One other thing worth noting: We know the new Montevina chips use about 30% power. The new NVidia 9M cards also use less power. DDR3 uses less power, and SSD has the potential to if Intel gets it right. The Montevina and the 9M are a given, so if Apple can add one more expensive power saving technology (DDR3 or SSD) then they could potentially have a laptop that lasts 7 hours. That would be enough to get a lot of people to switch, although you're right that there doesn't seem to be a way to prevent others from doing the same.
A) The profit margin will stay at 35% until this new product is released.
This product won't be announced until August 19th at the earliest.
Good post!
The article said "Apple's gross margins [will drop] from 34.8 percent in the spring quarter to just 31.5 percent in the July-to-September window in which the update takes place, ultimately settling at about 30 percent during Apple's fiscal 2009."
That could mean 2 drops! This quarter (till Sept) we will see a drop to about 28% (so that on average we end up at 31.5, down from 35%) and until March (Apple's fiscal year ends March) we'll see another drop to probably around 25-26% so that the average is 30%.
Or it means the new product will show up really late in the quarter, more like September than mid August.
In regards to iPods going all touch, I can't really see then go past 128GB SSD storage on the 'classic', but dropping maximum storage from 160 to 128GB will not make everyone happy. And will certainly leave room for the competition to keep offering higher storage capacities with HD based units.
Unless Apple goes 256GB SSD I don't think this would qualify as 'shutting out the competition'.
As other have said, merely putting in an SSD drive doesn't really differentiate Apple from the competition that much anyway as every manufacturer can do that.
But how about breaking the SSD drive up and mounting the chips behind the LCD in a laptop? This requires hardware integration average OEMs can't do. And would allow laptops to go even slimmer. But also means no user-replaceable HD anymore. But for the MBA this could be doable.
Or how about OLED screen? What if Apple forged a deal with one of the manufacturers to be the first to offer laptops with OLEDs?
Combine that with above idea and you get a screen that's the same thickness as current MBA screens (probably needed for stability reasons anyway, any thinner and the screen starts bending) _and_ save the HDD space in the base unit. Add Montevina space savings and the base unit could be lots slimmer than even today - and have room for more USB ports!
Such a combination would certainly leave the competition scrambling.
Let's hope that the transition is to quad-core CPUs and Blue-Ray drives on all computers. That would complete the transition to High Definition, started more than 2 years ago (4 years, is it possible?)
1) AppleTV: this is not a big market and shutting out competition is neither easy nor is a technique involved others couldn't compete with.
2) MacBook/iMac/Macmini: this is a huge market but Apple will not be able (on a short term basis) to shut out competition regardless of pricing. And there is no technological advance for Apple (beside Mac OS X)
3) iPod: Apple has virtually shut out competition so the only thing needed to completely shut out competition would be price reductions and not a technology transition
4) iPhone/Smartphone market: this is going to be a huge market even on an short term basis, so with a product transition (e.g. iPhone nano or similar) they would be able to shut out competition from Nokia, RIM, SonyEriccson, Microsoft, HTC. Also a high volume product would be needed to reduce overall margins that much. So this would be my most probable guess.
I know, I know... no computing firm has broken into WATCHES recently! What, Casio and their stuff? Some watches have GPS functions and what not, why not an iWatch? The iPod Shuffle is already small enough! Slap on a small color screen, there you go. Bluetooth to stereo headphones and maybe a pedometer, and you've got the next big exercise thing. I dunno. But watches my boy, watches.
Nah, the "transition" is OS X being ready for deployment on a standard PC.
Analogous.
(Or maybe its just hype to get the stocks up more?)
Good post. I agree that adding SSD to the Macbook and MBP could create the same profit margin effect..
However, I don't believe a move like this could be seen as "shutting out the competition." Any of Apple's competitors could also add SSD to their notebooks and quite frankly, most of Apple's competitors sell more units and operate on much slimmer profit margins to begin with.. So a move like this would not so much "shut out" the competition as it would bring Apple more in line with the competitions margins.
I'm still convinced it's the iPod line going touch. nano included.
Ahh... lets go out on a limb. Why not Touch on EVERYTHING (Of course, once you do that you don't have to name anything "touch"). iPod Nano, iPod classic, iPod Air (renaming iPod Touch), MacBook Air, MacBook, MacBook Pro, iMac, Cinema displays. Lets make everything touch.
They could improve the service by making Netflix content browse-able from the couch, rather than requiring the user to set up an Instant Watch queue on Netflix's website on a computer <snip> This would put AppleTV in a league of its own among digital set-top-boxes but I don't see that being a big enough announcement.
Yeah it'd be nice if Apple made the AppleTV work with multiple other services. There are several services for paid streaming of payTV channels now too. Let Apple make money on the AppleTV and work with all the services. Even Unbox.
The other option is to make the AppleTV really cheap, and keep selling their own ever expanding service (expanded into subscriptions and ads maybe).
It will be Apple-branded interactive adult entertainment using multi-touch technology. The possibilities are endless. And the new adult films with this technology will be available same-day.
Why play Super Monkey Ball when you can fondle Jenna Jameson's breasts in real time while waiting at the bus stop?
I can just see the tagline to the ads now... "When I think about you, iTouch myself."
"The new, unnamed product will continue to have "technologies and features that others can't match," according to the CFO."
What kind of technologies and features does Apple currently have that competitors can't match?
Iphone? Nope, everything in the iphone is available on other competitors products.
Ipods? Not really.
MacBooks seem to be the only product that has a feature that no other company has: multi touch gesture.
They might improve the technology in the next line of notebooks, or they could introduce a new tablet notebook. Either way, this will be a unique selling point to all the people who already experienced the multi-touch gestures in the macbook and the iphone.
Read this to see what they've been workin on recently:
The new, unnamed product will continue to have "technologies and features that others can't match," according to the CFO.
Those words are very powerful.
That has to be Mac OS, because Apple's competitors will be able to match everything else if they put their minds to it.
Mac OS is the only thing that Apple has exclusivity on, and when Apple is selling Mac OS it often refers to it's 'technologies and features'.
Transition would suggest to me that Apple is taking an existing entity, and shifting the goalposts. They are moving to a new house, rather than buying a second additional house. Apple used the word 'transition' when it moved the Mac OS from PowerPC to Intel, and likewise when it talks about moving from 32-bit to 64-bit? Transition seems to suggest that they are abandoning whatever they are transitioning from.
Would Apple regard the unbundling of Mac OS from Mac hardware as a 'transition'? Every other product in their current offer works with both Macs and PCs – why not the Mac OS?
I can hear the cry from the naysayers already, but consider this - where would Apple be today if they had never opened up the iPods / iTunes / iPhone to PC users? Would they have enjoyed the same market share and the pennies that that brought?
If Apple opens up the Mac OS, it still retains exclusivity of the Mac OS. The question is not whether Mac OS will trounce Windows et al, but whether people will still buy Apple hardware - and I think that the MacBook Air has shown that there are a huge number of conspicuous consumers out there with more money than sense. Apple could end up building only high-end, high-margin hardware... whilst still making money out of the budget PC market where there is little or no margin in the hardware itself.
That has to be Mac OS, because Apple's competitors will be able to match everything else if they put their minds to it.
It's amazing you are the first to say this after so many posts. It sounds pretty clear to me:
"the company will make a key "product transition" that cuts back on its profit margins to help shut out rivals"
Apple is working hard on Snow Leopard and we all know it won't have much new features. They told us they are improving stability and such. My guess is that they are adding drivers and making the OS ready for mainstream pc's! It's a small step to make while it could mean a huge step in the desktop market. This would be a tremendous hit to Microsoft. Since Vista is doing so terrible companies are looking hard for a replacement and that replacement could very well be OSX. It will put big pressure on the margins on Apple computer hardware, like they said.
I actually think that it will be the imac that is the mystery product seeing as competitors like DELL, HP, Sony and to some extent the Averatec All-in-One already offer an all in one where else does apple need to keep its bread winner. Its an area where it needs to "Shut out rivals" and as we see on reviews after reviews these other all in ones look snazzy but the iMac whips them and with all of that said my money is on the iMac.
personally i think Dell's and HP's all in ones look shit
Product transition that will affect profit margin...
Hmmm.. Makes me think it is the iPod line and that all models will transition into touch versions.. The competition certainly couldn't match that and it would certainly cut into profit margin and it certainly is a transition..
my first thought was"bye bye Classic iPod" the Touch will get a capacity boost and a price drop down "NEAR" classic pricing, this will halo effect/promote the App store.
the other product transition it COULD be, that would be costly to apple if they keep the prices the same is transitioning EVERY iMac into a touch screen iMac..
It's possible the margin comment and the transition comment were co-mingled and this is causing confusion. If you consider how many iPod touches that Apple is giving away there's no question that margins are going to suffer in this quarter.
Comments
A subsidized AppleTV with enhanced features, including "home server"
Subsidized by whom?
One other thing worth noting: We know the new Montevina chips use about 30% power. The new NVidia 9M cards also use less power. DDR3 uses less power, and SSD has the potential to if Intel gets it right. The Montevina and the 9M are a given, so if Apple can add one more expensive power saving technology (DDR3 or SSD) then they could potentially have a laptop that lasts 7 hours. That would be enough to get a lot of people to switch, although you're right that there doesn't seem to be a way to prevent others from doing the same.
-- something using that USB port on TV.
-- maybe a tablet which will also interface with TV and let you surf the 'net, check e-mail, etc. wireless on your HDTV from your couch
-- TV transitions to also allow on-air recording...functionality more like a TiVo
You know, this is a great resource for Apple, even better than their own focus groups.
Two assumptions:
A) The profit margin will stay at 35% until this new product is released.
Good post!
The article said "Apple's gross margins [will drop] from 34.8 percent in the spring quarter to just 31.5 percent in the July-to-September window in which the update takes place, ultimately settling at about 30 percent during Apple's fiscal 2009."
That could mean 2 drops! This quarter (till Sept) we will see a drop to about 28% (so that on average we end up at 31.5, down from 35%) and until March (Apple's fiscal year ends March) we'll see another drop to probably around 25-26% so that the average is 30%.
Or it means the new product will show up really late in the quarter, more like September than mid August.
In regards to iPods going all touch, I can't really see then go past 128GB SSD storage on the 'classic', but dropping maximum storage from 160 to 128GB will not make everyone happy. And will certainly leave room for the competition to keep offering higher storage capacities with HD based units.
Unless Apple goes 256GB SSD I don't think this would qualify as 'shutting out the competition'.
As other have said, merely putting in an SSD drive doesn't really differentiate Apple from the competition that much anyway as every manufacturer can do that.
But how about breaking the SSD drive up and mounting the chips behind the LCD in a laptop? This requires hardware integration average OEMs can't do. And would allow laptops to go even slimmer. But also means no user-replaceable HD anymore. But for the MBA this could be doable.
Or how about OLED screen? What if Apple forged a deal with one of the manufacturers to be the first to offer laptops with OLEDs?
Combine that with above idea and you get a screen that's the same thickness as current MBA screens (probably needed for stability reasons anyway, any thinner and the screen starts bending) _and_ save the HDD space in the base unit. Add Montevina space savings and the base unit could be lots slimmer than even today - and have room for more USB ports!
Such a combination would certainly leave the competition scrambling.
1) AppleTV: this is not a big market and shutting out competition is neither easy nor is a technique involved others couldn't compete with.
2) MacBook/iMac/Macmini: this is a huge market but Apple will not be able (on a short term basis) to shut out competition regardless of pricing. And there is no technological advance for Apple (beside Mac OS X)
3) iPod: Apple has virtually shut out competition so the only thing needed to completely shut out competition would be price reductions and not a technology transition
4) iPhone/Smartphone market: this is going to be a huge market even on an short term basis, so with a product transition (e.g. iPhone nano or similar) they would be able to shut out competition from Nokia, RIM, SonyEriccson, Microsoft, HTC. Also a high volume product would be needed to reduce overall margins that much. So this would be my most probable guess.
Ala Cintiq, but with multitouch, and sits on a nice CD like base with iSight built in of course.
Reason why noone else could do it-- patent on multi touch
Reasons why profit margins would be good-- apple gets a great deal on new shit hot panels, and sells them for outrageous prices
The competitors have been trying to make a functional tablet pc and monitor for years now and have failed miserably, Apple could do it right.
Nah, the "transition" is OS X being ready for deployment on a standard PC.
Analogous.
(Or maybe its just hype to get the stocks up more?)
Good post. I agree that adding SSD to the Macbook and MBP could create the same profit margin effect..
However, I don't believe a move like this could be seen as "shutting out the competition." Any of Apple's competitors could also add SSD to their notebooks and quite frankly, most of Apple's competitors sell more units and operate on much slimmer profit margins to begin with.. So a move like this would not so much "shut out" the competition as it would bring Apple more in line with the competitions margins.
I'm still convinced it's the iPod line going touch. nano included.
Ahh... lets go out on a limb. Why not Touch on EVERYTHING (Of course, once you do that you don't have to name anything "touch"). iPod Nano, iPod classic, iPod Air (renaming iPod Touch), MacBook Air, MacBook, MacBook Pro, iMac, Cinema displays. Lets make everything touch.
That'd get people's attention.
They could improve the service by making Netflix content browse-able from the couch, rather than requiring the user to set up an Instant Watch queue on Netflix's website on a computer <snip> This would put AppleTV in a league of its own among digital set-top-boxes but I don't see that being a big enough announcement.
Yeah it'd be nice if Apple made the AppleTV work with multiple other services. There are several services for paid streaming of payTV channels now too. Let Apple make money on the AppleTV and work with all the services. Even Unbox.
The other option is to make the AppleTV really cheap, and keep selling their own ever expanding service (expanded into subscriptions and ads maybe).
It will be Apple-branded interactive adult entertainment using multi-touch technology. The possibilities are endless. And the new adult films with this technology will be available same-day.
Why play Super Monkey Ball when you can fondle Jenna Jameson's breasts in real time while waiting at the bus stop?
I can just see the tagline to the ads now... "When I think about you, iTouch myself."
GTSC
"When I think about you, iTouch myself."
:-)
"Pinch me, again"
What kind of technologies and features does Apple currently have that competitors can't match?
Iphone? Nope, everything in the iphone is available on other competitors products.
Ipods? Not really.
MacBooks seem to be the only product that has a feature that no other company has: multi touch gesture.
They might improve the technology in the next line of notebooks, or they could introduce a new tablet notebook. Either way, this will be a unique selling point to all the people who already experienced the multi-touch gestures in the macbook and the iphone.
Read this to see what they've been workin on recently:
http://forums.appleinsider.com/showthread.php?t=89272
Also, this new thing has to be really revolutionary (as opposed to evolutionary) in order to achieve huge sales.
The new, unnamed product will continue to have "technologies and features that others can't match," according to the CFO.
Those words are very powerful.
That has to be Mac OS, because Apple's competitors will be able to match everything else if they put their minds to it.
Mac OS is the only thing that Apple has exclusivity on, and when Apple is selling Mac OS it often refers to it's 'technologies and features'.
Transition would suggest to me that Apple is taking an existing entity, and shifting the goalposts. They are moving to a new house, rather than buying a second additional house. Apple used the word 'transition' when it moved the Mac OS from PowerPC to Intel, and likewise when it talks about moving from 32-bit to 64-bit? Transition seems to suggest that they are abandoning whatever they are transitioning from.
Would Apple regard the unbundling of Mac OS from Mac hardware as a 'transition'? Every other product in their current offer works with both Macs and PCs – why not the Mac OS?
I can hear the cry from the naysayers already, but consider this - where would Apple be today if they had never opened up the iPods / iTunes / iPhone to PC users? Would they have enjoyed the same market share and the pennies that that brought?
If Apple opens up the Mac OS, it still retains exclusivity of the Mac OS. The question is not whether Mac OS will trounce Windows et al, but whether people will still buy Apple hardware - and I think that the MacBook Air has shown that there are a huge number of conspicuous consumers out there with more money than sense. Apple could end up building only high-end, high-margin hardware... whilst still making money out of the budget PC market where there is little or no margin in the hardware itself.
That has to be Mac OS, because Apple's competitors will be able to match everything else if they put their minds to it.
It's amazing you are the first to say this after so many posts. It sounds pretty clear to me:
"the company will make a key "product transition" that cuts back on its profit margins to help shut out rivals"
Apple is working hard on Snow Leopard and we all know it won't have much new features. They told us they are improving stability and such. My guess is that they are adding drivers and making the OS ready for mainstream pc's! It's a small step to make while it could mean a huge step in the desktop market. This would be a tremendous hit to Microsoft. Since Vista is doing so terrible companies are looking hard for a replacement and that replacement could very well be OSX. It will put big pressure on the margins on Apple computer hardware, like they said.
I actually think that it will be the imac that is the mystery product seeing as competitors like DELL, HP, Sony and to some extent the Averatec All-in-One already offer an all in one where else does apple need to keep its bread winner. Its an area where it needs to "Shut out rivals" and as we see on reviews after reviews these other all in ones look snazzy but the iMac whips them and with all of that said my money is on the iMac.
personally i think Dell's and HP's all in ones look shit
Product transition that will affect profit margin...
Hmmm.. Makes me think it is the iPod line and that all models will transition into touch versions.. The competition certainly couldn't match that and it would certainly cut into profit margin and it certainly is a transition..
my first thought was"bye bye Classic iPod" the Touch will get a capacity boost and a price drop down "NEAR" classic pricing, this will halo effect/promote the App store.
the other product transition it COULD be, that would be costly to apple if they keep the prices the same is transitioning EVERY iMac into a touch screen iMac..
THAT should be fun!