Technology & Gadgets

With the release of the next-generation iPad just around the corner, speculation is heating up over whether Apple will announce significant price drops to ensure the future success of the device. PCWorld is predicting Apple will drop the price of the iPad 2 to $300, and possibly release an 8-inch iPad ‘mini’ for as low as $200 to compete with the Kindle Fire. To them, I say, why? Releasing a $200 or even $300 tablet would be the equivalent of Apple releasing a $500 laptop – it’s just not in their DNA.

They’re much more likely to continue selling the iPad 2 alongside the iPad 3 (or 2S, if that’s what it’s called) at a discount, in the same way they sell the iPhone 4 and 3GS alonside the 4S. They can do this, while maintining their profit margins, because of the constantly decreasing cost of components. According to Bloomberg, the profit margin on the nearly 3-year old iPhone 3GS is about the same as the recently released 4S; we should expect a similar case with the iPad 2 after the next-generation device is released (likely) in the next few weeks. But Apple has no reason to drop the price all the way down to $300; they’re still selling plenty of iPads at $500 and up, so a discount to $400 for the previous-year model would be much more reasonable, while still continuing to fend off most of the ensuing Android competition.

And what about Amazon’s Kindle Fire, and other 7″ tablets at half that price? As Apple’s said before, they’re not really concerned, and for good reason: they’re not really in the same market. The Fire is a high-end e-reader, and the iPad is a full-size tablet. While mini tablets can run a lot of the same kinds of apps that their larger counterparts can, not many consumers are going to replace their home PCs with a Kindle Fire; but an iPad? It’s already happening. And I think that’s the big difference: full-size tablets – currently heavily dominated by the iPad – are in more direct competition with the PC market, while 7″ tablets for the most part aren’t. If anything, they’re in closer competition with large-screen smartphones than they are with PC’s. So while similar, the iPad and Kindle Fire are in two very different product categories, the cheaper of which Apple has no reason or desire to pursue.

Now, this isn’t to say Apple will never release a cheaper iPad; I think they would be wise to release a rugged low-end version of the iPad aimed squarely at the education market some time in the future, perhaps at the $300 price point. I’m not holding my breath for that to happen this year, or even next, but maybe in 2014 or 2015, when the tablet wars have really heated up. After all, we’re still in the first quarter of this new game of tablets, and there’s a lot of plays yet to be made.

Taken individually, Apple’s claims may not look like they have much merit. For instance, one of Apple’s trademarks includes, “The mark consists of the configuration of a rectangular handheld mobile digital electronic device with rounded corners.” Another states, “The color gray appears as a rectangle at the front, center of the device” (the screen). It probably isn’t hard to find prior art of rectangular handheld mobile electronic devices with rounded corners and a screen. But put them together in the same configuration as the iPhone – the rounded corners at the same radius, a grid of colorful square icons with rounded corners, with the bottom 4 set apart on a silver background, and the whole device surrounded by silver edges – and the merit of the claim begins to focus.

There are plenty of ways to design a phone, and nothing before the iPhone could have possibly been mistaken for an iPhone. You can put an LG Prada next to an iPhone and make a case for Apple copying some of their design aspects, but you would never mistake the iPhone for the Prada; and that’s what this lawsuit is about – in their hardware design, interface, icons and through to their packaging, Samsung’s products all-around mimic Apple’s quite closely, and that’s what intellectual property Apple is trying to protect.

In this set of visual charts, Apple’s trademarks and self-proclaimed trade dress are broken down line-by-line, and checked against Samsung’s products prior to (SGH-F700 smartphone & Q1 UMPC) and after (Galaxy S smartphone & Galaxy Tab tablet) the release of the iPhone & iPad. While no silver bullet, it does illustrate the transformation Samsung’s products have made since Apple’s devices have been on the market, and how similar they have become to those devices.

Start: Apple vs. Samsung Page 1: Hardware Design

Apple’s profit margin on iPhones are estimated to be around 60%, and the average selling price of the iPhone is $625. That’s $375 net profit per phone, and $250 in costs. Considering the BOM is $187.50, that leaves $62.50 in other cost factors (licensing, R&D, pack, ship, reseller’s cut, etc.).

If they were to release a $200 phone, those ‘other factors’ likely wouldn’t decrease much, if at all; so even if they got the BOM down to $100 (near impossible), and they knocked $12.50 off the ‘other factors’ costs, the actual total cost of the phone would still be $150, leaving them with a mere $50 net profit (25% profit margin). They would have to sell 7.5 times MORE iPhone Nanos to make the same profit they’re making on the current $625 (average) iPhone. They sold 47.5m iPhones in 2010; so just to make the SAME profit, they would have to sell 356.2m iPhone Nanos in a year. Even for Apple, that’s a big jump. Read the rest of this entry »

As expected, Apple released an update to their Apple TV set-top-box. Just about all the rumors & speculators were right – the price dropped to $99, the hard drive is gone in favor of streaming, and TV rentals from iTunes will be $0.99/episode. Unfortunately, the new feature set fails to include one major update that had been widely expected, and whose omission will ensure the device remains squarely in the “hobby” department – the switch to the iOS platform. Had Apple included the iOS in the new device, it may have actually had a descent chance of being their next big success. Instead, with the custom, locked-down interface, it’s just another set-top-box.

Sure, the updated Apple TV streams from iTunes or your iPhone, & it has Netflix streaming built in – but that’s exactly the problem – it’s built in; ie., not expandable. Without the iOS and the App Store that goes with it, you’re stuck with only the applications Apple thinks you need. You prefer Hulu or Amazon On-Demand over Netflix? Get something else. You want to stream Pandora directly to your stereo? Move along. And who knows what will be out next year. The point is, by keeping the OS to a proprietary & non-expandable system, they have greatly limited its appeal, and thus its sales potential.

Had Apple built the new Apple TV on the iOS instead of their baked-in interface, consumers would for the first time really make a connection between the device, and their iPods/iPhones/iPads. As it stands, the Apple TV still *looks* like a hobby. It’s something completely different form any of their other products, and that’s the way people are going to perceive it… and continue to look right past it.

Apple had a chance to change the game when it comes to the living room. No other company has the brand recognition, loyalty, and positive mind-share in the consumer electronics market that Apple has. They could have leveraged that, and made a real run for the living room. They could have taken Apps on your TV mainstream. They could have been the king of the hill as far as set-top-boxes go, and had a huge head-start once they start integrating that box into their own TVs in the (hopefully) near future. Instead, they just came out with an updated version of one of the many set-top-boxes on the market; and if you hadn’t noticed, nobody’s really interested in the current crop of set-top-boxes.

[sigh] Well, there’s always next year.

“There’s an awful lot of hoopla – around the iphone 4 antenna…”

Personally, I didn’t have any issues with the antenna – even before I got a case for it.

Update: When I first watched this, a few hours after the Apple press conference, it had a few more than 4,000 views. It’s been 3 days now, and is over 600,000. It proves the artist’s theory – if you throw enough ‘stuff’ at the wall, eventually, something’s bound to stick. Here’s to you, Jonathan Mann.

True story. I had a speck of dust behind the screen of my nearly 1-year old iPhone 3GS. I had read you can bring in your iPhone (under warranty) for dust under the screen and Apple will take it in the back & either clean the dust out, or replace the whole screen. I gave it a shot, and after looking closely into all the crevices using a little magnifier, the Apple Genius suggested he just replace the phone with a new one instead of just swapping out my screen. He pointed out that there’s lots of dust & ‘gunk’ in the bottom, around the dock port and speakers; he also pointed out a tiny hairline crack I had never noticed before (around 3 or 4mm long- seriously!) on the edge of the dock port, and some scoffs on the case – mostly around the corners. The way he said it, it sounded like he considered them all defects, and not regular wear-and-tear. I guess they’re giving all of their still-under-warranty iPhone customers the kind of service usually only reserved for AppleCare owners. Fine by me! I wish they considered the dings on my MacBook Pro to be defects, too!

So he pulled out a new phone, and I specifically asked him if the phone was refurbished, or new. He didn’t directly answer, but I was intrigued by what he said: the screen, case & battery were all guaranteed to be brand new. Other parts may have been serviced & re-used; So technically, it’s a refurb; but all the parts that really matter are brand-spankin-new, and the phone doesn’t say anything on it about being refurbished. And it comes with a 90 day warranty. My original warranty had 26 days remaining, so that was good news, too!

So when the new iPhone 4 comes out, I should be able to get a premium for my ‘old’ 3GS on eBay, since it’ll be nearly new, and even come with a couple months of Apple warranty remaining. Not bad for a piece of dust behind my screen. The funny thing is, the phone is bright enough that you couldn’t even see the dust speck unless you were really looking for it.

From what I’ve gathered, the new iPhone (iPhone 4) will actually have the screen laminated to the glass – so there will be no way dust will be able to get in there. So I guess I’ll have to find a different ‘defect’ to complain about a year from now, to get a replacement for my ‘old’ iPhone 4 – right before the new iPhone 5 is released… on Verizon. Then I can sell it, and use the money to buy my way out of my AT&T contract, and jump ship to the Verizon contract. I’m the first to say 2-year contracts suck, but when you can resell your phone every year for the cost of buying the new phone, isn’t really not such a bad deal.

We were all hoping for Apple to release a Mac tablet. We got the tablet, but without the Mac; What they introduced was a giant iPod Touch, with optional 3G. At first I was sorely disappointed along with pretty much everybody else. But after taking some time to consider where the device will fit into our digital lives, and what our digitial future will be like, it actually makes lot of sense, and may turn out to be a successful new (albeit niche) product. Nobody ever said Steve Jobs doesn’t have good business sense (at least not in the past decade or so).

If you followed Apple in the pre-iPod era, you may recall their concept of a ‘Digital Hub’ – your PC; er, Mac, will be the center of your digital world; You’ll use it to get the most out of all your digital devices: digital camera, camcorder, mp3 player, PDA, Discman (hey, it was 2001!) DVD player, and yes, they even had the foresight to include a cell phone (in a time when the devices had postage-stamp-size black-&-green screens).

Apple's Digital Hub Strategy Announcement, MacWorld 2001

The Digital Hub strategy slide led Apple into launching iTunes later in the presentation, and subsequently the iPod, which as we all know lead to the iPhone and now iPad. If we update that slide for 2010, we can see that Apple has managed to make not only software, but hardware – peripheral devices – to cover most of the categories of their Digital Hub strategy.

Slide Updated for 2010, with Apple's Current Digital Hub Offerings

Apple was smart to make their tablet a peripheral, rather than a full-fledged computer. The reason tablet computers never caught on is that they doesn’t serve a need. You have a laptop for getting work done, and a smartphone for all your PDA-type needs. You don’t need another $1000+ computer that won’t replace either of those devices. Apple realized this; So while most people won’t need an iPad either, there’s still a much greater market than there is for a tablet computer. At $500, adoption will be rather slow. But in the future, when the price is closer to $300 or even $200 (current estimates put Apple’s hardware costs around $270, and those will only go down as production ramps up), it will make for a great Christmas present for your parents or kids; something to keep next to the sofa and pick up once in a while; not to get work done, but to casually browse the web, or check the weather, or chat with a friend. Sure, an iPod Touch or iPhone would do the job, but after using an iPad, I have a feeling those are going to feel tiny in comparison.

Think of it this way: When you see futuristic movies – and everyone is walking around with some sort of tablet device in their hand – does it have a couple USB ports on the side? Do you see it as a full-blown tablet computer? Or do you see it as some kind of peripheral device, that serves a more specific purpose? I think Apple’s looking further ahead than anyone was expecting, and while it might not be the runaway success that the iPod or iPhone have become, I think it will pick up steam over time, and make its way into millions of homes around the world as the first real ‘futuristic’ device we have in our homes.

Watch the entire MacWorld 2001 Digital Hub presentation.
Original MacWorld 2001 Digital Hub photo courtesy of Stefanoparis.com.