Apple’s Money Trail: iPads, Games & Patents

Mac OS KeniPad paywalls, Apple’s new in-app subscription rules, how to PWN the gaming market, how to sell more iPhones, Apple patents, and iOS security. Seems this week the news is all about Apple making money and how everyone wants to make money off of Apple. And, as usual, Mac OS Ken’s Ken Ray is more than happy to share his opinion on the week’s happenings.

NYP: Another Brick in the Wall
The New York Post has pulled an interesting move to get people to pay for an iPad subscription: Block access to its website on the iPad.

PaidContent writes up the move — which it hates — saying the move makes the Post’s editorial content “inaccessible and irrelevant” and is likely to send iPad users to other options besides the Post.

While pay-walls and digital subscriptions are no longer new, PaidContent says what makes this different from efforts from the likes of the Wall Street Journal, or the New York Times is that “The New York Post literally is blocking the web for a subset of users, targeting the way someone accesses the web to keep readers out.”

Well… until they pay.

The funny issue: It doesn’t work completely. While blocking the iPad’s mobile Safari will keep a majority of iPad owners off the Post site, the piece says “users of other iPad browsers like Skyfire and Opera Mini can slip right in.”

iPad: It’s What All the Kids Want
A couple bits of interesting tablet news this week: First, market researcher InStat says shipments of tablets are on pace to beat shipments of dedicated E-Readers by next year.

InStat says, “The growing success of tablets is leaving many to question the viability of the e-reader market’s sustainability.” While hardcore readers want a Kindle, or something like it, the majority of consumers want something that’ll read and surf the web and play games and videos — you know, all the stuff that keeps the majority of consumers from being hardcore readers.

Stephanie Ethier, Senior Analyst at InStat says, “Of the two, the tablet market is the stronger and more sustainable opportunity. In fact, e-reader manufacturers will soon begin adding tablet-like devices to their lineups in order to take advantage of the tablet frenzy. Barnes & Noble already offers the Color Nook, which is often compared to a tablet, and Amazon, the leader in the e-reader space with its Kindle, will likely launch a tablet device later this year in an effort to compete head-to-head with the iPad.”

But how will that go for them, these would-be iPad competitors?

Here we arrive at interesting tablet bit number two: People don’t want tablets; they want iPads. AllThingsD highlights findings from a Bernstein Research survey, which says: “Consumers are not interested in form factors that deviate from the benchmark set by Apple. Few consumers, less than 15 percent prefer the 7-inch screen size versus the 10-inch screen of the iPad. Over 50 percent of respondents are firmly in favor of the 10-inch screen, which leads us to conclude that the 7-inch tablet models recently launched, like the BlackBerry PlayBook, are destined for failure.”

But it gets worse for the wannabes. Even if they hit the same screen size and form factor, Bernstein says:

Fifty percent of respondents preferred Apple over all other brands. There is a remarkable degree of unanimity in consumer’s preferences for the iPad over competing products… In the U.S., we find that Apple has more than double the brand appeal of BlackBerry, HTC, Motorola, Nokia and Samsung combined. These manufacturers have a very high level of brand equity and visibility in adjacent categories. It is striking that they hold so little appeal for consumers in tablets.

So InStat says people don’t want eReaders, they want tablets. So much so that tablets will out-ship eReaders next year, and Bernstein says people don’t want tablets. They want iPads.

Surprise surprise. Looks like another good year on the way for Apple.

Playing By Apple’s Rules
We’re getting a clearer illustration of what Apple’s new rules for subscription based services for iPad look like. AllThingsD notes the change for the Hulu-plus app that brings it into compliance with Apple’s recently revised rules.

When Apple announced rules for such services earlier this year they said that companies like Hulu, Rhapsody, and Netflix would not only not be allowed to kick users out to the web to sign up for their services, they would, in fact, have to give consumers a chance to sign up for the service through Apple’s App Store, for which Apple would take 30-percent. Such services balked, and — in the last couple of weeks — Apple had a partial cave-in. Under the rules revision, companies like Hulu, Rhapsody, Netflix are still not allowed to kick users out to the web to sign up for their services, but they’re not required let users sign-up through their apps, either.

So what does this look like? Hulu gives us the answer. The login screen for its iPad app has a way to log in, with no way to sign up, and no indication of how to do so. If you’ve lived in the 21st century for any of the last ten years, you’d probably guess that they way to find out more and sign up would be Hulu-dot-com. Still, it is weird that you would have to guess.

While I say it’s “weird” BusinessInsider’s Dan Frommer says it actually creates an “un-Apple-like,” worse users experience because of the part that leaves would-be paid consumers having to figure out how to pay on their own. Frommer blames Apple for the “un-Apple-like” nature of the change, saying that many companies won’t — or can’t afford to — pay Apple the 30-percent it demands if people do want to sell through their Apps.

“So,” he says, “companies like Hulu are now being forced to reduce the quality of their app’s user experience to satisfy Apple’s requirements.”

I’m guessing the overriding question, at this point, is distance or accuracy, a la the movie “Gung Ho.”

The real question is “what will Amazon do?” Give Apple 30-percent of sales made through its iOS apps, kill the “buy” button on its iOS Apps, or kill its iOS apps entirely?

Do You Want to Play a Game?
It seems Apple may be the future of gaming. So says the architect of gaming’s past.

The Loop has Phil Harrison, driving force behind the original Sony PlayStation and one-time president of Sony Computer Entertainment’s Worldwide Studios, saying if things keep going the way they’re going, Apple will PWN the video game space.

Talking to Edge Magazine, Harrison says, “At this trajectory, if you extrapolate the market-share gains that they are making, forward for ten years — if they carry on unrestrained in their growth, then there’s a pretty good chance that Apple will be the games industry.”

Why? It’s the whole start-to-finish/soup-to-nuts thing. Harris cites Apple’s understanding of “the end-to-end shopping experience:” devices, visibility of games on the platform, and the simplicity of buying games and getting them onto iThings through the App Store.

It “has been so elegantly built by Apple,” says Harrison, “and they will continue to refine it.”

The Incredible Shrinking iPhone
Time now for something dumb: “If Apple wants to claim more smartphone marketshare it has to introduce a ‘mini-iPhone.’” That’s what BusinessInsider has Oppenheimer analyst Ittai Kidron saying in a research note yesterday.

Kidron calls the mini-iPhone “critical.” A mini-iPhone is “critical!”

Quoting the note:

Simply put, $600 iPhone expansion opportunities are good, but the opportunities are much greater with a complementary mini-iPhone ~$300. We believe this price-point can be met, allowing Apple to attack the midrange and extend its emerging/prepaid market reach.

He or she has apparently not heard about the US$50 iPhone 3GS that’s still on sale here and there.

While Apple may be benefitting from the falls of Nokia and RIM, Android is benefitting more, according to Kidron. “Our checks indicate demand outside the U.S. is stronger for mid-tier/value smartphones, which suggests Android-based smartphones would be a more direct beneficiary.”

I’m sorry “is” or “would be?”

I’d never say never, but won’t last year’s model always be the mid-tier/value iPhone?

I know Kidron is talking international market share, but there is something ironic about that note coming out the same day as a new note from Needham and Company analyst Charlier Wolf showing Android stumbling a bit in the states, apparently thanks to the introduction of the Verizon iPhone.

Fortune has the Wolf looking at IDC numbers, finding “Apple’s share of the U.S. smartphone market gaining 12.3 percentage points to 29.5-percent in the March quarter while Android’s share in the U.S. fell from 52.4-percent to 49.5-percent — its first sequential loss ever in any region of the world.”

Quoting his note:

In our opinion, this is just the beginning of Android’s share loss in the U.S. The migration of subscribers to the iPhone on the Verizon network should accelerate this fall when Apple coordinates the launch of iPhone 5 on the GSM and CDMA networks. The iPhone could also launch on the Sprint and T-Mobile networks.

One thing those Verizon customers won’t get is all-you-can-eat data. AllThingsD says Big Red is killing its unlimited data plans for cellphones for new subscribers starting next month, killing one of it’s competitive iPhone advantages over plans offered by AT&T.

Can’t Touch This
Apple has been awarded — what looks from the outside — like a giant patent this week. Like the patent of patents in today’s smartphone landscape. Like if you could only patent one thing in 20-11 smartphones, this might be what you’d want.

Looks big.

CNET says “The U.S. Patent and Trademark Office has awarded Apple a key patent for touch screen functionality on portable devices, such as the iPhone and iPad…” and correct me if I’m wrong; A ton of other smartphones and tablets who’s makers go to sleep every night wishing upon a star that — in the morning — their devices will be real tablets and smartphones like the iPad and iPhone.

Remember at the Macworld Keynote in 2007 Apple CEO Steve Jobs showing off the iPhone’s touchscreen and associated gestures and saying… “and yes… we’ve patented it,” or something to that affect? Yeah the CNET piece from four-and-a-half-years later says the Cupertino crew filed for this touch screen patent in 2007. Also known as the year the iPhone was introduced.

CNET boils down the patent to fairly simple terms: “When a person uses their fingers to interact with the touch screen, the software reacts to that gesture. Images that Apple included with its patent application show that functionality being implemented across several different applications, including a Web browser and a home screen.”

What will the patent win do for the world of lawsuits through which Apple is currently slogging, and the wealth of companies using such interfaces with which is not yet locked in legal combat?

Awesome question. Let’s watch what happens.

We Just Want to Help. No, Really.
And finally this week, security firm Kaspersky has an idea for Apple: you make the iPhone and iPad more open, increase the risk of vulnerabilities, then we’ll come in and make things, well, as secure as they seem to be currently.

I’m paraphrasing.

The website UK Computing has Kaspersky CTO Nikolay Grebennikov arguing against the way the all-things iMaker does things today, saying, “Apple simply can’t continue with its current closed approach, and in my opinion, to remain competitive it should be looking to open up its platform within a year.

“The Android platform, which is growing its market share, is much more open than the Apple iOS and it’s easier to create new applications for Android, including security software.”


While Apple works to keep iThings secure Grebenikov thinks they can’t really do that. Quoting the CTO again, “Apple is the only protector of its iPhone and iPad users but they don’t know the real situation with threats. It’s not possible to create the products they create, and be a world leader in security too; that expertise is elsewhere.”

In other words, Security firm Kaspersky has an idea for Apple: You make the iPhone and iPad more open, increase the risk of vulnerabilities, then we’ll come in and make things… as secure as they seem to be currently.

Yeah. Probably gonna happen…