Why Apple Shares Fell

Four months ago, Apple shares stood at over $700.  Today they sit at about $460, one heck of a drop. Given they've sold more iPhones in the last quarter than in any previous quarter that seems a little mean.  It's affecting their suppliers, too, including Samsung who spend half their time defending themselves in court against Apple.  Perhaps Apple have found the way to wipe the smile of Samsung's face?

Related stories - How many lawyers does it take to design a phone?,  Apple Samsung battle reconmences,     Apple case weakens

But all of this is unlikely to be the reason the shares fell.  Litigation aside, Apple have been extremely industrious the last quarter in introducing the new iPhone and the iPad mini.  Both have sold well, unfortunately not well enough to satisfy the money merchants but better than most normal people might expect in such a tough economy.

What won't have helped would have been the problems associated with the latest incarnation of their iOS, especially the mapping app that didn't work.

Related stories: Apple told to get lost, Apple to buy Tom Tom

However it's market expectations that they have fallen foul of, something I suggested semi-mockingly in a couple of posts (OK, I was actually taking the p*ss about the obsession with queues forming for new Apple products that actually became accurate, but mainly because Apple decided to market the iPad mini on the internet so aggressively that it likely affected their Apple Store sales).

Related Stories: Apple queues 'disappointing' say analysts, Apple and Gap to merge

And no, I don't think bloggers taking the micky out of Apple influenced the market.  Not much, anyway.

The real reason the share price is now a third lower than it was four months ago is twofold.

First, the price four months ago was too high.  I said that when it started falling - see Apple shares dive south

Second, Apple products are too expensive.  Sure they're selling, even breaking records, but the rate of increase in sales is slowing to a point that the money people recognise as a change in direction.  In calculus we call this the point of inflexion, where a curve changes direction on an axis.  Next quarter they will sell less than before.  Their competitors are catching up rapidly, the tablet computer is no longer a unique offering and the Apple customer base is starting to look static compared to Android.

The share price will sort itself out, so no offers of advice needed there (apart from think carefully before buying, but probably they are close to the right number now).  Apple need to look at dropping the price of its premium products if it wants to attract more new customers to the fold, otherwise Android based products will mop up new customers instead.  Selling the iPad Mini was a brave move as it allowed access to Apple for less than the standard iPad, but it is still a significantly more expensive item than its Android competitors.

My guess is that the rumoured cheaper iPhones will arrive this quarter along with cheaper full sized iPads by summer.  Let's wait and see.

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I can be followed on Twitter - @RayASullivan
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The End of Stuff

Hot on the heels of my article on Western consumerism (Tech Manufacturing Coming Home) I'm going to propose that actually part of the consumerist habits are likely to retreat in the very near future.  I'm talking about the next 12 to 24 months here, not some out of focus point in the distant future.

Now many of us are avid collectors of stuff - not just gizmos like laptops and tablet computers, but also the media associated with them.  DVDs and Blu-Rays are a major part of many a collectors home right now with bookcases and shelves bulging with years worth of collected special editions, boxed sets as well as the normal versions.  A few years ago we all had bookshelves bulging with CDs - well actually a lot of us still do but those collections are building up much slower now.  While CD sales haven't died completely, many of us are buying our music on-line and downloading it to iPods and other MP3 players without purchasing a physical copy at all.

You could argue that the iPod, iPad, Android phones and tablets, and all the other devices we have in our homes to store our on-line bought music are the modern manifestations of the CD library.  But then we have to factor in the iCloud and Google's Play cloud where we can store up to 25,000 music tracks that we own the rights to listen to - either music we've bought from the likes of Apple or venerable tracks sat on plastic CDs on our bookshelves.  If we feel the need to store more than 25,000 (20,000 with Google) then that's also OK, but be prepared to pay for the storage.

So really, the CD collection is almost certainly a thing of the recent past.  We shouldn't be too surprised, it isn't that long ago that we had bookshelves of 12" vinyl records - OK I admit it, I've still got some in the attic and a turntable in my home office, but I don't play them anymore.  And the VHS tapes were recycled years ago (I'm not going to mention the Betamax tapes I used to have).  Fair enough, there's no shortage of records and VHS tapes on eBay, proving that there is still some demand.

And let's face it, the argument for owning DVD and Blu-Ray discs is only for completists.  What you can't Tivo, Sky+, record on your HD recorder you can order from LoveFilm either as a DVD on loan or streamed through to your tablet computer to watch, well, wherever you can get WiFi.

I haven't even started to rant about books, either.  Unsurprisingly I'm a great believer that eBooks are about to overtake print.  This holiday season we're going to see an avalanche of tablets ranging from £70 no-name Android devices to £500 iPads with everything in-between.  Some of these will disappoint, others will cause arguments on Christmas day over the costs, but pretty soon half of the adult residents in the UK and the US plus our friends in Australia, New Zealand and Canada will have devices that can, among other things, be used to read eBooks.

To me this means two things.  First, we're on the edge of not needing as much physical stuff as we historically have.  The toys will remain, the tablets and netbooks, but the physical media will shrink.  But the second thing is that the future probably isn't iCloud or Google's variant.  I think we will see the emergence of personal cloud space that could link to our Apple iCloud etc.  So we could take advantage of the iCloud directly or via our own cloud.  Critically I think there could be a family cloud, where common media could be stored - photos, diary, contact lists plus, assuming the ongoing arguments over intellectual property rights can be ironed out, our common music and film copies.  Then each family member could have their own overlapping cloud space - like the ultimate Venn diagram.  And critically each personal cloud would overlap to some degree with your iCloud, your Amazon cloud, your Google cloud.  It would be a unique space that all of us will have, that we'll be able to access day or night from anywhere with WiFi.

Perhaps I ought to pop onto eBay, take a look at those completists buying records, VHS tapes, DVDs and Blu-Rays.  They might want to buy my bookshelves.

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I can be followed on Twitter too - @RayASullivan
or on Facebook - use raysullivan.novels@yahoo.com to find me

Why not take a look at my books and read up on my Biog here

Want to see what B L O'Feld is up to?  Take a look at his website here

Worried/Interested in the secretive world of DLFs?  Take a look at this website dedicated to DLFs here, if you dare!

Can Amazon Overtake Apple in the Tablet Race?

A year ago the answer to this question would have been obvious.  Amazon entered the tablet market a full eighteen months after Apple launched the iPad, they pitched in with a pint sized version of Apple's quart, a size that Steve Jobs had said wouldn't cut it, and they pitched in where others had tried and failed.

And a week after the Kindle Fire launch I'd have still come to the same conclusion.  The initial reviews were lack-lustre, faintly damning.  Probably unfairly as most online reviews were comparing the Amazon product against the full sized iPad.

However consumers look at tech a bit differently to reviewers.  For one thing, they tend to have to buy their own kit themselves.  That makes us mortals compare things in the real world.  Sure, product A may transfer data a millisecond faster internally than product B, but it's 33% cheaper, so I'll hang around for a few more milliseconds, right?

And Steve Jobs was wrong about the screen size, as Apple have belatedly admitted by releasing the iPad mini.

So, a year on and there's been a lot of developments in the tablet world.  First off, not only have Amazon released an improved version of the Kindle Fire, they've released it world-wide.  Also, Google have weighed into the battle with their Nexus range that builds a family ranging from the near five inch mobile phone, through the mini tablet Nexus 7 right up to the iPad challenging Nexus 10.

Now Amazon are wading into that battle with the Kindle Fire HD 8.9 - not quite as large as the iPad, but large enough to matter.

But it's the numbers that tell the bigger story.  First, Apple are still leading the pack, which in case you didn't know, is a race between two operating systems - Apple's iOS and Google's Android.  Sure, Amazon have skinned their Kindle Fire Android OS to make it almost their own, but it's Android at its core.

A year ago Apple had about two thirds of the tablet market to itself - it probably felt more than that because the remaining third was spread across a multitude of manufacturers and devices.  Now it holds just over fifty percent, still highly commendable but steadily going south.  Google are denting the numbers, but it's the Amazon Fire that's making the big difference.  In just under twelve months they've gone from zero to hero, or to 54% of the Android market.  I think they will both increase their Android share and narrow the gap between themselves and Apple over the coming Holidays.  Apple have probably had their sales boost with the iPad mini and will see sales level out, whereas the competition in the Android tablet market coupled with the lower level of brand dominance will lead the late shoppers to lever last minute bargains as they hunt for a neat present for loved ones.

Google will probably nibble a bit more from Apple, too, as will the Nook devices from Barnes & Noble that are struggling to be perceived as more than glorified eReaders due to their affiliation with a bookseller - like that logic works against Amazon!

Will Amazon overtake Apple in the tablet market?  Not in the near future, but possibly they could challenge Apple's dominance in the medium term.  This could be the most interesting development in the short history of tablet computing yet.

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I can be followed on Twitter too - @RayASullivan
or on Facebook - use raysullivan.novels@yahoo.com to find me

Why not take a look at my books and read up on my Biog here

Want to see what B L O'Feld is up to?  Take a look at his website here

Worried/Interested in the secretive world of DLFs?  Take a look at this website dedicated to DLFs here, if you dare!

Sullivan's Almanac

We are rapidly approaching that time of year when folks think it appropriate to make forecasts about the future. Generally these are baloney and manage to give astrology a good name, or at least a better name.  I've two main issues with them.  The first is the ridiculous notion that the end of one year and therefore the start of a new year is a sensible point to make these predictions - let's be real here folks, the New Year is just an arbitrary point in time that is only significant because we start drinking in one year and don't stop until the next.  Actually, I think I understand it now!

The second point is probably the main one.  If I or one of the other hundred or thousand people who claim to have forecasts for the future were actually in receipt of certain knowledge we wouldn't be posting the predictions in a blog, we'd be buying and selling shares with every penny we had to our names.

Still, it does seem appropriate as we approach the end of the year to make some predictions.  So this is just for fun, right?  Don't go buying shares off the back of my opinions.  But if you do and I'm right, well you know where to find me.  Cash or cheques are fine by me.

My top six predictions for 2013

1.   Apple will still be here

No, really.  Sure it's going to be one heck of a year for Apple, but they'll survive.  iOS 7 will be launched in January - it'll actually be iOS 5 in essence but probably will have Apple Maps included and working.  It'll also have most of the 'enhancements' included in iOS6 reverted to how they were until iOS 6 was released.  By March there will be rumours of a new iPhone - look I never said this was going to be an innovative look into the future - but the phone won't arrive until August.  Maybe it'll have thought control?  Apple haven't got that many more new ways to go.  Stock price will rise and fall.  Probably in that order.

2.  Amazon will  still be here

No, really.  2013 will be a bit of a disappointing year for Amazon because they had intended to rule the world by the end of this year, but will be two countries short of the full set.  To be fair, North Korea and Iran have always been a bit difficult to anticipate.  The Kindle will still be the best selling dedicated eReader - that's the good news.  The bad news, for various reasons, is that dedicated eReaders will be in general decline having peaked at Christmas 2012.  The Kindle Fire will be the new entry level device for reading eBooks by September or December - I must dust this crystal ball before moving on to number 3.  However, one of the big players - maybe Amazon, possibly Apple, probably Google will launch a tablet that can be read in sunlight.  Stock price will rise and rise, probably in that order.

3.  Google will still be here

But I guess you knew that.  Google+ will be clinging on, but really it won't make any impact during 2013.  Google will do one of two things this year.  They will either use their formidable financial muscle to buy Facebook and rebrand it FB Google+ or they will save some money and develop a time machine, go back a few years and buy Facebook.  Or maybe they'll go back even further and create Facebook.  Their family of tablets will fight like hell all year for market share, but really that battle is between Apple and Amazon for the majority of the year.  There will be at least two new releases of the Android OS, both with stupid names that should be unforgettable but will just blend in with the older names.  Their share price will be quoted in scientific notation.  Greece will buy one share in January with the intention of selling it before the end of December and sorting out the deficit in one move.  They will probably have some change to spread around as well.

4.  Facebook will still be here

It's a close call, but it will manage to hang on one more year.  It will be a challenging year for FB, but not terminally so.  The challenge won't come from another social network but from a public that becomes jaded with the whole social network paradigm.  Either Facebook or Get Me out of Here - I'm a Celebrity will look like it will fail just after 2013 is over.  Facebook will announce, probably in the autumn, that they are introducing a thought controlled version to use with the 3D holographic tablets Apple will announce in the late summer. Did I forget to mention Apple will announce the  i3DPad in item 1?  Well, they will, but it won't exist until 2014 so that's for another almanac.  Stock price will fall until they unfriend the bankers.

5.  Twitter will still be here

But nobody will understand why.  So nothing new there.  Twitter will continue to innovate and may stretch the letter count up to 141 characters by the end of the year, but this will bring enormous bugs in its wake.  Twitter will end up in court defending account holders who have inadvertently defamed British politicians - like that's an easy task - but nobody will understand why they do this.  Stephen Fry will threaten to leave Twitter again and the share price will tumble.  Stephen Fry will eventually relent and share price will tumble further.

6.  Microsoft will still be here

No kidding.  More importantly the Surface Tablet will see version 2, Windows 8 will see Service Pack 2 by mid year and some confidence, obviously misplaced, will return to Microsoft.  The Surface will be pushed as the serious tablet for business use, will be tied strongly to Microsoft Exchange and will have the full suite of MS security built in to instil business confidence.  Consequently it will run like a dog with one leg, will install service updates virtually every time it is switched on and will reboot without warning most days, generally when in the middle of a critical transaction.  MS Exchange users won't even notice.  Share price will change, up or down, probably both, possibly simultaneously.

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I can be followed on Twitter too - @RayASullivan
or on Facebook - use raysullivan.novels@yahoo.com to find me

Why not take a look at my books and read up on my Biog here

Want to see what B L O'Feld is up to?  Take a look at his website here

Worried/Interested in the secretive world of DLFs?  Take a look at this website dedicated to DLFs here, if you dare!