By Graham K. Rogers

Opening Gambit:

Apple Stuff

I thought about this overnight and was not happy about the idea: analysts, theories, fact. There is a disconnect there and they end up playing not only with the share prices of a company they clearly do not understand, but the funds and investments that might affect the lives and retirement plans of many ordinary people. So I tracked this back: remember, always use the first source if possible.

The source for the AppleInsider article was Philip Elmer-DeWitt on Fortune who is normally reliable as far as Apple is concerned. He reported on the average opinions of a number of analysts who were all in agreement: Apple will reach its guidance; profits will fall. There was one link in the article that allowed me to access the source of this opinion and I followed that, something like Alice chasing the rabbit down the hole, with the same fantasy waiting for me at the bottom.

The analysis that by Robert Paul Leitao produces and the graphs displayed seem solid enough at first glance, although so dense I don't suppose too many people read it all the way through. However, there were a number of leaps of faith and a couple of misrepresentations, I felt. And a messy ending.

The odd thing that I noticed right away was that after all that hand-wringing from analysts over the last few years, he points out that Apple's predictions on earnings have always been conservative but reasonably accurate for the last nine quarters. Their predictions for the next reported quarter are known to be in the range around $41 - $43 billion. Yet as has been seen, these predictions are totally ignored quarter after quarter by the pundits who clearly do not know better.

Let me also examine some of the other shortcomings here. One example concerns the concrete conviction that so many have concerning the imminent arrival of a new iPhone: "Looking forward, Apple's gross margin performance will improve following the release of the second iPhone 5 series handset." He later mentions this again with "two iPhone 5 series handsets in the market". That is something that cannot be predicted. This is certainly possible, but no one can say with any degree of certainty.

He also brings into the mix the growth rate, not the actual sales. Showing that some of the lines have slowed down in terms of growth, is not a prediction of unit sales, but one factor he does mention is the known increase in sales of Macs now that the supply of new iMac models has freed up. Not that anyone knows how many have been sold. The growth rate of the iPhone is shown as falling when in the last quarter it has been made available in several more countries, but although this is included, it is not enough for him. He does however, correctly factor in the 14 week quarter for Q1 2012 which many other analysts did not recognise when the last set of figures was reported.

Let me enter an aside at this point as Maxwell Fisher on The Motley Fool is of the opinion that while other companies are just unable to deal with the tablet market - even Samsung reports low sales in comparison - Apple is going to ride even higher with the iPad, "because of the superiority of the product, and its culture of creativity and innovation." And the stocks will rise accordingly. [My source for this was MacDaily News.]

I think Leitao was trying to make some point in the article concerning the crazy situation, perhaps of Apple, perhaps the analysts, perhaps how no one really knows what to think about the company, as he uses words containing "mad" 9 times in the article, including the title, but 5 times in the Conclusion. This is either bad writing or a specific point that he is trying to drive home in a way that would be severely criticised in English 101.

As another side-note, Patently Apple report that Apple is beating Samsung in terms of revenues by a considerable margin, although lagged slightly in terms of units shipped: "On a revenue basis for the fourth quarter, Apple continued to dominate with 30.7% share versus 20.4% share for Samsung."

A report from Don Reisinger tells us that Apple is expected to expand considerably in India in the next couple of years and should triple its presence there by 2015 with around 200 dedicated stores. From the report it sounds as if the setup is the same as is found in Thailand with iStudio franchises - although I was hauled over the coals by one commentator on the Apple forums who insisted that Apple did not have franchises. The iStudio presence certainly made a difference to exposure of Apple products here, and India is a far larger market. An article on this by Ben Lovejoy on 9to5 Mac makes it clear that these stores are actually known as iStore and there is a photo of one with the article.

This item also makes it clear that, like Thailand, there will be no real Apple store there. The regulations that cover those stores may be different from Thailand where long term distributors hold sway. there was a rumour a while back, however, that there may finally be a real Apple store in Bangkok located at the new complex going up on the site that the British Embassy used to own.

Rather apt really: Patently Apple reports that Hon Hai Precision (that is Foxconn to you and me) has posted record profits and this is believed to be due in considerable part to the new iPhone and three versions of the iPad that Apple released in Q4 2012

The doldrums that many analysts are convinced Apple is in right now, despite its continuing high sales of almost all its products (OK, iPods have dropped off a bit), could be coming to an end as another rumour of a breakthrough product from Apple is aired. MacDaily News takes an announcement concerning collaborations between TSMC and Imagination Technologies, including 16-nanometer (nm) FinFET process technology, and adds into the mix an earlier DigiTimes article about a breakthrough product. Yes, yes. But we still don't know what it is.

And right on time, Tuesday evening an article from Lance Whitney reports on Gene Munster - another analyst whom some think is some sort of expert on Apple - claiming that new iPhone should start shipping by June with a low cost one following a few months later. This rumour is nothing new: recycled. Also on Munster is a comment from Jordan Kahn on 9to5 Mac who writes about this analyst's fixation with Apple TV when he predicts that Apple iPhone for June. Kahn also comments on the missed prediction on an iPad that Munster made earlier (and fails to mention now of course) and the iWatch. Recycled. At least I get to see what Munster looks like in the video in which he also predicts Apple will give more cash back to investors (see below).

One rumour that has a certain amount of solidity to it is the one about OS X. Of course there will be a version 10.9; we just don't know when, but Malcolm Wilde on MacWorld has some gap-filling information about this. Some developers were rumoured to have had a look last month and a number of sources mentioned this at that time. It will be no surprise to have some news about this soon as the time for the annual Developers' Conference approaches. Wilde adds in the information concerning analytical logs (devices with early version have been online). So, summer? August?

There is some question over the name, and although Lynx was expected, this may cause problems in the UK. We are also told (as expected) that Siri and Maps could be incorporated into OS X (and yes, the Bangkok Bank is still shown as having a branch in the middle of Bangkok's river - will Apple ever fix that?).

To add to speculation about Apple and its forthcoming products, a couple of interesting patents were reported on this week. Mikey Campbell on AppleInsider reports on a reissue of a patent for a mobile computer encased in a pen that was first filed in 1998. It was originally a patent from the UK that was later assigend to Apple. I guess they bought that one: that's how they use the cash. Another patent is for a "device control mode in which a user can interact with a multitouch display even when no content is being shown on screen", Mikey Campbell reports, with a full explanation of how this magic works.

A video link from The Motley Fool, in a MacDaily News article, that discusses Apple's cash (over-discussed) also sets out reasons why Apple will not buy Microsoft. MDN cannot resist the dig, "It would be the fitting end to MSFT, though, wouldn't it?" Actually, I sort of agree with that; but what would they do with Ballmer, have him share an office with Scott Forestall (while he remains in the building)?

The video does make the points that Google has the same level of cash reserves and no one is applying pressure there; and that Microsoft did succumb to the pressure, which has not made it a stronger company. Apple has that cash because it doesn't listen to other people. Everyone's an Apple expert, Austin Smith says. Maybe I am right after all: that is why the column is called Cassandra.

There must be an element of stupidity among certain parents of iPhone owning kids in the UK - the tabloid generation - who sense that they can get rich quick (or famous) by going public with their own crass behaviour. In recent times, Apple has been generous and refunded sums for bills that a couple of kids ran up when their parents were daft enough to give them the passwords to the iTunes store accounts and failed to turn on parental controls.

I think there should now be a special button to control these UK parents as a third has appeared. This time the bill is £3,700 and Apple says, No. With three families now in the mix, this has all the makings of a scam or a tabloid run headline grab.

With Apple's refusal, the parent, who also happens to be a policeman, says he has no choice but to report his son for fraud. This means he can have charges reversed by his credit card company. I think he is on thin ice there. MacNN has the story from the Daily Mail which was once a good newspaper and the father's comments make head-slapping reading, including the words, "Really I just want to embarrass Apple as much as possible." But I guess he has ended up embarrassing himself and the kid far more.

There is also a report on this from Kelly Hodgkins on TUAW, and it is clear that Apple turned him down: fed up with all these claims I would think. As many know I was a policeman in the UK for a number of years, and while there were a number of smart guys I worked with, I can visualise one or two who would fit this man's profile exactly.

There is more. I linked to the Daily Mail story by Luke Salkeld and in this there are some comments about reporting his son and what he might do if the police wanted to see him (what else would he expect if he files a complaint?), but then this gem, "Mr Crossan logged the details of his MBNA Virgin credit card with Apple when he used his son's device to download music." Now I am not sure about the contract legality of that, but it clearly was his actions that opened the doors. It is possible to register with the iTunes App Store and have an account that only allows free apps to be downloaded, but doing this and failing to apply parental controls caused the problem and this is hardly Apple's fault.

A couple of weeks ago there were reports on attacks on Apple and VolksWagen by the Chinese station, CCTV, but they were found out when one of the messages from a star involved left on the point that this was an organised attack (8:20PM). Despite the ridicule that was levelled at CCTV and those that took part in this, Electronista reports that the Chinese media are continuing their campaign against foreign-owned companies. Whatever the reasons, the companies are under some pressure and it is probable that the government is behind this: if they did not approve, it would stop. The article details a number of the events and speculates on the probable reasons for this.

There were more reports later on this from several sources with Steven Sande on TUAW for example telling us that China is now complaining about Apple warranties and the reply that Apple gave concerning why some phones are replaced and some repaired.

On another sour note, Ellis Hamburger on The Verge looks at iCloud and its serious shortcomings, despite it being the number one service (at least in the US): more users than other cloud services. iCloud doesn't just work. I must admit when it does, it is nice (Calendar, Contacts, Keynote presentations), but I am reluctant to have the only copy of a piece of work saved on the cloud (iCloud or Dropbox) because local conditions mean that connections are sometimes flaky, while iCloud itself has a lot of downtime. But mine are relatively simple problems and the Verge article looks at some serious situations that some have faced (he mentions problems with Dropbox too). He concludes that Apple has to take some steps to address the commplaints, and soon.

As a note, both John Gruber and Jim Dalrymple link to this article and agree with the main points.

Many sites (almost all that I link to each day) carried the news that T-Mobile in the USA - not related to the companies with a similar name in Europe - announced that it was to carry the iPhone 5 and this will work with 4G on its network. Megan Geuss on Ars Technica writes that "T-Mobile's iPhone 5 will be a tweaked version of the A1428 model, which AT&T currently uses."

With the pilots of certain airlines now using iPads instead of carrying on asuitcase full of manuals, it was almost inevitable that if the airline staff were allowed to use such devices, the FAA ban on them during takeoff and landing was looking a bit stupid. Joseph Keller on iMore reports that there is now a likelihood that this ban may soon end; and with that so will end a lot of the fussing of the airline staff. No smartphones, and the "reading devices" will have to be in "airline mode", but at least that will mean some may be able to get some work done or play games. Maybe.

The MacBook Air was billed as the notebook with the "highest-resolution notebook ever", at least until the arrival of the Chromebook Pixel, Kelly Hodgkins reports on TUAW. She writes that the designation has now been changed to, "High performance has never been so well defined."

Other Matters

On a number of occasions I have wondered about the longevity of CEO Steve Ballmer at Microsoft, despite several errors of judgement that have been clear for all to see, including now Windows Blue which is going to fix the perfect Windows 8, which followed the wonderful Windows 7 that replaced Vista. So why are so many people still using XP? Of course some of those embarrassing videos and stories of chairs being thrown also hurt the reputation. But he stays. The main reason is that he has the support of Bill Gates, and what Bill says, the board endorses; so Ballmer stays. For how long is anyone's guess, but Rocco Pendola on The Street in a scathing article on Ballmer and the failure of 8 plus, "That loud flop we heard late last year -- the Microsoft Surface tablet -- pretty much proved the point." My source for this was MacDaily News who have some of their own useful input, plus a loop of one of those Ballmer videos.

Also having executive problems is Zynga whose star is slightly faded these days. I hardly know anyone who plays their games and I could not move on Facebook last year for offers to join in with Farmville and restaurant games. Gone now. And so is their CIO, Debra Chrapaty, Rachel King reports.

We sometimes wonder where politicians get their ideas (and their money) and that came to the fore in recent years with the backing of certain politicians by those with vested interests. Names bandied about include the Koch Brothers, the NRA and (as ever) big Pharma, with the RIAA coming up behind. Tim Cushing on TechDirt reports on a petition that - if successful - would have members of Congress wear the logos of their corporate sponsors. The article discusses the implications and the possible outcomes with a certain glee.

Another report on TechDirt, this time by Mike Masnick has a look at what has almost been a Holy Grail of some politicians: sales tax on Internet transactions. The report suggests that this has moved one step closer this week and while there may be no let out for states like Montana where there are no sales taxes, we wonder what will happen when it comes to international sales. Or haven't the politicians thought of that? At least the UK has a no-VAT option for those of us buying from outside.

TechDirt also has a report on George Galloway who is a British politician with a colourful past. Timothy Geigner writes that Galloway has the bright idea that the authorities there should ban Twitter as the police did not get full cooperation from the company when they (the police) were exceeding their authority by demanding that pictures should be deleted and demanding the account details of users.

Chillingly this dovetails with comments on a local Tweet I saw a couple of days ago concerning the banning of messaging services like Skype and What's App unless they can be censored. Ryan Huang writes on ZDNet about plans by the authorities in Saudi Arabia who are thinking about this. Censorship is the keyword here, but the real cause may be revenue that the carriers think they are losing.

Local Items

A week or so ago there were some reports about an iPhone 5 that overheated when the owner was making a call and "exploded" when the he threw it onto the ground. I looked at the pictures and the news report and thought then that there was some information missing. It was handed over to the NBTC, but I thought it would not stay there. I was right.

A student of mine posted a link on Facebook to a news item here on ADSL Thailand. It is all Thai so I tried Google translate which was about as good as usual, so I asked local news man, Don Sambandaraksa, who summarised the report for me:

The exploded iPhone 5 in question was sent to the NBTC which found out that it needed special equipment to open (duh!) and, at the same time, Apple Asia South sent the NBTC a a letter asking for the phone in question to be sent to the company (Apple Asia South) so that it may send the phone to Exponent, an independent US based phone reseasrcher with labs, and when this independent lab finishes its report, it will send a copy to the NBTC.

I already had some of that from Google and had looked up the name Exponent, which is an Electronics Component Reliability Consulting company. I guess they will analyse it for Apple and provide an independent report. After all, Apple wants to know as much as the customer. Unless, of course, the customer was not using the iPhone properly (say jailbreak or unauthorised components). I did mention at the time that I queried the screen and back covers that were in use.

Graham K. Rogers teaches at the Faculty of Engineering, Mahidol University in Thailand. He wrote in the Bangkok Post, Database supplement on IT subjects. For the last seven years of Database he wrote a column on Apple and Macs.