What can Apple Do with $40 Billion?

Apple had its annual shareholder meeting yesterday, and, among the other information the company provided was the amount of Apple’s war chest: $40 billion. Apple has long held on to a lot of cash, rather than giving dividends, something that allows the company to maintain share value, but also to take risks.

So that made me think. What kind of risks could Apple take? Would it involve acquisitions, maybe buying out a major company to fuel a new era of growth? Or could it be major new products that might require large investments? Here are some ideas on what Apple might or might not do with this money.

Buy Nokia: With a market cap of around $49 billion, Apple could easily afford to buy a controlling interest in a company like Nokia. While the iPad shows that Apple wants to expand into more mobile devices, it would make little sense for Apple to acquire a mobile phone manufacturer. Apple, at least since the return of Steve Jobs to the company, has always had a pared-down product line. Mobile phone companies, on the other hand, have dozens of different phones, and it would make little sense for Apple to take on that type of complication. Apple has shown that simpler product lines are more effective, so a mobile phone company is probably not what they have in mind.

Buy Sony: Sony has a market cap of only about $34 billion, so Apple could buy them and still have enough change for the toga party that Steve Jobs joked about at the shareholder meeting. But a company like Sony raises issues similar to that of Nokia: a very broad product line, across many categories, which would be difficult to corral into the Apple ethos. So this, too, seems unlikely.

If Apple is to acquire companies, they are more likely to want to pick up companies that will help them make the products they sell now, or will sell in the future. For example, the 2008 acquisition of PA Semiconductor for a mere $278 million, now makes sense. At the time, it wasn’t clear why Apple wanted to purchase this company, but it’s now obvious, with the iPad, that Apple was planning ahead to have its own chips for mobile devices. Also, Apple purchased the Lala music company, which offers streaming and online music storage, for a pittance (less than $100 million). We probably won’t see the fruits of this acquisition for some time, but one can imagine that iTunes will eventually offer a streaming music subscription.
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Will Apple Allow Other eBook Reader Apps on the iPad?

Publishers are all a-buzz about the iPad, because it provides a new possibility for reading e-books. No more will readers have to put up with the poor contrast of the Kindle. No more will readers have to buy a dedicated device that does little more than just display e-books. The iPad, for just a few dollars more than the Kindle DX, offers a host of features, from web browsing and e-mail to gaming and productivity apps.

However, it’s not clear yet whether Apple will allow other e-book apps on the iPad. There are many such apps for the iPhone, but Apple’s conditions for accepting apps in the App Store require that they do not duplicate the functionality of built-in applications. For example, one e-mail program was refused because it “duplicates the functionality of the built-in iPhone application Mail,” another because it “duplicates the functionality of the Podcast section of iTunes.”

Now that there’s an e-book app on the iPad – it’s called iBooks – will Apple allow others to provide or sell similar apps? Will they nix the Kindle app for the iPad? The Kindle app is available for free for the iPhone and iPad mini (or iPod touch), but there is no built-in Apple functionality for those devices. And will Apple eventually make a version of iBooks for the small-screen devices, thereby eliminating existing e-book apps for the iPhone and iPod touch?

This may get more complicated outside the US. For now, Apple is only providing the iBooks app for users of the iPad in the US. They haven’t said when they will be selling e-books in other countries (and that will certainly depend on agreements in each country, so will not happen for all countries at the same time). Will they therefore allow e-book apps outside the US?

My guess is that if Apple were to disallow e-book apps on the iPad, there would be a movement from Amazon and others to attack Apple on anti-trust grounds. I have no idea of what legal footing Apple would be on to prohibit such apps, and therefore the commerce of ancillary products, on their device. But I would be willing to bet that it would be a big fight, because the future of publishing is playing out on these new portable devices.

My iPad Scorecard: How Were My Predictions? And Further Thoughts on the iPad

Well, the long awaited Apple tablet was announced yesterday. I made some predictions about the device before the announcement, so it’s only fair that I look back and what I foresaw and see where I went right, and where I went wrong. I’m also going to comment on what I missed, and what I think about the device in general.

So, first, here’s my scorecard:

• Name: Since I didn’t come out firmly behind any of the names I mentioned, I don’t get any grade here. I did say I prefer iBook, and it turns out that Apple is using that name for its ebook reader app (well, it’s “iBooks”). I don’t think iPad is the best name, in part because I’m going to make lots of typos between iPod and iPad. Since I write about these things, it’ll be irksome. But no big deal.
• Size: On the screen size I got it right, and the actual thickness and weight as well, even though I didn’t suggest any numbers for the latter. It’s worth noting that it’s half the weight of the MacBook Air, which feels heavy to me, but it’s hard to actually imagine what the device is like without holding it. Colleagues who have held it say that it doesn’t feel heavy.

  One interesting point about the screen is its format: with a resolution of 1024 x 768, it’s a 4:3 ratio, something we haven’t seen on computer screens for quite some time. When you think about this, however, there’s a subtle logic to this format: it’s better for reading things such as books, magazines and web pages than a 16:10 format (which is what Apple uses for all its Macs). It’s cleanly not designed for video, even though you can view videos on it, but it’s probably better for games.

• Connectivity: I pretty much called that, suggesting a wifi-only model and a 3G model. $130 seems to be quite a difference for the 3G model, but the non-contract nature of 3G access, at least in the US, is a good thing.

  I did miss on the wireless syncing. I hope it’s something that Apple adds soon, both to the iPod touch/iPhone and to the iPad.

• Content: With the screen size and the new ebook store, one of the main uses for this devices is indeed reading. Gaming is also the other area that Apple highlighted, so I’m pretty good on this. I never expected something like iWork, though, and I wonder how that will play out. I can’t see doing anything complex on a table, but it might work. It can be useful to use it for presentations, with Keynote, and spreadsheets, with Numbers, but for complex layout in Pages it probably won’t be very practical.

  Apple didn’t talk about textbooks, and I think that may be something they focus on around the end of the school year, as we already know that textbook publishers are involved in preparing content for the device.

• Operating system: I got this one right, but I expected that there would be some multi-tasking to allow more than one iPhone app to run concurrently. I hope they bring multi-tasking to this device soon.
• Content delivery: As predicted, Apple will be selling ebooks, but there were no announcements of anything for periodicals. Apple did show a New York Times app, and perhaps the method will not be providing issues by subscription, but rather users buy an app with a subscription, and delivery is made by the content provider, rather than Apple.

  It’s not clear what kind of files you can view, other than for iWork, nor if you can access files from another device (file sharing). After all, say I’m making a presentation with Keynote; I’ll need access to certain images, charts, etc. that may be on another computer. We’ll know more about this soon.

• Price: My colleagues laughed at me when I suggested a $500 price point, but they were surprised when that was indeed the starting price. Obviously, there are different versions, but a lot of people will be able to get by just fine with the $499, 16 GB wifi version of the iPad. Those who need more storage will be able to go as high as 64 GB for $699, which is not excessive for the additional capacity. As I said above, I think $130 is a bit steep for the 3G version.
• Availability: I called this right too. As I suggested, this gives time for developers to create apps for the device. It also allows Apple to get FCC approval in the US, which it does not yet have.

All in all, this is one impressive device. While I wish it had a Dvorak keyboard layout, maybe Apple will add that before it’s released. I think it’s going to be hugely successful, and will meet a lot of needs that aren’t currently met. Many people will find it an improvement over their smartphone for doing basic computing tasks (web browsing, e-mail, etc.), and others will use it to replace their laptops for the same thing. A large number of people will probably buy it simply for reading ebooks, and, interestingly, there will be competition for the content, with Apple providing their own sales, and, most likely, Amazon upgrading their iPhone Kindle app as well. The press will come along very soon, either with apps to access their content on a subscription basis, or with some Apple-supported periodical distribution system, and games will be a big element that help sell this device.

I’ll be buying one as soon as it’s released, and I’m looking forward to the future of the iPad as a paradigm, and I wonder what other computer companies will do to try and fight for what may be a new market that, in the past, they were not able to capture using a standard operating system (ie, Windows).

What will Apple’s Tablet Be Like?

You may have seen my editorial about how the Apple tablet will save the press. I’ve been thinking a lot about this device, and since I’m here in my Alpine village home in tablet-watch, waiting for Apple’s presentation in about 8 hours, I thought I’d post my thoughts about what I think the tablet will be like. I have no shame in making predictions, and I’ll leave them posted so you can see exactly what I got right and what I got wrong. So here’s a list of bullet points with my thoughts on the tablet.

• Name: iPad, iTablet, iBook? I like the last one best. Apple owns that trademark already. All the rumors about Apple registering other names could simply be red herrings. I think iPad is not very good, though; too close to iPod.
• Size: 10″ screen seems to be the ideal size for such a device. I think the real question, though, is how thick and how heavy it will be. If it can be as thin as a new iPod, that would be great, as long as it’s solid. As for weight, Apple’s done wonders with the MacBook Air, so i think it’ll be possible to keep it light enough.
• Connectivity: There has been a lot of discussion about the tablet having 3G connectivity. Unless carriers can offer a data plan that’s really affordable, I don’t see that as being viable. Many people will only want to use it with wifi in their homes. So if a 3G contract is required for the device, it’ll fail. Everyone has a cellphone already, and paying two phone contracts would be ridiculous. However, offering the possibility of a 3G connection would be a good thing for people who travel.

  Oh, and this will be the first iPod-type device that won’t need to connect to a computer to sync. It’ll have 802.11n, and syncing will be via wifi. (Though I’d guess there will still be a dock connector for connecting to accessories.)

• Content: I think the main focus for the tablet will be for reading. It’s clear that Apple has been in discussion with many publishers, from the print media and book publishers. McGraw Hill’s CEO confirmed that the companies textbooks will be on the tablet just yesterday, and there have been a number of magazine and newspaper publishers who have let slip suggestions that their publications would be tablet-compatible. Regarding textbooks, I think this could lead to two models of the tablet: one for education, which might be more sturdy, and would only offer e-reading features, and one for general use.

  There are rumors that Barnes & Noble will “power” the book section of the iTunes Store. This would probably be a smart move on Apple’s part, getting a book-savvy company to run this part of the store, just as the audiobook content is provided by Audible (though it’s not clear that Audible does anything other than provide the content.) Note that since Audible is now owned by Amazon, it’s likely that when their current contract with Apple runs out they’ll no longer provide audiobooks for the iTunes Store.

  I think that games will also be a big feature, notably two-player games, where each player sits on one side of the tablet. I’m hoping there will be a go game.

• Operating system: It will use a modified version of the iPhone OS. There will be the ability to run current iPhone apps in windows of the same size as the iPhone, sort of like Dashboard widgets. The new iPhone OS SDK, to be announced today, will allow developers to make apps that run full-screen, but some may choose to keep the smaller screen size for widget apps.
• Content delivery: iTunes, of course. Apple will provide books, magazines, newspapers and apps through the iTunes Store. I would like the tablet to be able to run Mac apps as well, but I really don’t think that will be the case. I hope that, at least, you will be able to easily add files and view them on the tablet: files such as word processing documents, spreadsheets, presentations, etc. It will need .doc, .xls, .ppt and PDF support at a minimum.

  The tablet should naturally offer web access, e-mail and other basic desktop functions. What is up in the air is how text input will be handled. Will it be a kind of virtual keyboard, like on the iPhone? The iPhone works for inputting short texts because of the way you hold it and use your thumbs. With the size of the table, there could be a (more or less) full-sized keyboard that would require typing differently. As a touch-typist, I think it would be hard to get used to touch-typing on a surface with no tactile feedback.

  There have been rumors over the past couple of months about Apple negotiating with TV networks to offer some kind of subscription service – a flat rate for all the network’s programs that are available on the iTunes Store. There have also been recent rumors that Apple’s trying to get networks to agree to lower the price of TV shows from $2 to $1. I’m not sure how all this plays out with the tablet, though; I don’t see a tablet as being a device for watching videos, but I guess it’s better than an iPhone (though not as good as a laptop). So whether or not the tablet will be specifically designed for video playback (with an appropriate graphics chip) remains to be seen.

• Price: I think that under $500 would be good. If it’s a lot more expensive, it would be a luxury item. However, as a 1.0 version of a product, it could be good to have a high price, leading to slower adoption, but allowing for glitches to be fixed for the 2.0 model which would then be cheaper. Also, the question is whether Apple can produce enough tablets to meet initial demand; a higher price would lower demand, making it easier to deliver tablets to those who want them.
• Availability: Look for the tablet to ship late March or early April. Apple needs the time to get enough developers to create apps. While the tablet itself is groundbreaking, it’s the software that will really sell it, as it has been for the iPhone. Apple will also want to give newspapers and magazines time to get their content ready for the actual product launch.

My Thoughts About the Apple Tablet and the Future of the Press

My latest Macworld article is an editorial about what I think the Apple tablet will do for the press.

“Should Apple roll out a tablet on Wednesday as it’s expected to do, the device could contain the ability to save newspapers and magazines from their demise. Kirk McElhearn looks at what a tablet could mean for newspaper and magazine publishers and the people who read those publications.”

Orange France Confirms Release of Apple Tablet

French Mac site On Refait le Mac has published information regarding a confirmation, on French radio, that Orange France will be selling Apple’s tablet at the end of the month. Stéphane Richard, the future CEO of Orange, said, in an interview, that his company would be selling the device, and that it would contain an iSight camera for video-conferencing.

On the other hand, I hope this means that there will be two versions of the tablet. Because if the only version is one tied to a 3G data contract, this device will certainly fail. People buy phone contracts for phones, not for this type of device. While a mobile tablet device will be interesting, there had better be wifi in it as well, and the 3G contract had better be optional, or Apple will certainly lose a lot of potential users.

Macworld’s Most and Least Popular Stories for 2009 – Who’s Number 1? Yours Truly!

Macworld published a list of its most and least popular stories for 2009, based on reader ratings. Who’s number 1? My story about five underused Finder tools. Thanks to all the readers who liked that story, and I hope you’ll like more of my Macworld articles in 2010.

Apple TV Update Broke My Apple TV

I’ll have to admit, I’m an early adopter, at least for software updates. I generally play without a net, and go for the updates without waiting to see what problems there are. So, when Apple released an Apple TV update yesterday, I turned on my device and downloaded the update right away. I didn’t do much with it last night, but when I got up today, and tried to download the latest episode of the Daily Show, I saw that the Apple TV wasn’t showing up in iTunes. I had to restart it (ie, pull the plug and re-plug it) to get it to show up. Then, when it was lunch time, and we wanted to watch the funny, it wouldn’t boot up correctly. Solution: pull the plug again.

Well, I then tried to sync something else, and it kept disappearing from iTunes. So I reset it to factory settings (the 2.2 software), and it’s working now. I’m not going to bother with trying to update it again until, maybe, Apple issues a 3.0.1 update to fix whatever’s wrong with it.

FWIW, I’m not the only one; in Apple’s forums there are plenty of people with problems.

This device was a real pain early on, but I think that was because of iTunes issues; at some point, an iTunes update fixed syncing. But I’m not going to even try and get the 3.0 software to work. I’ve already lost 2 hours of my life because of Apple’s crappy update, and I don’t plan to waste any more. It wasn’t broke, and I won’t fix it.