The Macalope Weekly: Works of fiction


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Attention budding fiction authors! Technology is a great way to exercise your imagination! Turns out. Yes, with Apple you can write authoratively about products that don’t exist yet, as well as project the company’s stock price based on your personal feelings. For bonus points, dream up wild scenarios in which Microsoft emerges triumphant!

I know all about this product that doesn’t exist

Writing for the Forbes clown car (DBA “Contributor Network”), Evan Spence has got this “iWatch” thing all figured out.

“Just Like Apple TV, The Apple iWatch Will Be Another Hobby For Tim Cook” (tip o’ the antlers to the Jony Ive parody account on Twitter).

And how does Spence know this?

Dude, this is Forbes! You don’t have to “know” things to write for Forbes. Psh. Come on.

I think we’re looking at the iWatch product as being closer to Apple TV than the Apple iPad.

Well, that’s an opinion. The problem is that it’s an opinion on a device we know nothing about. If you’re going to write a piece about an unknown Apple product, you want to avoid two pitfalls:

  1. Assuming it’ll be like other products currently available.
  2. Not knowing anything about what Apple might bring to the table.

Back to Spence:

The form factor and expectations of a watch mean there is very little physical room to try out new ideas.

Just because you can’t imagine how to innovate in a particular space does not mean that Apple can’t.

I also doubt that Apple has come up with a fundamental change in battery technology …

Sure! Heck, it’s not like the company’s ever come up with any innovations in battery technology before. And it’s not like Apple’s constantly working on new ideas. Give it up already, Apple. You’re just embarrassing yourself with tablets and laptops that run all day.

Now watch this logical kung foolery. Spence thinks an Apple iWatch will be evolutionary rather than revolutionary because Apple’s only shipped evolutionary devices in the recent past.

These are conditions where Apple has been strong in the last few years – working within an industry expectation and looking to do something different that appeals to the public – but that’s not every Apple product. The MacBook Pro’s addition of a retina screen is a push to do higher resolution, not a fundamental change to the laptop; the iMac is thinner with a focus on minimalism; and the iPhone is a steady as she goes product with incremental improvements in the hardware.

And the new Mac Pro is just like the old one, except in an entirely new form factor with a unified thermal core and, OK, look, coming up with opinions that make sense is really hard.

Here’s the thing. There’s a reason that Apple generally makes incremental improvements to existing product lines: When it enters a market it ships the best product it knows how to make. The iPod, iPhone, and iPad all completely reinvented their respective markets. It’s possible that Apple will just ship an incremental improvement on existing smartwatches, but it would be completely out of character for the company to do so.

Which leads me to Apple TV. I think any iWatch product is going to take a similar approach and allow Tim Cook and the team at Apple to explore the wearable technology space.

The Macalope would argue that the Apple TV was more than an incremental improvement on existing TV boxes, but, more to the point, it’s a terrible example to use when speculating on what an Apple smartwatch might be like. The key thing that’s hamstrung the Apple TV from being transformative has been licensing rights with content owners. How is this likely to be an issue with a smartwatch?

As long as they can sell that story to the press and everyone goes along with it (as opposed to the fun they had around the launch of their own mapping product) …


… the iWatch is going to be a successful second tier product for Apple.

It’s fine to have your own belief system. But it’s important to recognize when it’s a belief system rather than something based on empirical evidence.

How well would an iWatch do? Well, it’s a little hard to tell when we know absolutely nothing about it. But, as Apple’s track record has shown, basing it off of existing products in the same market is a logical fallacy.

Failing upwards

Good news, everyone! CNBC thinks that Apple’s position is now sound enough to ask the question “Apple on Comeback Trail?”

Wait, comeback from … what? Comeback from being the largest, most successful technology company in history? Boy, that is tough to come back from, isn’t it? The Macalope doesn’t even know how a company could do that. Having to wade through all that cash alone must be almost impossible.

CNBC brings on a “pro-Apple” guy and an “anti-Apple” guy because the gods of balance must be appeased. Who’s the “anti-Apple” guy? New Constructs CEO and Forbes contributor [slide whistle] David Trainer, a guy whose target for AAPL is $240/share. Even the host seems to be saying “Are you for real?”, although he too gets his facts wrong.

Host: “Even the sell side is saying this week, to move the shares down meaningfully, you’d really have to see a much bigger erosion in their installed base.”

What erosion has there been to date?! More people buy iPhones every year and while Mac sales were down slightly year-over-year in the last quarter it’s because so many people bought iPads instead. But such is the state of perception about Apple on Wall Street.

Host: “Do you think that’s going to happen?”

Trainer: “I think that’s coming, I think we already see that coming. … Unless they can come up with some new great revolutionary product, which I don’t see coming …

“Coming up, a man who should be using safety scissors doesn’t see Apple shipping new products. We’ll give him 15 minutes of air time.”

… I think the returns on capital for the company are going to revert back to a more normal level, which implies a price in the range of 240 bucks or so.

The “pro-Apple” guest, Capital Advisors’s Channing Smith, should be given a Daytime Emmy for not falling out of his chair laughing.

Smith: Um, yeah, but to get to that price you’d have to see Apple lose tremendous market share and margins collapse. We just don’t see that. … everyone’s starting to look toward the fall, to the new releases of the products … there are opportunities out there.

Well, you see that because you actually listened to the words coming out of Tim Cook’s mouth instead of stuffing hamsters in your ears and consulting a Ouija board.

Trainer: I think it’s sometimes hard to get people to focus on the future than the past and if you look at the future I think it’s clear that Apple’s going to have a return on capital that returns to a more normal level.

So, the disagreement here succinctly defines the difference between Apple bulls and bears. The bulls think Apple will release new products in the future, you know, like Tim Cook said the company would. The bears think that’s it, Apple’s only ever going to make iPods, iPads, iPhones, and Macs for the rest of its existence. Which, OK, you can have that opinion, it’s a free country, but it’s a little weird when the whole point of the segment was to talk about Apple in light of its hiring of Paul Deneve specifically to work on special projects.

This isn’t Trainer’s first time in the limelight, which unfortunately does not include actual lime. In the comments on this short piece about Trainer by Philip Elmer-Dewitt back in June there are some amusing footnotes to Trainer’s expertise. First there’s an uncomfortable exchange between Trainer and someone who apparently used to work with him. “He’s a dunce. He’s one of the least intelligent people I’ve ever had the misfortune to work with. He was a joke who everyone just laughed at.”

Second, however, and more damning, Trainer ignores the specific points made by people questioning the assumptions he uses in his model and instead leaves this self-serving comment:

Of course, people will try to poke holes in my financial analysis, but that appears to be an attempt to divert this dialogue away from the real issue stated above: Apple’s future.

Uh, no, TV boy. When someone points out that your input for return on invested capital is five times less than Apple’s current return on invested capital and you decline to address that, instead making vague statements, that’s diversion.

Here’s an interesting insight into the application of Trainer’s inviolable model, about which questions will not be taken. In May of 2012, when AAPL was at 558, Trainer was yelling “Buy!” A year later the stock is at 420 and he’s yelling “Sell!” What’s the bit that was flipped? Trainer’s personal view on Apple’s future. He changed the inputs and got different results.

There seems to be only one reason he’s on TV. It’s because he has a fringe view on AAPL’s valuation.

Needs a retcon to make it believable

Another week, another master plan for how Microsoft is going to become relevant again.

“How Microsoft could rule consumer electronics” (tip o’ the antlers to Tay Bass).

That’s our old pal our Internet acquaintance lump of congealed meat product Mike Elgan writing for Computerworld and telling us how you dummies don’t appreciate the gifts that Redmond has spent so much time spinning, like gold from flax.

Let’s face it. In the consumer electronics space, Microsoft is floundering. But their lack of success isn’t the result of their products, and it’s definitely not the result of their technology.

You people don’t deserve a nice Surface! Philistines!

So what does Microsoft need to get back into the hearts and minds and wallets of consumers?

The Microsoft moonshot

Wait, another Microsoft moonshot? Windows 8 and the Surface were Microsoft’s moonshot. Microsoft’s moonshots are like the Soviets’, full of explosions and smash landings into their destination.

Consumers don’t know it yet, but every major company in the industry knows that the desktop, TV and boardroom computer of the future is a big-screen touch-, voice- and in-air gesture-based computer.

Uh … suuuure. [Backs slowly toward the door.]

What if Microsoft shipped that future years ahead of everyone else?

Which it could totally do because Microsoft!

So, Computerworld is now publishing Microsoft fan fiction. Good to know.

Mike thinks the ticket is Microsoft’s latest version of the device formerly known as the Surface and now called the PixelSense, which features:

… a brand-new, high-performance 3M screen, also unveiled this week, that can handle not just 10 simultaneous fingers on the screen, but 60!

You know how you go to a board meeting and everyone wants to put their hands on a screen at the same time. To, uh … er …


Microsoft could make all its hardware, and the mobile hardware made by its Windows and Windows Phone partners, to automatically and instantly interact with the table. … the table would be a giant-screen station for Microsoft-powered mobile devices.

This is the same Mike Elgan who waxes poetic about how awesome the cloud is and laments how the haters don’t seem to get that. Mike, if you have your data in the cloud, you don’t need to dock the device.

Who wouldn’t want this?

It’s the perfect accompaniment for all those Microsoft devices you don’t own!

Microsoft could probably ship such a table for $5,000 or $6,000 each—well beyond the reach of the average consumer.

So it’s a sure-fire winner!

But even at a price many times higher than a low-cost PC, the existence of the product would enhance the Microsoft brand.

Ah, so it’ll be just like the Soviet moonshot program: expensive, late, and of little value to the general public.

How many teenagers buy an iPod touch because when they go wide-eyed into the Apple Store and gape at those iMacs and Retina iPads and MacBooks they know that’s the direction they want to go in, and they know Apple is the company they want to be associated with?

A Retina iPad starts at $499. Apple doesn’t waste its time on products that people aren’t going to buy.

Everybody would be talking about Microsoft’s table instead of Google’s Glasses or Apple’s non-existent wristwatch.

No, they would not. Microsoft has been shipping the PixelSense for five years and no one other than technology nerds knows it even exists. Making it a dock for devices few people own isn’t going to change that.

Sorry, Mike, your plot just isn’t believable. Just like most fan fiction.

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