12 Mar 99
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While we're on OS X Server watch, we thought you'd like to see what Microsoft thinks about IEEE1394 Storage devices. This information was sent to us several days ago:
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Also of interest
The FirePower drive is going to come in three configurations.
Drive Configuration 1: 8.4 GB
Drive Configuration 2: 10.1 GB
Drive Configuration 3: 14.4 GB
Average Access Time: 9.5
Spindle Speed (RPM) 7200
Hard Drive interface type FireWire (IEEE-1394)
Drive Pricing:
8.4 GB: $499
10.1 GB $699
14.4 GB: $899
Now if Microsoft wants storage to move to the IEEE1394 interface, then where are the markets going to head? Especially those that are reliant on Microsoft? Where do you want to go tomorrow? IEEE1394. That's where.
Back when the rumors and reports of Apple shipping Macs with Linux installed we stated that since OS X Server and even Mac OS X will "Out Linux Linux," why would Apple want to ship hardware with only Linux installed? Especially since people who wanted to use PowerPC Linux can easily download and install the operating system? There was no need to ship Macs with Linux installed as the only OS on the box. In fact, it would be at cross purposes to Apple's OS strategy.
Last fall we used the chant: "Ease of use! Look and feel! That's the OS X Appeal!" But, we didn't expect Apple to use such a slogan in any promotion pertaining to either OS X Server or Mac OS X.
While we know that there will probably be hand wringing over Apple not shipping Macs with PPC Linux installed, it's not a disaster because "Apple isn't jumping on the Linux band wagon." Remember, Macs have long been that alternative OS and platform. Will people wring their hands if some PC manufacturers don't ship boxes with Linux installed? Even as an alternative to Windows? We don't think so. Why? Because those users who want Linux only computers can install and configure Linux on their boxes.
Lastly. There are rumblings in the Linux community over Red Hat getting all of the attention and "investments" from the large technology companies. Which means that there is trouble brewing. That one distributor of Linux is being invested in and apparently "blessed" by the large tech companies was bound to happen sooner or later. Why? Because they need a reliable source that they can work with. And they also need to have one version upon which they can rely. Otherwise, they might have a Tower of Babel that plagued the PC industry and caused all manner of conflicts.
We'll have to watch the developments in the Linux movement. However, Red Hat apparently being blessed by those tech companies was inevitable. And if it wasn't Red Hat, it would have been another.
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We're standing by the No Later Than Monday for OS X Server.
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For the record. Reason magazine is libertarian as in small "l" and not "Libertarian" as in political.
While you're waiting, you might be interested in reading something about a potential "New Cold War" and arms race that might be starting. Read RFI Analysis: Unintended Consequences. In fact, share it with your friends. Maybe even your elected officials.
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If you want to know, we were expecting it to be up earlier than today. Time will tell but we're standing by the reports.
Here's what RFI put out in one of the updates yesterday:
Unless our sources got mixed messages, OS X Server was supposed to be going on sale today. Not in the stores, that would take a few days, but was supposed to be available for ordering on the AppleStore today. Along with the G3 servers. Today. And we were also told that OS X Server was FireWire compatible and that the G3 Servers are supposed to have FireWire in them. We'll see.
So, we're standing by.
And you don't want to know what we've been hearing about IEEE1394 and OS X Server. Or do you? No, guess you don't.
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Yes. We know the difference between Mac X and OS X Server. We're standing firm on the report regarding OS X Server. No Later Than Monday is what we've been hearing and we're going to stand by that.
Cheers!
According to our sources OS X Server will be appearing later today and no later than Monday. And we have reports that it is shipping to the EDU channel with pricing. We'll stand by that report.
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OS X Server is now on sale at Education. Please note the pricing for the EDU channel.
You're welcome.
Rather than getting into the fact that the "Solar Panel Assist" addition to the hand crank story probably originated from MacWEEK's Mac The Knife Boards, we're not going to get into the details of that news story.
In late '97 we got into a lot of hot water by discussing Apple's intentions to use "The Mother of All Boards." One board all across the product lines. Just one board. In fact, some people went ballistic that we even discussed it privately in Recon For Investors (RFI).
Now. If Apple is going to incorporate a hand crank generator with a solar panel assist into the P1/WebMate, then it will have to be included on the motherboard, no? Meaning that it would add to the costs of the motherboard for all of the Apple products that wouldn't be utilizing those features and complicate things as well. Correct?
Does this pass the smell test as far as Apple's current strategic moves to standardize its boards, components and technologies to a single standard? And would you be able to render a Photoshop file while using the hand crank and solar panel assist? We don't think so. Think of any processor intensive task that also sucks a lot of juice from a PowerBook battery. If you have the control strip open and are displaying the power level in the battery, you watch it get drained pretty fast, no?
As for the General Electric tie-in with the generator development, we suggest that someone bother to take a look at the plethora of prior patent art that General Electric possesses. If they were going to do something like this, they could easily pull out one of their old patents, do the work and then submit an entirely new patent for the new and improved manual generator.
And if General Electric and Apple were doing such a project, we'd hazard a guess that it would be under bullet proof Non Disclosure Agreements (NDA), and General Electric's NDA structure is a lot more restrictive than Apple's.
Oh well. We guess we'll all see come 2000/2001. Won't we?
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Microsoft's Golden Convergence Challenges. It about says it all. And while Microsoft does "get convergence" it's got a lot of heavy lifting to do if it doesn't want the above to happen.
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Tomorrow, Apple Recon is going to be the feature link on Apple Days.
Thought you'd like to know.
If for no other reason than "The Culture Boom" cover story, the April '99 issue of Reason magazine is a "Must Read." And while it won't appear at their web site ( http://www.reason.com ) until the April or May '99, it's well worth the US$2.95 if you can find it on a news stand's racks.
Why is it a "Must Read?" Because that cover story is part and parcel of the impacts Golden Convergence, and all that it implies, will have on "culture." From the basest to the highest, Golden Convergence will only accelerate the boom in content. Whether most will consider it "culture," is entirely different.
The article even discusses how those "cultural guardians," the critics and others, are already decrying the death of culture because the cultural boom is causing them to lose their power over an increasingly skeptical and selective public. In other words, their pronouncements are no longer gospel that the rest dare not to cross. Amazing. People are actually freed from the Cultural KGB who used to be able to kill things that did not fit into their worldview?
What's also of interest is that the article hints at Golden Convergence but doesn't bother to delve into the topic. Strange for a libertarian publication whose motto is "Free Minds and Free Markets." They totally missed out on the free markets aspect of the handing to the public the tools for creating, publishing, etc. their own cultural content and also selling it to others who are willing to pay for it. The ultimate free market in cultural content.
About their only mention of the hardware and software side of Golden Convergence was a reference to George Gilder's telecomputers in 1990. In '95 he touted "All Java, All the time, Java Everywhere" information appliances that would become ubiquitous. And for the record, we came out against his predictions of "Java, Java, JavaOS Everywhere" as it didn't have multimedia. And JavaOS hasn't shipped yet, has it? In fact, those "Java, Java Everywhere" appliances are fast becoming less likely unless Apple decides to use Java as part of its "Mac OS Lite" (QT4.X+). Mr. Gilder forgot that one key element for his telecomputers to become ubiquitous.
In fact, because of this omission there are major questions that were left unanswered, It is possible that they will realize that there are unanswered questions as well as unexplained free market opportunities; which they can cover in subsequent articles or issues. They know that something revolutionary is already occurring, and that something even more revolutionary is on the horizon, they just don't know "what" it is. The "what" is Golden Convergence.
We know you're already believers in Golden Convergence, and all that it implies, because we have delineated it in Recon For Investors (RFI) updates and special reports. And if the increased queries on Golden Convergence are any indication, others are catching on as well.
For what it's worth, we're going to put up a redacted version of this update on Apple Recon. Do yourself a favor. Buy the April '99 issue of Reason and see for yourself why both "The Culture Boom" and Golden Convergence are inextricably linked. You'll also see why a lot of entrepreneurs will see opportunities to profit from it as well.
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RFI Report: Sony goes for the gold
Editorial: Arrogance & Complacency in Macdom about says it all.
And in other news, the IEEE1394 Association Chairman responds to the USB 2.0 story in EE Times in a Letter to The Register. It was linked on MacWEEK on Sunday.
And while you're at it, make sure you read "The Battle of the Next Century" in the Sunday edition of The New York Times.
Yesterday we were left scratching our heads as to how the IBM and Dell "parts deal" benefited the tech sector as a whole, Intel in particular, and any other part of the markets except for IBM and Dell. Upon reflection we've come to the realization that they don't. Oh, maybe it will also benefit AMD as Dell will have access to IBM's Copper (Cu) and SOI chip technologies via AMD chips, but the rest of the tech sector? We're still puzzled on those who think it does.
The main beneficiary of the deal is IBM. They got the better end of the bargain. How so? Well they've locked Dell in as a customer for the term of the agreement and by selling Dell components, even at reduced from market prices, they are in effect subsidizing their own desktop box ventures without getting creamed by the likes of Dell, Compaq, et al. You have to understand. There are some who insist on IBM desktops because of the IBM name and the fact that IBM stands behind them. But they are also getting killed in lots of market sectors where people are getting the "cheap" desktops and even the sub $1,000 computers. And as Golden Convergence type devices gain market share the box makers will see them scrambling for a smaller slice of the pie; especially once the "Really Cheap and even Free PCs" start eating into their potential customer base. Yes, the deal only bought some time and ephemeral advantage for Dell.
As for Dell's access to technologies, we also opined that maybe Dell found a back door into the 1394 market with the IBM deal. People soon put that speculation to rest. Dell has "nothing to trade" and therefore is still a "FireWire Have Not." While they might get the 1394 components from IBM for a price, the components alone do not spell a FireWire license. Dell still has to come to the 1394 patent pool and pay up like the rest. And we're certain that Dell will come. We're just not certain what it will cost them. We'll hazard a guess that neither does Dell. And we don't think that Compaq will make their lives easy for them either. Even if IBM tries to put its weight behind Dell's negotiations for a license. Without 1394, Dell is in big trouble ging forward.
Anyone who believes that the tech sector as a whole benefited from the IBM and Dell deal are seriously deluded. Who won? IBM. As we said, caution lights are flashing.
Even before the AMP/vMac issue was being seriously discussed, albeit sub rosa, Sony (SNE.N) was "our single best idea in Japan." It still is. Sony has been a favorite of ours for a long time. Here's the last missive we sent out to subscribers on Sony. It's from 15 Feb 99.
We don't care if the entire Japanese economy implodes and shares of Sony Corporation (SNE.N) plummet to 100 Yen. We're going to pound the table on Sony as being inside "Golden Convergence Ground Zero" until either our hands are a bloody pulp or the callouses get calcified and become as hard as bone. We'll keep pounding the table until people either pay attention or get caught flat-footed by subsequent events and developments. Yes, we're serious on this issue.
Sony has a vested interest in Golden Convergence, whether Apple cooperates or not. Sony was an early licensee of FireWire / 1394 and recognized the latent potential of QuickTime. It's no accident that Sony has ambitious plans and intentions vis-a-vis FireWire and has even incorporated 1394 compatibility in its computers. And it's no accident that Sony also has ambitious plans to incorporate FireWire all across it's line (where applicable) and is seriously weighing either cohabitating or commiting even further to QuickTime and its future incarnations and versions.
We've been laying out the case for all of this for a long time. And it was no accident on our part for relying heavily on Sony products in the Golden Convergence Special Report sample schematic. Gee. Who has the most FireWire devices and appliances, with more to come? No Betamax this time.
Yes. We're going to pound, and keep pounding, the table on Sony Corporation (SNE.N) no matter what happens to the Japanese markets and economy. It's that important.
Since that update Sony has unveiled the PlayStation 2 specifications as well as announcing its partnership with Toshiba. Shares of both companies spiked on the news.
More will be discussed in the next installment of the RFI Report on MacWEEK.
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We appreciate all of the positive feedback we received from all ends of the ideological and political spectrum on our reporting yesterday about the outrage that is going on over this. So much so that we're posting the RFI Special "Butt Nikked Men and Wimmen" for your reading pleasure.
There is one aspect that we overlooked in that report and that is the fact that the child who used to be picked up at that bus stop now has to have their father walk them to the "New, Improved, Unoffensive & Politically Correct Bus Stop." What about that child's "rights?" Inconvenience someone else so their daughter doesn't have to avert her gaze or close her eyes for a few moments? Ludicrous. And if we take it to the most ridiculous extremes, what about the other bus stops that might stop by a store selling and advertising "Demon Tobacco?" Does the School Board therefore accommodate all other complainants? Including those who might complain about stopping in front of, or in sight of, Mr. DelVecchio's home because the mere sight of it symbolizes what they find offensive and demand that the bus stop be moved from that offensive view? Where does it stop?
Sorry for the indignation over this. We'll stop now.
Other non-protest content to follow later today.
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Indeed. What is wrong with this picture? Nothing that we can see. Now you know why we're outraged. This was the photo that graced the cover of The Connecticut Post yesterday when this issue erupted onto the stage. You tell us. What's is "wrong" with this picture? Tell them as well.
Now do you see why we're outraged?
Read the following article Shelton takes the bus away from 'David' before it's lost as yesterday's old news. This is getting insane. We're working on a special treat for RFI's subscribers and will probably share it with the public as well. Michelangelo's 'David' inappropriate to expose 10 year old children to? And the school board caved in? Good Lord!
For what it's worth, isn't it part of Apple's goals for bringing live streamed multimedia to the classrooms and homes so children could be exposed to the "Brain On" content which they might not otherwise be exposed?
Yes. We're wound up on this issue and with good reason. So wound up in fact that it borders on performing a J'Accuse! on those who would seek to protect their children from seeing 'David' on a daily basis, but probably allow them to watch "The Simpsons" and even "South Park" on a daily basis.
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This is a markup notice for a special update that will be headed your way. In Shelton CT some culturally challenged people, one person in particular, has objected to his 10 year old daughter being exposed to "only one of the seven in the world exact replicas" of Michelangelo's "David" because her school bus USED to stop where the children on the bus would be "exposed" to (GASP!) "a butt nikked man" with his genitals exposed!
Stand by for a blast. And if the local papers, The Connecticut Post and Huntington Herald, dare publish Robert Morgan's "Letter to the Editor" we'll let you know. The person objecting to the children being "exposed" to the statue, and their supporters, probably haven't taken an inventory of the culturally challenged content they allow their children to be exposed to on a daily basis. "The Simpsons" and "South Park" anyone?
As we said. Stand by for a blast. Righteous indignation over culturally challenged and deprived ignoramouses is headed your way. While we're at it we better put a swimsuit on "Venus" and a bikini or bra on "Liberty." And the protestors better hide the Victoria's Secret catalogs in a location where their children can't cut out the pictures and pass them around at school, like prepubescent and adolescent boys do today. And we might as well ban National Geographic from the schools as well, lest children be exposed to "bare breasted women!"
Yes, we've been wound up. And remember, we're an entity that is appalled at what is accepted in the popular culture. We'll take 10 year old children being "exposed" to Michelangelo's "David" over "The Simpsons" and other garbage any day of the week.
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Mr. Fred Johnson of the Apple Marketing Group sets us straight on the existence of the Hand Cranked P1/WebMate and the fact that Mr. Jobs hasn't made up his mind yet. Make sure you read our explanatory response as well.
One of the unreported aspects of the FireWire licensing controversy was the fact that Microsoft incorporated 1394 as part of its PC Spec 2000. So if the box makers wanted to keep their "Windows Certified" status for their boxes then what would they have had to license? And if they didn't, then what would happen to their Windows certification? Yet that was strangely absent from their protests and they also conveniently forgot to tell that to the reporters who wrote the stories. Gee. Wonder why they conveniently forgot to mention that part? And we wonder how those reporters would feel if they were informed that the FireWire licensing protestors withheld key aspects of the issue from them? If the reporters had known that then the stories might have taken on an entirely different tenor, no? Don't get angry at the reporters who wrote the stories please. They ran with the available information that they possessed.
In reading the IEEE1394 patent pool press release, we had to go back and try to read into the inherent ambiguity contained therein. On the first read you would think that the IEEE1394 licensing fee was 25 cents per device, no? But it said 25 cents per device for key patents. This is the first ambiguity.
If there are 8 key patents to enable a box to implement IEEE1394 and a licensee would have to pay that 25 cents per key patent then it would come out to $2.00 per box or device for full implementation, no? That is, unless those 8 key patents could be had for the one low price of 25 cents. And, for the record, someone making a low cost appliance (under $100) probably wouldn't need all of the key patents just a few of them to make them 1394 compatible.
But with the IEEE1394 patent pool, if there are more than 8 key patents needed to make the boxes or devices compatible, then the costs will exceed the $1 per port licensing fees that Apple was asking, no? Ah, the devil's in the unexplained and ambiguous details. Which is why we stated that with the advent of the IEEE1394 patent pool that the costs of licensing 1394 probably just went up. And it will go up again when the 800-Mbps 1394 is deployed because there will be even more key patents to license. Remember what we said about the difference between the FireWire / 1394 Haves and Have Nots? There you go. Companies like Dell (DELL.O) are FireWire Have Nots and what are they going to have to pay? Full freight. That's what.
Which brings us to the second area of ambiguity, but it was intentional on their part. That second area are the cross-licensing terms of those in the IEEE1394 patent pool. Apparently, all of those in the pool can trade their patents for the others but it's probably not going to be one for one swaps. Remember how we said that all FireWire licensees are not created equal? That, like in Animal Farm, some pigs are more equal than others? Well, from the language in the press release it looks like that too has come to pass.
Instead of thinking in terms of one-to-one swaps, think of a group of boys trading baseball cards. One Mark McGwire is worth three Sammy Sosa's and the like. Sooner or later one of the traders will have to pony something up other than the cards that they possess. Most likely money or some other treasure that the one with the desired cards wants. Care to guess who has got the most McGwire cards that all the others want? Liken it to the cross-licensing deal that Apple and Microsoft negotiated prior to Macworld Boston '97. It's business. And we suspect that not all patent pool partners are created equal. Yet, we'll go back to the assertion that bulk gets price. A Sony or Matsushita, which will ship millions of 1394 devices won't "pay" as much as someone just wanting to ship tens of thousands. That's business too.
The devil's in those ambiguous details. There's enough ambiguity in the IEEE1394 patent pool announcement so we could liken it to a 1Tb Ethernet pipe. A lot of stuff could be pumped through that pipe. Interesting, no?
Intel announced its intentions to make USB run north of 200-Mbps and made the bold claim that it would send FireWire/1394 into a "niche market." Niche? Depends on what your definition of "niche" is we guess. But, the article had its intended results as it touched of all manner of hand wringing over yet another great technology being crushed by the Intel behemoth. Too bad it was wasted energy. You see, 200-Mbps USB will be great for all concerned but as a threat to 1394? Come on. Since when does 200-Mbps "beat" 400-Mbps? 800-Mbps? And will Intel really want to use "Slower is Better!" in its campaign to send 1394 into a niche?
If we use Intel's assertions on this issue then we gather that all of those people salivating over the prospects for a 1 GHz Pentium chip should in fact be lusting after 150 MHz Pentium II chips because "Slower is better." Furthermore, the mass market consumer companies aren't about to engage in investing in "Betamax technology," which will actually impede the performance of their products.
Let's put it this way. Consumer: "200 Mbps? Will it work with my [insert mass consumer market company device here]? It won't? It's not compatible with 1394? Well, I guess I'll pass. Show me the 1394 stuff okay?"
Furthermore, we were told "theoretically" that with two FireWire/1394 ports on a box that you already have the potential for 800-Mbps throughput. And that comes pretty darn close to 1Gb Ethernet, no? But, those Gigabit Ethernet cards come in at $1,000 per card. Yes, that's $1,000 per box. Hmm. Let's see. Just dollars per box compared to $1,000 per box. 400-Mbps today and 800-Mbps later on versus 200-Mbps down the road. Sounds like that's a real threat to us!
Don't get us wrong. We're not against 200-Mbps USB, or even Gigabit Ethernet. We're glad that Intel is working on 200-Mbps USB. It will be a boon to all of the companies who currently use USB, Apple included. However, making the bold boast that it would send 1394 into a niche probably sparked guffaws throughout the mass consumer market companies, with fits of hysterical laughter in the Consumer Electronics (CE) manufacturers: "You want us to do WHAT? Slow down performance? Put power supplies back in where we don't need them now? You're kidding, right? Right?!"
Remember what we've been saying from the start. Don't look at what the tech companies, especially the box makers, are doing with 1394. Look at what the mass consumer market companies are doing with it; especially the consumer electronics companies. Granted, Intel was able to spark a lot of hand wringing over their bold boasts in a friendly venue but those bold boasts went unchallenged as well. Why didn't they get reactions from the consumer electronics firms whom will have to bless 200-Mbps USB in favor of 1394? Did Sony et al all stampede to endorse it over FireWire / 1394? Did the home automation and home theater industries? Listen. This is where the markets are heading. 200-Mbps USB does have its uses, but putting 1394 into some "small high performance niche" isn't one of them. Remember. The reason why Intel didn't put 1394 on the board is that they couldn't figure out a way to make money off of it. Their bold assertions pertaining to 200-Mbps USB is a way they can make money off relatively (slower) high-speed connectivity. And we don't think the mass comsumer market companies are going to ditch 1394 for it.
If you need further proof, go back and read those RFI Report columns on MacWEEK in respect to FireWire / 1394.
Enough said.
Yes folks, it's true! Apple is preparing one of those hand cranked P1/WebMate consumer portables for a limited edition that is tentatively being called "The Millennium Special!" Just in time for the anticipated power outages associated with Y2K. It's wireless Internet and QT Streaming features will allow its proud owners to surf the Internet and watch those federal government Public Service Announcements (PSAs) telling people not to panic because of the power outages! Immediately followed by watching news reports being streamed over the Internet of people panicking in the streets because they didn't hear or see those PSAs because of the power outages!
Yes! Be the first one on your block to have one of those hand cranked P1/WebMates! But wait! There's more! If you order one today (on the AppleStore only!) you can get the optional Exercise Cycle package for the low, low price of $399.95! Since you won't be able to get to your health club (because the world is going to hell in a handbasket all around you!) you will still be able to get your aerobic workout!
Reportedly, Mr. Jobs isn't really sold on "The Millennium Special" as the marketing name. He's also considering "The Portable for the Millennium" as one potential moniker. However, the wags have already settled on the moniker that they intend to use for it! They've decided on "The Model T," in honor of Henry Ford's breathtaking technological advances early in the 20th Century.
Where did the idea for "The Millennium Special" come from? According to extremely dubious sources, far removed from Apple, Mr. Jobs allegedly came up with the idea for that hand cranked P1/WebMate according to one of the following scenarios:
3) Watching World War II movies and seeing those guerrillas using hand cranked radios to contact HQ as well as sending out warnings to others that the enemy was going to attack.
2) Came up with the idea after seeing one of those TV reports on those health clubs that allows specially equipped Exercycle users to surf the Internet as long as they keep on exercising. For what it's worth, this might be the most credible as it is probably where the idea for the optional exercise package came from!
1) Mr. Jobs is addicted to listening to the Art Bell late night radio whose show has sold millions of those hand cranked radios for those who are looking for Y2K Armageddon. He thought that if Art Bell could sell millions of those radios, what could he do with hand cranked computers that also allowed people to have wireless Internet?! This is when the Hand Cranked P1 became "Jobs 1" at Apple.
It's quite exciting really. In fact, Apple is also considering submitting the "Model T" for certification as not only being part of "Goals 2000," but is also going to submit if for the seal of approval for the "President's Physical Fitness" program. These are exciting times for Apple! The entire world! Starving children in Africa, Asia, Latin America and other places; who don't have running water, let alone electricity or telephones; will be able to enter into the Information Age for "ONLY $1299!" Of course, the price might be a sticking point since a lot of those places have a gross per capita income of less than US$360. Maybe they can offer a special loan program where they can put no money down and pay a penny a month for eternity.
Does Apple have such a box in the works? If they do then we're going to bitch about "asinine projects." The first we heard of such a box was the report on Mac OS Rumors. In fact, it was the only place we heard of such a box. Our first reaction was to chuckle and believe those "Some People" were playing mind games with Mac OS Rumors yet again. Our second reaction was that it had the fingerprints of "The Vast Mac Wing Conspiracy" all over it. Our third reaction was that "just maybe" Mr. Jobs made it "Jobs 1" at Apple because of the concern over Y2K. Look at all the money and batteries it would save for schools and others! Three (green, yellow and red) lights would notify the user to stop their work and crank the handle lest the box crash and they lose all of their work. We can just hear all of those whirring dynamos in the classrooms all over the world! That, and the warning voice for those who ignore the lights: "Yo! Fool! Crank me or your history report is history!"
And then we had visions of Dilbert dancing in our heads. Specifically the "Pointy Haired Manager" asking Dilbert to reboot his Etch-a-Sketch laptop. Except that he now had one of those hand cranked WebMates. He'd have to hire an intern to turn the crank and keep the box going as he surfed all of those "free previews" spams that are sent to his e-mail. "Faster! Turn it faster! The picture's breaking up!" It's at that point that we dissolved into laughter.
If Apple does unveil such a box, we'll ask the honest question: "What WERE you thinking, if at all?"
There. Does that answer your queries on "The Model T?" We hope so!
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Yes, all of us would like to see AAPL trading north of 87. But at 87.31 it would be trading at a P/E of 37+, a premium to the market. Why use a P/E of 37? How about a Microsoft P/E ratio (63)? That'll boost the price even higher.
Hey! We better up our target price for AAPL! We'll go one better than a mere P/E 37! Not even Microsoft's P/E of 63 (which translates into AAPL trading at 147'7)! We're going to assign it an Internet P/E! Let's see, AAPL once held a P/E of 250 when it first started spiking before its string of profitable quarters, so we'll use that "Historical P/E." Therefore, we are upping our target price for AAPL to 585! Yes! Five Hundred and Eighty Five Dollars! BUY! BUY! BUY!
We hope you realized that we're joking and didn't hit the buy button when you read that paragraph. Instead of inflating expectations in the current market environment, let's get The Street to at least assign Apple a conservative P/E of 20 or 30 rather than trying to price Apple in line with the rest of the tech stocks. Trying to do that would make Apple as inflated as the rest of the markets. First we'd rather have The Street fairly value Apple on its trailing P/E rather than trying to overvalue the stock. The valuation levels on those stocks mentioned in an article border on the irrationally exuberant.
For what it's worth. If we use Apple's trailing earnings of $2.34 and assign it a P/E of 20, then AAPL should be trading today at 46 7/8. If we assign a trailing P/E of 30, then AAPL should be trading today at 70'3. If we split the difference and use a P/E of 25, then AAPL should be trading today at 58 1/2.
If we use RFI's conservative FY '99 projected earnings of $2.58 / share, then we get the following prices: P/E 20 = 51 5/8, P/E 25 = 64 1/2, P/E 30 = 77 3/8.
Now, all of those numbers we used to place a valuation on AAPL are based on trailing and conservatively estimated expected earnings. We didn't try to "fairly value" AAPL based on the markets, but on Apple's past and expected performance. And that's what the analysts do when they make their calls for price targets on individual stocks. They use other factors as well, but with a stock like AAPL they can't make assumptions based on what other stocks are valued at and what their P/E ratios are. If that were the case then none of them would have to bother with the conference calls and other mundane aspects of research and analysis.
Now you know why we tell people not to try this at home. While Apple is underpriced and undervalued in respect to its P/E and the markets, the others are out of whack as far as their valuations are concerned to both their earnings and the markets. It's as simple as that. More Semi Bulls and Hope Scenarists are seeing that, but they are riding the wave for the present. Any bad news from the techs and they will start to head south, hard. Currently, Apple is insulated from that occurrence even though it would most likely be dragged down along with the techs and the general markets if they head south. But, that would only make it more attractive on a valuation versus expected performance.
Let's keep expectations modest for the present shall we? Let's just shoot for a trailing P/E of 20 - 30 rather than attempt to "fairly value" Apple in regards to the other techs or even the Internet stocks. Okay? As we've said in the past: "Kids! Don't try this at home!" The phrase usually uttered by "Mr. Science" just before he performed some dangerous experiment that could result in injury, death and destruction. And the last thing we want anyone to do is blow themselves up by adding water to acid rather than acid to water.
No offense intended to anyone with this. We just don't want anyone to get irrationally exuberant or start raising their expectations too high. We'd love AAPL to be trading north of 87, but it's got a lot of heavy lifting to do before it gets there.
Working....
Well Morgan has submitted his copy for this week's installment of the RFI Report on MacWEEK and he's certain that the content of that column will provide no small measure of discomfort to some, while providing a lot of comfort and entertainment to others. He can't help the discomfort part, but the comfort and entertainment part were intentional. But, you'll understand what we mean when you see the column.
"Come Monday, it'll be all right" was the message we borrowed from a Jimmy Buffet song to tell RFI's subscribers when others were wringing their hands over: the glitches during the keynote, brewing tempests in teapots over the keynote and other issues. It's Monday. Is Apple (AAPL.O) trading higher or lower since Thursday? Was there news "Come Monday" or even "before Monday" as we stated? Bullish news? There was? GASP!
If we weren't wringing our hands over the Tokyo keynote and expo, why were others? If the glitches weren't important enough to us to report on them contemporaneously, why get worried? And we're not referring to the Mac centric Internet sites, although more than a few of them were hand wringing. There were some people who were out on the ledge for no good reason, and that was before the Mac Internet sites posted their reports on the keynote. In fact, we had hoped that Friday would see AAPL weaken so it would provide a better trading entry point. Even still, we spent part of last Friday sending out the message: "Come Monday, it'll be all right." It did.
So, with that we're headed off to The Monastery to await the arrival of the RFI Report on MacWEEK. We might even head off to the fortified Monastery in the exclusion zone on Monserrat.
Working....
While we're not going to out the conspirators behind the "Talking Points" (old and new) as of today, we thought that you'd want to see those talking points so you'll know who has signed on to their agenda; before the spinning starts. It's for your use and information. Call it "Spin Protection." By their content you shall know them. That's all. You can view the talking points from the original conspiracy e-mail, and not the site that posted them after it started.
And no, we're not being mean by revealing those "Talking Points." You see, we received some very well thought out and reasoned messages from Bostonians who thought Robert Morgan was being malicious with the "Deal with it!" statement. He wasn't. We weren't. The same people behind those talking points said that (and worse!) to us last Summer; especially after the Post MWNY '98 Special Report was released to the public.
When they were informed of this, those who submitted those reasoned responses were either stunned into silence or responded again that the talking points were "untrue," to use a polite term. And they requested that we not publicly dissect them for special reasons. Being the reasonable people that we are we'll acquiesce to their requests.
By their content you shall know them. We're just giving you spin protection.
NOTE: To those who asked "since all of the major publishing conglomerates are in New York, then why is Seybold held in Boston? we'll reply: "Good question! Why is Seybold held in Boston?" Don't give us any ideas to start asking Seybold questions like that. Could it be that Macworld was also held in Boston? Gee. Maybe we should ask! ;-)
All Bostonians can stop diving for the Maalox and Prozac. We're not going to ask. Promise!
The story by Jon Elsen in The New York Post on ABC execs leaving NYC puts the final nail in the coffin of the Disney to buy Apple and Pixar and make Steve Jobs Disney's president. And, there are even more things signaled in that article that not even the reporter who wrote the story realizes. But, that has not reached fruition yet. But, it was intimated in the Golden Convergence 1.1 RFI Report column on MacWEEK.
We hope that all of those who were holding out hope that the rumors just might be true won't be too dejected. Apparently Mr. Eisner has an heir apparent and it's not Steve Jobs. And we don't want to be the one to break the news to him.
Working....
Contrary to what a lot of people would assume, the responses coming in on that column on MacWEEK are positive regarding the move to New York. As for those who are protesting, we can pretty much figure out which ones are reading from the "Talking Points" script of the conspirators who are trying to make it appear that there's a huge groundswell of grassroots support for keeping the expo in Boston, and even reversing the decision to go back to New York in '99.
What? There's a "Conspiracy" behind those "Talking Points" canned responses? You bet. What the conspirators don't realize is that there's a mole in their midst. Someone who actually likes the idea of Macworld Expo returning to New York, even as they appear to support the conspiracy.
If we keep getting the canned responses from those using the old, and even new, "Talking Points" we'll out the conspirators and you'll also see which Mac Centric Internet sites and others are reading from that canned script. In fact, you'll be able to recognize everyone who is part and parcel, or a supporter of that effort! Some might think it's like clubbing baby seals for sport by outing them, but when you start playing those games being discovered and outed should be considered as part of the dangers.
Are we concerned about revealing the identity of that mole? Not really. They're safe. They'll probably be just as publicly outraged that we outed the conspirators!
And, if need be we'll respond to each and every one of those talking points. Starting with the fallacious "New York isn't safe." New York is safe. Safe enough for families with small children in tow as they walk through Times Square late at night. New York is safer than it has been in decades. That's why some New Yorkers are complaining that it's "Too safe." Go figure.
Don't let any convince you that it isn't safe. And don't stay away from MWNY '99 because someone convinced you it wasn't.
In fact, Aikiko Ashley ( a New York based Mac consultant) has offered to act as a free resource to anyone who wants to know where to stay and go "economically" in The City. Can't beat the price! See? It's not "too expensive" either.
Like the MWNY '99 graphic? Someone made it up for us as a special treat. We still don't know if they want public attribution, but if they do we'll reveal their identity.
Working...
Well, work on the RFI Apple Recon Weekly Update ground to a halt when we were apprised that AppleInsider is reporting on a rumor that had been shopped around to us for months. Given the fact that we didn't comment on the rumors, report their existence or even reply to those who promulgated the "Disney+Apple+Pixar & Steve Jobs as CEO" rumors should be telling. As soon as the AppleInsider report hit the web, not only did the queries start coming in but "an extremely reliable source close to Apple" came calling and was treating it as a joke. It was "Right. The press releases are going to hit the wires at any time! Buy! Buy! Buy!" We hope you realize that they were being sarcastic over this rumor report and aren't hitting the Buy buttons.
The AppleInsider rumor report couldn't resist taking a sarcastic shot at both RFI and Apple Recon with their mention of the hybrid Disney / Apple graphics we have been using to telegraph future anticipated developments. They're being "churlish juveniles" to put it mildly ( Note: that churlish reference was deleted by MacNN/AppleInsider later in the day).
While we are expecting developments between Disney (DIS.N) and Apple (AAPL.O), it is not some complex merger deal that would require the approval of three (3), count them THREE!, sets of shareholders which would also leave Steve Jobs as Disney's president. Steve Jobs is "good, real good" but he's not "good enough" for either The Street or Disney's shareholders. If Michael Ovtiz didn't last at Disney, what makes anyone think that Steve Jobs would? That's not a slight against Mr. Jobs' talents or capabilities, it's just our opinion. And, it would be shared by many on The Street and in Hollywood. Steve Jobs suddenly becoming "The Most Feared Executive in Hollywood"? Disney Chairman Michael Eisner's heir apparent? Come on!
Furthermore, Disney is an immense entertainment conglomerate. We don't think Mr. Jobs has the experience or the desire to oversee Disney's diverse and immense holdings. Things like: Disney Studios, Disney Interactive, Theme Parks, ABC, ad infinitum ad nauseam. Toss in also overseeing both Apple and Pixar (PIXR.O), and it soon becomes ludicrous.
Do you see why we offered that advice to Mac Centric Internet sites when they started their forays into the markets? Why we said: "Kids! don't try this at home!"? Even if Robert Morgan personally floated the content of that AppleInsider report to Traders who knew him and implicitly trusted him, as soon as he was done they'd ask him if he was feeling all right. Then, they would ask him what he had been: smoking, ingesting, inhaling, snorting or rubbing into his belly button. Enough said. Back toreal work.
While we don't know if that rumor report was meant to flood our mailboxes and send the phones ringing for private comment, or whether it was planted by someone long a lot of out of the money Feb 99 Apple call options, we don't know. What we do know is that the truthfulness of that "Disney to buy Apple and Pixar and make Steve Jobs Disney's president" sure gave a lot of people some of the best belly laughs since we were sent this picture over the weekend that shows how President Clinton really feels about a lot of those on both sides of the Impeachment issue!
Also. Those "Disney and Apple" graphics were only meant to telegraph anticipated developments between Apple and Disney, not a takeover or merger. The time for that to have even be a possibility has long since passed. And while they'll stay up, we promised not to keep looking for "Hidden Mickeys," like the one in the HAL ad.
Whistling as we work!
Please stop flooding the mailboxes with requests for commentary on the Disney and Apple rumors. We will not be making any public comments on the rumor reports until after the markets are closed. Thank you for your patience.
Working....
Recon prior to 14 Feb 99
For those of you who are having Apple Recon withdrawl, there's another place where you can "Get Some" if the public releases on Apple Recon are not as often as you like. The RFI Report debuts today on MacWEEK.com and is going to be a weekly feature. Yes, Robert Morgan has become a Contributing Editor for MacWEEK.com.
Previous Recon can be accessed on the 15 Sep 98 Index page and links thereon.
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1998 Echo 4 Holdings / Recon For Investors. All Rights Reserved.
