TV-PGJuly 17, 2003: Apple beats the analysts and posts a $19 million quarterly profit-- and is just chock full of happy news. Meanwhile, prepares to take on the iTunes Music Store with its own Windows-catering copycat called "iMusic," and Microsoft admits that virtually every version of Windows contains a massive security flaw-- the day after it wins a $90 million, 5-year contract to supply software to the Department of Homeland Security...
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Time For The Happy Dance (7/17/03)

Yeeeaaaaahhhhh BUDDY! If you found the time to tune in to Honest Fred Anderson's quarterly conference call with the analysts, you already know that the news is good, the ink is black, and it's nothing but sunshine and smooth sailing from here on in. Apple made a $19 million profit last quarter (significantly higher than the analysts expected), boosted revenues to $1.545 billion (that's up 8% from a year ago), and increased its gross margins to a healthy 27.7%. Cash is up once again, to $4.54 billion, and both profits and revenues are expected to grow still further next quarter. In short, there's no down side. Nope. None at all.

Well, okay, there's a slight down side, but it's nothing like the sky-is-falling sense you get by scanning the "legitimate press" headlines over at MacSurfer, which make it look like Apple's about to declare bankruptcy while kicking several puppies and small children; half of them include such cheerful phrases as "decline in profit," "net income falls," profit slides," "company responsible for SARS, global unrest, and chewing gum in your hair," etc. Okay, yes, fine, Apple's $19 million profit represents a 41% decline from the same quarter a year ago-- but we're still talking about a profit, folks, and one higher than anyone expected, at that. Luckily, judging by Apple's stock spike today, it looks like Wall Street's paying attention to the revenue (Apple's highest in three years, notes The Register) more than anything else, though investors may also be cheered by the zillion little things that are also going Apple's way.

Take a gander at the copious notes over at MacMinute for a comprehensive list, but some of the happier highlights include a 71% increase in PowerBook sales, a 5% rise in education sales, increased traffic to the almost-breaking-even Apple retail stores, 6.5 million songs sold at the almost-breaking-even iTunes Music Store, and "strong" preorders for the G5, still slated to ship next month. C'mon, doesn't that all just make you want to wear a silly hat and dance a little jig? In public? Naked, during rush hour? Yeah, we thought as much. It's a magical time, indeed.

Meanwhile, we haven't yet compiled the final results and stats in our quarterly Beat The Analysts contest (expect them sometime before the sun goes nova), but we've done enough poking at the data to find that the big winner is faithful viewer Yorik, with his decidedly analyst-beating guess of $19,011,725 for Apple's quarterly profit. That is, you'll notice, just a hair's breadth from Apple's actual reported profit, whereas those hoity-toity analysts with all their fancy book-learnin' were off by sixty-something percent. (Take that, institutes of higher education!) Yorik therefore gains the unyielding fame of being a BTA winner that will certainly put him on the gravy train for life-- and as if that weren't too much already, the AtAT Prize Patrol will also be contacting him shortly to offer him his choice of this season's hottest looks in AtAT-themed apparel or a dusty, crusty software title straight out of our infamous Baffling Vault of Antiquity™! Why, it's like a fairy tale come true!

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Something Sounds Familiar (7/17/03)

Say, did anyone notice just how heavily discussion during that conference call was skewed towards topics of a decidedly musical nature? And there was plenty of good news on that front, too. Consider, for instance, the fact that Apple sold 304,000 iPods this past quarter; not only is that up from 80,000 iPods sold in the previous quarter (and 54,000 sold in the quarter a year before), but it's also almost a third of all iPods ever sold, which certainly suggests that the iPod is still a massively accelerating product. Then there's the fact that Apple has sold 6.5 million songs from the iTunes Music Store in less than three months, and that's just going to pop straight through the roof once the Windows version of iTunes ships later this year. And like Fred said, iTunes for Windows may well serve as a "Trojan horse," selling still more iPods (and maybe even some Macs) to those poor sods still moldering over there on the Windows side of the fence.

Of course, there's still plenty of time for the Windows version of the iTMS to fall flat on its face, especially in light of competing music download services which are hoping to beat Apple to market. We've mentioned lots of other wannabes in the past, but the latest copycat to jump on the bandwagon may also be the most direct threat to the iTMS's success. We're talking about, who wins the "No Trace of Shame" award for not only appropriating Apple's 99-cents-per-song/no-monthly-fee model, but also for deciding to name its service "iMusic." No, we're not kidding. The company confirmed its plans yesterday, according to And the reason this might spell trouble for Apple is that's little project is set to launch this coming Tuesday with "a massive promotional campaign in New York City's Times Square."

A launch this early gives a five-month head start on the iTMS-- maybe. Apparently it's not even clear whether or not has any licensing deals in place with the labels, so it's possible that this "massive promotional campaign" will be promoting a service with no actual songs on its shelves. That strikes us as a fairly major omission. Now, the article cites an analyst from Jupiter Research who claims that doesn't actually need licensing deals with the labels, because it could just "partner with a third-party firm that already owns licenses." There's just one little problem with that plan: isn't Apple pretty much the only company that managed to secure pay-per-download rights from all five major labels? Heck, even Apple reportedly still needs to persuade three of them to sign on for the Windows version of iTMS; regardless of whether or not that actually happens, we'd be at least mildly surprised if Apple joined up with against, well, Apple.

So we're actually pretty keyed up for Tuesday, just to hear what this iMusic deal is really all about, because there could be some serious drama in the offing. Meanwhile, it's nice to know that once Apple gets iTunes for Windows out the door, it'll already have all its music and technology in place. In addition to the 200,000-something songs from the five (we hope) majors, we expect Apple will have a healthy selection of indie music by then as well; that meeting with the indie labels is just now starting to bear fruit, as Billboard reports that Vagrant's own Dashboard Confessional has just released the first single from its upcoming album A Mark, A Mission, A Brand, A Scar as an exclusive download at the iTMS. Consider the floodgates opened.

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And Boy, WE Sure Feel Safe (7/17/03)

It's not just us, right? Surely there are other people out there who are even now wondering just what the heck the Department of Homeland Security was smoking when it officially named Microsoft as its "primary technology provider" last Tuesday. (Hey, guys, doing drugs finances terrorists! It must be true, because we saw it on TV!) The DHS has just committed itself to a five-year, $90 million contract with Microsoft, who will provide the department with software for roughly 140,000 computers responsible for protecting our national safety. Sadly, folks, this isn't a joke-- or, at least, not the "ha ha" kind, but more the sort of "lock yourself in the basement with a shotgun and forty cases of SpaghettiOs" kind; faithful viewer jedi2187 directed us to a Reuters article confirming the whole sordid story. Sheesh, if this isn't a reason to raise the current threat level from yellow to red, we don't know what is.

Of course, it only gets better (or worse, depending on your perspective) from there. Now that the single company whose association with the word "security" is most often prefixed with the phrase "appalling lack of" is providing tons o' software to the folks responsible for protecting us from the bogeyman, it's only appropriate that it reveal just how boneheaded a mistake the DHS made by tossing $90 mil in Redmond's general direction. Faithful viewer Erok notes an Associated Press article whose headline pretty much says it all: "Microsoft admits critical flaw in nearly all Windows software." And no, they're not just talking about the fact that using it makes you want to shoot yourself.

Get this: apparently just about every version of Windows ever shipped includes a fun little vulnerability that "could allow hackers to seize control of a victim's Windows computer over the Internet, stealing data, deleting files or eavesdropping on emails." Better yet, when they say "nearly all Windows software," they're including the brand spankin' new Windows Server 2003, which Microsoft had previously touted as "its safest ever." (Granted, that's like calling Quaker's latest mix of oatmeal "its tongue-scorchingly spiciest ever," but hey, it's Microsoft.) Ah, so this is what a stonyfaced Microsoft commitment to "Trustworthy Computing" gets us! Terrorists the world over are toasting each other with celebratory Frescas even as you read this.

Of course, Microsoft didn't admit the presence of the flaw until it had a patch ready, but you know how that goes: when it comes to Windows, as soon as you plug one hole, three others pop open. So what's our succinct advice to U.S. citizens now that Microsoft is technologically responsible for protecting us from terrorist attacks? Simple: Run! RUN FOR THE HILLS!!

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