An Apple Cocktail?

An article in the Financial Times claims that Apple is planning to upgrade its popular Ipod Touch to a 10″ tablet-sized device by Christmas. As a new user of the palm-sized version, I’m really hoping that story is true.

Indeed, the only thing wrong with the iPod Touch is that it’s a mite small given all the great things you can do with it. Within minutes of switching it on within range of a WiFi connection, I had checked my email, uploaded the latest edition of the New York Times, IM’d with a friend on Facebook, found an app which provided the recipe for that night’s dinner, downloaded Skype, and checked out the weather forecast for the next five days. And that was before I connected it to a PC.

Others might fault it for its relatively small 8 Gigabytes of memory but it took all my music, once I did connect it up to my PC. The real joy of the iPod Touch (for anyone within reach of WiFi) is its ability to put the basic PC functions into your hand. For me, turning on my PC is no longer an invitation to have fun. PCs these days are clunky beasts, full of security warnings and annoying pop-ups and, for most of us, a  reminder of the tasks we haven’t done. With the iPod Touch, you can pick and choose your responsibilities – yes to email, no to internet banking. Bliss!

Even better, through the Apps store, you can connect to any one of dozens of enjoyable passions – reading, cooking, hobbies, music, games, and so on. £1.00 for the complete works of Dickens? What’s wrong with that? Reading on its small screen is a breeze, especially for the squashed commuter who can’t open a newspaper during the daily trips on public transportation. My only hassle is that the keyboard function is a bit fiddly. The bigger version, one hopes, will solve that problem.

Problems we’d like to have

Big intake of breath – Microsoft has just announced its first drop in sales in the   company’s 34-year history. According to the Financial Times, this brings to an end the “most dramatic uninterrupted growth stories in modern business.”

Or does it? Are revenues the only way to measure a company’s growth? Surely, given what’s going on globally, wealth-creation should also be a factor. And in this regard, the folks at Microsoft are still winners. Take a look at cash on hand – at the end of the third quarter, Microsoft had a cool US$25.3bn parked on its balance sheeet, up  US$23.6bn the previous June. According to Google Finance, the company sports a gross margin of 84.2%, operating margins of 39% and provides a return on equity of 50%, figures most companies would drool over.

The other figure that continues to go up at Microsoft is R&D spending. In the third quarter, despite making job cuts and other cost-saving measures, the group increase R&D spending from US$2bn to US$2.2bn in the quarter to the end of March compared to the same quarter last year.

With this kind of cash-generating power and the continued emphasis on R&D, Microsoft has an excellent chance of finding more motors for growth for the years ahead.  The recent drop in sales – all of 6% – were primarily due to declines in the PC operating systems business, which fell 16%. The company’s internet activities were also off by 14%.   The message here is simple – in the wake of its the failure of its bid for Yahoo, Microsoft needs to  find another likely partner or innovate its way into the world of web-based products and services.  

Luckily, it’s got plenty of resources to fulfill both of those goals and more.

Laptop Nations

Amid all the downbeat business news these days, Dell is claiming that there is one bullet-proof business – the trusty lap-top. At a press conference in San Francisco earlier this week, the PC maker predicted that the sales of the portable will hit 1bn within five years. That’s because battery life – the bane of all road warriers – is getting longer. Also, PC users in the developing world, according to Dell, want the smaller, lighter PCs if they want any PC at all.

At first glance, we are inclined to take a somewhat skeptical view of Dell’s PR. Afterall, it unleashed 10 new laptop models at the same press conference. But another headline caught our eye this morning. According to a story running on Bloomberg, Taiwan’s Simplo Technology the world’s largest maker of laptop batteries, reports that a global shortage of the components will last another three months because producers have not increased output fast enough. We’re inclined to take this as proof positive that what Dell is predicting will, in fact, come true.