Monday, June 6, 2011

Apple announcements: "it just works"

I've been an Apple fan and user since 1987; I've owned probably a dozen Macs over the years, and today, between my wife and I, we have two iMacs, one MacBook Pro, two iPhones, one iPad, and two Airport Extremes. I've subscribed to Apple's MobileMe service for several years, and during that time we have finally consolidated our Address Book and Calendars—whereas before I tried to keep contacts and calendars up to date on my computer while she relied on a paper calendar and a phonebook list, and our information inevitably became hopelessly jumbled and out of synch. Thanks to MobileMe, which (used to) cost $100/yr (but is now free), all of our Apple devices now display the same up-to-date contact and calendar info. We can make a change on any of our devices and the change shows up on all the others within minutes or even seconds. All automatic; it just works.

Today Apple announced that it is providing this same service for free to anyone who buys an Apple device. Plus, it is extending this service to provide automatic synching of all your iBooks, music, and new photos (up to 1000 for 30 days), and automatic backup and synching of all your documents (with free storage up to 5 GB). Moreover, Apple has taken key elements of its mobile iOS and will add them to the Mac OS, in the planned Fall release of OS X Lion, which will cost only $29. The Apple Mac/iPod/iPhone/iPad ecosystem was already huge and growing, and now it is even more integrated and accessible than before.

Over the years Apple has been THE personal computing innovator. Apple was the first to introduce a mass-market graphical interface, the first to abandon the floppy disk, the first to offer WiFi on its entire product line, the first to introduce a computer without a hard drive or CD/DVD slot, the first to introduce Thunderbolt connections, and the first to introduce FireWire connectors. Today, Apple announced that mobile devices such as iPhones and iPads will no longer need to connect to a computer—they can be set up and updated wirelessly, wherever you happen to be. Apple has cut the computer-mobile device umbilical cord, and at the same time Apple has eliminated the need for CDs and DVDs altogether. You can now purchase and download software, books, magazines, and music wirelessly, even OS updates, for all your computers and mobile devices, all from a central location. Buy it on one and use it on them all (up to 10 for music)! And one more thing: Apple is now incorporating Twitter into its mobile and desktop software.

Apple is not only offering a broad range of digital devices (iPods, iPhones, iPads, laptops, and desktops), but it is now going to tie all those devices together seamlessly, for free. This is a powerful combination, since the whole Apple experience is much greater than the sum of the parts. You will no longer need a computer (Apple or PC) to use an iPhone, but if you have an iPhone, you will be much more inclined to make your next computer or laptop an Apple, if you haven't already—or to make your next smartphone an iPhone, if you haven't already. Apple will even make it easier to switch from a Windows computer to a Mac, with a Windows Transfer application.

The market appears to have been disappointed that Apple failed to introduce new hardware at today's WWDC conference. But that doesn't preclude the possibility that we may see a new iPhone in a few months' times, or a refreshed Air laptop. And it shouldn't overshadow the importance of what Apple did announce, which was significant progress towards the seamless integration of our digital lives—with the sole exception of movies, which could be another piece of the puzzle to be added at a later date (what else is there that wasn't included?). Books, music, documents, photos, messages, calendars, contacts, applications, backups, all synchronized and backed up to the Cloud automatically and available on any and all your Apple devices with a simple one-time setup, and for free. This works for me, and I suspect it will work for plenty of other folks as well. Today Apple has given new meaning to Cloud computing—a nebulous concept until now.

Investors might want to take note of the fact that (according to Bloomberg) AAPL today is selling for a trailing PE of 16.1, and a forward PE of only 13.7. This, despite having grown revenues at a 42% annual rate over the past five years, and there being every reason to expect revenues to continue to grow at impressive rates in the future.

Full disclosure: I am long AAPL at the time of this writing.


randy said...

It is amazing to go to the mall - walk past dozens of stores with few customers, until you pass the Apple store. It is always packed to the point that my wife was suspicious they were paying people to pretend to be shoppers.

The free MobileMe is a fantastic plan to add stickiness to consumers who are tempted by the fine Android based phones. There is a whiff of Microsoft like "our OS controls your world" philosophy that caused MS to over-reach and over-extend their software to the point that it became unusable. However, the last several years of Apple innovation demonstrate that they get the usability thing better than anyone.

Frozen in the North said...

This is bad Scott:

I'm 100% in agreement with you... Until 5 years ago I was a windows fan, now all (but for my office computer) devices are mac products.

My office laptop has not left its cradle in more than a year -- now that I have an ipad, and I am far from being the only one in the office who has done the shift.

Don't know if Apple will rule the world for ever, but right now, it is THE platform. said...

They went free when on MobileMe? I re-upped at a hundred dollars January, 2011. said...

I just finished watching the WWDC. Let other countries high five themselves about building cars. American ingenuity is alive and well. It makes US tops, and AAPL has it in spades. Now, the theft of MSFT software by foreign countries will be minimized. You couldn't pirate AAPL software and expect it to work in the cloud.