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Mac Bloggers Size Up New Rivals, Break Down iPhone, Watch MobileMe Fall Flat

By Chris Maxcer MacNewsWorld ECT News Network
Jul 18, 2008 4:00 AM PT

While iPhone 3G shortages still abound, Mac bloggers have still been hitting the new handset from all angles -- including from the inside out.

Mac Bloggers Size Up New Rivals, Break Down iPhone, Watch MobileMe Fall Flat

Of course, there's more to Apple than the iPhone -- how about the company's rising PC market share, which now puts Apple in third place in the U.S.

Also, Apple TV took a couple punches this week from Microsoft and Sony, and MobileMe is perhaps not so pushy after all.

Million iPhones on the March

The release of the iPhone 3G spawned posts across the blogosphere, as Apple watchers covered everything from activation issues on the July 11 launch day to the iPhone 2.0 software update to the App Store and beyond.

"On Monday, Apple announced 1 million iPhone 3G units sold and over 10 million applications downloaded from the App Store. Right now, there are over 800 applications available for download, and I suspect that number will exceed 1,000 in the coming weeks," Raven Zachary, a research director for The 451 Group, told MacNewsWorld.

"This is a segment-changing event. Apple's success this month will end up redefining the consumer mobile space yet again, as Apple did last year with the initial launch of the iPhone," he added.

Cutting through the wide-ranging iPhone 3G and App Store buzz, a few other nuggets are worth digging for.

iPhone From the Inside Out

iSuppli, which came up with an estimate of the component cost to manufacture the new iPhone 3G a few weeks ago, got its hand dirty and tore apart a brand-new iPhone 3G to take a more educated guess. After inspecting the contents, it turns out iSuppli's original estimate was just US$1.33 off the mark. The new cost to manufacture comes in at $174.33, giving Apple decent, if not enviable, margins. iSuppli doesn't take into account labor and distribution-related costs, however, so the exact true numbers for each unit is known only to Apple.

There were no major surprises in the components or the vendors selection to provide those components, Jagdish Rebello, iSuppli's director and principal analyst of wireless communications, consumer electronics and India research, told MacNewsWorld.

"However, the board layout for the 3G iPhone is significantly different from the earlier model," Rebello added.

Some of the component changes were likely done to make the iPhone 3G more compatible with service networks around the world, AppleInsider noted in its post on the subject.

Some commenters weren't ready to buy into iSuppli's numbers, however, pointing out that marketing and software costs could be quite high for Apple, which could effectively make the hardware component effort meaningless in the big scheme of things. Others questioned the pricing for the components themselves.

"How in the world can iSuppli determine the final build cost when two of the components listed can not be identified. The 'display' and the 'touch screen' are both unidentified, and thus impossible to determine Apple's actual cost," commented kresh.

Of course, if Fake Steve Jobs were still around, he'd say that Apple doesn't ever pay list price or anything, not even the average price -- heck, in some instances, component manufacturers pay Apple just to use their products. (And yes, bloggers are still mourning the loss of the Fake Steve Jobs.)

In any event, "For the most part [iSuppli] assumed industry [average selling prices] for components," Rebello said.

Apple's Rolling

Two research reports, one from Gartner and another from IDC, show that Apple's market share of the personal computing market is on the rise in the United States. Gartner's report for the second quarter of 2008 shows that Apple's share was 8.5 percent for the quarter on a whopping 38.1 percent rise in Mac shipments. The total industry shipment growth came in at 4.2 percent, so Apple must be doing something right. Oh, and Apple is now the No. 3 "PC" provider in the U.S., behind Dell and HP, and slightly above Acer, according to Gartner.

As for IDC, Apple's U.S. market share is 7.8 percent -- a bit lower than Gartner's -- which puts Apple in a virtual tie with Acer. In the world at large, however, Apple's not in the top five when it comes to market share.

"Getting iPhones into millions of hands can only help these numbers for next quarter," commented zombitronic on the MacRumors.com post on the subject.

Still, Apple has a long way to the top, assuming that's even where the company would want to be.

"Dell/HP have quite a comfortable lead over Apple. I don't think Apple is aiming for #1 here, though. Dell and HP have lower profit margins per computer. That's why Apple doesn't really care about conquering the sub-$1000 machine market, which is where they would have to move into if they do want to have a shot at beating HP or Dell," noted commenter queshy.

Game Consoles Fire on Apple TV

Meanwhile, Microsoft teamed up with Netflix to let Xbox 360 owners stream Netflix movies to their Xbox 360-connected TVs. The service is similar to what owners of the Netflix Player by Roku can get with the Roku set-top box. Microsoft said that only its Live Gold subscribers can get the Netflix service, though, so it's not exactly a freebie add-on. Still, it's instant streaming movies from one of the biggest movie rental companies in the U.S. Score a blow for Microsoft's Xbox 360 and Netflix.

"This is a great idea if you have Netflix. The PS3 could use this. I already watch Blu-rays all the time on it because its like $8.99/month for unlimited (and once you watch Bluray you can't go back to anything else). But having both would be sweet," noted commenter phinnvr6 on the Engadget post on the subject.

Speaking of Sony, the company announced that its PlayStation Network users can now rent and purchase movies and TV shows online, in both standard definition and high definition. Pricing starts at $1.99 for TV shows, with movies coming it at $9.99 to $14.99 for purchase and $2.99 to $5.99 for rental. If that doesn't sound a lot like Apple's Apple TV offerings, how about the portability? PlayStation movie watchers can also watch their selections on their PlayStation Portable devices, much like Apple TV owners can watch their content on iPhones and iPods.

So what does this mean for Blu-ray?

"But wait, I thought the PS3 was supposed to be the most awesomeness blu ray player!?! why would Sony be so quick to give up plastic substrate media technology from the 1990s? Oh wait, Netflix and Xbox 360...," commented inteller on the Engadget post on the subject.

Others questioned Sony's pricing. "$5.99 for an HD rental doesn't sound so good, particularly since the Apple TV and DirecTV both had HD rentals for $4.99," noted Jose.

So what's all this mean for Apple TV and the iTunes rental store model? Devastating competition? Or none at all?

"It really doesn't matter, as the game console installed base is way larger than the Apple TV installed base," Van Baker, a vice president of research for Gartner, told MacNewsWorld.

"Apple TV is the least successful of the Apple products, thus Steve Jobs' comment about it being a hobby. I think that the movie rentals helped a bit, but the device needs more features than what it currently has to gain significant share. For non-gamers, the Apple TV may be appealing, but for gamers, they already have the hardware, so the content is just another feature that they have available," he added.

MobileMe a Bit Weak?

After a rocky launch of Apple's .Mac replacement, MobileMe, the company apologized by offering MobileMe subscribers a free 30-day extension of their subscriptions. In addition, it turns out that MobileMe may not be quite as pushy as Apple first implied. While MobileMe's "push" capabilities provide near-instant updates for iPhones, it can take several minutes for PCs and Macs to get the new data.

Apple's efforts to placate frustrated MobileMe users met with responses ranging from harsh criticism to praise. Some were happy enough with it -- and never really expected a smooth migration in the first place -- while others sounded downright angry.

"Ummm, maybe give some extra iDisk space? Something that actually has value? Extending a subscription service by a month has nearly zero practical value," noted alex cutter on The Unofficial Apple Weblog (TUAW) post on the subject.

Either way, TUAW commenter Big John explained most of the noise: "It's a vocal minority. In my experience, most Apple users didn't really care about the 'inconvenience' over the weekend. My .Mac / MobileMe syncing still worked. Me.com didn't. Early adopters love to scream as loud as possible about issues."

Is "too much screen time" really a problem?
Yes -- smartphone addiction is ruining relationships.
Yes -- but primarily due to parents' failure to regulate kids' use.
Possibly -- long-term effects on health are not yet known.
Not really -- lack of self-discipline and good judgement are the problems.
No -- angst over "screen time" is just the latest overreaction to technology.
No -- what matters is the quality of content, not the time spent viewing it.
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