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back to article Apple leaves profits on table for 'huge' iPad future

Apple has great faith in the "very large" market opportunity for the iPad - so much so that it's allowing "very aggressive" pricing of the magical and revolutionary device to slice into its profit margins. Speaking to reporters and analysts on a conference call announcing Cupertino's financial results for the quarter that ended …

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Silver badge

who is the no-brainer?

> "In terms of the iPad competing for customers who were considering a netbook,

> you know, I'm the wrong person to ask because to me it's a no-brainer. iPad, netbook -

> it's sort of a hundred to zero."

So in one corner you have a high resolution (or at least higher), multitasking, open, usable box with plenty of storage, a working WiFi, USB ports and a keyboard that doesn't involve leaving sticky finger marks all over the screen

In the other you have an iPad with a longer batter life.

Hmmmm how long was I intending to spend in the coffee bar?

So will the Apple Store let me have an application that lets a iPad take over as the router at home when BT fail my ADSL lines and I need to fall back onto mobile connections?

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Sigh

If you were the Chief Operating Officer for a company, as the man you quoted is, and it was YOUR financial results announcement, would you say you'd rather buy a netbook than your companies brand new product?

What did you expect him to say, for God's sake?

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Stop

You forgot...

In one corner you have an atom powered device running Windows XP, in the other you have something that is a pleasure to use.

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Linux

Re: you forgot

Prag Fest wrote "In one corner you have an atom powered device running Windows XP, in the other you have something that is a pleasure to use..."

... an Atom-powered device running a suitable Linux distro (Ubuntu UNR in my case)

(Cheaper than the iPad, full range of software, and no lock in to the Church of Jobs)

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Anonymous Coward

@Sigh

Completely agree but he wasted my time and his with his waffling verbiage that amounts to something 100% predictable and utterly unreliable (due to his bias); that's annoying. Why not keep the financial report limited to finance and not lapse into burbling about how great the iPad is? It may well be, but cut the crap, Mr AppleMan.

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WTF?

Apples and Oranges?

Aren't you comparing apples to oranges here?

On one side, you have a personal computer that will run your operating system of choice and play nicely with any kind of hardware / storage / peripheral devices without locking you into a walled garden.

On the other side, you have a magical appliance, that is aimed at "Content Consumers".

It is an ebook reader, without the advantages of an ebook reader. It is a tablet pc without the benefits of a tablet pc. It is a computer without any extension slots / storage.

Are they really in the same league?

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Go

No, YOU forgot

It's running Ubuntu ( Windows XP was first against the wall when the revolution came ) everything I need works nicely on it and it is a pleasure to use.

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Higher Resolution you say?

So in one corner you have a high resolution (or at least higher), .....

In the other you have an iPad with a longer batter life.

Last time I looked 99% of netbooks sold had a 1024 x 600 display and the iPad has 1024x 768

Either way I won't buy either until iPad has a USB port or "cheap" netbooks come with at least 1024x768 displays

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Anonymous Coward

re: who is the no-brainer?

"So will the Apple Store let me have an application that lets a iPad take over as the router at home when BT fail my ADSL lines and I need to fall back onto mobile connections?"

Which as we all know is the type of question that yer average consumer asks when making a purchasing decision.

Yes, a regular netbook has the kind of functionality you mention, which the iPad lacks but for someone who is thinking about a netbook for a bit of surfing, light work (e.g. reviewing documents or emailing) and leisure like watching a film, then the iPad is fine (btw for my own needs, both a netbook or an iPad would be just a extravagent toy as I don't need either).

The iPad has something that a netbook doesn't - the status of being a 'must-have' device that will change the face of computing/publishing/ad bloody infinitum.. no little thanks to Apple's marketing machine. Did the iPod take the mobile music market because iPods were the best devices on the market? In the same way that VHS won over beta because it was the best solution, I suppose.

So basically, even if a netbook would suit many a user better than an iPad, I bet there will be a fair few who will go for the latter.

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FAIL

I forgot nothing

I knew the beard and sandal brigade would soon pop up with a tiresome 'but I use an Ubuntu distro blah blah' come back.

Listen to me. Normal human beings have no interest in Linux distros, they find them utterly bewildering because everything they are used to on windows is missing or in the wrong place. It's why the freebie Linux netbooks get rapidly returned en mass or quickly reformatted with XP.

Contrast this to iPhone, OS X, it's simple, intuitive, 99% of people can be doing all the things they want to do with a computer (i.e. Facebook, Amazon, email) within 30 mins. Thats what Apple do so well, what all the Apple haters who have never actually used an Apple product and cluelessly play spec top trumps dont get.

Palm approaching face at raid rate of knots.

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Actually....

VHS was the inferior format. It is well know that BetaMax was the superior format.

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Re: Higher Resolution you say?

"""Last time I looked 99% of netbooks sold had a 1024 x 600 display and the iPad has 1024x 768"""

Pretty much all the Ion-based netbooks come with 1366x768 screens, and the graphical power to play 720p/[Hx].264 video, given the right software. Yes, most netbooks do come with that useless resolution, but not 99% of them, and, since there are many models from many manufacturers, at many price points, you have the option to select the one that meets your needs.

I've been looking (for the significant other) at some HP mini that does 1366x768 at $330US, or the little Thinkpad Lenovo has now, for somewhere around $500US. She wants one of them exclusively for spreadsheets in bed, which seems to be pretty much what netbooks can do.

I personally have been a fan of the ultra portable (and comparatively expensive) laptop for years, and am periodically tempted to spend $1500 or so on an x201s that I really, really don't need. But it's just so tiny and high resolution (1440x900 @12 inches? Where do I put my credit card number?)

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On the contrary,

Early on, Betamax could only play for an hour, while VHS could play for upwards of two. This almost totally excluded Betamax from the playback of movies. By the time Sony fixed this they were too late, having lost too much market share.

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@ Actually

"VHS was the inferior format. It is well know that BetaMax was the superior format."

As was the sarcasm in the post that you are replying to - but did not seem to catch.

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So what you're saying is

that Macs are for the cattle (moo!), and Linux is for those who Think Different?

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Bronze badge
Paris Hilton

Just out of curiosity

So let me get this straight..

People don't use Linux because it isn't exactly like Windows, and doesn't have all the programs Windows does.

So obviously they are borderline OCD, and will freak out if they move their mouse to an area on the screen and the icon they expect is not there..

Yet they flock to the iPad.

So that must mean the iPad is running Windows.. Yes?

Paris.. because even she would have trouble swallowing your argument.

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Flame

iPad ShmiPad

«iPad, netbook - it's sort of a hundred to zero." And he wasn't done there. "I can't think of a single thing the netbook does well. And iPad does so many things very, very well that I'm already personally addicted to mine and couldn't live without it."»

That's very nice. I wonder how I could, say, work on my Python (ipython with scipy and matplotlib) and Matlab (OK, Octave, but still) data analysis, while checking my mail, browsing the web and posting comments on El Reg. All at the same time. While listening to my drm-free music. On an iPad?

Sent from my ASUS EEEPC 900 netbook.

100 to 0: not the Apple way.

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To be fair you are probably not the target customer

My parents and schoolkids are the target customers .. hence the need to keep the price low.

I can easily see my dad reading the newspaper on this device, browsing the web on the sofa whilst my mum watches yet another soap.

I on the other hand have more gagdgets than my wife has handbags and shoes, so I will probably get an ipad for the sheer fun of it .. and it does look fun. Whether it ends up in my "gadget museum" alongside the Newton, Palm, Z88 [great little word processor!], Zaurus, TRS-80 Model 100, Psion 7 to name a few, is yet to be seen.

Certainly my iphone 3GS will stay with me a bit longer ... as it currently sits as my best gagdet phone of all time (tm) alongside my unibody Macbook Pro, 2nd Gen iPod shuffle and 1st Gen iPod touch [damn you Apple for making such compelling products!] ... coming in a close second is the Acer Aspire One running Ubuntu Netbook Remix and Sony DTS receiver + BluRay player.

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Import antigravtity

"I wonder how I could, say, work on my Python (ipython with scipy and matplotlib) and Matlab (OK, Octave, but still) data analysis..."

You know, many normal people would look at that sentence, and ask if it was actually a sentence. In fact, many non-python people would only be able to identify it as being intended for human consumption, rather than some interpreter, somewhere, by the absence of colons and square brackets.

(Hell, even python programmers probably read that sentence and think of this:

http://xkcd.com/353/)

However, this story really isn't about what people like you and me do with computers. in fact, computers have largely stopped being about what people like you and me do with computers.

This story is about whether this thing will sell; and you know damn-fine-well, it will sell.

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Re: To be fair you are probably not the target customer

"... hence the need to keep the price low."

You and I have different definitions of low when it comes to prices of nonessential equipment.

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Happy

@Dr Richard

Could you adopt me? (Or help me pay for my kids college educations?)

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Coat

"I can't think of a single thing the netbook does well."

Well, I can't think of a single thing the iPad does. Let alone well.

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FAIL

Boring.

I cannot think of a single interesting comment that you have ever made...

If you don't like Apple or their products, why read and comment on their articles? You blatantly don't like them; every single article, there you are, sounding off about how crap on of their products is, so why bother reading about them? I hate Manchester United. I don't read any articles about them and certainly wouldn't comment on articles about them. Change the record! You, and those like you, are boring.

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Silver badge

Yep

I looked at that statement he made and thought "how about - it lets its owner do what they damn well want with it?"

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Joke

"Why bother reading about them?"

Because he's a crank who thinks you can change the Universe by writing things on the Internet. A large number of Reg commenters, are such cranks: are you new here, or something?

You want an iPad? There's a religion for that.

You want to change the entire structure of the universe, one comment at a time? There's probably a religion for that, too (and it's probably run by Noel Edwards).

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Thumb Up

The real strength of the iPad

Apparently it blends.

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Funny...

You and others who slobber over every Apple product are just as boring to those of us who are capable of independent thought...

Well, maybe more amusing than boring...

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Troll

Isn't it..?

"...who are capable of independent thought..." Is that the same ~90% of people that independently bought netbooks with Windows on them? Silly troll.

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Jobs Horns

You'd need no brain to get an iPad...

... instead of a netbook.

Costs a lot more; No USB; No VGA out for presentations;No camera for Skype; No application freedom due to arbitrary, inconsistent app censorship from Apple, I can install what I want, when I want on a netbook from OS to apps ;Can't surf everywhere due to no Flash;No keyboard for word processing;Touch screen finger mark grease to drive you nuts; No kickstand so no watching TV in bed on it , oh and no USB so no TV tuner available anyway ; Can't replace battery; Apple always in control of your machine. I'm sure I can think of other things too given some more time to write.

iPad is a toy, no more. A netbook does real work and can entertain you too for half the price.

My EEE PC 901 is the best gadget I've ever bought and is used for hours each day for work and leisure. Complements my desktop and laptop perfectly. You'd have to pry it from my cold dead fingers.

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Jobs Horns

Dividend?

"Surely some Apple shareholders who haven't received a dividend check since, oh, around the signing of the Magna Carta will be interested to learn that Apple's cash hoard totalled $41.7bn at the end of the just-completed quarter, up from $39.8bn at the end of the previous quarter."

So if Apple doesn't pay out dividends, what's to justify their high share price? A share is supposed to be a share of the profit, but St Jobs isn't paying out, what's the point in having it? If Apple start blowing that cash pile on buying other major companies I think I'd be pretty pissed that my cash was being used to inflate Job's ego even further. Especially when that amount of cash has been generated by Apple as it currently is. I can't see how buying something major like, oh I don't know, Adobe, would make that cash pile significantly bigger in the long run, but it would make it significantly smaller in the short term.

As for spending it on R&D - give it a break. Apple aren't in the business of developing major CPUs from scratch. They don't develop magical and wonderful components themselves, they just get someone else's technology built to a specification. Their software stack isn't that pricey a development. So unless Apple decides to start doing all their own R&D they're not going to spend it on the iNextShinyThing.

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FAIL

Dividends v Share Price

This isn't that unusual for shares that are sharply increasing in value.

If you had bought a single Apple share on 1-Apr-2009 for $104 and they had issued a dividend of 3c/$, you would have received a share of profits totalling $3.02. Alternatively, you could have sold the shares one year later on 1-Apr-2010 for $237, netting a return in excess of $133. Which would you rather?

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Anonymous Coward

Anyone who invests in Apple is there for the price

If you want dividends buy Microsoft shares. Geez, you are not compelled to invest in Apple.

I nearly bought APPL when it was $17 (pre-split), if I had and sold them today I would make around 30 times what I would have put in. No-wonder Jobs is top CEO for shareholder value.

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re: Dividend

“A share is supposed to be a share of the profit, but St Jobs isn't paying out, what's the point in having it?”

Because of the way Apple’s share price performs? Although dividends are nice, I think many investors hold shares how the price might perform in the future.

Seven years ago, Apple stock could be had for as little as seven dollars – and the highest that year, wouldn’t have been much more. Like any stock, it does go down as well as up, but for nearly five years, (I'm pretty sure) Apple’s share price has been over $100 – at the moment it’s around $240-50.

Going back to 2003, if you had bought shares for $7 and bought 1,000, based on the latest share price, your investment would be worth $1,708,000 today.

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Tech companys generally don't pay dividends

When they do, you usually get about one hundredth, the market price of the share, each quarter - if you're lucky.

Last quarter my Microsoft shares paid out 13 cents a share. Current sahre price? $31.36. I'll be getting the money in June.

You don't hold tech stock for the dividend.

(Anyway, it's not the dividend that pisses me off: it's mostly Steve Balmer, with a side-order of Robbie Bach).

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Anonymous Coward

this is common practice

Many companies do not pay dividends - particularly tech ones, it seems.

Company shares are exactly that - shares in the company - and not (automatically) shares of the profits.

If a company is sitting on a cash pile then its asset value is increased by the value of the pile.

The share price of a company will often reflect the asset value of the company (among other things) but share prices are set by the market so a company with 1000 shares and assets of £1,000,000 does not mean the price of a share is £1000

If you were a shareholder and were "pretty pissed" about the company strategy then you would try to use your shareholder vote to influence the board or you would sell your shares. I expect.

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@bazza

"So if Apple doesn't pay out dividends, what's to justify their high share price?"

The high share price does. It makes up for the lack of dividends. Depending on the market sector a company is in will determine what if any dividends they pay.

The short version, essentially Apple (AAPL) makes stuff so they need cash on hand to pay for inventory. The larger the pile of cash, the easier it is to rapidly increase their inventory. The high price reflects this value position. If they pay dividends, they are less fluid, slower to react and if pinched they need to sell stocks to raise cash. More stock means a lower stock price for the same corporate value.

Compare this to a service company like Teekay Tankers (TNK) who only need money to purchase capital goods and pay salaries. The current earnings per share are 1.28 and their dividends are 1.03 for a current annual yield of 8.5%. They recently purchased new tankers and sold stock to cover the purchase because they aren't sitting on a pile of cash. The stock price took a hit but seems to be slowly recovering a bit.

Now then, 8.5% puts a doubling time at nearly 8.5 years where AAPL stock has a doubling time of either 1 or 3 years depending on market volatility. Also the 8.5% dividend yield of TNK isn't fixed either and when short of cash they can and will withhold the dividend. The downside to not having a dividend is you need to sell the stock to realize the profit. Note that BRK-A doesn't pay dividends either but at ~$120K/share does it really matter?

In the interest of full disclosure, I have financial stakes in both AAPL and TNK and really wish I had a stake in BRK-A but at ~$120K/share... Boy, so much for the short version.

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Anonymous Coward

N900 software + bigger box = fully expandable iPad

My son has an iPhone - simply because he could not wait. Now he has seen my N900 he is looking to when the iPhone contact runs out .... In the office, my N900 is just a window on the desktop machine and I use a proper keyboard. All we need is a bigger screen version of the N900 - if we ACTUALLY need anything at all?

I might be biased - I haven't used windows on the desktop for a couple of years so using a hand held that works exactly the same ......

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"I can't think of a single thing the netbook does well."

In addition to the above points, mine can rest on a flat surface or my lap with the screen pointing at me. Trivial I know, but people claim the iPad is for casual users sitting on the sofa and watching video.

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Coat

Good Point

The review on Giz a few weeks ago had the fellow complaining about how he had to sit just so to make it balance on his knees. It looks very akward to use to me. Too big to just casually hold in your hand like a phone. How do you type on it when you are holding it in one hand? Do you have to put it down on something flat? or hope it doesn't slide off your lap if you are in the couch pose?

Mines the one with the eeePC in the pocket.

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Silver badge

Cut price marketing

Utter utter nonsense - "we think we can sell loads of the iPad, so we're selling it for less than it's worth" is a useful way of paraphrasing it.

Or: "We've realised that it's overblown hardware with a proprietary CPU that we haven't hit the pricing sweet spot on yet, so we're selling it cheap. On the plus-side, we'll make money when people buy software for it"

Ring any bells, PS or Xbox?

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Terminator

The age of steel dawns

"We have several more extraordinary products in the pipeline for this year," Mr Jobs added, who also owns Cybus Industries.

EarPods, used extensively in the place of MP3 players and mobile phones, allowing information to be directly downloaded into people's heads.

An upgrade to humanity and the ultimate move into cyberspace, allowing the brain to survive in an ageless steel body? Delete all those deemed incompatible with the upgrade.

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Jobs Halo

Now look

Come on, all netbooks are dog shit, I've never used one I didn't want to throw out the window after ten minutes. Now, I'm not here to judge, but lets just be honest with each other, netbooks are basically bought by people who are too poor to buy a real notebook.

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Boffin

Netbooks are not laptop replacements

I don't think you get it. Netbooks are no more a replacement for a PC laptop than an iPad is a replacement for a Mac laptop, though they come closer in that they have much more of the functionality of their big brothers.

Netbooks do not have the power to replace a full laptop, but they have much better battery life and are lighter and even more portable. They are great for people who travel or just want to have one handy. While they lack the "cool" factor of the iPad they can do more than the iPad and have more flexibility.

Both products are needed because not all people use a computer the same way. I think it is important that both markets exist and people being critical of the one they don't use is wrong. Just because it is not your thing doesn't make it wrong. A family with a van may be critical of a little 2-door coupe saying that it's too small to be useful....can't work with it and no room for kids and luggage. The driver of the coupe may think the van is a gas-hog and no fun to drive, Who is right? THEY BOTH ARE!

Relax....enjoy your thing and let others enjoy theirs.

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I'll say it again

"I can't think of a single thing the netbook does well"

I can. Lots of other people obviously can too - that's why we bought one.

Off the top of my head, with a netbook I can

- Charge my phone via USB

- Charge lots of other things via USB

- Download GPS tracklogs from a Garmin, convert them to KMLs and view them on Google Earth. Is there an app for that?

- Type on a keyboard

- Throw it in a suitcase with my shoes and not worry about scratching it. Generally look after it like I'd look after a pair of shoes actually.

- Get online via my mobile phone without buying a second contract

iPads are fashion statements that no doubt are brilliant while you sip your latte in a Kensington Starbucks. Cheap, portable, travel workhorse though? Netbook please.

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"couldn't live without it"

So what happened prior to January? Machines that go "ping"?

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"iPad, netbook - it's sort of a hundred to zero."

That's harsh, the iPad deserves a couple of points for style at least

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Go

iPants

Apple needs lots of Muppets to buy the iPad so that they will all go on to buy the stupid, single function "Apps" in the App store, that's where they will make the money with this business model.

Also, what's he on about when referring to "the netbook", what? Is there only one Netbook available?

Saying "the iPad" works because it's a single product, saying "the netbook" just shows what level of idiot they are aiming at.

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You are saying it wrong

It's not The iPad. It's iPad. Read his coments again. It isn't a thing, its a person. Or at least thats what they would have you believe....

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Jobs Horns

re: You are saying it wrong

Haha yeah, so it is!

My bullshit deflector sheilds must have filtered it out the first time I read it.

Or did it? Maybe now on a subliminal level I see iPad as a persona....

DAMN YOUR WITCHERY TIM COOK!

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FAIL

Hmm..

"I wonder how I could, say, work on my Python (ipython with scipy and matplotlib) and Matlab (OK, Octave, but still) data analysis, while checking my mail, browsing the web and posting comments on El Reg."

If you're posting on El Reg you're not working on Python code. You're either doing one or the other. You may think you're doing both, but you're actually task switching, not multi-tasking.

And iPhones have been able to play 'DRM free music' in the background since day one.

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