During Apple's Q2 financial conference call last week, Tim Cook dished out one of the loopiest lines that I've ever heard from an Apple executive. When asked if Apple would compete with the coming Wintel hybrid Ultrabook that will double as a tablet, Cook stated that "You can converge a toaster and a refrigerator, but those things are probably not going to be pleasing to the user." This report takes a closer look at that statement to show you where the facts are and where the shtick begins. At the end of the day, Apple has left the door wide open for the hybrid Wintel Ultrabook-tablet to enter the market unchallenged that's big enough for a fleet of war ships to enter – and they will.
Wintel's Haswell Based 2013 Hybrid Ultrabooks will deliver a Powerful Punch
In 2013, the Ultrabook will be powered by Intel's advanced processor called Haswell. Some of what we know from various keynote slides and notes is that it will be the first 22nm processor for notebooks on the market and according to Intel, will have the power to reinvent the notebook.
In our cover graphic you're able to see one of Intel's Ultrabook slides illustrating that next generation interfaces will also be supporting voice commands and hand gesturing controls which was recently highlighted in a Microsoft patent. According to Intel's secondary slide above, Haswell based Ultrabooks will support multiple operating systems. Some of the leading candidates include Windows 8 with Metro, Google's Android and/or Chrome, HP's WebOS and Linux.
Intel also claims Ultrabooks will offer all day battery life and always on connectivity. Obviously this means that LTE will be baked right into next generation Ultrabooks. In January 2011 Intel's acquisition of Infineon was completed. At the time, Intel stated that Infineon Technologies AG Wireless Solutions (WLS) business was "a leading provider of cellular platforms to top-tier global phone makers, and part of Intel's strategy to accelerate always-connected computing platforms that span a variety of device and market segments, including laptops, cars, smart phones, tablets and smart TVs." Intel also acquired SySDSoft to further support their always-connected strategy that is likely to appear in their 2013 Haswell based Ultrabooks. This could translate into eliminating the added cost for the cellular chipset. Today, devices like Apple's iPad Wi-Fi + 4G add a premium of about $120 for that chipset that gives you cellular-data connectivity. Such a move by Intel would provide their Ultrabook OEMs with a pricing advantage against the iPad. Whether Intel intends to play that card is yet to be determined.
One of the most interesting features behind the Haswell based hybrid Ultrabook-Tablet is that it's designed to be a low powered notebook or tablet while you're on the go and yet enable the user to connect their Ultrabook into a next generation docking station at work or at home and be able to crank the power up to that of a full blown desktop. In theory, it'll be the ultimate all-in-one computer. As Intel's marketing puts it: It's a tablet when you need it. It's a PC when you want it: All Day – Every Day.
If Wintel delivers this savory beast, then I think that they'll have a winner. But Apple's Tim Cook rained on that parade last week. It reminded me of Wintel raining on the iPad's parade. Wintel paid a heavy price for that. Is Apple's reluctance to play in this market a wise move or a potential blunder? Let's take a closer look at what Tim Cook said in the totality of the conference call.
Tim Cook's facts and Shtick
During Apple's Q2 financial conference's Q&A session, Tim Cook honestly talked about supply constraints. Cook stated that "On iPad, worldwide, we're supply constrained on the new iPad, both coming out of last quarter. And to give you a current view, we're still supply constrained on the new iPad. Demand has been incredibly robust, and we are selling them as fast as we can make them, as Peter mentioned earlier."
It specifically boils down to Retina display related supply constraints. That's a key factor in understanding Apple's reluctance in playing in the hybrid notebook-tablet category. Tim Cook stated that "we're not going to that party. Others might. Others might from a defensive point of view, particularly. But we're going to play in both." The context being that Apple will continue to sell iPads and MacBooks but not a hybrid.
In perspective, Tim Cook made it abundantly clear that Apple couldn't find enough supply of displays for the new iPad that's currently experiencing out of control demand. So just on a purely logistical level, just the thought of adding a multi-touch Retina display to a MacBook Air would create a daunting supply nightmare. Especially if the MacBook Air display doesn't match the size of the iPad. Then you're opening an impossible scenario for touch-related Retina displays that would over burden Apple's current suppliers. So this marketing shtick about not wanting to play in the hybrid notebook-tablet market is just that, shtick. It's really a matter of Apple not being able to conceivably retain enough supply to even contemplate such a hybrid at this time.
Let's face it; Apple could afford to pass on the hybrid Ultrabook market because they have the number one selling tablet in the market today. Their priority, and rightfully so, is to put all their wood behind this product to hopefully keep it number one. They could afford to allow the hybrid Ultrabook to enter the market unchallenged and play a waiting game. If this category takes off to a point where it's challenging iPad sales, Apple will "magically" introduce such a hybrid. If the hybrid Ultrabook fails, Cook looks like a visionary. It's a calculated gamble in a high stakes game.
At the End of the Day
At the end of the day, Apple has left the door wide open for Wintel's hybrid Ultrabook-Tablet to storm the market unchallenged. They have good reason; they won't compromise the iPad's success to play with a yet unproven category. And, as we've shown, the display factor would jeopardize the iPad's supply and that's not a point even to be considered. It's not that Apple hasn't thought of a hybrid unit of sorts, because they have a granted patent to prove that they have.
For Apple, the timing is all wrong and they'll defend their insanely popular iPad first and foremost and it's the right move for Apple. But that's a far cry from the Ultrabook being an overly compromised product that Tim Cook alluded to. His indirect analogy of a hybrid Ultrabook being a mismatch likened to mixing a toaster and a refrigerator was just the loopiest lines that I've ever heard from an Apple executive.
When Steve Jobs was around, marketing shtick was simply discounted as being a part of his reality distortion field. Macites knew differently. We loved Steve's embellishments because he was Steve, the guy behind the original Mac, the David who took on the Goliath Wintel and was victorious. We expected Steve to do that. It was his trademark. But with Tim Cook, his view of a hybrid notebook just came across as disingenuous marketing mumbo jumbo.
At the end of the day, we get it: Apple won't be playing in this new hybrid notebook category. But will it come back to haunt Apple? In my view, Wintel has finally found a chink in Apple's armour and their going to drive a bloody freight train right through it. If Wintel ever had an opportunity for an all-out counter attack, they have finally found their entry point. Without a doubt: Interesting times lay ahead.