Has Apple Reached Its Inflection Point?

Recently, the Financial Times ran an article questioning Apple’s performance in emerging markets (basically Asia ex-Japan, Africa and the Middle East). While the bulk of Apple’s revenue comes from the US/North America, Europe, and Japan, they are mature markets where most of the growth has already taken place; growth in revenues (and Apple is valued as a growth stock not a mature business) depends on ramping up sales and profit in places like China, Africa, and the Middle East. Sales in China and India of the Iphone are lackluster, reports the FT. Same with the Ipad, just too pricey for consumers in either country. Let alone Africa and much of the Middle East (which excepting a few lucky Gulf citizens/subjects remains poor). Meanwhile at home in places like North America, and Europe, stagnating economies mean consumers will look for bargains. Has Apple reached its inflection point?

My guess would be yes, it has, based on my admittedly non-scientific excursion outside the Apple realm for an MP3 player. I think Apple will retain in North America and Europe a hefty portion of Iphone, Ipad, and Ipod users, but growth is likely to be yesterday’s story.

Life inside the Apple ecosystem is very good, most of the time. Apple does a very good job, of system integration. It is not perfect, however. Older Ipods are generally not supported, and older Mac OS X operating systems also work poorly with both old and new Ipods. But most of the time, on a Mac or on Windows, Itunes plus an Ipod work very well. Similar stories are told (I don’t personally have either) with respect to Iphones and Ipads.

An Ipod or other MP3 player is a very useful thing. It has provided me comfort and support in many a hospital emergency room, or waiting area, or doctor’s office, let alone plane rides, airport lounges, and the like. You can put podcasts, audio books (many free from Librivox), and of course MP3s and AAC music. You can buy music from Amazon, Itunes, or other sources and easily put it on an Ipod (or other MP3 player). You can rip vinyl records fairly easily with a computer and USB microphone, plus free audio program Audacity. Save the files to a CD or simply convert them on the spot to MP3s, or both. Cheap and easy audio entertainment on the go is a good thing.

Putting music on an Ipod through Itunes, and organizing it, is very simple. While there are some gotchas, including non-support for older Ipods, most of the time Apple has done a superb job of hardware and software integration, their traditional strength. It just works.

But there is a price. The price is well, money.

For around $49 retail, you can pick up (at almost any Best Buy or online) an Ipod Shuffle. Nice, cute, neat, the Shuffle as of this writing has 2 GB pro-forma storage, the ability to create (with Itunes) playlists, and voice-over capability to choose songs or playlists. There is of course, no screen. For about $55 or so on Amazon, you can pick up the Sansa Clip Zip, with 8 GB of storage, with the option of a maximum of another 32GB by inserting a microSD card. You get an FM radio, recording (both voice and FM radio), and of course a screen. Playlists are supported, and so too are file formats MP3, AAC (non-DRM), FLAC, Ogg Vorbis, WMA, and WAV. The Ipod only supports MP3 and Itunes-generated AAC files (the Shuffle and some other Ipods will not play non-Itunes created AAC files).

If you have a Windows PC, and Windows Media Manager, life is good with the Sansa Clip Zip. Moving songs off and on, works very well (including Audible.com’s Audio Books). So does creating playlists. If you have a Mac, or a Linux machine, things don’t work quite as nicely.

For a Linux machine, Ipod support is an adventure. The Itunes replacement Rhythmbox, Amarok, and Banshee music-manager programs all have intermittent support for various Ipod models, and the program GTKPod is only slightly better. Getting older versions of Itunes to work under “WINE” (the Windows Emulator) can be done, but is tricky and requires searching around the Internet to find the right version of Itunes. Reformatting an Ipod, or updating the firmware, requires a recent version of Itunes and a Windows or Mac machine. If you have a Linux machine, you better be dual-booting to support your Ipod. Playlist creation on an Ipod with any of the Itunes replacements or GTKPod works intermittently at best.

Things are a bit better with the Sansa Clip Zip. The player works as an extended USB drive, essentially. Like the Barnes and Noble Nook and Amazon Kindle, you drop files into the appropriate folder off the root of the device. For the Nook and Kindle there are folders with names like “Books” where you would put the appropriate Epub or MOBI file when loading through the USB cable, the Sansa Clip Zip has a folder called Music. Where yes, you put your MP3 or other music files. Assuming the ID3 tags are properly filled out with the artist, album, genre, and other data, your player can display songs by album, artist, genre, etc. Just like an Ipod. Again if you have a Windows machine, creating playlists is a breeze.

Not so on a Mac or Linux machine. There, you need to have a program like Easy Tag to create playlists. Then, use a program like Emacs to edit the resulting xxx.m3u playlist files and move the songs around in copy-paste editing to get the order you want. For the Mac, this requires having your Development Tools installed and something like MacPorts or Fink installed as well (to get EasyTag). You’ll also need the latest Quartz version of X11, found here since the X11 environment provided by Apple crashes when launching Easy Tag.

To its credit, Sansa has many forums, with threads such as this one dedicated to Linux and Mac OS X support. Following the instructions to enable Rhythmbox or Banshee support, insert a file at the root directory named ” .is_audio_player” with the contents “audio_folders=MUSIC/,RECORD/” and things should work well. Though as the thread points out, later versions of Rhythmbox have menus that can be checked to force it to recognize the player.

Easy Tag works well for me on both a Mac and Linux machines. I have not tested Rhythmbox in moving content or creating playlists, with the Sansa Clip Zip.

When copying files from a Mac onto the Sansa Clip Zip, be aware that you need to erase the crummy ._ files that Mac OS X creates on FAT/Windows volumes. You can use the terminal to manually erase them, or with Mac OS X 10.5 and higher, use the terminal to do it with the command “dot_clean” like so:

$dot_clean /Volumes/SANSA\ CLIP/MUSIC/

There’s also a shareware/freeware program that requires an Intel Mac that does the same thing. If you don’t erase the ._ files however the player won’t find the MP3 or AAC files.

So in short, you can save money, but if you move outside the Windows environment, you have to jump through hoops to make things work right. Nothing show-stopping however and there is online support.

Updating the Firmware can be done easily, without Windows. Just drag the new firmware file onto the root directory after you download it from the Sansa website.

It is best if you organize your files a bit under the MUSIC directory, like make a folder for say an artist, or classical music, or what have you. I did find a few AAC files encoded from Itunes off a CD (ripped through Itunes in other words) choked the Sansa Clip Zip player, they needed to be removed before the player would operate. Until then it hung “refreshing the media” which was a pain.

Apple just makes things easier. But for a price. Certainly people will continue to make them profitable. If you have an Ipod, or an Ipad, or an Iphone, chances are when you replace it, you’ll get another one. But consumer budgets are tight. Prices for food, gas, clothing, and energy/utilities are going up. So are taxes, nation-wide. Wages and income are stagnant if not declining. IF discretionary income gets pointed towards a new Ipod type player, or a new Smart Phone, or a new tablet, not a replacement for an existing model, my guess is that other players will slowly but surely eat into Apple’s marginal sales the way eating at home has hurt the casual dining market.

People still go to fast food joints. Just not as much. They still dine out at very pricey restaurants, but not as much (USA Today reports that the rich are scaling back, both Tiffany’s and Blue Nile report crummy earnings for the past quarter). But the mid-market guys, the Olive Gardens and the Outback Steakhouses and the Rubys are hit very hard. There, people are not showing up the way they did before the recession. Recovery in meals eaten there has been slim to none. While home-cooked meals have increased.

It is more time consuming, and difficult, to prepare a meal at home than dining out. But it’s a lot cheaper, and you can have things exactly the way you want them. That is likely to drive a lot of users marginal decisions. No one is going to throw away a working Ipod. But particularly the Nano and upwards models, durability is not good, general sense among users is that an Ipod with a screen is good for about a year of use, that’s it. Afterwards you must replace it. In that case I think the other manufacturers, by playing the cheaper/more features game with Apple, can pick up wins. That’s likely to be true with the Amazon new tablets, and Android-based smart phones which the FT notes command most of the market share in Asia.

For Apple to continue its growth, and not be just another mature company, like say IBM, or Canon, or Toshiba, or … Sony? Well it needs to be “insanely great” as Steve Jobs was fond of saying. Creating something brand new, out of the obvious, in a way that is ridiculously easy to use, that meets a need for consumers they did not know about until they saw it, and immediately wanted it. Maybe the rumored Apple TV will be that new device. Given the push-back from various content providers, I doubt it. Moreover, Tim Cook whatever his merits has not shown the vision of creating new products that Steve Jobs did. Cook is more like Bill Gates, who screamed at and reportedly fired engineers who showed him tablet computers, music players, and smart phone prototypes in the mid to late 1990’s. In other words a guy skilled at squeezing out money from skilled IT labor, but not so much in creating a synthesis of existing hardware and software that integrates into something new, and better.

There are a lot of things I don’t like about Apple. The smugness. The elitism. The uber-liberalism, coupled with mind-boggling hypocrisy. Yet, they still made beautiful computers and MP3 players. Apple at its best made computing in all forms more beautiful. And I would hate to see that lost, for a lack of vision. America would be a poorer place if Apple has reached its inflection point, and becomes just another Canon or Toshiba. Let alone … Sony.

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About whiskeysplace

Conservative blogger focusing on culture, business, technology, and how they intersect.
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29 Responses to Has Apple Reached Its Inflection Point?

  1. ConfederateH says:

    Great review Whiskey. you obviously have a very broad knowledge of the market. I like Samsung, they are very a-political and make reliable non-bleeding edge products. Sony is a RIAA henchman and I never could accept life in an apple world. I have one ipod nano that I like, otherwise I avoid Apple.

  2. idealart says:

    I tried to upgrade to the newest operating system called Mountain Lion. I got a message saying my current operating system cannot be upgraded because my early 2006 iMac is too old. I have no idea why. They haven’t changed the processors have they? It appears Apple has decided to force me to buy a new computer. Bummer.

    • You can extend the useful life of your Intel Mac (yeah, I have the same problem on one of my Macs) by installing MacPorts or Fink from Sourceforge.net . Nope, the boys at Apple did not change processors, they just had that as a cut-off point.

      Being a Mac of course it can run Linux natively, there are ways to dual boot even with a Mac.

    • The Continental Op says:

      Your old iMac must have some video card/chip that is no longer supported in Mountain Lion. But you are not forced to update your OS, Lion (or whatever you have) still works, right? They have have not forced anything, they still support older versions of the OS (with patches, for example).

      But maybe you’re just disappointed because you don’t have the latest shiny happy OS version.

      • idealart says:

        Its the mail. I can’t use my computer’s mail program anymore. They switched to iCloud. I have to login online. Its slow plus I don’t trust this cloud business. All my stuff is “out there” isn’t it? Which means somebody can get at it easier.

        Plus, eventually, Safari and other programs will start bogging down as developers must conform to new standards.

  3. dan3487kurt says:

    re: “The Ipod only supports MP3 and Itunes-generated AAC files (the Shuffle and some other Ipods will not play non-Itunes created AAC files). Wh.

    Garage Band will convert most files to a format to use on an iPod or iPhone. Garage Band is part of the free stuff on every iMac that one purchases and it is drag and drop easy to use.

    I use Garage Band to convert MP3 files (not from the iTunes store) of speech to a format that my iPhone (nearly 2 yers old) can play back at 2X speed. Apples 2X playback speed has no pitch change and is clearly heard allowing an hour program to be heard in 30 minutes. That feature alone is worth paying the Apple Tax.

    Dan Kurt

    • True enough, but for my ears anyway even with cheap Ipod earbuds, I can HEAR the difference between original encoding and another round of transcoding. Information invariably is lost, because the encoding is “lossy” — so I had to go back to the original source and encode directly to MP3 (using ffmpeg) from the source of AAC.

      Like you say, for podcasts and the like, no big deal, but for music probably for many (at least, me) a deal breaker.

  4. It’s funny how you mention Sony. I remember back in the day that Sony was a big brand name, and if you were going to buy home electronics that would be the top brand. But I guess that hasn’t been the case for a long time.

  5. arvind says:

    Whiskey, I am a big fan of your blog, you mention not being able to afford Apple products anymore… I urge you to google “apple clearence” apple has refurbished products that cost much less than the new ones – you can buy refurbished ipads for example.

    Many of the best games and apps are free – so staying entertained with apple products doesn’t have to cost an arm and a leg

  6. Matt Strictland says:

    if you run Linux especially Ubuntu try Kaiser Mambo Flix
    The user interface is a little rough but it works pretty seamlessly with both Ubuntu and Windows.
    It also has a ton of features, FM, AM (IIRC), PDF, MP3, MP4 etc and mine has proven rock solid.
    Its also fairly cheap as well.
    Now I grant you can’t play games on it, but can’t have everything

  7. guest says:

    There is also Rockbox, a replacement firmware for music players.
    iPod 1g through 5.5g, the above mentioned Sansa Clip and many more…

    You can have the best of both worlds, Apple hardware and an open system.
    No more dealing with the bloated monstrosity that is the iTunes software.

  8. Just1X says:

    @Matt
    Steam is being ported to linux…here come da games

    http://www.omgubuntu.co.uk/2012/07/valve-confirm-steam-left-4-dead-2-coming-to-ubuntu

    (I know that there are native games on ubuntu, this is just additional good news. No need to buy windows anymore)

  9. I have entered thre realm of tabletst with the purchase of an Amazon Kindle Fire from T—–,at $140.00. I now get free wi-fi in my apartment. Music is not a big deal to me I like my MP# player–i just bought a super cheap Phillips player for $20.00. I wont use it for music but for stuff like Major Mark hypnosis recordings,some Brian Tracy self improvement stuff,and various Game stuff. They say if you DL (for free heh heh heh)the Hypnotics track “Sphinx Of The Imagination” in mp3 form it will lose some of its “magic”? Izzat true??

  10. Oh wait! It seems we’re really not tackling Whiskeys subject: Will Apple lose some of its luster,(as well as its fat cash reserves and sky high stock price)? I say yes,its inevitable. Jobs is dead. Dead I say! Tim Cook is a great CEO I am sure but he is not the guy who got them where they are. Vanity Fair had a great piece on why Microsoft makes “shit”;the short answer,the OTHER Steve,Steve Bauman. This is the guy Gates relied on for business sense. Jobs had the brains and cajones—let me be clear,I hate Steve Jobs,he was an outsourcing asshole,but,still–to get rid of Schully when he saw that he was fucking things up. When will MS get rid of Bauman? Does he have pics of Gates going down on Wilt Chamberlain or something?? But with re to Apple: I read a piece a while back about this Mormon guy(name escapes me) who is a business genius. His Big Theory is that the low end of the market becomes the death knell for the Big Boys.Producing cheaper stuff,which is not as good as the best,but is still pretty damn good,they eventually overtake the leaders and dethrone them. Google–tho ahuge company,obviously,–has a low end tablet coming out,made with Asis. Its a $200 Android tablet that is as good as the IPad for most people,esp the young. There’s talk that Amazon will take down the price of the Kindle and intro another tablet at $200 to compete with the Google.I think the iPad willl have a lot odf competition and will have trouble justifying the absurd price,even with that reticular shit!

    • The Continental Op says:

      Jobs is dead. Dead I say!

      Is he? IS HE???! Yet his spirit lives on in the zombie legions of Apple fanboys.

    • peterike says:

      “When will MS get rid of Bauman?”

      They got rid of Bauman years ago. But things won’t get better there until they get rid of Ballmer.

      But seriously, he really IS most of the problem. For those interested in the perils of life and work at Microsoft, google “mini microsoft” and read that blog. The comments are chock-a-block with current and ex Softies spilling the beans. Whiskey, if you’ve never been there I think you’ll love it.

  11. whorefinder says:

    Whiskey, a bit depressed here. After Heartsie posted the 3 Swedish sluts vying to reverse gangbang Usain Bolt, is there any hope for non-black men? Its clear from pop culture that women fantasize about unintelligent, violent, anti-social negroes fucking them and no one else. I’ve noted that Leverage—- a female-oriented “action” show (i.e. lots of female buttkicking, a group of moral-minded Robin Hoods picking on rich whitey men for poor, oppressed people)—openly promotes the young, blond female character as shacking up with the black guy “computer hacker.” And this show is a hit! Even ten years ago that pairing would have been risque—-now the female and left-wing fantasy of ape-on-blond sex is openly promoted in media with no comment.

    Personally, since non-blacks in this country are afraid to police either black dysfunction or female sluttiness, leftists feel embolden to portray the leftist fantasy black-cuckold openly. And in my job, I see a high volume of pretty non-blacks with Sambos—not “guy who happens to be black” but rather some ghetto stereotype who is openly a dysfunctional shit. And these girls have no shame in their eyes, no idea that they are the lowest females not named prostitute.

    I feel that such open disdain for civilized man and embracing of the ape as a lover by “normal” women is a signal of the rapid decline. In a generation, we will have more mulatto children than ever before, and fewer non-black children who have any pride in their own race. And those mulatto children will be dumb, violent, and raised by skanky single mothers—and the media will portray this as ideal and further push it so that every OTHER couple in the media is a black male-white female grouping.

    This can only lead to societal devastation in 2-3 generations, as the stupid, violent, parasitic, unloved mulattos riot for bread while the non-blacks, but esp. whitey, is yelled at to pay for it all. But eventually, because of the media’s breeding program and female ape-loving, there will be no more whitey to pay—and we all become Detroit.

    Thoughts?

  12. ErisGuy says:

    OK. I will wager Apple will continue to succeed; you wager it will fail. I will bet that Apple stock will still be above $400 in 1 January 2014. You will be that it will be below $100. (Both prices adjusted for inflation/deflation.) On 2 January 2014, the loser will pay the difference– if the price is above $400, you owe the (current price – $100) x shares; if the price is below $100 I owe ($400-current price) x shares. I’ll wager 100 shares to Whiskey alone.

    • rjp says:

      Yeah, the 100p/400c riskie ….. you’ll have people jumping all over this. Let’s see, what wil probably be worth more in a year and a half, a call in the money 212 dollars, or a put 512 dollars out of the money?

      A Jan14 100p on a $612 stock vs. a Jan14 400c. The 100 put has a theo of 0.00, the 400 call has a theo of 220.23. 0.0% interest, $2.65 quarterly div, 28% vol.

  13. bob sykes says:

    Well, if it is at an inflection point and if your model is logistic, then Apple with double its present size before peaking out. What happens then is anyone’s guess. Maybe another 30 to 40 years of profitability.

    Other electronics companies compete in a commodity market where price is the only distinguishing characteristic between companies. Think WalMart. In that market, the lowest price producer always wins. Does IBM still make PCs?

    Both ecological theory and economic theory say that in order do succeed do not compete head-to-head. Find an unoccupied niche and settle in. That is what Apple has done. They have almost always (except for the brief clone period when Jobs was absent) eschewed the low-end commodity market and focused on the high-end (boutique?) market.

    My wife and I own both Macs and PCs. Originally (in the pre-Windows era) Macs were able to do math type-setting and had European keyboards built-in. In DOS world both were impossible. We still prefer Macs for ease of use, especially file management, and reliability and high end performance, but there really isn’t much difference in the day-to-day experience of wor processing, spread sheets and internetsurfing.

    • The experience of Sony, Motorola, and Nokia all suggest that for electronics firms, slide into bankruptcy can be very, very quick. Sony is not there yet, Motorola and Nokia are already flirting with that, and all three pursued Apple’s top-end-market strategy. To be there in electronics is not like fashion, or luxury cars, or high end watches. It takes constant innovation and producing products people did not even know they wanted, but want … because they’re so damn easy to use. And the easy is well, hard to do, from a corporate perspective.

      Apple’s high-end sales approach worked well in the 1970’s-1980’s, hit a snag in the early 1990s, and came back in the 2000’s. But selling a $1 million laptop to Kanye West won’t get it done, and their sales by dollar amounts have been driven by sweet-spot computers, around $200 or so with incentives: the Iphone. To a lesser extent the Ipod. The comment below is on point, Android collectively sells a lot more smart phones, Angry Birds is on Android as well as Iphone.

  14. HT says:

    I avoided Apple products for years (over priced and that whole fanboy/SWPL thing) but I bought a Touch a few months ago – fabulous device, and the whole iTunes thing is pretty smooth, too (though I buy mp3 files from Amazon or Napster). In the past I’ve had large capacity mp3 players from iRiver and Sony. The Sonys (HD3 and HD5) were great hardware for their day and great sounding, but were saddled with the worst manager program ever to come from a major company, the dreaded SoundStage. Sony let their music division ride roughshod over their hardware department because of concerns over DRM and an Apple-like attempt to make their ATRAC encoding standard the dominant method for online purchases. That pretty much knocked them out as a major force in the mp3 player market.

  15. Ras Al Ghul says:

    Not on topic, but relevant to your blog:

    http://finance.yahoo.com/news/pittsburgh-reinvents-itself-hollywood-film-094000471.html

    Thought you might enjoy that.

  16. odegaard132@hotmail.com says:

    There is a huge debate raging with both sides putting a lot of money down:
    Downloading or Disc based technology?

    Right now the downloading side is winning the debate. There is no shortage of tech magazines confidently claiming that DVD’s, Blu Ray, BDXL, HVD basically any type of technology that involves shooting a laser at a spinning plastic disc is going to be dead in the water 10 years from now because everything will switch over to downloading. I disagree. The bandwidth capacity is not there. The only way to get more bandwidth capacity is to hire a construction crew with a backhoe to dig a ditch and drop a cable into the ground and that takes time. It’s going to take 40 years NOT 10 years to completely switch over to a downloading based system. The bottleneck in the system is not in long distance cables but instead trying to string a cable to each and everyone’s neighborhood. Yeah I know a lot of people think I’m crazy for thinking it’s going to take 40 years.

    What does this have to do with Apple?
    They are completely in the downloading camp. Is this a mistake that will come back to haunt them? All it would take is Comcast to switch over to a usage base billing system and charge people $2 per giga-byte and that’s going to end the debate right there. Sounds absurd you say? Most people are already paying that amount if not more. The average household is paying $50 bucks a month and using less than 25 GB.

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