Updated: 22:07, Monday March 5, 2012
Apple’s App Store for iPad and iPhone devices recorded its 25 billionth application download on Saturday, its iTunes website showed.
The company, though, has yet to announce the winner of a $10,000 ($A9,342) app store gift voucher.
The new milestone showed that app downloading volumes have accelerated sharply: It took nine months for the first billion apps to be downloaded after their launch in 2008 and it was only in January 2011 that the 10-billion mark was reached.
The app store now offers around 600,000 applications to owners of Apple devices.
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Obviously at some point this year Apple will release the next generation iPhone, which is currently being referred to as the iPhone 5, and original rumours speculated that Apple would deliver the iPhone 5 in summer, whilst a recent rumour has it that iOS smartphone will arrive sometime in the fall, but whenever the iPhone 5 surfaces no doubt all of the iOS faithful will want the handset.
Well according to an article over on Insane Planet, the release of the iPhone 5 could cause upgrade concerns for some because as the currently iPhone 4S was released last year in October rather than in the summer, many will have only owned the smartphone for a few months.
ATT customers have the right to upgrade if they purchased a device in the last 12 to 18 months whilst Verizon customers can upgrade their device after a year and eight months, so thus it is Verizon customers that could be affected the most.
However according to the guys, those that couldn’t upgrade their iPhone to the present iPhone 4S, the release of the iPhone 5 shouldn’t cause them any upgrade problems, whilst those that currently own the iPhone 4/4S should be prepared to part with roughly $200 to $250 when upgrading to the next generation iPhone.
Again according to the article, those customers that are tied into a 2-year contract won’t be able to upgrade to the iPhone 5 and will have to wait until Apple pushes out the iPhone 6 sometime next year.
However of course no matter what contract you are currently in, if you want out desperately enough you can opt to buy your way out, although in doing so it could cost you quite a packet to get out of your contact and then purchase the iPhone 5.
So the thing is, will you be dumping your current handset no matter what the cost is simply to be able to get the iPhone 5 once the device finally arrives, or will you just wait it out until your contract allows you to upgrade without incurring cost?
With Apple (AAPL) trading at 22% of its true value, what happens with Apple in China could help determine whether investors ever get to bite into the other 78%. Fortunately labor could account for a mere 5% of the cost of building an iPhone.
Before getting into the five biggest challenges that Apple faces in China, why is Apple’s true value closer to $2.5 trillion? The world’s most valuable company, at $508 billion, trades at a lowly Price/Earnings ratio of 15.5.
But if it was fairly valued — that is, its P/E equaled its expected earnings growth of 55% in 2012 – Apple would trade at a P/E of 55, yielding a market capitalization of $2.36 trillion. In other words, investors are getting only a 22% slice of Apple’s full value.
Why is Apple so severely under-valued? That could be due to a massive earnings growth slowdown expected for 2013 — up a mere 12%. Why would Apple’s earnings slow down so much? It’s entirely possible that before he died, Steve Jobs set in place a new product slate that would only put Apple’s earnings at warp speed for another 18 months.
Another possibility is that Apple’s problems in China could cost it some serious earnings growth. Apple got some bad press in January related to fires at the Foxconn factory along with the suicides and overwork of its young employees. I was unable to find any Apple customers who would stop buying its products as a result and the general feeling seems to be “who cares?”
But Apple issued a statement to the effect that it does care. And on February 17, Foxconn announced that it would raise workers’ pay by between 16% and 25%. So instead of pulling in $145 a month as they did in 2008, they will earn a whopping $290 a month.
If those workers put in 8 hour days 20 days a month — probably they work many more hours than that — their new pay would be $1.81 an hour, about 25% of the New York minimum wage of $7.25 an hour.
While that does not seem like a very big increase in pay, it raises five important strategic questions for Apple management. Here are the issues and some thoughts on each:
- How much will the Foxconn’s pay increase raise the cost of manufacturing Apple’s products? The answer is, it would add at most 4% to the cost of building an iPhone. The 16GB iPhone 4S costs $196 to make. But a Nokia (NOK) manufacturing expert recently estimated that labor accounts for between $12.50 and $30 of the cost of each iPhone. Holding all the other costs constant, a 25% increase in that $30 would add $7.50 to the cost of making an iPhone.
- Can Apple continue to demand and get 10% annual cuts in Foxconn’s manufacturing cost if it raises pay and improves working conditions? Since labor cost represents about 15% of the cost of an iPhone — and a Nokia expert thinks labor cost is a mere 5% of that total — then Apple should have plenty of room to negotiate 10% lower costs in the other parts of the iPhone cost structure.
- If not, should Apple shift its production to another supplier that can make its products at 10% lower costs every year? I don’t think Apple will need to think about shifting production unless it is forced by bad PR to use a safer manufacturing process — for example, one that does not involve explosions of aluminum dust. Such a process upgrade could send Apple in search of a manufacturing partner with lower labor costs.
- Should Apple continue to use Foxconn and hold its prices constant — thus lowering its profit margin? Apple charged $649 for the 16GB iPhone 4S — yielding a 70% gross margin using the $196 cost to manufacture it. It could certainly afford to accept a lower margin, but would only do so if Apple executives concluded that its customers were highly price sensitive.
- Should Apple raise its prices to consumers to maintain its margins as Foxconn’s costs rise? Given the fanatical loyalty of Apple customers, I think the company could get away with raising its price by 1% to pay those workers $7.50 more per iPhone. And that way, Apple could maintain its 70% gross margin with little risk of losing sales at that slightly higher price.
In short, if the Nokia expert is right about the low labor cost component in its products, Apple could easily raise its prices to pay those Foxconn workers a higher wage without losing market share or its gross margin.
And that means that the bigger risk for Apple investors is whether its earnings growth will slow down in the absence of new category-killing products. The market jury is still out on that verdict.
The iPad 3 is coming—but what exactly is the iPad 3?
The iPad 3 is all but official now. Apple sent out formal invitations to select members of the industry and press earlier this week. But the big question remains: What exactly is being announced?
Rumors are swirling around, and on cue, iPad 2 owners are beginning to trade in their tablets in anticipation of shiny newness.
As the sourcing of these rumors becomes more reliable, it feels like we’re starting to gain clarity on the iPad 3’s feature set. A faster processor with more CPU threads and 4G access feel like no-brainers at this point.
But we are talking about Apple here. Even the most obvious-sounding rumors are still suspect. Remember the iPhone 5…I mean iPhone 4s?
Whatever the case, numerous sources have indicated that the iPad 3 will have a super high-resolution 2048 x 1536 retina display. At literally double the resolution of the iPad 2 on the same size screen, this would qualify as a true “retina” display—a screen that has a high enough pixel density (pixels per inch) that the naked eye cannot perceive individual pixels at all.
At the same time rumors have continued to swirl that there may be a 7-inch iPad announcement coming also. Is this the iPad 3? Or the iPad HD? Both? Neither?
Given the slightly lackluster critical response around the iPhone 4s announcement, and the reality that Amazon’s Kindle Fire is cutting a swath through the smaller form-factor tablet category, I wouldn’t put it past Apple to announce both.
In fact, who’s to say that the March 7 announcement has to be entirely focused on iPad 3? Rumors out of the LA Times indicate that Apple might also use the event to announce a new version of Apple TV.
It makes you (or me) wonder—are we about to see some kind of surprising second-screen tie-in announcement this week?
It’s hard to shake the feeling that we’re all in for some kind of surprise.
Is iOS 6.0 coming also?
Another big question is what the OS side of the iPad 3 equation will be. Siri is expected and will probably be in the release, but will it come in the form of a major or minor OS update?
This answer appears to be coming into focus, and it looks like a dot-zero OS release. Late on Friday, Ars Technica published a story saying that its own web site logs revealed that a small number of higher-than-normal resolution devices in Cupertino were browsing arstechnica.com. A number of these devices appeared to indicate an entirely new iOS operating system labeled version 6.0.
One final thought here: The notion of a 2048 x 1536 10-inch display will create some interesting complications and a potential upheaval for developers. Just like 800 x 600 graphics look terrible on a 1024 x 768 display, the current state of the art could become instantly obsolete on the iPad 3’s display.
On the flipside, such a high-resolution display will have a dramatic impact upon business, and healthcare in particular. As a general rule, higher resolutions equal increased clarity and insight around X-ray imagery, ultrasound, and more.
Microsoft Windows 8
I’m betting that internally and from a tablet perspective, Microsoft’s employees have mixed feelings about the current two week window.
The buzz around the Windows 8 release will to some extent be swallowed whole by iPad 3 rumors and Apple’s official announcement this coming week. This is convenient for Ballmer and crew; it essentially allows Microsoft to duck a whole bunch of unanswered questions about the ARM-based tablet version of Windows.
The truth about Windows 8 is that, right now from a consumer perspective, it’s still a desktop OS. That will change in time. But most critics, analysts, and pundits have yet to hear or see much regarding the very first ARM-compatible version of Windows, aside from the proclamations that Office apps will be present, and that most marketplace apps will be cross-compatible.
But if Microsoft’s Windows Phone 7 release is any indicator, it’s not likely that we’ll see much more of Windows in tablet form until the official release. Microsoft said as much at the end of its Mobile World Congress 2012 announcement. The next time we see a new version of Windows 8, it will be RTM.
TabTimes is holding out hope that Microsoft will reveal a little more about enterprise and corporate functions of Windows 8 tablets at CeBIT in Germany later in March, but numerous questions remain.
Will Office on ARM tablets cost consumers extra dollars? How much will Windows 8 cost tablet manufacturers? Will ARM tablets have the same networking functions and management that desktop Windows PCs do?
This week’s winners
Golf Digest Magazine: Conde Nast’s golfing magazine scored a huge win this week when it released an exclusive excerpt of Hank Haney’s new book about Tiger Woods, “The Big Miss”, on its iPad app (iTunes, $4.99). A great move that magazine publishers can learn from. We’ll be curious to hear how well it worked.
Adobe: For many publishers, Adobe’s Digital Publishing Suite is a godsend; for resource-strapped publishers of all sizes, the ability to quickly and easily convert digital and print content into a tablet-friendly format cannot be under-rated.
The news that internal statistics revealed that 16 million digital publications powered by the Adobe Digital Publishing Suite were downloaded over the last twelve months is pretty spectacular, for both publishers and for Adobe, which nets a tidy profit on each app-publication.
A friend of mine who works at a San Francisco-based magazine/digital publisher said it best: “If you’re not at least thinking about going with Adobe after hearing that, you’re crazy.”
This week’s loser
RIM: Did you hear anything about last week’s PlayBook 2.0 release this week? Neither did I.
On the horizon
For the next two weeks, it’s all about the iPad 3, and/or whatever else Apple announces on Wednesday, March 7. Until then, nothing else matters on the tablet frontier.
And, as a healthy reminder that software counts as much as hardware in the tablet space, on Friday evening, Apple sent out word that its App Store had received its 25 billionth download. That’s incredible, even if the vast majority are iPhone apps.
Also amazing: It was just two years ago that Apple released the original iPad, literally kicking off this whole tablet phenomenon.
Some lucky individual — we don’t know who just yet — will collect an iTunes gift card worth a cool US$10,000, as the App Store hits 25 billion downloads after just more than three and a half years in existence.
Apple’s App Store has served up 25 billion downloads, the company announced on Saturday.
The iPhone and iPad maker’s main website was festooned with a banner trumpeting the milestone, but the 25 billionth downloader — and consequent contest winner — has not yet been announced. That lucky individual will receive a gift card for the iTunes Store, worth US$10,000. (That’s a lot of Beatles ring tones.)
Last January, Apple ran a similar promotion for the 10 billionth app downloaded, also awarding a US$10,000 gift card. That was a follow-up to the company’s 2009 award to the person who downloaded the 1 billionth app. That first time was a bit more generous, with 13-year-old Connor Mulcahey nabbing a US$10,000 iTunes gift card along with an iPod Touch, MacBook Pro and one of Apple’s Time Capsule devices.
The acceleration in App Store downloads has been swift since the business launched in July of 2008. The store hit 1 billion downloads in its first nine months, reaching 5 billion downloads in June 2010. By January 2011, the company tallied 10 billion downloads, a number that topped 18 billion in October of the same year.
Apple has said that it pretty much breaks even running the App Store. But the point of the enterprise is not to profit from the sale of apps, but to make Apple’s devices more useful and more attractive to gadget buyers.
Apple said it would unveil the winner of the 25 billion contest within 10 days, on this page.
CNET’s Josh Lowensohn contributed to this report.
As with any pending Apple reveal, the approaching iPad announcement has frothed up quite the speculative stir within our increasingly antsy tech community. Many a user is positively giddy with excitement, and — whether ready to stand in line for the first time or hawk his second-gen tablet for a discounted third — the Daft Punk promise of harder, better, faster, and stronger is, for most folks, almost too much to handle.
Of course, there are others who aren’t quite so enthralled. Surprisingly, though, that number seems much larger than prior cycles would indicate, and such waning anticipation is an inevitable (and inevitably serious) hurdle for Apple going forward. Unfortunately, as a side effect of the Cupertino company’s unprecedented string of recent successes, the problem is likely to be fundamentally insoluble. Apple simply cannot maintain the unrealistic pace of yearly revolution — at least as far as that concept is currently (and incorrectly) defined.
To be certain, we’ve seen all manner of comments and analyses across the blogosphere these last few frantic months, and everything so far presented and expected about Apple’s new tablet says it will, in fact, be a substantial upgrade from the awesome iPad 2. It’s alleged to include a Retina display, a faster CPU, a beefier GPU, dramatically improved cameras, a bigger, longer-lasting battery, and the famed Siri digital assistant. There might even be a capacitive home button, more RAM, increased storage, and a wider range of cellular support (read “LTE”) onboard. From every technical standpoint imaginable, the iPad 3 is going to be a completely new and massively better portable machine.
Still, it doesn’t seem to be coming off that way.
Just like Apple burst our iPhone 5 bubble after announcing its 4S handset late last year, there’s little question that — outwardly, at least — the iPad 3 will be something of a letdown for many potential upgraders. Faced with the sure reality of its off-the-charts specs, however, I’ve had some difficulty unravelling the puzzling “why” in all this. But persistence pays off, and my answer is sickeningly simple: People don’t consider something new and different unless it looks new and different. You know, on the outside.
It all goes back to a piece I wrote more than two months ago:
We have now, perhaps more than anytime else since 2007, very little to look forward to in the personal applications of the mobile technology realm. Sure, there’ll be a few surprises here and there, but we won’t see another truly revolutionary piece of hardware for some long while. …
No, the next several years will likely mirror the late nineties and early aughts, where we saw great change in hardware substance but no change at all in hardware style. …
As I’ve written some several times before, pieces of kit like the iPhone and iPad are, ergonomically, fast approaching the very real point of diminishing returns. Nowhere are these physical limits more apparent than in the design jump from the first-gen iPad to the iPad 2. While the former was certainly slim enough, the latter is almost impossibly thin. Shaving anything more than a few millimeters of thickness off its aluminum housing would render the product too sharp, awkward, and uncomfortable to use. Imagine an iPad-sized iPod touch 5G, and you’ll see what I mean. Ouch!
In the comments section of the above-cited article, reader Aula astutely condensed my longwinded verbosity and expertly broke down my overarching (but, I dare bet, not overreaching) message:
Design is limited by the fact that we have fingers and voice boxes.
No new iPad will look or behave differently than any existing iPad, just as no new iPhone or iPod touch will deviate drastically from the form and feel we’ve already seen. But even as the iPhone 5 might feature a small screen boost to the fabled four inches, its bigger brother has no such room — or reason — to grow (or, for that matter, shrink).
Those of you opting to skip the iPad 3 release on the grounds that it doesn’t represent a true step forward will be sorely disappointed come models four and five and six and so on. The introduction of some radical external alteration to the iPad line is a lifetime away, and there will be no newsworthy physical redo until the paradigms of digital interaction change entirely. And, for as long as iOS remains a touch-based operating system, that’s just not happening.
Take a look at some of the concepts floating around the internet, and you’ll see how change for the sake of change will never disrupt, outpace, or replace change for the sake of evolved interaction. Until some actual benefit is presented in such futuristic vision, the aesthetic realities of tablet computing in general — and the iPad in particular — will remain relatively fixed.
Beyond the short-term promise of autostereoscopic (a.k.a. glasses-free) 3D, the newest trend du jour seems to be the transparent LCD. But, much like we’ve seen with the industry’s various 3D solutions, it’s readily apparent from Samsung’s recent (first?) exercise in innovation that the practical applications of such tech have nothing to offer beyond eye-candy gimmickry. See for yourself:
Just as 3D brings little more than the rare “ooh” and “ahh,” there is no functional advantage to a see-through display. Plus, via its various apps, the iPad already features (or is perfectly equipped to feature) most of the “benefits” that transparent panels theoretically offer. As long as there’s a rear-facing camera, this will always be the case. Even you, prestigious red dot award winner, are unconvincing. Everything you can do, iPad can do better.
There are lots more examples online of this falsely important approach (like Thomas Laenner’s garish mock-up), but they’re all equally unnecessary on a basic hardware level. Fun and imaginative, sure, but not seriously compelling.
This concept, on the other hand, is more interactively sound:
Unfortunately, while most of its ideas are already achievable with modern components (albeit bezels are here to stay!), its blockbuster highlights — holograms — are so far in the consumer offing that they’re little more than completely irrelevant in the here and now and tomorrow to come. Like Samsung’s stretchable, foldable, free-powered slate, holograms are still very much a sci-fi dream. Yes, we’ll probably have them eventually. No, it definitely won’t be soon.
Knowing this, how can Apple change our minds about what constitutes actual broad-stepping progress? The smartphone was a huge leap, a once-in-a-generation breakthrough like the home computer or color television. That Apple so quickly followed up its iPhone with the market-defining iPad was nothing short of a visionary(‘s) miracle. Lightning won’t keep striking the mobile landscape; there are no more obvious arenas for outright revelation.
Revolution, then, must come from refinement. Specs will continue their climbs to the top, and there will be no shortage of power-hungry apps to showcase the magic that Apple continues to create. We must simply get excited about different things now. Beauty is only skin deep, but revolution rarely is. Check under the hood, and you’ll see with iPad 3 that, once again, it’s a whole new ballgame.
And as usual, it’s going to be a blowout.
[Lead image: mobilityfeeds.com]