Oops

Posted December 15, 2006 By The Macalope and has 6 comments.

The Macalope was indisposed yesterday so he was unable to post about Gene Munster and comScore’s retort saying that iTunes sales are doing just fine, thank you very much.

Soooooo…

…who’s got egg on their face?

Well, Andrew Orlowski, for starters, as Forrester called the Register out in particular, referring to it as “A UK outfit called The Register”. That’s shorthand for “I’ve never heard of these clowns before and now they’re wearing our research like a party hat and dancing around like Roberto Benigni.”

If you want more amusement, read Orlowski’s response to Forrester’s clarification which should be titled “No takebacks!”

Orlowski’s defense of over-hyping the Forrester numbers? He put “collapse” in quotes.

He then concludes:

It’s a pity today that beseiged by parties who have vested interests, and their own agendas, Forrester wants to downplay the implications of its valuable work – and instead it finds itself doing crisis management on behalf of Apple.

Yes. It’s also a pity that beseiged by the people who actually did the research, someone who jumped to conclusions about it continues to pimp his pet theory.

Orlowski even unironically chides Wall Street “gamblers” for misreading his story. He has yet to respond to Munster and comScore’s report of booming iTunes sales.

Looking for more egg, Nick Carr’s probably kind of wishing he hadn’t jumped on this one so quickly.

The Macalope found his response to a commenter who provided a link to Forrester’s addendum rather amusing.

Thomas,

Forrester has not retracted its study, so I assume it stands by its numbers and analysis, which I believe I reported accurately in this post.

I have to say that I’m really not sure how to interpret the Forrester statement you linked to.

Nick

Well, Nick, allow the Macalope to rephrase what Forrester is saying more succintly:

Stop trying to hump our numbers like a horny lap dog.

None of this is to say Forrester’s analysis isn’t problematic. You can read the blog summary and see if you don’t find what the Macalope did — that all the really good analysis is in the comments.

Looking back over the numbers, the Macalope notes that they represent a small sample size and don’t reflect all the ways you could buy stuff from iTunes. It also focuses on the supposed decline in sales over the first six months of 2006.

You know, this sounds awfully familiar. What was that other thing that had falling sales from January to June and some silly pundits were rushing to declare its demise?

Oh, that’s right. It was the iPod.

What a coincidence.

(That’s sarcasm in case you can’t tell.)

Now, the Macalope is giving Orlowski and Carr a hard time, but it’s important to note that ultimately their point that online sales of DRM-ed music is not a panacea for the music industry may be correct. It’s just that now it seems that their highly touted example is actually an exception.

Also, remember…

…who cares about iTunes sales?

ADDENDUM 12/19: Here’s a good post providing some data to back up the Macalope’s oblique assertion about the connection between iPod sales and iTunes downloads.

From the horse's mouth

Posted December 13, 2006 By The Macalope and has 5 comments.

Forrester Research sez:

iTunes sales not falling. The Register and Bloomberg took our data out of context. It’s not our fault, it’s Apple’s.

Gene Munster sez:

Yer all hopped up on goofballs. iTunes sales surged in the first half of 2006.

And can the Macalope just ask, who are the imbeciles who sold Apple based on the misinterpretation of Forrester’s report? Looking a little foolish now.

Disclaimer: the Macalope holds an insignificant number of Apple shares.

More on iTunes sales

By The Macalope and has 6 comments.

TUAW links to the Macalope’s previous post and says:

Of course, The Macalope asks ‘who cares?’ to all this worry of how the iTS is doing, but Geoff Duncan at Digital Trends reminds us of some interesting potential shifts in the digital distribution model that could depend directly on how well present offerings fair.

The Macalope did address that issue by noting that the recording industry could come up with something more heinous than DRM. Duncan’s piece is mostly a summary of some pieces done by the Register’s Andrew Orlowski. The Macalope wouldn’t call Orlowski biased, but he’s clearly got his ideas of how this is all gonna go down and — while he eventually may be proved correct — he’s lost some objectivity in his trumpting of Forrester’s research.

Of Forrester’s numbers Orlowski writes:

The figures don’t include gifts redeemed via the iTunes Store. While Apple can argue this does not reflect the volume of transactions taking place, it gives a more accurate picture of what customers are actually prepared to pay for.

Uh, right. That’s like saying anything bought at the Gap as a present shouldn’t count in their sales figures because the person who receives it didn’t make the purchase and may not have wanted it. Note to Orlowski, if a gift card comes from the iTunes Store, it’s something customers are actually prepared to pay for. The gift card purchaser is the customer, not the person who downloads the songs.

Now, no one but Apple knows if gift card sales are enough to make iTunes sales figures all sunshine and puppies, but pretending they somehow don’t count is simply engaging in argumentative assery.

Still, there is substantial evidence that the recording companies have lost that loving feeling for DRM. And if they’ve decided that DRM is a failure — both in keeping people from illegaly copying music and putting them in a position of strength when negotiating with technology companies — they will start seeking other ways to extract their pound of flesh.

One way is a “tax” on the devices and the other is a “tax” on the Internet.

The Macalope supposes just paying for DRM-free music directly is out of the question.

Are iTunes sales dropping?

Posted December 12, 2006 By The Macalope and has 7 comments.

The Macalope has a better question: who cares?

The Apple web is rife with cries of “woe is Apple” and angry denouncements today over Forrester Research’s report claiming that the only people still buying songs from the iTunes Store are a family of shut-ins in Kenosha, Wisconsin.

Forrester’s conclusion is that DRM isn’t working and people are still stealing music as their primary means of acquisition.

That’s not the Macalope’s experience, but for the sake of argument (and because it spares the Macalope from having to do a bunch of math), let’s say Forrester is right and iTunes sales are down 375 million percent or whatever they said.

Let’s look at some things that make this less concerning than you might think:

  1. Apple doesn’t make money on music sales. They’re used to drive iPod sales.
  2. iPod sales are still strong.
  3. iTunes is still by far the most popular online music store.
  4. Falling sales of DRM-ed music mean the recording industry has to consider non-DRM solutions.

The negatives are:

  1. The recording industry could come up with something more heinous than DRM.
  2. Apple will no longer have the “velvet lock” of iTunes DRM that keeps customers in iPods.

But then they’ll just have to keep people buying iPods by keeping them awesome.

So, can we all calm down, please? The Macalope can barely hear his iTunes-purchased Christmas music over all the shouting.

Stand back! I'm not sure how big this thing is going to get!

Posted December 11, 2006 By The Macalope and has 15 comments.

The teaser of Rex Crum’s piece titled Apple bulls start looking beyond the iPod caused the Macalope’s furry ears to stand up today.

Steve Jobs will need more than a phone to sustain growth

What?! Can it be that the iPhone – which, if you’ve been paying attention, you’ll note has not been announced yet – is not even enough to save our beleagered Apple?!

No, this is simply a case of teasers gone wild because, while there is some other silliness, this particular assertion is not in the piece. Teasers are often not written by the reporter but by a copy editor who may or may not have read the whole piece and may or may not have understood it. Even the lede belies the implication of the teaser.

Money managers who own shares of Apple Computer Inc. — and the Wall Street analysts who follow the company — believe firmly that Chief Executive Steve Jobs has more iPod magic up his sleeve.

And what the piece says, which is true, is that Apple will need more than the iPod to sustain growth.

Yet even those who are bullish on prospects for the technology giant say Apple’s reliance on its handheld music player to power sales and profit growth cannot sustain it forever.

Fair enough, but Crum’s just begun to display his firm grasp of the obvious.

If Jobs is out of tricks, and Apple’s sales start to slow, many of the growth-fund managers who’ve bought its stock may become sellers.

Indeed! And if Steve Jobs eat an infant on live TV, it could adversely affect the company’s share price!

Crum provides some cause to be concerned about future iPod sales, mostly due to the maturation of the market, but lays it on a little thick.

And it’s not like Apple will have the media-player market to itself.

Like it does now.

Uh, what?

Microsoft plans to spend heavily to market its new player, which it rolled out in November. While the product didn’t exactly set the world on fire at the beginning of the key holiday-shopping season — its sales through Amazon.com lagged well behind those for a half-dozen iPod models and even an iPod adapter — Microsoft has a history of tenacity and is expected to produce 10 million of the devices next year.

Two points about this:

  1. “Produce” != “sell”.
  2. In the last year, Apple’s sold an average of almost 10 million iPods a quarter.

“We think Microsoft will be Apple’s most formidable competitor,” said Prudential analyst Tortora, who has a neutral rating on Apple shares.

Truthfully, it remains to be seen if the Zune will be able to make much headway in 2007. With a starting price point of $250, it’s simply not in a position to take on “the iPod”, which consists of three (soon to be four?) separate lines, starting at $80.

But ask the Macalope again when the Zune 2.0 comes out.

Tortora, apparently, is not one of the bulls mentioned in the title. It does seems a bit odd that in a piece ostensibly about bulls, the first two quotes from analysts are rather bearish. It’s not like the bullish opinions on Apple should be hard to find. The Macalope took a look and of the last 21 firms to change their rating or initiate coverage on Apple, 17 have above-average recommendations and four are neutral.

Several analysts have already noted their expectations that iPod sales will be strong this quarter and may even beat the prior year, which was really, really big.

Crum’s point, muddled by some silliness, is about growth. Apple’s been a Wall Street darling of late because of it and it might be concerning to you if you lived in a cave and hadn’t heard anything about what Apple might have on the drawing boards for 2007. But between the iTV and rumors of the iPhone, the “true” video iPod, a lightweight laptop and a tablet device, there’s little reason for growth-fund managers to start selling Apple now.

Note: the title is the punch line from an old joke about what Adam said to Eve.

Disclaimer: the Macalope holds an insignificant number of Apple shares.

This is the best we can do?

By The Macalope and has 4 comments.

For the record, the Macalope does not profess to “know” whether or not Apple will make an iPhone or whether or not it will succeed. He merely thinks there’s an opportunity there.

For those who believe there is no room for Apple in this space, please take a look at eWeek’s roundup of smart phones available this holiday season and if you’re comfortable with these, then you should consider checking yourself into the Jonathan Ive Clinic for the Esthetically Challenged.

A new low in iPhone speculation assery

Posted December 7, 2006 By The Macalope and has 40 comments.

Others have opined about the general silliness of how sure everyone is that Apple will be announcing an iPhone. And an iPhone 2. And an iPhone mini. And an iPhone nano. And…

Well, CNET’s Michael Kanellos has lowered the stupid bar so low that the Macalope is doubtful anyone will be able to limbo under it.

Not only will Apple announce an iPhone, Kanellos says, but he knows it will fail.

This is like the flip-side of Tuesday’s Crazy Apple Rumor. Sadly for Mr. Moltz, the Apple rumor world has become self-parodying.

Michael Kanellos is not psychic. He’s not a time traveller. He’s not able to bend reality to his will. So, what he’s saying is that he thinks he’s considered all the possible alternative entrants that Apple could make to the cell phone market and he’s determined that none of them will work.

Oh, and it’s his birthday and as a little present to himself he wants to “antagonize Apple fans.”

Well, at least we know where we stand.

Mike, just a hunch, but did you get your ass kicked a lot in high school?

If Apple got into medical devices, people would come out of Steve Jobs’ speech proclaiming “The iBag is the easiest, most user-friendly colostomy device I’ve ever encountered.”

Ha-ha! Those silly Apple fans and the way they value ease of use! It’s so funny! Ah, Apple fans! Will you never learn?

Sales for the phone will skyrocket initially. However, things will calm down, and the Apple phone will take its place on the shelves with the random video cameras, cell phones, wireless routers and other would-be hits.

Can we dissect, for a second, how little sense that makes? If the iPhone is going to be a flop, chances are it’s going to be a flop from the get-go. People are either going to buy into the proposition – unlocked GSM, Apple’s own service, VOIP, whatever it is – or they’re not. It’s not like they’re going to rush out and buy one, get it home and suddenly realize they have to swap SIM cards or something and start posting angry missives on the Internet causing others not to buy one.

Unless Apple makes wild promises about it that it can’t deliver on (and so far the only ones making wild promises are Apple analysts), sales are unlikely to “skyrocket” but ultimately amount to not much.

Remember the Mac Mini? It was supposed to ignite a revolution for small computers.

It was? Who said that?

Oh, some other jackass at CNET.

It didn’t. The flat-panel iMac? Some predicted that Apple’s price tag would drive other prices higher. Whoops.

That’s it? That’s Kanellos’ list of Apple trend-setting failures?

Because if it is, that is awesome. Both of those products are quite successful and – just because they didn’t live up to the hype his own publication attempted to create – it doesn’t mean they’re “would-be hits.”

He could have listed the Newton. He could have listed OpenDoc. It’s not like Apple’s never had a much-hyped technology fail before. But he just doesn’t seem to be trying that hard. Well, it’s his birthday and maybe CNET has a policy where you can phone in a column on your birthday.

But the iPod looks like it may turn out to be a non-repeatable experience. Look at the historical record. When the iPod emerged in late 2001, it solved some major problems with MP3 players.

…

Unfortunately for Apple, problems like that don’t exist in the handset business. Cell phones aren’t clunky, inadequate devices. Instead, they are pretty good. Really good.

Well, now, there’s the rub. You’ll get a whole range of opinion on this but, in general, the devices themselves aren’t that bad. The Macalope’s more inclined to stop at “pretty good” than “really good”, but the hardware’s not the main problem. It’s the interfaces that are tied to service providers that suck so badly.

It’s ridiculous that the Macalope has to point out the linear nature of time, but it remains to be seen if Apple has a solution to this problem that will work with multiple carriers.

Kanellos notes that users conflate their satisfaction with their phone to the capabilities of their carrier’s network. And, unless Apple’s been secretly constructing their own network, this will always be an integral piece of the user experience the company won’t own. But, still, it’s a problem faced by all hardware manufacturers.

The issue Kanellos doesn’t mention at all is support. When a user has a problem now, he or she calls the cellular provider who sold or gave them the phone. The service and the hardware is supported by one entity. If Apple does go the unlocked GSM route, are customers going to be able to diagnose whether their problem is hardware or network related? Will they know who to call?

But Kanellos has got a rash that says “Apple is style over substance” and he’s gonna scratch it no matter what the doctor said!

Apple, in other words, won’t be competing against rather doltish, unstylish companies like the old Compaq.

Uh, wait, are we talking about computers now? The Macalope thought we were talking about the iPod, where Apple competed – not against Compaq – but against Rio, Sony, Creative, etc.

Kanellos believes the iPod succeeded because Apple chose to use 1.8-inch hard drives and made it easier to use than the competition. However, because he’s unable to see how Apple might be able to leverage new hardware and ease of use again, he declares that the iPhone will be a failure.

The phone the company hasn’t announced yet.

That phone.

Granted, Apple will use contract manufacturers to assemble their phones, but designing these phones takes experience and talent. And the cell carriers are far deeper into it here.

Mmm, yes. Creating a cell phone is a special kind of alchemy that only fifth level druid mages with plus five hit points can perform.

There’s really not much point in going through this exercise. Kanellos has already admitted that the point of the piece is to be contrarian, which absolves him of any responsibility to actually make sense.

But someone should really throw a bucket of cold water on the whole collection of silly pundits who already think they know what the iPhone’s whole product life cycle will look like.

Because the Macalope doesn’t know if you’ve noticed, but…

Apple hasn’t announced an iPhone yet.

Damn this iPhone-induced cough!

Posted December 6, 2006 By The Macalope and has 5 comments.

Julie Ask at Jupiter Research has an interesting post about the challenges and opportunities a company (cough – Apple – cough) might face in selling an unlocked phone and the challenges and opportunities a consumer (cough – Macalope – cough) might face getting a service provider for it.

Sales pitch is low and away

Posted December 4, 2006 By The Macalope and has 6 comments.

Steve Ballmer is still shakin’ that money maker but corporate audiences just aren’t slipping the bills into his sweaty g-string.

The Macalope will give you a minute after that disturbing image.

That’s it. Just walk it off. Walk it off. You’ll be OK.

Better? Can we proceed?

OK.

The launch of Windows Vista, Office 2007 and Exchange 2007 for businesses is the most significant release of the flagship products in Microsoft’s history, Microsoft CEO Steve Ballmer said Nov. 30.

The Macalope hates to tell the glistening one his own business (well, not really…), but there’s little doubt that Windows 95 was the most significant release of Windows in Microsoft history.

Totally new GUI? Long file names? Preemptive multitasking 32-bit applications? Any of this ringing any bells, Steve-a-rino?

Nope?

Hello?

Ballmer said Windows Vista will usher in a wave of innovation.

No comment.

“I am happy to finally be here, and that’s all I’m going to say about the past,” Ballmer said, referring to the fact that Vista has taken five years to bring to market.

Wow! “Baby, I know I hit you all those times, but I don’t want to talk about that…”

Being Microsoft is never having to say you’re sorry.

Asked about the timeline for Vista service packs, Ballmer quipped that as it is the highest-quality, most secure and reliable Windows operating system ever, there should be no need for a service pack.

Steve. Steve.

Oh, Steve.

Steeeeeeeeeeve.

For lessons in CEO honesty, perhaps Ballmer should turn to Seagate’s Bill Watkins who said in a recent interview (tip o’ the antlers to Hack the Planet):

“Let’s face it, we’re not changing the world. We’re building a product that helps people buy more crap – and watch porn.”

See, Steve? That’s minty fresh! When the Macalope hears Bill Watkins talk, it’s like he’s standing the middle of a forest and the only thing he can hear – ba-by! – is the dew dropping from the cool, gr-een leaves! Ha-ha!

You, on the other hand, sound like the dumpster out back of a Denny’s in Gary, Indiana.

UPDATE: More disturbing Ballmer imagery from the Macalope’s stylistic brother Robert X. Cringely.

Must be something in the air today.