Snow Leopard's low-key launch
Apple's Fifth Ave. store
As of 8 a.m., there was no queue of eager customers lining up outside Apple's (AAPL) flagship Fifth Avenue store in Manhattan to buy the sixth major update of the Macintosh operating system, Snow Leopard, which went on sale Friday morning.
The relatively low-key launch was in striking contrast to the Oct. 26, 2007 unveiling of its predecessor, Leopard, which drew crowds that began at the store's big glass cube and wound around the block.
It's also in keeping with the nature of the new system, which for a new Apple OS boasts relatively few new features. As most reviewers have noted, Mac OS 10.6 is a faster, slimmer "refinement" of Leopard whose improvements are largely hidden from users.
UPDATE: Reader David Emery reports that there were 30 people waiting outside the new Reston, Va., Apple store when it opened at 10 a.m. Friday morning. And reader Mike in New York City reports that there were approximately 100 people outside Manhattan's 24-hour Fifth Ave. store when Snow Leopard went on sale at midnight the night before. It was raining in New York Friday morning, which may have discouraged early buyers.
See also:
25th anniversary video: Steve Jobs unveils the Mac
The famous Ridley Scott "Big Brother" commercial — shown once on Super Bowl Sunday, Jan. 22, 1984 — was only a teaser.
The Mac's real 25th birthday dates from Jan. 24, when the machine went on sale and a dapper-looking Steve Jobs — dressed in double-breasted blazer and green bow tie — unveiled it at the Flint Center for the Performing Arts near Apple (AAPL) headquarters in Cupertino, Calif.
You're likely see clips from the Super Bowl ad more than once this weekend. (It's pasted in full below the fold.)
But my favorite video from the launch of the Macintosh is the one recorded 25 years ago at the Flint Center by Scott Knaster, restored and digitized by TextLab, and available today on YouTube.
It's a lovely period piece, with plenty of cheesy Jobsian stagecraft and a crowd that goes nonlinear over features we now take for so much for granted, the effect is unintentionally comical.
The Flint Center video:
Below the fold: The Ridley Scott commercial.
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Despite everything, Mac sales grew year-to-year
CEO Steve Jobs may be struggling with health problems, but sales of Apple's computers seem to be holding up.
In a holiday quarter in which the PC industry recorded dismal growth — its worst since 2002, according to Gartner Research — Apple (AAPL) sold more than 1.25 million Macintosh systems in the United States, up 8.3% from the same quarter last year.
Domestic shipments of Dell (DELL) computers, by contrast, were down 16.4% and HP's (HPQ) off by 3.4%, according to preliminary fourth quarter sales figures released Thursday by Gartner. (Click here for press release.)
The news was mixed for Apple, however. Although sales were up year-to-year, they were down 23% from the previous quarter — often the Mac's strongest because it includes back-to-school promotions. (Mac sales declined 0.24% between September and December 2006, according to company, but grew 7.16% between the same two quarters in 2007.)
Apple moved from third to fourth place in Gartner's survey as the Mac's domestic market share slipped to 8% from 9.5% in October. (See Macintosh share of the U.S. market tops 9%.)
The big winners last quarter were Acer (sales up 55.4% in the United States) and Toshiba (up 12%) — largely on the strength of their mini-notebooks (a.k.a. netbooks), which sold in large numbers, and at steep discounts, in the last days before Christmas.
Apple, by contrast, kept its prices — and presumably its margins — high over the holidays. We'll find out how profitable those sales were when the company releases its quarterly earnings next Wednesday.
Overall, worldwide PC shipments totaled 78.1 million units in calendar Q4 according to Gartner, a paltry 1.1% increase over the same quarter last year.
Below the fold, Gartner's raw data for domestic and worldwide PC sales. Note that in Gartner's global results (Table 1), Apple's worldwide sales are consigned to the "others" column.
Jan. 1984: How critics reviewed the Mac
Anticipating the 25th anniversary of the Macintosh — unveiled by Apple (AAPL) in a Super Bowl ad on Jan. 22, 1984 — AAPLinvestors has assembled some choice quotes from the first wave of critical reviews.
Below, a sample from their collection, to which we've added a few of our own (from Owen W. Linzmayer's Apple Confidential 2.0).
Our favorite: John Dvorak's blistering critique of that newfangled pointing device called a "mouse."
Byte, Gregg Williams, February 1984
The Macintosh brings us one step closer to the ideal of computer as appliance.
Creative Computing, John Anderson, July 1984
In its current form, the Macintosh is the distilled embodiment of a promise: the software can be intuitively easy to use, while remaining just as powerful as anything else around. It is now time to lay out the “bads”:
• The Macintosh does not have enough RAM.
• Single microfloppy is slow and inadequate.
• There are no internal expansion slots or external expansion buses.
• MacWrite has some severe limitations.
• The system is monochrome only.
• MS-DOS compatibility is ruled out.
• The Macintosh will not multitask.
• You can’t use a Mac away from a desk.
• MacPaint has an easel size limitation.
• Forget about external video.
• Macintosh software development is an involved process.
Bill Gates
Anybody who could write a good application on a 128K Mac deserves a medal.
InfoWorld, Thomas Neudecker, 26 March 1984
We think Apple has at least one thing right — the Macintosh is the one machine with the potential to challenge IBM’s hold on the market
The Seybold Report, Jonathan and Andrew Seybold
Apple also got some important things wrong. Our biggest worry is that Mac may be under-configured… But the dumbest thing Apple did with the whole development effort was to allow two different operating systems for Mac and Lisa.
San Francisco Examiner, John C. Dvorak, 19 Feb. 1984
The nature of the personal computer is simply not fully understood by companies like Apple (or anyone else for that matter). Apple makes the arrogant assumption of thinking that it knows what you want and need. It, unfortunately, leaves the “why” out of the equation — as in “why would I want this?” The Macintosh uses an experimental pointing device called a ‘mouse’. There is no evidence that people want to use these things. I dont want one of these new fangled devices.
David Bunnell, Macworld, from The Macintosh Reader
Borland founder Philippe Kahn was half right in January 1985 when he called the early Macintosh a "piece of s___." It was underpowered, had very little software, no hard drive, no compelling applications like desktop publishing, and was marketed by a company that seemed to be near death. I can't help but be amused by all the pumped-up bravado I hear and read about the people who created the Macintosh. To hold up the Macintosh experience as an example of how to create a great product, launch an industry, or spark a revolution is a cruel joke.
Click here to see APPLinvestor's full collection.
Below the fold: That 1984 Super Bowl commercial with the "Big Brother" theme.
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Apple's Internet share registered strong gains in Dec.
Apple's (AAPL) presence on the Web expanded to record levels in December, according to preliminary data released early New Year's day by Net Applications.
Mac OS X's percentage of Web hits reached a record 9.63%, up more than 9% since November and nearly 32% from Dec. 2007.
Gains for the iPhone were even more impressive. Its share of the Web traffic grew nearly 19% to hit a record 0.44%. That's more than three and a half times the 0.12% share it recorded one year ago.
The iPod's Web share, meanwhile, grew 60% last month, from 0.05% to .08% — another sign of the strong holiday sales of the iPod touch reflected last week by a sharp rise in downloads from the App Store (see here).
All told, the entire Mac OS X Web experience now stands at 10.15%.
Microsoft (MSFT) Windows, meanwhile, continues its downward drift, having lost more than 1.1% of its Internet share in the space of a month. Windows PCs still dominate the Web, however, with 88.68% of page hits as measured by Net Applications.
Net Applications’ monthly surveys are conducted by sampling browser data from some 160 million visits to Web sites operated by the firm’s clients. Although it describes the results as “market shares,” the Web metrics company does not actually measure share of market in the traditional sense of sales revenue or unit sales. It does, however, provide a consistent methodology by which to gauge browser and operating system trends.
To see its Jan. 1 report, click here. The results are summarized in the table below.
Hidden in these monthly figures are the sharp spikes recorded by Apple's mobile devices around the holidays. You can see them in the day-to-day chart of Net Applications data posted early Thursday on The Mac Observer's Apple Finance Board by member Alexis Cabot. In the graph below, the dark blue line represents Web hits from iPhones and the green line hits from iPod touches.
It remains to be seen if the end-of-year trends hold up in 2009. A note on Net Application's website warns:
"The December holiday season strongly favored residential over business usage. This in turn increases the relative usage share of Mac, Firefox, Safari and other products that have relatively high residential usage." (link)
What the recession means for the Mac
Money gets tight. Buyers get picky. Price-sensitive consumers — the kind Steve Jobs and Apple famously "choose not to serve" — start shopping for bargain basement PCs and Taiwanese netbooks. Mac sales plummet.
That's the conventional wisdom. Or at least that's the line Morgan Stanley's Kathryn Huberty pitched in September — when she lowered Apple's (AAPL) rating twice in two weeks — and reiterated last week, when she earned the distinction of being the first and only mainstream Apple analyst to set a 2009 price target below $100 a share. (see here)
“PC unit growth is decelerating," she wrote in September, "and the remaining source of growth is increasingly in the sub-$1000 market where Apple does not play.”
The only trouble with this argument, as Turley Muller of Financial Alchemist points out, is that it flies in the face of Macintosh unit sales for the first 12 months of the recession.
"Huberty claims Apple is at risk because it’s highly exposed to the premium-end, where demand has been falling," Muller writes in an analysis posted Friday. "However, Mac unit sales grew nearly 40% for 2008, and its share in the premium segment almost doubled. Mac sales have been growing roughly 3x the market."
Huberty, whose Mac and iPhone estimates are among the worst in the industry, has become a favorite target for Apple enthusiasts. (See Why Apple shares took a nosedive.)
But Muller may be the first to put his finger on precisely what she's doing wrong.
"I understand why consumers aren’t paying-up for Windows PCs," he writes. "How are HP, Dell, Acer, Toshiba, etc different from each other if they all use Intel chips, run Windows, and have many other of the same components?"
And because the PC industry is so dominated by Windows PCs, the dynamics that drive demand for Microsoft (MSFT) Windows machines are going to determine what demand for the entire industry looks like.
But, as Muller points out,
"Macs and Windows PCs are not similar product offerings. Some analysts, notably Huberty, appear to conflate the two. Macs are Windows machines, for one can install Windows OS on Mac hardware and use it just as if it were a Dell or HP. But, PCs such as Dell and HP can’t run Mac OS."
"Therefore," he writes, "it’s Windows PC demand that is shifting to the lower-end" (emphasis his).
Muller's analysis suggests that Apple was right not to offer sharp Black Friday discounts and to stay out of the business of making $500 computers — the kind of "junk" Steve Jobs says Apple's DNA won't allow it to ship.
Even Muller concedes, however, that no company is immune to the effects of an economic downturn of this magnitude. He argues — as others have before — that once you've tasted the benefits of the Mac OS, it's hard to switch back. But with money tight, buyers may be less likely to explore the high-price offerings in the Apple Store.
"The recession won’t cause cheap Windows PCs to take sales away from Macs," he concludes. "Instead it will slow the rate that Macs take share from PCs."
Click here to read the rest of Muller's piece.
The case for a netbook at Macworld
TBR's Ezra Gottheil issued a remarkably detailed description Tuesday afternoon of the "inexpensive mobile device" he believes Apple (AAPL) will announce at MacWorld on Jan. 6 for delivery mid-year.
"It will come in two sizes," he writes, "one much like the MacBook Air and one similar to a netbook, with the smaller unit priced at $599."
Almost as if he had seen the specs, Gottheil ticks off the benefits the new device offers the user:
- It will provide web access, e-mail, media playing, and essential applications at a single low price.
- Computer beginners will be able to start using it quickly and easily. Users will have fewer questions, problems, conflicts and security breaches, as the device will be less intimidating than both PCs and Macs.
- As with the iPhone, iTunes and the App Store will offer an array of content, applications and games.
- As with the iPhone, the software can be rebuilt from the App Store. With an optional online backup service, the entire device can be restored. Under a more expensive support plan, Apple will be able to send the customer a replacement functional device if theirs is stolen or physically damaged.
There are also several benefits for Apple:
- It will open up new markets, including emerging economies, price-sensitive consumers, and those for whom all PCs, including Macs, are too complicated.
- Because all applications are delivered through the iTunes App Store, Apple will maintain sustained relationships with users, making it easier to upsell and cross-sell to existing customers. TBR believes Apple will make online services like MobileMe increasingly attractive to all customers, but purchasers of the new Apple device may find its simplicity especially appealing.
- The device will provide yet another entry point into the Apple digital hub family of products.
- Apple will be able to sell the captive peripherals that work with the device.
Moreover, the thing will give Apple entree into the most price-sensitive markets — an important consideration in the middle of a recession — with, as Gottheil sees it, only minimal risk of cannibalization of MacBook sales.
Of course, as John Paczkowski of AllThingsD reminds us, Steve Jobs pooh- poohed the whole netbook idea last October, and famously added:
"We don’t know how to make a $500 computer that’s not a piece of junk, and our DNA will not let us ship that." (link)
But Gottheil's device, conveniently enough, starts at $599, giving Jobs just enough leeway not to have to eat his words.
We were intrigued, so we called Gottheil and asked for the source of his information.
"I made it up," he said, with remarkable candor.
"I have no spies or internal information. It's triangulated. It's logical. It fits with what they're trying to do. And it solves a lot of problems for them."
And it gives us something to talk about, three weeks before the Macworld keynote.
A bullish analyst lowers his Apple price target
For a full 12 months – even as Apple's (AAPL) share price fell and rose and fell again, from $202 last December to $80 last month – Piper Jaffray's Gene Munster stuck to his price target of $250 share.
Until today.
Citing the "macroeconomic headwinds" that are slowing PC sales across the board, he announced on Thursday that Piper Jaffray is lowering its 2009 target for Apple to $235 a share.
That's still higher than all but five of the 35 analysts surveyed by AAPLinvestors, whose targets for Apple range from Barclays Capitol's $113 to ChangeWave's $275.
But it represents a significant concession by one of Apple's most bullish analysts, and the one that many investors consider the most reliable.
In a report to clients issued early Thursday morning, Munster offered three scenarios – bear, neutral and bull – summarized in the table below:
But even his most bearish estimates will sound - except perhaps for his iPod numbers - bullish to some. He justifies them as follows:
- Mac. "While our '09 Mac unit growth estimate of 10% y/y may seem aggressive, we point out that Mac units (excluding the Sept. 2008 quarter…) have grown on average by 43% Sept. '07 to June '08."
- iPod. "Bottom line: we are modeling for the sky to fall on iPod demand. In FY08 iPod units grew at 6% y/y. We are modeling for units to be down 20% in CY09. This is not an optimistic outlook for iPod in '09."
- iPhone. "We think that iPhone demand will spike in CY09 (we are modeling units to go from 16m in CY08 to 45m in CY09)."
Munster's prediction that Apple will ship 45 million iPhones in 2009, it must be noted, is considerably higher than any other analyst we've seen. How does Munster justify it, especially given what he acknowledges is a meltdown in consumer spending? 1) His belief that the smartphone market will grow in '09. 2) The power of iPhone software. 3) His continued belief that Apple will introduce a family of iPhones in '09, aimed at market segments (prepaid, teens, business professionals) not currently being targeted by Apple.
Munster does offer one caution about the iPhone's prospects for 2009. Given the flood of competing smartphones (i.e. Storm, Instinct, Nokia N97, and Android-based phones, to name a few), he adds:
"On a separate note, the iPhone does run the risk of death by a thousand cuts as new phones enter the market with strong initial demand, then fade away."
Munster concludes by pointing out that Piper Jaffray is lowering its 2009 revenue and earnings estimates across its "entire coverage space" in the range of 10% to 15%. But Apple, he believes, is better positioned than most companies to weather the storm. Accordingly, he is reducing Apple's revenue estimate by only 3% to 7% in his three scenarios:
Black Friday: 13 Macs per hour
Piper Jaffray analyst Gene Munster and his research team spent 10 hours counting Mac and iPhone sales in five Apple retail stores during the post-Thanksgiving shopping frenzy, and this is what they saw:
- Discounts on seven items (including some Macs but no iPhones) that averaged about 8% off.
- Mac sales that averaged 13 units per hour per store, up from 2 per hour clocked earlier in November.
- iPhone sales that averaged 3.4 per hour (not including iPhone gift cards), up from 1.3 per hour .
- Munster's conclusion: Macs are selling better than expected this holiday season; iPhone sales are in line with expectations, although they were probably undercounted.
In the "investment recommendation" section of the report, which was e-mailed to clients early Monday morning, Munster slips in an explanation of how he can maintain a target of $250 a share in the face of Apple's (AAPL) precipitous 12-month decline.
His target is based on 20 times earnings, which is in line with other analysts. But rather than using the usual EPS, based on generally accepted accounting principles (GAAP), he's using Apple's non-GAAP earnings, which include revenue from iPhones that would otherwise be booked over two years.
Apple shares opened Monday at 89.91 and headed south in early trading.
For more holiday sales results, see Apple's Black Friday bestsellers.
Mac Internet share hits record 8.87%; Windows drops below 90%
Apple's (AAPL) slice of the Internet pie grew measurably in November as both the Mac and the iPhone hit record numbers in a Net Applications Web survey issued overnight Monday and updated Monday morning.
At the same time, Microsoft's (MSFT) Web presence crossed two psychological barriers, with Windows' Internet share dropping below 90% for the first time and Internet Explorer's market share retreating to less than 70%.
The Mac's share of Web hits, having lost ground in October, grew 8.04% in November to a record 8.87%, according to the Web metrics firm's preliminary corrected data. The iPhone's gains were sharper: up 12.12% to 0.37%.
(Linux grew even faster, up nearly 16.9% for the month, following a 22% drop the month before.)
Windows' share slipped nearly 10% to 89.62% as Vista's gains failed to make up for sharp losses by Windows XP.
Internet Explorer's shrinkage — down 2.1% to 69.78% – was largely due to gains by Mozilla's Firefox, which topped 20% for the first time in November.
"Reaching 20 percent worldwide market share is a significant milestone for Firefox and Mozilla," Mozilla CEO John Lilly told Net Applications. "It's a huge achievement by the global Mozilla community, one that just a few years ago most would have considered impossible."
Net Applications' monthly surveys are conducted by sampling browser data from some 160 million visits to Web sites operated by firm's clients. Although the company describes the results as “market shares,” Net Applications does not actually measure share of market in the traditional sense of sales revenue or unit sales. It does, however, provide a consistent methodology by which to measure browser and operating system trends.
To see Net Applications’ Nov. 1 report, click here. The results are summarized in the tables below.
These monthly reports, however, mask considerable variation from week to week and day to day. To get a sense of how variable web browsing patterns can be, see the see-saw graphs below the fold created by Financial Alchemist's Turley Muller, who has been tracking Net Applications' daily reports since last June.
Below: Muller's daily tracking of Mac and iPhone Internet shares.
