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Morgan Stanley, J.P. Morgan (heart) Apple

2009-07-17T13:30:20Z

With Apple (AAPL) set to report quarterly earnings next Tuesday, analysts are dusting off their spreadsheets, taking a second look at the numbers, and making adjustments — mostly upward.

On Friday, it was Morgan Stanley and J.P. Morgan Securities’ turn.

The J.P Morgan team, led by Mark Moskowitz, raised most of his Apple estimates, including

Price target (to $167.50 from $155),
Q3 earnings estimate (to $1.23 a share from $1.12)
iPhone unit sales (to 4.34 million from 3.88 million)
and Mac unit sales (2.50 million from 2.13 million)

Morgan Stanley’s Huberty, whose sentiments about Apple tend to go hot and cold, made some even more dramatic adjustments.

Given the early launch of the iPhone 3GS, the “resulting pull forward of demand,” and supply chain checks that show iPhone builds coming in higher than expected, she raised her estimate of Q3 iPhone unit sales nearly 43%, to 5.0 million from 3.5 million.

Huberty’s revised Q3 revenue estimate ($8.3 billion) is in line with the consensus ($8.16 billion), as reported by Thomson Financial Network.

Moskowitz’s estimated EPS ($1.23) beats the Street’s ($1.16) by 6%.

Apple shares closed Thursday at $147.52, up 1.2% for the day.

Apple plays softball with Palm

2009-07-17T11:24:55Z

As you may have heard, Apple (AAPL) on Wednesday pulled the plug on a much-hyped feature of the Palm Pre: its ability to sync seamlessly with iTunes.

On Thursday Palm’s (PALM) shares took a nosedive, falling 7.4% in early trading from Wednesday’s high as the rest of the market was enjoying a midsummer bull run.

But by the end of the trading day, Palm was back where it started Wednesday, no worse for wear.

Because, really, for all the fuss that the trade press made about the flap — Google News turned up 159 articles and 39 blog items — was this the best Apple could do?

Apple COO Tim Cook, who was running the shop while Steve Jobs was on medical leave, has been making threatening noises about Palm ever since his former colleague — and now bitter rival — Jon Rubinstein unveiled the device that many hailed as an iPhone killer.

“We think competition is good. It makes us all better. And we are ready to suit up and go against anyone,” Cook told analysts on a earnings call in January.

“However,” he added, his voice rising, “we will not stand for having our IP [intellectual property] ripped off, and we’ll use whatever weapons that we have at our disposal. I don’t know that I can be clearer than that.” (link)

The tenor of Cook’s remarks, reiterated three months later, led analysts to believe that Apple was getting ready to take Palm to court. Speculation centered on a patent suit over Palm’s use of multi-touch technology that Jobs had insisted was heavily protected by multiple patents and which other iPhone competitors — Google’s (GOOG) Android, for example — have been careful not to use.

“If faced with legal action,” a Palm spokesperson promptly responded, “we are confident that we have the tools necessary to defend ourselves.”

Perhaps they do, because the Pre has been selling for six weeks now and the threatened court actions still haven’t materialized.

Instead we get a flap about iTunes.

It may not have been wise, as many have suggested, for Palm to make such a fuss about the Pre’s ability to trick iTunes into thinking it was an iPod — something it was able to do because team Palm is chock-a-block with former Apple engineers.

After all, Apple could rewrite its iTunes software at will — and it did. Witness iTunes 8.2.1, released Wednesday, which as an Apple spokesperson helpfully pointed out, “disables devices falsely pretending to be iPods, including the Palm Pre.”

This is hardly a death blow for Palm, however. Music syncing was not the only thing the Pre’s software does well, and there are any number of third party programs that offer workarounds (the New York Times today recommends dazzboard; Wired.com likes Salling Media Sync).

Meanwhile, we’re still waiting for Apple to bring on the heat. If Tim Cook has stronger stuff in his arsenal — as he has suggested twice now — we haven’t seen it yet.

Softball photo by Karen Morris.

Mac shipments up and down in competing surveys

2009-07-17T09:27:52Z

It’s numbers like these that make you wonder what exactly Gartner and IDC are measuring.

In competing reports issued Wednesday afternoon, the two leading PC market research firms reported domestic Mac shipments for the second quarter of 2009 that differed by more than 200,000 units.

Gartner reported Apple (AAPL) shipping 1.422 million Macs in the U.S., a 2.5% increase over Q2 2008 in a quarter that saw overall PC shipments in the U.S. decline 1.2%.

IDC had Apple shipping 1.213 million Macs in the same quarter, a 12.4% year-to-year decline that was far worse than the industry average -3% and dropped Apple into fifth place the U.S market, after Dell (DELL), HP (HPQ), Acer and Toshiba.

According to Gartner, Apple has an 8.7% share of the U.S. market. According to IDC, that share is 7.6%.

The only stated difference between the two reports is that Gartner counts X86 servers as PCs and IDC does not. Apple did introduce a new version of its Xserve rackmounted server in April, but the server market is particularly soft this year and Apple is unlikely to have sold 20,000 units in the quarter, never mind 200,000.

Both reports are labeled “preliminary” — a designation that is supposed to encourage us to pay for their propriety final reports but which does not, in this case, inspire confidence.

“We may revisit our numbers next week, and get more aggressive,” Loren Loverde, director of IDC’s PC sales tracker, told Computerworld when asked about the discrepancy.

Gartner and IDC’s press releases are particularly unhelpful for Apple analysts because they include only the top five vendors in each category. Apple usually makes the top 5 in U.S. shipments but has never done so, for as long as we can remember, in worldwide shipments. For definitive sales figures, we’ll have to wait for Apple’s fiscal third quarter earnings, which are scheduled for release next Tuesday.

IDC and Gartner both report overall PC sales as better than expected, although Gartner attributes that in large part to inventory restocking. IDC believes PC shipments fell 3.1% worldwide in the second quarter, better than the 6.3% decline its analysts expected. Gartner has global PC units falling 5%, but that’s a lot better than its predicted 9.8% decline.

IDC’s Loverde called its results “a very positive indicator for the second half of the year.”

Gartner’s Mikako Kitagawa saw “a small sign of a PC market recovery” in a market that is still in decline.

UPDATE: Found this in The Four Hundred, where Timothy Prickett Morgan was writing about last month’s server sales:

“Gartner measures server revenues and shipments from vendors or their channel partners into end user accounts, while IDC measures vendor factory revenues.”

I’d never heard that. According to reader Joe Wilcox, it could explain the discrepancy. I.e., Gartner’s numbers are higher because of strong Mac sales; IDC’s numbers are lower because of inventory already in channel.

Below: IDC and Gartner’s U.S. and worldwide PC numbers.

IDC:

Gartner:

Steve Jobs spotted at a Coldplay concert

2009-07-16T12:50:22Z

Not only has Apple’s (AAPL) CEO recovered sufficiently from his liver transplant to return to work a couple of days a week, he’s apparently feeling well enough to brave the crowds at a rock concert.

One of the crew on Coldplay’s long-running Viva La Vida tour keeps a running blog and has proved — over the space of 13 months and 90 posts — to be a pretty reliable reporter of life behind the stage and inside the tour bus.

So we take at face value Roadie #42’s account of what was for him the highlight of the band’s performance at Mountain View’s Shoreline Amphitheatre Monday night:

“I’ll be honest with you folks, the only thing that mattered to me tonight was the presence of one Steve Jobs. I’m a confirmed Apple devotee and I really cannot imagine doing the job I do now (or even having got into this line of work) without my Macbook Pro (and all the Powerbooks that went before it). Creating these tools and putting them into the hands of folks like me was the vision of this man…

“I spot Steve chatting with Dave Holmes outside the dressing room and suddenly feel like a star-struck teenager. In order to get the gall up to speak to the guy, I down a double espresso. The mixture of caffeine buzz and feeling like a cheesy little fanboy means that all I can manage to say to him is “Thank you so much”. I realise that I’m quite simply making a tit of myself and so excuse myself as fast as I appeared.

“With that, I suddenly have sympathy for every nervous and excitable kid that shakes hands with the band at a meet and greet. Time to hit send and fold up the laptop.”

Roadie #42’s encounter is the first reported public sighting of Jobs outside the Cupertino campus since his return from medical leave last month.

Photo courtesy of Daigo Oliva. Thanks to MacRumors for the tip.

Town approves Steve Jobs’ mansion tear-down plan

2009-07-16T16:06:57Z

Steve Jobs’ 15-year real estate nightmare is almost over.

On Tuesday night, the city council of Woodside, Calif., approved Jobs’ plan to dismantle a 14-bedroom Spanish colonial mansion he bought in 1984 but never really liked. He’s been trying since 2004 to raze the house and replace it with a smaller home more to his exacting taste.

The latest plan, which was approved in a 6-1 vote, is a three-way deal. Jobs would spend $604,800 to deconstruct the house. A wealthy Silicon Valley investor — Gordon Smythe, founder of Propel Partners — would take possession of the pieces and have five years to find a suitable property on which to reconstruct them. The town of Woodside and the county museum would have first dibs on anything Smythe doesn’t use.

Jobs bought the mansion known as the Jackling House the year the Mac came out and camped out in it for about 10 years before moving to Palo Alto. He found the sprawling hacienda a cold and dreary place to live. He has called it “one of the biggest abominations of a house I’ve ever seen.”

His 2004 demolition permit was approved by the town council but blocked by an ad-hoc group called Uphold Our Heritage. They view the abandoned structure — built in 1925 by George Washington Smith in his Santa Barbara style for copper mining magnate Daniel C. Jackling — as a national treasure.

Smythe

Smythe, a long-time admirer of Smith’s architecture, has said he is assembling a team to carefully remove historically significant parts of the house for use in a new home.

After Tuesday’s meeting he told reporters from the San Jose Mercury News that he will focus on preserving the original 10,000 square feet that were built by Smith in 1925.

A large addition, including the room that houses a much-photographed pipe organ, was built in 1931.

“If you look at that addition, it really changes the whole flow of the building,” Smythe said.

The agreement focuses on preserving the exterior of the home. It asks that Smythe follow “to the extent practical the original plans of the House for exteriors, with modifications to the interiors to make it consistent with the requirements for a House of commensurate quality and location in contemporary terms.”

Smythe started talking to Jobs’ representatives nearly three years ago and spent much of 2007 looking for a suitable site for it. He will begin his search again once the deal is finalized.

A Superior Court judge has given Uphold our Heritage until Aug. 3 to explain why Mr. Jobs should not be allowed to proceed with the demolition. Jobs and the town of Woodside will have until Aug. 19 to respond to any objections they might have.

Uphold spokeswoman Clotilde Luce sent a local paper — The Almanac — a statement that said the Smythe proposal was chosen “because it asks nothing” of Jobs.

Jobs has not showed up for any of this year’s town council meetings. In April his lawyer told the town that Jobs was “too weak” to attend. Jobs was on a medical leave from Apple (AAPL) at the time, recovering from surgery to replace his failing liver.

Mansion photos by Jonathan Haeber posted with permission. For more of his work, click here and here.

How Apple’s App Store got to 1.5 billion downloads

2009-07-15T23:43:21Z

Apple (AAPL) announced Tuesday that its customers have downloaded more than 1.5 billion applications in the year since its iPhone App Store — “the largest applications store in the world” — opened for business.

There was no countdown odometer this time — as there was for the 1 billion mark last April — and no prizes for the user who downloaded the last app.

Just a press releasefrom Apple PR and a self-congratulatory quote from Cupertino’s prodigal CEO:

“The App Store is like nothing the industry has ever seen before in both scale and quality,” said Steve Jobs, who couldn’t resist adding a small dig at the competition. “With 1.5 billion apps downloaded, it is going to be very hard for others to catch up.”

One of the factors feeding the App Store’s growth — and in turn being fed by it — is the size of the installed base: 40 million iPhones and iPod touches according to Tuesday’s release, a number likely to grow when Apple announces its fiscal third quarter earnings next week.

The other is the variety and sheer quantity of applications to choose from — 65,000 according to Apple’s press release, 58,000 of them in the U.S. App Store, according to 148Apps.biz’s independent count, and another 7,000 in the App Store’s 70-plus overseas branches.

Logic would suggest that this breakneck growth can’t continue forever. But the rate of downloads took off late last year and, as the slope of the curve below suggests, hasn’t slowed since.

The $79 (refurbished) iPhone

2009-07-15T18:42:52Z

The sticker price on Apple’s (AAPL) iPhone — once an formidable barrier to widespread adoption — is falling faster than Sarah Palin’s approval ratings.

When it first hit the market two years ago, the 8GB iPhone cost $599.
Two months later, to the dismay of early adopters, it dropped to $399.
Last July, an iPhone 3G with 8GB sold for $199.
In June, with the launch if the 3GS, Apple dropped that price to $99.
Now AT&T (T) will sell you a refurbished 3G for $79 — which is, as Edible Apple points out, 87% off the price of the original 8GB iPhone.

Of course, most cellphones eventually sell for $0.00, fated to become loss leaders for carriers that make their real money locking users into long-term contracts.

Indeed, the price cuts on the iPhone have helped shift the focus from the (heavily subsidized) sticker price to the real cost of ownership: the two-year AT&T contract that starts at $74 a month for unlimited data and 200 text messages.

At that rate, a $79 iPhone will cost you a minimum of $1,885, before taxes and surcharges.

Refurbished iPhones, according to AT&T, “are previously owned devices that have been unused or lightly used and returned during the 30-day trial period.” They come with a 90 day warranty.

If you’re still interested, check out AT&T’s offer here.

UPDATE: Reader CdnPhoto from Toronto points out that Canada’s Fido is offering a “refreshed” 8GB iPhone 3G for $49 Canadian (about $42 US). The catch: it comes with a 3-year contract. Here’s the link: http://fido.ca/web/page/portal/Fido/iphone.

iPhone video: 3GS insanity in Singapore

2009-07-12T22:22:37Z

The still photos of the iPhone 3GS debut in Singapore Friday (see here) don’t quite do justice to the magnitude of the event.

To get a better feel for what it was like to be there that night, check out the video pasted below. It was shot by customer No. 10 — a student named Satya — with his new phone as he walked back through lines that seem to go on forever.

SingTel, Apple’s (AAPL) local carrier, estimated that 1,500 to 2,000 people would turn out that night. Satya, who shot his video two hours before closing time, put the number at closer to 3,000.

Thanks to reader Don from Palo Alto for the tip.

IT on the iPhone: 'Use at your own cost and peril'

2009-07-15T18:29:58Z

Ever wondered why your company will support Research in Motion’s (RIMM) BlackBerry but not the iPhone? Does it seem like the corporate deck is stacked against Apple (AAPL)?

A conference call with four chief information officers organized by Morgan Stanley’s Kathryn Huberty last week might have confirmed your worst fears.

Of the four guests, only one — the CIO of a multi-billion dollar company who runs a Mac shop for the “creatives” who work there — actively supports the iPhone.

The other three dismissed the device with varying degrees of curiosity and contempt.

“[Our company] doesn’t explicitly prevent employees from using the iPhone,” said one veteren CIO. “But we don’t support it through the help desk. So if there’s a problem we won’t help them with the issue.”

“Frankly,” added a second, “some management in our organization think it’s more of a toy/gimmick thing because of the way it’s marketed.”

The third summed up the posture of his department as “Use [it] at your own cost and peril.”

What, exactly did these IT professionals see as the iPhone’s shortcomings?

The most detailed answer came from Timothy Campos, the former CIO of KLA-Tencor (KLAC), a leading supplier of semiconductor yield enhancement equipment based in Milpitas, Calif.:

“Apple is way behind BlackBerry in terms of centralized management of these devices,” he said. “They’re starting to catch up, but in terms of being able to control and manage what is on the device, to configure the device, to do remote provisioning of the device, to make sure the device works — we can do that for the BlackBerry; we can’t do that for the iPhone.

“It’s a solvable problem, but there’s no business case — at least in our industry — for solving that problem. And so do we don’t do it.

“What’s interesting about the iPhone is [that] the capability of the device is tremendous,” he added. “We’re looking closely at it. There are a lot of people in IT who play around with it. So I wouldn’t say we have our heads in the sand. And as Apple catches up on the centralized management issues, it’s not out of the realm of possibility that we would replace BlackBerrys with iPhones, or add iPhones to the mix.”

That sentiment got dittos across the board. But in the current economic climate — which has put constraints on IT spending at all four companies — these managers are not looking to complicate their lives.

“We might have taken it on if it weren’t for the downturn,” said the managing director of IT at a ceramics manufacturing company that already supports two mobile platforms — BlackBerry and Palm. His department was thinking of adding the iPhone to the mix. But “that was one of the projects we didn’t need to take on,” he said.

Apple can take comfort in the fact that IT’s resistance to change is generalized and not restricted to the iPhone. Three of these four shops are still running Microsoft’s (MSFT) Windows XP — with no plans to move up to either Vista or Windows 7.

Photo: Apple Inc.

Thousands crowd iPhone launch in Singapore

2009-07-15T18:34:58Z

Steve Jobs is not the only one who knows a thing or two about event marketing. Check out Damian Koh’s photos of the launch of the new iPhone 3GS in Singapore Friday night.

By 8 p.m., according to SingTel, Apple’s (AAPL) exclusive local carrier, between 1,500 and 2,000 eager customers had gathered outside company headquarters for the festivities, with many more expected over next two days.

“On average,” executive vice president Yuen Kuan Moon told Channel NewsAsia, “a customer during the peak period will queue between anywhere for three to four hours.”

Some people waited a lot longer than that. Jackson Low, 29, a medical test subject recruiter, was second in line for the iPhone 3G last year. Just to be sure, he arrived 11 hours early this year and was both first in line and first to walk out of SingTel headquarters with a new iPhone 3GS. (See photo, left.)

To help build excitement — and swell the crowd — SingTel staged fireworks and a confetti drop worthy of a Republican National Convention. Waiting customers were ushered through three “experience zones” to keep them entertained.

But the biggest draw — besides the iPhone itself — may have been the presence of television actress Felicia Chin (right) one of Singapore’s top 10 most popular “female artistes” for three years, according to Star Awards, and winner of two of 2008’s top 8 most likeable female characters (Lin Fei in The Golden Path and Tao Haitong in Love Blossoms).

Koh caught Chin in a quiet moment with a new iPhone 3GS for which we suspect she didn’t have to wait in line. Or, for that matter, pay for.

Thanks to iPhone Asia’s Dan Butterfield for the tip.

Photos courtesy of Damian Koh.

UPDATE: It turns out the photos don’t quite do justice to the magnitude of the event. For a video shot by one of the first customers in line, see 3GS insanity in Singapore.