It's not quite so cut-and-dry. You forgot to mention the CPU, which in the Touch HD is a relatively weak Arm 11 at 528mHz rather than the significantly faster 600mHz Arm-based Cortex A8 used in the 3Gs. The Touch HD's OS is WinMo 6.1, which is not anywhere close to being as optimal as iPhone OS, not in the same league really. The Touch HD only records video at a miserable 320x240 resolution, with complaints of poor framerates, compared to the 3Gs's 640x480 video capturing with smooth framerate. The battery life of the Touch HD is about 1/3 less than the 3Gs in actual tests, so you'll surely be needing those extra batteries (granted that is a nice option to have, even if it's an edge case). The 3Gs comes with a 16GB minimum of space, up to 32GB for an extra $100. Also, both the Touch HD and the 3Gs have the 3.5mm stereo headphone jack. I won't mention the 65,000+ applications available for the 3Gs (oh wait, I just did).
I'm sure you're very happy with your Touch HD, but your comparison is a bit misleading. Handset vendors have been using bullet-point feature list comparisons for years to sell their wares, but they hardly ever give any appreciation for the difference in value between the two offerings. It's easy to look good on paper.
That first link you provided is utter BS. Apple is *speculated* to keep ~30% of every song they sell (the rest going to the label), but the actual margins after all the expenses are nowhere near 30%. It's all speculated in any case, so it's hardly worth discussing those figures.
Your second link is just a google search with a bunch more poorly-written and speculative pieces all circle-jerking around some prior speculation. Show me some credible data on profitability, then I'll concede that you might have a point.
There are examples of Apple throwing away businesses that weren't making them enough money, even though they weren't losing money. The Newton comes to mind. In the post-Jobs-return Apple, they've been known to drop the axe on several of their side businesses to focus on their bread and butter. Point is, it's unclear that the iTMS business as it stands alone is both profitable enough and defensible enough against competitors that Apple would be interested in it for very long. There's no question that the service adds great value to their hardware products, however, and so accounting their business as a whole, it still makes sense for them. Once that's no longer the case, once their hardware products are entrenched enough in the market that there's no chance they won't be catered to by other media services, I wouldn't be surprised to see the distribution business get sold off or spun off, and then actually focused on expansion in its own right rather than promoting a particular line of hardware products.
Re-read my statement. Apple loses the user experience *advantage* over Palm by letting them continue to sync in iTunes, meaning that the experience of a Palm user becomes similar to that of an iPhone user. They're not extorting any fees, only making the experience of using one of their competitor products with iTunes that much crappier by blocking the Pre syncing, to make their product look that much more polished by comparison. This is all a pointless discussion, as it's Palm that gave Apple the opportunity to shaft them so easily, by hacking their way into iTunes syncing rather than using the proper supported API for doing so. Cry moar!
One example would be if there was a trend from lower numbers of high value transactions (album sales) to large numbers of smaller transactions (individual song sales), the credit card processing fees could eat into the margins. But it doesn't necessarily have to be the case that the margins on the iTMS business are going down, but merely that they're not projected to grow enough to ever be a primary focus for the company, or worth expanding to encompass a large part of the company's value, compared to the relatively high profitability of their hardware business. If Apple is to invest its resources in the most profitable way, it's not in expanding the iTMS as a standalone business, it's in investing the least necessary to fulfill the purpose of selling the hardware, where the real innovation and market differentiation is taking place, and where the resources are best spent.
Those articles were both old and purely speculative. Gonna have to do better than that. Apple's gross margins are about 30%, and after operating and transaction expenses, there's no way the iTMS is anything but a drag on those overall margins. That's why they hide that businuss' revenue in the iPod & iTunes business category on their financial reports, to make it more acceptable to shareholders. A 10% margin as implied in that second link is not necessarily a good thing for Apple's stock value, and I didn't see any attempt to account for the labor expenses in the operation, so it could be dangerously lower than this.
No, but they do lose a significant user experience advantage over their competition, one that they've spent a substantial amount of resources developing. Personally, I am completely unsurprised by this turn of events. Palm knew it was only a short matter or time before this happened, and they chose to do it anyway. QQ
Obviously, Apple technically is a distributor, but it's important to make the distinction that that aspect of their business is secondary and subservient to their plan to move hardware, as it helps explain their behavior in this case. Apple doesn't care about expanding their iTMS business to more 3rd party devices; they just want to get people to use their kit thanks to the superior overall user experience. It's therefore unsurprising that they would move to protect that advantage in this case.
I jailbroke my iPod, so I can have both the nice software AND run any software I want on the thing. It may not be an ideal relationship with my phone vendor, but no one can deny that I'm both having and eating my cake.
It's obviously not broken since it's making them money as a whole. No one said you can't have value-added services for your products. It's not like Apple did anything underhanded here; Palm simply built one of their core bits of functionality on an extremely flimsy foundation.
One statement we can make is that Palm is not responsible for their own customers being able to sync music between their Pre and their computers, apparently preferring to leave that to third partie competitors, and that turned out badly. Palm could benefit from a little responsibility in this case.
That's because what you're doing is not LOSING money for Apple, but they're still not making any significant money off of you. Apple wants you to make your next music player an iPod, which they make real margins on, and that's why they give you iTunes free for Windows. If there weren't an iPod, there wouldn't be an iTunes Music Store.
Great, so you can run terrible, terrible software (at least given a cursory comparison to the level of visual design of an iPhone OS equivalent) on a terrible, terrible OS openly... How's that working out for MS so far?
Do you think it would be in the interest of Apple's customers if Apple were instead to shut down the iTunes Music Store, because the margins on that aren't high enough, and they no longer have the iPod margins keeping it all afloat? You can't separate Apple's iPod business from their iTMS business, as one is necessary for the other to be worth it for them.
That's a silly argument. Apple is not a music distributor. The ONLY reason they run the iTunes Music Store, which is a very low-margin business for them, is so they can sell more iPods and iPhones, where the real profits are made. iTunes is not a product in its own right, it's a part of the iTunes/iPod ecosystem of products, and as such, there will never be a wall erected between iPod and iTunes business units. The iPod sales are what make the iTunes Music Store worth running in the first place.
Because Apple only runs the iTunes Music Store to move iPods and now iPhones/AppleTVs. They make marginal profit on the store itself. If they can flip a bit and make using the Pre that much less of a positive experience for consumers, while maintaining an advantage that the iPhone has over its competitors, then it's a no-brainer.
Those days are over, but that doesn't necessarily mean the death of the type of content. While you might not be able to count on being able to make the same level of income as the old model allowed if you did manage to get published and distributed, there's also the fact that anyone can now "publish" and distribute themselves without needing the approval of some publisher, giving many more content creators the ability to market their work (including some every bit as talented and valuable as those who were accepted by publishers in the old system, but would never have gotten a break for various reasons). There's also a much broader global market to distribute to if you can figure out how to drive awareness and offer them something of value. Culture and knowledge isn't going to disappear or stop being made simply because centralized distribution systems crumble. Society's loss of many "professional" artists will be made up for by the gain of increasingly prolific and sophisticated amateur content every bit as valuable as that which it replaces.
There will always be communities of content creators working together to create and perfect their works, and the same movie that might have taken $100,000,000 to create 10 years ago is now possible to make for $10,000 or $100,000 given the advancing capabilities of consumer production equipment and the leveraging of communities of volunteers and freelancers. In the end, I'm sure we'll survive somehow, and the death of intellectual property as it has been known in the last half-century does not mean that people will stop creating interesting art or useful content. The value propositions will change, and the transition will be painful for many professional content creators, but fighting it is futile, and only accelerates the downfall of the old system. Trying to artificially impose copy restrictions and price controls will simply make alternative content without these limitations that much more attractive.
There is no use fighting the tsunami of cheap and free content in the name of returning us to the glory days of yore (at least for those artists lucky enough to have gotten their work selected for distribution). There is no escaping the fact that it now takes virtually no resources to distribute IP works, and so obviously any system built on artificial scarcity and limited access is doomed to go the way of the dodo. Thanks to the internet, information truly does want to be free for all intents and purposes, just as manual labor has all but lost its value with the increasing sophistication of automation and robotics. Ultimately, we seem to be headed for a world where the skills of most people are not of any particular value to anyone else, and our basic needs are to be met by ubiquitous and cheap technology in some kind of collectivist system of entitlement. As more and more "jobs" wind up being performed by machines and groups of amateurs, what value can you really offer the world to make them part with their money and resources?
We've been through this discussion before with the loss of manufacturing jobs to robots; it's just that the victims this time around are quite a bit more articulate, and so they are able to have a larger impact on the public discussion; but in the end, you are really not much different than the auto assembler who lost his job to a robot when that type of labor lost its value to advancing technology. Just like him, you do not have the option to make the world go back to the way it was in the name of saving your particular way of life. You are the buggy whip manufacturer trying to figure out how to get people to buy horse-drawn carriages again. I hate to end my rant on such a gloomy note, but I don't know of any solution to your predicament. All I do know is that we only go forward, not backwards, and no amount of legislation or lobbying will ever bring even the slightest pause in the march of progress.
Note that the attack did knock out emergency response in several cities, and there were reports of increased armed robberies during the communication outage in affected areas. While defining this as terrorism is unwarranted, as it is unlikely that the attack was meant to physically harm anyone directly, it does go beyond mere vandalism when you put people's lives at risk, by preventing them from reaching the hospital, fire department or police in case of emergency.
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You're saying that software is unimportant? Thanks for making my point about worthless feature lists for me.
Agreed. I want more realistic dismemberment physics as well.
It's not quite so cut-and-dry. You forgot to mention the CPU, which in the Touch HD is a relatively weak Arm 11 at 528mHz rather than the significantly faster 600mHz Arm-based Cortex A8 used in the 3Gs. The Touch HD's OS is WinMo 6.1, which is not anywhere close to being as optimal as iPhone OS, not in the same league really. The Touch HD only records video at a miserable 320x240 resolution, with complaints of poor framerates, compared to the 3Gs's 640x480 video capturing with smooth framerate. The battery life of the Touch HD is about 1/3 less than the 3Gs in actual tests, so you'll surely be needing those extra batteries (granted that is a nice option to have, even if it's an edge case). The 3Gs comes with a 16GB minimum of space, up to 32GB for an extra $100. Also, both the Touch HD and the 3Gs have the 3.5mm stereo headphone jack. I won't mention the 65,000+ applications available for the 3Gs (oh wait, I just did).
I'm sure you're very happy with your Touch HD, but your comparison is a bit misleading. Handset vendors have been using bullet-point feature list comparisons for years to sell their wares, but they hardly ever give any appreciation for the difference in value between the two offerings. It's easy to look good on paper.
How is it in Apple's interest? Google Voice adds significant value to the iPhone in the eyes of Apple's potential customers.
You haven't seen the new & improved iTunes firmware flasher... /evil laugh
"They just chose to do it in a different place than the rest of the market."
Yeah, the stupid place that Apple is going to break every month.
That first link you provided is utter BS. Apple is *speculated* to keep ~30% of every song they sell (the rest going to the label), but the actual margins after all the expenses are nowhere near 30%. It's all speculated in any case, so it's hardly worth discussing those figures.
Your second link is just a google search with a bunch more poorly-written and speculative pieces all circle-jerking around some prior speculation. Show me some credible data on profitability, then I'll concede that you might have a point.
There are examples of Apple throwing away businesses that weren't making them enough money, even though they weren't losing money. The Newton comes to mind. In the post-Jobs-return Apple, they've been known to drop the axe on several of their side businesses to focus on their bread and butter. Point is, it's unclear that the iTMS business as it stands alone is both profitable enough and defensible enough against competitors that Apple would be interested in it for very long. There's no question that the service adds great value to their hardware products, however, and so accounting their business as a whole, it still makes sense for them. Once that's no longer the case, once their hardware products are entrenched enough in the market that there's no chance they won't be catered to by other media services, I wouldn't be surprised to see the distribution business get sold off or spun off, and then actually focused on expansion in its own right rather than promoting a particular line of hardware products.
Re-read my statement. Apple loses the user experience *advantage* over Palm by letting them continue to sync in iTunes, meaning that the experience of a Palm user becomes similar to that of an iPhone user. They're not extorting any fees, only making the experience of using one of their competitor products with iTunes that much crappier by blocking the Pre syncing, to make their product look that much more polished by comparison. This is all a pointless discussion, as it's Palm that gave Apple the opportunity to shaft them so easily, by hacking their way into iTunes syncing rather than using the proper supported API for doing so. Cry moar!
One example would be if there was a trend from lower numbers of high value transactions (album sales) to large numbers of smaller transactions (individual song sales), the credit card processing fees could eat into the margins. But it doesn't necessarily have to be the case that the margins on the iTMS business are going down, but merely that they're not projected to grow enough to ever be a primary focus for the company, or worth expanding to encompass a large part of the company's value, compared to the relatively high profitability of their hardware business. If Apple is to invest its resources in the most profitable way, it's not in expanding the iTMS as a standalone business, it's in investing the least necessary to fulfill the purpose of selling the hardware, where the real innovation and market differentiation is taking place, and where the resources are best spent.
Those articles were both old and purely speculative. Gonna have to do better than that. Apple's gross margins are about 30%, and after operating and transaction expenses, there's no way the iTMS is anything but a drag on those overall margins. That's why they hide that businuss' revenue in the iPod & iTunes business category on their financial reports, to make it more acceptable to shareholders. A 10% margin as implied in that second link is not necessarily a good thing for Apple's stock value, and I didn't see any attempt to account for the labor expenses in the operation, so it could be dangerously lower than this.
No, but they do lose a significant user experience advantage over their competition, one that they've spent a substantial amount of resources developing. Personally, I am completely unsurprised by this turn of events. Palm knew it was only a short matter or time before this happened, and they chose to do it anyway. QQ
Obviously, Apple technically is a distributor, but it's important to make the distinction that that aspect of their business is secondary and subservient to their plan to move hardware, as it helps explain their behavior in this case. Apple doesn't care about expanding their iTMS business to more 3rd party devices; they just want to get people to use their kit thanks to the superior overall user experience. It's therefore unsurprising that they would move to protect that advantage in this case.
I jailbroke my iPod, so I can have both the nice software AND run any software I want on the thing. It may not be an ideal relationship with my phone vendor, but no one can deny that I'm both having and eating my cake.
It's obviously not broken since it's making them money as a whole. No one said you can't have value-added services for your products. It's not like Apple did anything underhanded here; Palm simply built one of their core bits of functionality on an extremely flimsy foundation.
One statement we can make is that Palm is not responsible for their own customers being able to sync music between their Pre and their computers, apparently preferring to leave that to third partie competitors, and that turned out badly. Palm could benefit from a little responsibility in this case.
That's because what you're doing is not LOSING money for Apple, but they're still not making any significant money off of you. Apple wants you to make your next music player an iPod, which they make real margins on, and that's why they give you iTunes free for Windows. If there weren't an iPod, there wouldn't be an iTunes Music Store.
Great, so you can run terrible, terrible software (at least given a cursory comparison to the level of visual design of an iPhone OS equivalent) on a terrible, terrible OS openly... How's that working out for MS so far?
Do you think it would be in the interest of Apple's customers if Apple were instead to shut down the iTunes Music Store, because the margins on that aren't high enough, and they no longer have the iPod margins keeping it all afloat? You can't separate Apple's iPod business from their iTMS business, as one is necessary for the other to be worth it for them.
That's a silly argument. Apple is not a music distributor. The ONLY reason they run the iTunes Music Store, which is a very low-margin business for them, is so they can sell more iPods and iPhones, where the real profits are made. iTunes is not a product in its own right, it's a part of the iTunes/iPod ecosystem of products, and as such, there will never be a wall erected between iPod and iTunes business units. The iPod sales are what make the iTunes Music Store worth running in the first place.
Because Apple only runs the iTunes Music Store to move iPods and now iPhones/AppleTVs. They make marginal profit on the store itself. If they can flip a bit and make using the Pre that much less of a positive experience for consumers, while maintaining an advantage that the iPhone has over its competitors, then it's a no-brainer.
Something must be done! Now what's this hot girl farting app you speak of? I'll pay $50 for one!
[cough]google[/cough]
Says the anonymous coward... The ironing is delicious.
Those days are over, but that doesn't necessarily mean the death of the type of content. While you might not be able to count on being able to make the same level of income as the old model allowed if you did manage to get published and distributed, there's also the fact that anyone can now "publish" and distribute themselves without needing the approval of some publisher, giving many more content creators the ability to market their work (including some every bit as talented and valuable as those who were accepted by publishers in the old system, but would never have gotten a break for various reasons). There's also a much broader global market to distribute to if you can figure out how to drive awareness and offer them something of value. Culture and knowledge isn't going to disappear or stop being made simply because centralized distribution systems crumble. Society's loss of many "professional" artists will be made up for by the gain of increasingly prolific and sophisticated amateur content every bit as valuable as that which it replaces.
There will always be communities of content creators working together to create and perfect their works, and the same movie that might have taken $100,000,000 to create 10 years ago is now possible to make for $10,000 or $100,000 given the advancing capabilities of consumer production equipment and the leveraging of communities of volunteers and freelancers. In the end, I'm sure we'll survive somehow, and the death of intellectual property as it has been known in the last half-century does not mean that people will stop creating interesting art or useful content. The value propositions will change, and the transition will be painful for many professional content creators, but fighting it is futile, and only accelerates the downfall of the old system. Trying to artificially impose copy restrictions and price controls will simply make alternative content without these limitations that much more attractive.
There is no use fighting the tsunami of cheap and free content in the name of returning us to the glory days of yore (at least for those artists lucky enough to have gotten their work selected for distribution). There is no escaping the fact that it now takes virtually no resources to distribute IP works, and so obviously any system built on artificial scarcity and limited access is doomed to go the way of the dodo. Thanks to the internet, information truly does want to be free for all intents and purposes, just as manual labor has all but lost its value with the increasing sophistication of automation and robotics. Ultimately, we seem to be headed for a world where the skills of most people are not of any particular value to anyone else, and our basic needs are to be met by ubiquitous and cheap technology in some kind of collectivist system of entitlement. As more and more "jobs" wind up being performed by machines and groups of amateurs, what value can you really offer the world to make them part with their money and resources?
We've been through this discussion before with the loss of manufacturing jobs to robots; it's just that the victims this time around are quite a bit more articulate, and so they are able to have a larger impact on the public discussion; but in the end, you are really not much different than the auto assembler who lost his job to a robot when that type of labor lost its value to advancing technology. Just like him, you do not have the option to make the world go back to the way it was in the name of saving your particular way of life. You are the buggy whip manufacturer trying to figure out how to get people to buy horse-drawn carriages again. I hate to end my rant on such a gloomy note, but I don't know of any solution to your predicament. All I do know is that we only go forward, not backwards, and no amount of legislation or lobbying will ever bring even the slightest pause in the march of progress.
Note that the attack did knock out emergency response in several cities, and there were reports of increased armed robberies during the communication outage in affected areas. While defining this as terrorism is unwarranted, as it is unlikely that the attack was meant to physically harm anyone directly, it does go beyond mere vandalism when you put people's lives at risk, by preventing them from reaching the hospital, fire department or police in case of emergency.