

    That is not good.

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  9. Robert Douglass Saturday, April 18, 2009

    @ Mr. Kelleher-

    <>

    Hardly! The iPhone will do fine, even without China. It’s fate is FAR from uncertain; In fact, all the ‘stiffest competition’ is really just me-too’s, trying to catch a forward moving target…

    <>

    Please be more specific. I, for one, do not believe that ANY ‘crucial strategic decisions’ have been made without Steve’s input… which is your implication in your article.

    I find the whole ‘slant’ of your article an attempt to promote FUD.

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    1. Fully agree – Steve said he’d be involved in strategic decisions during his leave and there is no evidence that he has not. Totally unsupported assertion.

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  10. Oh Blah Dee Blah Dah Saturday, April 18, 2009

    RE: “… This quarter, however, it’s expected to roll out initiatives that involve considerably more risk…. ”

    Oh, maybe Apple should do nothing new and just keep selling what it already has on the market.

    Please, Apple has done superbly for years by introducing innovative products and services. and it should keep on doing that, regardless of the economic conditions. Some of the most revolutionary products introduced many decades ago were brought to market during bad economic times.

    Apple will only introduce a product when it can “get it right.” And, THAT is the right time to introduce an innovation.

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    1. That is quite true. As much as I loved the Newton, or more accurately the possibilities of the Newton, it was a failure. A business failure… Apple is doing just fine, and the iPhone is nothing if not a revolutionary business success.

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