UBS talks Intel transition at sit-down with Apple execs
Analysts from UBS Investment Research have just returned from meeting with Apple axecutives in Cupertino, which focused primarily on on the company's Intel Mac transition, AppleInsider has learned.
Apple executives at the meeting included Chief Financial Officer Peter Oppenheimer, Senior VP of Retail Ron Johnson, Senior VP of Product Marketing Phil Schiller. In addition to the Intel transition, conversations also focused on Apple's retail division and the future of the iPod.
In a research note released on Wednesday, analyst Ben Reitzes said Apple management seemed confident that the Intel transition was on track, but acknowledged the potential for some near-term disruption in unit sales given the timing of product announcements.
"We believe the comments were in-line with our recent checks with dozens of Apple stores, visiting New York area Apple stores and contacting several other retailers like CompUSA nationwide," Reitzes wrote. "Remember, Apple has launched only two Intel-based Macs out of its six product lines ? with the rest of the line-up set to transition by calendar year-end."
The analyst also discussed Adobe and Microsoft?s software transition plans at length during the meetings. "Our research indicates that new Power Macs could be announced with Intel processors by September, but Apple?s Rosetta emulation software should still be needed to run Adobe?s major high-end applications like Photoshop at that time," Reitzes wrote. Still, he believes Power Mac sales could be adversely impacted well into 2007 fiscal year, given comments made by Adobe management that it will not update its key creative professional products for Intel Macs until the spring 2007.
Apple management reportedly remains confident that most software applications for the common user will run smoothly when using Rosetta, but did acknowledges some performance degradation for high-end professional usage.
"We believe it is likely that some creative professionals will wait for Adobe to introduce its software in the 'universal' code, which will allow an Intel-based Mac to run the program without translating the code," Reitzes said. He estimates that Power Macs accounted for about 6 percent of Apple?s sales in the first fiscal quarter of the year, or about 12 percent of Mac units sold.
Despite concerns surrounding the Power Macs and some higher-end iMacs given Adobe?s timing, the analyst believes that demand with consumers for new MacBook Pros, iBooks, Mac Minis and other products will more than fill the void in fiscal 2007.
While acknowledging that some users may want to wait for Adobe to introduce its new versions of software, Apple management reportedly feels that Microsoft Office runs relatively well out of the box in Rosetta, especially for word processing. "Apple believes that most users are unaware of any performance issues when using most Office software (Word, Excel, etc.) and that performance characteristics are currently at acceptable levels," Reitzes wrote. "The company also noted that Microsoft, like Adobe, remains a committed partner for Apple in creating software in 'universal' code."
Meanwhile, Apple retail stores surveyed by UBS showed a very positive reaction to the MacBook Pro in terms of pent-up demand that could be realized later this year. "Our surveys and conversations with Apple reveal the level of inquiries regarding the new MacBooks is extremely high, and it is clear that with more models and more applications, Mac sales can benefit," Reitzes said. "As a result, we believe any slowdown in consumer Mac shipments is only a matter of timing over the next 2-5 months."
Looking ahead, UBS believes Apple is hard at work on innovations and is set to announce several new products into 2007. Some of the potential products listed by the firm include a digital hub, iPod speakers and an Apple-branded cell phone.
"We also believe that Apple may choose to enter new consumer markets for iPod speakers and Apple branded cell-phones over the next year where the company would be able to leverage its market leading innovations and creative designs that have made the iPod such a tremendous hit with customers," the firm said. "In addition, we anticipate that Apple will continue to announce new partnerships with content providers and build on the media it currently has available for download."
Apple management also indicated to UBS analysts that it is able to receive higher gross margins on third-party accessories than its own Apple- branded accessories and that it plans to continue to explore new potential products with its partners.
The firm maintains a "Buy" rating on Apple shares with a price target of $100.
Apple executives at the meeting included Chief Financial Officer Peter Oppenheimer, Senior VP of Retail Ron Johnson, Senior VP of Product Marketing Phil Schiller. In addition to the Intel transition, conversations also focused on Apple's retail division and the future of the iPod.
In a research note released on Wednesday, analyst Ben Reitzes said Apple management seemed confident that the Intel transition was on track, but acknowledged the potential for some near-term disruption in unit sales given the timing of product announcements.
"We believe the comments were in-line with our recent checks with dozens of Apple stores, visiting New York area Apple stores and contacting several other retailers like CompUSA nationwide," Reitzes wrote. "Remember, Apple has launched only two Intel-based Macs out of its six product lines ? with the rest of the line-up set to transition by calendar year-end."
The analyst also discussed Adobe and Microsoft?s software transition plans at length during the meetings. "Our research indicates that new Power Macs could be announced with Intel processors by September, but Apple?s Rosetta emulation software should still be needed to run Adobe?s major high-end applications like Photoshop at that time," Reitzes wrote. Still, he believes Power Mac sales could be adversely impacted well into 2007 fiscal year, given comments made by Adobe management that it will not update its key creative professional products for Intel Macs until the spring 2007.
Apple management reportedly remains confident that most software applications for the common user will run smoothly when using Rosetta, but did acknowledges some performance degradation for high-end professional usage.
"We believe it is likely that some creative professionals will wait for Adobe to introduce its software in the 'universal' code, which will allow an Intel-based Mac to run the program without translating the code," Reitzes said. He estimates that Power Macs accounted for about 6 percent of Apple?s sales in the first fiscal quarter of the year, or about 12 percent of Mac units sold.
Despite concerns surrounding the Power Macs and some higher-end iMacs given Adobe?s timing, the analyst believes that demand with consumers for new MacBook Pros, iBooks, Mac Minis and other products will more than fill the void in fiscal 2007.
While acknowledging that some users may want to wait for Adobe to introduce its new versions of software, Apple management reportedly feels that Microsoft Office runs relatively well out of the box in Rosetta, especially for word processing. "Apple believes that most users are unaware of any performance issues when using most Office software (Word, Excel, etc.) and that performance characteristics are currently at acceptable levels," Reitzes wrote. "The company also noted that Microsoft, like Adobe, remains a committed partner for Apple in creating software in 'universal' code."
Meanwhile, Apple retail stores surveyed by UBS showed a very positive reaction to the MacBook Pro in terms of pent-up demand that could be realized later this year. "Our surveys and conversations with Apple reveal the level of inquiries regarding the new MacBooks is extremely high, and it is clear that with more models and more applications, Mac sales can benefit," Reitzes said. "As a result, we believe any slowdown in consumer Mac shipments is only a matter of timing over the next 2-5 months."
Looking ahead, UBS believes Apple is hard at work on innovations and is set to announce several new products into 2007. Some of the potential products listed by the firm include a digital hub, iPod speakers and an Apple-branded cell phone.
"We also believe that Apple may choose to enter new consumer markets for iPod speakers and Apple branded cell-phones over the next year where the company would be able to leverage its market leading innovations and creative designs that have made the iPod such a tremendous hit with customers," the firm said. "In addition, we anticipate that Apple will continue to announce new partnerships with content providers and build on the media it currently has available for download."
Apple management also indicated to UBS analysts that it is able to receive higher gross margins on third-party accessories than its own Apple- branded accessories and that it plans to continue to explore new potential products with its partners.
The firm maintains a "Buy" rating on Apple shares with a price target of $100.
Comments
Given that Adobe has swallowed the other major plaftorm for web/graphics development (Macromedia), it is a consolidation of some of the key software high end pro users rely on.
I've often wondered why Apple hasn't done the same with PortalPlayer (if they haven't already)--given the tie to the iPod plaform. Unless at some point apple plans to dump them and develop their own IP in the mp3 player space. Wonder what would happen if Microsoft bought them and then rolled out their own branded xbox-lite media player?
Just how much cash is Apple sitting on?
Has Apple acquired any technology firm in the last 5 years?
Originally posted by nagromme
Apple actually has either 6 or 7 lines of Macs, depending on whether they plan to keep selling a rugged CRT all-in-one (eMac) to schools. Do they still make eMacs for schools?
I count five lines that are available to the public. You have the four from the matrix (desktop or laptop vs. consumer or pro), i.e., iBook, iMac, PowerBook (Mac Book Pro) and PowerMac, and the odd one out, the Mac mini. The eMac was returned to its original purpose: a computer built for schools.
I'm getting a little sick and tired of Adobe sabotaging Apple. Apple ought to buy a big interest in Adobe (maybe even a controlling interest) and ensure that its products are ready for the Mac first. On the other hand, maybe Apple can create a Photoshop killer and be done with Adobe's grip on its future.
Originally posted by macFanDave
I count five lines that are available to the public. You have the four from the matrix (desktop or laptop vs. consumer or pro), i.e., iBook, iMac, PowerBook (Mac Book Pro) and PowerMac, and the odd one out, the Mac mini. The eMac was returned to its original purpose: a computer built for schools.
I'm getting a little sick and tired of Adobe sabotaging Apple. Apple ought to buy a big interest in Adobe (maybe even a controlling interest) and ensure that its products are ready for the Mac first. On the other hand, maybe Apple can create a Photoshop killer and be done with Adobe's grip on its future.
does it occur to you that it's quite possible that apple sabotages adobe plan's for the direct future. i think adobe was already programming for and even testing its next gen creative suit apps when apple throw in it's universal binaries bomb.
[edit] you forgot xserve [/edit]
Originally posted by gar
does it occur to you that it's quite possible that apple sabotages adobe plan's for the direct future. i think adobe was already programming for and even testing its next gen creative suit apps when apple throw in it's universal binaries bomb.
[edit] you forgot xserve [/edit]
Well that goes to the heart of what kind of strategic relationships does Apple build with MAJOR developers on its platforms?
Does Apple simply wait until the day before a public announcement of a technology shift or strategic direction to clue their partners in?
Does Apple even operate with the notion of their key platform providers being privy to strategic and tactical direction?
If not, WHY NOT?
Jobs could certainly NDA Adobe at the senior executive level and clue them in that they should move say from one development platform to another (as is the case with the move to intel).
Originally posted by gar
does it occur to you that it's quite possible that apple sabotages adobe plan's for the direct future. i think adobe was already programming for and even testing its next gen creative suit apps when apple throw in it's universal binaries bomb.
[edit] you forgot xserve [/edit]
Thanks for reminding me about the Xserve. (Is that the "pro" version of the Mac mini?)
Apple did not throw in the UB bomb for arbitrary reasons. IBM and before them, Motorola, failed Apple by not being able to keep pace with Intel and AMD. I think Adobe is slow-rolling their update to Photoshop as a punishment for Aperture.
Maybe Apple is coming up with a Photoshop-killer so we won't have to put up with those chumps anymore.
Originally posted by gar
does it occur to you that it's quite possible that apple sabotages adobe plan's for the direct future. i think adobe was already programming for and even testing its next gen creative suit apps when apple throw in it's universal binaries bomb.
[edit] you forgot xserve [/edit]
I think Apple was trying to rush too hard through the transition anyway. Adobe has quite a large code base to transfer, though I don't think they were necessarily testing the next versions of apps when the transition was announced. Apple probably had plenty of time to prepare for a transition, but the large third party companies had their work cut out for them just redoing the code for Xcode, and they probably counted on the transition not being done until mid 2007 anyway.
Originally posted by macFanDave
Thanks for reminding me about the Xserve. (Is that the "pro" version of the Mac mini?)
Apple did not throw in the UB bomb for arbitrary reasons. IBM and before them, Motorola, failed Apple by not being able to keep pace with Intel and AMD. I think Adobe is slow-rolling their update to Photoshop as a punishment for Aperture.
Maybe Apple is coming up with a Photoshop-killer so we won't have to put up with those chumps anymore.
What? You really don't know about Apple Enterprise I see.
XServe, XRaid, XSan and Mac OS X Server are the current Enterprise lineup.
They have nothing to do with a Pro MacMini.
Think Fortune 500 Corporate Computing.
as in close to 100% gross margin in the "made for ipod" licensing fees? as opposed to 10%-30% gross margins for apple-branded accessories?
....Apple Enterprise...XServe, XRaid, XSan and Mac OS X Server ....Think Fortune 500 Corporate Computing.
Fortune 500 Corporate Computing. With Style.
I'm getting a little sick and tired of Adobe sabotaging Apple. Apple ought to buy a big interest in Adobe (maybe even a controlling interest) and ensure that its products are ready for the Mac first. On the other hand, maybe Apple can create a Photoshop killer and be done with Adobe's grip on its future.
Clearly Adobe, Macromedia and Microsoft are the key final dominoes in the Intel transition.
Now let's assume mid-late 2006 the final steps of the hardware side of the transition is complete, with the release of Intel PowerMacs (or Intel "Mac Pro"s).
We are looking at Mac OS 10.4.6 Universal. Microsoft Office Mac running via Rosetta by this stage will really be a non-issue. Sure, it won't be "teh snappy" but it will work, it will be responsive, and it will get the job done.
Microsoft Office Mac :: Sorted.
Now let's look at Adobe/Macromedia. Photoshop and Illustrator CS2. Flash and Dreamweaver. These are the key apps for Rosetta to really start kicking ass in Mac OS 10.4.6 and above.
Adobe | Macromedia :: Sorted. IF Rosetta 10.4.6 and above does a really good job of 95% speed of equivalent PowerPC native
Originally posted by sunilraman
IF Rosetta 10.4.6 and above does a really good job of 95% speed of equivalent PowerPC native
Do you know something about 10.4.6 that the rest of us don't?
first, apple made the decision to change to intel shortly before annoucing it last year. it would have been a major burden to tell adobe to start coding for a universal bianary structure that they weren't sure themselves was going to be at all relevant, and whose introduction was scheduled to be a year away from that annoucement.
second, it was largely believed that the first products that were going to be introduced were on the consumer side.
third, the main product (intel revision of the powermac) was never scheduled to be released in early/mid 2006, but rather maaaaaaybe late 2006 but more likely "sometime" in 2007.
and now, considering that they won't be releasing the powermac revision until late 2006 anyway, at which time the photoshop revision will be essentially just around the corner. also, at this pont adobe can just as easily end up with an accelerated calander than what they have projected.
although i do see some validity toward integrating a certain amount of transparency on the senior executive level from now on (except that will inevitably trickly down and maybe leak).
either way, so since the big seller is really the future intel "power" mac, for now adobe and any other developer has the macbook pro and imac to play with. so this conversation is really being blown out of proportion....at least in my eyes.
but i'm sticking with my story out of sheer lazyness!
i think this conversation is being blown way out of hand..............either way, so since the big seller is really the future intel "power" mac, for now adobe and any other developer has the macbook pro and imac to play with. so this conversation is really being blown out of proportion....at least in my eyes.
you're missing the point of this "conversation". it's just a ploy by UBS to start creating optimism and hence push up the share price from it's two-month-low. look at their price target. for some reason they decided to get a bit more active, they probably got in some more on apple at this two month low and they are looking to move the share price up a little starting from around now. look at the way the "conversation" is spun in a positive light, saying, it's okay, the transition is in place, it's happening, there is some downside with the pro market but mostly pent-up demand for macbook pro and strong consumer offerings will help apple meet its targets through this year.
it just so happens that UBS is right IMHO about the current state of things with apple, but nonetheless their intention with this "conversation" is as transparent as 1% opacity on a photoshop layer (for non-photoshop people that means it's bloody frackin transparent!!).
Do you know something about 10.4.6 that the rest of us don't?
no
Rosetta on Intel PowerMacs has to be really good if they are going to release these machines without Universal Binaries from Adobe|Macromedia.
that's part of my "working speculation" on the whole Intel transition thing
If apple can hit 90+% of powerpc native on certain adobe photoshop action-set/ filter-set benchmarks using rosetta, then performance gains via intel conroe/woodcrest dualcores will be enough to show a nett performance gain or a nett performance-per-watt gain over the g5 dualcores*. This will all be enough to push out and strongly market the intel powermacs...
*could a dual-dualcore conroe or woodcrest be better than the g5 Quad? possibly...
Adobe continues to move further and further away from feature parity with the Windows side of its business. Even, as we know, just killing those apps that have any competition from Apple.
I feel that Adobe can and should offer a CS UB upgrade as Apple has done/is doing with their apps. The fact that Adobe clearly doesn't want to bother speak voulmes. I know making a UB of Photoshop is probably tough but no tougher than making a UB of something like Final Cut Pro. Unless of course Adobe was not using XCode as its development environment. If they weren't then, again, I think it points to an Adobe/Apple rift.
It would be a shame if this rift can't be fixed. Its good for no one. Apple will *have* to develop a CS competitor if Adobe won't keep CS at least equal to the WIndows versions. If that happens, then Adobe will lose a huge chunk of its income from those creatives who go to the Apple alternatives. Apple will lose a huge chunk of its revenue from creatives who stick with CS and move to Windows hardware.
The only winner: MS. Who would undoubtedly pick up Adobe's carcass for relatively cheap in the wake of such a battle.
Let's hope it doesn't come to that.
Umm... I think they mean "Mac Macs"
It makes no sense for Adobe to spend massive time and money porting CS2 and then have to start over porting CS3, which has already been in progress for some time. It makes TOTAL sense for them to make the NEXT version (CS3) ported to Universal, and ONLY the next version. Which is on track to be released in the same timeframe past Photoshop updates have been.
It's unfortunate, but there's no evildoing there that I can see. If anyone really thinks Adobe has changed the timing of CS3 to spite Apple, I have to wonder what evidence there is. They're right on schedule.
I know making a UB of Photoshop is probably tough but no tougher than making a UB of something like Final Cut Pro. If they weren't then, again, I think it points to an Adobe/Apple rift.
You think Adobe would avoid Xcode just to spite Apple?
Fact: Adobe CS2 was announced April 4, 2005.
Fact: Adobe holds tight to their 18-24 month timeline between revisions.
That adds up to CS3 coming out as early as October 2006 or as late as April 2007.
To say CS3 is coming out in spring 2007, some source is purely riding a hidden agenda.