ImaginativePRO Blog

APPLE UNVEILS TWO NEW IPADS: A 5TH GEN 1-LB, ALUMINUM iPAD AIR AND 2ND GEN iPAD MINI WITH RETINA DISPLAY AND A-7 CHIP

Apple CEO Tim Cook holding the new 1-Lb iPad Air tablet at the San Francisco unveiling on Tuesday, October 22, 2013. (Click Image To Enlarge)

On Tuesday, October 22, 2013, Apple held a new product unveiling event before the press at San Francisco's Yerba Buena Center For The Arts.  Apple CEO Tim Cook spoke about Apple's recent product releases and its quest for new product innovation, then turned the microphone over to Phil Schiller, Apple's V.P. of Global Marketing, who introduced the press to the iPad Air, a 5th generation iPad equipped with a 9.7 inch retina display, the new 64-bit A7 microprocessor and weighing only 1-lb, and the 2nd generation iPad Mini now equipped with a 7.9 inch retina display and new 64-bit A7 microprocessor. 

 

Apple CEO Tim Cook was joined on stage by marketing chief Phil Schiller, iTunes head Eddy Cue and software chief Craig Federighi, who took turns demoing new products. As always, the audience was filled with tech notables, including Path CEO Dave Morin, Flipboard co-founder Mike McCue, former Apple CTO Avie Tevanian, and Apple board member Bill Campbell.

iPad Air 

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Apple unveiled the iPad Air, the fifth generation of its iPad tablet.  The newly named iPad Air features a design that's reminiscent of the iPad mini released last year.  It's thinner and lighter than prior versions, and features a smaller bezel, which shrinks the footprint of the tablet down without compromising on screen size. Apple says it's 20 percent thinner at only 7.5mm thick, and weighs just 1.0 pound (28 percent less than the previous iPad). The screen remains the same; it's a 9.7-inch Retina Display with 2048 x 1536 pixel resolution. This is the first major redesign of Apple's flagship tablet since the iPad 2 was released in March 2011.

 

The iPad Air features the 64-bit A7 processor and M7 motion coprocessor found in the iPhone 5S, which Apple says is 8 times faster and has 72 times better graphics performance than the processor in the original iPad released in 2010. It also has a 5-megapixel iSight camera and FaceTime HD front-facing camera and 10 hour battery life. Apple says the iPad Air has twice the data transfer rate on Wi-Fi thanks to new MIMO 802.11n support, but it doesn't support 802.11ac.

Phil Schiller, Apple V.P. Global Marketing, explains why the new iPad Air is so thin (Click Images To Enlarge)

The iPad Air will be available in silver and white and space grey and black color options starting at $499 in dozens of countries on November 1st. An LTE version will be available starting at $629. Apple is also keeping the geriatric iPad 2 in the lineup for $399. All of the new iPads will be shipping with iOS 7.

iPad Mini 2

iPad mini with Retina display and 64-bit processor coming in November for $399 (Click Image To Enlarge)

Apple's worst-kept secret and one of its most momentous announcements of the day has just been made: the iPad mini is getting upgraded with a new Retina display. The new screen's resolution is 2048 x 1536 — matching that of the latest 10-inch iPads — and the processor powering it is the same 64-bit Apple A7 chip as in the iPad Air and iPhone 5S.

Available in November for $399 with Wi-Fi or $529 with mobile data, the new mini is more expensive than its direct predecessor, but the first-gen device is being kept around as well. The 2012 iPad mini gets a price cut, now costing $299 and acting as Apple's entry-level tablet device.

 

The 2013 iPad mini will be available in either a white and silver color combo or a space gray and black pairing. One of the subtler upgrades on the list of changes is the addition of a new 128GB storage option — that will set you back $699 on the Wi-Fi mini or $829 if you want a mobile connection as well. Apple's being unusually cagey with the timing of the new iPad mini's release, identifying it only as "later in November," but Tim Cook closed off today's presentation by promising that all the new products will be available in time for the holidays.

Phil Schiller, Apple V.P. Global Marketing, alks about the new iPad Mini with retina display at the San Francisco unveiling (Click Image To Enlarge)

Alongside the refreshed 7.9-inch iPad mini, Apple is introducing a new set of colorful Smart Covers, costing $39 each, and more expansive wraparound cases that cost $69. 

The new iPad Mini comes with a 7.9 inch retina display with a resolution of 2048x1536 and 326 pixels per square inch. (Click Image To Enlarge)

The new iPad Mini is equipped with the A7 chip with 64-bit architecture which is 4X faster, has 8X faster graphics with 10 hours of battery life. (Click Image To Enlarge)

iPad Air and iPad Mini 2 With Retina Display Prices and Specifications

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Full-Size Tablets Compared - iPad Air vs The Competition

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This iPad Air comparison chart includes Google's Nexus 10 (Click Image To Enlarge)

Mini Tablets Compared - iPad Mini 2 vs The Competition

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COMMENTARY:   In his overview of the iPad, Tim Cook said Apple has sold 170 million tablets since introducing the “magical device” three and a half year ago. 

Investors have been clamoring for Cook and Apple to speed up their new product rollout schedule to boost sales growth and fend off rivals from Amazon to Google to Samsung in the two markets where it gets about 70 percent of its sales: smartphones and tablets. Amazon, with its Kindle, and Google, with its Nexus, already offer high-definition displays in their small screen tablets, and Samsung beat Apple to market with its release last month of a smartwatch called the Gear that works with its Galaxy phone.  Analysts don’t expect Cook, who last month introduced the new iPhone 5s and  iPhone 5c as well as a faster iMac desktop, to unveil a smartwatch until next year.

Ovum analyst Jan Dawson praised Apple for adding the most advanced tech to its iPad Air, saying,

“The iPad Air is a good enough boost to the previous version to trigger good upgrade sales and get iPad shipments growing again, which was a key objective for this launch.”

But Apple’s pricing across the iPad line may not woo users away from lower-priced tablets built around Google’s Android operating system.

Milton Booty, a technology analyst, said in an email statement.

"This is the clearest statement Apple could have made that it is only interested in competing in the premium tablet space. The yawning gap between the specs of the cheaper iPad Mini and iPad 2 and the new iPads signifies that it is only willing to compete at the lower price points with older models. This leaves a huge chunk of the tablet market unserved by Apple while others such as Google, Amazon and a raft of others aggressively target the sub-$400 market. This reinforces our view that Apple’s share in tablets will continue to fall as Android’s share rises over the coming years.”

How Apple Created The Lightest iPad Yet

Just 7.5mm wide and weighing one pound (20% lighter than the iPad 4), the iPad Air is the thinnest and lightest full-size tablet Apple has ever created.   To get an idea of the magnitude of this accomplishment let's look at a comparson of the dimensions of the iPad Air and its predecessor the iPad 4.

Dimensions

iPad Air: 240x169.5x7.5mm, weighing 478g
iPad 4: 241.2x185.7x9.4mm, weighing 662g

If you were wondering how Apple's engineers were able to achieve this, it comes down to good ole fashioned design ingenuity and innovation.   

• Thinner Bezel - The bezel around the iPad Air display is 7.5mm thick compared with the iPad 4's 9.4mm bezel -- a reduction in the bezel of 43 percent.
• Aluminum Chasis - The iPad Air kept the lightweight aluminium chassis of the iPad 4, but due to a thinner and lighter A7 microprocessor chip and thinner bezel, the aluminum chasis is also thinner and contributes to the overall lower weight. 
• A7 Microprocessor - The iPad Air is equipped with the new A7 microprocessor chip with 64-bit architecture which is blazzingly fast:  Processes data 4 times faster than the A6 chip and displays graphics 8 times faster.  Apple was also able to shrink the down the process with which the A7 chip was made from 32 nanometers to just 28 nanometers--remember, the smaller a chip is, the less electricity it needs to run--meaning that, not only is the A7 chip powerful enough to drive an iPad's Retina Display, it's more power-efficient too.
• Power Saving Retina Display - The iPaid Air is rumored to be using Sharp's indium gallium zinc oxide or IGZO thin-film transistor display technology (or something like it). IGZO allows more light from a display's backlight to shine through to the pixels of the screen to produce a brighter display without draining excessive power from the battery. During the iPad unveiling event, Apple quietly made mention in their presentation unveiling the new iPad Air and Retina iPad mini that both devices used "improved backside illumination."
  

With the iPad Air and Retina iPad mini, Apple has been able to finally ditch the much thicker and power-draining A6 microprocessor.  The 64-bit A7 chip that Apple debuted with the iPhone 5s has powerful enough graphics in its default configuration to handle a 3-million-pixel-plus Retina Display. Apple was also able to shrink the down the process with which the A7 chip was made from 32 nanometers to just 28 nanometers--remember, the smaller a chip is, the less electricity it needs to run--meaning that, not only is the A7 chip powerful enough to drive an iPad's Retina Display, it's more power-efficient too. 

Courtesy of an article dated October 22, 2013 appearing in The Verge, an article date October 22, 2013 appearing in The Verge, an article dated October 23, 2013 appearing in Business Insider, an article dated October 24, 2013 appearing in The Gazelle, an article dated October 22 2013 appearing in Mashable, an article dated October 22, 2013 appearing in Forbes, an article dated October 23, 2013 appearing in The Inquirer, an article dated October 22, 2013 appearing in Fast Company Design

GOOGLE REPORTS Q3 2013 REVS OF $14.9 BIL, NET INC OF $2.97 BIL, BUT MOTOROLA LOSES $250 MIL IN SPITE OF MOTO X LAUNCH

On Friday, October 18, 2013, Google Inc (NASDAQ.GOOG) shares rose +122.61 to a new high of $1011.41 or +13.80% following a stellar Q3 2013 earnings report the day before (Click Image To Enlarge)

MOUNTAIN VIEW, Calif. – October 17, 2013 – Google Inc. (NASDAQ: GOOG) today announced financial results for the quarter ended September 30, 2013.

Larry Page, Google CEO said. 

“Google had another strong quarter with $14.9 billion in revenue and great product progress.  We are closing in on our goal of a beautiful, simple, and intuitive experience regardless of your device.”

Q3 Financial Summary

Google Inc. reported consolidated revenues of $14.89 billion for the quarter ended September 30, 2013, an increase of 12% compared to the third quarter of 2012. Google Inc. reports advertising revenues, consistent with GAAP, on a gross basis without deducting traffic acquisition costs (TAC). In the third quarter of 2013, TAC totaled $2.97 billion, or 24% of advertising revenues.

Operating income, operating margin, net income, and earnings per share (EPS) are reported on a GAAP and non-GAAP basis. The non-GAAP measures, as well as free cash flow, an alternative non-GAAP measure of liquidity, are described below and are reconciled to the corresponding GAAP measures at the end of this release.

• GAAP operating income in the third quarter of 2013 was $3.44 billion, or 23% of revenues. This compares to GAAP operating income of $2.74 billion, or 21% of revenues, in the third quarter of 2012. Non-GAAP operating income in the third quarter of 2013 was $4.34 billion, or 29% of revenues. This compares to non-GAAP operating income of $3.76 billion, or 28% of revenues, in the third quarter of 2012.
• GAAP net income including net income from discontinued operations in the third quarter of 2013 was $2.97 billion, compared to $2.18 billion in the third quarter of 2012. Non-GAAP net income in the third quarter of 2013 was $3.64 billion, compared to $2.96 billion in the third quarter of 2012.
• GAAP EPS including impact from net income from discontinued operations in the third quarter of 2013 was $8.75 on 339 million diluted shares outstanding, compared to $6.53 in the third quarter of 2012 on 333 million diluted shares outstanding. Non-GAAP EPS in the third quarter of 2013 was $10.74, compared to $8.87 in the third quarter of 2012.
• Non-GAAP operating income and non-GAAP operating margin exclude stock-based compensation (SBC) expense, as well as restructuring and related charges. Non-GAAP net income and non-GAAP EPS exclude the expenses noted above, net of the related tax benefits, as well as net income or loss from discontinued operations. In the third quarter of 2013, the expense related to SBC and the related tax benefits were $886 million and $207 million compared to $706 million and $155 million in the third quarter of 2012. In the third quarter of 2013, restructuring and related charges and the related tax benefits were $12 million and $3 million, compared to $313 million and $67 million in the third quarter of 2012. In addition, net income from discontinued operations in the third quarter of 2013 was $15 million, compared to net income from discontinued operations of $18 million in the third quarter of 2012.

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Q3 Financial Highlights

Revenues and other information – On a consolidated basis, Google Inc. revenues for the quarter ended September 30, 2013 were $14.89 billion, an increase of 12% compared to the third quarter of 2012.

Google Segment Revenues – Google segment revenues were $13.77 billion, or 92% of consolidated revenues, in the third quarter of 2013, representing a 19% increase over third quarter 2012 Google segment revenues of $11.53 billion.

• Google Sites Revenues – Google-owned sites generated segment revenues of $9.39 billion, or 68% of total Google segment revenues, in the third quarter of 2013. This represents a 22% increase over third quarter 2012 Google sites segment revenues of $7.73 billion.
• Google Network Revenues – Google’s partner sites generated segment revenues of $3.15 billion, or 23% of total Google segment revenues, in the third quarter of 2013, compared to $3.13 billion of Google network segment revenues in the third quarter of 2012.
• Other Google Revenues – Other revenues from the Google segment were $1.23 billion, or 9% of total Google segment revenues, in the third quarter of 2013. This represents an 85% increase over third quarter 2012 other Google segment revenues of $666 million.

Google Revenues By Source by Quarter - Q1 2011 Through Q3 2013 - Business Insider (Click Image To Enlarge)

Google Segment International Revenues – Google segment revenues from outside of the United States totaled $7.67 billion, representing 56% of total Google segment revenues in the third quarter of 2013, compared to 55% in the second quarter of 2013 and 53% in the third quarter of 2012.

• Google segment revenues from the United Kingdom totaled $1.39 billion, representing 10% of total Google segment revenues in the third quarter of 2013, compared to 11% in the third quarter of 2012.

Google Revenues - U.S. vs International by Quarter - Q1 2011 Through Q3 2013 (Click Image To Enlarge)

Foreign Exchange Impact on Google Segment Revenues – Excluding gains related to our foreign exchange risk management program, had foreign exchange rates remained constant from the second quarter of 2013 through the third quarter of 2013, our Google segment revenues in the third quarter of 2013 would have been $41 million higher. Excluding gains related to our foreign exchange risk management program, had foreign exchange rates remained constant from the third quarter of 2012 through the third quarter of 2013, our Google segment revenues in the third quarter of 2013 would have been $135 million higher.

• In the third quarter of 2013, we recognized a benefit of $22 million to Google segment revenues through our foreign exchange risk management program, compared to $62 million in the third quarter of 2012.

Reconciliations of our non-GAAP international revenues excluding the impact of foreign exchange and hedging to GAAP international revenues are included at the end of this release.

Paid Clicks – Aggregate paid clicks, which include clicks related to ads served on Google sites and the sites of our Network members, increased approximately 26% over the third quarter of 2012 and increased approximately 8% over the second quarter of 2013.

Cost-Per-Click – Average cost-per-click, which includes clicks related to ads served on Google sites and the sites of our Network members, decreased approximately 8% over the third quarter of 2012 and decreased approximately 4% over the second quarter of 2013.

TAC – Traffic acquisition costs, the portion of revenues shared with Google’s partners, increased to $2.97 billion in the third quarter of 2013, compared to $2.77 billion in the third quarter of 2012. TAC as a percentage of advertising revenues was 24% in the third quarter of 2013, compared to 26% in the third quarter of 2012.

The majority of TAC is related to amounts ultimately paid to our Network members, which totaled $2.22 billion in the third quarter of 2013. TAC also includes amounts ultimately paid to certain distribution partners and others who direct traffic to our website, which totaled $755 million in the third quarter of 2013.

Motorola Mobile Segment Revenues – Motorola Mobile segment revenues were $1.18 billion, or 8% of consolidated revenues in the third quarter of 2013, compared to $1.78 billion, or 13% of consolidated revenues in the third quarter of 2012.

Elimination and Other – Beginning in Q3 2013, Google and Motorola segment revenues are impacted by intersegment transactions that are eliminated in consolidation. Additionally, segment revenues associated with certain products were recognized this quarter in the segment results, but deferred to future periods in our consolidated financial statements. Such intersegment revenues and deferred revenues were $63 million in the third quarter of 2013.

Other Cost of Revenues – Other cost of revenues, which is comprised primarily of manufacturing and inventory-related costs, data center operational expenses, amortization of intangible assets, and content acquisition costs, increased to $3.44 billion, or 23% of revenues, in the third quarter of 2013, compared to $3.19 billion, or 24% of revenues, in the third quarter of 2012.

Operating Expenses – Operating expenses, other than cost of revenues, were $5.04 billion in the third quarter of 2013, or 34% of revenues, compared to $4.61 billion in the third quarter of 2012, or 35% of revenues.

Amortization Expenses – Amortization expenses of acquisition-related intangible assets were $281 million for the third quarter of 2013, compared to $287 million in the third quarter of 2012. Of the $281 million, $153 million was as a result of the acquisition of Motorola, of which $116 million is included in Google segment results and $37 million is included in Motorola Mobile segment results.

Stock-Based Compensation (SBC) – In the third quarter of 2013, the total charge related to SBC was $886 million, compared to $750 million in the third quarter of 2012. We currently estimate SBC charges for grants to employees prior to September 30, 2013 to be approximately $3.29 billion for 2013. This estimate does not include expenses to be recognized related to employee stock awards that are granted after September 30, 2013 or non-employee stock awards that have been or may be granted.

Operating Income – On a consolidated basis, GAAP operating income in the third quarter of 2013 was $3.44 billion, or 23% of revenues. This compares to GAAP operating income of $2.74 billion, or 21% of revenues, in the third quarter of 2012. Non-GAAP operating income in the third quarter of 2013 was $4.34 billion, or 29% of revenues. This compares to non-GAAP operating income of $3.76 billion, or 28% of revenues, in the third quarter of 2012.

• Google Segment Operating Income – Google segment operating income in the third quarter of 2013 was $4.64 billion, or 34% of Google segment revenues. This compares to segment operating income of $3.95 billion in the third quarter of 2012, or 34% of Google segment revenues.
• Motorola Mobile Segment Operating Loss – Motorola Mobile segment operating loss in the third quarter of 2013 was $248 million, or -21% of Motorola Mobile segment revenues. This compares to segment operating loss of $192 million, or -11% of Motorola Mobile segment revenues in the third quarter of 2012.

Interest and Other Income, Net – Interest and other income, net, was $24 million in the third quarter of 2013, compared to $65 million in the third quarter of 2012.

Income Taxes – Our effective tax rate was 15% for the third quarter of 2013.

Net Income – Consolidated GAAP net income in the third quarter of 2013 was $2.97 billion, compared to $2.18 billion in the third quarter of 2012. Non-GAAP consolidated net income was $3.64 billion in the third quarter of 2013, compared to $2.96 billion in the third quarter of 2012. GAAP EPS in the third quarter of 2013 was $8.75 on 339 million diluted shares outstanding, compared to $6.53 in the third quarter of 2012 on 333 million diluted shares outstanding. Non-GAAP EPS in the third quarter of 2013 was $10.74, compared to $8.87 in the third quarter of 2012.

Cash Flow and Capital Expenditures – Net cash provided by operating activities in the third quarter of 2013 totaled $5.08 billion, compared to $4.0 billion in the third quarter of 2012. In the third quarter of 2013, capital expenditures were $2.29 billion, the majority of which was for production equipment, data-center construction, and real estate purchases. Free cash flow, an alternative non-GAAP measure of liquidity, is defined as net cash provided by operating activities less capital expenditures. In the third quarter of 2013, free cash flow was $2.79 billion.

We expect to continue to make significant capital expenditures.

A reconciliation of free cash flow to net cash provided by operating activities, the GAAP measure of liquidity, is included at the end of this release.

Cash – As of September 30, 2013, cash, cash equivalents, and marketable securities were $56.52 billion.

Headcount – On a worldwide basis, we employed 46,421 full-time employees (42,162 in Google and 4,259 in Motorola Mobile) as of September 30, 2013, compared to 44,777 full-time employees (40,178 in Google and 4,599 Motorola Mobile) as of June 30, 2013.

COMMENTARY:   

Motorola Disappoints

In spite of Google's stellar Q3 2013 earnings report, Motorola, continues its downward decline, as it posted another $250 million dollar loss in spite of the Moto X launch -- evidently those personalized phones haven't been selling swiftly enough to stem the tide.  Page is optimistic about Motorola, as he waxed poetic about its voice recognition features and stated that the Android ecosystem is healthy -- it now numbers 1 billion devices strong, and continues at a pace of 1.5 million more activations per day. The problem? Well, Moto's manufacturing is up to speed, but the process of building marketing and distribution are what's holding Moto back.

Motorola's Moto X smartphone (Click Image To Enlarge)

Unveiled on August 1, 2013, the new 4.7-inch screen smartphone is aimed at market leaders like the iPhone and the Galaxy S phones. The Moto X features “all-day” battery life, a choice of colors and materials, and an instant-start camera, the company said today at a press event in New York. The Moto X is priced starting at $199 with a two-year contract and will be available on all the major U.S. carriers by the end of August or early September.

Bloomberg's panel of technology experts discusses Motorola's new Moto X smartphone designed to compete against the iPhone. Google acquired Motorola in 2011 and I covered it in my blog on September 7, 2011 (Click Image To View Video)

Dennis Woodside, chief executive officer of Motorola Mobility, said at the unveiling press event.  

“This is a relaunch of Motorola.  A year ago today, the Google team sat before a whiteboard and said, ‘What do we want to build? And how do we make it different?’ And this is it.”

The Moto X is assembled by contract manufacturer Flextronics International Ltd. (FLEX) at a former Nokia Oyj facility in Fort Worth, Texas.  Staffing the facility will require about 2,000 jobs, Woodside said in May.

Working initially with AT&T Inc. (T), customers can customize the colors of the front, back and accents of the Moto X on website Motomaker.com. The customization work is done in Fort Worth, and Motorola guarantees phone delivery in four days, said Osterloh. One of the custom options available is a wooden back made from a choice of rosewood, teak, bamboo or ebony.

Woodside said in an interview with Bloomberg Television.

“You can build this phone in 2,000 combinations.  By giving consumers the option to customize phones, that’s going to be fun and interesting.”

Boy, I thought Apple had gone crazy with its iPhone C color combinatins, but Motorola topped the iPhone C's color combinations by a factor of 10.

Google Still Leads In Search, But Market Share Is Flat

The company's share of the search market has remained relatively flat and its margins on desktop search advertising — Google's bread and butter — have declined as PCs are replaced by smartphones and tablets. Last quarter its cost per click, a metric of how much brands pay to advertise with Google, declined 6 percent. It fell again this quarter, down 8 percent year of year and 4 percent from last quarter. But the total volume of paid clicks (when people click on ads across Google's sites and on ad networks it serves) rose 26 percent year over year, offsetting that decline.

Google Bullish On Mobile Video

Page and Google are also bullish on mobile video, announcing that a full forty percent of YouTube's revenue now flows from phones and tablets. Just two years ago, the video service only got six percent of its cash from such devices. And, as YouTube has continued to beef up its video library -- be it livestreaming events or sponsored weeks of original content -- video continues to grow in importance to Google's overall bottom line. However, when asked about a rumored partnership to broadcast NFL games, the company remained coy. Nikesh Arora, Google's Chief Business Officer would only say that YouTube's always talking to content providers, but remains satisfied with its current business plan.

Chromebooks Big With U.S. Schools

As for the company's other main hardware, Chromebooks, well, things are looking up there too. Over 8,000 locations worldwide are now selling them, and twenty percent of US school districts have deployed Google-fied laptops. Gotta get 'em on the Google bandwagon early, right?

Google's Chromebook is a laptop that uses the Chrome operating system and all applications and user-generated files are stored in the Google cloud ecosystem (Click Image To Enlarge)

Search Ad Revenue Growth Slows

As Colin W. Gillis, a technology analyst at BGC, pointed out in Time on Friday morning, Google has seen a substantial deceleration from the 35 percent annual growth that the company delivered as recently as 2011, averaging around 20 percent in its last several quarters. Gillis says.

"We see the slowing core business as a one reason why Google is investing so heavily in new ventures as new products are needed to reignite revenue growth."

R&D 

all topics on the earnings call revolved around making money, there was some talk of spending it, too. Through the first three quarters of this year as compared to last, Google's R&D budget has increased by almost $1 billion. And, if Larry Page had his way, he'd be spending even more. Part of Page's job is to spend on long-term R&D -- projects that are "speculative" according to Page. You know, stuff like Calico, Project Loon and Google's self-driving cars. Current spending on such projects "isn't consequential for Google" according to Page, and he wants to do more of it.

Earnings Report Conference Call Transcript

For a complete transcript of Google management earnings report conference call, please click HERE.

Courtesy of a press release dated October 17, 2013 issued by Google, an article dated August 1, 2013 appearing in Bloomberg, an article dated October 17, 2013 appearing in Engadget, an article dated October 17, 2013 appearing in The Verge, an article dated October 17, 2013 appearing in Business Insider, an article dated October 17, 2013 appearing in SeekingAlpha, and an article dated October 17, 2013 appearing in VentureBeat

MICROSOFT UNVEILS THE NEW SURFACE PRO 2 TABLET, THINNER AND LIGHTER, LONGER BATTERY LIFE, WITH A FASTER i5 HASWELL PROCESSOR

Panos Panay, Microsoft's VP of Surface, holds the new Surface Pro 2 tablet during Monday's unveiling press conference (Click Image To Enlarge)

Microsoft has unveiled the Surface Pro 2 tablet, a new version of its flagship 10.6-inch Windows tablet, with the power of a full-size PC in a tablet.  Pre-orders begin tomorrow, Tuesday, September 24, 2013.  Prices starting at $899.00 

Though little has been changed externally on the updated device — it has the same size, weight, and black color scheme as its predecessor — Microsoft says that what's inside has changed quite a bit.  Panos Panay, Microsoft's VP of Surface says. 

"We improved the performance on this product by 20 percent.  If you thought it was fast before, it is lightning fast now."

Panay says that the tablet is now faster than 95 percent of laptops and that its graphics performance has increased by 50 percent. The updated tablet includes one of Intel's Core i5 Haswell processors, and Microsoft says that it'll see a 60 percent improvement in battery life over its predecessor.

 

The Surface Pro 2 is also trying to address one of the biggest complaints many had with the original tablet: that its built-in kickstand was difficult to use when propped on your lap. The new tablet's kickstand has a second position that can prop the device up at a 55 degree angle — in addition to the 22 degree angle present on its predecessor — adding a much more sloped position for it to stand in. Panay also says that the Surface Pro 2 will run quieter and cooler than the original Surface Pro, and that its 1080p display has 46 percent greater color accuracy.

Microsoft announces Surface Pro 2 with updated kickstand and Haswell processor  (Click Image To Enlarge)

The Microsoft Surface Pro 2 tablet with attached Pwer Cover or full-size keyboard. (Click Image To Enlarge)

Panay says. 

"This is power.  This thing's a beast."

Panay also believes that Surface Pro 2 will deliver the "full power of a PC" but in the form factor of a tablet. The tablet will be shipping with Windows 8.1 on October 22nd — just a few days after the general release of Windows 8.1 itself.  

The Surface Pro 2's pricing begins at $899 and stretches up to $1,799, with configurations for 4GB of RAM with either 64 or 128GB of storage, and 8GB of RAM with either 256 or 512GB of storage.  It'll be available for pre-order online beginning tomorrow at 8AM ET.

The Microsoft Surface Pro 2 tablet with kickstand. (Click Image To Enlarge)

The Microsoft Surface Pro 2 tablet is comes equipped with a digitizing pen. (Click Image To Enlarge)

Everyone who purchases a Surface Pro 2 will be given access to several Microsoft services too, including one year of free Skype calling to landlines, as well as unlimited use of Skype-branded Wi-Fi hotspots. And for two years, users will get 200GB of SkyDrive storage as well.

 

Microsoft is also unveiling several new accessories for its Surface tablets. The Surface Pro line is getting a docking station that will transform the tablets into something closer to a traditional PC by providing USB ports for connecting a mouse and keyboard to, as well as a Mini DisplayPort for adding an external monitor. There’s also a new attachable keyboard called the Power Cover, which includes a built-in battery for extending the tablet’s daily longevity, in addition to a backlit keyboard called the Type Cover 2, among others.

The Microsoft Surface Pro 2 tablet with kickstand in the out position (front and back views) (Click Image To Enlarge)

The Microsoft Surface Pro 2 tablet standing with kickstand out and with the attached full-size keyboard. (Click Image To Enlarge)

COMMENTARY:   Microsoft just announced a docking station for the Surface Pro and Surface Pro 2, the first docking accessory for the Surface line of tablets. The dock has been expected for a long time, and it looks like a solid workstation intended to appeal to business users who use the Surface for serious computing.

The Microsoft Surface Pro 2 tablet with optional docking station (front and rear views) (Click Image To Enlarge)

The Surface Docking Station, unveiled at a press event in New York City today, is large and sturdy-looking, framed by two wings that fit on either side of the docked tablet. The dock includes three USB 2.0 ports, one USB 3.0 port, audio in, audio out, and will of course charge the device while connected. It can also power two monitors.

Unfortunately for Surface RT and Surface 2 users, the new docking station will will only support Surface Pro and Surface Pro 2. Like many other docking stations, you can use the Surface version to connect a display via a mini DisplayPort dongle, or use a wired connection through the ethernet port.

Seven months ago, Surface vice president Panos Panay there were no plans to build a docking station, so it's interesting that the company changed its mind. Perhaps the software giant listened to customers who remarked that the ability to have monitors, keyboard, and mouse connected to a docking station "would really seal this system up for a lot of business users." The Docking Station for Surface Pro will retail at an estimated $199.99. Microsoft expects to release it in early 2014. 

There's also the new Type Cover 2 that's 1mm thinner (2.5mm total, to be exact) than the previous model and packs a whopping 1,092 sensors for a better typing experience and touch gestures. This one is backlit (the first for a Surface tablet) and dims intelligently with the help of a proximity sensor. At $130, it offers 1.5mm of travel for what should be improved ergonomics for longer typing sessions on both the Surface Pro 2 and the Surface 2. The Touch Cover 2 is also thinner and lighter than its predecessor while getting the backlit upgrade and a $120 price tag. Rounding out the lot is a $60 Bluetooth wireless adapter for the covers, a USB car charger and a Surface Edition of the Arc Touch Mouse priced at $70.

The Microsoft Surface Pro 2 tablet is comes equipped with a touch cover or keyboard that comes in four different colors. (Click Image To Enlarge)

The biggest issue that I find with the new Microsoft Surface Pro 2 tablet is that it is a laptop disguised as a tablet.  The optional power keyboard, bigger memory and docking station really transform the Surface Pro 2 from just a tablet into a laptop -- a very expensive laptop. Who is going to pay $899 for a tablet, and with add-ons upwards of $1,799 (or over $2,000 with sales tax and extended warranty).  Very few people are going to buy it at those price points.  

If Microsoft were smart, it should've produced a 7-inch Surface Pro 2 tablet to compete with Apple's iPad Mini and Google's Nexus 7 2nd generation tablets.  I think that this is where the consumer market is going.  9.7 and 10.1 inch tablets are bulky and heavy.  The children's market is where the growth will come from.  Children can easily hold a 7-inch tablet, and they are a whole lot lighter.  As an owner of the new Nexus 7 2nd Gen tablet, I can attest to this.  The Nexus 7 2nd Gen tablet is the best damn 7-inch tablet money can buy.

If you are a PC power user, stay with your laptop.  But, if you want to own a tablet strictly for for the enjoyment of surfing the internet, playing games, music, videos and movies, a 7-inch tablet makes a lot of sense, if you truly want to be mobile and not incumbered by something bulky and heavy. 

Courtesy of an article dated September 23, 2013 appearing in The Verge and an article dated September 23, 2013 appearing in The Verge and an article dated September 23, 2013 appearing in Engadget

APPLE NO 1 IN TABLETS, BUT MARKET SHARE SLIPS TO 32% OF TABLETS SHIPPED DURING Q2 2013, SAMSUNG MARKET SHARE DOUBLES

Apple iPad 4 and iPad Mini (Click Image To Enlarge)

While iPad shipments fell year over year in the June quarter, competing Android tablets saw huge gains, reducing Apple's share of worldwide tablet shipments to less than a third.

Apple remains the largest tablet maker in the world, according to the latest estimates published Monday by IDC. But it accounted for 32.4 percent of shipments in the second quarter of calendar 2013 — well off from the 60.3 percent the company held in the same quarter a year ago.

Tom Mainelli, research director for tablets at IDC, said.   

"A new iPad launch always piques consumer interest in the tablet category and traditionally that has helped both Apple and its competitors.   With no new iPads, the market slowed for many vendors, and that's likely to continue into the third quarter. However, by the fourth quarter we expect new products from Apple, Amazon, and others to drive impressive growth in the market."

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Top 5 Tablet Vendors During Q2 2013

• #1 Apple - Apple's shipments slid 14.1 percent year over year, competing tablet makers who use Google's Android mobile platform all saw significant gains.  
• #2 Samsung - The second-largest tablet maker, Samsung, posted a 277 percent year over year gain to 8.1 million units, good for 18 percent of the market.
• #3 Asus - In third was Asus, which grew 120 percent to 2 million units, taking a 4.5 percent slice of shipments. 
• #4 Lenovo - Lenovo came in fourth with 313.9 percent growth, hitting 1.5 million units and 3.3 percent share.
• #5 Acer - Finally, in fifth place was Acer, which shipped 1.4 million units, or 3.1 percent of the total market, on 136.6 percent growth. 

In all, tablet shipments were up 59.6 percent from the same quarter in 2012, and reached 45.1 million total units.

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In terms of platform, Android was found on 62.6 percent of tablets shipped in the second quarter, or 28.2 million units. iOS carried the same share of 32.5 percent in both software and hardware, as the platform is only available on Apple's iPad.

The platform that saw the largest growth during the quarter was unsurprisingly Microsoft's Windows, which surged 527 percent year over year. Tablets running Windows RT and Windows 8 weren't available until late 2012, meaning last year's June quarter saw virtually no Windows-based tablet sales.

Ryan Reith, program manager for IDC's Mobility Tracker programs, said.   

"The tablet market is still evolving and vendors can rise and fall quickly as a result.  Apple aside, the remaining vendors are still very much figuring out which platform strategy will be successful over the long run. To date, Android has been far more successful than the Windows 8 platform. However, Microsoft-fueled products are starting to make notable progress into the market."

Of course, shipments and market share are only part of the story, as actual sales to customers are unknown, and Apple is still the undisputed leader in collecting the lion's share of profits from tablets. Apple Chief Executive Tim Cook noted in his company's most recent quarterly earnings report that the latest Web browsing share data shows that the iPad accounts for 84 percent of tablet traffic.

Cook said.    

"If there are other tablets being sold, I don't know what they're being used for."

COMMENTARY:     If you are in the market for a new tablet, checkout the following tablet features comparison chart:

Top Tablet Brands Comparison Chart (Click Image To Enlarge)

According to Apple Insider, Apple's much rumored iOS 7 tablet, the iPad 5, promises to deliver better productivity and provide highly efficient navigational features thanks to a newly approved patent and the very popular Google Map.

Approved Apple iPad 5 patent drawing according to Apple Insider (Click Image To Enlarge)

Apple's rumored iPad 5 will have vastly improved Google Map app (Click Image To Enlarge)

U.S. authorities gave its nod this week on an Apple invention that would enable iPad users to access 'virtual drafting tools' like ruler, protractor, compass, stencil tools and in the near future - a stylus, Patently Apple said in a report.

Seen as one of the new applications that Apple will lump with the fully-revamped iOS 7, this CAD-based designing tool involves advanced multi-touch screen manipulation, bringing computer-aided tasks from desktop to mobile devices.

The most suitable platform, of course, would be the 9.7-inch iPad though Apple does not discount the possibility of adding CAD-like features to the iPad Mini model, which sports a 7.9-inch profile.

According to Apple, CAD and other drafting programs and functions would be easily ported to iPads through multi-touch display screen implementation.

When in use, the tool will allow users to "resize, scale, or make other adjustments (on a specific design project) with full gesture support," Apple Insider said on its report.

The beauty of the soon-to-be-introduced Apple app is it fully supports the use of numerous virtual tools, allowing users to "invoke a ruler, protractor and t-square, interacting with each simultaneously." Additionally, these tools can be customised depending on users' preferences or actual project requirements.

Adding to this likely iPad 5 application is another tool, coming this time from another tech titan - Google.

The company's version 2.0 of the Google Maps is released this week for the iOS crowd, specifically supporting the screen size of the iPad and iPad Mini.

In the new serving, Google highlighted the application's "enhanced navigation with incident reports and live traffic updates," 9to5Mac said in a report.

Apple Insider added.

"The update also includes indoor mapping functionality for malls, transit stations and airports." 

And the best part is, global rollout of Google Maps has already commence so those in the iOS system can try out the navigational tool prior to its optimal deployment for the iOS 7-powered fifth-generation iPad.

Analysts pegged the iPad 5 release date this fall or shortly after the iPhone 5S issuance, placing the now slimmed down and lighter Apple tablet's debut between late September and early October.

Courtesy of an article dated August 5, 2013 appearing in Apple Insider and an article dated July 17, 2013 appearing in International Business Times

THE XO TABLET REPLACES THE ONE LAPTOP PER CHILD INITIATIVE, COSTS ONLY $150 AND AVAILABLE AT WALMART

XO Tablet is a fairly low-performance tablet, includes Android 4.2 (Jelly Bean OS, a 1.6GHz dual-core ARM processor, a 7-in 1024x600 display, and boasts nearly eight hrs of battery life (Click Image To Enlarge)

THE ANDROID SEVEN-INCH TABLET ASKS CHILDREN NOT WHAT APP THEY WANT TO LAUNCH BUT WHAT THEY WANT TO BE.

The One Laptop Per Child initiative has always believed in the power of technology to transform the lives of children. Founded by outspoken techno-utopian Nicholas Negroponte with the goal of putting a working $100 computer in the hands of every child on Earth, OLPC has not always been without controversy. In some parts of the developing world, kids have far less use for laptops than clean drinking water, working toilets, and a good deworming. Even so, ever since the first OLPC computer came out in 2006, the project represents a vision of the future in which free access to information and technology in considered to be the clean drinking water of the mind: a basic human right.

The XO has a lot of the bulbous, bright green colors of the XO-1.  It’s durable, accessible tablet designed by Yves Béhar, who also designed the Jawbone products like the Jambox and Jawbone Up (Click Image To Enlarge)

The first Children’s Machine came out in 2006 during a curious period of mass insanity in the computer industry when everyone thought that netbooks--cheap, crappy laptops with tiny keyboards that didn’t do anything particularly well--were the future of computing. Half e-reader, half netbook, the OLPC XO-1 is now used by over 2.4 million children around the world--but it looks as much like computing’s future as a pair of parachute pants represents the future of fashion. As Steve Jobs once famously put it, we’re now living in the post-PC world. That’s the one kids are going to have to grow up in.

Enter OLPC’s latest Children’s Machine, the XO Tablet, available to buy starting today at Walmart and for $150. A co-production between OLPC, design house Fuseproject, and gadget maker Vivitar, the XO Tablet is a Children’s Machine for the post-PC world that takes a dash of inspiration from Neil Stephenson’s The Diamond Age to give kids the tools and inspiration they need so that they can realize their dreams, no matter their background.

The specs of the XO tablet is the aspiration of dreams, not clock cycles, but the MO of OLPC.  What makes the XO so interesting is the way it reimagines Android as a hub of dreams that children can explore. (Click Image To Enlarge)

The first thing you’ll notice about the XO Tablet is its kid-friendly design, which inherits a lot of the bulbous, bright green visual queues of the XO-1. It’s a durable, accessible gadget masterminded by design legend Yves Béhar, who is also the principle designer behind Jawbone products like the Jambox and Jawbone Up.

The XO Tablet comes pre-loaded with a large number of apps, games, and e-books that children might enjoy. (Click Image To Enlarge)

Underneath the green rubber shell, the XO Tablet is a fairly low-performance tablet running Google’s Android 4.2 (Jelly Bean) operating system. It features a 1.6GHz dual-core ARM processor, a seven-inch 1024 x 600 display, and boasts nearly eight hours of battery life. But the specs of the machine aren’t really the point: aspiration of dreams, not clock cycles, is the MO of OLPC. And what really makes the XO Tablet so interesting is the way it reimagines Android as a hub of dreams that children can explore.

It’s also fully Google certified, meaning that kids can download and install apps from the Google Play store if they want to. Perfect for would-be hackers. (Click Image To Enlarge)

The XO Tablet doesn’t want children to interact with a touch screen; it wants them to touch their future. When a kid boots up the XO Tablet, they are presented with a menu that doesn’t ask them what app they want to launch, but what they want to be. If a child tells their XO Tablet that they want to be an artist, it would show them a number of tools that would help them realize that goal: a picture book of art, or a fun drawing app. If a kid wanted to be an astronaut, they might get to explore the solar system, or learn more about NASA. A budding writer might find a collection of e-books or an app that asks them to collaborate on writing a story. And while the XO Tablet comes pre-loaded with a large number of apps, games, and e-books that children might enjoy, it’s fully Google certified, meaning that kids can download and install apps from the Google Play store if they want to. Perfect for would-be hackers.

A finger hold makes it easy to tote around. (Click Image To Enlarge)

It might seem odd that a computer meant for kids in the developing world is first going on sale at Walmart, but OLPC has always tried to offset the cost of getting cheap computers into the hands of children who need them by selling the same computers locally to those who can afford to pay more. Anyway, even in America, there are still children for whom the future is murky and grey and dreamless. If there’s one thing that the XO Tablet has been designed to correct, it’s that.

The tablet is available from Walmart for $150. (Click Image To Enlarge)

COMMENTARY:    Now that's what I call a cool tablet.  WIFI accessibility still remains a problem for families in poorer communities, but I am glad to see that the people at XO have taken the lead in producing a tablet targeted to young children.  The 1.6Mhz dual-core processor and 7-inch display provides more than adequate horsepower at the $150 price point.  That little ring in the corner is perfect for young hands.

Courtesy of an article dated July 22, 2013 appearing in Fast Company Design  

GOOGLE UNVEILS 2ND GEN NEXUS 7 TABLET, SLIMMER, NARROWER, LIGHTER, FASTER, AND FULL HD 1920X1200 DISPLAY

Back of second generation Nexus 7 tablet unveiled on July 24, 2013 (Click Image To Enlarge) 

Google and Asus have teamed up again to create and launch the second-generation Nexus 7.

The Mountain View, Calif., company formally unveiled the new Nexus 7 on Wednesday morning, July 24, saying the device now features a "black on black" design on a body that is now slimmer, narrower and lighter than its predecessor.

Hugo Barra, vice president of product management for Android at Google Inc., displays the new Nexus 7 tablet.  Photo by Tony Avelar, Bloomberg, July 24, 2013. (Click Image To Enlarge)

Hugo Barra, Google's Android director of product management said.

"It fits easily into your purse or your jacket pocket." 

Prior to Google's press event, Best Buy revealed the new Nexus 7 tablet by making it available for pre-order through its online store early Wednesday morning.

The new Nexus 7 will be the first device to run Android 4.3 Jelly Bean, the latest version of Google's mobile operating system.

 

The tablet also has an improved 7-inch screen that can now display 1080p HD videos. The Nexus 7 has a 1,920-by-1,200-pixel resolution with a 323-pixel-per-inch density, the highest of any tablet on the market, according to Google.

The company also added a rear-facing, 5-megapixel camera. The device will run on a 1.5GHz quad-core Snapdragon S4 Pro processor.

Google said the new Nexus 7 will be available for $229 with 16 gigabytes of storage and $269 for a 32-GB version. Those models will be available starting July 30.

A 4G LTE version that can work with AT&T, T-Mobile and Verizon will be available "in coming weeks." It will cost $349.

COMMENTARY:  

Best Buy Leaks New Nexus 7 Tablet

Prior to Google's press event, Best Buy revealed the new Nexus 7 tablet by making it available for pre-order through its online store very early Wednesday morning.

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The new 2nd generation Nexus 7 tablet is now available for sale on Best Buy's website.   Sam's Club and PC Connection are now displaying the new Nexus 7 tablet through their online stores too.

2nd Generation Nexus 7 Specifications

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2nd Generation Nexus Tablet Reviews

Here is a sampling of the rave reviews the new second generaton Nexus 7 tablet has received.

"The Nexus 7 is still the best damn Android tablet, Period.  The new Nexus 7 is a better tablet in many ways than its predecessor, and it still carries a great price." - Mashable  

"The new Nexus 7 is a downright steal. It’s the best 7-inch tablet, period. Google has redefined budget tablet so that it no longer refers to cheap-feeling, sub-£200 devices. You can now grab a svelte, premium 7-inch tablet with a high-resolution screen, wireless charging, quad-core processor, and 2GB of RAM for a measly £199." - PC Advisor

"Google's Nexus 7 was the best small tablet of 2012. Rather than mess with success, Google did something uncharacteristically conservative: It made little improvements here and there and left the rest mostly as is. The result? This year's Nexus 7 is more low rumble than tectonic shift, but it's still our new favorite tablet." - Gizmodo

"The new Nexus 7 is the best 7-inch tablet that money can buy. The original Nexus 7 was merely a bargain, a good-enough tablet at a great price. The new Nexus 7 is a downright steal. It’s the best 7-inch tablet, period. Google has redefined budget tablet so that it no longer refers to cheap-feeling, sub-$200 devices. You can now grab a svelte, premium 7-inch tablet with a high-resolution screen, wireless charging, quad-core processor, and 2GB of RAM for a measly $229." - TechHive

It certainly appears that from the above reviews, that Google's second generation Nexus 7 is a winner.  I just bought one, and will be posting reviews in the not too distant future.

Courtesy of an article dated July 24, 2013 appearing in The Los Angeles Times

MICROSOFT DROPS PRICE OF SURFACE RT TABLET, HOPES TO INCREASE SALES, THEN WRITES-OFF $900 MIL IN SURFACE RT CHARGES

Microsoft CEO and co-founder Steven Ballmer at the unveiling of the Microsoft Surface RT tablet on June 19, 2012 (Click Image To Enlarge)

When Microsoft announced its Q4 2013 earnings Thursday, it included a jaw-dropping $900 million charge related to its Surface RT.

The charge comes just days after Microsoft cut the price of the Surface RT tablet by $150. Since its release in the fall of 2012, Microsoft has struggled to get users to understand the value of the Windows RT-based tablet. Meanwhile, the company has had much more success with the Surface Pro.

During its earnings call, Microsoft CFO Amy Hood said that the price decrease will "accelerate Surface RT adoption and position us for better success."

A year ago, when Microsoft unveiled Surface (see below), it looked like it might be a great product — something that would allow Microsoft to compete directly with the iPad and Android tablets.

 

One year later, Surface RT is responsible for nearly $1 billion in charges and Windows 8 has failed to take off with consumers.

How did we get here? Why did the Surface RT fail?

A Confusing Name and a Confusing OS

The Surface RT — and Windows RT in general — continue to be tremendously confusing products to consumers. Back in April 2012, Mashable Tech Editor Pete Pachal lamented the terribleness of the Windows RT name. He was right.

Not only is the name problematic — the fact that Windows RT still contains the non-Artist-Formerly-Known-as-Metro interface is jarring too. With Surface RT, Microsoft could have gone with the "Microsoft design language"-only interface, eschewing the regular desktop. This would have been a nice differentiator between the Surface RT and Surface Pro. Instead, you had two systems (and operating systems) that look the same and run some of the same apps, but aren't the same.

 

I had an interesting conversation on Twitter with some of my fellow tech writers about the branding behind Windows RT.  We all agree that it has remained a significant barrier for consumers because some Windows apps will work, but older so-called "legacy" apps won't.

It's possible that with Windows 8.1, Microsoft could fix some of these problems and make the difference between Windows RT and Windows 8 more clear. By the time that happens, however, will anyone care?

Microsoft is already having to do a lot of backtracking with Windows 8.1. I'm not sure if even a price cut can be enough to convince buyers to try out a Surface RT.

Click Image To Enlarge

Where Are the Apps?

It's ironic that apps — one of the areas that x86-versions of Windows have dominated the competition — is one of the biggest problems facing the Surface RT.

In short: There aren't enough apps built for Surface RT available within the Windows Store. The 60,000 apps available in the Windows 8 store pale in comparison to the ~400,000 iPad specific apps in the App Store.

In all of its advertisements around the Surface RT or other Windows RT tablets, Microsoft likes to play up the idea that a Windows RT tablet is better than the iPad because of its ability to work with Office documents and show more than one app at once.

Click Image To Enlarge

Putting aside the fact that Office 365 is almost definitely coming to the iPad — the problem with those ads is that they highlight the app gap. Where is a music creation tool a la Garage Band or the new Logic Remote? Making fun of the ability to play Chopsticks on a piano would be a lot funnier if the only "competing" app for Windows RT wasn't a basic virtual piano.

I frequently check out the app selection on the Windows RT tablet we use for testing purposes and I'm always saddened by the lack of apps, especially when compared to the iPad.

With a regular Windows 8 tablet — such as the Surface Pro — you can get around some of these app limitations because it will also run any other Windows app. That's not the case with the Surface RT.

To top it all off, the Surface RT doesn't even have access to Outlook (unless you use the web browser). Yes, Microsoft is remedying that problem with Windows 8.1, but did no one learn from the disaster that was the BlackBerry PlayBook? Building a tablet even remotely aimed at "business" users without a native email client is just sad.

A Better Alternative Exists

Of course, the biggest problem with the Surface RT is that it exists alongside the Surface Pro. While the Surface RT is a product that seems to be looking for a market — not quite a tablet but not quite a full laptop either — the Surface Pro can run all the same apps as the Surface RT and legacy Windows apps. It also has better add-ons (including a stylus), a faster processor and more memory.

Meanwhile, Microsoft isn't the only player in the Windows 8 tablet space. Asus, Samsung and Lenovo all have their own Windows 8 tablet or convertible notebooks at various price points.

Samsung and Asus are also introducing tablets that can use either Windows 8or Android. You know, so the adult in you can enjoy the Windows apps and the kid in you can access the vast world of Android apps.

Whither Surface?

In hindsight, it seems telling that Microsoft's hardware partners have largely stayed away from Windows RT. Early on, one might be able to ascribe hesitance to adopt Windows RT as payback for Microsoft becoming a direct competitor.

The complete disinterest by the market, however, shows that maybe there was more to it than that. A year ago, I predicted that the de facto Windows 8 tablet experience would be a Surface experience.  I'll concede I was wrong with that prediction — in large part because no "de facto" Windows 8 tablet market really exists.

The Post PC world is certainly upon us. The problem is, it doesn't seem to include room for the Microsoft Surface.

Let us know why you think Surface has failed — or why you think it can still succeed — in the comments.

COMMENTARY:   In a blog post dated June 19, 2013, I called the Surface Tablet with Windows 8 "awesome" and had what it took to become an "iPad-killer."   It now appears beyond a shadow of a doubt that this was a very bozo and premature prediction on my part.  

With only about 40 million computer users of all type adopting Windows 8, I now think that the failure of the Surface tablet (both RT and Windows 8 versions) to dominate both the iPad and Android-based tablets, has more to do with the lack of interest in the new operating system, and less with the design of the tablet itself.  I have often marveled at the beauty of the new Surface tablet.  The Microsoft designers did a great job.  The design effort was almost Apple-like.  This goes to show you just how difficult it can be to disrupt industry standards (Android and iOS).  

Some where in graduate school I learned that the cards are stacked against you when it comes to disrupting an industry standard, especially one that is so widely adopted as are iOS and Android. Microsoft has tried to disrupt the browser market with BING, but Google still dominates browsers.  HP, Samsung, BlackBerry and other small vendors have tried to disrupt the tablet market and failed miserably.  Only Amazon with the Kindle Fire and new Kindle Fire HD tablet line has been able to make a dent, albeit a small one, in the tablet market.   

In short, any new tablet with a different operating system standard has to be so darn good in every possible way, that it leaves no doubt in the consumers mind that it would be a mistake not to upgrade.  You must also have mobile apps.  Lot of them.  The new tablet also has to run older apps.  However, in Microsoft's case, the new Windows RT and Windows 8 are so completely different from Windows 7 and XP that users are simpy not going to make the jump because this means leaving all their favorite legacy apps in the dust.   It takes a lot of panche to convince developers to develop new apps for the new operating system, and Microsoft is finding this out the hard way. 

So who's winning the mobile apps war?

On March 3, 2013, ABI Research estimated mobile users will download 70 billion apps in 2013 – 58 billion to smartphones and 14 billion to tablets. As one put it, that’s over 10 apps downloaded per human being on Earth!

Given the sheer pace of change in the mobile market today, you may be wondering – just how many apps are there now in each of the major app stores? And how do these counts compare with one another? Well, wonder no more.

Here’s ABI Research's updated inventory of apps available on Android, iOS, Windows, and Blackberry (some are official, some are estimates as reported):

• Google Play/Android is estimated to have 800,000 apps (Jan. 4, 2013)
• Apple iOS App Store recently reported 775,000 apps (Jan. 7, 2013)
• Windows Phone Marketplace is up to 125,000 apps (Oct. 25, 2012)
• Blackberry World is now up to 70,000 apps (Jan. 30, 2013)

Courtesy of an article dated July 19, 2013 appearing in Mashable and an article dated March 5, 2013 appearing in Pure Oxygen

APPLE UNVEILS THE NEW MAC PRO, A RADICAL NEW CYLINDRICAL PRO DESKTOP COMPUTER FOR DEVELOPERS AND POWER USERS

Click Image To Enlarge

A Major Step Forward Requires Completely Changing Direction

When we began work on the next Mac Pro, we considered every element that defines a pro computer — graphics, storage, expansion, processing power, and memory. And we challenged ourselves to find the best, most forward-looking way possible to engineer each one of them. When we put it all together, the result was something entirely new. Something radically different from anything before it. Something that provides an extremely powerful argument against the status quo. Here’s a sneak peek at what’s next for the pro computer.

The New Power Structure

Engineered around workstation graphics with dual GPUs, PCI Express-based flash storage, high-performance Thunderbolt 2, new-generation Xeon processors, ultrafast memory, and support for 4K video, the new Mac Pro delivers state-of-the-art performance across the board.

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Processor

The new Mac Pro is muscle through and through, starting with the new-generation Intel Xeon E5 chipset. With configurations offering up to 12 cores of processing power, up to 40GB/s of PCI Express gen 3 bandwidth, and 256-bit-wide floating-point instructions, you’ll never be at a loss for speed.

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Memory

Every component in the new Mac Pro is optimized for performance. That includes a four-channel DDR3 memory controller running at 1866MHz. It delivers up to 60GB/s of memory bandwidth, which means you can fly through even the most compute-intensive tasks in no time. And since it’s ECC memory, your render job, video export, or simulation won’t be stopped by transient memory errors.

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Graphics

Traditionally, pro computers have relied primarily on the CPU for their computing power. But as GPU performance has dramatically increased, software developers have begun to leverage that power in their apps. With the new Mac Pro, we looked ahead and engineered an even more powerful GPU architecture. Not only does it feature a state-of-the-art AMD FirePro workstation-class GPU with up to 6GB of dedicated VRAM — it features two of them. With all that power, you’ll be able to do things like seamlessly edit full-resolution 4K video while simultaneously rendering effects in the background — and still have enough power to connect up to three high-resolution 4K displays.

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Storage

There’s flash storage, and then there’s next-generation PCI Express flash storage. We’re talking storage that’s up to 2.5 times faster than the fastest SATA-based solid-state drive and up to 10 times faster than a 7200-rpm SATA hard drive. Most flash storage systems connect via SATA buses designed for slower spinning hard drives. But we designed the new Mac Pro around new PCI Express-based flash controller technology to deliver the fastest solid-state drives available standard in a desktop computer. So booting up, launching apps, even opening massive files happens in, well, a flash.

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Unified Thermal Core

The new Mac Pro packs an unprecedented amount of power in an unthinkable amount of space. A big reason we were able to do that is the ingenious unified thermal core. Rather than using multiple heat sinks and fans to cool the processor and graphics cards, we built everything around a single piece of extruded aluminum designed to maximize airflow as well as thermal capacity. It works by conducting heat away from the CPU and GPUs and distributing that heat uniformly across the core. That way, if one processor isn’t working as hard as the others, the extra thermal capacity can be shared efficiently among them. No computer has been built this way before. And yet it makes so much sense, it’s now hard to imagine building one any other way.

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Cooling Fan

An incredible amount of innovation went into designing a fan system capable of cooling such a high-performance device. Instead of adding extra fans, we engineered a single, larger fan that pulls air upward through a bottom vent. As air passes vertically through the center of the device, it absorbs heat and carries it out the top. It’s simple and elegant — and also astonishingly quiet. To achieve that, we had to consider every detail: the number of blades, the size of the blades, the spacing of the blades, and even the shape of the blades. By minimizing air resistance throughout the system, we were able to design a fan with backward-curved impeller blades that runs at fewer revolutions per minute, draws air more efficiently as it spins, and creates considerably less noise.

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Expansion, Vastly Expanded

In creating a pro computer for the future, we wanted to provide an enormous amount of expansion — without being limited to the space inside the enclosure. Designed with built-in Thunderbolt 2, USB 3, Gigabit Ethernet, and HDMI 1.4 ports, Mac Pro sets a new standard in flexible, high-performance expansion. It’s our most expandable Mac yet. And it has everything you need to build a workstation completely customized to what you need and how you work.

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Thunderbolt 2

Thunderbolt is the fastest, most versatile I/O technology there is. And with Mac Pro, we’re jumping even further ahead. Thunderbolt 2 delivers twice the throughput, providing up to 20Gb/s of bandwidth to each external device. So you’re more than ready for the next generation of high-performance peripherals. You can connect massive amounts of storage, add a PCI expansion chassis, and work with the latest external displays — including 4K desktop displays and peripheral devices capable of broadcast monitoring in 4K. And since each Thunderbolt 2 port allows you to daisy-chain up to six peripherals, you can go all out by plugging in up to 36 external devices via Thunderbolt alone.

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Other I/O Connections

Mac Pro equips you with all kinds of connections for all kinds of peripherals. USB 3 gives you the versatility to hook up dozens of different types of external devices. Two Gigabit Ethernet ports let you connect to multiple networks. And an HDMI 1.4 port provides support for the latest televisions, projectors, and displays, including Ultra HD TVs. But the thought we put into expandability extends beyond the types of peripherals you can use. As you rotate Mac Pro to plug in a device, it senses the movement and automatically illuminates the I/O panel. So you can easily see the ports you need when you need them.

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Advanced Wireless

Access your network over three-stream 802.11ac Wi-Fi for the latest in high-speed wireless connectivity. For all your other wireless connections, Mac Pro includes Bluetooth 4.0. It’s the fastest, most reliable way to connect your keyboard, mouse, and other wireless devices without having to physically attach anything.

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Radical New Design

The new Mac Pro looks unlike any other computer. Because it is unlike any other computer. By rethinking the architecture of its internal components, we had the chance to rethink the entire enclosure. And since everything centers around a unified thermal core, we were free to design a much leaner, lighter, quieter, and far more streamlined structure. Its unique design and beautiful finishes are executed to an extraordinary degree of precision. And at just 9.9 inches tall with a diameter of just 6.6 inches, it’s a pro desktop computer that can actually sit on your desk.

 

Designed and Assembled In The U.S.

With the new Mac Pro, we’re assembling the entire product and machining several of its high-precision components in the United States. By leveraging the innovative power of industry-leading companies in Texas, Florida, Illinois, Kentucky, and over a dozen other states across America, we're able to build a product that's impeccably constructed and beautiful in every detail. In other words, exactly as it was envisioned by our designers and engineers in California.

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Coming Later This Year

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COMMENTARY:    Apple’s new Mac Pro 2013 isn’t due to hit shelves until later this year, but that hasn’t stopped the desktop from getting a preview at WWDC 2013. Long overdue an update, the new Mac Pro hasn’t held back, a significant departure from the aluminum tower of the current model, not to mention ramping up the specifications until this is the most powerful Mac to-date.

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The circular, barrel-like design is likely to be polarizing. The old Mac Pro offered all the internal expansion possibilities that the iMac and Mac mini could never accommodate, but the 2013 Mac Pro approaches such matters of flexibility in a very different way.

Instead of internal SATA bays for extra drives, the new Mac Pro goes at it from a modular perspective. Six Thunderbolt 2 ports are each capable of handling six individual devices daisy-chained from them; that’s a total of thirty six peripherals – hard-drives, A/V interfaces, even 4K displays – that can be strung from the one compact desktop.

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Also likely to divide opinion is the switch to flash-only storage. Just as on the MacBook Air and Retina MacBook Pro, Apple has dropped spinning-platter drives in favor of more compact, faster flash memory. The headline numbers are up to 1.25GBps read rates and up to 1.0GBps write rates, though just as we’ve seen on the Apple notebooks, it makes upgrading – at least internally – more difficult.And yet, for all the potential headaches and changed perspectives when it comes to upgrades, we can’t help but be charmed by the new Mac Pro. The design has evolved from “another desktop” to something reminiscent of the unusual aesthetic of the old Power Mac G4 Cube. A completely different shape, of course, but approaching design in such an offbeat way that it’s eye-catching and engaging in a way a PC workstation seldom manages.

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There’s plenty to be answered still about the Mac Pro 2013. How fast its meaty Xenon processor runs; how effective the dual ATI FirePro graphics are; how much of a compromise being so reliant on external expansion is; and – nowhere near least – how expensive the whole thing turns out to be. We’ll know more answers later in the year, when the new Mac Pro goes on sale.

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Pricing and Availability

Apple has described the new Mac Pro glimpse as a preview, and as such there’s no official price or release date. However, given the nature of the components Apple is fitting, and the power-user positioning of the Pro itself, this isn’t going to be a cheap workstation.

I am absolutely amazed how much computing capability the new Mac Pro has in its relatively dimuitive 9.9-inch tall by 6.6 inch diameter cylinder.  This is nothing less than a computing beast, that will satisfy the demands of any jaded Apple evangelist power user or developer who must have the baddest and the greatest computer Apple has to offer.   Get your checkbooks out, it will be expensive, but having looked at the demographics of Apple computers, I am sure that many pro's will want one, or have their company pay for it.     

Courtesy of a press release dated June 10, 2013 issued by Apple and an article dated June 10, 2013 appearing in Slash Gear

AMAZON.COM REPORTS Q1 2013 RESULTS, REVS $16.07 BIL, NET INC $82 MIL, EPS $0.18, REVS +22% OVER Q1 2012, BUT NET INC DOWN 37% FROM Q1 2012

 

Last quarter, Amazon, which has been a freight train and Wall Street darling over the last year, surprised analysts by reporting lower-than-expected earnings. Expectations were high considering the holiday shopping season, but Amazon saw net income drop 45 percent to $97 million in Q4, compared to $177 million in 2011, although on the bright side, net sales continued to increase (by 22 percent) to $21.2 billion.

Today, Amazon continued the trend, still finding itself in a bit of a hangover after missing expectations in Q4. The eCommerce giant reported earnings from Q1 after the market closed this afternoon, in which it saw cash flow increase 39 percent to $4.25 billion, compared to $3 billion for the prior year, while net sales increased 22 percent to $16.07 billion in Q1, compared to $13.18 billion in first quarter 2012.

And by mixed results, we mean that Amazon blew away earnings-per-share expectations at $0.18 in Q1 on revenue of $16 billion. Leading up to today’s announcement, Wall Street expectations were much lower for EPS, with analysts expecting $0.08 EPS for the quarter. In turn, the Street expected Amazon to report sales of $16.2 billion, which the company just missed with $16.07 billion in sales.

In spite of the mixed results, as the market has been wont to do over the last year, Amazon’s stock was trending up, closing at $274.70 per share, on rumors that the company could be launching its own TV set-top box this fall, bringing more of the company’s hardware into your living room.

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Tellingly, in today’s announcement, Amazon founder and CEO Jeff Bezos didn’t touch on the numbers or falling profits, instead plugging the company’s efforts to take on Netflix with some original programming of its own for Instant Video customers. Last week, the company launched 14 new comedy and kids pilots on Instant Video, which quickly became the “most watched TV shows on Instant Video,” the company said Monday.

“Amazon Studios is working on a new way to greenlight TV shows. The pilots are out in the open where everyone can have a say,” Bezos said in today’s earnings release. “I have my personal picks and so do members of the Amazon Studios team, but the exciting thing about our approach is that our opinions don’t matter. Our customers will determine what goes into full-season production. We hope Amazon Originals can become yet another way for us to create value for Prime members.”

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Other points of interest:

• Free cash flow fell 85 percent to $177 million year-over-year, compared to $1.15 billion in the year prior, due in part to dishing out $1.4 billion to purchase new office space in Seattle. 
• Operating income decreased 6 percent to $181 million in Q1, compared to $192 million in the same quarter last year, while net income fell 37 percent to $82 million from $132 million in Q1 2012.

The upside for Amazon continues to rise, thanks to its move into original programming and the expansion of its selection for Prime Instant Video, which is in part due to new licensing agreements with A+E, CBS, FX, PBS And Scripps. This means that shows like Downton Abbey, Justified and Under The Dome, as well as content from Food Network, the Cooking Channel, the Travel Channel and HGTV will all be headed to Amazon. The company said that Prime Instant Video now has 38,000 movies and TV episodes in its collecton.

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In addition, Amazon touted the launch of its new MP3 store for Safari, which allow iPhone and iPod touch users to discover and purchase digital music from the company’s catalog. This comes on the heels of reports today that the influence of the company’s Appstore is growing and shows high revenue potential. Amazon also announced its Cloud Player for iPad and iPad Mini this quarter, extended AutoRip to vinyl records and announced the launch of Kindle Fire HD 8.9″.

Amazon MP3 Store Optimized for Safari and iOS Devices (Click Image To Enlarge)

Good news also came for authors and readers, as Amazon announced that it will start paying its authors their royalties monthly, ahead of the twice-a-year industry standard, along with the acquisition of popular book recommendation hub, Goodreads.

All in all, it was a busy quarter for Amazon, especially for AWS, which launched a slew of new products over the last few months and again lowered its prices. The company said in its announcement today that AWS “has lowered prices 31 times since it launched in 2006, including 7 price reductions so far in 2013.”

Looking forward, Amazon is lowering expectations, however, as it said today that it expects sales to come in between $14.5 billion and $16.2 billion next quarter — equivalent to a 13 to 26 percent increase from Q2 2012. In turn, it expects operating income to be between -$340 million and +$10 million. In other words, a potential loss.

In response to Amazon.com's statement of lowered earnings for the rest of 2013, on Friday, April 26, 2013, the market hammered Amazon.com (NASDAQ:AMZN) stock, as it dropped 19.89 points or down 7.24% to end trading at 254.81.

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COMMENTARY:  

Highlights

In its press release issued on April 26, 2013, Amazon.com cited the following highlights for the quarter ending March 31, 2013:

• Amazon.com expanded selection for Prime Instant Video, announcing new licensing agreements with A+E Networks,CBS Corporation, FX, PBS Distribution and Scripps Networks Interactive, bringing exclusive access to popular television series such as Downton Abbey, Justified and Under the Dome as well as shows from HGTV, DIY Network,Food Network, Cooking Channel and Travel Channel. Prime Instant Video now includes more than 38,000 movies and TV episodes that are available for Prime members to watch at no additional charge.
• Amazon Studios, the original film and series production arm of Amazon.com, debuted 14 original comedy and kids pilots. The pilots, which feature stars such as John Goodman, Jeffrey Tambor and Bebe Neuwirth, are available exclusively at www.amazonoriginals.com and on the Amazon Instant Video app for Kindle Fire HD, Kindle Fire, iPad, iPhone, iPod touch, Roku, Xbox 360, PlayStation 3, Wii and Wii U, as well as hundreds of other connected devices. Viewer feedback will help determine which pilots Amazon Studios will produce into full series.
• Amazon expanded the popular Kindle Fire feature “X-Ray for Movies” to TV shows, bringing the power of IMDb directly to the most popular TV shows on Kindle Fire. With a single tap viewers can discover the names of actors and what they've been in, without even leaving the TV show.
• Kindle Owners’ Lending Library has grown to over 300,000 books available to borrow for free as frequently as a book a month, including many titles exclusive to Amazon.
• Amazon announced the launch of the Amazon MP3 store optimized specifically for Safari browser. For the first time ever, iPhone and iPod touch users can discover and buy digital music from Amazon’s 22 million song catalog. Amazonalso announced its Cloud Player app for iPad and iPad mini, enabling customers to play or download music stored in Cloud Player to their device, play music that is already stored on their device, and manage or create playlists.
• Amazon announced it has extended its popular AutoRip services to vinyl records. AutoRip provides customers with free MP3 versions of CDs and vinyl records they purchase from Amazon. Additionally, customers who have purchased AutoRip CDs or vinyl records at any time since Amazon first opened its Music Store in 1998 will find MP3 versions of those albums in their Cloud Player libraries – also automatically for free.
• Amazon announced the launch of Kindle Fire HD 8.9” — the large-screen version of its best-selling tablet —for theU.K., Germany, France, Italy, Spain and Japan. With the expansion of Kindle Fire HD 8.9” to Europe and Japan,Amazon also announced a lower price on Kindle Fire HD 8.9” in the U.S., with the Wi-Fi version starting at $269 and the 4G version starting at $399.
• Amazon Publishing, the publishing arm of Amazon.com, announced that it will start paying authors their royalties monthly, 60 days in arrears — allowing authors to receive payment more frequently than the twice-a-year industry standard.
• Amazon acquired Goodreads, a leading site for readers and book recommendations that helps people find and share books they love. Goodreads members can discover new books by seeing what their friends are reading or by using the Goodreads Book Recommendation Engine; share ratings and recommendations; track what they have read, and list what they want to read.
• Amazon Web Services (AWS) announced the launch of Amazon Redshift, a fast and powerful, fully managed, petabyte-scale data warehouse service in the cloud for a fraction of the cost of a traditional data warehouse.
• AWS launched AWS OpsWorks, an application management solution for the complete lifecycle of complex applications, including resource provisioning, configuration management, deployment, monitoring, and access control.
• AWS announced Amazon Elastic Transcoder, a highly scalable service for transcoding video files between different digital media formats. Amazon Elastic Transcoder manages all aspects of the transcoding process transparently and automatically, providing scalability and performance by leveraging AWS services.
• AWS announced AWS CloudHSM, a new service enabling customers to increase data security and meet compliance requirements by using dedicated Hardware Security Module (HSM) appliances within the AWS Cloud. The CloudHSM service allows customers to securely generate, store and manage cryptographic keys used for data encryption in a way that keys are accessible only by the customer.
• AWS has lowered prices 31 times since it launched in 2006, including 7 price reductions so far in 2013.

Q1 2013 Financial Reports

Below are the following financial reports for Amazon.com for the quarter ending March 31, 2013:  

• Consolidated Statement of Operations for the quarters ending March 31, 2013 and March 31, 2012.
• Supplemental Net Sales Information for the quarters ending March 31, 2013 and March 31, 2012.
• Consolidated Statements of Cash Flows for the quarters ending March 31, 2013 and March 31, 2012 and Year-Ending December 31, 2013 and December 31, 2012.
• Consolidated Balance Sheets for the quarter ending March 31, 2013 and Year Ending December 31, 2012.  

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Website Traffic

Amazon.com website traffic measured by unique visitors is tracked by Compete.com (see below) has steaily increasing since March 2012, and peaked at 138.3 million unique visitors at the end of December 2012 due to Christmas shopping, but has since declined to more normal levels.  At the end of March, Amazon.com reached 129.7 million unique visitors.  

 

Amazon.com Unique Visitors, Rank by Unique Visitors and Competitie Rank by Unique Visitors as of March 31, 2013 (Click Image To Enlarge)

What's Costing Amazon.com

Although Amazon's net income for the quarter ending March 31, 2013 declined significantly from the same quarter last year,  profit margins were higher in Q1 2013 than Q1 2012 -- 26.56% vs. 23.95%, but the following operating expenses as a percentage of net sales were much higher in Q1 2013 than Q1 2012:  

• Fulfillment costs -- 11.18% (Q1 2013) vs 9.82% (Q1 2012). 
• Technology and content costs -- 8.61% (Q1 2013) vs. 7.17% (Q1 2012). 
• Marketing expenses -- 3.93% (Q1 2013) vs. 3.64% (Q1 2012). 

Amazon.com is subsidizing a portion of the cost that it charges customers for its Kindle Fire tablets, but hopes to recover that cost by charging for its Prime service offerings and incremental sales from apps, digital music, hardcover and digital books, accessories and other retail products.  According to several experts, this strategy seems to be working, but the exact amount that Amazon.com is making from post-tablet sales revenues and services is not known. 

The Potential of Amazon's Cloud Computing

As an inducement for customers, Amazon.com is absorbing a significant amount of shipping costs on some orders meeting a certain amount, but this is costing the company in the bottom line.  Amazon.com has also made extenive investments in its technology infrastructure in order to keep pace with its cloud computing services, increased sales volume and higher inventory carrying costs needed to fulfill orders.

According to Quartz, a digital research firm, Amazon.com now generates $2.4 billion in revenues from its cloud computing services, which Amazon refers to as Amazon Web Services. However, at the present time, Amazon.com does not charge customers for storing digital content on its cloud service.  Apple, on the other hand, charges for storing digital content purchased outside Apple's ecosystem.  The addition of MP3 Store for the iPhone, could eventually generate incremental revenues for Amazon.com if iPhone users start downloading digital content from Amazon.com, since there are no cloud storage costs.  Amazon.com carries a lot more music and book titles than Apple iTunes, and that is a huge inducement. 

Courtesy of an article dated April 25, 2013 appearing in TechCrunch, a press release dated April 26, 2013 issued by Amazon.com and

APPLE REPORTS Q2 2013 RESULTS, $43.6B IN REVS, $9.5B IN PROFITS, EPS OF $10.09, BUT POSTS FIRST EARNINGS DECLINE SINCE 2003

 

The Cupertino company has just released its fiscal Q2 2013 earnings — it reported $43.6 billion in revenue (up from $39.2 billion in the year-ago quarter) along with $9.5 billion in quarterly net profit, which works out to earnings of $10.09 per share.

That means that the rumblings were true — Apple posted EPS of $12.30 back in Q2 2012, which makes this the company’s first year-over-year quarterly earnings decline in nearly a decade. Naturally, the bigger question is whether or not this ignominious milestone will mean anything for Apple going forward and there’s no clear answer to that just yet. Financially speaking, it was bound to happen sooner or later, but Apple’s recently cultivated image as a computing juggernaut could take a very prominent hit. Apple has $145 billion in cash in its coffers, so we can all lay off the doomsday scenarios, but CEO Tim Cook admits that the company’s growth has slowed. Cook also noted during Apple’s customary earnings call that the company would kick off an effort to buy back Apple shares to raise the value of its stock.

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These past few days have been surprisingly turbulent ones for Apple (the company’s share price tumbled below the $400 mark just last week to a new 16-month low), so it’s no surprise to see that analysts weren’t quite as bullish on Apple as they usually tend to be. According to Bloomberg Businessweek, the analyst consensus was for Apple to announce earnings of $10.02 per share on $42.4 billion in revenue, which the company managed to beat. On the other hand, Apple’s own (once notoriously conservative) guidance from its last earnings release forecasted revenues between $41 and $43 billion. And Apple’s guidance for next quarter? The company expects to pull in between $33.5 billion and $35.5 billion in revenue and gross margin between 36 percent and 37 percent.

Apple CEO Tim Cook noted in the release.

“We are pleased to report record March quarter revenue thanks to continued strong performance of iPhone and iPad,.  Our teams are hard at work on some amazing new hardware, software and services, and we are very excited about the products in our pipeline.”

Despite the fact that Apple didn’t release or unveil any new hardware in Q2 (as some eagerly suggested it would), device sales were still nothing to sneeze at. As always, we’ve got more detailed breakdowns of how Apple did in terms of hardware this quarter courtesy of Jordan and Darrell, but here’s how the company did during Q2 2013 in a nutshell:

• iPhones - 37.4 million iPhones sold during the quarter. 
• iPads - 19.5 million iPads sold during the quarter 
• Macs - 3.9 million Macs sold during the quarter. 
• iPods - Apple did not provide any figures for the number of iPods sold during the quarter.

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Not too shabby considering that iDevice sales are up across the board compared to the year-ago quarter (and in the iPad’s case, dramatically so likely thanks to the iPad mini), but the lack of any new standout products has weighed heavily on some people’s minds over the days and weeks that have led up to today’s release. Apple hasn’t pulled back the curtain on a new product since the iPad mini was unveiled back in October 2012. There’s nothing intrinsically wrong with that — the company likes to stick to its timetables after all — but the release of impressive new smartphones from Samsung and HTC could mean that Apple could be facing even stiffer competition as it works to dominate the mobile market. That could all change very shortly too, as rumblings of a new iPhone to be unveiled sometime this summer (along with a possibly cheaper model to follow) continue to circulate.

While Wall Street may have had concerns about Apple prior to the release, Apple’s stock price is up roughly 4 percent in after-hours trading.

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COMMENTARY:    

The Apple App Ecosystem

Apple took time to update investors on the status of its ecosystem during Tuesday's earnings call conference, revealing that it had crossed the 45 billion total app download mark, just over four months after it crossed the 40 billion download mark back in January 2013. Apps are being downloaded at a rate of 800 per second, from a total pool of 850,000 iOS apps in total, with 350,000 apps designed for iPad alone.

That 350,000 is the same as the number of total iOS apps reported by Apple as of January 2011, just a year after the launch of the iPad. At the time, Apple had only 60,000 iPad apps, which means iPad-specific titles have seen a 483 percent increase in the intervening years.

Apple also revealed that it has App Stores in 155 countries, covering 90 percent of the total iOS user population, and that it has so far paid out more than $9 billion to developers. That’s a $1 billion increase from the total it reported it had paid out to developers as of mid-February.

Apple now pays out $1 billion per quarter to devs, Oppenheimer said at the close of the call, and $4.5 billion or half of the grand total has been paid out during the past four quarters alone.

Retail Sales

Apple's retail arm reported a 19% year-over-year surge in sales.

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Revenue By Product Category

iPhone sales represented 53% of total Apple revenues during the quarter, but are down year-over-year compared to Q2 2012 when iPhone sales represented 58% of total revenues.  iPad sales represented 20% of total Apple revenues during the quarer, but are up year-over-year compared to Q2 2012 when iPad sales represented 17% of total revenues. 

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Cash On Hand

Meanwhile, the amount of Apple’s cash on hand has swelled to $145 billion — to put that in perspective, Facebook’s market cap is only about $62 billion.

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Where Is That $145 Billion Invested?

For the fiscal quarter ending March 31, 2013, Apple reported $39.1 billion in cash and short-term investments and $105.6 billion in long-term investments.  So where is Apple investing all this money?  Nobody has a clear answer.   An article dated October 26, 2012, The Guardian, reported that Apple formed Braeburn Capital in 2006, a State of Nevada-based, privately-owned investment hedge fund, to manage and invest its cash.  Braeburn Capital invests most of that $145 billion in cash into a variety of investments.  According to The Guardian, Apple maybe one of the largest private holders of U.S. government securities.  

Since Braeburn Capital works only for Apple, it is not required to file disclosure reports to the SEC or Investment Advisor Public Disclosure registrar.  However, it is known that much of Apple's money is invested overseas, sheltered from U.S. taxes.   If Apple repatriated that money back to the U.S. it woul be taxed at a rate of 35%.  But it can be invested at home in the form of U.S.-backed government debt like treasuries and bonds.

The decision to locate Braeburn in Nevada rather than Apple's home state of California makes sense because Nevada does not collect corporation tax or capital gains tax. California, by contrast, has a corporate tax rate of 8.84%, a rate of contribution to the public coffers that has not been enough to prevent a school funding crisis in a state that houses some of the world's most valuable companies. Managing its money from Nevada also allows Apple to lower its tax bills in other states. Florida, New Jersey and New Mexico discount taxes when a company's financial management is in another jurisdiction.

Apple declined to comment on Braeburn's activities, but in the year its investment arm was established, an Apple spokesman explained that it would function as a regional treasury office, on a par with existing offices at its Cupertino headquarters, in Singapore and in Cork, Ireland.

The Nevada Annual Report, a register of companies located in the state, lists three Braeburn officers: Apple attorney Gene Levoff, Michael Shapiro and Gary Wipfler, who as Apple's treasurer is the person officially responsible for the management of the technology titan's billions.

What Wall Street Analysts Are Saying

The reactions of analysts who tuned into Apple's (AAPL) earnings call Tuesday, April 23, 2013, were all over the lot.  According to CNN Money, there were things they liked, things they didn't and things they have to ponder some more.  

I did a quick sampling and a clear majority of the stock analysts lowered Apple's price target considerably from the previous quarter.  Many analysts described Apple shares as "Overweight," meaning that there was still room for further declines.  Some analysts, in spite of lowering their price target, recommended Apple as a "Buy," while others still believe that Apple "Outperforms" the market meaning that for them Apple still has upside potential.   Others mainted "Neutral" or "Hold" positons meaning that Apple share prices are nearing their bottom and the price is likely to rebound, and there is no need to sell at this time.   

Here's what a few of them said:         

Bernstein's Toni Sacconaghi: Debrief -- Several Puts and Takes; GM Erosion Worrisome, but the Fundamental Debate Remains the Same.  Lowers price target to $600 from $725. Maintains Outperform.

"Overall, Apple's FY Q2 results were largely in-line with expectations, with revenues modestly higher and gross margins somewhat weaker. However, guidance was disappointing... On balance, we were pleased with the magnitude of the return, but would have preferred a higher dividend and lower buyback, and a cash return commitment that was expressed as a percentage of free cash flow" 

Goldman Sach's Bill Shope: $100 bn capital allocation partly eases sting of big EPS cut. Lowers price target to $500 from $575. Maintains Buy. 

 "Apple reported better than expected March quarter results, but June quarter guidance was far worse than feared. The financials, however, were partly overshadowed by a remarkably large capital allocation program. Our sense is that the tepid guidance and increasingly depressed earnings trajectory will remain the key focus for investors, and concerns on this front are unlikely to completely subside until it becomes clear that Apple's next product and ecosystem refreshes can begin to form a bottom for earnings power. "

J.P. Morgan's Mark Moscowitz: Results Beat; Soft Outlook Might Weigh Momentarily; Boost to Dividend/Buyback Could Set the Floor.  Lowers price target to $545 from $725. Maintains Overweight. 

"We are ... removing Apple from the J.P. Morgan Analyst Focus List, as we think the soft Jun-Q outlook could weigh momentarily and our estimate revisions result in our price target declining 25%. Despite the reset, we think that a compelling part of the stock's risk-reward profile is that upside potential can return to the model moving toward C2014. The company signaled on its Mar-Q earnings call that new products/categories stand to be introduced this fall and in F2014, which could render the softer Jun-Q outlook as near-bottom, in our view."

Deutsche Bank's Chris Whitmore: These Apples won't harvest before fall. Lowers price target to $480 from $575. Maintains Buy.

"Apple more than doubled its capital return program from $45B to $100B by 2015 through a combination of: 1) share buyback authorization increased from $10B to 60B, 2) dividends increase and 3) RSU net share settlements of ~$1B per year. These shareholder friendly initiatives will certainly appeal to investors but does not hide the fact that Apple needs to introduce a 5 inch iPhone, a new 5S and a low cost iPhone for Emerging markets. We believe there is substantial appetite for a lower priced iPhone & believe AAPL would be well served to address the market with a 'good / better / best' segmentation strategy. Moreover, until investors get more visibility on new product launches, we expect AAPL to remain range-bound."

RBC Capital's Amit Daryanani: Awaiting Product Innovation... Now Till Fall.  Lowers price target to $475 from $550. Maintains Outperform. 

"There was plenty for both bulls and bears to hold onto during the March-qtr call. Bulls will point towards - better capital allocation and new product launches, while Bears will focus on declining gross-margins and delays in new launches. We believe the stock is stuck in a trading range ($375-425) till we witness the launches in "fall" time frame."

Morgan Stanley's Katy Huberty: New Products and Easier Comps Drive Growth in Dec.   Lowers price target to $540 from $600. Maintains Overweight. 

"The key to AAPL working from here is 1) consensus Sept Q estimates moving closer to our $35B Rev / $7 EPS, 2) iOS7 preview with hints of new services, like mobile payments, at June WWDC, 3) return to EPS growth in C4Q13 on the back of new product launches and annualizing iPad Mini introduction."

Piper Jaffray's Gene Munster: Soft Guidance Offset By Capital Allocation And Talk Of New Products.   Maintains $688 price target and Overweight rating. 

"Our thesis on AAPL remains intact as CEO Tim Cook stated during the company's March earnings call that the company is looking at new product categories and has exciting product launches planned for the fall and throughout 2014. The announced additional $50B in share repurchases (using debt) was at the high end of buy side expectations. Additionally, we expect many analysts on the Street to re-set forward expectations to adjust for lower core iPhone growth. As we approach these product launches, paired with re-set numbers, we continue to believe that AAPL shares can trade higher through the back half of 2013."

Merrill Lynch's Scott Craig: Later product launch(es) offset by capital allocation.  Maintains $540 price target and Buy rating. 

"1) Disappointing guidance means another negative revision... (2) New product launches later than expected. New iPhone(s) likely in late F4Q13/F1Q14, not F3Q13 as some expected. (3) Increased dividend (15%) and buyback by $50 billion through C2015, a clear positive, although dividend increase modest."

Citi's Glen Yeung:  Buyback in Rearview Mirror, Weakening Fundamentals Now in Focus.   Lowers price target to $430 from $480. Maintains Neutral rating. 

"While bulls will laud Apple's substantial buyback increase, we note that its impact to EPS is more than nullified by Apple's below-consensus guidance. With capital allocation no longer a future catalyst, investor attention will likely revert back to fundamentals. Here we remain concerned about Apple share, noting that loss is clearly evident in F3Q13(Jun) guidance. Meanwhile, with iPhone mix already negatively impacting GM, our concerns about Apple's longer-term gross margin sustainability are supported. When then factoring in a relatively weak result from China (another area of concern for us), and the likelihood that iPhone5S is delayed, and we think the bear case outweighs the bull case. Although it is fair to say much has been built into the shares, in our view, we found little from Apple's results to warrant buying the shares: we remain in the minority by NOT recommending Apple shares."

Credit Suisse's Kulbinder Garcha: Cash Today, Recovery to Follow. Lowers price target to $525 from $600. Maintains Outperform.

"We see the recent announcements as mixed. On the one hand, the June quarter guidance suggests that investors will need to wait until 2H13 for new products. On the other hand, the company is returning $100bn to shareholders which should prove to be a near term benefit. Fundamentally, with a structural advantage in the compute market, Apple could deliver [long-term] EPS power of $60."

Nomura's Stuart Jeffrey: Creaking Fundamentals Offset Cash Returns. Lowers price target to $420 from $490. Maintains Neutral. 

"Falling ASPs, gross margins and market share might be a product-cycle issue, but it seems unlikely to us. Rising demand for iPhone 4 and lower storage versions all point to saturation of high end – at least for 4" screens – and point to further ASP and gross margin weakness. An evolutionary iPhone 5S will likely struggle to change this dynamic, while a mid-range iPhone could further pressure gross margins and ASPs... We had anticipated a late July to August launch of the iPhone 5S and mid- range iPhone, a date which component supply timings seem to support. Yet CEO Cook spoke of a Fall product release cycle, suggesting that the September quarter may see little benefit."

Barclay's Ben Reitzes: The Cash and the $7 Guide We Expected – Now What? Maintains $465 price target and Overweight rating.  

"In line with our lowered estimates from last Friday, Apple issued guidance for $7 in EPS for the June quarter. While this guidance may provide a "jolt" to some investors, it does serve the purpose of reigning in outlandish predictions while maintaining margins above the key 36% level and helps make the stock investable into new product cycles that likely start in September (with builds hitting in June). The share repurchase also could help smooth the ongoing transition from growth to value holders. While the reception of the iPhone 5 and execution of late has tested our patience, the cash announcement, performance and guidance sets Apple up better into product cycles predicated on platform/service innovations."

Conclusion

I am of the belief that the only thing keeping Apple from truly going south is its huge army of loyal Apple evangelists who are willing to buy anything Apple produces, and are willing to pay premium prices on the belief that Apple products are superior to those of competitors.  

However, in previous blog posts, I pointed out that Apple is facing serious competition from numerous fronts.  Samsung is giving Apple its money's worth when it comes to smartphones, and is the clear global leader in all cellular phones, and a very, very close second behind Apple in smartphones.  According to many mobile experts, the Samsung Galaxy S4 is clearly superior to the Apple iPhone 5, and I expect Samsung to jump ahead of Apple in smartphones when the S4 begins shipping later this month or early May.  

In tablets, Amazon's Kindle Fire HD (7 and 9.7-in tablets), Google (Nexus 7 and 10-inch tablets) and the Microsoft Surface are giving the Apple iPad and iPad Mini strong competition.  Many mobile device experts have called the Nexus the "best tablet" on the market, and you have to give Jeff Bezos credit for single-handedly expanding the market for 7-inch tablets with the Kindle Fire. Steve Jobs once called 7-inch tablets "dead on arrival," but Apple has quickly entered that market with the Mini, and this could end up canibalizing sales of the larger of the larger iPad 4.

Apple still has an advantage in mobile apps with well over 600,000 iOS apps listed in its iTunes store compared to only 450,000 Android apps listed in the Google Play store.  Amazon now has about 50,000 Android apps in its online app store.  The latter two wipeout any competitive ed Apple held in mobile apps, and in the coming years, that gap will narrow even more. 

Apple has clearly become too dependant on consumer electroics mobile devices -- 73% of its revenues come via the iPhone (53%) and iPad (20%).  If it is not careful, it could lose its market leadership in smartphones and tablets, as mobile devices become more commoditized due to a lack of innovation.  Clearly, Apple must innovate much better, and think beyond the smartphone and tablet.  When Steve Jobs was CEO, there was never any question that Apple could innovate. This is no longer the case under Tim Cook, the new Apple CEO.   

Product life cycles are now measured in months for most new versions of a moble device, and the pressure to reduce costs, yet pack each device version with new product features, is becoming much more difficult, putting huge pressure to maintain profit margins.

The stock market has spoken, sending a clear message to Apple management -- innovate or die.   

Courtesy of an article dated April 23, 2013 appearing in TechCrunch, an article dated April 23, 2013 appearing in TechCrunch, an article dated April 24, 2013 appearing in CNN Money and an article dated October 26, 2012 appearing in The Guardian