Intense research and development is being done by many companies to produce convenient and inexpensive mobile reading devices. Right now we are working with software, hardware, and other publishers within the industry to develop a model that works for consumers. Beyond the economics, it is crucial we maintain a direct relationship with our customers.

Andrew Clark - Guardian News

 

Just on the subject of charging for newspaper Web sites, I wondered how much of a risk do you think it is to be the first to do this? What can you do to stop readers simply migrating to sites that remain free that are part of other media organizations?

 

K. Rupert Murdoch

 

Just make our content better and differentiate it from other people. And I believe if we're successful, we will be followed by all the media. Frankly, the big free competition will be coming from the BBC.

Source: News Corporation F4Q09 (Qtr End 06/30/09) Earnings Call Transcript
 

That’s not to say the Camry sucks or that the Porsche is perfect. They’re just two different cars that cater to different markets.

Note the implication that Apple isn't threatened by low price PCs just as Porsche isn't threatened by Camrys.

The problem is that the Porsche-Camry thesis is disproved by a datapoint from Apple's own conference call, in which it revealed that Apple sold out of its cheapest MacBook laptops.

That suggests that consumers (in contrast to businesses) are willing to pay a premium for OS-X because they prefer it so much to Windows. But as soon as cheaper Macs become available, they buy them.

In other words, this isn't Porsche vs. Camry, it's that the Wintel model is broken by poor product quality from Microsoft. My guess is that many consumers would be happier with cheaper Macs with less flashy hardware, but are being forced to pay up because in practice buying an over-spec'd Mac is the only way to avoid Windows. (Linux isn't perceived by consumers as a viable alternative.) For example: Do all the purchasers of MacBooks really want to pay up for a one-piece metal body? 

There are therefore two risks to Apple. First, Microsoft may get its act together, with Windows 7. In that case, consumers who are being forced to pay $1,100 for the cheapest MacBook Pro will quickly trade down to $500 Wintel laptops. 

The second risk to Apple is that the OS loses its importance as more and more functionality moves to the cloud. Like many other people, I have a Mac and love it, but I'm using fewer and fewer local features. I no longer use Apple Mail or the Mac address book because my firm uses Google Apps. And increasingly, we're also using Google docs and spreadsheets. If I had a good online solution for my music, photos and document storage (the long awaited Gdrive?), I'd only care about the OS to get me booted up and online fast. 

What's the chance that either of these risks will turn out to be real? There are early signs of Microsoft fixing its OS problems. This glowing review of Windows 7, for example, comes from a devoted Mac fan. And cloud services like Google Apps continue to grow, and Google has announced Chrome, an operating system tailored for them.

Meanwhile, netbooks are a threat to Apple despite its protestations to the contrary because the price difference between Apple's hardware and the cheapest available non-Apple laptops continues to grow.

Windows 7 + Google Apps and Chrome + netbooks. Let's see how Apple's market share looks 12 or 18 months from now.

Here's what ThinkEquity said about Bankrate's Q2 results; emphasis is added by me:

Q2 Preannouncement Suggests Rapidly Deteriorating Fundamentals

Simultaneous with the announcement of the sale of the business, Bankrate preannounced preliminary 2Q09 results. The company expects 2Q09 revenue of $31.0 million (down 23% Y/Y), well below our (recently lowered) estimate of $36.2 million and the Street consensus of $37.5 million. Pro forma EPS (excluding SBC) is expected to be $0.18 per share, well below our estimate of $0.29 and the Street consensus of $0.30. Adjusted EBITDA is expected to be $9.4 million, also well below our estimate of $12.8 million.

As we highlighted in our June 15 research report, we believe that traffic trends during Q2 were relatively anemic, based on our analysis of multiple third-party audience measurement data sources, compounding a difficult financial advertising environment in general, continued deterioration of the credit cards business (due to more stringent approval standards by card issuers), and seasonality in the insurance business.

Now, it appears that top-line fundamentals were weakening even more rapidly than we had expected. Given the apparent abruptness of fundamental deterioration, we believe management probably made the right call in taking the company private.

I think some of the netbooks that are being delivered or many of those are -- have very -- are very slow. They have software technology that is old. They don’t have a robust computing experience. They lack horsepower. They have small displays and cramped keyboards -- you know, I could go on and on but I won't. 

Here are all the mentions of netbooks in Apple's call.