It seems scarcely an issue of Consumer Reports appears that doesn’t cover personal computers and other electronics gear these days. In the wake of their strangely-concocted criticism of the iPhone 4’s antenna design, CR has gotten loads of favorable public attention — often not deserved.

It’s unfortunate that virtually nobody in the mainstream media ever seems to take CR to task for its serious shortcomings. Yes, the magazine doesn’t seem to be influenced by manufacturers, because it is published by a non-profit corporation that doesn’t take advertising. What’s more, the tested products are all bought at retail at regular dealers. That includes autos, which means that CR must run up bills in the millions of dollars to acquire all these products.

At the same time, being perceived as incorruptible doesn’t mean CR can’t be wrong. As I’ve said before, being a jack of all trades and a master of none has its shortcomings. CR wants to reach a general interest audience that is perceived as not technically savvy. So they strive to oversimplify technical details in such a way that the interests of would-be buyers isn’t being served.

In the September 2010 issue, food supplements and vitamins share top billing, followed by computers, printers, smartphones and even 3D TVs. You also learn “5 Ways to Slash Your Cell Phone Bill.”

Is there anything they don’t know?

Well, yes, because they seem totally ignorant of the fact that the most popular personal computers are available with either of two different incompatible operating systems. The latest review does mention that there is something called Windows, but the existence of a Unix-based alternative, Mac OS X, isn’t part of the picture.

While Apple continues to rate high among the product ratings, usually at or near the top, the subjective category of “Ergonomics” restricts its focus to such hardware considerations as “the quality of the keyboard and mouse or touchpad and accessibility of features.” The usability, predictability, reliability and performance of the operating system isn’t part of the picture.

A magazine that prides itself on trying to protect the consumer ought to also add a category covering a computer’s security. After all, billions of dollars are lost almost every year as the result of Windows-borne malware. But CR doesn’t appear to want you to know that it’s essentially a Windows problem.

Indeed, the average reader who isn’t well versed on such not-so-fine distinctions would come away with the impression that Macs may be highly-rated, but they are also expensive, so why not just select something cheaper since it ought to be near as good?

In addition to eliminating one of the key considerations in the choice of a personal computer, CR fares hardly better with a brief survey of tablet computers. Yes the iPad seems to get the highest marks, but its gaming performance is, peculiarly, rated as simply average. An unnamed $700 laptop gets a “better than average” gaming score, which is preposterous. Note-books in that price category generally have integrated graphics or the cheapest possible discrete graphics chips. Many popular 3D games are simply too powerful to function on such hardware at high screen resolutions with all or most options selected. Or maybe CR relies strictly on Pacman.

In contrast, every single game on an iPad is not just playable, but performs exceedingly well according to every test report I’ve read.

Now I suppose some might suggest that CR has to be correct because their gaming test methodology is more scientific. But we don’t know what that test methodology is, since it’s not mentioned in the magazine. More to the point, I challenge CR’s editors to produce a $700 portable computer that can play all the popular PC games at a decent frame rate, if they run at all. In contrast, I also challenge CR to tell us which iPad games fail to deliver good performance, assuming that there’s no program bug that might create a playability problem.

On the positive side of the ledger, CR does seem to make a passing effort to define the various smartphone operating systems, although the claim that the Android and iOS are very closely matched is not borne out by most reviews of these products. Or maybe CR’s standards, whatever they might be, are far too lax to accommodate anything but a drastic difference.

However, the iPhone 4 does seem to fare well, simply because that absurd laboratory test of its antenna system isn’t mentioned. Perhaps the magazine’s deadline passed, or CR is starting to realize that junk science doesn’t trump Apple’s multimillion dollar antenna test facility. Or, for that matter, those widely-publicized videos that demonstrate that rival smartphones are also prone to signal degradation when held the “wrong” way.

At least I now know which multivitamin to purchase, and which food supplements to avoid. I feel confident that I’ll live a longer and healthier life as a result, although I’ll continue to remain in total ignorance about what electronics gear to buy, at least if I depend on CR for that information. And I don’t.

It’s fair to say that the media and industry analysts just don’t get Apple. They keep wanting to pigeonhole the company into the same category as other tech giants, not understanding that they are dealing with a firm that doesn’t play by those rules.

So, for example, you expect that as a company gets extremely large, sales growth will max out, maybe even flatten. But that situation hasn’t so far applied to Apple, at least not yet.

Of course, part of that is simply due to the fact that the market shares of the Mac and the iPhone still retain minority status. How the iPad will fare against forthcoming competition isn’t obvious yet, though it certainly has a huge head start.

Indeed, even with the iPod, the revenue curve has grown even while sales have flagged, largely because the iPod touch still has plenty of room to expand. It may well be that this trend will continue, unless Apple can make the lower priced models more compelling.

Continue Reading…

This article may come across as unduly jingoistic, and for that I apologize, at least somewhat. What’s more, what Apple is doing isn’t especially different from the rest of the tech industry, but Apple also has some of the highest profit margins around, other than Microsoft of course, so maybe there’s some wiggle room.

Now once upon a time, your Mac was built in the U.S. or perhaps in Ireland. Sure, Apple’s price structures were far less competitive than they are now. You really had to pay a whopping premium for a well-equipped Mac in those days.

Over the years, Apple, as with most tech companies, opted to build their gear in Asia, but keep product design and support in this country. When you consider the huge savings in manufacturing costs, it made a whole lot of sense. Salaries are far lower over there, although they are increasing. So you could build gear in a state-of-the-art production facility, send it half way around the world — and sometimes use express shipping to satisfy early adopters — and still save a bundle of cash.

Those savings went, in part, to the company’s bottom line, but it also meant that your Mac, iPad, iPhone and iPod cost a whole lot less than if they were assembled in America.

Apple is, of course, not alone. I challenge anyone to identify a tech product, except for a few specialty designs, that are still assembled in North America (other than Mexico) or Europe. It just doesn’t happen.

Now I am not against a third world country wanting to create a higher standard of living for its citizens. Certainly the people who work on the production lines in the factories building products for Apple and other companies have a higher standard of living than their neighbors. Indeed, Foxconn, one of the larger contract manufacturers, who assembles millions of products each year for Apple, has recently granted salary increase to their employees.

What you see here is that, as wages improve, it will become less economical to farm out manufacturing. At what point does the cost of assembly and shipping from Asia to North America suddenly become less appealing to a company’s bean counters?

Understand that this article is self-serving. The major industrialized nations all have high unemployment. Millions of potential customers for these products can’t even buy them because they have to struggle to cover housing, electricity, food and other survival expenses.

Now you might see where I’m going. What sort of wages would it take to provide an adequate standard of living for someone working on the assembly lines in America? No, I’m not talking in terms of minimum wage, nor what one might get manning the counters at a fast food restaurant.

I could, of course, also see where a factory job might serve as an entry-level position for a young person just entering the work force, maybe looking to provide a supplemental income to cover the costs of education, or perhaps just help someone establish a level of independence while still residing with one’s parents.

Once you tally the cost of wages and benefits there is, of course, the expense involved in building a factory equipped with the appropriate state-of-the-art automated production systems.

Indeed, would it at all be economical for contract makers to actually construct plants in the U.S.? I mean, auto makers from Asia and Europe are already doing that (and sourcing from local parts suppliers of course), finding that it’s cheaper to build a car here than to assemble and ship one across the pond. On the other hand, the cost of shipping an iPhone is minuscule compared to a two-ton motor vehicle, and the savings may vanish rapidly.

Or maybe not.

The real question here is, of course, whether the major tech companies are willing to weigh the costs of building their gear over there, with the attendant shipping and quality control expenses, compared to the costs involved in assembling them closer to where they are actually sold.

I do concede that the answers to these questions are likely way above may pay grade. I do not pretend to have the answers, and I suppose that Apple and other companies are always busy looking into more efficient ways to assemble products.

On the other hand, if the cost of domestic assembly was only slightly higher than building those products elsewhere, maybe it’s worth the investment, even if profit margins are slightly lower.

Indeed, would a “Made in the U.S.A.” label on a new iPhone or Mac justify a slightly higher purchase price? I realize that’s a serious question that may not bring the answer you or I would want to hear. The real issue is whether Apple and other tech companies even care anymore. Perhaps they have become so accustomed to assembling their gadgets elsewhere that they won’t even seriously consider alternatives.

I can’t help but laugh at the constant carping by the nasty negativists that the rapid growth of the Android smartphone population is somehow going to hurt the future of the iPhone. The perception is that this is merely a repetition of the Mac versus Windows platform wars, where there can be only one.

As history has shown, however, Apple can live long and prosper with a small market share, so long as sales continue to grow and financials continue to beat Wall Street estimates. Unfortunately, far too many alleged industry analysts can’t perceive that basic truth, which explains why the ascendancy of Google’s Android OS has been represented as a potential death knell for Apple.

It doesn’t even matter if Android grows faster, as appears to have happened in the first half of this year, likely due to the fact that, in the U.S. at any rate, Android is available from all the major carriers. Apple is still, of course, tethered to AT&T, and it may be months or even a year or more before that situation changes.

Except for the years where Apple lost its way, the company was almost always profitable even when Macs, monitors and LaserWriters constituted the largest portion of the product lineup. Sure, market share was but a fraction of the total PC market. However, loyal Mac users didn’t buy Apple’s gear based on market share, but on preference. The Mac was (and is) the best tool for the job.

Now the iPhone and other mobile products have totally turned Apple around, to the point where they’ve moved over 100 million units in just over three years. There are far more iPhones and iPod touches than Macs. The iPad’s initial sales were extremely close to that of the Mac during the product’s first quarter on sale, even while the new gadget remained seriously backordered and not even available in many parts of the world.

But far too many pundits want you to believe that Apple must beat Google to survive as a viable company, despite the fact that Android OS market share is still below the iPhone, even though there are many more models and, at least in the U.S., more sources from which to acquire one.

Winners must be declared, however, and the fact that Google’s smartphone market share is increasing faster than that of the iPhone is cause for some to feel Apple must be in trouble, and that they are doomed to also-ran status. This despite the fact that the BlackBerry is still ahead of both, and it’s not as if RIM is standing still when it comes to revising their products.

It’s also not certain just how well Microsoft’s next mobile OS will fare. True, Microsoft has had serious trouble moving beyond the core operating system, server software and productivity suite market. Yes, the Xbox appears to be doing well, after loads of money was thrown at the gadget. In retrospect, though, I wonder how long it’ll take Microsoft to actually recoup all of that investment, although it doesn’t seem the company’s stockholders are complaining.

In any case, after the Microsoft Kin debacle, it’s an open question whether they can actually develop a credible operating system contender in the mobile space, or whether it’ll be an also ran in the tradition of the Zune. In other words, Microsoft continues to believe that “innovation” means imitating someone else’s product two years later.

Now despite ongoing concerns about security, Google appears to be doing well with Android. Many of the most interesting non-Apple smartphones use that OS, and lots of people seem to have embraced the various iterations of the Droid and similar products with loads of names I don’t choose to recall.

In addition, the OS is getting frequent updates, and hardware makers are coming out with new models every few weeks. There’s surely enough momentum to carry the platform to a larger share of the market. I suppose it’s quite possible that there will some day be more Android phones sold than iPhones, simply because there are so many more models from which to select. More to the point, they seem rather more distinctive from one another than the typical commodity Windows PC box.

This is not to say I feel Apple will fail. So long as people around the world wait for hours outside a store to buy the latest and greatest iPhone, and Apple can continue to report annual sales increases in the 50% to 100% range, you cannot possibly call the product a failure or a potential failure.

Yes, I suppose Apple’s competitors were cheering loudly when that Antennagate furor erupted, but it turns out that it wasn’t such a big deal, and there may, in the end, be little or no lasting damage to Apple other than the relatively tiny (for them) sum of money spent on giving away free cases.

In the end, though, I think Apple’s mobile platform will actually expand a lot faster than the critics expect. But it doesn’t mean Apple has to be number one. There’s plenty of room in that market for several players to score big.