Tuesday, January 15, 2008

Macworld

Macworld is just around the corner. Steve Jobs' Keynote takes place Tuesday January 15th at 9:00 am PST in Moscone West at the Moscone Convention Center in San Francisco. The most prominent reports flying around the interwebs are about changes to Apple's notebook line, content announcements for the iTunes Store and updates to the iPhone. I think that the keynote could look like this: begins with an update on the iPhone, with possible provider announcements and an update on the SDK, then new content announcements and other changes to iTunes video as well as to the AppleTV and then the announcement of the subnotebook and a focus on Apple's notebooks for the rest of the keynote.

Several websites have reported that Apple has one or more updates or new additions to its notebook line to take the wraps off of, the most likely of which I believe is an ultraportable laptop that takes advantage of SSDs and an external optical drive as well as modifications to ports to achieve a smaller form factor than the current MacBooks. There have been other reports of a tablet which I believe is much less likely to be unveiled. Whatever it is, it will probably take on Apple's aluminum and glass design scheme and incorporate multi-touch in some form. There have also been rumored to be updates to the MacBook Pros but only minor component updates like speed bumps and configuration changes- nothing too dramatic. Apple announced updates to the Mac Pros this past Tuesday, one week before Macworld and in the middle of CES. Coincidence- who knows? The updates to the Mac Pros are probably it for Mac desktops, allowing Apple to really focus on notebooks during the keynote, which have been stressed in conference calls as the driver for growth in Mac sales. Steve will likely address this in the keynote with figures on overall Mac sales, market share and notebook sales.

The iPod and iTunes part of Apple's music business have been going great guns recently, but iTunes video hasn't really caught on. Content providers like NBC have removed all their video from the Store and many people have speculated that it was because of pricing concerns on NBC's part. One issue is that in the eyes of the networks, there are many viable alternatives out there like hulu that offer a significant amount of video for free. None of the alternatives aggregate a large amount of TV from a bunch of different places and networks, the iTunes Store is the best in this area, but networks look at the situation and think that they are not reliant or restrained to Apple and the iPod and iTunes ecosystem. With the iTunes Store it is different this time around with video as opposed to music because when Apple was negotiating with music studios, Apple was the only real, viable way to distribute music online and there was the appeal of the tight integration of the iTunes Music Store and the iPod as well as the iPod's dominance of the MP3 player market. With video there is still the appeal of iPod and iTunes but there are other established alternatives out there for the studios and networks. I expect that Steve will take a significant part of his keynote to address changes to video on the iTunes Store, on your computer, on your iPod and on your TV. There have been many reports of a movie rental service that is ready to be released at Macworld with many of the major studios on board and a variable pricing scheme. I believe that Apple will have an update to the AppleTV ready, possibly increasing storage and reducing the price in an attempt to make it catch on more than it has so far. I think that this will be the first step, if not the first few steps, in transforming the video part of Apple's business (including the AppleTV) from a hobby to the third leg on Apple's chair. Apple has shown with their transformation of the way people enjoy music that they have the power to transform the way industries operate, especially the content providers, largely because of Steve Jobs' involvement with the content providers. He is currently on the board of Disney and Disney's largest shareholder and was the head of Pixar before it got bought out by Disney. I believe that Apple has the capacity to really change and control the way that people watch video on their computers, iPods, iPhones and televisions. The television/video industry and the way that Apple can change it will be addressed in another post that will be here soon.

Steve will likely begin the keynote with an update on the iPhone which was announced at last year's Macworld and will give an update on its market share and possibly units sold. I don't think that there is any way that Steve could not talk about the iPhone. There could be a software update and an update on the SDK. It is also possible that there could be an announcement of provider agreements in other countries. Apple had said they would ship the iPhone in Asia-Pacific in 2008 and it is possible that they could announce the availability of the iPhone in Japan but China seems out because its largest mobile provider announced today that they had broken off talks with Apple. Apple has never made any reference in its iPhone strategy to Canada, whose mobile phone industry, especially for data, is ridiculously brutal and oligopolized. One analyst from RBC came out Monday and said that Apple could have a deal in place with a Canadian provider to announce at Macworld and there were also reports Monday that Telus is switching its network from CDMA to GSM, where it would join Rogers as the only two GSM providers in Canada. These could be signs that a deal is in place for Canada that will cause a shakeup in the industry (fingers crossed). It is unlikely that the iPod line will see any updates but it is odd that the ads around San Francisco that announce the beginning of Macworld are iPod ads. There have been banners that have gone up in the Moscone Center as well as a Macworld teaser that has gone up on Apple's website sporting the slogan "There's something in the air." Many reliable indications say this is a reference to the upcoming subnotebook's name (the MacBook Air) or it could be a reference to another wireless strategy that Apple has in mind, likely including the new content announcements for the iTunes Store. Usually if there is a Macworld teaser, there will be something big. There could be a few surprises but we will all know once Steve takes the stage tomorrow exactly what he has in mind for Apple.

One thing that is for sure is that last year's announcement of the iPhone seems difficult to top though Steve Jobs is known for surprises and is driven to keep doing things bigger and better consistently, especially when people don't expect it. Apple's stock may take a hit if only what is expected now is announced because Apple shares seem to jump only when investors are surprised or expectations are exceeded, because what has been rumored is usually already factored into the share price by speculators. Apple's stock has come off its fifty-two week high recently and has been bouncing around between 170 and 180. Whatever happens, it is sure to be quite the week for Apple and its share price, with Macworld Tuesday January 15, options expiration Friday January 18 and earnings Tuesday January 22.

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