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Apple Reports Fourth Quarter Results (apple.com)
142 points by ugh on Oct 18, 2010 | hide | past | web | favorite | 109 comments

The iPad sales are just staggering. Moving that many units of a product that didn't even exist a year ago, in a category that was long thought dead, is incredible.

Identify an optimal user experience, polish the hell out of it, then perform an airtight integration of every single component, from end-to-end. The software and hardware, the content ecosystem, the physical distribution, all of it fits together perfectly.

When you look at it closely, Apple, as a portfolio of talent, technologies and interacting businesses, resembles the sort of microorganism that Intelligent Design proponents advance as evidence of a god. Everything cooperates in such a concerted, integrated way it's almost impossible to imagine developing any of it in simpler phases.

In a world filled with corporations whose in-fighting and conflicting agendas make them look like mosh pits, Apple has the tightest marching band in history.

edit: Also, anyone notice how often Apple reports their "best quarter ever?"

When you look at it closely, Apple, as a portfolio of talent, technologies and interacting businesses, resembles the sort of microorganism that Intelligent Design proponents advance as evidence of a god.

Having been an Apple employee, it's funny to me when people describe Apple this way. If you think of their operations as perfect, godlike, or seamless, you have no chance of really understanding them or replicating the good parts yourself.

At Apple there are indeed conflicting agendas, moments of doubt, in-fights, technical debts, and lame-duck products. There might be less of these things than other big companies, but it's still just a group of thousands of individuals trying to make great stuff.

This corresponds closely with my experience, as well. What keeps the wheels from falling off is largely people's emotional investment in product; the harshest assessments of Apple's product I've ever heard came from Apple employees. Too, everybody loves a winner, and Apple's been doing a lot of winning lately; it keeps people motivated when they can read about their projects in the Times.

But it's a big company, and it has a lot of big company problems.

This is really interesting to me – self-organizing passion keeps things juiced more than the strategy or leadership?

Puts the whole "biggest startup in the world" business into perspective, I suppose.

I'd love to hear stories from your experience that illustrate how this motivation works. Others have told me that Apple is very big company but somehow this doesn't poison the end-product. I was crediting this to leadership and smart planning, so I'm fascinated to hear the real deal.

It largely depends on which group you're in. There are people working on stuff that's just sort of ticking along (there's a lot of technology in OS X, some of it sort of hidden -- like the latent semantic analysis framework, which is solely used for Parental Controls), or are inherently sort of gross (QuickTime for Windows, I'm looking at you), and I imagine that their experience would be different from e.g. the people working on iOS or hardware engineering on the Macbook Air or XCode.

I worked at the iTunes Store on video, and it was wild; I started about a year after the store launched, and there were maybe a dozen engineers on the team; by the time I left there had to have been a hundred (10x growth in five years.) What was really motivating was watching the broadcasts of the keynotes -- or being invited to attend -- and seeing the stuff you'd been working on presented by Steve. There was also, I have to admit, a certain charge that came from knowing stuff about future products that wasn't widely disseminated; Apple keeps their teams very segregated, and you often just know a code number or name of something that's passed over the transom, and you don't find out what it is until the rest of the world does.

But that said, siloing can have an adverse effect if you're not working on a hot product; once something is established, executive attention can wander onto something newer and cooler, and big company politics with all that that entails can come into play.

All taken with all, though, it was a fantastic place to work. I recommend it unreservedly.

EDIT: Cleaned up a couple of clunky sentences.

> Having been an Apple employee, it's funny to me when people describe Apple this way. If you think of their operations as perfect, godlike, or seamless, you have no chance of really understanding them or replicating the good parts yourself.

A completely agree, so I think you may have missed my point.

It's worth noting that I think Intelligent Design is horseshit, so god leaps neither from that argument nor from Apple for me. For reference, here's the background:

Flagellar motor (real):


Irreducible complexity (horseshit):


Apple, of course, did evolve from a much less complex organism than it is now, but the overall harmony of its successful products is impressive and demonstrably difficult to replicate. The easy route is to ascribe supernatural powers to Apple's success, but of course the history demonstrates methodical system planning, keen insight, hard work, a bit of fanaticism, and some good timing.

The difference between Apple and other organizations is that while in-fighting and conflicting agendas may exist (as in any human system) this doesn't seem to get in the way of a coherent user product. Compare that with Sony, which can't muster a coherent consumer strategy to save its life. (Well, absent saddling every last product with the proprietary storage device du jour.) Apple may itself not be seamless but the overall experience for users of Apple products is shockingly so, especially when compared to competing gear.

What internal back biting can you share from your tenure at Apple, though? It would be interesting to learn just how aggressively leadership must filter and otherwise confine these impulses to end up with the focus, profits and product mix we see today.

It would be interesting to learn just how aggressively leadership must filter and otherwise confine these impulses to end up with the focus, profits and product mix we see today.

A big key is that things don't ship unless Steve thinks they're great. There's lots of stuff that doesn't ship, and lots of stuff that isn't pursued. However, as a consequence, there's a lot of internal competition to get Steve's attention - or to not get Steve's attention if you're in a services group.

Oh, too interesting. So because Steve holds the keys to the kingdom, incentives align in such a way that competition within Apple surrounds capturing his interest. Every system has an exploit – Apple's would then depend upon hacking Steve, or his circle, for maximum personal gain. Steve ends up being the filter for ambition that doesn't match Apple's long term agenda, while amplifying ambition that does. He's sitting at a loom, weaving all the stuff he likes into the long term vision and squashing everything else.

Thank you for posting and describing it this way – it's interesting and not how I originally thought of it, but of course it makes perfect sense.

The basic kernel of replicable process here seems to be:

  *Create a single point of accountability for product
  *Exercise restraint and focus
  *Have uncompromising taste
It doesn't necessarily scale well, but Apple's numbers suggest it doesn't really need to.

(aside: Putting it this way, Jobs reminds me of the Illusive Man.)


(Sorry, just realized that was way too cryptic. the Illusive Man was a character in Mass Effect 2 voiced by Martin Sheen. Martin Sheen, of course, played the main character, Willard, in the eminently quotable Apocalypse Now. One of the best lines in the film, in addition to the oft-quoted "I love the smell of napalm in the morning. It smells like...victory," as stated by Colonel Kilgore is Willard musing to himself: "Saigon...shit. I'm still only in Saigon."

Incidentally, Sheen was drunk during the filming of the opening scene, and really did cut his hand up. I highly recommend watching the making-of documentary Hearts of Darkness if you ever have the chance.)

Everyone gets everything he wants. I wanted a product, and for my sins, Steve gave me one. Brought it up to me like room service. It was a real choice product, and when it was over, I never wanted another.

> edit: Also, anyone notice how often Apple reports their "best quarter ever?"

It would be slighty more meaningful if you took inflation into account. (Though they are growing way faster than inflation.)

Apple wasn't always like that. Took a long time for that maturity and took a lot of centralizing power before everything came into being.

It took Steve Jobs returning and demanding extraordinary focus. It started with Apple's now famous matrix of consumer and pro for mobile and desktop. New products were added only after judicious consideration of both the user experience and business cases. As new parts of the business emerged, they were tightly integrated with existing products (iTunes + iPod, OS X + iPhone, etc)

edit: It's also worth mentioning that he cleared out all the dead wood, in terms of leadership, fired the board and re-organized Apple around people whose talent and passion positioned the company well for the future. Most famously, Jonathan Ive was on his way out. Steve discovered him languishing in Apple's Industrial Design labs, creatively wilting, dying to be set loose on something daring. Jobs let him have his way, he built the first iMac and now he's a VP.

The most interesting thing about Apple, from my perspective and theirs, is how often they say no to new opportunities. Focus is the sword they used to cut through bullshit before the turnaround and the sword they use now to plow through a field of opportunities, executing on only the best of the best.

Apple of the early-to-mid-90's was just like any other company. Management fiefdoms, conflicting product strategies, and a sea of impossible to understand variations on the same products. Nothing got done. It survived on the fumes that came from the power of the original Mac, and the DNA that was baked into the company: computers should be made to empower everyone.

I remember leaving Apple in the 90s, then visiting for meetings (because our start-up had a business relationship with Apple).

The contrast between our small (six person) company and the entrenched folks at Apple was amazing, especially since I had been one of them just a month or two earlier.

Us: Let's get this done. We're three months to financial destruction, let's move.

Apple: (totally not getting it)

... add to this people who stuck their heads in our meetings, saying "Sorry, I'm triple-booked, hi, see you next week."

I can't say I'm sorry to see the old Apple go. (I'm sorry that the Newton was never properly followed-through on, but that's another story).

And a lot of experience, with Macs, with the iPod, with the iPhone, etc.

Down 5.8% (-18.70) in AH trading: http://www.google.com/finance?client=ig&q=AAPL

edit: whew, and seeming to stabilize around a 4.5% drop still leaving it above $300. I was amazed it broke $300 so easily last week and was afraid it'd fall back below with this drop.

Apple announcements are a magnet for traders. There's no point trying to interpret the stock's gyrations as a judgement of their performance.

Who's offering any interpretation? I'm sure not.

Buy the rumor and sell the news.

This only works if you know the future. After you've heard the rumors, and the news have been reported, you're already too late. Buy solid companies over time and keep them, that's what works.

You don't need to know the future. You just need to hear the rumor before everyone else does.

Why do you think Apple had a big run up before they announced earnings and then dropped the past two days? Just a coincidence? Maybe, but more likely Wall Street knew the news before it was news and the folksy wisdom of "buy the rumor - sell the news" seems pretty spot on.

I do agree with your sage advice that for the individual investor, buying and holding good companies is a sound strategy (Peter Lynch and Warren Buffet would agree too). But no matter what your investing strategy, the individual investor is typically at an information disadvantage vs. investment professionals. They spend all day doing it. How can you possibly be more in "the know" than they are?

Over the long term, perhaps it evens out as you suggest, but the comment above me was wondering what explains why Apple stock would lose value on the day they posted their largest quarterly results ever. Wall Street buying the rumor and selling the news makes some sense to me. I've seen this happen over and over again (not just with Apple yesterday).

"You don't need to know the future. You just need to hear the rumor before everyone else does."

Good luck with that.

"How can you possibly be more in "the know" than they are?"

That's exactly my point. Also, if you do have privileged information, that's illegal.

Why so down? I assume market expectations were higher than what they reported, but in what categories did Apple fall short / what else was as good as expected?

The AAPL stock M/O for as long as I have kept track of it is buy on rumors, sell on news, regardless of how accurate the rumors were or how good the news is.

drop in gross margin from 41.8% to 36.9%

also, someone mentioned (CNBC?) that Wall Street thinks Apple should have sold more than 4.19 million iPads this quarter. Errr...

"Buy the rumor, sell the news"


If you look at the past few weeks it looks like most analysts already expected pretty good news from Apple.

This might not have been quite as good as expected - considering they were at 280 on Oct 1 and now are still 30 points higher I'm guessing there's a lot of investors trying to take some money off the table now.

It could also be because their predicted net revenue and profit for next quarter is not as high as the market expected it to be.

The Ipad and Ipod sales are much lower then expected.

iPod sales were expected (more iPhone victims), iPad expectations are just unrealistic.

No kidding. They sold 80% of the consensus prediction of 5 million units. That still puts Apple on track to sell at least 16 million iPads in its first year on the market.

Minimum retail price for an iPad is $500. 16m units X $500 = at least $8 billion gross revenue.

How many companies can take a new product line from $0 to $8+ billion in one year? It may 'disappoint' the analysts in a technical sense, but Apple's shareholders should be doing cartwheels at this news.

I'll throw my spin on that drop-off...

Say you're an Apple key employee. One who is prohibited from trading within so many days prior to the earnings report (because you have insider information). You sit there, note the stock price runup, and say "man, I'd like to sell a few of my shares at $300".

So you talk to your broker, personal financial advisor, etc, and tell them "I want to move 1,000 shares at $300 once the quiet period is over.

Bam, stock price drops temporarily, and then starts to trickle back up. I have no idea how many people are in this category, but I'm sure there are more than a few at Apple.

Profit taking from the "Buy on rumour, sell on news" crowd. Happens every time.

That was profit-taking. The sell-off wasn't because the news was bad.

If it was predictable it would not have happened. Markets are anti-inductive... oh, never mind.

ah, you edited your post since i was about to reply (and HN crapped out on me). here was my original response:

Finance-related articles: I read several. Margins are depressed[1]. iPad sales were lower than expected[2]. Revenue was above expectations, but profits were below [3].

[1] http://www.nytimes.com/2010/10/19/technology/19apple.html

[2] http://online.wsj.com/article/BT-CO-20101018-713881.html

[3] http://blogs.barrons.com/techtraderdaily/2010/10/18/apple-fy...

Yeah... I thought the bit about "read some articles" sounded snide :)

I guess I also agree it's up to debate, but I don't see how the results Apple posted are a cause for deflation, margins or no. 20 billion in revenue, nearly a quarter million devices a day, and Verizon yet to come.

Everything looks rosy for Apple, with only the Android dark horse to worry about (which has been worried about for some time).

Also, iPad sales are lower than "some" expected. Not everyone.


Actually that is todays trading it is still down in after hours trading currently.

that was the closing price. AH means after hours. check the google chart more closely...

Steve Jobs is just now highlighting Android’s “fragmentation” and discussing Android’s openness. He is also talking about upcoming tablets and their 7" screens. (Trash talking them, that is. No 7" screen from Apple anytime soon.) Ars Technica is blogging: http://arstechnica.com/apple/news/2010/10/liveblog-q4-2010-e...

There were rumors of an Apple 7" device earlier this year. I wonder if they were deliberately started by Apple to send competitors down what they considered a blind alley.

I don't buy into this kind of conspiracy thinking.

Apple builds more products than it releases. It's entirely possible (if not probable) that Apple developed a 7" prototype. Just like I'm sure there's been a CDMA iPhone prototype. That means nothing however. Just because there is/was a prototype doesn't mean there will be a product.

I believe the 7" competitors come down to two things:

1. The competitors might feel like they need to differentiate themselves from the iPad; or, more likely,

2. Apple has tied up the world supply of 10" capacitative touch screens so the competitors needed to go for parts they could get.

Unfortunately a lot of these Apple rumours are started and propagated by people who simply don't understand how Apple operates or are simply link-baiting.

On the outside it is of course impossible to know. But if you listen to Steve Jobs speak, you see he has healthy sense of humor. I would guess if Apple did feint in the 7" direction earlier this year, Steve probably got a big kick out of now slamming competitors for following. Probably not as big a kick as he got from his comments about the PC being the "truck" to the iPad "automobile" that only farmers will still use, after in 2007 in his joint interview at All Things Digital with Bill Gates when he stated that PCs and mobile devices would coexist in a PC-centric ecosystem, but fun nonetheless. By 2007 the iPhone design was basically complete as were Apple's plans to supplant the PC.

In this earnings call, Jobs basically ranted about how it isn't Open vs Closed that is important. This is probably aimed at solidifying the competition's commitment to an Open system and making them less likely to switch to Closed and "admit Apple was right", when the "Closed" nature of Apple's devices is a critical competitive advantage of the Apple platform.

More likely Apple's feverishly working on a 7" device but it wasn't ready to be announced yet. This is a recurring trope in Steve Jobs's speeches -- slag an idea as being unworkable or undesirable, only to announce it at the next major conference.

I'm not sure why you got downvoted for that. It's demonstrably true that Jobs has talked down certain product lines before releasing something in that field. Remember that post-iPhone joint talk with Steve Jobs and Bill Gates, where Bill Gates was all about the tablet-format computer, and Steve Jobs dismissed that, focusing instead on the phone?

When the iPhone first came out, third-party development was, in Jobs mind, to be relegated to HTML and javascript. John Carmack had 'a fairly heated argument' with Jobs that had him saying "I have an iPhone right now and it's a platform I would enjoy developing for but Apple is not taking progressing steps in regards to [gaming]."

I' sure there are more (better) examples, but I think it's a pretty safe bet that when Steve Jobs ramps up the negative rhetoric towards something, Apple is simultaneously testing and developing something along the lines of that thing being dissed.

Select Q&A:

Q: What do you think about the 7" tablets?

A: one naturally thinks a 7" screen offers 70% of the benefits of a 10" screen, but this is far from the truth a 7% screen is only 45% as large as a 10% screen because the measurements are diagonal. This size isn't sufficient to create great tablet apps, in our opinion. One could increase the resolution to make up for the difference, it's meaningless unless the thing also includes sandpaper so users can sand down their fingers.

Another comment by Steve:

"It's being grabbed out of our hands. I talk to people every day in every kind of business who are using iPads boards of directors, nurses, doctors, etc. The more time that passes, the more i am convinced that we have a tiger by the tail here."

Q: Could this be your second biggest business behind iPhone?

A: I try not to predict, I just report.

Q: Any updates on you stance on Flash?

A: Ah, Flash memory? We love Flash memory! [I wonder if the reporter who asked the question understood the joke. ;)]

Q: So if the market starts to move toward lower-functionality smartphones and dramatically lower price points, and you feel you can't make an appropriate product on those price points, you'll throw in the towel?

A: You're looking at it wrong. you're looking at it as a hardware person who doesn't know much about software. who doesn't think about an integrated product and thinks the software will just take care of itself. You assume the software will just somehow come alive on this product you're dreaming up, but it won't. Because these app developers are taking advantage of products that came before it, with larger screens and more capabilities. it throws you back to the beginning of the chicken and egg problem again most developers won't follow you.

Pure gold from Steve. Competitors better listen to this call and learn from the man himself.


You really gotta hand it to Steve. Absolute no corporate speak (aka bullshit) when he talks. Compare this with recent email from Steve Ballmer,

"I sent a message to the world that we’re ‘all in’ when it comes to the cloud. In that speech I noted that Ray’s Internet Services Disruption memo nearly five years ago, and his work since, stimulated thinking across the company and helped catalyze our drive to the cloud." (from http://www.microsoft.com/presspass/press/2010/oct10/10-18ste... )

Cloud? Why do executive use the word 'cloud' when the word 'Internet' is so much better. 'Stimulated thinking'... 'catalyze our drive', looks like someone has been reading too much of Dilbert.

The difference between Steve Jobs and Steve Ballmer is staggering.

Interesting article in WSJ about some research around the language used by lying CEO's:


I'm not saying Ballmers lying, it's just interesting to read the quote above after reading the article.

Actually the term "cloud" and "internet" generally mean different things. The cloud refers to services sitting on endpoints that you don't maintain (or likely don't own either).

The internet generally refers to the communication infrastructure between endpoints. You can be all in on the internet and not care about the cloud. The opposite is more difficult though.

Also Steve's 7" answer seemed odd. The iPod Touch is a 3.5" tablet. He's saying that he can't figure out how to create a device that made good use of twice the diagonal?

I think his point was the size of the human finger creates some hard limitations for multi-touch UI design. So at any resolution a 7" tablet isn't going to offer the physical space required to significantly increase the number of tap targets on screen. As a result you're probably going to end up with applications that look, feel and operate more like a SmartPhone app though with less scrolling & resizing. I believe this might be partly negated by the way Android hides so much functionality under the Menu button. You possibly don't need significantly more tap targets on-screen at any given time in Android to have a good workable tablet UI. It does water down the whole multi-touch experience by adding a layer of abstraction to the UI. Direct manipulation is the real magic of multi-touch and that's lost when we start working with multi-step procedural UI checklists to do common tasks.

OK. I get what you're saying, but I think it is BS myself. And to be perfectly honest I think Steve thinks its BS too. And they'll be working on it until the day he says, "A lot of people have said 'Steve, a 7" tablet would be great'. Well today we have something a lot better than great".

Anyone who thinks you can't do a differentiated multitouch 7" UI is either lying or incompetent. Steve is clearly not the latter. My prediction is that within the next 18 months they release a 7" iPad. Sooner if a 7" Android tablet takes off.

What software will this 7" iOS device run? iPad software shrunk down 50% in size, or iPhone software expanded 50% is size?

Neither works. Neither is compelling. UI design is fundamentally different between a 4" screen and a 10" screen, regardless of the actual screen resolution.

The only reason people are talking about 7" tablets because Android 2.2 is absolutely ridiculous on a 10" screen (see previous paragraph). It's also a way for these manufacturers to compete on price with the iPad.

It's just hard for me to see what value a 7" iPad would bring. Just as Steve said, I can't pocket it, so I still have to have a smartphone. And if I'm going to use something other than my smartphone (which Steve went out of his way today to say that most iPad buyers already have), why would I want to use something only slightly bigger? If anything, the 10" iPad is too small.

The concern isn't that Apple couldn't make a variant of iOS run well on a 7" tablet: it's that the product itself doesn't really have a purpose for being, and that it's asking too much for app makers to target (well) three different sizes that are so close to each other.

(Now, is the current iPad too heavy? Yes. I strongly expect the next iPad revision to be 9.7" and 1/3rd lighter.)

I disagree almost across the board with you. The 10" iPad is just too big for me to feel comfortable carrying around (and yes, it is too heavy. That is the main reason I returned mine).

The problem today is that I have a phone that is really too small to be super useful. I've made considerable concessions, but really browsing and apps on the iPhone kind of suck. It's just they suck a LOT less than phone apps used to. And given the relative infrequency for which I talk on the phone, why do I want to have the phone drive the size of this device?

At about 7" I have an adequate mobile experience, and I can stop using my phone for things it really isn't very good at.

With that said, I'll take a 10" tablet at .75 pounds, which folds in half to the width of something like the Samsung Galaxy tab today (and of course, unfolded there is no visible seam).

Please stop downvoting this post. My sentiments are not the same as kenjackson's, but his are valid and well-expressed. Reply if you disagree with him, but there's no reason to downvote.

Do you have a 7" tablet?

I've used one, but I don't own one. I do plan on owning one soon though. I was anticipating owning a 7" iPad early 2011, but now it appears that it'll likely be a 7" Android 3.0 device. I have owned a 10" iPad though.

I'm just wondering what device it was, and what tasks it did better than the phone, to the extent that you'd carry it around.

Because I'm having a hard time seeing what tasks would be notably better on a half-ipad-sized screen. Reading would be better than a phone, sure. Videos, sure. But beyond that, I'm not sure what the draw is.

It seems any task beyond those two (consumption, the very thing people dismissed the ipad as only being good for) would suffer from the lack of significantly increased tap real-estate.

I mean, even the keyboard itself would have to be annoying. In portrait, it'd be little-better than a phone and in landscape it's the same width as the ipad's portrait keyboard, which is just not good. (far too narrow to touch-type, but too wide to thumb-type[1])

And I can't say I'd be optimistic about Android app developers notably filling the gap at the outset. Even if they can figure out how to add capability in that space, with the array of screen sizes on their way, I wouldn't want to gamble on how much attention they'll be spending on any one screen size. Not until there's some shake-out and consolidation.

I recall that you had and disliked an iPad. It just seems odd to me that you'd dismiss the iPad as not being useful enough, yet jump on the bandwagon for a device that is inherently less-useful.

It'll be smaller and lighter. But still large enough that it's not going in your pocket. So what's the draw?

[1] and that's coming from a fairly large-handed fellow; I found the original xbox "duke" controller to be the most comfortable gamepad I'd ever held.

First, I disliked the iPad, but the main reason was the weight of the device. Besides the weight I think it is a pretty great device, especially with iOS 4. (Although I don't believe it is a laptop replacement).

So actually it is two devices I've used: The Archos Home Tablet 7 and the Samsung Galaxy Tab. The Samsung was way better. The Archos has a resistive display which makes it hard to navigate and a REALLY slow processor. But in terms of button size and general UI layout, both do a good job.

For me the big app draws are those you listed, videos, reading ebooks, but also general web navigation and maps.

The keyboard on the Galaxy is better than the iPad keyboard. In part due to the size. The same reason I prefer portrait sliders over landscape sliders for phones.

My use for a tablet is almost all consumption. This is in part why I think the 7" form factor is so great. I don't pretend this is a laptop replacement.

And the Galaxy tab fit into the pocket on my jeans, admittedly I have them really loose and they have pretty big pockets. But it will also fit comfortable in an inside jacket pocket or a purse.

But the price needs to come down. Even if I prefer a 7" form factor, I'm not going to pay the same price as a 10" form factor. I'll just feel cheated. But I expect we'll see good 7" Android tablets for $299 in the next six months -- if the Tab comes down to that price, I'd get it.

The latest kindle has a 6" screen (which could be expanded to 7" without changing the form factor) and I can fit it in my coat pocket or my wife's purse easily, and my pants pocket with just a little fiddling to get the angle right. It also fits well in the side pouch of my kid's diaper bag.

I find the size far more convenient than larger devices. I'd much rather have a generic prepaid phone and a kindle-sized pad than an iPhone and a 10" iPad.

There's plenty of room for a roughly 7" tablet of some sort to enter the market.

I believe Jobs was talking about fragmentation. You would have to especially adapt the UI for a 7" device, like you have to especially adapt the UI for a 3.5" and 10" device. You can’t just shrink it down or blow it up.

Jobs seems to believe that Apple shouldn’t fragment their product line any further. He seems to think that 3.5" (pocketable) and 10" (more stationary and more capable) are sort of local optima and that Apple should stick to those.

Yep. And he made it sound specifically like they think of 10" as a minimum for the iPad line, not necessarily a maximum.

Edit: I've always thought that was the biggest problem with a 7" Apple device: either you have to scale 3.5" iPhone apps up or 9.7" iPad apps down. Neither of which is optimal. And I don't believe you're gonna be able to (or even that you want to) get devs to adapt their existing apps for a third "sub-platform".

Can you give me some example of 'cloud' services? Aren't they web application/services?

And Apple classifies iPod touch as portable music player/gaming device and not 3.5" tablet.

Cloud services don't have to be web services, although it is becoming more common that they are.

FTP sites are often hosted for a single user or small group of users who host and maintain the site. They own the burden of full site upkeep. It's not something that sits in this "cloud", but its a service on the internet that they maintain.

There's another thing that is implicit about cloud services, which is why I choose the FTP example, which is that the content on the service that is of most value is the content you, the user put in the service. So CNN.com, while a service on the internet, isn't generally considered a cloud service. Whereas FaceBook, Flickr, and GMail are examples of cloud services.

There are many cloud services not tied to the web - an example is a service that replaces tape backups (for enterprise data) by letting you stream the data to an online service.

Aw, cute!

Q: Any updates on you stance on Flash?

A: Ah, Flash memory? We love Flash memory!

Not wanting to point out the obvious, but Apple is the leading seller of 3.5 inch tablets - the iPod touch.

I’m only quoting Jobs here, not presenting my own opinion but I think I can shed some light on that point: iPad and iPod touch do not use the same UI, they do not have the same intended uses. Jobs obviously seems to think that 3.5" (where you sacrifice functionality for compactness) and 10" (where you sacrifice compactness for functionality) are local optima.

27 million iOS devices in the last 3 months, thats a very nice demographic to target that does not seem to be slowing down even with Androids rapid growth also gaining real momentum, I like being in mobile its certainly interesting!

Android is doing well, but we know that Apple users buy apps, not so much with android users.

I think part of the reason is not just the whole Android culture of free, but the poor Market experience. Once Google cleans up the Market, I think sales will increase. Perhaps not to iOS levels, but I would be surprised if there isn't a significant improvement.

Android was slower to rolling out frictionless payment onto their store, only recently did it roll out in a lot more countries http://android-developers.blogspot.com/2010/09/more-countrie... So I would not necessarily use the past history of paid apps on Androids market as direct comparison to Apples app store. However the self selecting fact that more Apple users are likely to have a disposable income is very appealing when choosing to just target an iOS device if you do not need reach, I think for non hit applications, that are more of a business though reach is very important as cracking the top 100 in Apples app store is rather difficult and you have very few other options if you do not succeed in this endeavor

Yeah, I'm doing my last work on 3 desktop apps and then moving into iOS for the forceable future.

I wish I was Apple's CFO. That strikes me as right up there with San Diego Weatherman as the easiest job in the world. Yesterday was sunny and 80 degrees, today is sunny and 80, and tomorrow is going to be sunny and 80.

Then when it does rain, they come after you with tar and pitchforks.

Most interesting of the press release "We still have a few surprises left for the remainder of this calendar year."

They always say something like that, and there's a big Mac event scheduled for Wednesday.

(This sentence is immediately preceded by a highlight of iPhone sales and a dismissal of iPhone competition from RIM.)

Just to clarify, it was my impression that the coming “surprises” specifically relate to the iPhone, based on the context of the statement.

(Though, as glhaynes notes, we are now less than two days away from the “Back to the Mac” event, which will almost certainly have a number of non-iPhone surprises.)

Steve Jobs is an amazing showman. He's got the ability to work the _full_ crowd, but he'll always have his eye on the audience members who have reserved the box seats .. the VIPs (i.e. shareholders).

By ensuring that shareholders are delighted, he makes sure that the show is lubricated with enough cash; so that they're able to ensure even more daring stunts and fireworks are available for the next season's performances.

I think it's wrong to assume that Apple are perfect. In my opinion, there are many things that could be improved about their products, but Jobs realises that perception is _everything_ and he's worked hard to ensure that Apple's image is carefully crafted and actually fulfils emotional needs that Apple's customers have grown to appreciate - and would gravely miss if Apple wasn't around.

The amount of vitriol that's produced by Apple's advocates (when the parent company is attacked) consistently amazes me.

Watching the show from the cheap seats, I'm reminded how every business action can serve multiple aims. Every (slightly or even, overtly) nefarious action can be teamed with a more egalitarian or idealistic aim; each of which can be used by advocates to fight Apple's corner. It's supremely clever work.

I'm not sure if a corporation which operates such a cunning, clever operation should necessarily be congratulated every time they release results. When smoke and mirrors are involved, I think it's worth trying to preserve some critical judgement.


You know the old saying "always darkest just before the storm"?

How's about: "always highest revenue just before the bubble bursts"?

Huge numbers of consumer leaders or consumer suckers have, in the past few years, bought lots of this line of products. Either a large number of them and non-buyers agree "Well, that was worth it" or, the opposite.

Place your bet.

(I'm not saying "droid wins" or "MSFT wins". I'm saying "the category of products is suspect for sustained growth ... Apple is just accelerating the rate at which we find out.")

To be honest, each time Apple has a record quarter (which has been quite often lately) folks doubt that they will sustain that growth, but they’re almost always proven wrong.

Where is Apple slowing? In Macs, which see only modest increases year over year, and iPods, which are in decline. But both of those categories are not losing to competitors — they are being cannibalized by Apple itself, who is busy selling incredible numbers of iPhones and iPads.

If you’re wondering whether Apple’s customers are happy, Apple just earned the highest-ever score in the American Customer Satisfaction Index, in large part due to the iPad: http://digitaldaily.allthingsd.com/20100921/ipad-boosts-appl...

I'm not sure I would characterize the Mac growth as "modest" for the past several years they gave been growing several times faster than the industry average.

Indeed, “modest” is very much an understatement to describe Mac sales :)

Everything is relative, and in the greater market context, Macs are strong. But among Apple’s products, the iPhone brings revenue equal to Macs, and arguably greater potential greater, with the iPad not far behind — likely catching up to Macs by 2012. [1]

[1] http://aaplmodel.blogspot.com/2010/09/ipad-to-exceed-mac-rev...

Several times faster during a major recession. Go chew on that for a minute.

I don't think it is so much Apple, per se, that is nearing the bubble burst as the broad category of mobile gadgets. The "was it worth it" question applies to the category more than the particular company.

Right now I see a lot of these mobile gizmos being sold as status markers and fun toys. Sure, for some they are valued tools but mostly: status marker and/or toy. A status marker branding for a mass produced, mass market item is inherently self-limiting (status markers have to be unusually expensive and scarce to last). A fun toy branding for a product that is fundamentally expensive to obtain and operate month to month is on a collision course with economic reality -- especially when it's a product that breaks easily, is easily stolen, and, anyway, needs to be replaced every few years.

I'm not claiming I can "time markets". Apple may very well have several more great quarter or, if the stars align, might tank after two. I am saying a sharp downturn seems to me to be inevitable and not too far out.

"always highest revenue just before the bubble bursts"?

Isn't this a bit like asking why a lost item is always in the last place you look for it?

Of course revenues are highest before a decline starts. The decline has to start from somewhere; some event has to happen to turn your fortunes from positive to negative. Your revenue has to be climbing upwards for anyone to label it a "bubble". Mediocre companies that implode don't warrant the "bubble" label.

This is just misinterpreting a turn of language.

What would be the consequences of the “bubble bursting”?

I’m asking because there is really no way you can respond to a statement like that. What is your specific prediction? Will Apple be bankrupt in the short or long term? Will their iPhone sales decrease? Will they plateau? Will they grow slower than the Smartphone market? Are you only talking about the iPhone or maybe all iOS devices? Maybe the Mac, too?

in all fairness the OP might be referring to Microsoft as an example.

Proclamations predicting the imminent decline of Apple got old many years ago.

Anecdotally, Apple has a lot of repeat customers. I know lots of people that have purchased Iphone, iphone 3g, 3gs, 4g, ipad, macbook pro (often one work and one personal.) Once you get into the apple ecosystem, things are nice. interoperability is another issue altogether (and dont get me started on the old apple tvs)

one of the Q&A yielded the AppleTV number at being over a 250,000

I guarantee in a generation or so we will look back and do case studies of Apple and Steve Jobs. What made them so successful, etc. Things like to how to develop amazing products, create compelling user experiences, create new markets, market to customers, etc, etc.

Companies like this aren't created everyday.

Will iPad sales dissuade developers from using Flash or promote the development of iPad apps to augment rich Flash sites?

I think the onus is now on Flash developers now to make the case for why Flash is necessary in new development. And I think that's an important threshold.

It's not really. Right now Flash can be used to deploy for iOS finally thanks to Jobs' recent change of heart so essentially "Flash vs. iOS" is a solved problem (although it needs and will get more work from Adobe).

Flash cops a bad rap but it is a massive platform for gaming with hundreds of millions of people choosing Flash games over every other form of entertainment and distraction all day, every day. Yesterday I tracked almost 6 million people that collectively spent 171 years playing Flash games.

There are a handful of technologies that promise we'll be able to make once, deploy everywhere - whoever does it best is going to win the developers. It's not Flash vs. iOS, it's "how do I get my game on n platforms". Adobe fancies themselves in the running, people are working on positioning Mono to solve that problem, Unity are a very likely contender, and of course there's HTML5.

Given that different OSes have different UI idioms and capabilities, it's not clear that "write once, deploy everywhere" is the right strategy.

That's pretty much what I said - it's a problem that Adobe, Mono, Unity etc. are hoping they can solve for us.

I don't think it'll ever be as simple as write once, deploy anywhere ... but write once, in one language, and deploy everywhere with minimal fuss is an admirable goal.

> That's pretty much what I said - it's a problem that Adobe, Mono, Unity etc. are hoping they can solve for us.

It's a problem that companies have been trying to solve, in one form or another, since the advent of the microcomputer.

I'm highly sceptical that a solution is ever going to appear. There is no silver bullet that will allow you to paper over the significant differences in platforms in a transparent, non-clunky manner.

It's a problem that HTML5 is promising to solve too, and that HTML/CSS/JS in general did a pretty good job at in many use cases.

Francisco Tolmasky (of 280 North / Cappuccino fame) had an insightful blog post about this subject:

But let’s get to the real issue here, because this is once again a misunderstanding of design vs. programming. HTML, JS, and CSS do not magically create wonderful experiences on every platform they are run. As you can see from the above screenshot, they certainly have the nice side effect of working on said platforms, but if you’re expecting HTML to somehow handle the subtle and explicit differences between a handheld multitouch peripheral and a desktop application, well then you’re doing it wrong. These are completely different environments and they require completely different designs and often implementations.


HTML/CSS/JS don't solve the problem at all. As they are used today, they target a small set of viewers which happen to go out of their way to provide a fundamentally similar presentation on different platforms. If the viewer happens to deviate from how the most commonly used viewers render, they tend to break horribly (see, for instance, a heavy javascript site viewed via lynx). It's easy to do "write once, view on most viewers" when most viewers try to act more-or-less the same and freely break underlying OS conventions because users have learned to expect that web sites will look and behave the same regardless of the underlying OS conventions.

On the other hand, when you're natively targeting several platforms with radically different UI conventions outside of the browser, it's a lot harder to provide a single language and library set that can cover up those differences. You could go for the browser strategy and attempt to convince users that your application is exempt from the underlying OS conventions because it's special, but that's a steep uphill climb (especially with users bases known to be hostile to applications which deviate from expected conventions, like the Apple community; god help you if you're trying to sell an Adobe Air app on OS X).

Like I said, there is no silver bullet here. You can't get polished interfaces on multi-platforms if you're not willing to polish your interface separately for each platform.

Absolutely Flash still has a place - for some web games, HTML5 is a contender; but for most, Flash is still where it's at.

But if, say, a company were making a new website for the car they're selling (or their restaurant!), Flash was the obvious way a year ago: a case didn't generally need to be made for it. But now, an in-touch manager should demand that a strong case be made for it before going down that path.

Pretty sure at this point video is the most likely reason a site people actually visit have Flash... I'm out of the loop these days but I don't even remember the last time I saw a pure-Flash site.

In terms of video the web at large will never migrate just as they didn't care about the various versions of HTML, the rise of "standards matter" etc, but I thought the largest sites that really matter made themselves compatible ages ago?

I haven't seen it. Not having Flash is still a big bummer on the iPad.

Along the same lines, plenty of developers haven't bothered making iPad versions of their iPhone apps. I think Apple expected too much there. And the crappy pixel-doubled version is not exactly showing off the iPad.

Not a single cent of my money.

I stopped using Apple products when they started to lock down the iPods (by using encryption) and tied devices to a specific installation of iTunes.

And do not even get me started on the closed platforms that are the iPhone or the iPad (i.e. the Apple Store).

The amount good will this company has with consumers is staggering.

Your religion is not serving you.

Yes, I could have stated it more friendly:

I disagree with Apple's policies so I do not buy their products. On some level I also do not understand why not more people are bothered by Apple.

Because the things you think are important just aren't to most people.

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