Michal Ždanský At the end of February, we met Jan Sedlák, editor of Živě, E15 and Reuters magazines, in the pleasant Prague cafe Retro, and talked with him about Apple's economy, Apple TV, the mobile world and the future of the PC world...
The interview was long and inspiring and it was not easy to decide which parts to choose from the 52 minute recording. Nevertheless, I believe that we managed to select the most interesting thing that was discussed that evening. Please note that the interview took place before the release of the new iPad and Apple TV.
Stocks and money
First question. How is it possible that in a time of "crisis" Apple is still skyrocketing in the stock market?
The crisis no longer has such an impact as it did a few years ago, and Apple simply built it all on products. If it continues to sell this amount of its boxes and the App Store generates more and more profits, plus it keeps innovating, it can grow even more.
At the same time, Apple did not present any new products, "only" a new iPad is expected soon...
The latest financial results were influenced by the iPhone 4S and the pre-Christmas season. Apple pulls it all together with innovation, which is why they are doing so well. The iPhone 4S has Siri, and I think they've caught a large portion of users on that.
Isn't it possible that the current growth is a bubble that will deflate over time and stocks will go down again?
It's not a bubble because it's built on real products, real sales and real purchasing power. Of course, the stock market works on expectations to some extent, but I don't think Apple's expectations are overstated. Stocks are expected to be worth up to $1000 per security, which I think is realistic. Now, it will largely build on the strategic iCloud platform that allows Apple to keep growing. If it ever comes with a TV, for example, it has another giant market.
How much do you realistically see a possible TV from Apple?
I don't like to speculate about it, but there are relatively enough hints now and it makes sense given iCloud and iTunes. With a giant video rental and digital content store, it would make sense. You come home, turn on their TV and pick up an episode of a series from their iTunes Store for 99 cents. Another thing – Apple can do that by stuffing its processors into a TV and turning it into a game console, for example. At Apple, it sure pisses people off that Microsoft has Xbox and is the center of living rooms. This is what Microsoft did. I wouldn't be at all surprised if the Apple TV has a revolutionary control that will work better than Kinect and everything will be connected to Siri. But it is also quite possible that the Apple TV will still be a small box that can be connected to everything. It's significantly cheaper, will actually do the same thing, and has a better chance of reaching as many users as possible.
Do you think such television can be expected this year?
That is a question. In my opinion, they have to come up with it relatively quickly, because all the TV manufacturers are preparing this. For example, Sony has announced that they want to have one common platform for the distribution of digital content. Both for TV, Playstation and PS Vita. Google already has Google TV, although it's all sorts of things. Microsoft is gaining more and more power with Xbox. Today, many televisions have an operating system and the content is also pushed there.
Going back to stocks, there is an interesting trend here that the biggest increase started after Tim Cook took office. How is he different against Jobs?
Tim Cook is much more open towards shareholders, there has even been speculation that he will start paying dividends. And the shareholders expect a lot from this. It's one of the things that adds value. Apple has huge potential in countries such as China, India or Brazil, where it has not yet taken root, and the size of the market there is and will be huge. For example, their products are already being fought over in China. 1,5 billion people live there, the middle class is constantly growing and already has money for such toys. All technology companies will grow in the BRIC countries, nothing much awaits them in the USA and Europe.
What do you think Apple will do with that huge cash reserve? After all, he doesn't have it stored somewhere centrally and he can't transfer all that money to America because of taxes...
Exactly. Apple now has a lot of money in different countries and that is also the reason why they are not paying dividends yet. They would pay a lot in taxes. Analysts asked on the last conference call what Apple will do with the money, but no one knows yet. Cook and Oppenheimer responded that they were actively looking into it. What can Apple do with that money? Maybe buy back a bunch of your shares. They have enough money now, so the best move is to buy back as many shares as possible. They will also invest 8 billion this year: one billion in data centers, five billion in production capacity...
By the way, you were an Apple shareholder yourself. Why did you sell your shares and don't you regret that it was just before the rocket growth?
I made $50 at one event, but somehow I don't want to comment [laughs]. At that time, the stock was jumping quite a bit. For a while it kind of jumped, so I waited for my original quota, at which I wanted to sell from the beginning, and I sold. It immediately jumped $25 higher, and then suddenly a forecast came out from analysts that they were expecting a value of $550. At the time, I thought to myself that it might not be true. It annoys me [laughs].
The future of operating systems
A test version of Windows 8 is to be released at the end of the month, Apple presented OS X Mountain Lion a few weeks before. Do you see the point?
I don't know if Apple did it on purpose, but these things happen. This is a completely normal thing for companies, a competitive game.
How about moving to yearly updates?
Do you mean Mac OS? It will depend on how much the update will cost, but it probably won't be much. Even the update to Lion was quite cheap. In my opinion, this is reasonable, because development is moving forward very quickly and it is necessary to constantly update. In addition, Apple's vision for the desktop is to make the system a second iOS - by transferring the feeling of the mobile environment. It will be better if updates come out more often, similar to mobile. There, various updates are also quite frequent.
What about the gradual unification of the system? Microsoft is doing the same with tablets now, will we see it at Apple in the near future?
That is inevitable. In a while, Windows 8 will run on ARM and these chips will also make their way into laptops. Ultrabooks will definitely run on that platform one day. The advantage is that ARMs are already fast enough and, above all, economical. It'll come one day. It's a logical step, as a mobile user interface is more natural for users than clicking somewhere with a mouse.
Isn't it more possible that Intel will come up with some ultra-saving platform?
Of course that too, but Intel will have a hard time now because it's not in tablets. At CES, they declared that tablets are useless, that the future is in ultrabooks. For that, they introduced such a horrible, disgusting hybrid... The only reason they are talking like this is because tablets just don't have it, they don't have the platform for it.
If ultrabooks are the future of laptops, what about classic computers like the MacBook Pro?
It's evolution. Notebooks will become thinner, lighter and more economical. When the graphics card and fast processor become available to enable the slimmer design of the MacBook Pro, it will turn out the same as with the white MacBook. One day it will come to the point where there will be 11”, 13”, 15” and 17” MacBooks and it will be as thin as the MacBook Air. Apple is pushing for simplification and will be interested in keeping those computers to a minimum. It is easier to sell and lowers production costs. MacBook Pros are bought by people who need more power for video editing, photo editing, and the like. When this hardware will be smaller and can be stuffed into a narrow body, there is no reason to do heavy work with a mechanical disk, etc.
Mobile operators
How will the Czech Apple Online Store affect iPhone sales at operators? Will they have to reconsider their price list in the future?
The iPhone never paid off for operators, see that O2 already refused to sell it. I just talked to the operators about this, and they are very annoyed by the conditions that Apple dictates. I don't know all of them exactly in detail, because the operators don't want to specify much, but you could say that Apple bullies the operators a lot (at least here they deserve it). He knows that's what people want from carriers, so he has to have an iPhone. For example, Apple has set how many units must be sold, how the phones should be displayed, etc. It's a terrible "bump" for operators.
At Apple, they are obsessed with control, and it annoys them that they have to sell it through operators, that there are distributors... That's why they create authorized resellers and give them quite harsh conditions, because they want to control the user feeling, the purchase... They want to control everything. They have one idea of how to sell it and that is connected to everything. Because of this, the idea of the Apple Store was born.
If we take operators in general, how will they have to change their services? Because services like VOIP or iMessage will soon replace their classic portfolio.
He has to adapt. Their SMS revenue is already falling due to services such as iMessage, mobile Facebook or Whatsapp. So they will reduce the FUP to make people pay more for data. The customer needs more and more data, and if they give him a smaller FUP, he will consume the data faster and will have to buy another data package.
The upcoming iPhone is rumored to have LTE. How do you see 4th generation networks in the Czech Republic?
This is one of the reasons why O2 has reduced the FUP now - they don't want to invest in 3G reinforcement and the like. So about that much for the approach of Czech operators. We are an advantageous market for operators in that we Czechs are generally passive. We can't stand it when the store sells low-quality bananas, low-quality salami that doesn't have meat in it. We can't do what the Americans can do, who get upset and change banks overnight, for example, because the fees are, for example, a dollar lower there. They are not lazy to reset standing orders and the like. We Czechs are terrible at this. Let us chop wood. We can't keep jumping to another operator every month.
Then, of course, there is the fact that the Czech Telecommunications Authority is a bunch of incompetent ignoramuses who should monitor this and let another operator into the game. When this happens, maybe things will move a little. Perhaps an Orange would enter the game and a completely different situation would arise.
So let's hope that CTU will wake up. Finally, would you like to say something to our readers?
I would say one thing - disturb. Don't chatter in discussions, just don't complain, do something. Do business, try to come up with new ideas and the like.
Very nice message. Thank you, Honzo, for the interview.
I, too, thank you for the interview and the invitation.
You can follow Honza Sedlák on Twitter as @jansedlak
Nice interview!
I would say a very nice interview. He has a head and a heel, it's not nonsense, it's just an opinion on a concrete thing, when it's clear that Honza has already done something, and above all, I'm not afraid to say at least some opinion. Basically, I have nothing to complain about.
Great article, I agree that we need to do more and feel free to switch providers if not satisfied. I do it sometimes and I will let you know why I do it. Most providers of various services in the Czech Republic are thieves, not to mention the operators.
And what is with Mr. Sedlák's hand in that photo?
She moves very fast :-)
Ha ha!
That Orange! Well, that's what you would do! Like us here in Slovakia. Although Orange is the technological leader, it is also the most expensive operator.
And let's talk about that - it wasn't a good example. I don't miss meat there. At least they kill a few less sentient beings.