Company / division: Apple
Apple Hires Amazon’s Fire TV Head to Run Apple TV Business – Bloomberg (Feb 7, 2017)
Two things worth noting here: firstly, this is one of a relatively small number of senior hires at Apple in recent months amid what has seemed like a larger number of departures from the upper echelons there (including one earlier today). In and of itself, the numbers don’t mean much – Apple is a massive company and many of those poaching its employees are smaller (notably Tesla) such that the balance will always be lopsided in favor of the smaller companies, where promotion opportunities will also be greater. Secondly, and perhaps more importantly, this hire itself is into a hardware product role, but it frees up the guy who had been running the Apple TV product to focus on content negotiations, which is arguably where Apple really needs to be putting its investment right now. I continue to maintain that this is the year when Apple finally launches its own subscription video service – the pieces are in place with the Apple TV and the TV app it launched last fall, and the market is getting to a tipping point where an over-the-top pay TV alternative is both more feasible and more needed than ever. This move will hopefully help move Apple along in its pursuit of that goal.
via Bloomberg
Apple Said to Revive Efforts to Sell Used iPhones in India – Bloomberg (Feb 7, 2017)
The Indian government shot down Apple’s previous attempt to sell refurbished phones in India, but it sounds like it’s giving it another try. That’s good, because these refurb phones are about the only way Apple is going to dramatically reduce the price of iPhones in India and break out of the niche premium market there and into the lower tiers of the market, where far more phones are sold. Between taxes and import fees, iPhones are actually typically more expensive in India than elsewhere in the world, even though what Apple really needs there is to sell cheaper phones, so re-selling used phones is the way to go. There’s still been no official confirmation from Apple of its plans to build iPhones in India, but if that really is on the table, it’s possible that Apple is using that investment as a carrot to persuade the government to allow it to pursue its other goals in India, including selling refurbished phones and opening its own retail stores. It’ll be fascinating to see if it succeeds in getting what it wants – the original reason for rejecting Apple’s earlier request was somewhat ridiculous, but the reasoning doesn’t matter as long as the government says no.
via Bloomberg
Apple exec for business sales departs – Reuters (Feb 7, 2017)
John Solomon certainly isn’t a high profile figure outside of Apple, but he’s been managing an important aspect of Apple’s overall business: enterprise sales, which make up around 10% of total revenues. His appointment was met with some raised eyebrows among the Apple faithful – a printer salesman as Apple employee? – but the key here isn’t product expertise but knowing how to navigate the enterprise procurement world, which Solomon no doubt understood well. The point is, there are lots of people that understand that world, so he shouldn’t be too hard to replace, and Apple could probably use some fresh help here in supporting their recent partnerships with IBM, Cisco, Deloitte and others with a really solid sales approach.
via Reuters
Apple Pay most popular mobile payment service among US retailers, survey finds – NFC World (Feb 7, 2017)
This survey suggests that Apple Pay is the most popular mobile payment service among 500 top retailers surveyed by Boston Retail Partners (BRP). It beat out PayPal (which I’ve never seen at retail other than at Home Depot, but appears to be largely used by smaller entities rather than big chains), and a variety of other card network-, bank, or store-specific alternatives like Chase Pay, MasterCard PayPass, and Visa Checkout, as well as Android Pay, which was accepted by 24% versus Apple Pay’s 36%. That’s good progress for Apple Pay, but still makes it a minority option even among these larger retailers, which tallies with my own experience of trying to find places to use it – where I live, two of the nearby grocery stores take it, but our closest and default store doesn’t, Subway and one or two other fast food places take it, but most don’t, and several other places (including CVS) have NFC-enabled terminals but block Apple Pay. The progress is good, but until Apple Pay is available more often than not, I suspect many people will just never bother trying – there’s too much embarrassment around a failed payment for most people to endure the trial and error process it often entails.
via NFC World (original report in PDF here)
Apple’s “new” UAC port wasn’t made by Apple, and it isn’t new – Ars Technica (Feb 7, 2017)
An update on an item from a couple of days ago. The headline kind of says it all, but here’s just a little more detail: the “new” UAC connector Apple added to the MFi program isn’t actually new – it’s an existing connector (though Apple gave it a new name), and Apple added it to the program because licensees were asking for it. So we can all move along now.
via Ars Technica
Apple plans new smaller Ultra Accessory Connector (UAC) for Made-for-iPhone accessories – 9to5Mac (Feb 6, 2017)
This is one of those reports where we have the alleged what, but not the official why. The last big example of this was the pervasive rumors of the demise of the 3.5mm headphone jack before the iPhone 7 launched. The rumors turned out to be accurate, but none of them came with an explanation, which meant that for months we had screeds about Apple’s anti-consumer stance without any kind of input or defense from Apple, which hadn’t even announced a change yet. With that in mind, though it’s tempting to complain about yet another new connector technology from Apple (on top of USB-C in MacBooks and Lightning in almost everything else), we don’t know yet exactly what it will be used for. At some point this year, Apple will no doubt give us an explanation, and we’ll have to decide whether it’s a sign of courage, user-hostile, or something in-between. (For what it’s worth, I was pretty positive on Apple’s headphone jack transition.)
via 9to5Mac
NetEase Offers Google a Way Back to China — The Information (Feb 6, 2017)
Though the NetEase tie-up is the main “new news” here, the broader story is that there are still important barriers to Google getting back into China (just as there are for Facebook), the thorniest of which is whether Google sacrifices its stance on censorship in order to re-enter the market. That was the primary reason it left back in 2010, and yet the Chinese government’s approach hasn’t really changed in the interim. Unlike Facebook, which is prevented by the government from operating in China at all, Google chose to leave China of its own volition, and the main barrier to re-entry would be deciding to go back in despite the moral quandaries inherent in such a choice. This is where Apple’s history in China is interesting – as first and foremost a hardware company, it has been able to run the core part of its business just as it does elsewhere, with any censorship applying to narrow slices of its overall business, such as individual apps in the App Store or the iBooks store as a whole. For Google and Facebook, however, access to information is their central value proposition, and so sacrificing the completeness of that offering to censorship is a much bigger concession.
via The Information
97 companies file opposition to Trump’s immigration order – TechCrunch (Feb 6, 2017)
Last week, Recode reported that several big tech companies were drafting a letter to the Trump administration on immigration, though I still can’t find confirmation that this letter has actually been sent. However, those tech companies and many others have now filed an official friend of the court brief in the lawsuit being brought against the administration by the states of Minnesota and Washington. This steps things up a notch, formally putting the 97 companies behind the brief on the other side of a court case from the administration. As with the early condemnations of the executive orders just over a week ago, Amazon is notable by its absence, as is Tesla (whose CEO Elon Musk has continued to sit on the advisory council Uber CEO Travis Kalanick vacated last week). Tesla’s absence is consistent with Musk’s overall stated strategy of trying to bring change from within, but Amazon’s absence may simply be due to the fact that it weighed in on the case separately earlier in the process (though Microsoft has participated at both stages).
Update: this tweet explains that Amazon was asked not to sign the amicus brief because it was a witness in the original case.
via TechCrunch (more coverage on Techmeme)
Apple now offers Final Cut, Logic, and other pro apps for $199 through education bundle – 9to5Mac (Feb 4, 2017)
Apple has always been strong in the education market – a much higher percentage of schools than homes use Macs as their primary computers, and hardware discounts have been part of that strategy for a long time. But recently Google has made significant inroads in education with a combination of Google Apps and Chromebooks, and of course a big part of the appeal is that the software is free or very cheap. By contrast, both Apple’s hardware (whether iPads or Macs) is expensive, even with discounts, and its pro creative software runs to several hundred dollars each for the core apps. This new bundle addresses that by bringing the price down quite a bit (given that the bar a customer has to clear to qualify for the bundle is pretty low, it can’t be priced too aggressively or it’ll undercut sales much more broadly), making it more affordable for schools. Many schools, of course, won’t require anything beyond iMovie or GarageBand for movie and audio editing respectively, but for those teaching higher-order creative tasks, this will help bring down the costs of those programs.
via 9to5Mac
LG has redesigned its 5K Mac monitor so it can handle being placed near a router – Recode (Feb 3, 2017)
This has been a bizarre story – LG somehow produced a monitor for its partnership with Apple whose performance was seriously affected by close proximity to a router, something I’m guessing isn’t uncommon in home offices around the world. This is an unfortunate side effect of Apple’s decision to cede its first party monitor role to a partner – it no longer has control over quality and performance in quite the same way. Buyers and potential buyers had already been complaining that the monitor doesn’t look nearly as nice as Apple’s own, but that there should be serious performance issues too makes it worse, especially given the high prices (before discounts) of these monitors.
via Recode
Hacker Dumps iOS Cracking Tools Allegedly Stolen from Cellebrite – Motherboard (Feb 2, 2017)
Given that Apple argued precisely that security backdoors almost always make their way into the hands of evildoers, this news is great validation of Apple’s refusal to cooperate with the FBI early last year, even if it’s a private firm rather than the government that’s been hacked in this case. Indeed, that seems to have been the hacker’s motivation in this case. It’s also worrying from an Apple perspective that a provider like Cellebrite should have had such lax security that a hacker could breach its systems and access these tools, assuming the claims being made here are in fact legitimate.
via Motherboard
Apple is no longer the most valuable brand in the world as Google takes top spot – MarketWatch (Feb 2, 2017)
This is one of those exercises that seems almost entirely intended to garner interest for the company doing the evaluation, and indeed Brand Finance’s actual report starts by explaining how it does similar analyses for clients. As usual, the methodology is just opaque enough that we have no idea how the results are actually arrived at in detail, but it’s fairly clear that there is a financial component – in other words, it’s very likely that Apple’s drop in revenues in the past year had a big impact on its 27% “drop in brand value”. It’s ironic, then, that the report should arrive the same week as Apple announced its highest ever revenue and iPhone shipment quarter, not to mention highest Apple Watch shipments and revenue and highest Mac revenue. The short-term financial focus of the Brand Finance exercise is clearly something of a flaw in its methodology, but it’s generally worth discarding any such study entirely, unless it’s strongly rooted in customer perceptions of brands and the products they represent.
via MarketWatch
Apple To Make iPhones in Bengaluru, India – Hindustan Times (Feb 2, 2017)
I haven’t seen any big US news outlets report this yet, and there’s been no official word from Apple, but several Indian publications are reporting that Apple has told officials in Karnataka that it intends to begin manufacturing iPhones through its partner Wistron in Bengaluru (Bangalore), in the province. Local manufacturing would help overcome some of Apple’s challenges in India, though certainly not all. They would help reduce prices by avoiding the import tax, and would allow Apple to permanently overcome the government’s ban on local retail for companies whose products aren’t made largely in India. That still leaves low incomes, tendencies towards thriftiness and favoring local brands, and other challenges for Apple in India, but it would be meaningful progress.
via Hindustan Times
Apple Tops Samsung in the Fourth Quarter to Close Out a Roller Coaster Year for the Smartphone Market, According to IDC (Feb 2, 2017)
Pick your poison here – most of the big names have put out similar releases this week crowning Apple the victor in the December quarter for smartphone sales, narrowly pipping Samsung. This is an entirely symbolic victory, but it’s the kind of thing that often causes the more negatives around Apple to die down temporarily (which isn’t to say there haven’t still been various articles this week warning that Apple’s next phone had better be be a big deal or else). Two other things worth noting here: Apple only ever comes in at number 1 in the December quarter, when it sells massively more iPhones than in any other quarter, and so for the year as a whole Apple will always be behind Samsung. Secondly, the IDC figures and others I’ve seen seem to have used Apple’s official iPhone sell-in figure for its first fiscal quarter – there are issues with using sell-in as opposed to sell through in these contexts, but I see the logic in using an official figure rather than an estimated one. However, there’s a problem with this approach of taking Apple’s number this quarter, because Apple’s quarter actually started in the last week of September this year, giving an extra week of sales very early in the iPhone 7 cycle. Without that extra week of sales, it’s very likely Apple wouldn’t have been ahead of Samsung, but I’ve seen none of these market share numbers acknowledge that fact or adjust Apple’s number downward to account for it.
via IDC
iPhone 7, 7 Plus Grow US Installed Base – CIRP (Feb 2, 2017)
Consumer Intelligence Research Partners is often an interesting source of data, in particular on Amazon’s Prime base in the US, but also on other topics, in this case the US iPhone installed base. It suggests in this PDF press release that iPhone has a base of 132 million in the US, with the vast majority of devices in that base being models launched in the fall of 2014 or later, which puts the age of almost all of them at under 30 months. That’s striking at a time when upgrade cycles in the US have been lengthening, and Tim Cook was asked about that phenomenon on the Apple earnings call this week. The fact is that smartphone upgrade cycles have been lengthening, but the iPhone doesn’t seem to have been affected as much as other smartphones have. In part, that’s because iPhones have been the focus of both Apple’s own and carriers’ regular upgrade and leasing programs, and it’s partly the nature of the iPhone and those buying it. It’s also worth noting that the 132m figure is likely a tad high – it suggests a market share a little higher than most other sources I’ve seen. It also looks like the iPhone 7 sales cycle has kicked off faster than the 6S cycle, but more slowly than the 6 cycle, which is in line with evidence I’ve seen elsewhere.
via CIRP (PDF)
Google, Apple, Facebook, Uber plan to draft a joint letter opposing Trump’s travel ban – Recode (Feb 2, 2017)
It’s been interesting to watch the early separate responses of big tech companies to the immigration executive orders begin to coalesce into something more like a joined-up response, with both combined efforts on possible lawsuits in states like Washington, and now this letter from several companies. This letter could have focused merely on the practical aspects of the impact of the EOs on the companies and their employees, but goes further than that (at least in the the current draft) to address refugees and use words like compassion, going beyond mere self interest. The letter is measured and offers assistance in finding better ways to address the intended goals of the recent actions on immigration, which is at once less confrontational and also slightly condescending – I’m curious to see if the text evolves at all from this version. At any rate, it’s clear that we’re going to see ongoing engagement at various levels by the tech industry in this issue, including from a number of companies which participate in Trump’s tech councils.
via Recode
Apple shareholder proposal seeks more diversity at top – USA Today (Feb 1, 2017)
Apple, along with most of the rest of the tech industry, could be much more diverse than it is in its employee makeup. It’s made progress in some areas (and can argue it’s the only major tech company to be run by an openly gay individual), but women and people of color are still unrepresented at all levels, and especially on the board and among senior management. This shareholder proposal wants Apple to move more quickly to change that, while Apple argues that it’s already working on increasing diversity, and the accelerated changes are focused too narrowly to be broadly beneficial in changing Apple’s workforce as a whole. It’s a reality that changing the composition of a workforce that’s over 100,000 strong is much harder than, say, Twitter’s workforce of a few thousand, and will take considerable time. And swapping out senior executives with full-time jobs based on increasing diversity alone obviously wouldn’t wash either, especially in a company that has as little movement in the upper ranks as Apple does. But board seats are one area where Apple could potentially move more quickly, because there’s a plethora of qualified individuals available. I’m betting the proposal gets voted down, but that’s not to say there isn’t some merit in it.
via USA Today
Apple Developing New Mac Chip in Test of Intel Independence – Bloomberg (Feb 1, 2017)
The first ARM-based chip in a Mac arrived with the new MacBook Pro with Touch Bar late last year, but it handled a brand-new function. Bloomberg is reporting that another ARM-based chip could take over functionality currently performed by the main Intel chip, which would be something of a first. Specifically, it’s the Power Nap function in macOS which the ARM chip would handle, something particularly well suited to a low-power, energy efficient chip. Naturally, all of this also enables Apple to continue testing ARM-based chips in Macs as a way of seeing which functions they might take over from Intel over time, with a possible endgame of replacing Intel entirely. Apple has been somewhat frustrated in recent years by its dependence on Intel’s roadmaps and the way PC makers have benefited more from recent upgrades to its chips than Apple has. Reducing its dependence on Intel in its Mac lineup might give Apple more freedom to move faster and differentiate versus PCs, and would also put pressure on Intel to help Apple do the same with its own chips.
via Bloomberg
Cheaper Rivals Eat Away at Apple Sales in China – WSJ (Feb 1, 2017)
This is a story that’s been going for a while now – China’s sales in China have been down, but ironically the quarter just reported was the first in quite a while in which its revenues in China itself were actually flat, per Tim Cook’s remarks on the earnings call yesterday. In other words, in China (as opposed to the Greater China region) Apple grew in constant currency by 6% year on year, its best performance in a year. However, as with other smartphone markets around the world, as the Chinese market continues to grow, more new users will choose cheaper Android phones than iPhones as their first phones, and those who prioritize price will always choose something other than an iPhone. The reason Tim Cook always emphasizes switchers and new users is that this is where future growth will come from, even as Apple’s market share falls – new users become upgraders in the next cycle, and as the market saturates, Apple’s share tends to rise. It’s too early to know yet whether that will happen in China, but that’s what Cook is banking on, not steadily increasing market share in a market that’s far from maturity.
via WSJ
Apple Reports December 2016 Quarter Results – Apple (Jan 31, 2017)
This was an important quarter for Apple – it had predicted a return to growth, and it delivered on that promise, though the growth was helped by the extra week in the quarter due to Apple’s quirky reporting calendar. The highlights were iPhone, Mac, and Services growth, with the latter being by far Apple’s most consistent and fastest growing segment. The lowlights were the iPad, Other Products, and Greater China, all of which were down. Both total revenues and iPhone shipments (which are closely tied) have been within a remarkably narrow range the last three years in the December quarter, suggesting at least something about supply constraints and natural limits. The Mac had its best revenue quarter ever, helped hugely by the new MacBook Pros, which are more expensive than the average Mac Apple sells and boosted ASP a lot. Services was mostly driven by the App Store as usual, but music (Apple Music and iTunes combined) grew for the third straight quarter, and iCloud and AppleCare also helped. Apple Watch had a record unit and revenue quarter too, apparently, though we have to guess at the actual numbers. I’d guess it was marginal growth year on year, for around $2.1 billion in revenue and 6 million units. iPad dropped significantly both in unit shipments and revenue (and ASP), though some of that was down to channel depletion, and the large iPad Pro had launched a year ago, boosting that quarter. Overall, a pretty decent quarter for Apple, but no strong growth here yet (especially when you strip out the extra week). Foreign currency isn’t helping either unit sales or reported revenues or profits, and arguably roughly offset that extra week in several regions.
Lots of real-time tweets from me in this thread, and I’ll be updating the Jackdaw Research Quarterly Decks Service deck for Apple in the coming days once the 10-Q is out.
via Apple