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Apple CFO Gives Info on Company Direction 418

Posted by Zonk
from the no-plans-to-make-furniture dept.
osViews.com writes "Mac World is reporting a recent talk given by Apple's Chief Financial Officer (Peter Oppenheimer) at the Goldman Sachs Technology Investment Symposium. The article illustrates several things about about Apple's business plan, much of which is totally new information about the company's current and future direction. Here's the nutshell summary: iPod "Halo" effect is causing some Windows switchers, little demand for satellite radio/iPod integration, iPod shuffle margins below HD ipods, happy with rate of growth - no plans to license OS X, margins on Mac mini equal to eMac (both below corporate average), retail store to expand to 125, no plans for media center PC - prefers to stream multimedia to TV from primary computer over wireless network, no video for iPod, portable media centers a failure."
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Apple CFO Gives Info on Company Direction

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  • great submission! (Score:5, Insightful)

    by KingPrad (518495) on Saturday February 26, 2005 @07:19PM (#11790004)
    Kudos to the submitter and the editor for posting a useful and interesting story with a useful and concise summary. I wish we had more stories done exactly like this one.
  • by 2nd Post! (213333) <gundbear AT pacbell DOT net> on Saturday February 26, 2005 @07:20PM (#11790008) Homepage
    Hook up near a TV, plug in your S-Video+Optical out, and you have your 'media center pc-less', or something.

    So for $189 you have a base station, streaming music, streaming video, a print server, and no need for another computer.

    Any bets on whether we'll see something like this soon?
    • by TWX (665546) on Saturday February 26, 2005 @07:27PM (#11790051)
      That depends on how much it costs to develop, and how many computers are already owned by the target audience. I have a video projector and a lot of other AV equipment and I've had various rackmount form factor computers hooked up to it. I like having all of it right there usable with the wireless IR keyboard. For quite some time my DVD playback was through the computer. I've since taken that computer apart and not gotten it back together, so right now I'm without a web browser in there.

      If too many Apple fans already have a G3 or G4 tower laying around that has been obseleted by a more powerful Apple then they probably would hook that computer up instead of this one. Even an iMac could be integrated into an AV cabinet using a "TV View" or other VGA to NTSC device, or people could upgrade to something nicer like a TV with RGB inputs or digital. If too many people have other fairly easy options then Apple won't sell enough of these "Express 2" devices to pay off the development costs, let alone get into profit.
      • You have to consider the population in general: How many people have computers near the TV; isn't that why the PC/Microsoft world is hyping media center PCs?

        What I am describing is NOT a PC.

        Take that old G3 or G4, and have it running iTunes. Equip it with a $60 wifi card.

        Take the new Airport Express 2 and hook it up to the TV.

        Stream from the computer to the TV; build in 20ft bluetooth into the Airport Express to enable a wireless keyboard and mouse. Play DVDs, music, and other content on the TV, sans PC.

        Look up the Airport Express [apple.com] because I don't think you understand what I'm talking about here.

        A $189 device! Not a PC at all!
        • I know exactly what you're talking about. What I'm asking is why I should spend another $200 for a device when I can just throw the PC that is laying around into the entertainment center rather than streaming over wireless or cat5. If I only have ONE computer then your device idea makes sense. If I have two computers, one of which is just sitting there because my newer one replaced it, then the old one goes into the cabinet with the VCR and stereo receiver, or goes on the floor next to it. If it's an iM
          • You're assuming then that the PC is equipped for HTPC use; TV out of sufficient quality, quieter than the quietest parts of a quiet movie, no audio distortion from the power supply when playing music, no adverse EM distortion on the TV from the computer, etc.

            I think many households are still single computer; and those with two computers, one is for kids and one is for parents, and the parents are those that have modems, 15" screens, and the original Pentium processor. At least that's what I've seen at my a
            • I've had many consumer-level PCs near AV equipment, and I've never had any problems with electronic interference, and never any noise problems that couldn't be easily overcome by turning up the volume. Between the ceiling fan, the air conditioning blower motor, the traffic outside, the dog barking, and the conversations happening, the fans and hard disk drive of your average PC sitting across the room from you are negligible.

              There's this device called a "TV View" that converts VGA to NTSC, as I've alrea
          • by BasilBrush (643681) on Saturday February 26, 2005 @08:04PM (#11790305)
            Because most people aren't like you. Take a look next time you visit a non-geek. You'll notice that there isn't a tatty old computer sitting by or under the TV. And if you even suggested such a thing, Mrs Non-geek will tell you your not having any such thing in her lounge thank you very much. Computers belong in the office/den.

            Even for those people that are OK with the idea, most desktop computers have too much fan noise to be used for the purpose.

            You go with your idea. It's just the thing that geeks do. I might consider doing it myself. But recognise that you and I are in the tiny minority.

            • Okay then, how many Mrs. Non-geeks are going to let their family room be turned into another workstation? How many are going to want to take a device that they already don't know how to use very well (the computer) and try to use it for DVDs, streaming video, music, or anything else like that? Remember, NTSC televisions don't have the resolution that it takes to have a decent web surfing experience, so unless she likes running back to the den to put a movie in or to change CDs then odds are that she's goi
              • Web surfing belongs on the dektop, not the sofa and TV. Nor it the idea to bring a computer desktop and arbitrary apps to the TV. That's not the idea at all, leave that nonsense to Microsoft.

                This is about the possibility of streaming multimedia using an ordinary looking remote control and satelite/cable/PVR type UI on the TV. It's about the possibilities of selling television programmes and movies like songs are sold on iTunes now. And to have a central PVR that all the TVs in the house can access like

                • I think he has a point here and you missed it. Mrs. Non-Geek will never go for a piece-wise solution, she'll want something that can just be plugged in and works.

                  Also, 'streaming over wi-fi' is something that will most certainly produce the MIGO effect to Mrs Non-Geek. She has no idea what it is and, worse, is not interested in the gory details of how to set it up. You're trying to sell an idea to the wrong audience - that is, if t's a one piece kit that's been set up by the manufacturer, she might buy it;
        • The Hauppauge MediaMVP, Model 1000 is a 85 dollar device that does pretty much the same thing without the wireless.

          It can also act as a front end to mythtv.

          The problem with the macs is not the front end, it's the back end. How do you get your mac to record the TV signal without spending a bundle bundle and how do you run your cable from the living room to your office.

          If the apple wireless device you mentioned could also encode video and stream it back to the PC then you'd have something. Even then I doub
        • Combine this with the HD capabilities in Tiger and you end up with a pretty nice setup for not a lot of dough. But will 54 MB/s be enough to stream TV shows and movies without pausing and skipping? Hmm, why has Apple been doing so much work on low-bandwidth video protocols?

          I'm keeping my fingers crossed that the next version of OS X will be codenamed LYGER.

          http://returnself.com/blog/
    • Elgato already offers something like that: EyeHome [elgato.com]
    • by Leo McGarry (843676) on Saturday February 26, 2005 @07:44PM (#11790133)
      First, SD video is dead. Forget it. It's history, over, gone. So there will be no S-video output. It'll be either DVI or HDMI with a pigtail-style adapter to go to component analog. (DVI has the ability to carry an analog signal alongside the digital one. I'm only assuming HDMI does too.)

      Second, such a device would require a dedicated AVC decoder chip, which would push the price range up into at least the $400 range. Mark my words, when it debuts at $399, every armchair CEO in the world is going to bitch about the price.

      Finally, what's the point of building a print server into a device that's meant to plug into your television? Anybody who wants to plug a printer into a wireless network can already buy either an AirPort Extreme base station or an AirPort Express, or any number of third-party wireless products.
    • Hell that's what I thought the mini would be during that orgy of speculation in the week or two before the keynote. A small box that can leverage a large box for media purposes.

      I also speculated that Apple might offer a downloadable movie service. Even if you have to start the download 1/2 an hour early to let it buffer, that's still better than going to Blockbuster.

      The bandwidth costs would be hefty for Apple, and having some kind of p2p thing doesn't seem like their style even if they made it seamless a
  • In other words... (Score:3, Interesting)

    by TWX (665546) on Saturday February 26, 2005 @07:20PM (#11790011)
    ...what we've already known either because the products are out or because there have been pre-release photos of real equipment.

    As much as I'd like Apple to diversify and build more products suitable to my needs, a 17" wide "pizza box" of an entertainment center computer isn't very likely and probably wouldn't sell well enough to pay off development costs. I'd buy one if it were less than $800, but the odds of that are small.
    • We didn't know about margins on iPods and Mac minis before. Nor have we had such a clear signal that they don't intend doing a video iPod or a media center Mac. Though streaming video from a Mac in the office to the TVs in the house in the form of an video Airport Express sounds likely.
  • by Anonymous Coward on Saturday February 26, 2005 @07:25PM (#11790037)
    Halo wasn't even that good, but it's being given now not only credit for the success of the XBox but the success of the iPod??

    Something is seriously wrong with us as consumers if we are so reordering our world for such a mediocre FPS.
  • by Faust7 (314817) on Saturday February 26, 2005 @07:36PM (#11790091) Homepage
    This is somewhat believable. I'd wager that average college students would be a prime target for the Mac Mini, as well - unlike Apple's laptops, it doesn't cost a mint, and its size would be a great advantage for students living in space-challenged dorm rooms. Most of the software they'd need would be on it, too. Your usual non-computer-geeky college kid would play games on their console, not their computer, and the Mac has Microsoft Office and fine Internet capabilities. Colleges use plenty of specialized software (e.g. statistics packages) but most kids go to the labs to use that stuff rather than bothering to acquire their own copies. If the Mini can make a successful tie-in with the iPod in the minds of this particular target audience, then Apple stands a fighting chance of boosting its market share at least with that segment.

    Apple is very good at marketing perceived value (iMac, iPod, etc.) as opposed to embedded value (the way Microsoft pushes most of their products). I'd say that perceived value is what matters a lot in the impressionable minds of young students.
    • No, college kids buy iBooks. Mac minis are no good for dorm-bound teens. The Mac mini is specifically for switchers who are replacing an obsolete PC with a new Mac.
      • The Mac mini is specifically for switchers who are replacing an obsolete PC with a new Mac.

        Funny how the Apple exec didn't say that. I'm guessing the main markets for the Mini are (in this order):

        1) People who would otherwise buy eMacs (schools, etc)
        2) People with older G3 Macs that are looking for a cheap upgrade
        3) People with newer Macs that want a second machine
        4) Switchers or PC users who are Mac Curious.
        5) New computer users

        This is based on the historical trend that most Mac sales tend to go to exi
    • by mrchaotica (681592) on Saturday February 26, 2005 @07:49PM (#11790175)
      unlike Apple's laptops, it doesn't cost a mint
      Bullshit. An iBook only costs ~$400 more than the Mini, and that's including a keyboard, mouse, LCD screen, battery, and portablility. At least an equally good value, I'd say.

      I am a college student, and I bought my "good for college students" Mac more than a year before anyone had even heard of the Mini! Saying "the Mini is a good value" is good, but saying it's the only Apple with good value is just FUD.
      • Indeed (Score:3, Interesting)

        by lakeland (218447)
        A while back I got irritated by some troll on slashdot trotting out the standard 'apple computers are slower and more expensive' line -- mainly because they were low-id rather than an AC, but I digress.

        Anyway, I compared two machines, a 20" iMac and a dual 2.5GHz G5. The iMac was there because they wanted to see a budget range computer, and the dual G5 because they claimed AMD was faster.

        The rules were pretty simple, configure a roughly similar machine at newegg and compare the price to apple's. Compone
        • Re:Indeed (Score:3, Insightful)

          by toddestan (632714)
          Anyway, I compared two machines, a 20" iMac and a dual 2.5GHz G5. The iMac was there because they wanted to see a budget range computer, and the dual G5 because they claimed AMD was faster.

          You consider the 20" iMac, which costs $1,899, a budget computer?!? And then you turn around and wonder why people claim Apple computers are more expensive?

          Here is some news for you, most people in the PC world would consider a budget computer something that is $500-$600 or less. And that is with a monitor, keyboard
  • no plans for media center PC - prefers to stream multimedia to TV from primary computer over wireless network


    I don't buy that Apple will buy Tivo, but I can see them creating a Tivo-like device with these abilities:

    DVR with free remote control service (why free? wait a second)
    Ties right into the iTunes Movie store.

    Right, Movie store. Imagine Jobs going to the MPAA and saying "Hey, remember all the problems the RIAA had with downloading? Lawsuits didn't help enough - but now we have legal music, and people are buying music online, and look how many songs I've sold.

    "Join with me, and we can end this pointless conflict, and bring order to - *cough*, I mean, we can sell movies."

    The PC/Mac will still be the hub - use iTunes to buy music, or buy a movie. You can put either on a new iPod, but for the movies, the iView (just a name I threw in) will be the best way.

    Want to watch a movie? Forget Netflix - just use the iTunes store. How about a documentary (independent movie makers who have limited releases would love this - what if you could pick up a documentary for $10, and around 50,000 people all wanted to - now that little indie project just broke even).

    Miss a TV show? Why DVR it (though you have that power) when you can go to your computer, type "Battlestar" or "Babylon" to get the entire current archives (including commercial), and for $3 (or $20 for the entire season), you can watch your movies *now* (or, with broadband and figuring about 300 MB per 30 minutes, about 30 minutes or so).

    The biggest thing of this is what it turns Apple into. With the iPod and the iTunes Music store, apple is moving away from hardware systems, and going towards hardware accessories and services. Eventually, I can see a Linux client - but in the end, Apple won't care what you run as long as you buy an iPod and use their iTunes store for movies and music - they still make money (though they'll still tell you a Mac will work better, and as the services do well they'll sell more Macs along the way).

    Anyway, that's just my opinion. I could be wrong.
    • Now *that* would kick ass. I sincerely hope your prediction is correct.
    • Bingo bango bongo (Score:5, Interesting)

      by mblase (200735) on Saturday February 26, 2005 @07:49PM (#11790176)
      Miss a TV show? Why DVR it when you can go to your computer, type "Battlestar" or "Babylon" to get the entire current archives, and for $3 (or $20 for the entire season), you can watch your movies *now*.

      A column not too long ago (don't ask me to recall who or when or where) discussed this sort of thing in light of sites like "Homestar Runner". The case was that this is the future of video entertainment -- visit the show's web site and download and watch any episode you like, in any order, at any time, rather than wait for your favorite episode to reach syndication or buy the whole season on DVD.

      The bandwidth, I think, is still the biggest problem, but that's just a matter of time and R&D. And the difference in quality from downloadable video vs. HDTV will, like the difference between MP3 and CD quality audio, keep the downloadable format from completely replacing TV broadcasts or DVD sales.

      All we (and Apple) need is the device to do it, at a price point people can afford. That too is a matter of time -- iPods arrived costing, what, $400? $500? Now you can get a Mini for $200 and a Shuffle for even less.

      I think Apple would like to sell just what it described in the article: a program that lets you download and view video on your computer, but supplemented by a small remote-controlled set-top device that streams it wirelessly to your television set, a la Airport Express. Video on an iPod-sized device is impractical by any measure, but video on your television set is a given -- but it has to be as easy to use as a DVD player. Fortunately, that sort of ease of use is Apple's specialty.

      I perceive this as a certainty, not a possibility -- it's just a matter of when.
    • I don't buy that Apple will buy Tivo, but I can see them creating a Tivo-like device with these abilities:

      Unless they were going to use a modified TiVO to act like a video airport-express to stream video to the TV. At least that was the first thing I thought [slashdot.org] when I heard the rumor about Apple buying TiVO. It's easier and faster to buy existing tech and modify it for your purposes than to create from scratch, and sometimes cheaper, too.

  • I Switched (Score:5, Interesting)

    by MBCook (132727) <foobarsoft@foobarsoft.com> on Saturday February 26, 2005 @07:49PM (#11790163) Homepage
    I switched. There are about 10-15 blog style entries on the page mentioned in my sig about it. Here is a short version of why:

    Used to like Apple, moved to PC for customizability/etc (in mid 90s). Never considered moving back because the more I learned, the more obviously out of date the Mac OS was. Then I learned Linux and fell in love with Unix. Add to that the hate and distrust I've gained in MS and I was ready to jump ship (and I knew it wouldn't be too hard for me, unlike some people). Linux didn't seem "there", I wanted something more mainstream. When OS X came around (and I got to try it on my brother's PB) I really liked it, and started following it. I got an iPod, which did serve to remind me of Apple's quality. Then when my current computer (a Dell laptop that served me well for 4+ years) became too slow for my needs I waited until new PowerBooks were announced and I bought one. The whole (longer) story is in the site linked to in my sig.

    So as for "the halo effect", I'm not so sure. It might happen for some people. I used to love Apple so I was really just finding them again. And even without the iPod I would have switched because of OS X. I have three observations on all of this. First is that iTunes really showed me how nice Apple software was these days (iTunes on Windows was the first Apple program I'd used since leaving my old LC II in about 95). Second was if OS X was available on a PC (as some want it, and as some other companies have been asking Apple) I doubt I would have switched (why switch processor architectures when you don't have to?). And third, I had been wanting a Mac to try OS X on for the last few years, but even used Macs were expensive (for what you got). Had the Mini been available 2 years go (the equivelent kind of computer, at that price point, not neccessisarily that size) I would have bought one as fast as I could and I may have switched earlier.

    I'm not the "typical" switcher (someone relativly new to computers and raised on Wintel that went to Apple) since I'm a power user (used the OS 7 back in the day, Linux, most flavors of Windows, etc); but I switched and I am VERY happy with my new little Mac. Next step: evangilizing when people ask me about what to buy for their first computer!

    • I never liked the old classic Macs; my first computer was a Tandy 286 running DOS. I proceeded to Windows, from 3.1 to XP, and never had a problem.

      And then I tried Linux.

      I fell in love with the UNIX philosophy and the command-line, started noticing how much of a horrible heap of shit Windows is (and how evil Microsoft is), and stopped using Windows entirely.

      But then I realised that, despite having a lot of fun, Linux wasn't perfect either -- I was spending a lot of my time assembling my OS, instead of u
      • The classic Mac OS (v6 or v7) was the first computer that I ever used that much. I was 8-10 years old and it was that or DOS (which my parents could barely use). So when you compare those, Classic was a great choice WAY ahead of it's competition.

        But as I said as I learned more the want to configure and mess with things brought me to Windows (and later to Linux).

        As for Linux, I agree. I love the OS and it's fun, but I wanted something with that UNIXy goodness that "just worked". I don't mind searching for

  • switchers (Score:4, Interesting)

    by tverbeek (457094) on Saturday February 26, 2005 @07:50PM (#11790180) Homepage
    iPod "Halo" effect is causing some Windows switchers

    I can confirm that anecdotally. Last night I got a call from my uncle and my cousin the college student. She has yet another broken Windows laptop (it'll cost several hundred bucks to fix it), and they wanted the family geek's advice on what kind of computer to get to replace it. Without me even having to suggest it, she (an iPod owner) had already been looking at Apples. So I just steered them toward the 12" iBook with AppleCare. Talking to her, I added that it'd match her iPod; to him, I explained that it was the best bang for the buck of the Apple line, and AppleCare would be cheaper than any repairs that might be needed.

    • Re:switchers (Score:4, Insightful)

      by michaeldot (751590) on Saturday February 26, 2005 @08:30PM (#11790529)

      they wanted the family geek's advice on what kind of computer to get to replace it.

      Yes, I think that's how most people decide to buy computers - word of mouth from trusted friends & family.

      Lucky for her (and Apple), you're obviously a Mac enthusiast, but 97% of the market is not, and will continue to advise people to get what THEY know.

      (Most of my computer using relatives know nothing about Macs, just that they can't stand them because they only have one mouse button, don't have any software, no one uses them at work, and are too expensive, blah, blah, blah. Guess what most of my extended family uses? Windows...)

      I guess that's why us Apple fan(atic)s get so annoyingly evangelical: we have to get our 2% voices heard about the 97% louder voices.

  • No media center PC? (Score:3, Interesting)

    by FaasNat (522755) on Saturday February 26, 2005 @08:26PM (#11790501)
    Thought there were going to be some big plans for a digital hub. Seems that a unit capable of displaying digital pictures (iPhoto), digital tunes (Tunes), digital movies (DVD player, Quicktime), and digital TV shows (through their own means or if they acquired TiVo) would be at the top of the digital hubs. I thought the Mac Mini would've been a great digital hub item, but it's missing a digital audio out.
    • The mini is the repository of everything and it gets beamed to the Airport Express. It already works nicely with music. Apple is going to skip the whole DVR in the living room which will always be a commodity and keep it all coming off the PC wherever and however you want. Brilliantly efficient, simple, and they control the front end of the media delivery. No one is ever going to make money with something like TIVO.
  • ipTV? (Score:2, Interesting)

    by sow251 (319031)
    so does that mean that anyone can have a tv station -- all you need is an ip address and the new Airport will stream to the little box that's hooked up to the TV - video content from the web? everyone will be v. happy to watch their "tv" on their tv like they all seem so die hard about.

    with enough viewers (advertisers will love the registered hits stats) we might see advertising dollars going to some nice startups of whatever kind -- a nice departure from what the networks and cable companies have set up
  • by amichalo (132545) on Sunday February 27, 2005 @12:31AM (#11792137)
    I think it was a wise decision for the regularly tight lipped CFO to give some insight from the company. Here's why:

    (1) Usually it is Jobs that announces any sort of strategy or "feelings" Apple may have on a technology. This helps investors feel like someoen other than the CEO is running the ship.

    (2) With iPod obviously so huge, it is important to know if Apple is seeing itself as a music playrer company or what. Also, with TIVO rumors abounding, it is important for Apple to stake out their position on the DVR battle field.

    (3) Stating the intent of the Mac mini. Obviously people are seeing cool applications for the Mac mini and as the CFO said, some people will try to use it as a home media PC, but he clearly states that it isn't that which helps to determine what the thing IS - a Windows Switcher PC.

    (4) A glimp into Apple's crystal ball. It is interesting how he proclaimed the death of the personal video players. Jobs has said this before but with people trying to make the iPod Photo into a video player, it is interesting to hear another cheif reiterate the position.

    (5) Points 3 (Mac mini not a PVR) and 4 (iPod Video not in the future) help us to see Apple's implementation of the Digital Hub more clearly. At home, the Mac becomes a dual purposed iLife Workstation as well as a media server. Using products like AirTunes to stream audio around the house and one day perhaps AirFlicks (FireFlicks?) to deliver a 21st century family slideshow, streaming video from DVD, or even PVR style recordings.

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