Tech Industry

 Apple kept it close to its chest during its financial results conference last week, but it seems the company has yet another singular success on its hands with the MacBook Air, which the company’s Form 10Q SEC filing today says was the primary driver of increased Mac net and unit sales in the quarter.

In black and white, the note (on page 26 of the report) reads: “The increases in Mac net sales and unit sales were driven primarily by sales of the new MacBook Air, introduced in January 2008, and higher sales of the iMac and other Mac portable systems.”

The report notes Mac unit growth of 51 per cent and 48 per cent in the second quarter of Q2 and first six months of 2008 respectively, observing the rate of growth strongly exceeds the industry average.

Apple’s laptop sales climbed 61 per cent, with 2.29 million Macs sold in Q2, 1.433 million of Macs sold were laptops.

While its interesting that Apple seems to have nailed the lighweight laptop category with the MacBook Air, this may be scant comfort to some early adopters of the first generation machine, with numerous complaints noting some (but not all) of these have a tendency to overheat during normal use. 

The report also notes iPod sales climbed, albeit slightly, but observes strong sales of the iPod touch, with consumers favouring that device above the purchase of the iPod shuffle.

The report also confirms research-&-development spending climbed 49 per cent, or $90 million to $273 million in Q2 08, compared to Q2 07. “The Company continues to believe that focused investments in R&D are critical to its future growth and competitive position in the marketplace and are directly related to timely development of new and enhanced products that are central to the Company’s core business strategy,” the report also explains.

 Apple’s iPhone plans continue to leak, or so it seems as the pre-June rumour mill continues to drive through the gears – now a new report claims we’re going to see not one, not two but three different models of the device.

These reports confirm our earlier “Apple plots iPhone diversity roadmap” story, which claimed Apple plans to diversify its iPhone product range in order to widen its reach in the mobile phone market.

The latest leak comes from the Taiwan Economic News, which claims three models of the iPhone may appear. The first will be a smaller, lighter handset with a plastic rather than aluminium magnesium case.

This device will weigh just 110-120g, less than the 135g weight of the current model. It will also offer a 2.8-inch screen, rather than the 3.5-inch screen currently offered on the iPhone.

The smaller model won’t offer 3G support. Instead, Apple intends selling a higher-specified iPhone equipped with such support. This handset will also offer GPS and will have a larger case, presumably more or less the same dimensions as the existing handset.

Finally, Apple plans to maintain its current generation iPhone as a third middle option.

“Components suppliers in Asia pointed out that Apple has asked them to ready materials for the new phones by the end of next month. They are asked to deliver components enough for 300,000 phones in the initial stage and components enough for three million phones in June,” reports the Taiwan Economic News.

Multiple rumours meanwhile suggest Apple will also mark June’s introduction of the new generation iPhones – and the next version of the software that runs all iPhones – with a widespread launch of the device to multiple companies, perhaps on a carrier-agnostic sales model.

Australia, South America, Canada, India, Russia, many European states, Korea and more all seem set to see the product launch, perhaps as part of an overweaning push to help Apple secure the level of sales it requires in order to meet its ten million sales target by the end of the financial year.

UPDATE TO ADD: That Apple will diversify its iPhone range isn’t really the question, at present the discussion should focus on when. The analysts at Piper Jaffray this morning also observed Apple to be likely to diversify the range in a note to clients (as reported by Apple Insider): "We continue to expect Apple to offer a family of iPhones (2-3 separate models) in the first half of 2009, including lower priced ($200-$300) models. Just as the company slowly diversified the iPod lineup and entered lower price points with every new version of the iPod, we expect Apple to launch new models of the iPhone at lower price points in CY09. This expectation, along with the expectation for lower price points, and world wide availability of the phone, is critical to our CY09 iPhone estimate of 45m units," the analysts explained.

Cnet ‘stralia gets the inside information.  Optus is getting the 3G iPhone.  But we know Telstra is getting it too.  Everybody is getting it it seems – maybe even 3 and Virgin. 

Perhaps that story a month ago about all of Australia’s resellers getting the iPhone was true as well.  Timetable: …wait for it..Late June, just like everyone else. 

Also, Australia…Sorry for the picture, we know how much Paul Hogan is revered as a representative of your proud nation…

Apple’s expected to introduce the much-anticipated 3G iPhone next month – but what if the company’s planning a little more than simple support for the 3G standard?

Enter InterDigital. In March, that company revealed it has signed-up Apple (and RIM) as a licensee for its 3G technologies. “As to our market share for 3G, while we did not achieve the 50% target, we did add some very high-quality licensees including Apple, Giant, and RIM…,” the company explained.

This news generated sparks of speculation that InterDigital’s SlimChip architecture might be deployed in products from Apple. InterDigital is currently suing Nokia on grounds that company contravenes the former’s held patents on 3G technologies. Apple’s agreement to license these forms some kind of evidence of 3G inclusion in the iPhone – but we think Apple may plan a far bigger step. We suspect – and we have to say this is only speculation on our part – that Apple may plan to move from behind the cutting edge of mobile technologies (by not including 3G support in the first place) right to the forefront of what’s possible. And in order to achieve that, we think there’s a chance Apple may introduce support for the little-known 802.21 wireless standard. 

802.21 is soon to be an official standard that converges various types of fixed and mobile technologies: in the case of an 802.21 handset, deployment of the standard could theoretically allow the device to seamlessly switch between various connectivity options, including Wi-FI, 3G and (drum roll please), WiMax.

Now, as Computerworld recently noted, “as is normally the case with new standards, this standard will need a good deal of marketing to really get rolling and it also will need to get the best of competing convergence efforts.”

Apple’s success in bringing new technologies to market was made most clear when it single-handedly popularised WiFi technology (AirPort) when it introduced the iBook in 1999. WiFi’s fairly popular nowadays. InterDigital’s move to join the WiFi Alliance this year, followed by its move to license its 3G modem technology to a shadowy (unnamed) Asian fabless semiconductor company also passed under the radar.

Intel’s WiMax technology has been a promise on a whisper for some time now. Implementation of the technology has faced some resistance, not least from mobile phone networks, scared to cede their control of wireless networks. While that resistance is common in developed telephony markets, it’s less visible in some emerging markets.

Take Russia, for example. December 2007 saw local mobile telco Comstar and Intel announce their intention to build a nationwide WiMax network to launch in Moscow this year (cost, $20/month). Comstar (under its Stream brand) is already Moscow’s leading broadband provider.

Why does a WiMax network make sense for Russia? The secret’s in the existing infrastructure. Russia has 147.3 million mobile subscriptions but just 40.1 million standard telephones. The majority of the existing Russian mobile phone infrastructure is based on 2.5G technologies, though this is changing following the April 2007 granting of 3G licenses to Megafon, MTS and VympelCom (which trades as Beeline). As such, 3G services are set to launch in major Russian cities in late spring/summer. However, Russia is a vast country, and WiMax could provide an alternative route to bring more of the country into the digital decade. 

The US is seeing WiMax deployments, albeit slowly and subject to much delay. Zyxtel is shipping XHOM WiMax high speed routers to Sprint that will be used in its nationwide WiMAX rollout, perhaps later this year. And AT&T’s unlikely to take its eye off the importance of its network products segment – it won’t let Sprint take home all the gravy. 

WiMAX is also being rolled out in Germany and Japan, two of Apple’s bigger markets, with active trials underway and early 2008 mass rollouts planned.

So, let’s consider the evidence at this point: We know Apple has a licensing deal with InterDigital; we are fairly confident Apple will introduce a 3G iPhone soon; we know Apple has aggressive sales targets for this device, and that the company plans to introduce iPhones into more territories this year; we know that some of those target countries, Russia, for example, are moving to adopt WiMax; and we know InterDigital is deeply involved in developing a convergence standard to facilitate use of mixed network standards through a single device.

We also know Apple likes to amaze, and is in a close relationship with Intel, which is looking for a WiMax champion (and is building WiMax support into many of its chips). With WiMax network roll-out set to gather steam this year, Apple has the opportunity to leapfrog all debate regarding 3G support and initiate a new age of wide area network computing. 

All these signs and portents don’t constitute anything other than speculation. After all – WiMax isn’t yet widely deployed, and Apple may choose to wait until it is before it initiates such a move. But when (or if) it does, it already has the key relationships – and products – it needs to hustle users into a new connected age.  Remember, Apple was the first to bring its customers to Wifi – with its Airport products introduced at MacWorld New York City in 1999.

 Apple’s laptop sales are booming, up 61 per cent in the second quarter, and the good news is impacting the company’s notebook OEM, Quanta, which announced an 18 per cent increase in profit this morning, on strength of Mac sales.

Apple last week confirmed 2.29 million Mac sales in its second quarter. Mac sales overall climbed 51 per cent, year-on-year, a rate of growth an astonishing 3.5 times that of the overall PC market. Desktop sales climbed 37 per cent, also faster than PC market averages,

The company’s portable sales were driven by continued strong demand for Macbook, Macbook Pros and the MacBook Air. This steady demand meant Quanta Computer saw profits climb 18 per cent to book NT$4 billion for the quarter. The OEM observed strong demand for notebooks, predicting demand would climb 25 per cent in the current quarter.

Apple’s no niche player, the company explained, with management and analysts agreeing the Apple-driven laptop sales explosion seems set to continue, despite the downturn. Apple accounts for 25 per cent of Quanta revenue.

"Notebook growth is coming in faster than we expected," said Quanta Vice Chairman C.C. Leung. "There’s some slowdown from the U.S., but Asia and emerging markets are still seeing growth. So far things look positive for overall notebook demand."

The consumer move to favour laptops is posing an interesting new challenge for Apple’s notebook maker – the company has confirmed components for laptops, principally those used to make laptop enclosures, are running in short supply. Quanta management said this would be unlikely to affect Apple and other larger brands, but would definitely impact the smaller notebook brands.

The surge in Mac sales isn’t simply a fashion, but could become a tipping point, as Apple CEO Steve Jobs said last October: “The question is, are we headed for a tipping point, it sometimes feels like that."

NPD recognises significant gains in Mac notebook sales, which the researchers claim rose 64 per cent in units and 67 per cent in revenues year over year.

Apple seems set to continue to expand its marketshare – and Quanta’s profits – on strength of strong notebook sales. According to IDC, some 23.5 million computers were sold in the first quarter of 2008 in Europe, the Middle East, and Africa, which is equivalent to 19 per cent sales growth over Q1 2007. Market growth is the result of the growing popularity of notebooks. While sales of desktop PCs fell by 1.7 per cent to approximately 10.5 million items, sales of notebooks grew by 43 per cent to 13 million items, IDC said. Apple’s overall Mac sales in Europe climbed 45 per cent in the March quarter, the company’s financial results confirm, with 627,000 Macs sold (both desktop and laptops).

News out of the Hackintosh forums continues to flow in on throwing Leopard on PCs.  Today’s news is that some enterprising hackers got OSX Leopard working on an OQO – one of the smallest full PCs out there.  Nevermind that it takes two minutes to start up and not all of the wireless networking components work.  It is still a very compelling setup.  

The last few weeks were about Psystar selling Hackintosh PC’s.  Apple’s lawyers usually swoop in within seconds to stop EULA ‘violations’ like this.  On Psystar, they are eerily quiet.  Psystar is shipping clones and customers are receiving them. 

What does all of this mean? 

Perhaps Apple is considering licensing the Leopard OS out to PC vendors.  Maybe they’ll sell it as a virtual machine?  Or perhaps a paired down version for Web browsing, and iTunes?  Most likely not but it is kinda weird all of this Leopard on PC stuff.  It seems a little too easy.

According to Barron’s and B. Riley analyst Salomon Kamalodine, STEC will be making the Solid State Drives (SSD) in future Apple products – most notebly, the MacBook Air.  The 64Gb SSD’s on current MacBooks are manufactured by Samsung.  High end MacBook Air owners were upset recently when their SSD Hard drives showed little performance increase and battery life over 1.8" hard drive equipped macbooks.  

Hopefully STEC can up the performance and lower the cost of entry to this technology.  They currently offer SSDs in capacities ranging from 73-512GB however the most likely candidate for the MacBook Air – the Mach8 line –  ‘only’ scales to 128Gb.  Will this be the next MacBook Air go to 128Gb in SSD size?  Will the prices remain the same?  Are we going to see a revision 2 MacBook soon?

More from Barrons:

Kamalodine writes in a research note that the finding is based on “discussions with industry sources.”
He says the Apple business could lead to an incremental $25 million to $30 million in revenue in 2009. Kamalodine raised his 2008 and 2009 revenue estimates to levels well ahead of the Street consensus. He sees $237.8 million this year and $302.9 million next year; the Street has been looking for $217.6 million and $273.1 million.
STEC today is up 79 cents, or 9.7%, to $8.96.

digg_url = ‘http://9to5mac.com/STEC-Samsung-macbook-air-hds’;

Apple today upgraded its iMac selection to include faster (and more efficient) Penryn (or Montevina QX9770!?) processors – topping out at over 3 GHz.  The iMacs can be configured with much burlier graphics cards (NVIDIA GeForce 8800 GS) as well.  Unsurprisingly, Apple didn’t include Blu Ray as an option…perhaps next time?

“The iMac’s gorgeous aluminum and glass all-in-one design has been an incredible hit with our customers and is just one of the reasons Mac sales are growing three and a half times faster than PC sales,” said Philip Schiller, Apple’s senior vice president of Worldwide Product Marketing. “With the latest Intel processors, a faster new graphics option and more memory, customers now have even more reasons to love the iMac.”

Also Apple touts the new iMac’s green credentials:

The iMac furthers Apple’s commitment to environmental progress with highly recyclable and durable materials including scratch-resistant glass and professional grade aluminum. Every model in the iMac line is rated EPEAT Silver and the power-efficient iMac also meets the stringent Energy Star 4.0 requirements for power consumption. Customers who purchase any qualifying Apple computer can recycle their old PC or Mac® for free via the Apple Recycling Program.

The new iMacs are on sale immediately and start at $1200 in the US.

20", 2.4GHz, 1GB RAM, 250GB Hard Drive, ATI Radeon HD 2400 XT 128MB. $1199
20", 2.6GHz, 2GB RAM, 320GB Hard Drive, ATI Radeon HD 2600 PRO 256MB, $1499
24", 2.8GHz, 2GB RAM, 320GB Hard Drive, ATI Radeon HD 2600 PRO 256MB, $1799
24", 3.06GHz, 2GB RAM, 500GB Hard Drive, NVIDIA GeForce 8800 GS 512MB, $2199

 Apple’s seems incredibly interested in expanding its reach in the professional and enterprise space, posting a job opportunity which calls for a ‘Hardware Design Manager’ for Apple’s, “new Pro Servers and Towers teams”.

There’s several key statements there – it seems to imply Apple has more than one strategy for servers, with multiple teams involved in their development.

Anyway, if you’re interested in taking the job, it’s a full-time position at Apple’s Cupertino campus. Rather than indulge in our own speculation (though we’d welcome yours in the comments below), here’s detail from the job advert:

“In this critical design manager position for the new Pro Servers and Towers teams, the selected candidate will manage a team that determines design approaches and parameters, analyzes equipment to establish operating data, conducts experimental tests and evaluates results.

“Candidate will lead others in selecting components and equipment based on analysis of specifications and reliability. Candidate may also review vendor capability to support product development. Involves heavy schematic design as well as strong lab skills and system integration skills. Strong Unix skills preferred with light programming skills required. Domestic and international travel required.”

 Apple has aggressive sales targets for its next-generation 3G iPhone, anticipating 20-25 million units of the new device to be sold within the product’s lifecycle.

This news leaked from the Far East this morning, where long-time Apple partner, Foxconn Electronics (Hon Hai Precision Industry), has once again been named as being contracted to manufacture the new device, according to the Chinese-language Commercial Times. Foxconn also manufactures the current iteration of the iPhone.

Component suppliers are on scramble now to ship their parts by the end of May, with shipments of the device expected to exceed three million units in June. This would assume to reach well into 2009 (assuming 1 year product cycles that Apple seems to have on iPods and iPhones).

The news once again reinforces expectation the new breed of the device will ship in June.

 Security researchers have identified a fresh vulnerability in QuickTime for Windows, which they claim can allow hackers to take control of infected machines.

[youtube http://www.youtube.com/watch?v=fZd9ChU3XAY&hl=en]

 Apple’s online retail store in the US and the UK is down, as anticipation climbs the company plans to introduce new model iMacs this week.

Introduction of the new Macs was anticipated to take place tomorrow, but Apple may have bought this forward for reasons of its own. Equally, Apple may simply be indulging in site maintenance of its retail store while the US sleeps. We’ll know more later.

EDIT TO ADD: The new iMacs are visible now on the Apple Store. They comprise four models in total, with either 20-inch or 24-inch screens, with a 2.4GHz processor at the bottom end, topping out with 3.06GHz processor at the top.

Prices appear about the same as before. More information follows.

Although it is beyond obvious at this point, it is still nice to have some confirmation that the next iPhone will be 3G.  Today 9to5Mac has it.  Looking in the latest iPhone SDK Preferences application, we find references to both EDGE and 3G Networking.

…which compares to EDGE code found further along in the file.

…developing…

 Half-way through the financial year, Apple’s retail stores seem set to create new sales records as other high street retailers face falling sales and the credit crunch.

Apple launched its first Apple retail stores in May, 2001, entering the high street market in the same year Gateway began to divest itself of its own-brand retail shops. 

Critics warned Apple would fail in the scheme.

David A. Goldstein, president of researcher Channel Marketing Corp. famously told Business Week: "I give them two years before they’re turning out the lights on a very painful and expensive mistake."

He was wrong.

Apple’s retail segment returned $1.45 billion in its March quarter – up 74 per cent year-on-year and 48 per cent quarter-on-quarter, resisting the downward trend at high street retail.

To put this into perspective, two quarters into the 2008 financial year and Apple has already generated more revenue ($3,152 million) than in any year up until 2005 ($2,350 million) and is just under a billion short of the record it set for itself last year ($4,115 million).

Elsewhere, high street retailers are watching sales shrink – Home Depot and Dick’s Sporting Goods have both seen declining sales. 

With 34 million visitors to an Apple retail store in the March quarter, Apple’s Mac sales climbed 54 per cent – three-and-a-half times the average PC industry growth rate. And 50 per cent of Macs sold went to customers new to the platform, Apple claimed this week.

“If Apple can bring in those types of numbers during this fairly gloomy economic period, that bodes very well for them,” said Jupiter Research analyst, Michael Gartenberg. 

Apple’s execution of its retail concept was remarkable. The first prototype designs were constructed in secrecy in warehouses near its Cupertino headquarters by design firm Eight Inc. 

The company invested in talent, hiring in experienced retail executives from key retailers, Gap, Target, Sony, Disney and others. Gap CEO Michael Drexler was adopted to Apple’s board in 1999, with the retail initiative in mind. And the retail initiative is led by former Target vice president, Ron Johnson.

The cutting-edge aesthetic of the stores was quickly recognised, winning the company a Gold IDSA award. "This store communicates Apple’s design language—the attention to detail reflects the Apple product line. I was especially impressed with the idea of the Genius Bar, with a resident in-house expert for tech support. The emphasis on lighting must make it a great environment. This is delightful. I want to visit it today!" said IDSA’s Carla Blackman.

What’s the secret? "People haven’t been willing to invest this much time and money or engineering in a store before," Apple CEO Steve Jobs observed to CNN last year. "It’s not important if the customer knows that. They just feel it. They feel something’s a little different."

And that’s part of the point, as explained by Johnson in 2001 when the first stores opened up: "Our vision for hiring people for Apple stores is to get people who have Apple and the Mac in their bones," he said. "We want people who have a sincere service orientation.

"You have two choices in a retail store: a service culture or a retail culture. We’ve chosen service so customers will be in charge of their store experience."

The service-focused in-store culture is one thing, that all the stores offer Internet-connected Macs passer’s by can use have transformed the stores into an international chain of free internet cafes, generating store traffic while creating brand loyalty and stimulating sales. And the iPod halo and the company’s continued place at the forefront of innovation and slick product design also play their part.

With new iPhones in the pipeline and the Mac in absolute resurgence, Apple’s high street success reflects its growing market share. 

 Apple’s purchase of PA Semi doesn’t mean the company’s relationship with Intel is cooling off, Apple CEO Steve Jobs told the Wall Street Journal.

The relationship between Apple and Intel is still strong, Jobs said, "We have a great partnership with Intel. We expect that to continue forever.”

As 9to5 Mac reported early this week, the acquisition wasn’t driven by any plan to migrate Macs back to PowerPC, but by Apple’s interest in hiring PA Semi’s team of expert chip designers, Jobs reassured. The newly-hired talent will lend their expertise to Apple’s work developing chips for portable electronics devices such as the iPod and iPhone. Jobs explained Apple has "been involved" in designing chips for these for some time.

Asked if Apple plan to return to the PowerPC chip in its Macs, he said “I wouldn’t lose too much sleep over that. We’re very happy with Intel.”

News around the web is spreading that Apple is going to announce the 3G iPhone on June 9th – at Apple WWDC 2008.  While this makes much sense, we really feel that you’ll have to sweat it out for at least a month before they are in your grubby hands.  Apple typically waits about six weeks between announcing products and releasing them when they involve the FCC.  Hope this doesn’t affect your summer vacation plans ;)

 Carphone Warehouse is out of stock of 8GB iPhones following its recent move to cut £100 off the cost of the device.

The high street mobile phone retailer has been warning website publishers who are members of the Tradedoubler affiliate advertising network to stop advertising the discounted models, as they’re out of stock.

"Thanks to the most phenomenal response to the promotion, The Carphone Warehouse is now out of stock on the Apple iPhone," a message from the retailer reads. "Please can you remove all reference to the iPhone promotion in your copy."

The company website continues to take orders for the 8GB model, but the retailer says it doesn’t "expect to receive any additional stock at this time." 

The imminent release of a new version of the iPhone was once again discussed by the analysts at CitiGroup last night, where Richard Gardner and Yeechang Lee predict the new device will be announced during the WWDC keynote speech on 9 June.

The analysts say the new (3G) iPhone will be the "first of an impressive wave of new products", predicting upgraded laptops and iPods may also make their appearance at the show.

More information is coming out of Geek Sugar on new iMacs being released this week.  The normal prediction:  Speed bump via Penryn processor upgrade and bigger hard drive varieties.  Same price points. 

While that may be true, we’d also like to see some of the Blu Ray, video upgrades and HDMI goodness the new motherboards can provide.  This would be the first upgrade since the Aluminum iMacs were introduced on August 7th.  Remember that?

 Microsoft seems to be changing its attitude to the Yahoo deal, with the company’s bombastic boss, Steve Ballmer, changing his tune on the deal.

Microsoft is offering $44.6 billion to acquire Yahoo, but management there are stoutly resisting the offer, even though Microsoft is threatening to launch a proxy vote battle to see the current board replaced.

Yahoo’s resistance is so strong, including an unusual ads sharing deal with Google, that now Ballmer may be considering how he can exit the deal without appearing a complete failure – in the week CNBC’s Jim Cramer called Windows "irrelevant". "We’re prepared to move forward without a merger with Yahoo," Ballmer said onstage at a technology conference in Milan.

"Today Google has the lead, there’s no doubt about it and I wanna make sure that they have plenty of competition," Ballmer said. "We think the best way to move that forward quickly is to come together with Yahoo. I hope that it works, but if it doesn’t we go forward alone."

[youtube http://www.youtube.com/watch?v=tmja_g5h4Fg&hl=en]

 CRM software maker Salesforce and Apple seem to be growing increasingly tight, with a major move to Mac now the speculation of the day,

At Apple’s March iPhone event, a Salesforce representative took the stage to demonstrate a version of that company’s sales software running as a native application on the iPhone.

“The opportunity to use the innovative iPhone OS platform to deliver compelling Software-as-a-Service applications to mobile users is empowering to us, and ultimately, our customers, “said Marc Benioff, chairman and CEO of Salesforce.com. “They are asking us for new ways to harness the power of Force.com to access their business information on any device regardless of location.”

Now it looks like Salesforce has taken Apple’s Mac message to heart – and plans to migrate its 4,000 employees to the Mac, making the company one of the largest enterprise software companies to use the Mac. The reason for the switch is telling, according to blogger (and iPhone developer) Alex Curylo: "Why, you ask, Security! The resources it takes to defend against all the stuff the baddies throw at a PC, it’s just cheaper/easier to pay a few bucks more for a Mac and not have any of those issues." It’s a major bonus for Apple’s increasing acceptance by business and enterprise shops as Mac sales climb 50 per cent year-on-year.

40% US Sales increase
47% international

Retail 50% new to Mac

51% growth year 3.5 times PC growth

2-3 times for last 3 years

37% desktop growth

portables 61%

MacBook Air  – No number
3-4 weeks channel inventory

73% US Marketshare of iPods

45 more stores in fiscal 2008

expecting 33% growth over year ago