Apple may not quite be recession-proof, but it’s darn close.

Reporting earnings for the March quarter yesterday, Apple exceeded Wall Street expectations by a resounding 24 cents per share. Its profit of $1.21 billion translated to $1.33 per share, well above the $1.09 predicted.

To put this achievement in perspective, consider that Apple’s total profit was 26 cents per share as recently as the September quarter of 2004. In its fiscal 2003 Apple’s entire annual profit was just 19 cents per share.

So once again Apple made the gloomy prognosticators look foolish. (Even I admit I had my doubts.)

Overall Apple had its best non-holiday quarter ever, said Chief Financial Officer Peter Oppenheimer, with revenue increasing 9 percent year over year and profits increasing more than 15 percent.

Though Mac sales declined 3 percent from 2.29 million units in last year’s March quarter to 2.22 million, the iPhone picked up the slack and then some.

Unit sales of the iPhone rocketed 123 percent resulting in a 302 percent revenue increase year over year. The iPhone contributed $1.52 billion to Apple’s revenue total for the quarter, compared to $378 million last year.

Of course, the comparison isn’t exactly fair. The iPhone now is sold in 81 countries; in the early part of last year it was available in just four, including the United States.

Meanwhile, iPod unit sales grew 3 percent to 11 million, though revenue declined 16 percent from $1.818 billion to $1.665 billion.

I found this odd since Apple Chief Operating Officer Tim Cook said iPod Touch sales had more than doubled year over year. I’d have thought the Touch’s higher margins would have helped prop up overall iPod revenue.

But the iTunes Store segment (which includes “iPod services and Apple-branded and third-party iPod accessories) had a nice 18 percent bump in revenue from $881 million to $1.049 billion.

The amazing success of the App Store – which is on the verge of selling its 1 billionth app -- apparently gave the iTunes Store an extra boost this quarter.

A less likely contributor to Apple’s successful quarter was the Software, Service and Other sales category, which also saw revenue increase 18 percent to a tidy $625 million. Oppenheimer said that sales of the iLife ’09 and iWork ’09 suites, introduced in January, were better than anticipated.
A few more nuggets from the conference call:

Mac holds its own: For the past three months, numerous analysts and pundits have berated Apple for refusing to lower prices or introduce a low-cost laptop to compete with cheap netbook PCs. Apple has stubbornly held its ground, but was not punished as harshly as some predicted.

In fact, given the “challenging economic environment, Oppenheimer said the company was “very positive about our Mac performance.” He noted that IDC data showed the larger PC market contracting by 7 percent in the quarter, making the 3 percent decline in Mac sales look better by comparison.

No wonder Oppenheimer prefers IDC’s data; its report last week showed Apple’s market share increasing from 7.2 percent to 7.6 percent. Gartner’s report showed Apple’s market share falling from 8 percent to 7.4 percent.

The 2Q results could have been much worse. Cook said the refresh of the entire Mac desktop line March 3 gave sales a big boost at the end of the quarter. He said Mac sales in the U.S. suffered because both creative professionals and education customers were putting off buying due to the poor economy.

Unit sales of laptop Macs dove 22 percent, and many of those who did buy went for the previous-generation model $999 MacBook. Cook called that a “good thing,” seeing it as strength among the consumer market.

The dreaded netbook question: Asked about the diminutive PCs, Cook blasted the category as he has before, criticizing the “cramped keyboards, terrible software, junky hardware, [and] very small screens.”

Cook said Apple had no interest in creating such a product, then deftly pointed out that the iPhone and iPod Touch can perform many of the tasks for which people buy netbooks, such as e-mail and light Web browsing.

And then he hinted once again that Apple might be developing some sort of innovative product in the genre, offering teasers such as “the product pipeline is fantastic for the Mac.”

Retail Stores: The stores made a bit less money, but Apple is selling its wares – particularly the iPhone – in more places these days. Still, Oppenheimer said “about half” of all Mac sales in the stores were to customers who had never previously owned a Mac, same as he always does. So apparently people haven’t stopped switching from Windows to the Mac, no matter what Lauren says.

The money’s in the mattress: Apple’s cash position grew by $841 million, bringing its war chest to $28.9 billion. And no plans to spend it. “Our investment priority for the cash continues to be preservation of capital,” Oppenheimer said. So there.

Steve Jobs: When asked for an update on the recuperating CEO, Oppenheimer reiterated the company line: “We all look forward to Steve returning to Apple at the end of June.”

The iPhone platform: The combined sales of the iPhone and iPod Touch have reached 37 million units, with about 21 million iPhones and 16 million Touches. Both Cook and Oppenheimer spoke often of the new platform’s potential, particularly with the iPhone OS 3.0 coming this summer. “I think it unleashes a whole new level of innovation that keeps Apple years ahead of everyone else,” Cook said.

Feeling the love for AT&T: Piper Jaffray’s Gene Munster, citing survey data showing that some people don’t buy an iPhone just to avoid AT&T, asked why Apple maintains the exclusive relationship in the U.S.

Cook replied that AT&T has “done a very good job with the iPhone.” He said Apple is happy with AT&T and has no plans to change the relationship. He also admitted that Apple’s choice of GSM technology – driven by the need to make the iPhone work with the most common networks globally -- precluded a relationship with Verizon, which uses CDMA.

Posted by David Zeiler at 7:13 AM | Permalink | Comments (1)
                       

More mundane than magic, Apple’s final Macworld keynote produced no blockbuster iPhone-caliber product, with the bulk of the 90-minute presentation consumed with product updates.

Perhaps the biggest surprise was the musical guest at the end – legendary singer Tony Bennett, rather than the usual more pop contemporary John Mayer. Steve Jobs made not so much as a cameo.

Jobs’ designated replacement, Apple Vice President for Worldwide Product Marketing Phil Schiller, spent more than half of the keynote demonstrating features in the new versions of Apple’s iLife and iWork software suites. The lone hardware announcement concerned the high-end 17-inch MacBook Pro.

Schiller saved one long-awaited chunk of news for last – as of today, 80 percent of the songs on the iTunes Store will no longer have copy protection, with the remaining 20 percent following by the end of March.

The lack of copy protection means users will be able to copy the music they buy on to as many devices as they like without restriction. The issue has caused much controversy since the iTunes Store launched in 2003.

Other online music vendors like Amazon have been selling DRM-free songs for over a year, so this move just catches Apple up. But because iTunes is the market leader, the move hammers the final nail in DRM’s coffin, at least for music. Schiller made no mention of TV shows or movies.

Apple also said as of April it will offer flexible pricing at the iTunes Store, finally caving to years of pressure from the major music companies. Instead of all songs for 99 cents, some will cost a mere 69 cents – 5 cents cheaper than even a Wal-Mart’s discounted downloads – or $1.29. Some songs will remain 99 cents; most albums will remain $9.99.

Expect new releases and popular songs –in other words, most of what people will want to buy -- to tip toward the $1.29 price.

Those who have purchased a lot of songs and music videos from iTunes over the years can obtain DRM-free versions, but at the cost of 30 cents per song and 60 cents per video.

The new MacBook Pro Schiller unveiled really belongs to the family of new MacBooks announced in October, the ones with shells carved from a single block of aluminum. At the time many noted the missing 17-inch model.

Maybe Apple felt it needed to save this monster MacBook Pro for the keynote so it would have at least one cool piece of hardware to show. The new 17-inch MacBook Pro is less than an inch thin, weighs a sleek 6.6 pounds, and comes with 4 gigabytes of memory and a 320 GB hard drive. Alas, the processor is a 2.66 Intel Core 2 Duo, not a quad core as I had hoped.

The most compelling feature of the 17-inch MacBook Pro is its battery. Schiller said this MacBook’s custom-made battery can supply an amazing 8 hours of computing time on a single charge – 3 more hours than the previous 17-inch Pro -- and that it will endure 1,000 recharge cycles, roughly five years of use.

The down side is that the cell is not user-removable, but Apple has a program for exchanging the battery. In all probability, a typical user would only need to exchange the battery once over the machine’s life.

And it can be yours for (ahem) a reasonable $2,799.

The bulk of Schiller’s talk covered the new features in fresh versions of the iLife suite (iPhoto, iMovie, GarageBand) and iWork suite (Keynote, Pages and Numbers).

The noteworthy twist here is the beta launch of a Google Docs-like service called iWork.com. People using the iWork apps will be able to share documents over the Internet via iWork.com. However, users will only be able to edit the documents if they download it to their computer and, presumably, have a copy of iWork on their Mac. Apple doesn't make an iWork version for Windows.

All that means Apple will have to do better if it wants people to give up using Microsoft Office for creating and sharing of word processor, presentation and spreadsheet documents.

Google might have something to worry about if Apple 1) didn’t plan to charge separately for the service and 2) if Apple did what I’ve suggested and create platform-independent online versions of its iWork apps that people could access via its MobileMe service.

Schiller didn’t say how much iWork.com would cost, or whether it would be a monthly or annual fee, but charging for it is bad strategy. As a new player competing against free services Apple needs to find a better way to monetize it, like my MobileMe suggestion.

Schiller gave lengthy demos of new software features that should appeal to many Mac users, though perhaps not enough to inspire them to pay for an upgrade.

iPhoto ’09 offers several nifty new organizational tools. Faces will remember a person’s face and create a category of photos of that person.

Better yet, this feature can integrate with such Web 2.0 sites as FaceBook and Flickr. Slowly Apple has shown recognition of the importance of making its products more Web 2.0 friendly. (Note to Apple: Better integration of iMovie with YouTube would also be a good idea.)

Places uses the GPS data in some cameras (and, as Schiller pointed out, the iPhone) to organize photos according to location. You can see where you’ve traveled by looking at an iPhoto map that puts virtual stickpins in the places where you’ve taken photographs. If your camera lacks GPS data, you can tag your photos manually.

Schiller half-admitted last year’s version of iMovie wasn’t quite a hit with many customers: “not every feature was there for every customer.” This year’s iMovie adds several appreciated features, such as auto-stabilization for shaky video (like those taken on a bumpy car ride) and animated travel maps.

GarageBand, the music creation part of iLife, adds a “Learn to Play” feature that provides nine video lessons each on how to play the guitar and piano.

Once you’ve completed those, you can learn how to play a some individual songs tutored by the artists themselves. Yep, you can learn how to play “Proud Mary” from John Fogerty himself. Other artists include Sting, Sarah McLachlan and Norah Jones. Apple will provide more lessons via download for $4.99 each.

Among the iWork apps, the coolest addition was not part of the suite but a 99-cent iPhone app called Keynote Remote that turns your iPhone or iPod Touch into a touch-screen remote control of the Keynote presentation program.

The iLife 09 suite ships in late January at the usual price of $79 -- $99 for the Family Pack. The iWork suite is available today, at the same prices. It requires the Leopard (Mac OS X 10.5) operating system. You can get both suites along with Leopard as part of he new “Mac Box Set” package for $169.

Posted by David Zeiler at 3:43 PM in MacBook, Macworld & WWDC, Software by Apple, iTunes/iTunes Store | Permalink | Comments (1)
                       

I replaced the optical drive in my MacBook the other day.

And to my surprise, it still works. Replacing hardware inside a laptop is not a task for the easily deterred, and I recommend it only to the most daring.

Now I’m the type of guy who has never been afraid to open up a Mac tower for anything from a memory upgrade to a CPU replacement. But until this week, I had never performed a major hardware upgrade on a laptop, wary of the complexity of getting the case open and the fragility of the components within.

My apprehension -- despite my success -- turned out to be justified.

What drove me to it was the MacBook’s failing optical drive, the factory-installed combo drive (reads and writes CDs, but only reads DVDs).

While on summer vacation I had problems playing a DVD; the DVD player kept hanging or skipping over large sections. I was peeved, as playing DVDs when I’m vacationing is one of the duties I expect of a laptop.

When I got home I ran various tests to confirm the problem was not software or operating system-related. I also found other users in forums who seemed to be having similar problems.

I still waited on the Mac OS X 10.5.5 update just to be absolutely certain. The drive, indeed, was kaput.

What to do next? I bought my MacBook in May of 2006, so I was beyond Apple’s one-year warranty. I considered doing without the drive; I probably could live without DVDs while traveling, and in a pinch the MacBook could access the SuperDrive in my Mac Pro over my home network.

But replacing the drive could get expensive; an optical drive costs about $150, and that doesn’t include installation. Then again, I could save a lot of dough installing it myself.

As I poked around the Web to find out how tough it might be for me to do this myself I found several sites that sell replacement parts and provide free guides, both in video and PDF form, on how to take various systems apart.

Screwing up my courage I ordered a SuperDrive (why not upgrade while I’m at it, eh?) from PowerBook Medic, though iFixit had similarly priced drives. Fortunately, the job requires only two tools, a Philips size #00 screwdriver and a Spudger, a stick-like nylon tool used to pry up connector cables and nudge otherwise stubborn parts.

I set aside an evening to do the job and a good thing, too – it took me about three hours moving at a deliberate and cautious pace.

The reason it takes so long is because of all those darn screws holding the MacBook top case in place. They are almost all tiny, nearly identical but not interchangeable. In other words, you need to keep track of where each screw came from in order to get the correct ones back in their proper places. Otherwise you could have a screw either slightly too large or too small for the hole.

Once you get the top case off, getting the drive out isn’t too difficult, though you need to disconnect several other cables to free up the optical drive. One nasty little screw, the tiniest of them all, is tucked beneath several cables. It’s a bear to get back in.

More headaches: you need to remove several pieces from the old drive and attach them to the new drive, one of which – a plastic piece that hold the Bluetooth antenna in place – is glued on.

After struggling to get the machine back together properly (you have to follow the directions in reverse), I pressed the power button and held my breath. When I saw the Apple logo, I knew the MacBook had survived.

The good news: my new SuperDrive works flawlessly (it’s a Matshita UJ-857E, for those who must know) and is much quieter and faster than the combo drive had been when it still worked. For that matter, it’s much quieter then the SuperDrive in my Mac Pro, which is annoyingly noisy.

But trust me on this one: unless you know what you’re doing and aren’t afraid to put your $1,000-plus (or $2,000-plus for the Pro models) Mac laptop at risk, don’t try this sort of thing at home.

Posted by David Zeiler at 1:17 PM in MacBook | Permalink | Comments (7)
                       

Showing surprising strength in a weakening economy, Apple reported an extraordinary September quarterextraordinary September quarter yesterday.

Mac sales up, iPod sales up, iPhone sales way, way up, and an uncharacteristic appearance by CEO Steve Jobs at the analyst conference call. It’s hard to know where to begin.

Jobs showed up in part to discuss Apple’s decision to disclose some alternative financial data from now on. Because Apple periodically issues free software updates for the iPhone and Apple TV, revenue from those sales is recognized over the two-year life of the product rather than entirely in the quarter the product is sold, as with Macs and iPods.

To help analysts and investors better “evaluate the company’s overall performance,” Jobs said the company plans to release “non-GAAP” financial results along with the usual earnings figures. (GAAP stands for Generally Accepted Accounting Principles.)

Tremendous sales of the iPhone 3G – 6.9 million units – prompted the change, Jobs said. The iPhone accounted for a whopping 39 percent of Apple’s 4Q revenue.

“The non-GAAP results are truly stunning,” Jobs crowed, and it’s hard to argue with the numbers. Including the iPhone and Apple TV sales in their entirety adds nearly $3.8 billion in revenue, a 48 percent increase over the $7.9 billion the company reported.

Non-GAAP adjusted income doubles from $1.14 billion to $2.44 billion, a 115 percent increase. For those keeping score at home, the $1.26 per share Apple reported balloons to $2.69 per share in the adjusted figures. Yowza!

Jobs probably has grown tired of AAPL’s slumping stock price – which had slid $6.95 to $91.49 yesterday before Apple announced its results. He wants the world to know how much dough Apple is really making.

Apparently investors got the message: AAPL rose $12.12 in after-hours trading and is up today in a down market.

More details from Apple’s earnings call, by topic:

The blockbuster iPhone 3G/App Store: The star of the quarter, the iPhone 3G blew away all expectations. Customers bought more iPhones in the September quarter than during the entire previous lifespan of the product (6.9 million vs. 6.1 million).

Oppenheimer said Apple has “already surpassed our goal of 10 million iPhone sales in calendar 2008,” but that claim must include some October sales. Adding the reported sales of the first three quarters of 2008, I get 9.3 million iPhones. At the rate iPhones are selling, Apple probably hit 10 million about a week or so ago.

Prospects for future iPhone sales also look good. Oppenheimer said Apple is now selling the iPhone 3G in 51 countries, with the number expected to increase to 70 by the end of the year. Apple has 3,100 iPhone distribution points in the United States and over 30,000 worldwide, he said.

Jobs pointed out that Apple beat Research in Motion’s BlackBerry in unit sales 6.9 million to 6.1 million this quarter. Furthermore, Jobs said, Apple is now the No. 3 mobile phone maker as measured by revenue, with $4.6 billion in sales (behind Nokia with $12.7 billion and Samsung with $5.9 billion).

The App Store, despite some grumblings from developers whose apps Apple rejected, has amply demonstrated the iPhone’s potential as a software platform. “Customers will download the 200 millionth application from the App Store tomorrow [Wednesday], only 102 days since its launch,” Jobs said, noting the availability of over 5,500 apps.

Jobs also said Apple’s strategy is not to build “a hundred variations” of the iPhone like other handset makers, but to use software as the differentiating factor.

The Mac hangs tough: Mac sales fell slightly short of last month’s optimistic analyst projections, but at 2.61 million units still set a record for most Macs sold in a quarter. The growth rate of 21 percent year over year wasn’t as impressive as March’s 51 percent or June’s 41 percent, but remains respectable.

Apple CFO Peter Oppenheimer said cutbacks in education budgets as well as rumors of imminent new MacBook models (which Apple did indeed unveil last week) probably hampered Mac notebook sales at the end of the quarter. Two-thirds of all Macs sold are notebooks.

Apple has its corporate fingers crossed the new models will boost notebook sales going forward. “We’ve had a very, very strong launch and we are anxiously awaiting to see the demand trajectory that will unfold during the quarter,” Jobs said.

When asked if Apple would consider “more affordable” Macs, Jobs repeated a long-standing Apple philosophy: “There are some customers we choose not to serve,” he said. “We don’t know how to make a $500 computer that’s not a piece of junk.”

If fresh iMacs appear in November as rumored, unit Mac sales could set another record come January.

iPod not dying: Apple sold 11 million iPods in the quarter, a record for a non-holiday quarter and an 8 percent increase year over year. Market share for the iPod remains at a healthy 70 percent. The iPod stubbornly continues to defy predictions of its decline.

During what could be a bleak retail holiday season, the line of iPods refreshed in September should keep it high on many shopping lists.

Apple TV on pause: Jobs reiterated his take that Apple TV is “still a hobby.” He said it would stay that way at least through 2009, dashing the hopes of those dreaming of a major Apple TV announcement at the annual Macworld Expo in January.

More stores: The growth of the retail chain continued unabated, with the addition of 31 new stores, bringing the total to 247. As always, Oppenheimer said half of all Macs sold in the stores were to people who had never owned a Mac before.

The stores saw 42.7 million visitors in the quarter, another record and further evidence that the ailing economy has so far failed to impair the lure of the Apple brand.

Rainy Day Fund pays off: Having generated another $3.7 billion in cash, Apple’s stockpile of money stands at $24.5 billion. Jobs brushed off a question about returning some cash to shareholders in the form of dividends. “It’s not burning a hole in our pocket,” he said.

But Jobs also said Apple’s unusual cash position “provides us tremendous stability and the ability to invest our way through this downturn,” which he said means more money going into research and development of future products. He wouldn’t comment, however, on the possibility of acquiring other companies.

Posted by David Zeiler at 1:06 PM | Permalink | Comments (1)
                       

Having had some time to ponder on and learn more details about Apple’s new line of notebooks announced last week, a number of things occur to me:

Price cut veils price hike: Steve Jobs masterfully obfuscated this by keeping the previous plastic MacBook on the roster, but Apple’s new consumer notebooks do in fact cost more than those they replace. Previously the low-end MacBook cost $1,099; the cheapest aluminum MacBook is $1,299, a $200 increase. A MacBook with a slightly faster processor and bigger hard drive costs $1,299; its aluminum equivalent is $1,599, a $300 increase.

The already expensive MacBook Pro line escaped any increase, but higher prices on the consumer models makes them tougher for students and home users to afford. It seems an odd strategy in the face of a dark economic forecast.

True, the aluminum MacBooks have better graphics and those fancy multi-touch glass touchpads. But still. In the past Apple has often conferred significant upgrades on a line of Macs while maintaining or dropping prices. These MacBooks don’t even have a FireWire port, for Pete’s sake.

And yes, you can buy the “old” MacBook for $999, but that’s yesterday’s technology. Remarkably, most of the news stories last week emphasized not that the new MacBooks cost more, but that Apple had dropped the price on the old model. Brilliant!

Even more remarkably, the $999 MacBook was widely – and erroneously -- reported as “Apple's first sub-$1,000 notebook.” Apple’s first offered a sub-$1,000 notebook back in November of 2002 when it dropped the price on the iBook G3 to $999.

Reality distortion field, indeed.

“Mystery product” revealed: At July’s earnings conference call, Apple CFO Peter Oppenheimer referred to a “future product transition” that would lower gross margins for the September quarter, setting off speculation that Apple had some exotic new product in the wings. It turns out Oppenheimer was referring to the manufacturing method of carving the new MacBooks out of a single block of aluminum. Impressive to be sure, but many had hoped for a smaller “netbook” type of product or even a touch-screen tablet Mac.

Death of FireWire? I noted in my post last week on the new MacBooks that the consumer models lacked a FireWire port (the Pro models retain a FireWire 800 port). I shot off an email to Apple PR asking for an official explanation that they predictably ignored.

Over the next few days the Mac Web exploded with complaints, with many swearing not to buy a new MacBook until Apple restored the FireWire port. One Mac fan in Germany even started an online petition.

Steve Jobs reportedly sent a customer an email explaining that most digital video cameras now use USB 2.0, negating the need for FireWire on the consumer MacBooks.

But FireWire isn’t just for digital video. For many, FireWire’s Target Disk Mode (which allows a Mac attached to another by FireWire to access the second Mac’s hard disk as if it were an external drive) is an indispensible troubleshooting tool. Some just use FireWire to attach speedier external drives. And others use FireWire for digital audio as well as digital video.

While USB 2.0 can perform all of these tasks (except Target Disk Mode) to some degree, FireWire performs them faster, particularly when transferring large amounts of data.

Apple played a key role in the development of the FireWire (IEEE 1394) standard; you’d think it would be the last PC company to drop it from a product line. Though FireWire never became he ubiquitous standard that USB 2.0 has become, many Mac users nevertheless have a legitimate need for it. Apple pulled the plug on FireWire in the MacBook a bit prematurely, in my opinion.

Some users worry FireWire will gradually disappear from all consumer Macs, remaining only on the pro models as an enticement to upgrade. We should get an answer to that question when the iMac line is refreshed, which could happen before the end of the year.

Posted by David Zeiler at 8:29 AM in MacBook | Permalink | Comments (2)
                       

Touting a new manufacturing process, LED-based displays, glass trackpads and an innovative graphics chipset from Nvida, Apple refreshed its entire line of notebooks today.

The announcements, made by CEO Steve Jobs and several of his top lieutenants at a special Apple Media Event on the company’s Cupertino campus, confirmed most of the rumors swirling around the anticipated MacBook upgrades for the past few weeks.

Perhaps the only disappointment was in the pricing. Some had predicted an $800 entry-level MacBook, but Jobs merely announced a $100 price drop on the existing white plastic-encased model to $999, which the company plans to continue selling.

The new technologies turn up in all the new MacBooks; the backlit LED-based display technology also turns up in two refreshed 17-inch and 24-inch Cinema Displays.

According to as video shown at the event, LED display technology is brighter, boasts “instant-on” capability and is 30 percent more energy-efficient traditional flat-screen displays.

Perhaps the most dramatic new technology from a user perspective is the glass multi-touch trackpad, which is included in all the new models except the MacBook Air.

With the glass trackpad, Apple has dispensed with the button, providing 39 percent more surface area. The trackpad itself is now one big button so you can click on any part of it.

Building on the iPhone and iPod Touch interfaces, the glass trackpad enables a few new gestures, including some that require three and four fingers. It may take some getting used to, but using gestures as a primary means of controlling a computer could well replace the veteran mouse.

The MacBooks also will sport a new integrated graphics chip from Nvidia, the GeForce 9400M. Jobs said the chip is five times faster than the Intel GMA integrated graphics chip used in the previous MacBooks. In real world use, Jobs claimed the Nvidia chip is three to eight times faster, providing half the performance of a dedicated graphics card.

The high-end MacBook Pro uses the Nvidia 9400M as well but retains a dedicated graphics card, the Nvidia 9600M GT. Yep, you get both. The rationale? The 9400M is more energy efficient; “Turbo mode” with the 9600M GT costs you an hour of battery life. So the user can switch between the two depending on the priority.
Apple spent a fair amount of time boasting about its new manufacturing process.

Originally devised for the ultra-thin MacBook Air, the process starts with a solid block of aluminum, which is cut and carved into the desired configuration. Apple Senior Vice President for Industrial Design Jonathan Ive explained that this method results in lighter, more rigid notebook frames than building them the old way with multiple parts.

The specs on the new goodies:

MacBook Pro
$1,999 model: 15.4 inch LED display, 2.4 GHz Intel Core 2 Duo, 2 GB RAM, 250 GB hard drive, SuperDrive, GeForce 9600M GT with 256 MB RAM. Shipping today.

$2,499 model: 15.4 inch LED display, 2.53 GHz Intel Core 2 Duo, 4 GB RAM, 320 GB hard drive, SuperDrive, GeForce 9600M GT with 512 MB RAM. Shipping today.

Notes: The MacBook Pros get a FireWire 800 port, but no FireWire 400 port, a bad omen for the FireWire 400 spec. However, Apple has added an ExpressCard/34 slot.

MacBook (new aluminum models)

$1,299 model: 13.3 inch LED display, 2 GHz Intel Core 2 Duo, 2 GB RAM, 160 GB hard drive, SuperDrive, GeForce 9400M integrated graphics. Shipping today.

$1,599 model: 13.3 inch LED display, 2.4 GHz Intel Core 2 Duo, 2 GB RAM, 250 GB hard drive, SuperDrive, GeForce 9400M integrated graphics. Shipping today.

Notes: The consumer-level MacBooks drop FireWire altogether, and don’t get the ExpressCard/34 slot. Sayonara, FireWire.

MacBook Air

$1,799 model: 13.3 inch LED display, 1.6 GHz Intel Core 2 Duo, 2 GB RAM, 120 GB hard drive, GeForce 9400 M integrated graphics. Shipping early November.

$2,499 model: 13.3 inch LED display, 1.86 GHz Intel Core 2 Duo, 2 GB RAM, 128 GB solid-state drive, GeForce 9400 M integrated graphics. Shipping early November.

Notes: The MacBook Airs did not get a price drop, just some beefed up specs and some of the new technologies shared with its MacBook siblings, such as the Nvidia 9400M and a mini-display port.

One More Thing: Apple COO Timothy Cook opened the presentation with a few word on how well the Mac business is doing. He mostly repeated things avid Apple followers already know, but offered some impressive market share figures.
According to Cook, Apple now has 17.6 percent of the U.S. PC market by unit sales and 31.3 percent of the U.S. PC market by revenue.

He also tipped his hand a bit on the Oct. 21 earnings conference call when he noted that Apple has sold 7.1 million Macs so far in 2008. Subtracting the Macs sold in the first two quarters, that means Apple sold about 2.3 million Macs in the September quarter, fewer than many analysts expected.

The impressive recovery of AAPL stock in the past few trading sessions could be in for a setback when Apple announces its earnings next week.

Posted by David Zeiler at 4:14 PM in MacBook | Permalink | Comments (2)
                       

If you’re shopping for a computer with a good balance of features, performance and price, check out a Mac. And if solid tech support is a major concern, your choice is even clearer – Apple’s support tops all competitors.

So says Consumer Reports in its annual computer-buying extravaganza (June issue). The latest data continues the trend, as it has the past few years, of overall praise for Apple’s line of Mac laptops and desktops an in particular for its customer support.

On tech support issues, Apple stands out. Its reader score for laptops is 83 out of 100 (meaning it solved the problem 83 percent of the time), well ahead of Lenovo’s 66 and Dell’s 60.

Apple beats its rivals by an even greater degree in the desktop category. Its score of 81 percent led the field by an embarrassingly large margin; second-place Dell (56 percent) trailed by 25 points, just ahead of Gateway (54 percent).

Not that Consumer Reports has been chugging Steve Jobs’ Kool-Aid. As it has done often, CR criticized Apple for its brief 90 days of free tech support compared with a year for most other PC makers.

Because of that, as well as the above-average service Apple customers get with paid support plans, the magazine advises Mac buyers purchase an AppleCare plan.

Consumer Reports also points out, however, that all Mac owners can get free tech support at the Genius Bar in Apple’s retail stores, which CR says solved problems an impressive 90 percent of the time. But the customer is responsible for the cost of any required repairs.

However, the CR piece misleads a bit when it describes the Genius Bar as “walk-in support.” Yes, you can walk in to any Apple Store with a Mac problem but you can’t consult with a Mac Genius unless you’ve made a reservation.

The only truly bad news for Apple appears in the main article, in the “Brand Repair history” survey chart. While Apple’s desktops boast the fewest repairs – 12 percent versus 17 percent for its closest PC competitors – Apple’s laptops sit at the bottom of their category.

According to the CR survey, 23 percent of Mac laptops required repair or had a serious problem. While that’s not so far from Lenovo’s category leading 20 percent, Apple should take note that the quality control of its laptop line could stand improvement.

Elsewhere in the main article, in which CR makes its general recommendations, both Mac laptops and desktops earn high marks.

In the 15.4-inch “workhorse” laptop category, the MacBook Pro was the magazine’s top choice: “The Apple weighed the least and had the best battery life among the 15-inch models.”

The beefier 17-inch MacBook Pro earned top honors in the “Best Desktop replacement category despite its much higher price relative to its competition (it costs $1,000 more than the next cheapest laptop in that category – a Sony Vaio VGN-AR770).

Meanwhile the newest member of the MacBook family, the MacBook Air, managed to take second in the “Best Lightweight laptops” category on the strength of its exceptionally low weight (3 pounds), strong battery life and slim form factor. The CR editors apparently decided those characteristics trumped the Air’s higher price and missing features (no CD/DVD drive or Ethernet port).

Here’s how CR assesses the Air: “This somewhat pricey, ultra-thin ultra-portable won’t replace your everyday laptop, but the generous keyboard, touchpad technology, and small size make it worth considering. The compromises are in performance and ease of loading and unloading data.”

On the desktop side, the Mac appears absent at first, but it turns out Consumer Reports has added a third Apple-inspired category: all-in-ones.

CR says the best inexpensive all-in-one is the 20-inch iMac (“excellent performance and good ergonomics”) -- and that was before last week’s processor upgrade. Going from a 2.0 gigahertz Intel Core 2 Duo to a 2.4 GHz Core 2 Duo, the 20-inch iMac represents an even better value now.

The 24-inch iMac was ranked behind the HP TouchSmart IQ775 (who comes up with these names?), but that model’s processor upgrade to a 3.06 GHz Core 2 Duo from 2.4 GHz enhances its value quite a bit, too.

Curiously, the Mac Pro got no mention in the “high-end” desktop category, perhaps because it’s not aimed at ordinary consumers but rather video and graphics professionals.

Overall, this year’s CR report card looks as more favorably upon the Mac than ever. That’s the sort of positive reinforcement that could encourage more potential Windows users to switch in the months ahead, maintaining the Mac’s market share growth momentum.

Posted by David Zeiler at 5:06 AM in MacBook, iMac | Permalink | Comments (9)
                       

While hunting through The Sun’s photo archives (in my design editor role) for something completely unrelated, I discovered this Associated Press photo taken March 5 in Los Angeles of David Simon working on his MacBook Pro.

Simon, of course, is the renowned creator of the acclaimed HBO television series
“The Wire,” which ended its five-year run March 9. Simon was a police reporter at The Sun during the mid-1980s and early 1990s, which inspired his first TV series, “Homicide: Life on the Street.”

I e-mailed Simon about his Mac use. Though he has a PC at home, Simon replied that because he travels a lot and has a relatively hectic work schedule, the Mac is his primary computer, used for “most of my work.”

However, “The Wire” was produced mostly with Avid video products according to Karen L. Thorson, the show’s producer (though Macs were used by many on the post-production staff for non-video support tasks).

In the photo, Simon is working on dialogue for next project, “Generation Kill,” a new miniseries based on the Iraq and Afghanistan wars. The seven-hour miniseries is scheduled to air on HBO in July. I haven’t gotten word on whether this show will be produced using Apple products, only this promising clue: the guy in charge of post-production has a .Mac e-mail address.

Note to flamers: I realize this isn’t news, but though some Mac fans would get a kick out of it.

Posted by David Zeiler at 7:11 AM in MacBook | Permalink | Comments (6)
                       

Apple CEO Steve Jobs delivered no huge surprises in his keynote address this morning in San Francisco, but still hit home runs with the new Macbook Air laptop and the iTunes Movie Rental Service.

Both had been rumored in recent weeks, but one can never be sure what’s going to happen in a Macworld keynote.

Though he saved the MacBook Air for last, the iTunes Movie Rental Store announcement was probably more significant in terms of what it will mean to Apple in the long term. This move should position Apple to dominate the realm of video downloads.

Jobs said that all the major film studios were on board, a major coup for Apple. The rental service will offer new films 30 days after their release on DVD as well as a library of older films. New films will cost $3.99 to rent, older titles $2.99. The iTunes Store also will continue to sell movies and TV shows at their current prices.

Customers will be able to watch the movies instantly, and can view a film as often as they like within 24 hours of starting the stream. If a user wants to finish watching their movie on their iPod or iPhone, they can do that, too. Users have 30 days to launch the stream before the rental expires.

The iTunes Movie Rental Store service launches today, Jobs said, with 100 titles, but will have 1,000 by the end of February. At first the service will be available only in the United States, but Jobs said it will be available internationally “later this year.”

Just as significant as the announcement of the iTunes rental service is the vehicle with which many customers are likely to access it: a much-improved Apple TV.

No longer does the Apple TV need to be tethered to a computer for functionality. As I had hoped, the device can access the Internet directly through a wireless connection, allowing it to link to the iTunes Store directly. Customers can browse movies, TV shows and music on their TV screen right from the snazzy Apple TV interface. You can buy or rent.

After you’ve made your choice you can watch the content on your TV or your computer – or your iPod or iPhone. The Apple TV still syncs with your computer, but now it also syncs backwards. So stuff you obtain via Apple TV will be available on your computer, too.

Apple didn’t stop there. The new Apple TV can access photos from Flickr or a .Mac site as well as YouTube videos. Apple has vastly improved Apple TV by allowing a variety of ways to access digital content (though digital rights management was never mentioned … hmmm). And on top of all that, the company dropped the price of Apple TV from $299 to $229. The few who bought an Apple TV last year will get a free software upgrade to enable these features. I think Apple will sell a lot more Apple TVs in 2008 than it did in 2007.

The MacBook Air gave Jobs some sexy new Mac hardware to show off. The 3-pound notebook is wedge-shaped, just .76 inches thin at its thickest point and an astonishing .16 inch thin at its slimmest. It sports a 13.3-inch LED display and a full-sized backlit keyboard (the keys are black). The trackpad is oversized to allow the use of iPhone-like gestures, such as twisting your fingers to rotate an image in iPhoto.

The MacBook Air uses a tiny 80-gigabyte hard drive like the one found in the iPod Classic, and comes standard with a generous 2 GB of memory, the same as the MacBook Pro. The price: $1,799.

But the MacBook Pro’s most distinguishing feature is what it doesn’t have – an optical drive. One can buy an external SuperDrive that connects via USB for $99, but Jobs argued that people won’t bother. “We don’t think most users will miss the optical drive or need the optical drive,” Jobs said. As an alternative Jobs said the MacBook Air will be able to access the optical drives of other Macs or PCs over a wireless network.

The omission of an optical drive recalls Jobs’ introduction of the first iMac in 1997, which omitted a floppy disk drive (though external ones could be purchased as an option). Clearly Jobs foresees optical media – CDs and DVDs – suffering the same fate as floppies.

Jobs also introduced new software features for the iPhone and iPod Touch, as well as a new wireless hardware backup device, Time Capsule. Designed to work with Mac OS X 10.5 Leopard’s Time Machine automatic backup feature, Time Capsule uses the fast 802.11n wireless protocol and comes in two sizes: a 500 GB version for $299 and a 1 terabyte version for $499. I wish I had known about this before I bought a Buffalo LinkStation a few months ago. (sigh.)

I may have more thoughts on the keynote later.

Posted by David Zeiler at 2:40 PM in MacBook, Macworld & WWDC, iPhone, iTunes/iTunes Store | Permalink
                       

Regular readers of this blog (all six of you) may have noticed I’ve been a bit light on the posts this week. That’s because I’ve been installing Leopard on my Macs and ran into a self-inflicted problem during the Leopardification of my MacBook. Here’s a lesson on how trying to skirt past an alert message can buy you a heap of trouble.

After you get past the initial option screens, the Leopard installer checks the integrity of the DVD before continuing. Just a few minutes into this process, I got an error message explaining that Leopard could not be installed because of a problem with the disk. The message advised me to clean the disk and try again.

Since I had just then removed the DVD from its package, I could hardly see how it got scratched or dirty. But I obliged the message, cleaned the disk and ran the installer again. Same message.

Impatient to get Leopard on my MacBook, I convinced myself that the disk checking mechanism was wrong and decided on my next attempt to bypass it by clicking the “skip” button. Not a good idea.

At first it looked like I had fooled the installer; the progress bar slowly moved across the screen. But about halfway through it stopped and presented this heart-stopping message in large letters: “Installation failed.” A smaller message informed me that one of the language packages could not be opened. The disk-checking mechanism had been right after all.

Because the installation was partly completed, I no longer had either a complete Tiger or Panther system on my MacBook. The internal drive was unbootable.

I didn’t panic because I had the full contents of the MacBook stored as a disk image on a network hard drive (thanks to the marvelous shareware backup tool SuperDuper!). But I still needed to bring the MacBook back to life.

After some time toying with Target Disk mode and consulting with an tech expert provided to me by Apple, I hit upon an idea. I booted off the Leopard DVD but this time deselected all the language packages in the options window. I still needed to click “skip” on the disk check, but by then I had nothing to lose.

Leopard finally installed on the MacBook. All my old user files were moved to a “Previous System” folder because I did an Archive and Install on the botched first attempt. So I didn’t lose any data, but it was a scary experience. As a veteran user I should know better, but I succumbed to Leopard fever. Learn from my mistake.

My review of Leopard will appear in The Sun’s Plugged In section Thursday, Nov. 15, as well as here on baltimoresun.com.

Posted by David Zeiler at 4:25 AM in Mac OS X, MacBook | Permalink | Comments (2)
                       

While the portability of laptops is the main reason they’ve grown increasingly popular, that portability comes a price, namely rechargeable batteries. Not only do these batteries limit how long you can use the computer away from a power outlet, they gradually lose their ability to hold a charge.

That’s why laptop users need to be able to check the health of their computer’s battery periodically. True, you can always go to the Energy Saver System Preferences Pane and click on the “Show battery status in menu bar” option if you just want to know how much juice is left, but it’s helpful to know exactly how much of a charge your laptop battery can still hold, and how close it is to requiring replacement. Here are a few of the better options among the Mac battery freeware and shareware out there (all are Universal Binary, good for both PowerPC and Intel Macs):

CoconutBattery: Perhaps the most elegant of the freeware options, CoconutBattery offers a single gray window with three panes and lime green indicator bars. One pane shows the current battery charge and another current battery capacity, indicating how much of your original capacity your battery has lost since you’ve owned it. A bottom pane of “Additional Info” shows you “battery load cycles” (how many times you’ve recharged the battery) and the age of your Mac laptop in months. CoconutBattery even has a Dashboard Widget available.

Battery Health Monitor: Another freeware option, not quite as pretty as CoconutBattery, but gives you most of the same information. Battery Health Monitor has a grid at the top that shows you the power status of the laptop. When plugged in, the word “A/C Power” is bold for example; when on battery power, the word is grayed out. Other indicators include “Battery Depleted” and “Not Chargeable,” neither of which you’ll want to see bolded. Battery Health Monitor also tells you how many charge cycles the battery has gone through as well as the current voltage the battery is delivering.

SlimBatteryMonitor: This piece of freeware is essentially a fancy replacement for Apple’s battery icon. While it does not provide any of the supplemental data the other options do, SlimBatteryMonitor’s main attraction is that it takes up less space in the menu bar than Apple’s built-in version and is much more customizable, particularly in the colors you can choose for the battery icon.

iBatt2: I had the earlier version of this on my old G3 500 iBook, and it helped me track issues with two aging batteries. It’s $19 shareware, but does offer more than the other apps. iBatt2 offers multiple windows, some of which supply the same data as the freeware apps, such as current charge capacity versus the original capacity. A second window supplies the serial number and manufacture date of the battery, as well as “average time to full” data if you’re charging and “average time to empty” data if you’re on battery power. A third window uses data from other users stored online to compare your Mac laptop’s battery to others using the same model. In addition to the raw capacity numbers, iBatt2 assigns your laptop battery a grade. My MacBook’s battery earned only a “C.” The software also charts your battery’s power activities on a graph that updates itself automatically. Finally, iBatt2 has some cool-looking but not terribly useful gauges at the bottom of the screen showing wattage and charge levels.

Posted by David Zeiler at 4:53 AM in MacBook, ~Monday morning Macware (archive) | Permalink | Comments (4)
                       

I have long suspected that Macs had made more headway in capturing market share than the periodic research reports have indicated. Finally, we have a report that explains why.

A Bernstein Research report by Toni Sacconaghi, Jr., which I discovered via Philip Elmer-DeWitt’s Apple 2.0 blog at Fortune, provides some fresh numbers on the Mac, particularly its laptops.

The Bernstein report differs from other market share reports I’ve seen in that it breaks the data into five price “quintiles.” Mac laptops have a whopping 29.4 percent of the top quintile (machines over $1,300) and 9.3 percent of the second. When you drop the two quintiles in which Apple does not compete (the bottom two fall under $1,100), Mac laptops still net a 13.8 percent market share in the U.S. While still a long way off from parity with the Windows competition, these numbers jibe better with real-world observations than the 5 to 6 percent numbers that reflect sales of mountains of cheap PCs to businesses.

One of the charts included in the Bernstein report includes a line that breaks out Apple’s U.S. market share in the highest price category in the education and consumer markets, excluding the corporate market that the company historically has ignored. Mac laptops comprise 45.8 percent of that market. Wow.

While anecdotal proof for the Mac’s increasing popularity has been building for several years, the market share numbers have not reflected what seemed obvious. True, the Mac’s overall market share has doubled since 2004 (from 3.2 percent in the U.S. to 6.7 percent and from 1.8 percent worldwide to 2.9 percent, according to Gartner data), but all those glowing Apple logos on laptops on college campuses, at technical conferences and in public Wi-Fi areas argued for higher numbers.

Apple’s laptop share worldwide has shown a similar pattern. Mac laptops do best in the highest price quintile with 11.2 percent, and have 8.1 percent of the second most expensive one. Mac desktops have 8.1 percent of the top quintile of the global market (but almost nothing in the other four). While these figures are far from dominating, compared to Apple’s scrawny worldwide share overall, they’re startling.

Another surprise in the Bernstein report is that Apple’s surge in the high-priced categories is a relatively recent phenomenon. In 2000, Mac laptops held 3.6 percent of the top quintile in the U.S. and 4 percent of the second. The highest percentage, 6.1 percent, was in the lowest-priced quintile. By 2004, the Mac laptops had risen to 7.6 percent of the top quintile and 7.2 percent of the second. That year Apple had the highest share in the third quintile at 9.7 percent.

Despite what appears to be great news for Apple laptop sales – rapidly increasing market share in the highest-priced, most profitable quintiles -- Sacconaghi’s report points to dark consequences. It views Apple’s rapidly increasing share of the pricey end of the laptop market as a limiting factor to growth in the years ahead, particularly in light of the Mac’s increasing average price versus that of a typical PC laptop.

I had almost forgotten this, but the iBook a few years ago started at $999. The increase in price of the entry-level MacBook to $1,099 combined with the perpetual fall of Windows-based laptops has had the net effect of making Macs more and more expensive relative to their PC counterparts. Sacconaghi theorizes this will narrow the potential market for Mac laptops and pressure Apple to drop the entry-level price back to $999 or lower to perpetuate the rate of growth it has enjoyed over the past two years. Combined with Apple’s determination not to go after the corporate market, further limiting its overall market share growth, I have to concede that Mac laptop sales could hit a wall at some point.

Sacconaghi does not note in his report that Mac laptops, while costlier on average when compared to the entire Windows PC market, are priced about the same as PCs of comparable abilities (Charles Gaba’s System Shootouts site has many examples of this). Apple refuses to make cheap Macs because it wants to maintain its image as a maker of quality computers and because it disdains low-margin hardware. But in doing so, Apple has written off a significant chunk of the PC market.

This could present a problem as Apple’s market share grows, but one of the notable aspects of the company’s recent increases in market share is that they have come despite the higher average selling prices of Macs. Consumers are voting for the Mac with their pocketbooks, and there are no signs yet the trend is slowing.

Even if Sacconaghi’s scenario materializes (he projects sales into 2011), Apple’s generous margins always give it the option of prudent price cuts to goose market share. Case in point: the controversial $200 iPhone price cut resulted in a sustained 56 percent increase in sales, according to Piper Jaffray’s Gene Munster.

But for the near future, I see Apple standing pat. Wall Street should be more than satisfied with the boatload of good news Apple will deliver in its fourth quarter earnings report Oct. 22.

Posted by David Zeiler at 2:18 PM in Mac market share, MacBook | Permalink | Comments (4)