Beats by Dre: Designed by Apple in California

I know it’s been a while (over a year) since I last posted anything on here. 2013 was just a hectic year. Lots of stuff happened in tech, but I won’t bother to point out what I was right about last year (almost everything). So what has brought me back to Tumblr? This Apple acquisition of Beats Electronics. Ever since rumors first broke of this deal, my mind has been churning as to what makes Beats worth $3.2B. And while the deal came in at $3B ($2.5B for Beats Electronics and $500M for Beats Music) and many reports as to why Apple wanted Beats, I’m still a little mystified. Are Dr. Dre and Jimmy Iovine really that valuable? Is Beats streaming music service and their 200,000 subscribers worth $3B? This certainly isn’t about overpriced and mediocre-sounding headphones and speakers. Can’t be. And I don’t want anyone to think I’m hating on a widely popular electronics brand. I’ve owned Beats headphones and earbuds since day one. I’ve been lucky enough to never have had to pay for any. The quality just isn’t there for me. I’d much rather listen to music via a pair of Sennheiser RS 180’s. I won’t even mention the HD 700’s. Best consumer headphones you could ever buy. Even still, I’m in love with my Beats Executives and my Beats Pill. They are amazing products for what they are designed to do. Amazing. And they also have a certain cool factor. Apple products also have a cool factor. So there’s that synergy between two lifestyle brands. But that alone isn’t worth Apple largest ever purchase. Apple’s largest purchase before this was it’s purchase of NeXT in 1996 for $429M (inflated to $639M today). The purchase of NeXT allowed Apple to develop Mac OS X. This was key in Apple developing a modern operating system for it’s Mac lineup, and later iOS for iPhone and iPad. Considering all the products that run on NeXT code, that purchase was cheap. I just don’t see the same value in this Beats purchase. Tim Cook has gone on record as saying that new features for Beats will “blow your mind” and that there are “products you haven’t thought of yet”. Those are bold statements. Some could say that they are for investors who are concerned that Apple just blew $3B of their money on a company that only cleared $1.5B in revenue last year. I think it’s clear to say that the return on this investment won’t come in the form of headphone sales, no matter how high the profit margin is for Beats products. From everything I’ve been reading, this purchase was for the people resources that Beats will bring to Apple. Dre and Iovine will be full-time employees at Apple. Still not sure how that is going to work. You don’t just go from owning a company to being an employee. No matter how much money ($700M for Dr. Dre in this case) you made from selling your company. It’s a different mindset when you’re the guy at the top making the decisions than when you’re just another employee. And yes, I know they won’t be too far from senior management, reporting to Apple SVP Eddy Cue. But they won’t be involved in many closed door meetings. That’s not an easy pill to swallow. Egos can wreck a business faster than any rival. I don’t see that happening with Dre as he’s a relatively quiet figure and Iovine has had a good relationship with Apple in the past. But the chemistry between these two and Apple’s top brass should be watched. I think Apple is betting on Iovine’s relationships in the music and TV industry to boost declining music sales and to possible secure some content deals for Apple’s heavily rumored television product. Apple has promised to go into categories that it currently isn’t in. So along with the obvious iWatch, a true Apple TV is likely the other. While the iWatch will generate a few billion for Apple, television is a much bigger opportunity. Should Apple be able to successfully tap into that, we’re talking about the worlds first trillion dollar valuation for a company. In the short term (I’m thinking holiday quarter), we can expect to see some Jonny Ive inspired headphones and speakers. Too early to see Beats Audio in iPhones but it will likely come. Still, nothing mind-blowing. All very predictable really. For this deal to be successful, Iovine has to deliver some huge content deals.

Apple Made Google Maps Better

I’ve had the chance to use the Google Maps app for iOS for a few days now and I have been blown away by how great the app is. It is hands down the best mapping app available for mobile devices. But you know what else I realized in using the app? Apple was right to kick Google Maps off of its devices in favor of its own mapping solution. Sure, the new Maps for iOS app isn’t that great (I’m not going to slam it like others have), but it accomplished what it needed to do. Apple showed everyone what type of company Google really is. For at least two years, Google refused to bring turn-by-turn navigation to the iPhone because it wanted its Android operating system to have a competitive advantage. And so only but being kicked off of the platform, did Google update its app. And now, iOS has the best version of Google Maps available. And look at how quickly it took Google to push out the app. It’s amazing what a company can do when given the right amount of incentive. Kudos to Apple for pushing Google to release a better app. Now if Google can only fix this Gmail issue with iOS devices!

The World Has Gone Mad….

Apple (AAPL) is trading below $700 and Gangnam Style has almost a billion views on YouTube. Something just isn’t right.

And So The World Yawns At The iPad mini

I usually don’t get too excited about Apple product launches and so I won’t this time either. After all, Apple only releases products that sell in the millions and beat previous sales records of the product it’s replacing.

The iPad mini went on sale today with small lines and very little fanfare. So this product must be a flop. Wrong. Only the WiFi model went on sale today. Just wait until the cellular version goes on sale and the the holiday shopping season kicks into high gear. Then you will truly see that Apple’s family of iPads dominate the iPad market. As I’ve said many times before, there isn’t a tablet market. There’s an iPad market and everyone else.

Tim Cook Shakes Up The Orchard

When I first read the story, I was mixed with emotion. Happy to see John Browett leave, but kind of concerned about the departure of Scott Forstall. Browett wasn’t the right man for the job, and while his recruitment to Apple in a partial indictment on Tim Cook, his departure shows that Tim can pull the trigger when needed. But on the other hand, Forstall was like a rock star in Palo Alto. But if I think deeply about it, he needed to go.

But let me talk about this Browett guy for a moment. First of all, I had never even heard of Dixons before. But then when I found out what Dixons was, I realized that this guy wasn’t the right guy for the job. Apple Retail was created from the vision of Steve Jobs and the hard work of Ron Johnson. No one outside of Apple, has any idea how to make Apple Retail work. Ron’s successor should have been someone from within Apple Retail’s senior management. I suspect this will now be the case. Tim can’t afford to make the same mistake twice. Apple Retail is just as important as the products themselves. Think about it. Most people have their first meaningful interaction with an Apple product in an Apple Store. Not only does a customer buy an Apple product because it meet their needs, they buy it because of the support that they get with that product. And that support extends to over 380 Apple Stores worldwide. Apple Retail is the face of the company just as how Steve Jobs was and the iPhone is today. So you can’t have some British bozo (God save our Queen) who has no idea about the Apple culture come in and with such authority. Apple Retail employs more staff than any other division at Apple. Apple Retail is where the culture of Apple lives. And as a former Apple Retail employee, I felt extremely offended that this Browett guy would come in and try to make cost-cutting measures in Apple Retail. Apple Retail isn’t designed to generate revenue. It is a support feature first in many ways. Sales comes second. Why do I say this? Just ask any Apple Retail employee how much commission they make. They don’t! Apple Retail isn’t driven by salespeople. It is driven by people people. People who can empathize with an irate customer. People who can help an elderly couple get set up with an iPad that allows them to FaceTime their grandchildren halfway around the world. Any idiot that think laying off staff to increase revenue within Apple Retail is a good idea deserves to get sacked so quickly. Mr. Cook, you and I have been friends for a long time, but you better think long and hard before you pick Ron Johnson’s (Browett was a mulligan) successor.

Now on to Forstall. Like Jony Ive, I thought Forstall was golden. Simply untouchable. This is the guy who told Steve Jobs not to have an iPod-like interface for the iPhone and to go in the direction that the iPhone is at now. In any other company, the success of the iPhone would have been enough to secure employment until retirement. But not at Apple. Your current success only serves as the benchmark for your next project. And while iOS (Forstall’s division) continued to progress, the level of “wow” seemed to be fading. Each year the tent pole features seemed to be more and more incremental. And while I personally feel that smartphones are reaching a feature saturation point, I think the iOS team could push the envelope a little more. But this isn’t the reason why Forstall is leaving Apple. Speculation is that he’s actually being forced out. Here’s what John Gruber has to say about it:

Forstall is not walking away; he was pushed. Potential factors that worked against Forstall: his design taste, engineering management, abrasive style, and the whole iOS 6 Maps thing. I also wonder how much Forstall was effectively protected by his close relationship with Steve Jobs — protection which, obviously, no longer exists.

I can believe it. Siri debuted as a beta product. I think it still might be. Not sure. And while slapping a beta tag on something lowers expectations, it’s just so unlike Apple. You expect that from Google but not Apple, where products are known for having such polish. But instead of learning from that “mistake”, Forstall signed off on Apple’s new Maps app. Now while I haven’t had any problems with Maps on iOS6 so far, and much of the “issues” are overhyped, Maps was egg on the face of Apple. Apple had to publish an open letter to apologize for the new Maps app. A letter that Tim Cook had to sign because Forstall is rumored to have refused to sign it. This was the final nail in the coffin for the golden boy. And as Gruber suggest, without Jobs, the protection for Forstall is no longer there. Jobs was famously known for valuing personal relationships, but maybe Tim Cook doesn’t. It may appear that he is a cold a decisive individual. The reason why Apple masters the supply chain as well as they do.

Now I’m sure investors will overreact to this news and it’s good that Apple did it when the stock market was closed (Thank you, Sandy!). This will allow Apple PR to try and massage the concerns of its investors before the massive selling begins. I have to admit, this shake up had me thinking about selling my stock. Not because I don’t agree with the moves, but because it might show that Tim Cook isn’t a confident leader. I don’t believe this to be true. I believe that he is supremely qualified to head Apple, but I don’t know if the large investors believe that. But let’s give this shakeup some time to play out. Jony Ive is heading up HI (Human Interface) design, which I believe he will exceed in just like he had with the physical design of Apple’s products. And if we look ahead, Apple is heading into its biggest fiscal quarter with its strongest product lineup ever. Investor concerns should be eased over the holiday quarter’s massive sales.

Google Crashes The Market

Did anyone pay attention to the stock market yesterday? No? Well let me fill you in on what happened. Google’s earnings got published early and sent the tech sector into a dive. Google missed their quarterly expectations and so the selloff began. Now I genuinely don’t care about what Google does (aside from them ripping off everything that that produce from someone else). But I start to care when Google’s earnings somehow decrease my Apple (AAPL) shares! How the hell does Google’s earning have to do with my stock? I’m waiting for Wall Street to return my inquiries on that. Apple has exceeded their own guidance for as long as I can remember. Yet their stock gets hammered when they don’t crush analysts inflated expectations. Does anyone see what is wrong with Wall Street? Because I surely do.

Designed by Apple in California. Assembled in China.

I might not agree with the gasbag that is Rush Limbaugh but he’s right.

Now, something fascinating came up the other night in a debate, and I wanted to mention it the other day, and I didn’t get to it. Candy Crowley brought up the Apple example and manufacturing. And the example was that not one Apple product is made in America, and yet they’re the largest company in the country, they sell gazillions of products, and not one of them is manufactured in the United States, and of course the hand-wringing and, “Oh, what can we do? Can we bring that back? Oh, my God.”

There’s a simple reality. The last time Apple products were really manufactured in this country, you’ve gotta go back to when John Sculley ran the company, the early nineties. Apple had two factories, and they could stamp out a million Macs a day, computers. There was no iPhone at this point in time, just the Macintosh. They had two factories. One was in California, I think Fremont, if I’m not mistaken, somewhere in California. The other one was in Cork, Ireland. But the iPhone, the iPod, the current iteration of the iMac, all the Macintosh line of computers, the iPad, have never been made in America. Those are not jobs lost. Those are not manufacturing jobs that have somehow been squandered and lost.

Those products have never been made here. However, they wouldn’t exist without American ingenuity. All of the industrial design, all of the software engineering, many of the components for the various products, all of them are designed here, every damn one of them is designed here. Many of the components inside, the chips, made here… what did it take to get those iPhones in everybody’s hands? It took airplanes. FedEx, an American company. Apple buys out FedEx routes for weeks leading up to the release of a product. Then once the iPhones got here, where did they go? They went to Apple stores, they went to carrier stores, they went to individuals’ homes. They had to be delivered by somebody. UPS delivered some, FedEx delivered some, people picked them up themselves.

The Apple Store has its own employees. The number of jobs that Apple creates or facilitates, despite the fact that their products are manufactured (or assembled, I should say) in China would astound people if they ever stopped and looked at it. There are plenty of jobs in this country that are being filled and that are necessary because of Apple, even though their products are manufactured there…

By the way, I’m not speaking to you as an Apple fanboy. I’m speaking to you once again strictly in economic terms. Apple is not a drag on the US economy, even though those products are not manufactured here. Those are jobs that are never gonna come back. Have you ever stopped to think…? The iPhone 5 right now, they can’t make enough. They are selling every iPhone they make.

They have had the fastest rollout, international rollout of a product ever. The iPhone is on sale in more countries than any phone at this stage of its release date as any product they’ve ever had. They simply can’t make enough…. Their phones, their products, their computers, the iPads, the iPhones, the iPods. All these are made by one company called Hon Hai Precision, Foxconn, and they’ve got factories all over China, factories that employ 300,000 people. The total number of employees of the manufacturing firm is over one million. It takes five days to make an iPad, I read. Manual labor, five days. I don’t know what it is for an iPhone. One of the reasons the manufacturer says the iPhone’s late or tough to get is because its design is so intricate.

It’s the thinnest and the lightest and it just takes a long time to put one of these things together, and it is really hard because it’s so miniaturized. It’s so technically advanced… The bottom line is that those jobs were never here. We didn’t lose those jobs. And the jobs that are related to all those products are real, and they are American jobs, and the intellectual content — the stuff that makes those iPhones valuable — is all made and designed here…

I don’t know where to stop when talking about Apple. Look at the people that make accessories for all their products: the cases, the external batteries, the chargers. It really represents total economic ignorance to sit here and wring your hands and worry about the fact that the iPhone, the iPad, whatever, is not made in the United States. The economic activity associated with the assembly of those products over there by the ChiComs is incalculable.

Well, you could calculate it, but it would stun you.

Sold Out In 1 Hour???

If you’re trying to get an iPhone on launch day (September 21), you will have to wait outside of a store like some hopeless loser to get one. That is because Apple, in all their marketing glory, only had 500 iPhone 5’s available for pre-order sales. Last year, it took the iPhone 4S to sell out of pre-order inventory in 22 hours. Today, the iPhone 5 sold out of pre-order inventory in 1 hour. I bet the haters and doubters are getting tired of being wrong about every iPhone release. The only phone that can outsell an iPhone is a newer iPhone.

Sent from my iPhone 5 (Thanks, T. Cook!)

iPhone 5 Announcement…. Zzzzz!

I must admit. Apple’s iPhone 5 announcement was one of the longest and most boring product announcements that Apple has ever done. This main attraction was so well-predicted. We knew absolutely everything about the product. Everything! From the dimensions, to the data/charging port, to the placement of the headphone jack, to the headphones themselves, to LTE connectivity, etc. Everything was leaked. Everything. The only surprise is that Apple would call their new port, Lightning. Someone either needs to be fired or given a raise because of that name. I haven’t quite figured it out yet. I’m only a bit confused because I thought that a thunderbolt was actually lightning. But apparently not. Either way, Apple marketing does it again. But at the end of the day, I’m pretty underwhelmed with the iPhone 5 from a hardware perspective. This iPhone is all about the software. And that is what makes the hardware such a big deal. This release is all about the software and user experience. The hardware will only help to enhance that. Everything that iPhone users do, will be done quicker and better. iOS6 adds lots of new goodies. And it makes lots of tasks that we could already do, better. I’ve been using the beta for a while now and I love it. While it’s not ground-breaking, it further enhances the iOS platform.

But has it sunk in that the iPhone 3GS will run iOS6? Just think about that for a second. Apple is showing how wide the gap is between its platform and all others. The 3GS was released in 2009 and it will still run Apple’s latest operating system. Most Android phones from last year (and some from early this year) won’t be able to run 4.1 Jelly Bean. Apple is clearly showing that with their platform, they offer a level of support that no other manufacturer can offer. Another thing to think about is that the iPhone 4 is now free. Free! Let that sink in as well. With the exception of Siri, faster cellular networking, and some other minor features, this phone will essentially be given away. Even Android OEMs can’t do this. Why? Because they have to make larger margins on their hardware sales. With this move, Apple is blurring the line between being a hardware company and a service/content provider. They’re essentially attacking the mobile industry on all fronts. Oh and for all those who complain that the design is pretty much the same since the original, have you taken a look at laptop design for the past 25+ years? You’ll probably enjoy this quote.

The iPhone hasn’t departed radically from its original format. Nor have any of the other smartphones that followed it. Why should they? The clamshell laptop was patented more than 30 years ago by the British industrial designer Bill Moggridge, who died this week – and we’re still using clamshell laptops. Maybe that means every laptop manufacturer “ran out of ideas” in 1982. Or maybe it’s a good idea that we’re sticking with because it works – just like the touchscreen phone that Apple invented in 2007.” - Adam Banks for BBC News

So will I get the iPhone 5? Sure. I just can’t decide between black or white. I usually hate the black models, but the aluminum finish on the black model is very nice. I might have to flip a coin.

The Flattery Continues

What has HTC learned from Samsung? Don’t copy they iPad for your tablet design. Copy the iMac. Apple’s lawyers must be salivating.