• Its profit margin came in higher than expected, at 19.2%.
• iPod sales rose 21% from a year prior.
• Macintosh computer sales rose 33% from a year prior to 150,000 units -- the most ever sold in a single quarter.
• Sales in the 185 Apple Stores rose 33% from a year prior to $915 million.
• The company will open 12 new stores this fall to end the year with 197.
• The company still expects to sell 10 million iPhones next year.

Labels: AAPL

I graduated college back in 2000 and went to work for a software company, one of the products that I worked more with was a PIM and e-mail synchronization tool for handheld devices. It was manufacturer agnostic, meaning that it could sync any Palm, Windows Mobile, or WAP device to the information on any Exchange, Domino, or standardized mail server.

I was talking with a friend of mine who works for a large storage company and was intrigued to hear that he's looking for a device to replace his BlackBerry. Turns out that corporate policy is changing and his company will no longer be allowing new users to purchase and use a BlackBerry on the corporate server.

A BlackBerry is a staple in most corporations these days. It is a fairly versatile device, but it does one thing really well and that is get push e-mail: when a message arrives on the server, it is pushed to the device instantly. So if you are at your desk or sitting on the beach, a message arrives on your device right when it hits the server.

BlackBerry Enterprise Server is a middleware product. You have to have a dedicated server to handle all of the BlackBerry traffic. The server communicates with the Exchange or Domino Mail server. So, for example, I send this e-mail to your corporate account. It travels across the net and gets to your corporate server. The BES (BlackBerry Enterprise Server) has monitoring on your mail server, which intercepts the message and triggers a copy to be sent to RIM's headquarters in Canada and then it is sent over the cellular networks to your device where you get it instantly if you are within a coverage area.

So, the total cost of ownership for this service is expensive. You have to purchase the BES, a moderately powerful server to handle the software, whatever costs you incur to have an extra server on the network, and then you must purchase a license for every device, buy the devices themselves, and subscribe to a data plan for each device.

Microsoft announced Direct Push technology for Exchange some time last year. Basically the Exchange Mail server has the functionality built in to talk to phones and/or hand-held devices over a network (wireless or cellular). When mail hits the Exchange box, there is no middleware. But the Exchange box has network connections that make it just like you are on the local network, and pushes the message instantly to the device where you get it.

When I was working with this technology, we had a trigger if the device was offline to send an encrypted text message to the device to synchronize and securely download the message over the data network. I'm not sure about the specifics on how Direct Push Active Sync works these days, but it is similar.

The key point here is that the push capability is built-in to MS Exchange. It supposedly offers very robust functionality. You can send a command to "kill" the device if it is lost or stolen. It will wipe all data from the device with the command. I assume RIM has this, too, but am not sure. But the interface is 100% Microsoft so it is familiar to people. And any Exchange administrator can handle it as it is basic functionality built-in to the software that they are supposed to be experts on.

Using Microsoft Exchange instead of BlackBerry's middleware dramatically reduces the cost of ownership. You need no additional box or software for it and no additional licenses for clients. You can purchase any Windows Mobile or Palm device to use. They have the ability to wirelessly sync in real time built-in to their default mail clients. You don't have to purchase any software other than the device. The other key here is that a Palm or Windows Mobile device has additional functionality and the ability to run other third-party applications such as CRM for sales forces, native opening and editing of office documents, and so on.

Plus, most people carry a BlackBerry in addition to a mobile phone, so there's no need for the extra data service on the BlackBerry if they already have it on their phone. Most U.S. cell carriers charge less per month for device data than for BlackBerry data.

As companies discover that they can save money while getting the same functionality, we may see a trend away from BlackBerry.

There are rumors that the iPhone will have Active Sync technology built into the mail client in a near-term firmware update. People are always impressed by some of the things I can do with my Treo. The unbelievable screen on the iPhone has got to be even better. And don't discount Jobs's vision to the future to go after business users or come out with a more reasonably and competitively priced device.

Since at least one leading large Technology company appears to be moving away from BlackBerry, others might be thinking about it as well.

I'm not sure what to make of Scot's piece. He compares a "tricked out" Dell model to one of the Macs and comes away with the Dell costing some $650 more than the Mac, due to it needing a faster processor. Scot's analysis is good and he has the data right, I'm just not sure that most people would consider needing the top-end processor at Dell to be equivalent to the Mac in question. Technically, yes, the specs didn't line up without Dell's top choice, but I've never met anybody who needed the $3,500 Dell M170.

Most people are probably like me in that they look at the hands-on stuff more than the internals of a new machine. I wanted a 17-inch screen, separate 10-key number pad because I do so much with numbers in the stock market, and a general coolness and appeal. These days, nearly any computer can do what you want it to do as far as the internals go. None come with tiny hard drives anymore, for instance, and the slowdown in my work happens more often in my brain than in the computer's processor. So far, I haven't been able to upgrade that!

So, my own quick analysis of paying $1,400 for my HP Pavilion dv9000 17-inch when the MacBook Pro 17-inch costs $2,800 seems to support the idea that Macs cost twice as much by the way most people approach it. Also, had I taken the time to gather a few rebates from electronics stores, I could have paid less than $1,400 for the HP. That's never an option for Macs, as far as I know. Do they ever go on sale?

I think you missed the point that I was making. I didn't address just the very top of the Mac line-up. I addressed several parts of it, including the low end.

It's true that if the PC you have to have or can afford to have fits in between the market positions of Apple's models, then you'll be able to find something that costs only a little less (or a little more) than the corresponding Apple model -- and that flexibility may hold extra value for you. But that extra value is not transferrable to everyone. It's about your personal preference. And it also works in both directions.

It's also not an apples to apples comparison about absolute, or intrinsic, value. Most Mac users have no trouble at all picking out a model that suits them. It's not like Apple has too few models (though I do wish they had a few more). The point is that to get at the true value question you have to review comparable hardware on both sides. Otherwise, all you're comparing is price.

The only way to get at value is to level the playing field. When computer experts dissect the level of hardware in comparable products, what you find is that sometimes the Apple hardware has more value, and sometimes PC hardware does.

There is another important factor. When you look at this over time, the value fluctuates again. Computer value is always changing. So any one snapshot in time is only one data point. That's all my story delivered. Were I to do it again now, the results might change. The point is this: It used to be true that Macs were more expensive than PCs. It's just not true any longer.

By the way, my article was just about the hardware vs. the hardware. I have more coming up about the software and the real world experiences of using both Windows and Mac hardware. As a long-time Windows expert, I think I have a far more objective viewpoint on this than most people writing about it. The honest truth is that Macs have picked up a good deal of steam on the software front.

And, you won't want to believe this, but Macs are far, far less problematic than Windows PCs -- even the best Windows PCs. Literally, this is true: If you count up the number of times that your Windows PC won't play the DVD, gives you an error message, freezes, requires a reboot, won't connect to the Internet, and so forth -- things that Windows users have learned to endure as if they're just the cost of using a computer -- and compare those same types of maladies on the Mac, the results are surprising:

You are three or four times more likely to experience a stop-everything-and-fix-it-or-give-up-on-it problem on a Windows PC than you are on a Mac.

I'm not saying Macs don't have issues. They do. It just happens a lot less frequently. I was surprised by how less frequently. OS X in particular has made the Mac far more reliable.

Michael Moore is a certified nutball, right up there with Al Gore. Please do not put any stock in anything the man says. Of course our health care system is broken. The deterioration started in the Lyndon Johnson era, with the implementation of his "Great Society." Any idea how people were cared for in the pre-Medicare era? It was called charity and all doctors practiced it. In fact, before LBJ, a medical doctor was an upper middleclass profession. With the "Great Society" came an infusion of government money, along with all the bureaucratic redtape. It's been downhill ever since, made even worse with Bush's Prescription Drug Plan.

I also refute the claim from one of your readers [Robert J. Manna in Rome, Georgia, whose comments appeared on Wednesday] who says there is no emphasis on "health care," only crisis and treatment. Every day there is news about the benefits of eating right, exercising, forgoing processed foods, etc. There are constant reminders to have one's breasts or prostate examined. Mostly we ignore it and then look for a scapegoat when something goes wrong.

I'm very sorry about your mother's horseback riding accident, but even that was preventable and shouldn't be a burden on taxpayers. Hopefully people that love your mother will do all they can to help. Beyond that, hopefully her church, horseback-riding friends, etc., will step up. Sucking on the teat of the government is anti-American and anathema to freedom.

There are a few things everyone should keep in mind.

First, former Colorado Governor Dick Lamb caused a huge controversy when he said "Old people must realize they have an obligation to die." In his review of medical costs he found that the greatest percentage of medical dollars are spent on old people within six months of their death. Does an 85-year-old with a pacemaker really need a new hip? Should a 70-year-old with a catastrophic stroke really be put on a ventilator in ICU for 3 weeks?

Second, we should all own up to our responsibility to carry health insurance. I hear about the excessive cost but for most people it's about the monthly cost of a new car. There are an awful lot of luxury cars on the road. Am I to believe someone can afford a Porsche but not health insurance?

Third, malpractice suits need to be limited. [Bad stuff] happens. Sometimes babies are born unhealthy through no fault of the doctor. Sometimes operations go wrong. And, yes, sometimes doctors make mistakes. Unless it's something egregious, the doctor shouldn't have to pay for an act of God.

We've become a nation of moaners and groaners. It's always someone else's responsibility, someone else's fault. We think there's a free lunch out there somewhere and we're missing it.

Why do the wealthy and powerful come to the U.S. when they're sick if they have such great health care in their socialized medicine country? Castro was almost killed by his Cuban doctors -- they had to bring in one from Spain to correct the damage.

Michael Moore tells stories from his personal viewpoint, the truth be damned.

The fact is free competition provides the best quality at the best price for every product, including health care. Doctors should develop a "patient outcome" index that shows how well they diagnose and treat diseases and a "patient satisfaction" index that shows what patients think of the care they've gotten, and compete on those. They don't want to be judged but they do want to be free to charge whatever they think is fair. I say, let the market decide.

I'm a physician practicing medicine in Canada who recently returned to Canada after four years of critical care medicine fellowship at Boston's Harvard Medical School.

When I first went to Boston six years ago I (and many of my peers) had a "grass is greener" perception of medicine in the U.S. But after four years of taking care of patients and seeing how other physicians practice medicine in several of the top U.S. hospitals, I have come to the conclusion that the quality of the medical care that patients receive in the U.S. and Canada are very, very similar.

About 1-2% of U.S. patients do get better necessary care, about 20-30% of U.S. patients believe they are getting better care when it is more or less the same, and 5-10% of U.S. patients don't get the care they should because they are uninsured.

Similarly, about 20% of Canadian patients believe they would get better quality of care in the U.S. than in Canada, but I think this is just a perception. Some patients do get better treatments in the U.S. through access to certain innovative treatments that are not yet accepted as standard of care and may not yet be available in Canada. Also there is better access to elective non-urgent treatments in the U.S. But the vast majority of patients in Canada get the basic medical care they need.

Both the U.S. and Canadian systems are far from perfect and both have areas in which they excel. Both suffer from the problem that health care in not cheap and patients want the best possible care for the least amount of money. The major problem with the Canadian system is that a lot resources are spent on acute care (emergency room patients, urgent surgeries, critically ill patients) and there is less left over for elective non-urgent cases.

Thus, a patient will get his chopped-off fingers reattached "for free" (there's no wait because you can't afford to wait), but the patient who needs that same operating room for his cataract surgery might wait nine months because it is not urgent.

By the way, I have read in comments about SiCKO that people wait nine months in Canada for bypass surgery. I have to say that that is absolutely not true. In Toronto, if someone needs cardiac bypass surgery they will get it ASAP -- within a few weeks. In Canada, everyone has medical coverage, in the U.S. that's not the case. In the U.S., if you have good insurance you will get the treatment you need, especially elective non-urgent treatments in a more timely manner.

There are two areas that compound the cost of health care in the U.S:

⇒ The existence of for-profit HMOs and,

⇒ The prevalence and threat of lawsuits

The Canadian healthcare system is administered by the government. It is not the most efficient system, but it is far, far less expensive. Furthermore, it is efficient for patients in that they do not have to think about getting health care, deciding what kind of health care coverage (deductible, cap, in-network/out-of-network, etc.), or worrying about whether they have coverage when they need treatment.

An article in the New England Journal of Medicine showed that health care administration is more than three times more expensive in the U.S. than in Canada:

"In 1999, health administration costs totaled at least $294.3 billion in the United States, or $1,059 per capita, as compared with $307 per capita in Canada."

The reason for this difference as outlined in SiCKO is that HMOs must make a profit and you, the consumer, are paying for your health care and for the profit of HMOs.

The threat of lawsuits is actually more damaging to medicine than the prevalence of lawsuits in the U.S. One reader [Hans Burkholder, whose comments appeared on Wednesday] mentioned a malpractice premium of $300,000 in Florida.

This year I will pay about $5,000 Canadian dollars for malpractice coverage for practicing critical care medicine and I never have to worry about my premiums going up because of any malpractice claims brought against me. But the biggest reason I chose to return to Canada to practice medicine is because of how the threat of lawsuits has negatively impacted the way physicians practice medicine in the U.S.

As your surgery resident contributor mentioned, doctors in the U.S., out of an unnecessary fear, order "reams of unnecessary tests." The system is plagued by frivolous lawsuits which have actually changed the way physicians practice. Extra tests mean extra time and effort wasted for the patient and add significantly to the cost of delivering health care in the U.S. There is something wrong when after 11 years of medical training, against your better judgment, you spend your days compelled by fear to order a test that you know is not necessary and which you wouldn't even order on your own mother.

Years ago an economics major friend argued with me that health care dictated by a free market system would be more efficient and cheaper. HMO's are the U.S. health care system's free market and the courts of law are the system of checks and balance. Because of their own self interests, neither of these systems has helped to reduce costs or improve efficiency.

Finally, I am very glad to hear that the health care system worked for you and your mother. I'm sure it makes the exorbitant bill much easier to swallow.

You say wouldn't buy it above $25/share yet you make no reasoning for 25. Jim Cramer makes these claims all the time, "don't buy company X under 100." But Jim Cramer is more suited as an entertainer than an intelligent and rational investor. My question is why $25? Why not $30? Why not $23? Do you see my point? Your $25 seems like an arbitrary number, there's really no real analysis behind it. I mean, I have no idea if you think this is a 50-cent dollar, a 30-cent dollar, or an 80-cent dollar. If I'm buying a shipping company for half of its ship's scrap value, it's clearly a 50-cent dollar or cheaper, but I have no idea about your reasoning behind Starbucks. Any explanation would be quite helpful.

Labels: AAPL, Health Care, SBUX

As you read the many interesting comments people have made about AAPL, you realize they are all projections and conjecture about what might happen, some of them contradictory to others. The only thing we know for sure is that the future is impossible to predict.

So pick your favorite scenario. Then the question, as it relates to Apple's stock, becomes a chain of questions:

• What effect will that scenario have on the company's finances?
• How will the investing public view and interpret the effect on Apple's finances?
• How will the investing public value that effect?
• How does that valuation compare to how Apple is valued right now?
• Will the public re-value Apple's stock?

Who knows? Nobody.

Your original question was, "Is it time to short Apple's stock?"

My simple answer to that question is, "What's it doing? It's going up and has been going up for about a year. Many people believe it is overvalued already, and has been for some time, but the fact is that it's been going up anyway."

So, to return to your original question, I still think the answer is to ride the wave or stay out of the water. If you're riding the wave, protect yourself with a stop-loss order...the wave may crash unexpectedly. If someone's thought is to short Apple because "it has to go down at some point," they are probably right, but wait until it actually starts to go down, or at least stops going up, before you do so.

Clearly, Apple's stock is trading on way more than fundamentals. It's trading on excitement, the iPhone, speculation about Macs vs. PCs, speculation about spin-off products and line extensions, adulation of Steve Jobs, and so on. It's in a little market bubble all its own (it went up a couple bucks two days ago when the market as a whole tanked).
When a stock gets this way, I believe the best thing to do is treat it as a trend-following opportunity. The rest of it will sort itself out in time, but there's little point in risking money soley on a belief that you've picked out the right scenario and answered the entire chain of questions correctly.

"Based on my experience with my customer who is a very loyal Mac user, all individuals need to maintain their computer. I am not in his office all that much, but I have been there when his computer freezes, and he has a Mac expert there to locate glitches in his computer operation, and he has had at least one total disk failure that cost him all his data. He never recovered some of it because it was not properly backed up."

I am a very experienced Windows user, having custom built my own PCs for ten years now. I have maintained Windows 98, WinME (ugh), and WinXP installations. While Windows XP is by far the best consumer operating system Microsoft has made, it does require semi-regular maintenance on the part of the user to keep it running well, especially if we are talking about an installation that is over 18 months old. I do most of the same housekeeping that Dale does and, in my opinion, it is unnecessary busywork that should not be mandatory to keep an operating system running well in the long run.

I bought my first Mac in 2002 when I started editing my portfolio reels and publishing them on DVD, courtesy of Final Cut Pro and DVD Studio Pro. I had never owned a Mac before but OS 10.2 and the strength and affordability of those applications convinced me that it was worth it. I liked it so much that I bought my first Powerbook the following year. I kept building PCs every two years to feed my PC gaming habit.

As it stands, the ancient G4 dual 1ghz desktop I bought in September 2002 runs at least as well as the day that I bought it with absolutely zero maintenance on my part. No routine maintenance, no formats and OS reinstallations, nothing. I say "at least as well as" because with each OS upgrade my system actually became slightly snappier than it was before. So I can probably say that after five years with no maintenance, no reformats/reinstalls, nothing like that, that it actually runs better than the day I bought it.

I have never kept a computer as long as I have that G4. Going on five years is unheard of for me. My only complaint with this old system is that MPEG renders are very slow compared to current machines. It still runs Final Cut Studio great. Come October I will replace it with a new desktop that will hopefully last me at least another four years.

I can't imagine trying to do anything with a PC from 2002 that has had Windows XP installed on it with no reinstallation. Remember that most computer users are not very savvy at all, so throw lack of maintenance into the mix and it would be unbearable.

In my experience, OS X is second to none as far as long-term stability goes. No registry, no dlls, no hidden files, nothing like that spread all over the system to get things bogged down. The underlying structure is UNIX, nice and tidy. You can get deep into the guts of the OS if you would like, just open up a terminal window and go. For most consumers out there, it is a situation where they get a great interface thrown on top of a bulletproof foundation.

If PC gaming weren't a hobby of mine then I would completely dump Windows at this point.

That is my own experience over the last 15 years with Windows, six with WinXP, and five with OS X.

Labels: AAPL

"I will never have as sophisticated a hard-drive management and registry cleaning routine as Dale seems to have. I don't really want to and it ticks me off that I should need to. Why can't the computer keep itself clean? Evidently it can, if the right software is installed, so why isn't it? I've never heard a Mac user talk about their registry problems."

Based on my experience with my customer who is a very loyal Mac user, all individuals need to maintain their computer. I am not in his office all that much, but I have been there when his computer freezes, and he has a Mac expert there to locate glitches in his computer operation, and he has had at least one total disk failure that cost him all his data. He never recovered some of it because it was not properly backed up.

Most of my maintenance is done automatically at night while I am sleeping. I do have two small programs that do not have the ability to run automatically; so I spend about 10 minutes a week using them to compact and defragment the registry. Prior to Microsoft Live I had a program called System Mechanic that did everything automatically, but it slowed down startup and reboots considerably. It used Russian anti-virus software that was a real memory hog. Perhaps Microsoft Live will eventually have registry compacting and defragmentation as part of its operation.

Considering the fact that Windows is used extensively on home computers, I believe Microsoft does quite well -- except for the period they had ME on the market.

Many analysts have predicted Apple would introduce future versions at lower price points, and a patent filing that was disclosed by the U.S. Patent and Trademark Office last Thursday further fueled the rumor mill.

The patent application, filed in November, describes a multifunctional handheld device with a circular touch pad displaying illuminated symbols that could change depending on the mode in use. Drawings in the filing show an iPod-like device with a scroll wheel resembling a rotary phone dial.

Apple enthusiast Web sites quickly offered up their interpretation: an iPhone Nano.

J.P. Morgan analyst Kevin Chang said in a note to clients that was widely publicized late Monday that the patent could lead to a new iPhone that will cost $300 or less. Unlike the current iPhone, which is controlled by a 3.5-inch widescreen touch screen display, the new model will likely be controlled by a scroll wheel and might have limited functionality, Chang wrote.

"We believe it's a strong sign that Apple could potentially convert every iPod nano into a nano phone," he wrote, referring to the company's popular flash memory-based music player.

A key point is that what Apple has in the iPod, iPhone, and its various computer models are products that are a class above the competition and pulling away from them. Witness iTunes and the iPod -- Apple's competitors ignored it in the early stages, never quite recognized what Apple was doing and now, five years later, they trot out second-rate imitations (both in internet music stores and devices) that remain way, way behind the curve set by Apple.

I don't think the phone carriers will remain as flat-footed regarding the iPhone as Sony, MS, and others did on iTunes and iPod, but Apple has such a head start on them already that I'd still bet on Apple.

Add to this discussion the crystal-ball gazing (from The New York Times article referred above) for the next product cycle for the iPhone and iPod. Sure, these are rumors and speculation, but these are pretty good guesses, in my opinion, if you extrapolate out from what Apple has done in the past with their upgrades on other products (particularly iPod.)

I believe Apple will make its iPhone targets and, with reduced costs and (rumored or speculated) new iPhone models, will exceed those targets. In two years, I will be ready for the next generation iPhone -- probably one of the lower end models as I don't need it to make toast for me, just phone calls, tell the time, and give me the date.

Anyway, I think this squares with your assessment of AAPL stock as an excellent mid- to long-term play. I agree that AAPL is due for a correction (or, rather, I sincerely, desperately hope for a correction as a good entry point, to be honest).

Along the lines of your discussion of changing over from a PC to a Mac, I am a "switcher" as we're called. Put me down in the "delighted" column. I really wanted to wait until Leopard came out, but after the latest hardware re-fresh in June, I jumped in and got one since I simply couldn't handle what I term the "computer road rage" anymore. It was a good choice; I won't mind shelling out $130 in October for Leopard (really looking forward to Spaces feature, by the way.)

The phrase "it just works" is a profound statement that you can only appreciate after having one for awhile.

I find that many Windows ideas are well-intentioned but needlessly complicated and only partially functional. You don't appreciate this until you work on a Mac and see it done simply and effectively. Cases in point: the Dock, System Preferences, Dashboard Widgets, Expose, user accounts, file structures, and so on.

One item I would note: my "muscle learning" is conditioned by 20 years of working on PCs. I still use overly complicated work steps and find myself failing to take advantage of simpler, more streamlined work procedures that are part of the Mac OS.

Example: I still crawl through Mac's Dock like I would in on a PC with the Taskbar while failing to use the faster Expose (mentioned below). I notice many similar instances like that. Slowly, I am coming around.

As for getting used to the new system, I found that I could work fairly fluently on a Mac after about three days. All you need is some file organizing project where you work in the simpler, more straight-forward file structure using a number of hot-keys for cutting, pasting, renaming, etc. These are basic work skills -- the "knowing where you are" in the file structure, and having routine work processes and hot-keys underhand. After a half hour of this, you now speak "Mac" reasonably well.

I would recommend D. Pogue's book with O'Reilly on the Mac OS, and also Rough Guide's Macs & OS X. These will accelerate your getting up to speed. Online at AppleLinks, MacRumors, etc. you'll find excellent "switcher" advice, especially on free utilities and other programs to download; many of these are quite excellent.

In my experience, my old PC programs (including Office 2000) work better on the Mac than they did on the PC! Partly this is due to the fact that I am running Office 2000 on XP without the accumulation of the last three years of XP-clogging updates. Since the Mac handles all my security, I don't need many of the XP updates.

People have said that Office 2004 for Mac is a better, more feature-rich program than the Office for Windows product. I can't verify that, but I've heard it a number of times and tend to give it credence.

I do look forward to Office 2008 for Mac due to be released later this year. Retail version is expensive ($400), but you can go to an Apple store and get a student/teacher version for $150. The limitation on this version is that you cannot upgrade on the next product cycle. Given that I am using Office 2000 in this year of 2007, a limited student version should last me until 2015 or so. That works out to $20/year. This last figure convinced me that I can forgo other solutions, even the free ones like OpenOffice, etc., and Google Docs ($50/year).

In sum, the "software" issue was a big one for me before I switched. I have found that Apple and many third parties have removed that issue for me entirely. I get all my PC software working fine, oftentimes better, and there is a lot of excellent software available for Macs that is surprisingly well-written.

Check out Dashboard and see how Widgets are meant to be handled. Widgets are nice thoughts in PC-land, however they hog resources and take up screen real-estate (in my experience on a three-year-old HP laptop). On a Mac, they deliver what a computer promised all those decades ago: weather, calculators, translators, dictionaries, wikis, etc.

Labels: AAPL

The iPhone seems to have limitations by design for business users. I think that this means that Apple has additional growth opportunities in reserve.

We use over a hundred thousand PCs in our corporate environment. All are networked and online. Given that our PC hardware and software builds are controlled, we have relatively few problems. It is possible to design a stable and useful PC. I have been as careful as one can reasonably be to control my PC at home, and yet my home PC is buggy due to software defects in Windows XP and various third-party applications. This is an opportunity for Apple.

And, now, I have to upgrade my graphics card and stop using some key applications to upgrade to Vista, assuming that I can successfully pick the correct one of the five versions of Vista. So, I have decided not to upgrade. It will be a losing proposition because sooner or later Microsoft will drop support of Windows XP, which is absolutely necessary to protect against security threats. This is an opportunity for Apple.

Because Microsoft is forcing me to replace my PC, I am converting to Macs at home. Apple controls the hardware and software more closely than Microsoft, Intel, HP, Dell and others. All the software I want is available for the Mac.

However, this is not a perfect world. Please don't let anyone convince you that a Mac never crashes. There is a healthy cottage industry on how to troubleshoot Macs.

I am convinced that the iMac, iPod and iPhone markets will grow, and that Apple has additional growth opportunities for these and, perhaps, future products. So, I'm sticking with AAPL.

Being able to download more software is a double-edged sword for the PC. You can download lots of cool software, and some very bad viruses, too.

Although official sales numbers have yet to be released, many consider the iPhone debut a success. However, with the early adapters and Apple enthusiasts among the early buyers, and concerns bubbling about the phone's network limitations, high price and potentially short battery life, some are wondering if Apple can maintain the momentum needed to achieve its ambitious sales goals.

Assuming your assessment is right, would you say it is logical to assume we can expect at least a short-term favorable position for the iPhone competitors, like Research In Motion?

Well, RIMM has been on a tear for so long that I don't think it needed the iPhone as a boost. RIMM is up 238% since last August, and up 64% since the beginning of May. I'm watching RIMM as a possible short, too, as I have been since January. Good thing I watched instead of acted.

Fiscal 2008 has gotten off to a great start with revenues, subscriber account additions, and earnings all exceeding the range we discussed on the last call.

The strong performance was driven by new product launches such as the 8830 World Edition, BlackBerry Curve, and BlackBerry 8800; channel expansion; and strong growth in both the North American and international markets.

Today, we also announced a 3-for-1 stock split in the form of a stock dividend. We believe we will continue to grow significantly over the next several years, and this stock split will make the share price more accessible to investors.

We added approximately 1.2 million BlackBerry net subscriber accounts during the quarter, which was higher than our April forecast of 1.13 to 1.15 million and was 18% higher than the 1,020,000 subscriber accounts added in Q4.

We shipped a record number of devices and we expect to ship our 20 millionth BlackBerry device this summer.

The BlackBerry Curve was launched near the end of the quarter and has just begun to ramp in Q2. The device weighs only 3.9 ounces, and offers innovative features and enhanced multimedia capabilities, while maintaining exceptional battery life.

The BlackBerry Curve is the first BlackBerry handset to offer a 2 megapixel camera and spell checker for email, and the addition of the Roxio multimedia player provides an enhanced multimedia user experience.

The Roxio media manager software allows users to easily search for media files on their computer, view and organize them, create MP3 music files from CDs, add audio tags, create playlists and automatically copy or convert pictures, music and videos for optimal playback on the device.

Reviews of the Curve have been exceptional. As Mike Elgan at Computerworld aptly put it, "RIM has taken the best feature from every phone it's ever sold and built them into a single device. And the phone of year will earn its position at the top the old fashion way, not because it is the most revolutionary gadget, but because it will probably be the best phone. The BlackBerry Curve has the mark of destiny upon it."

T3 Magazine said, "Slim, sexy and oozing business class smartphone skills, BlackBerry's new Curve is a dream to hold. It's obviously smaller than its e-mailing ancestors and attracts envious eyes every time it's whipped out in public."

"I think they did us a great favor, because they drove attention to the converged appliance space and particularly [helped popularize the idea] that you should expect media as a software app on your converged smartphone, [a category in] which we've built clear market leadership, and so I think the awareness and interaction they built there is really key. iPhone is launching, to the best of my knowledge, in one carrier and one country and we're in about 100 countries and 300 carriers."

Labels: AAPL, RIMM

The problem is, the business world is addicted to Microsoft. Until it is economically better to switch to Apple (which Apple doesn't seem to be pushing), PCs will continue to rule the world.

You said Macs are twice as expensive as their PC equivalents and I think that is an outdated opinion. The best analysis I have seen was done by Scot's Newsletter. Here is a recent posting from him.

I began with an Apple II, but migrated to Windows through a Kaypro CPM machine and then Windows. The only time I really had consistent problems with Windows was several years ago when I made the mistake of purchasing one running Windows ME, the version before XP. It was really buggy, and was eventually dropped.

Over the years I have found that it is essential to automatically do maintenance on the system. Not only should your hard-drive be defragmented regularly but so should your registry. I currently have four programs for this. Microsoft Live does the non-registry maintenance including virus protection plus. I have a registry cleaner program that removes unused information from the registry. I have a registry compactor that removes blank portions of the registry; and finally I have a program to defragment the registry, which is a free program. It only takes a few minutes of my time once a week to do this.

I am currently using a Dell Dimension E510, which remains on all the time. I like to have a system that does not attempt to insulate me from what is happening within the system. Macs tend to do that. Lots of great programmers are supporting Windows because of the numbers. Therefore, the cost savings is not only in the hardware, but also the software. When I want to do something unique, it is usually possible to find a program to do it -- sometimes free. I recently added Acronis for protection in case of a hard-drive crash, which I have never had. I also use it for regular backups of changing data onto an external drive -- where Acronis also stores my hard-drive disk image.

When there are around ten times the number of PCs than Macs out there, it is more likely you will hear more horror stories -- even autos are lemons occasionally. Additionally, many Mac users are essentially opinionated and would not tell anyone of their horror stories. I do contract work for one. He is in business with probably 99% of his customers using Windows and Microsoft Office. He has me do much of his file handling for his conferences to minimize the possibility of incompatibilities. He was manually page numbering his conference notes. I did an Internet search and found a program that would number PDF file pages. We now send all items to the printer in PDF format -- automatically page numbered. He could not do this on a Mac as far as I know. As I said, there is much more support for Windows with unique programs like this.

With my experience, I cannot see myself ever owning a Mac -- for very practical reasons.

Labels: AAPL

"In your articles about the iPhone and AAPL, you did not talk about the effect that this extravagant, mostly viral, marketing campaign has had on Apple as a brand. Everyone knows about it now, and most people love it. The iPhone is also closer to a Mac than the iPod in terms of software, and I think this will make users feel less shy about buying Macs.

The iPhone is a beautiful device, but when evaluating the long term capability of AAPL, we also need to evaluate how iPhone sales are going to impact Mac sales. I believe that since the iPhone has lived up to its hype for the most part, it's going to have an extremely positive effect on the Mac business, especially with the upcoming release of the Leopard operating system. Most consumers are now very attracted by Mac computers, and within the next couple of years I expect the Mac business to see a huge upside. I also think that when you combine the effect of the iPhone sales and the potential influence on the Mac business, Apple can go a long way and become the mainstream consumer lifestyle brand."

"I believe people who are making their first Apple purchase with an iPhone will be tempted to look at other Apple products. (I know I am.)"