The Macalope Weekly: CEO chatter


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It?s all about the CEOs this week, as Steve Ballmer takes potshots at Apple, Amazon?s Jeff Bezos gets a love letter, and Tim Cook gets a ?Dear John? letter.

CEO cage match!

It was a battle of CEO words last week as Microsoft?s Steve Ballmer and Apple?s Tim Cook were metaphorically locked into a virtual cage in a no-words-barred battle royale!

CNBC brings us Ballmer?s rationale for why the Surface beats the iPad (tip o? the antlers to The Loop):

?I don?t think anyone has done a product that I see customers wanting,? Ballmer said Thursday on CNBC?s ?Squawk Box?.

Uh huh. Well, Steve, if the Surface is going to overtake the iPad in sales, it might want to stop limbering up at the starting line and, you know, actually start running. Particularly considering the fact that the iPad has a two-and-a-half-year headstart.

Neither [Apple, Amazon or Google] ?has a product that you can use, that lets you work and play, that can be your tablet and your PC. Not at any of those price points.?

The Macalope?s not really sure where Microsoft?s Swiss Army knife obsession?to have one device that does everything?came from. It certainly doesn?t seem to have resulted from actual humans who buy technology products, or at least not from that many of them.

Yes, syncing can be a pain sometimes, but how realistic is it to expect to have your ?one device to rule them all? have just 32 GB of space? The Macalope?s iPhoto library alone is that big.

This isn?t to say the horny one sees no appeal at all to the Surface. He actually had a chance to lay his hooves on one and it was an interesting device. But it?s an interesting device tied to an uninteresting past. This isn?t 1998. The Macalope has no need or desire to run bloated desktop applications everywhere he goes. He doesn?t run spreadsheets much and he?d rather take a poke to the eye with all of the sharp sticks than use Microsoft Word for any reason.

Of course, some people still do need to run Office applications. We call them ?the damned? and take pity on them.

?There is really a unique opportunity. What we?ve done with Windows 8 is really re-imagined Windows end to end,? Ballmer said.

Well, except for the end with the desktop and legacy applications, which pretty much looks the same as Windows 7. You know, the butt end.

Windows 8 is different from previous versions of Microsoft?s operating software upgrades because it is designed for a more touch friendly interface.

A more touch friendly interface. Or, perhaps, a less hostile touch interface.

?Windows 8 is really all about enabling new, creative, imaginative devices,? Ballmer stated. ?PC Notebooks, PC desktops, PC laptops and now PC tablets as well??

PC phones, PC PCs, PC chest of drawers, and PC women?s undergarments, all fully capable of running Microsoft Office!

Tim Cook had his own feelings about the Surface, and would you be surprised to learn they don?t exactly coincide with Ballmer?s? Shocking, but true.

?Apple CEO Tim Cook: Microsoft?s Surface Tablet `Confusing? and `Compromised??

?I haven?t played with a Surface yet, but what we are reading about it is that it is a compromised and confusing product,? Apple CEO Tim Cook said on the company?s earnings call late this afternoon, which took place just hours after Microsoft?s Windows 8 launch event. ?One of the toughest things you do is make hard tradeoffs and decide what a product should be, and we?ve done that with the iPad.?

Tim, Tim, Tim. What customers want is a no-compromises, unholy tablet/PC hybrid that OH, GOD, IT?S ALIVE, IT JUST KILLED A SCIENTIST.

Cook didn?t stop there.

No, he did not.

?You could design a car that flies and floats, but I don?t think it would do all those things very well,? he said.

Well, yeah, OK, but what if not doing things really well?just kind of trying to cover all your bases and then shoving something out the door?was kind of your thing? What then, smart guy?

The Macalope?s terrible at predictions (OK, he totally nailed the BlackBerry PlayBook hitting the ground like a dead duck, but that was pretty easy), so he?s not going to venture a guess at how well the Surface is going to do. But with launch lines ranging from ?modest? to ?non-existent? and initial reaction being mixed (again, tip o? the antlers to The Loop), it?s not a great start for the device that?s supposedly what customers really wanted ? even while they were buying enough iPads to make a fort out of them.

Business model misunderstanding

There are not many truths the Macalope holds to be sacred, dear readers, but he has heard it said that if you were to put the articles written on Forbes?s website end-to-end, you could walk across this great nation of ours touching nothing but stupid.

And he sees no reason to doubt this.

Today on our journey across America, we will step on Pascal-Emmanuel Gobry?s ?Apple And Amazon Earnings Show Once Again Jeff Bezos Is Steve Jobs? True Heir? (no link, blah blah).

Yesterday Amazon and Apple reported earnings at the same time, which made it even easier to contrast these two outstanding companies, especially now that they compete directly.

Ah! So, naturally, the contrast is between Apple, which reported ?revenue of $36 billion and net profit of $8.2 billion?its `highest September revenue and earnings ever,?? and Amazon, which reported a loss of $274 million.

No, according to Gobry?s analysis, the big contrast is between iPad sales, which were down from the prior quarter but still up 26 percent from last year, and his made-up assumption that Amazon?s loss must be driven by huge Kindle Fire sales, which he says Amazon sells at a loss. Amazon, of course, does not report Kindle Fire sales numbers, so Gobry is pulling this from places that things should not be pulled.

If you put that next to Apple?s lower iPad numbers, it suggests that the Kindle Fire is eating into iPad sales in a significant way.

Because there are no other factors that could possibly explain this! Just think of how well Amazon would be doing if its losses were even larger!

Gobry goes from this unvalidated assumption to ALL HAIL THE IPAD-KILLING KINDLE FIRE in 3.5 seconds.

The Kindle Fire is not a success because it imitates the iPad. The Kindle Fire is a success because of the ways it doesn?t imitate the iPad: different form factor, different pricing and business model, and its own content and apps ecosystem.

Now, the Macalope suspects the Kindle Fire is selling at least fairly well, but that?s total supposition on his part, based on nothing more than anecdotal evidence. At least the horny one has actually seen people using them, unlike pretty much every Android-based tablet that came before it. But to blame a quarter-over-quarter drop in iPad sales on the Fire, the updated version of which wasn?t even announced until the third month of the quarter, is magic candy thinking.

It?s still early days. But my lesson of those earnings is that Amazon is crushing it in the tablet market, and it?s got Apple playing defense.

All because Amazon reported a loss.

Gobry doesn?t address the obvious flaw in his lauding of Jeff Bezos if this is true. If Amazon?s big loss is due to selling a ton of Kindle Fires, shouldn?t that loss have been offset by the company selling lots of content? That is, after all, the whole idea behind selling the Fire so cheaply. If handle sales are so good, how come people aren?t buying razor blades?


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