Brit blog names iPhone 'world's worst'

In June, Apple's smartphone was the editors' choice at CNET UK. How times have changed.



[Originally published Nov. 3, 2009 on Fortune.com]

"The iPhone may be the greatest handheld surfing device ever to rock the mobile Web, and a fabulous media player to boot," writes CNET UK's Flora Graham in a mock award citation posted Tuesday. "It may be the highest-rated mobile phone on CNET UK, rocking the pockets of half of our crack editorial team. It's certainly the touchscreen face that launched a thousand apps. But as an actual call-making phone, it's rubbish, and we aim to prove it."

What follows is a litany of complaints no iPhone owner hasn't heard -- or expressed -- before. But to read them in a publication that four months earlier named Apple's (AAPL) device the "world's best touchscreen phone" is unexpected. And in Ms. Graham's voice, sort of fun.

To quote a few of her sharper lines:

How Apple sliced its pie in 2009

The Mac and iPod slices shrank between '08 and '09. iTunes grew a bit. iPhone grew a lot.

[Originally posted Oct. 28 at Fortune.com.]

Steve Jobs likes to describe Apple's (AAPL) business model as a stool built on three-legs: the Mac, the iPod and the iPhone.

But a quick glance at the 2009 Form 10-K, which Apple filed on Tuesday, shows that it is now more like a four-leg chair, with a couple of wedge-shaped pillows on the side.

The Mac and iPod still bring in the biggest part of Apple's total sales revenue -- 37.7% and 22.1%, respectively -- but their shares of the pie are shrinking.

The iPhone, meanwhile, is rapidly catching up, thanks to unit sales that grew 78% and GAAP revenue (swelled by deferred revenue dating back to 2007) that grew 266%. The iPhone now accounts for 18.5% of Apple's sales, just behind the iPod.

The fourth leg of the chair is the line item Apple calls "other music related products and services" but which is mostly iTunes Store sales -- music, video and apps. It continues to grow at a steady pace and now represents about 11% of Apple's net sales.

Spreadsheets summarizing Apple's revenue streams are pasted below the fold. Apple's 2009 Form 10-K is available as a pdf file here.

[Follow Philip Elmer-DeWitt on Twitter @philiped]

Battle of the buzzwords: Apple vs. Microsoft

[Originally posted Sept. 20, 2009 at Fortune.com]

Apple (AAPL) is awesome. Microsoft (MSFT) is muscular. Apple execs speaks in adjectives; Microsoft's in gerunds. Cupertino wants to show us how cool its products are, and how easy-to-use. Redmond wants us to know how hard it's going to compete to grow its market share.

That's the take-away message from the pair of videos pasted below the fold.

The first -- Apple's Sept. 9 "It's only rock and roll" presentation boiled down to just the adjectives -- has been viewed nearly half a million times since it was posted last week by justanotherguy84.

The second -- which we put together Sunday morning at the suggestion of TechFlash's Todd Bishop -- is Microsoft COO Kevin Turner's July presentation to analysts boiled down to just the buzzwords. Turner is, as Bishop promised, a modern master of techno-business jargon.

Let's go to the videos. Each is less than two minutes long.

Microsoft's grinning robots

[Originally posted Sept. 28, 2009 at Fortune.com]

One of the disadvantages of reading American newspapers is that you don't get Charlie Brooker delivered to your doorstep.

Brooker is a British comedian and, as everyone who reads The Guardian knows, the author of the Screen Burn column that appears in G2 every Monday.

He's also Britain's funniest and most enthusiastic Apple (AAPL) basher -- an honorific he secured with a Feb. 5, 2007 column that included this classic paragraph:

"I hate Macs. I have always hated Macs. I hate people who use Macs. I even hate people who don't use Macs but sometimes wish they did. Macs are glorified Fisher-Price activity centres for adults; computers for scaredy cats too nervous to learn how proper computers work; computers for people who earnestly believe in feng shui." (link)

Now, in Monday's Guardian, he offers a sort of bookend to that 2007 column -- a companion piece in which he reveals his true feelings about Microsoft (MSFT) Windows. He still hates Macs and Mac users, but it's not as if thinks Windows is so great. In fact, he writes:

Boiling Apple down to its adjectives

[Originally posted Sept. 15, 2009 on Fortune.com]

Last week we counted how many times Apple (AAPL) marketing chief Phil Schiller used the words "amazing" and "incredible" in his presentation at the "It's only rock and roll event." (Answer: an incredible 15 times each.)

Now someone who calls himself justanotherguy84 has taken the exercise one step further. He (or possibly she) has posted a 2-minute YouTube video of the entire Sept. 9 event stripped of just about everything but the adjectives.

Ever wonder how Steve Jobs and company leave the indelible impression that Apple's products are really great, really easy and just plain awesome?

Check it out below the fold.

Apple's amazing, incredible Phil Schiller

[Originally posted Sept. 12, 2009 at Fortune.com]

The day after Apple's (AAPL) "It's only rock and roll" event, Erik Sherman asked on CBS's BNET why the media missed the strategic importance of the gaming announcements that were made that day.

He has a point. Apple spent nearly a third of the hour-plus long presentation talking about the iPod touch -- the "funnest iPod ever" -- and how it stacks up against handheld game machines made by the likes of Sony (SNE) and Nintendo.

Yet the attention of the press seemed to be on everything else: the return of Steve Jobs, the video camera on the iPod nano, the camera missing from the iPod touch.

I went back and reviewed the podcast video of the event and I think I've found the reason: Phil Schiller.

Why are there no Mac viruses?

[Originally posted Sept. 2, 2009 on Fortune.com]

There are, as far as we know, no Mac OS X viruses in the wild.

To prove that assertion wrong, you only have to name one.

Academic proofs of concept and theoretical vulnerabilities don't count. Neither do computer worms, Trojan horses, spyware, adware, spam or any of the other nasty species in the zoology of malware.

That eliminates Inqtana-A, iBotNet, MacSweeper and a handful of other examples of Mac malware usually trotted out at this point by PC apologists. Nor can you count the 10-second Zero Day Pwn2Own Safari exploit that got so much press attention last March. None of these, strictly speaking, were viruses.

The issue comes up anew because Apple's (AAPL) latest Get a Mac ads are once again hammering Microsoft (MSFT) for those "thousands of viruses" to which its operating systems and application suites are heir. And that, in turn, has led to a resurgence of comments in this space to the effect that a) Macs are just as vulnerable as Windows machines and b) the only thing that protects them is their miniscule market share.

Those ideas, while widely promulgated on the Web, are wrong. The fact that Mac OS X represents less than 4% of the worldwide installed base of computers might explain why there are fewer Mac viruses. But it wouldn't explain why there are none.

So what's the answer?

First, let's define some terms.

Arrington to Apple: Liar liar pants on fire

[Originally posted Aug. 22, 2009 on Fortune.com]

"A total lie." "Untrue." "Misleading." "Complete fabrication." "Way beyond misleading."

Those are some of the nicer things Michael Arrington had to say about Apple (AAPL) in his analysis of what he calls "Apple's long rambling letter to the FCC."

Arrington, for those who don't have Techmeme on their morning reading list, is the former securities lawyer and serial entrepreneur who runs TechCrunch, arguably Silicon Valley's most influential tech blog.

The letter he's referring to is Apple's formal response to an inquiry by the Federal Communications Commission into the role AT&T (T) played in Apple's rejection of Google's (GOOG) powerful Google Voice app. See here.

AT&T's answer: we played no role. Google's answer: redacted. Apple's answer: we never rejected the app; we just haven't, for various reasons, approved it yet. (link)

Arrington's response: Apple is lying through its teeth. In particular, he writes:

Putting lipstick on Microsoft's pigs

[Originally posted Aug. 6, 2009 on Fortune.com]

At the end of a long report on the Apple Stores -- and the corner he believes they have turned -- Needham analyst Charles Wolf turned his attention this week to Microsoft (MSFT) and its plans to launch a fleet of company-branded stores of its own, complete with wall-sized digital screens, spaces for free public events and "Guru" bars to deal with customers’ software complaints.

Let's hope Steve Ballmer isn't on Needham's mailing list, because Wolf's two-page description of Microsoft's efforts and its products may be most dismissive ever produced by a Wall Street analyst. He even goes so far as to evoke the old lipstick joke that got Barack Obama in so much trouble with Sarah Palin during the primaries.

"Microsoft has always touted itself as an innovator," Wolf begins in a section entitled The Sincerest Form of Flattery. "But the company’s true genius has stemmed from its ability to copy the ideas of others."

And the company it's most fond of copying, he says, is Apple (AAPL).

Apple's Q3 2009: Analyzing the analysts

[Originally posted July 22, 2009 on Fortune.com]

Tuesday was not a good day for professional analysts as a class -- and Merrill Lynch's in particular.

Not only were most caught off guard by the strength of Apple's (AAPL) record third-quarter results -- see here -- but the men and women who track the company for banks and brokerage houses were bested once again by a bunch of bloggers, day traders and amateurs analysts.

In the color-coded chart excerpted above -- and pasted in full below the fold -- the estimates that were closest to the mark are highlighted in green and the worst highlighted in red.

IT on the iPhone: 'Use at your own cost and peril'

[Originally posted July 12, 2009 on Fortune.com]

Ever wondered why your company will support Research in Motion's (RIMM) BlackBerry but not the iPhone? Does it seem like the corporate deck is stacked against Apple (AAPL)?

A conference call with four chief information officers organized by Morgan Stanley's Kathryn Huberty last week might have confirmed your worst fears.

Of the four guests, only one -- the CIO of a multi-billion dollar company who runs a Mac shop for the "creatives" who work there -- actively supports the iPhone.

The other three dismissed the device with varying degrees of curiosity and contempt.

Apple's Q2: Analyzing the Analysts

[Originally posted April 23, 2009 on Fortune.com]

No analyst we know of correctly predicted Apple's (AAPL) second fiscal quarter results for 2009, in which the company proved that computer makers don't have to slash prices or build "junky" $400 netbooks to weather an economic storm. But some analysts did better than others.

Who did best?

Let's look at the numbers. The table below represents the estimates of all the Wall Street analysts whose numbers we could get our hands on, as well as those of three of the most prominent blogger analysts. (We could have included lots more bloggers; everybody these days seems to have an Apple earnings spreadsheet in their hard drive.)

In our chart, the actual results and the most accurate estimates are highlighted in green. The worst estimates are highlighted in red. There were several ties.

All about Microsoft's "Lauren"

[Originally posted March 31, 2009 on Fortune.com.]

Her hair is red, her eyes dark brown, her physique slim. She stands 5'2" in her stocking feet and weighs 113 lbs. in her birthday suit.

Her name is Lauren De Long, and she set a million geek hearts aflutter with her spunky performance in the now famous "you find it, you keep it" PC ad, in which she chose an HP (HPQ) Pavilion running Microsoft (MSFT) Windows Vista Home Edition over any computer in the Apple (AAPL) store.

She also set off Apple 2.0's hottest flame war — 402 comments and counting — with the line "I'm just not cool enough to be a Mac person." (See How Microsoft put Apple owners on the defensive.)

She was supposed to be an ordinary American who answered a Craigslist ad for a market-and-research job and to her surprise found herself starring in a multi-million dollar Microsoft advertising campaign.

But a little inspired sleuthing by the wife of a Seattle-based investigative reporter turned up her film and television credits, her Now Casting bio and resume, her IMDB listing, her MySpace photo gallery and her official website.

Steve Jobs, chained to a rock

[Originally posted January 18, 2009 on Fortune.com.]

He was a Titan who stole fire from the gods and gave to mankind the tool that allowed mortals to rise above the beasts. For his sins, Jupiter had him chained to a rock on Mount Caucasus. Every day a vulture feasted on his liver, which grew back overnight.

Steve Jobs, who announced on Wednesday that he is taking a medical leave to focus on his health, must feel something like poor Prometheus, chained to his rock in the hills above Palo Alto. The vultures this week are an ever-expanding team of reporters from Bloomberg News -- and whoever is feeding them medical updates.

The day Apple released its iPhone revenue bomb

[Originally posted Oct. 23, 2008 on Fortune.com.]

Some Apple watchers have complained almost since the launch of the iPhone that Wall Street doesn't understand the device's value to the company. Analysts consistently underestimate Apple's revenue, these investors insist, because they fail to fully account for iPhone sales.

The problem has been festering for so long — and the gap has grown so large between Apple's actual earnings and the Street's grasp of those earnings — that Apple finally let the cat out of the bag Tuesday during its quarterly earnings call.

Measured by so-called generally accepted accounting principles (GAAP), the company earned $1.26 a share in 2008 Q4 on revenue of $7.9 billion. This is the form in which Apple (AAPL) has always reported its income.

But on Tuesday, for the first time, the company went one step further. CFO Peter Oppenheimer told analysts that when measured by actual revenue — counting the full value of every iPhone and Apple TV sold in the quarter — the company earned a good deal more: $2.69 per share on sales of $11.68 billion (see transcript here).

The consensus among analysts before the earnings call was that Apple's revenue for the quarter would be about $8.05 billion. Some traders looked at $7.9 billion and thought Apple had fallen short of the Street's target by $150 million. The smart ones looked at $11.682 billion and realized they'd underestimated Apple's earnings by nearly $3.8 billion. They're probably the reason Apple's share price jumped 12% in after hours trading.

How could the analysts have been so wrong?

Why does Steve Jobs look so thin?

[Originally posted June 13, 2008 on Fortune.com]

Much of the speculation about Steve Jobs' rail-thin appearance at the unveiling of the new iPhone on June 9 has tended to be all or nothing.

Either his cancer has returned or he is recovering from a bout with a "common bug," as his spokeswoman told the Wall Street Journal on Tuesday. "That's all there is to it," she said. (The talk may have unnerved investors a bit: Apple (AAPL) shares fell 4.1% on Thursday and another 2.4% by midday Friday.)

But this is not the first time Jobs' appearance has raised concerns about his health, and the "common bug" doesn't explain the weight loss that's evident in a review of his keynote videos over the past few years.

There's another possibility, one that is consistent with both Jobs' medical history and the changes in his appearance. It stems directly from the type of cancer for which he was treated four years ago and the nature of that treatment.