Edible Apple

Following another one of Apple’s blowout quarters which sent shares of Apple back up to the $600 range, The Atlantic put together a few charts to help contextualize just where Apple’s money is coming from and what products continue to drive revenue to unprecedented heights.

Apple Revenue by Product

Here we Apple’s revenue broken up by product and not surprisingly, the iPhone is Apple’s main workhorse accounting for 58% of the company’s quarterly revenue. And though it’s been repeated ad nauseam, it’s worth noting, again, that Apple’s room for growth in the smartphone market remains immense, especially when you factor in the burgeoning market in China.

And speaking of, the Asia/Pacific area is becoming more and more of a contributing factor to Apple’s bottom line, exceeding revenues generated in Europe during the past quarter. The Americas still accounts for the bulk of Apple’s earnings, but as Apple continues to make headway in the Asia Pacific region of the globe, and in particular China, it may be sooner than later that sales abroad will account for more of Apple’s revenue than sales in the Americas.

The following chart, which measures product growth by region, further serves to illustrate how crucial the Asia Pacific area is to Apple with a growth rate that tops 100%. Also, note how impressive it is that Apple’s slowest revenue driver in terms of growth, retail, is still growing by nearly 40% year over year. Incredible.

And finally, we have Apple’s individual products divided along their respective growth rates. Macs are clearly not growing all that well, but that could very well be because users are patiently waiting for expected refreshes to Apple’s iMac and MacBook Pro line this Summer. And also looking quite limp is Apple’s iPod which, though once the golden goose of Apple’s stable, is now relegated to negative growth rates. When you look at the iPad and the iPhone, one can’t help but marvel at how the bulk of Apple’s profits are now derived from two products that didn’t even exist 5 years ago. Apple’s ability to enter new markets and create new revenue streams to keep earnings ever growing is remarkable.

Not really too much new information here, but still worth a look as Tony “godfather of the iPod” Fadell talks about the three iPhone prototypes Apple had in play during development. The interview comes courtesy of The Verge.

Fadell left Apple back in 2008 but was an integral part of the development of multitude of iPods and the first 3 iterations of the iPhone. Fadell notes that initial iPhone prototypes included a keyboard-less model, an iPod/iPhone hybrid, and another version that we don’t know much about.

The ultimate decision maker was, of course, Steve Jobs who felt that a keyboard-less smartphone would was key to the iconic design Apple was trying to usher in, and as we can see today, did.

Rovio announced today that their latest offering in the Angry Birds franchise, Angry Birds Space, has now hit the 50 million download mark in just 35 days.

Angry Birds Space hit 50 million downloads within 35 days, making it the fastest growing mobile game yet and breaking all our previous records. This has been simply amazing, and the whole Rovio team is thrilled to see such a fantastic reception for the game.

We extend our deepest gratitude to all fans of Angry Birds everywhere. While numbers like this certainly say something about the popularity of Angry Birds, for us the main goal is to keep creating fun new experiences that everybody can enjoy! We just launched the first free update for Angry Birds Space, with plenty more surprises in stock.

It’s not a stretch to say that the same mobile app on iOS and Android devices don’t always look the same, which is to say that iOS apps tend to look more refined and elegant than their Android counterparts.

This phenomenon isn’t necessarily and solely rooted in the efforts of developers themselves, but is also the result of the coding tools Apple provides as compared to Google.

Wired reports:

Design is built into Apple’s DNA. Google’s legacy, on the other hand, is search. So it’s not too difficult to guess which platform places a higher premium on app U.I. and aesthetics — and which platform makes it easier to create beautiful software.

And then, of course, there’s fragmentation. With hundreds of Android devices out on the market, developers on Android have to account for a plethora of different screen sizes, resolutions, processing power etc. You might remember that Rovio a few months back issued an apology for poor Angry Birds performance on a number of Android handsets.

So how does fragmentation play a factor? Well for starters, it forces developers to sometimes code to the lowest common denominator, with one developer Wired spoke to explaining that it effectively “makes development slower.”

Another developer explained that a pixel stroke may look great on a new Android device with a high resolution, but when put onto much older devices, it just doesn’t look great.

Developer tools and documentation are also less robust in the Android space. While Apple has had 20 years to perfect the art of developer support — refining its approach to SDKs and building well-defined human interface guidelines — Google is essentially starting from scratch with Android…

And some detailed design features are easier to implement in iOS because of the wide variety of APIs and libraries available. “It’s harder on Android to do nice design touches such as transitions or rounded corners,” Steven Yarger, mobile product manager at Trulia said.

Google of course stepped up its game with Android 4.0, or Ice Cream Sandwich, but with a tiny minority of Android users actually running ICS, it almost becomes a moot point.

The full Wired article has a number of interesting comparison screenshots that are well worth checking out. Check it out.

The tablet wars, which you have to admit are terribly one sided these days, just got a tad more interesting. Earlier today, Microsoft and Barnes & Noble announced a new partnership in the form of a new Barns & Noble subsidiary that will focus on delivering “world class digital reading experiences” for users.

Clearly, Microsoft has its eyes set on Amazon, and to a lesser extent the iPad, and will invest $300 million in the new subsidiary.

The new subsidiary, referred to in this release as Newco, will bring together the digital and College businesses of Barnes & Noble. Microsoft will make a $300 million investment in Newco at a post-money valuation of $1.7 billion in exchange for an approximately 17.6% equity stake. Barnes & Noble will own approximately 82.4% of the new subsidiary, which will have an ongoing relationship with the company’s retail stores. Barnes & Noble has not yet decided on the name of Newco.

First up on the docket, according to the press release, will be a NOOK app for WIndows 8 that will give users access to B&N’s entire digital bookstore.

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During Apple’s recent earnings conference call, CEO Tim Cook, when asked about Apple’s cash situation as it relates to the multitude of lawsuits it’s currently embroiled in, explained that he has always hated litigation and would prefer to settle legal disputes amicably rather than via the court system.

At the same time, Cook explained that Apple can’t be the developer for the world and that companies need to work on inventing their own stuff, not simply copying Apple.

In light of that, it’s worth nothing that Apple CEO Tim Cook and Samsung CEO Gee-Sung Choi recently agreed to engage in alternative dispute resolution via a suggestion from Judge Lucy Koh where the two head honchos will attempt to hammer out a patent related settlement agreement. Samsung has been quite brazen in its efforts to copy Apple’s iOS software and hardware design, we think, so we wouldn’t bet on any big announcement coming out of the meeting which is scheduled to take place on May 21-22 in front of Magistrate Judge Joseph C. Spero.

FOSS Patents reports:

The meetings will take place in a San Francisco courthouse, while the litigation itself is before the San Jose division of the court… one of the things Magistrate Judge Spero wants the parties to do is to provide a settlement statement until May 9 including, among other things, “a candid evaluation of the parties’ likelihood of prevailing on the claims and defenses”

Cook might hate litigation, but remember that Steve Jobs in his biography mentioned that Cook may prove to be a better negotiator than himself, noting that Cook is a “cool customer.”

Per all settlement negotiations, the contents of the aforementioned meeting, including all proffered settlement offers, will remain highly confidential.

In any event, with legal battles spanning the globe across 10 different countries (and numbering 50 separate actions in total according to Florian Mueller of FOSS Patents), coming to an all-encompassing agreement seems like a long shot. Or, on the flipside, that may give both parties all the more incentive to settle.

But lastly, remember that Apple actually did try and settle with Samsung before taking matters to the courts. The Verge reported about a month ago that Apple, in the months preceding their initial April 2011 lawsuit against Samsung, tried 4 times to come to an agreement with Samsung in an effort to stave off litigation, including meetings where in both Cupertino and Korea where Apple presented “its infringement allegations with comparison photographs and patent claim charts.”

An odd and equally fascinating story from the recently released Insanely Simple: The Obsession That Drives Apple’s Success, a book by former Chiat/Day advertising director Ken Segall. Segall worked closely with Steve Jobs for many years, and while his new book aims to impart many of the business lessons he picked up while working on a myriad of iconic Apple advertising campaigns, the book, as one might expect, is liberally sprinkled with interesting anecdotes such as this one about how Steve Jobs once wanted to celebrate the 1 million iMac sale by putting on a full scale Willy Wonka style contest.

Steve’s idea was to do a Willy Wonka with it. Just as Wonka did in the movie, Steve wanted to put a golden certificate representing the millionth iMac inside the box of one iMac, and publicize that fact. Whoever opened the lucky iMac box would be refunded the purchase price and be flown to Cupertino, where he or she (and, presumably, the accompanying family) would be taken on a tour of the Apple campus.

Steve had already instructed his internal creative group to design a prototype golden certificate, which he shared with us. But the killer was that Steve wanted to go all out on this. He wanted to meet the lucky winner in full Willy Wonka garb. Yes, complete with top hat and tails.

As I said, odd and fascinating!

Now in case you’re scratching your brain trying to remember such a production, don’t worry, your memory is just fine. It turns out that California law precluded Apple from putting the plan into action.

MacRumors adds:

Those in the room with Jobs were amused by his excitement over the idea, but less than enthusiastic about seeing it come to fruition. Fortunately for those looking for a way out of it, California law required that all such sweepstake contests allow entry without requiring a purchase. Given that people would then be able to enter the contest without purchasing an iMac and there in fact being a very good chance that the winner wouldn’t be an iMac owner or even an Apple fan, Jobs’ pet idea for a Willy Wonka-themed prize was cast aside.

Interesting stuff, and which explains why Apple is able to run similar contests for iTunes downloads where users who download free apps and the like qualify for Apple’s x-millionth download contests.

When Apple put its WWDC 2012 tickets on sale earlier this week, it made a slight miscalculation in that tickets were already sold out by about 7:30 am in California. In other words, most folks in Silicon Valley might have been out of luck before even waking up. And sure, Apple puts videos of the event online shortly after the event ends, but there’s no substitute to interacting directly with hundreds of Apple engineers, not to mention the myriad of networking opportunities.

In short, WWDC 2012 is a hot ticket, and sold out quicker than any other WWDC in history.

And with that, comes the group of people willing to do anything to get in, even going so far as to change their name.

Yep, TUAW a few days ago directed us to this comical/pathetic Craigslist listing.

So this guy is willing to change his name and pay $1600 bucks for a WWDC ticket?!

Of course, its likely this is a joke given the details about his willingness to go to jury duty under the assumed name. Either way, some light hearted posting for a Saturday.

With another one of Apple’s blockbuster quarters in the bag, NetworkWorld published a piece detailing Apple’s ongoing financial success and the ill-conceived notion that Apple’s earnings growth can’t continue because of the law of large numbers.

People like to look at Apple and ascertain how much more money Apple has to earn in order to maintain the impressive growth rates investors have enjoyed over the past few years. But in doing so, they completely miss the point and ignore the variables that actually matter.

When considering the law of large numbers, it makes much more sense to study a company’s marketshare and prospects for growth than it is to look exclusively at their current revenue and past performance. Yet that’s what analysts who like to tout the law of large numbers tend to do. They look at Apple’s size and reflexively bring up the “law of large numbers” and shout, “Ya see how big Apple is?! There’s no way it can continue its phenomenal growth, there’s just no way!”

But the real operative variable isn’t revenue, but rather the factors that drive revenue – margins and marketshare. And when it comes to those two metrics, Apple is sitting pretty.

Interestingly enough, Apple CEO Tim Cook addressed the law of large numbers during a recent speech he gave at a Goldman Sachs Technology Conference.

Apple during the last holiday quarter shipped 37 million iPhones, an all-time record, and a figure so high that it prompted someone to ask what growth opportunities Apple still has ahead of it.

Cook astutely responded that the 37 million iPhone figure only represents 24% of the smartphones bought in the last quarter. And the number is even smaller when you look at the worldwide mobile phone market.

“As I see it, that 37 million for last quarter represented 24% of the smartphone market,” Cook explained. “There’s 3 out of 4 people buying something else. 9 out of 10 phone buyers are buying something else.

Handset market is projected to go from 1.5 to 2 billion units. Take it in the context of these numbers, the truth is that this is a jaw-dropping industry with enormous opportunity. Up against those numbers, the numbers don’t seem so large anymore. What seems so large to me is the opportunity.”

via Asymco

One need only take a look at the avalanche of lawsuits that are currently in play in the tech world to realize that the patent system is out of whack. Everyone is suing everyone, often times for patents whose validity are questionable at best.

And with nearly $100 billion in the bank, Apple is a more attractive target for patent trolls than most.

That said, Apple last week was sued by a Pennsylvania-based company called FlatWorld which alleges that Apple’s entire line of iOS products infringe upon a patent related to touch technology that was initially filed back in 1998.

The original patent in question was the brainchild of Slavoljub Milekic, Professor of Cognitive Science & Digital Design at the University of the Arts in Philadelphia, though it’s now completely owned by FlatWorld which originally used the technology to help develop museum exhibits.

Milekic’s patent describes a digital system that enables a user – children primarily – to manipulate images on a touchscreen by touching and dragging a selected image.

The patent reads in part:

A child may manipulate the images by touching them on the touch screen. Manipulations including slecting an image by touching it, “dragging” the selected image by moving the finger touching the image across the screen and “dropping” the image by lifting a finger from it, moving a selected image by touching another location on the screen and thereby causing the selected image to move to the touched location, removing an image from the screen by “throwing” it, i.e., moving it above a threshold speed, and modifying the image by taping it twice and then moving the finger in a horizontal or vertical direction on the screen.

And related to that, the claim tossed about in the complaint reads:

A system for manipulating images comprising a screen upon which an image is displayed; and a computer coupled to the screen, the computer causing the images to be manipulated in response to location inputs from a pointing device, the system being characterized in that: when the image is being dragged in response to the location inputs and the system detects that the velocity with which the image is being dragged exceeds a threshold velocity, the system responds by removing the image from the display without leaving any representative thereof in the display.

Funny, the iPhone has been out for nearly 5 years and now another patent hound comes into the picture seeking some moolah.

The suit was brought by the Hagens Berman law firm and they are seeking an “injunction enjoining Apple from continued infringement.” Oh, and not surprisingly, they want damages to compensate them on account of all the millions of iOS devices and MacBooks in circulation which infringe upon the aforementioned patent.

You can check out the full press release on the matter here.

Time Magazine last week released a special issue listing the “100 most influential people in the world.” Initially, I refused to read it in protest for not having even been considered, but after getting over my prima donna mindset, I leafed through it and found that Apple CEO Tim Cook had made the cut.

And penning Cook’s entry was none other than Apple board member and stalwart enemy of the Chad, former Vice President Al Gore.

It is difficult to imagine a harder challenge than following the legendary Steve Jobs as CEO of Apple. Yet Tim Cook, a soft-spoken, genuinely humble and quietly intense son of an Alabama shipyard worker and a homemaker, hasn’t missed a single beat.

Fiercely protective of Jobs’ legacy and deeply immersed in Apple’s culture, Cook, 51, has already led the world’s most valuable and innovative company to new heights while implementing major policy changes smoothly and brilliantly.

He has indelibly imprinted his leadership on all areas of Apple — from managing its complex inner workings to identifying and shepherding new “insanely great” technology and design breakthroughs into the product pipeline.

Cook’s personal discipline, physical regimen and work hours reflect a philosophy summarized in his 2010 Auburn University commencement speech, in which he quoted President Lincoln: “I will prepare, and someday my chance will come.”

Highly ethical and always thoughtful, he projects calmness but can be tough as nails when necessary. Like the great conductor George Szell, Cook knows that his commitment to excellence is inseparable from the incredible ensemble he leads at Apple. Szell was noted for saying, “We begin where others leave off.”

Cook’s chance has come. What a beginning!

via Time

If you take a look at Apple’s patent filings, it becomes abundantly clear that the company is constantly striving for ways to improve and refine its product line, and one characteristic it always has in its focus is slender design.

To that end, Patently Apple recently highlighted two new patent filings from Apple which detail next-gen dock connectors which would enable Apple to create slimmer devices across its product line.

Apple states that as devices and mobile devices in particular become smaller and slimmer they’re also being designed with more functionality. Apple sees this trend continuing well into the future; one that will continue to pack even more features into increasingly smaller devices…

In general, Apple’s invention relates to circuits, methods, and apparatus that provide connector receptacles having a smaller size. One example provides this smaller size by decreasing the depth of the connector receptacle. Contacts in the connector receptacle may be protected from damage due to improper insertion of a second electronic device or connection to a second electronic device. This protection may be achieved in various ways.

More often than not, a company as large as Apple comes up with patents for ideas that never find their way into actual products, but a smaller dock connector may be coming sooner than later.

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