Tag Archives: iPad

Devices, Services and the Modern Microsoft

In a letter addressed to Microsoft’s shareholders, customers, partners and employees, CEO Steve Ballmer laid out the direction in which Microsoft was about to embark upon, calling it a fundamental shift for the company. The gist of the change is that instead of being a software company, Microsoft was focused on becoming a devices and services company. This is a big shift in strategy and could very well be the defining moment for Microsoft as well as Ballmer.

Services

A lot of pundits have focused too much on the devices part of the strategy, and that is justified, given that traditionally Microsoft has not built hardware except the Xbox and some keyboards, mice and web cameras. The Surface tablet was introduced as “the first in a series of devices” that Microsoft intends to make. That statement, along with the phrase “devices of various form factors” in the letter would imply that Microsoft may in fact make other devices like phones, or smaller tablets in e-reader form factor.

However, I want to focus on the services part of the strategy. Microsoft is essentially saying that all the software it is making, is now going to be delivered as a service. We already see many of the server products being delivered as a service via Office 365, Azure, etc. This is a tremendous achievement because it is almost completely opposite of how Microsoft used to make money – boxed software or licensed software delivered as a product. Now, they have been able to pitch various types of models for the delivery as a service, like pure service-based delivery as Office 365, pure on-premise delivery as in Exchange Server (or any of the other servers) and the hybrid model where some part of the infrastructure stays on-premise and some gets delivered as a service.

It is not just the “business” side of things that have become the focus of services. On the consumer side Microsoft completely revamped their much-underutilized SkyDrive cloud storage service. Not only did they make it easier to use, but they made native apps available on all mobile platforms. See the devices angle that others have not focused much on? You can enjoy the benefits of their service across Windows, Mac, iOS, Android and Windows Phone. Similarly, they launched a brand new, extremely good-looking mail service Outlook.com, which takes the negativity associated with Hotmail brand away from Microsoft. The web app works nicely on all modern browsers, including mobile browsers on iPad and Android tablets. They also made Outlook.com work with Exchange Active Sync (EAS) so all modern smartphones can connect to it with 2-way push on email, contacts and calendars. Another huge service that is coming soon is the Xbox Music and Xbox Video, combined with their cross-platform app Xbox SmartGlass.

The other services piece for Microsoft is Windows Azure, both as a Platform-as-a-Service (PaaS) and Infrastructure-as-a-Service (IaaS). This area of focus is not brand new, but the pace at which the teams at Microsoft are innovating and competing (on price) shows that they are really serious about these services as well. They are investing a lot of time and money in improving the feature-set and filling the holes that the modern developers (read: not only Windows developers) have reported as crucial for them to adopt Windows as a development platform. Adding support to open source software and frameworks to Azure is a good example of how Microsoft is saying they are a service provider which does not have any favorites when it comes to tools and technologies. The market sure seems to like it because Azure has gained not just a lot of new customers (as Microsoft claims), but they have started reversing the negativity associated with Microsoft when it comes to the open source community.

Massive Change

As you can see, there is a lot of change Microsoft has stepped into, and these things are not going to start showing results immediately. When you are moving an oil tanker like Microsoft, turning it is not quick, nor easy. However, the speed at which Microsoft has pulled off this change, is amazing. They have realized that Windows is not going to have the same clout as it used to have in the 90s. They cannot force themselves onto customers, partners or consumers. Everyone has choices now, and more importantly, as tablet and smartphone sales have proven, people prefer smaller, simpler, mobile devices over larger, more powerful, but more complex devices like laptops. Microsoft knew they had to quickly retool themselves, or face irrelevance.

“PC” Market Or “Computing Devices” Market?

The PC market is now morphing into a more general category of “computing devices” market. Some prefer laptops, some prefer desktops, many prefer tablets, and some are even ok with just their smartphones. In this new world, Windows (which I consider to be 8, RT and Phone combined) would probably end up at no more than 30-40% while iOS and Android take similar shares. With focus on services that work across devices of all form factors, and more importantly, across all OSes, Microsoft is positioned well to take advantage of the new wave of computing.

Devices

Finally, as for the devices part of the strategy, it is important to note that while Microsoft may make their own devices in addition to the Surface tablets, they are definitely not going to become a hardware company. Making hardware at scale is very hard, especially in today’s world of supply chains spanning many companies and geographies, and hardware design needing specialized materials to get the most efficient devices made. I firmly believe Microsoft said devices in the letter to denote the importance of being present on all devices, some of which will showcase their own OS, while some may be running other OSes.

It is a bold strategy. One may argue this is probably the only thing Microsoft could have done to keep their enterprise customers happy while moving forward into the new computing era along with the consumers who have started embracing competing platforms in large numbers. By defining themselves as a company that provides services across all types of devices, Microsoft is ensuring they are built to avoid the irrelevance they would be relegated to if they stayed stuck to the old process of providing incremental updates to all their products.

Looking forward to seeing what happens this holiday season, and more importantly, how Microsoft reinvents itself as it starts providing updates to its entire line of services in the next year.

Apple May Unveil iPad Mini on October 23

Apple will probably unveil the iPad Mini, a budget version of the iPad, aimed at boosting its market share, on October 23.

It was expected to send out invites to a special iPad Mini event on October 10, but that has obviously not happened. However, rumors suggest that Apple will still be holding an event on October 23, so that the iPad is available before the holiday season.

While Apple may not have as fat a margin on the iPad Mini as it does on the iPad, it’s targeting another segment of the potential tablet market with it, so that there is minimum cannibalization.

WSJ recently reported that Apple had begun mass production of the iPad Mini, and that it was building close to 10 million units for Q4 2012 in the initial run.

With the iPad Mini, Apple will target the low end segment of the tablet market which is currently dominated by Android tablets. If Apple does play this game well, it will completely dominate the tablet market in a year.

The next quarter is going to be very exciting for Apple, given that the iPhone 5 sales will be reflected in its financials, and we might even see the impact of the iPad Mini.

via AllThingsD

iPad Replacing PC Sales in Education

A new analysis (via AppleInsiderfrom Charlie Wolf with Needham & Company said that PC education shipments saw a decrease of 265,000 units, or 13.9 percent, from the June quarter a year ago. During the same time period, Apple sold nearly a million iPads in the K-12 market in June, which he said is “definitive evidence” that the iPad has been “cannibalizing” PC sales in the U.S. education market.

The market data from the June quarter shows that for the first time ever, Apple’s iPad is replacing sales of PCs to schools and students. iPad sales in the June quarter were double from the previous year. The iPad also sold nearly double the number of Macs Apple sold to the education market during the same quarter.

Wolf believes that the sales of the iPad in the education market are only the beginning and will begin to put a dent in PC sales in other larger markets in the near future. Welcome to the “post-PC era”, folks.

Two Separate Apple Media Events for New iPhone and iPad Mini?

Rumors up to this point have pointed towards an iPad mini and next generation iPhone revelation at the same time. However, Daring Fireball’s John Gruber makes a strong case for why Apple would hold two separate events. He suggests that since the iPhone is Apple’s single most important product, it would be unlikely that Apple would share the spotlight with another product. Gruber’s points are very valid and makes an excellent point. His theory of two events is that one will be for the iPhone and iOS 6 and then hold a second “iTunes” event to talk about the smaller iPad, new iPods, and possibly the rumored iTunes 11 update. Last year’s iPhone 4S event was nearly 100 minutes long covering iOS 5 and the revelation of a new iPhone.

Famous Apple journalist Jim Dalrymple also hints at two separate events. He is known for his “yep” confirmations to Apple rumors and has posted a message suggesting that Apple will hold two separate media events this fall for the new iPhone and iPad mini.

It was previously been confirmed from many sources that Apple will hold a media event on September 12th to announce a new product, which is presumed to be the next-generation iPhone and an iPad. However, Dalrymple’s track record makes it seem possible that the new iPhone will be revealed first and a smaller iPad later in the fall during a separate event.

iPad Takes 70% of Chinese Tablet Sales

iPad Takes 70% of Chinese Tablet Sales

Recently, Apple  has  cashing in on China with the iPad, iPhone and Mac line of computers. Because of this, all of Apple’s platforms have been gaining markershare like crazy in China and parts of Asia. In fact, China Daily reports that Apple controls roughly 72.6% of the tablet market in China. These numbers are up just over 20% from Q1. These numbers are coming from the market researcher Analysys International.

The expected reason for this jump in iPad sales is because the new iPad was finally approved for sale in China and the iPad 2’s price was dropped. Another reason these numbers are so high is because China does not yet offer the Kindle Fire, Nook Color/Tablet or the Nexus 7, so there isn’t much competition from the lower end of the tablet market within China. If you’re curious, the second leading tablet in China is produced by Lenovo and holds just 8.38% of tablet marketshare in China. China Daily also reports that Samsung holds only 3.59% of the tablet marketshare. China Daily has not revealed markershare for other Android tables as of now, however, we hope to see more marketshare specifics in the future.

Source: China Daily Europe
Image Source: Yutaka Tsutano


Rumor: Apple to Unveil iPhone 5 and iPad Mini on September 12

Apple is expected to launch the next version of the iPhone — the iPhone 5 — in October, exactly a year after it launched the iPhone 4S.

Another much anticipated launch is that of the rumored iPad Mini, which Apple will supposedly release to “not leave a price umbrella” and prevent competitors to swoop in on the budget segment of the tablet market.

We have seen a ton of rumors and speculation about the iPad Mini, as well as varying theories about whether or not Apple will actually launch such a product, when its past product history indicates that it probably wouldn’t.

Anyway, today, we have yet another rumor related to the iPhone 5 and the iPad Mini. According to iMore, Apple is planning to unveil the “new iPhone”, which is what it’ll probably be called (in line with the new iPad), and the iPad Mini at a special event on September 12.

The iPhone 5 will be launched almost a week later on September 21, and the iPad Mini may soon follow.

While the new iPhone will supposedly have a larger 4 inch display, the iPad Mini will have a smaller 7 to 8 inch display, and will be priced around $299, to stop the proliferation of budget Android tablets like the recently launched Nexus 7, and completely dominate the tablet space, not only in terms of profits, but also in terms of market share.

Apple may also refresh the iPod range, and launch iOS 6 around the same time frame.

Let’s wait and watch! It’s just six more weeks.

Interesting Bits from Apple’s Q3 FY12 Earnings Call

Apple posted its earnings for Q3 FY12 on July 24, with quarterly revenue of $35 billion and a net profit of $8.8 billion, showing healthy growth of around 20% year-over-year. It also revealed some additional information in the press release, but most of the juicy tidbits were revealed only in the earnings call that followed.

iPhone

Apple sold nearly 26.028 million iPhone units in the last quarter which ended in June. It generated $16.425 billion in revenue from iPhone sales.

iPad

Apple sold around 17.042 million iPad units, generating $9.171 billion in segment revenue.

Mac

Mac sales added up to 4.020 million units (1.010 Mac desktops and 3.010 Mac portables), generating $4.933 billion in total revenue.

iPod, iTunes and App Store

Apple sold nearly 6.751 million iPod units, generating $1.060 billion in revenue from hardware sales. It also made nearly $2.060 billion in revenue from iTunes, App Store and iBookStore sales.

The App Store is now available in 155 countries, and offers more than 650,000 apps and games, with 225,000 apps specifically for the iPad. It has surpassed more than $5.5 billion in payments to developers, which is way more than Google can claim yet.

Other

It also made some additional revenue from peripheral sales, other hardware and software sales, and services, which added up to $1.554 billion.

All these numbers add up to $35.023 billion, Apple’s total revenue.

In the last quarter, Apple increased its cash reserves by $7.045 billion, bringing the total up to around $117.221 billion.

Geographically, while America still accounts for most of its sales, China is proving to be a huge opportunity for Apple. It generated $5.7 billion in revenue from China in Q3, with most of it coming from iPhone sales.

Going forward, we expect most of Apple’s growth to come from emerging markets in the Asia Pacific region.

Cook didn’t mention the iPad Mini or reveal any details of the next iPhone during the earnings call. Not that anyone expected him to.

Earnings call transcript via SeekingAlpha

Apple Q3 FY12 Earnings: $35 Billion in Revenue, $8.8 Billion in Net Profit

Apple has posted its earnings for the third fiscal quarter of 2012, with quarterly revenue of $35 billion and a net profit of $8.8 billion, both up nearly 20% year-over-year. It managed to improve its gross margins from 41.7% to 42.8% this quarter.

It sold 26 million iPhones this quarter, which was up 28% year-over-year, but fell short of analyst expectations which predicted 29 million iPhones unit sales. The lull in iPhone sales is because the iPhone 4S is now almost a year old, and consumers are holding out for the next iPhone which is expected to be launched in October.

It also sold 17 million iPads, which is significantly above the 15 million figure which consensus analyst estimates suggested. The iPad has been a huge hit globally, and the onslaught of cheaper tablets have failed to have much of an impact on its sales yet. That may change in the next quarter though, as we see the impact of the Nexus 7 tablet by Google.

Tim Cook, Apple’s CEO, said:

“We’re thrilled with record sales of 17 million iPads in the June quarter. We’ve also just updated the entire MacBook line, will release Mountain Lion tomorrow and will be launching iOS 6 this Fall. We are also really looking forward to the amazing new products we’ve got in the pipeline.”

The “amazing new products” could very well be the iPhone 5 and the rumored iPad Mini. We shall know soon.

Apple also declared a dividend of $2.65 per share which will be payable to shareholders on August 16, 2012.

Another interesting fact — Apple now has over $117 billion in cash, cash equivalents and short term and long term marketable securities.

Apple Q3 FY12 Earnings: What to Expect?

Apple will be reporting its financials for the third quarter of fiscal 2012 on July 24. Here are some insights into what to expect from the consumer electronics giant this earnings season.

iPhone

The iPhone 4S was launched last October and drove Apple’s revenue growth for the following two quarters. However, as consumers gear up for the launch of the next iPhone — the iPhone 5 — in October 2012, iPhone sales in the last quarter are expected to be relatively lower.

Apple always offers low guidance numbers, and then positively surprises analysts with better actual figures. However, it will be difficult for it to beat Wall Street consensus analyst estimates, given a slowdown in iPhone sales as well as a general macroeconomic weakness in China and Europe.

Since the iPhone accounts for a major portion of Apple’s overall profits, this will probably lead to significantly lower revenue numbers compared to last quarter.

iPad

The iPad 3 has been seeing some crazy sales numbers since its launch in March. This will be the first full quarter since the launch of the tablet, and we expect the revenue growth to be driven primarily by the launch of the iPad 3.

The iPad’s launch in China, particularly, could drive a huge jump in revenues.

Estimates suggest that Apple sold nearly 29 million iPhones in the June quarter, down from 35 million in the March quarter. However, it is expected to have sold around 15 million iPads this quarter, which could potentially compensate for the fall in iPhone sales.

The coming year is going to be very eventful for Apple, as it launches the next iPhone in October, possibly the iPad Mini before the end of the year, as well as the next version of the iPad in March 2013.

Other Stuff

Apple will also have sold a ton of Macs, iPods and other auxiliary stuff, and will also generate some revenue from iTunes and the App Store, but that is insignificant compared to its iPhone and iPad sales.

Analyst expectations point to estimated revenue of $37.2 billion in Q3 FY12, with earnings per share of $10.35.

via Reuters

Rumor: Amazon Working on 5-6 Kindle Fire 2 Variants

Amazon may be planning to launch more than five different variants of the Kindle Fire, all with different display sizes, including a 10 inch model.

The original Kindle Fire had a 7 inch display, and was a fairly huge hit. However, with Google launching the Nexus 7, and Apple reportedly working on an iPad Mini, Amazon may feel the need to compete in different segments.

If it does decide to launch multiple tablets, we expect them to be priced extremely cheaply, at just about break-even levels. Amazon aims to make money not by selling tablet hardware, but by selling digital content to its tablet users.

It has been building out its digital content ecosystem over the last couple of years, and that could generate a significant amount of revenue in the coming years, boosting its low margins.

Since the launch of the Kindle Fire, Amazon’s share of the online video and music market has increased significantly. Amazon may also be planning to launch a smartphone soon, to compete with the iPhone and other Android smartphones.

We certainly expect to see at least a smartphone, a 7 inch Kindle Fire and a 10 inch Kindle Fire before the end of the year. However, 5 to 6 different models may be a long shot. In any case, we will know soon.

via Reuters