Despite the drubbing Apple’s stock price has taken in recent months, the company remains one of the most profitable on the planet. But Apple didn’t get there paying attention to the critics. When they did listen on one occasion, they ended up almost going out of business.

Consider the endless requests to license the Mac OS. That request continues to this day from some, but Apple only listened once. Before that, however, other companies made what are best called “unofficial” clones, by installing the hardware-based ROMs from another Mac. Literally. This was the basis of the Outbound, an attempt to build a viable portable Macintosh in the days before the PowerBook. Up till then, Apple sold the famously oversized and expensive Macintosh Portable. The thing weighed 16 pounds, so it hardly felt portable, and sold for a starting price of $6,500.

But when the $2,300 PowerBook 100 arrived in 1991, the handwriting was on the wall. Those unofficial clones were on the way out.

In 1995, however, Apple decided to jump into the cloning game with both feet. They licensed the Mac ROMs and the OS to several third party companies, which allowed those companies to build genuine, Apple-approved clones. Apple hoped to expand the market, but one of those companies, Power Computing, went right after Apple’s core market of creative professionals with cheaper, more powerful gear. When new PowerPC chips arrived, Power would often introduce them first. As a result, they ended up cannibalizing sales of “genuine” Apple Macs. Apple hemorrhaged cash, and was in a bad way when Steve Jobs took over leadership of the company in 1997.

One of Jobs’ first acts was to find a way to kill the cloning program, realizing it was a bad decision. The clever solution was to introduce Mac OS 8, since the cloners were only licensed to use Mac OS 7. Well Umax did license Mac OS 8, but they stopped building Mac clones a short time later. Jobs also agreed to buy out the largest cloner, Power Computing, for $100 million, and it is said that Apple’s online ordering system descended from the one used by Power. So there was a big benefit, other than killing the competition.

Unfortunately, the people who demanded Apple license the OS conveniently forgot that the company made the lion’s share of profits from hardware. Any move that allowed other companies to cannibalize the sale of new Macs hurt the company. Sure, the iPad cannibalizes sales of Macs, but the sales and profits are kept within the company, which is a good thing.

These days, it is possible to install OS X on a white box PC with a little software skullduggery. It’s not actually legal, and any company that would mass produce such a computer would face the legal wrath of Apple, and that has occurred. But Apple hasn’t gone after individuals who build their personal FrankenMac or Hackintosh. While I’m not going to point you to a site that tells you how, let me assure you that such instructions aren’t difficult to find. Indeed, Macworld once did a story about building a Hackintosh, and Apple didn’t go after them.

The other demand is for Apple to build cheap stuff. The theory has it that the company will prosper substantially with the higher sales volumes. They fail to realize that the sales aren’t pure gains. Some customers are certain to buy cheaper products instead of more expensive gear. The end result is fewer sales of Apple’s high margin products, which is not such a good thing.

This doesn’t mean Apple cannot strategically enter lower priced market segments. Consider the $49 iPod, or the $599 Mac mini. Both products yield proper margins to Apple, while the same time serving customers who want less expensive gear.

These days, Apple is being strongly urged to introduce a cheap iPhone to serve parts of the world where people cannot afford $450 smartphones, or where subsidized contracts are unavailable. While this seems to make sense in theory, Apple has said many times that they will not produce junk. They aren’t going to build an iPhone to meet a price point. But that doesn’t mean there isn’t the possibility of a less expensive model, if Apple can provide the full user experience and sell it at a decent profit. Again, Apple would would have to do it in a way that doesn’t severely cannibalize sales of high-end iPhones, and actually expands the market.

When it comes to demands that Apple build a smartwatch or a connected TV, I suppose it’s possible that one or both products will arrive. But Apple doesn’t enter markets just because there are profits to be made. They look to markets that are not being fully served for one reason or another, and try to create revolutions. Perhaps that makes sense with watches, but it makes less sense with TVs.

So, how does Apple upend the TV market? That Tim Cook says that he feels he’s going back 20 or 30 years when he enters his living room, that doesn’t mean that Apple’s solution is to replace the TV. As I’ve suggested before, the problems with the TV can largely be addressed with an Apple TV on steroids. I think about my recent struggles to make a Logitech Harmony universal remote mate with a new TV and I can see where integration of devices is one area that cries out for a solution. Can Apple provide it? Does Apple need to establish a fully enabled TV streaming service to compete with Netflix, DirecTV, and Comcast, among others? Or can they revolutionize the business simply by striking partnerships with existing providers and deliver the goods in a smarter way?

So there’s a report this week that Apple’s main Asian manufacturing partner, Foxconn, is now on a hiring spree, supposedly to get ready to start building the alleged iPhone 5s. This comes not long after another published report appeared saying that Foxconn had cut staffing because of poor iPhone sales.

I know that if I was employed by Foxconn on the Apple production lines, I’d be mighty confused, being laid off one week, and being rehired the next. Is that a way to manage a company’s hiring practices? Maybe it would be better to keep on some workers to wind down the older manufacturing facilities ahead of setting up the new ones. But that’s just me, and I don’t claim to have any experience whatever in working or managing an assembly plant.

But this is just one more example of the illogical stories that get serious attention these days. Above all else, there’s the ongoing meme that Apple’s sales tanked in the March quarter, and that the company is poised to announce that they couldn’t even meet their own conservative guidance when the results are posted on April 23. Of course, none of this comes from anyone with intimate knowledge of the situation. Apple is pretty good about keeping earnings information a secret until the appointed time, although some details are occasionally revealed during a media event. Well, at least if the news enhances the marketing message.

Of course, even saying there will be an iPhone 5s is pure speculation. It’s all about assuming that Apple will behave in a predictable fashion, and that this year’s iPhone update will be a simple refresh of last year’s, with essentially the same look but with revised components. Maybe there will be some extras, such as fingerprint authentication and NFC. The former seems creditable enough, inasmuch as Apple did buy a company that pioneered that technology.

As to the rest of the features, talk of multiple sizes won’t stop. Today, Apple sells a four-inch and two 3.5-inch models, the latter by continuing to produce the 2010 and 2011 iPhones. That trend will probably continue with the new models, unless Apple breaks the mold and builds a lower-cost version, and maybe offers the high-end version in two or more screen sizes.

Why more than four inches? Well, because Samsung and other smartphone makers are doing very well with handsets in the five-inch range, so Apple must follow, I suppose. Apple’s argument has been that, if the screen size is too large, one-handed operation is difficult if not impossible. This is true from my experiences with last year’s Samsung Galaxy flagship, the S3, and I have long, thin fingers. Apple is approaching this from a logical point of view, I gather, but you can’t always assume customers are logical.

Even if there is a larger iPhone in our future, such as the mythical iPhone 5X, it’s possible Apple will justify the form factor with a configuration that is proportionate to the iPhone 5. This means that developers won’t have to rebuild their apps right away, and it’s possible screen resolution will scale up uniformly.

Then again, Apple’s Retina display may have a pixel density similar to that of other smartphones, but that doesn’t mean others have Retina displays too. I can tell you that I can clearly see the pixels on the Galaxy S3, even though, at 306 ppi, the spec is only slightly below the iPhone 5 (326 ppi). The difference should be insignificant, but clearly it’s not. And I won’t get involved in the differing technologies and how they might influence the end result.

What has allowed unfiltered and unconfirmed Apple speculation to continue unbounded is the fact that the company hasn’t said very much about new products. There are promises of great things, which mean nothing until the promises are fulfilled. Existing product changes so far this year have been so minor as to be relatively insignificant in the scheme of things. The Apple TV uses a smaller chip, for lower power consumption, but basic specs are the same. There was a minor MacBook Pro with Retina display refresh that combined lower prices on the 13-inch models with better specs for the 15-inch variety. You can get a fourth generation iPad with 128GB storage, and I can only hope prices on solid state memory are coming down to the point where you’ll be able to get more for less real soon.

Oh yes, there was talk of an imminent announcement of the next Mac Pro, or whatever it will be called when the promised 2013 version is out. The recent NAB convention would have been a great place to make that announcement, but it may just be that it’s still not ready. The Intel Xeon chips that will supposedly power the thing won’t be available until the second half of the year, so you may see a Mac Pro announcement at the WWDC, with shipping in July or August. Indeed, Intel may be responsible for delaying the thing.

That’s it for the almost reasoned speculation. And now let’s get back to the iWatch and the Apple connected TV. Or maybe not.

The other day, one commentator suggested that the early dream of Steve Jobs for Apple to control the PC industry was finally coming to pass in the years after his passing. It all began in 2010, with the release of the iPad to a highly skeptical audience.

Now up until the iPad arrived, the prevailing opinion had it that the Mac would continue to make gains against the Windows platform. Apple would get a double-digit global market share some day, but it would never grow high enough to displace Microsoft. Well, at least until the PC was no longer a serious factor in the tech business.

But it appears that Microsoft’s inevitable decline has come faster than industry analysts expected, but you know what I think about their predictions. In any case, it has become more and more evident that people just aren’t replacing their old PCs as quickly as they used to. Windows 8 has provided no incentive whatever, except to avoid it like the plague.

Continue Reading…

I suppose we need people who can consult the tea leaves, or Tarot cards, and somehow decide whether a company is doomed to fail, or will become a smashing success. When it comes to a specific product or service, such people will offer their predictions about how things are going. Some companies, such as the NPD Group, will actually consult sales figures to make their reports as accurate as possible.

Given that other analyses of Apple tend to be completely wrong, though, I have to think that the people who make these predictions are lucky to still have jobs working in that business. I would think that a track record of making wrong guesses would come back to haunt them, assuming anyone is paying attention. Or maybe having a business card from a company with a prestigious name is sufficient to gain credibility regardless of what’s being said.

So this week came two reports about PC sales. One, from IDC (a division of the company that brings you Macworld magazine), projected that PC sales in the March quarter declined by 13.9%, the highest percentage since the 1990s, and it’s dire news for Microsoft. U.S. reports indicated a 7.5% drop in Mac sales.

By itself, the IDC survey would seem a compelling document that even Apple can’t beat back the inevitable decline of PC sales. Clearly Windows 8 hasn’t helped matters either. But there are more shoes to drop.

Recently, NPD Group, which bases its figures on real sales as I said, reported that Mac sales in the U.S. were up 14% during January and February of this year. So if IDC is to be taken seriously, Mac sales would have had to drop through the floor in March, until you read a certain survey from Gartner.

Now Gartner’s analysis also indicates a substantial, though smaller drop PC sales, estimated at 11%. However, U.S. Mac sales reportedly increased by 7.4%. That’s more in keeping with the trend reported by NPD Group, although the final figures won’t be known until later this month when Apple releases the real numbers for the March quarter.

Before you take Gartner seriously, though, what about the time when they predicted that Windows Phone would have a 20% share of mobile devices by 2015? Clearly that doesn’t seem to be in the cards unless things begin to really turn around over the next year.

Sure, you expect surveys to have a margin for error, but the disparity between IDC and Gartner when it comes to Mac sales for the quarter are telling. The results are also troubling, because it clearly indicates that one of these two companies either missed the mark big time, or both are dead wrong.

But if I had spent a bundle to buy services from either company, or both, I would wonder if I was wasting my money. After all, what sort of track records do these companies have for delivering accurate data? Does anyone keep tabs of their surveys to see where they succeeded and where they failed? Shouldn’t that be a key indication whether the reports should get attention from the media?

Of course, not all reports of sales or future products are given equal weight. So, for example, when Digitimes, an Asian IT publication, makes a prediction about something, they are frequently wrong. Journalists who do their research will report that anything coming out of Digitimes should be taken with a grain of salt, and that makes sense. However, on the slight possibility that the information may be correct, it is quoted anyway. Maybe the best approach is not to pay attention.

I can say the same for those financial and tech pundits who have been so busy explaining what Apple has been doing wrong all these years, and how to fix those problems. Certainly if any of these people actually know how to run a successful multinational corporation, why are they working as an online or print commentator? The pay isn’t nearly as good, and there are no golden parachutes should they be laid off.

So is there any solution to the chronic problem of poor industry analysis? One way would be for someone with time on their hands (and surely an expert at spreadsheets) to examine an individual or company’s record for accuracy, and make sure it is widely published in a form easily quoted. It wouldn’t take long to determine whether IDC, Gartner, or any other firm engaged in that business deserves to be taken seriously.

From a casual glance, though, it appears as if the answer is no.

But imagine if every single report about one of these surveys contained the accuracy record. Imagine someone saying that Apple’s next revolutionary gadget is doomed to failure, accompanied by a report that the very same analyst predicted that the iPod, the iPhone and the iPad would also fail. It happens occasionally, but having that information in every single report about someone’s analysis would be the kind of news you could sink your tooth into. It may even encourage some of these analysts to get their acts together, or find another line of work.