Kibbles and Bytes – 500

This is the 500th issue of Kibbles & Bytes!  Who would have guessed that we would have hit this milestone when way back in 1996, Mark Engelhardt suggested to me that we start a weekly newsletter!  Here’s the entire text from the very first issue of Kibbles & Bytes:

“Dear Friends,

Welcome to the Small Dog Electronics special pricing mail list.  I know that many of you have been following Small Dog’s specials on DealBITS or the Idealist and following DealBITS decision to suspend publishing their list we have decided to start our own informal list to bring you news from Small Dog and the latest special pricing.

For this issue we have included our entire price list.  Please note that each item listing contains a condition code quantity (items listed as “stock” are either comodity items -i.e. memory Zip drives etc. or are items that we order from the manufacturer) and price.

Once the Small Dog Web site is up and operating (smalldoggy.com) we will have up-to-date pricing available there in addition to the special values that we offer in this mail list.  We expect that this site will be up within 2 weeks.

Mention this e-mail list when you order any Macintosh CPU and receive an 11 disk CD-ROM bundle for free.

Your comments and suggestions are always appreciated.  Once again welcome to the Small Dog family!”

We finally had some real winter weather here in Vermont this week. We had a big build-up for a winter storm on Monday, Martin Luther King, Jr. Day but the storm stayed south of us and we ended up with a couple inches of snow, a bunch of sleet, some rain and then some ice.   The ski areas are hurting and even more significantly the small innkeepers and restaurants are suffering, too.   We all remembered what winter was like with some double digit below zero temperatures on Tuesday and Wednesday night but it is warming up again for the weekend with only minor snow flurries in the forecast. Traveling home from MacWorld is usually an adventure in the winter time but even though I had to run through the Philadelphia airport I was able to make in home in time.

MacWorld was exciting as usual.  I spent most of my time in meetings and only had one day to actually get to the show and see the vendors.   I was at a remote broadcast of Steve Jobs keynote and I was wowed first by the Apple TV and then by the iPhone.    The shine was a bit off the apple as we learned that Apple’s independent resellers and anyone that doesn’t have access to AT&T/Cingular service will be frozen out of this new revolutionary device.   But more about that later.  I think that the best booth award goes to a Vermont company, Mophie.   Mophie is a manufacturer of iPod accessories that was born here in Vermont and started by Ben Kaufman, a young student at Champlain College.   They set up a booth that was constructed with a bunch of 2 x 4s and invited MacWorld show attendees to sketch out product ideas on provided sketch pads.

The sketches were digitized and the top three designs were voted on by the attendees and on Mophie’s web site.   Behind a piece of blue tarp in the corner of the booth, Ben and his engineers feverishly took the top three sketches and designed the products.  The three winners were an iPod dock for a digital picture frame,  an iPod holder/wallet  for a messenger bag strap and a shuffle holder that is a combination keychain and bottle opener.    Ben pledged to have prototypes on display by the end of the show on Friday and they had brought along their expensive prototyping machine to build the prototypes right in their booth.    I left on Thursday to come back to Vermont but I am sure those prototypes were in the process of being constructed.  You can see those ideas and a video from the show at Mophie’s web site:

http://illuminator.mophie.com/

My granddaughter, Khadija (stage name – Khadija K) has hit the net with her latest (and first) music video.   I’ve told my employees I’m going to have to quit my job soon to become her manager and go on tour!  Here’s Khadija’s video – give it a rating!

http://video.google.com/videoplay?docid=6946577075772151075&q=rap +freestyle

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Mac Treat #11: Family Controls in Tiger By Ed @ Smalldog.com

Several people have asked how they can restrict their home or family computer to protect their children from weirdoes, and the red-light aspects of the internet.

A nice overview of some of the basic kid-safe features of Tiger:

http://www.apple.com/macosx/features/family/

This article tells you about some of the other settings on your Mac that can restrict access to various websites:

http://docs.info.apple.com/article.html?path=Mac/10.4/en/wn10.html

Finally, if you have a computer that is being used by a youngster, you should consider creating an account for them that features parental controls. Not only will this keep them safe, it will keep them out of your account, so they can’t  deleting your emails  – or see the websites you’ve been looking at! See the how-to here:

http://docs.info.apple.com/article.html?path=Mac/10.4/en/mh2258.html

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iPhone, the Third Revolution By Don @ smalldog.com

I was interviewed by the Burlington Free Press about the iPhone yesterday and their story got picked up by AP and I had a few calls on my cell phone to comment about the iPhone.  One reporter interviewed me while I was in line at the DMV to get my driver’s license renewed.   I was commenting about how disappointed we were that Vermonters would be unable to take part in this new revolution and commented about our governor’s plan to make Vermont the eState. But, I am getting ahead of myself.   Let’s go back to the keynote.

I was in a huge ballroom with hundreds of other Apple resellers, Apple customers and Apple employees and we were all in awe as Steve Jobs took the stage.  I was ready for the Apple TV and I think that is going to be a huge new product for Apple with lots of add-ons and room for development.   Just like everyone else, though, I was thrilled to see Steve start to do the lead up to the iPhone.   He talked about how Apple had revolutionized the industry with the Macintosh computer (Apple had an even earlier revolution with the Apple II, too!) and then revolutionized the music industry with iPod and iTunes and now Steve was announcing that Apple had turned its attentions and its designers loose on the cell phone/ smart phone market.   Ed will go into the details of the iPhone in this issue of Kibbles but I wanted to make some comments on newest toy from Apple.

During my interview with the Free Press, I was asked if I was going to get and iPhone and why.  I said that I might just have to move to a Cingular area so I can have an iPhone  but the why was more to the point about why this is a revolutionary device from Apple.   Steve Jobs showed the current best smart phones on the market and anyone that has used those or even a less-full featured cell phone would probably agree with me in saying that they are not intuitive, that navigation is clumsy and some of the features simply are not accessible and useful.   I have never liked any of the many cell phones that I have had.   As Steve demonstrated the iPhone with its easy navigation, sophisticated screen and advanced sensors it was immediately apparent that he “got” it.   What Apple has achieved is to create the Mac of the smartphones.   It is so different, so revolutionary that it may very well change the nature of the telecommunications market.

As Steve demoed the product I had a rising appreciation of the simple elegance of the device and I was already getting emails from long time customers asking me when I’d have them for sale.   That bubble got burst when it was announced that it was an exclusive deal with Cingular/AT&T and that it would only be sold by Apple-owned stores and Cingular-owned stores.  That was a double hit to Small Dog Electronics because we do not have Cingular in our state and because we would not be able to sell the device.   We had long and sometimes tense discussions with Apple about this and while I understand the complexity of the deal, that does not mitigate the pain of not being a part of this third Apple revolution.

Since I have returned to the Green Mountains I have mellowed out a bit and am trying to take a longer term view of this product.   I expect that this technology will be used in a number of products and some of those may not require cell phone interface.  If Vermont’s legislature and our governor are in as much agreement as they appear to be regarding bringing broadband and wireless technology to every corner of the state, I can envision a time where my cell phone is obsolete, that i communicate over WiFi and the Apple iPhone technology has reached the point where I am carrying a small device that gives me total access.   I was not privy to the negotiations that led to the exclusive with Cingular and I if I were I might have done the same thing but it sure seems shortsighted to leave all or large portions of Alaska, Colorado, the Dakotas, Idaho, Iowa, Kansas, Maine, Minnesota, Montana, Nebraska, Nevada, New Hampshire, New Mexico, upstate New York, Oregon, Utah and Wyoming out in the cold. It also seems that leaving Apple’s reseller partners that helped to drive them through revolution one and revolution two out of the iPhone revolution is a difficult and misguided decision.   I am hopeful that as the product line develops that both of these issues will be resolved, that there will be access to iPhones for just about anyone that wants one and that Apple’s independent reseller channel will have a place at the table.

One thing that was remarkable about the keynote was the stark difference in the presentations of Steve Jobs and the CEO of Cingular,Stan Sigman.   Where Steve was comfortable and inspiring, Mr. Sigman was stiff and read from huge index cards.  I don’t think he had respect for the Apple fans in the audience and he went to great pains to emphasize his company’s exclusive and their relationship to AT&T.  There is definitely a culture clash between these two companies and strange bed fellows, indeed.   Cingular or not, I remain excited about Apple and the iPhone.   I will still have to have an iPhone, one way or another!

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Small Dog Answers Your iPhone FAQs By Ed @ Smalldog.com

We’ve been getting lots of iPhone questions. There have some great iPhone FAQs on the web – notably from David Pouge, who was actually able to use the iPhone for 40 minutes or so. You can access his FAQ from his website, linked here:

http://www.davidpogue.com/

Here is our version of the iPhone FAQ, listed in the order of how often these questions are asked.

– The iPhone won’t be released until June, and Apple has said there will be changes and advancements to the iPhone before it is released. We should expect this from Apple.

– The iPhone is only available from Cingular (AT&T) stores and some Apple stores.

– Will Small Dog Electronics ever carry the iPhone? Small Dog Electronics is not a cell phone company. However, if Apple ever asked us to carry the iPhone, we’d learn to be a cell phone company real fast!

– It really is Cingular only (Cingular is now AT&T, see article explaining this below).

– If Cingular (now AT&T) does not offer service in your area, you might be able to get a roaming contract to use the iPhone. In other words, here in Vermont it might be possible to get a contract with Cingular in Massachusetts, but only use the iPhone here in Vermont. Some people already do this. Other people who have tried to do this have had their contract canceled. As Cingular becomes AT&T, rules – and possible coverage – might change.

– Apple’s contract with Cingular appears to be for two years.

–  Cingular / AT&T have not released service plane pricing for the iPhone. Cingular has special data plans for its BlackBerry phones, and it’s likely, that the iPhone will have its own special plan prices.  It currently costs $39.99 for 450 minutes of talk time. Adding features and minutes can send AT&T’s monthly service rate up to $100 or even $200. Also, there is apparently a $175 fee for premature contract termination. Service plan pricing is mere speculation at this point.

– Apple says the iPhone can’t be unlocked.

– Apple says the iPhone will not work with SIM cards from other cellular services.

– No GPS – yet.

– No 3G Compatibility. But 3G coverage in the USA is spotty at best, even in a few major cities. Also, 3G usage is very battery intensive. “3G” refers to the advanced cellular networks that can stream video and audio directly to cell phones at any time.

– Steve Jobs said future iPhone upgrades will work with 3G services, once 3G is more widespread.

– The iPhone’s Wi-Fi will allow for much of the 3G experience when you are in a Wi-Fi hotspot. In most products, Wi-Fi is also causes major battery drain.

– The battery is rated at five hours talk time/ video/ web browsing time. Sixteen hours of audio playback time. The Treo W has a listed battery talk-time of 4.7 hours.

– The iPhone apparently uses a Samsung CPU and video processor, not Intel chips. The Samsung chips are highly regarded.

– No downloads directly from iTunes –  according to Greg Joswiak, Apple’s VP of iPod Products. Of course, there is huge incentive for this feature to be added to the iPhone, so it probably will be added.

– It is yet to be determined if songs purchased on iTunes can be used a ringtones. This is a silly feature, but people will want it, and will be disappointed if they can’t do it.

– No iChat, yet, but it will be possible to chat via third-part web applications.

– iPhone supports JAVAscript, but not JAVA. Flash is likely.

– Via web access on the iPhone, you can use many web applications.

– Does the screen get smeared up easily? The consensus is that it does smear up, but not as easily as one would expect. David Pouge said that a quick wipe of the sleeve removes all smears.  The screen in made of polycarbonate with an advanced coating. It’s not glass, as some have reported.

– According toe David Pouge, typing on the virtual buttons on the iPhone’s screen is a wash – not perfect, but not horrible. Some people will miss the tactile response of real buttons, while other people will adapt quickly to the on-screen buttons.

– The iPhone runs “OS X lite.” This is less than 500 MB, and it is stored in the flash hard drive in the iPhone.

– The iPhone is Mac and Windows compatible.

– All services are managed through iTunes.

– No syncing with Outlook yet, though this will probably be addressed soon. A third-party company may have to address that issue.

– No wi/fi or Bluetooth syncing – yet.

– The iPhone charges with a cable and /or dock, just like the iPod.

– It is highly likely that a “real” keyboard will be available for the iPhone – from a third-party company.

– For now, Apple wants to control what apps go on the iPhone. Third party applications.

– Unclear if disk mode will be possible with the iPhone, as it is with the iPod.

– The iPhone has the same 30-pin firewire adapter used by the iPod nano and iPod video. David Pouge says the iPhone will work with current iPod speakers and most other iPod accessories.

– Standard headphone port. Any headphones will work. Headphones included have a special mic and switch on the cord.

– No video-recording on the iPhone yet – however, this feature might be added. People are asking for it.

– The iPhone sports a two-megapixel camera with an auto-focus feature.

– Speed dial appears to be MIA – but they will almost certainly have to add this to the iPhone before it launches.

– Audio quality appears to be excellent on both ends, and speakerphone quality is decent, too.

– The video screen is very crisp and bright. Icons, video, photos, and text all look excellent on the iPhone.

– Price. Is the iPhone overpriced? I personally don’t think the iPhone is over priced. The Samsung Blackjack costs $199, with no wi/ fi or flash-based hard drive (it’s 64MB, with an option to add SD mini memory cards). The Treo is $399, again with only 128 MB of memory (and a full-sized SD memory card slot). A 4GB iPod is $199. The iPhone is a phone, and internet device, and an iPod (a widescreen iPod)!

People would pay $499 for the iPhone, even if it didn’t include a cell phone. I know, because people are calling to buy the iPhone, who only want it’s multimedia and web capabilities.

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Apple Clobbers the Street, Analysts Raises Estimates, AAPL Falls By Ed @ smalldog.com

You go figure!   Apple announced its quarterly earnings after the market closed on Wednesday and posted a profit for the quarter (that’s three months for those with scorecards!) of $1 Billion!  This was far in excess of even the “whisper numbers” and was the record earnings for any quarter in Apple’s history!   Soon afterward, eight brokerage houses increased their estimates for Apple stock (Soleil — to $115 from $100; Goldman Sachs — to $110 from $102; Bear Stearns — to $130 from $125; Prudential — to $100 from $90; PiperJaffray — to $124 from $99;  UBS — to $124 from $118; Citigroup — to $105 from $98; ThinkEquity — to $120 from $110) but by the next day (Thursday) Apple stock had fallen by over $5 to under $90.

Apple had given guidance for their next quarter (January through March) and those numbers were not nearly as spectacular as the numbers for the holiday quarter.  Duh!  As Apple’s product lines become more consumer focused with iPod, iTunes Music Store, AppleTV and now the iPhone, I think you will see an even greater seasonality to Apple’s revenues.   With all that said, however, Apple is targeting revenue of $4.8 to $4.9 billion and per share earnings between 54 cents and 56 cents for the quarter.   I remember well when Apple’s revenue for the year was close to those numbers and they weren’t posting any profit!

Here’s some more financial highlights from Apple’s holiday quarter:

The Mac side of the business:

Apple shipped 1.606 million Macs during the quarter, representing 43 percent of the company’s total revenue. This included sales of 969,000 notebooks and 637,000 desktop systems. The quarter showed surprisingly strong MacBook Pro sales. The 1.6 million Macs shipped during the quarter blew away Apple’s internal projections. The company is “thrilled” with Mac shipments. The Mac has outgrown the overall PC market for 8 of the last 9 quarters. Boot Camp downloads have exceeded 1.5 million. T A survey of student buyers shows that their intent to buy a Mac portable has increased from 17 to 28 percent in the past year.

The iPod music side of the business:

Apple sold 21.066 million iPods during the quarter, representing a 50 percent increase in the number of iPods sold year-over-year. All three iPod models did exceptionally well during the quarter. The iPod share of the US digital music player market was 72 percent in December. iTunes continues to lead the legal download market, with an over 85 percent share. The iTunes Store now contains over 4 million songs, 350 television shows, and 250 movies.

Apple Retail Stores

Sales at Apple’s retail stores came in at a record $1.1 billion with record sales of 308,000 Macs. Apple opened 5 new retail stores during the quarter to end with 170 stores. With an average of 169 stores open during the quarter, per-store revenue was about $6.7 million. The company expects to open 7 stores during the March quarter and 35-40 overall in fiscal 2007.

The Numbers

Gross margin for the quarter came in at 31.2 percent, due primarily to a favorable commodity environment across the board. Operating expenses for the quarter were $898 million, including $40 million for stock-based compensation.

And in another amazing accomplishment – Apple increased its cash balance during the quarter by a staggering $1.75 billion to end with $11.9 billion.  Not too shabby to put $1.75 Billion in the bank in a short 3-months.  It sure gives Apple a nice nest egg to comtemplate.

The Apple story of success driven by Steve Jobs and the extraordinary management team at Apple continues.  Innovative design of tools that we instinctively know how to use has made Apple one of the most outstanding American business success stories.  With Apple’s success comes a great responsibility.   A business is a member of society and has responsibilities that go well beyond making a profit or accumulating wealth. As a very vocal advocate of socially responsible business practices, I would like to see Apple talk more about their commitment to people, the environment and community.

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AT&T Hangs Up On Cingular By Ed @ Smalldog.com

Ok, so Cingular has the exclusive contract on the iPhone, right? Well, sort of – because “Cingular” is now AT&T. In other words, you’ll be buying your iPhone from AT&T. Remember AT&T?

It breaks down like this:

As we begin, Cingular is owned by SBC and BellSouth in a joint venture between the two companies. Next, Cingular buys AT&T Wireless, making Cingular the largest wireless provider in the USA with 46 million customers and the largest coverage of any wireless provider. Then Cingular’s owner, SBC, buys AT&T (which was different than AT&T wireless.) Then AT&T (now owned by SBC) buys BellSouth. The result is that Cingular is now a huge company providing wired and wireless phone and data services, and is going to change it’s name to AT&T. Simply AT&T.

Cingular wireless stores can now demo other AT&T products and services such as AT&T Yahoo! High Speed Internet, AT&T U-verse TV, or AT&T Homezone.

Edward Whitacre Jr., chairman and CEO of AT&T, said in a statement, “AT&T, BellSouth and Cingular are now one company, and going to market with our services under one brand is the right thing to do.”

Also, this means that investors can get a slice of what was Cingular Wireless by buying AT&T’s stock, which lists as “T.”

This is Apple’s new reality: dealing with the mish-mash stew that is the telecommunications industry. Makes me miss the day when all we had to worry about was G5 vs Intel!

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Specials!

Here are the specials for this week, valid through January 27th, or while on-hand supplies last. Be sure to use the wag URL to get this special pricing.

+——————+ Shure E2C Sound Isolating Earphones (No returns) – save $20, only $79!

http://www.smalldog.com/wag17180/mymac

+—————-+ Shure E3C Sound Isolating Earphones (No returns) – save $20, now only $159.00!

http://www.smalldog.com/wag17181/mymac

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iPod 60gb Photo (2005, Apple Certified Refurbished) – $209!

http://www.smalldog.com/wag17185/mymac

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LaCie Big Disk Extreme 500gb Firewire 800/400/USB – $239.00!

http://www.smalldog.com/wag17187/mymac

+—————-+ LaCie 250gb 7200RPM FireWire P3 Porsche – $119.00

http://www.smalldog.com/wag17151/mymac

+—————-+ LaCie 160gb Extreme Triple Interface Firewire 800/400/USB – $129.99

http://www.smalldog.com/wag17149/mymac

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Xerox Phaser 6120N 5/20PPM Color Laserprinter – $299.00

http://www.smalldog.com/product/41855

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LaCie Biggest Disk FW800 2TB USB 2.0 – $1579.00

http://www.smalldog.com/wag17161/mymac

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Mac OS X 10.4 Tiger Killer Tips – save $10.00 – only $19.99!

http://www.smalldog.com/wag17162/mymac

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Marware Protection Pack for MacBook Black – $16.00

http://www.smalldog.com/wag17169/mymac

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Marware Protection Pack for MacBook White – $16.00

http://www.smalldog.com/wag17170/mymac

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Altec Lansing inMotion 5 iPod Mobile Audio Dock – $59.99

http://www.smalldog.com/product/39391/mymac

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M-Audio Podcast Factory – $139!

http://www.smalldog.com/wag17167/mymac

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Thank you for reading this issue of Kibbles & Bytes!   It’s another football weekend and my Chicago Bears are playing the Saints in Soldier Field.  Later the Pats will try to pull another one from where the sun doesn’t shine and beat the Colts.  There’s going to be some real posturing around here if the Bears meet the Pats in the SuperBowl.   I hope you have a great weekend!

Your Kibbles & Bytes Team,

Don, Ed & Jimmy