It was a big hack alright

One year after The Big Hack story, and we still don't know the truth / Apple's investment in Didi / iPhone 11 sales are very strong / Apple TV+ facing new challenges

Greetings! Coming right up, the most interesting stuff about Apple in the past week. — Please forward this email to anyone you think might find it interesting.


It's been one year after the BusinessWeek expose on compromised servers and we don't know much about what really happened to those tens of thousands of affected machines. Apple and the other named customers of Supermicro denied everything, but the article hasn't been amended.

Surely, I don't know enough about journalism best practices regarding conflicting stories. But it's puzzling to see how much Apple's version differs from the quoted anonymous ex-Apple executives that serve as sources to the story. I get that there're plenty of interests behind a story like this, but given how big this "The Big Hack" story was last year, it's odd that we haven't got any more information from BusinessWeek or other outlets.

Apple-related bloggers, such as John Gruber, refuse to let the story fade out of memory, but fall short of calling it a conspiracy after the main author was promoted recently. I think only time will tell.


Talking about the past! It's been 1,234 days since Apple invested one billion dollars in Didi Chuxing, the Chinese Uber that's both larger and more successful than Uber (making Uber probably "the American Didi", but hey). A few points:

  • It probably was a money losing investment, given that Didi valuation has dropped in the private markets since. — Not that any Apple executive is losing any sleep about it.

  • Was the move politically motivated to keep Beijing happier and avoid the triggering of autocratic shenanigans? We don't know, but probably.

  • Was it more than that? A way to Apple to peek into the transportation business while working on "Titan"? Again, we don't know, but probably.


Tim Cook says iPhone 11 sales are "very strong", after meeting with several European suppliers and having a ceremonial beer in the Oktoberfest in Munich. We'll have an idea about initial sales figures in a few weeks.

My take: I think there’s a strong chance for Apple to exceed the iPhone XS/XR launch, both in units and in revenue:


Another hardware event for October? It still like the company could host another quick event for unreleased hardware such as the new Mac Pro, refreshed iPad Pro devices and the strongly rumored "Apple Tag" and new MacBook Pro. 


Apple TV+ could switch to cinemas and European productions. The company wants to premiere Apple TV+ films in movie theaters weeks ahead of their streaming release, and it's looking to work with European companies to fill their "30%" rate of local content by the end of 2020.

My take: 30% now surely feels like a lot now to Apple. Wink wink.


Apple will have to pay tariffs on several, minor Mac Pro components imported from China, such as the wheels, cementing the position of non-China and non-American companies as source of those components

I took a look at the total of Apple suppliers by country, nothing too surprising, except for Canada (0) and my own home country (0).


More from the orchard


Thank you for reading Apple Weekly. Please consider forwarding this email to your contacts or hitting the like button below. — Alex

I hadn't seen better reviews for any other iPhone ever

Apple Arcade looks like a hit / Apple Card as an accelerant / Change of the Guard

Greetings! Coming right up, the most interesting stuff about Apple in the past week. — Please forward this email to anyone you think might find it interesting.


The new iPhone is blowing expectations away. I hadn't seen better reviews for any other iPhone ever. The cameras aren't perfect, but are a tremendous jump in quality from the X and the XS. The battery life alone is being heralded as enough reason to upgrade.

My take: I think this is the iPhone we should have gotten last year: having that big of a battery inside was an internal decision, and the lack of night-mode in the cameras made some die-hard Apple to lust over other phones. 

Some details about the new phones:


About that battery life. There're two memes that refuse to die about the iPhone: (1) that the company plans for its devices to break after a certain amount of time, and (2) that Apple prefers thinner phones over battery life. 

  • (1) is so stupid I won't address it here.

  • (2) was true for plenty of years, but it all changed around 2016-2017, when the iPhone 8/X hit the stores we saw a new direction: thicker phones with longer lasting batteries. 


… and the Watch too. An ever so slight upgrade to a phone that ironically comes with one of the most awaited features of the device: always-on screen. Despite that, Apple says it has the same battery life, but that has been inconsistent for many users.

My take: I think the Series 5 will make most of the Series 0-Series 2 installed base get a new model, so we'll start seeing robust data into what's actually a "cycle" for the Apple Watch.

Few tidbits about the Series 5:

  • It has 32 GB of storage, great for music and podcasts, which is interesting because that's half of what Apple ships with the iPhone. 

  • What's left for next models: cameras, ultra-wide band chips, glucose sensors, integrated sleep tracking, solar charging or body heat charging

  • Things that i'm sure will never happen: Apple Watch support for Android, which I hope I jinx by writing, and round screens.


A transcription of every word said by Apple execs at the event let me dig some very interesting, even if probably not that relevant, metrics. Here's a list of words and how many times they were mentioned:

  • secure+security: 1

  • private+privacy: 1

  • siri: 1

  • ecosystem: 1

  • subscription: 4

  • battery: 10

  • innovation+innovative: 14

  • apple tv: 18

  • apple arcade: 20

  • ipad: 49

  • watch: 52

  • camera: 67

  • iphone: 98


Apple Arcade looks like a big hit too. The $5 a month games service has quickly earned a nice reputation amongst early adopters. Here's a great list of games and their specs. App Annie says it will cultivate "retention and engagement", but I have some questions:

  • What's the revenue share of the model? Apple surely takes 30% of that $5, but how's the company slicing the other $3.5?

  • Will Apple pay more to the creators that make the best rated games? The ones that drive the most minutes played per month? The most installed?

  • The answer of this question will shape how mobile games are created, as creators will try to optimize for what drives the key metric.

  • In short, Apple Arcade, even if only somewhat successful, will be (quite literally) a game changer.


Another life saved by the Apple Watch "SOS" feature, each of these news stories must sell quite a lot of devices. I wonder when the "snap" will happen and not having a smartwatch will be seen as the questioned stance. It took a decade for mobile phones to normalize, and we're on year five of this.


Apple Card could be a huge accelerant for Apple Pay in the U.S.Always interesting to read Turley Muller's points. Cash back percentages could become a nice tool to increase Apple Pay share of purchases, even if Apple is the one giving the rebates.


The Changing of the Guard at Cupertino keeps going. Steve Dowling, head of Apple's PR department is leaving after 16 years. He picked the top job after his boss Katie Cotton left. Dowling wasn't even a VP IIRC, but adds to the churn after Ive and Ahrendts.

👉 Check out this excellent article about how Apple's high rank organization chart looks like now. 


More from the orchard

  • Here's a list of hardware that Apple could yet announce before the end of the year.

  • "Find My" app is already paying off for some. Reddit user lost their iPad and it pinged its location when it contacted a close by unrelated iOS 13 device connected to the Internet.

  • Indian economy, pretty much like the rest of the world, is looking not-as-good as a couple of years ago. With unemployment "at a 45-year high", that could lessen Apple sales in the 2nd biggest smartphone market.

  • I'm guessing there must be some (even it at least weak) correlation between unemployment and iPhone sales. Anyone knows of any study? 

  • MediaRedef's Matthew Ball says Apple TV+ and Disney+ aren't actually competing with each other.

  • The YouTube livestream of the latest Apple event drew almost 2 million live viewers, increasing the company impact in social media.

  • Apple reportedly wanted a $500m exclusivity deal with J.J Abrams, and he turned it away.

  • Apple has been granted tariff exemptions on 10 Mac Pro parts, despite clear opposition by the U.S. President.


Thank you for reading Apple Weekly. Please consider forwarding this email to your contacts or hitting the like button below. — Alex

Questions before the first post-Jony event

Camera reviews, realigning names, pricing tactics and more

Greetings! Coming right up, the most interesting stuff about Apple in the past week. — Please forward this email to anyone you think might find it interesting.


We're two days away from the iPhone 11 event. And yes, it would be a surprise if '11' isn't the new monicker for the new devices. As is tradition, I won't be attending the presentation and I wouldn't want to bore you with rumors, so I'll stick with questions.


Will they have the best camera? The current line up cameras are great, but have been facing competition from the Pixels and Huaweis, dethroning the once unbeatable iPhone in many regards. 

The new iPhones will come here looking like electric hobs, but journalists and experts are going to evaluate their software processing the most, and the reviews will focus extensively in the camera.

Personal note: I like the new design and I don’t care about camera bumps.


Will realigning the iPhones' names work? Last year we got the XS, XS Max and the XR. The XS felt like the main choice because it was presented and marketed as such. Despite that, the customers flocked in masse to the equally powerful and cheaper iPhone XR. 

This time, Apple naming will be more conventional: iPhone 11 (XR successor), iPhone 11 Pro (XS's) and iPhone 11 Pro Max (a name a bit of a mouthful). So the previously main iPhones are now the Pros, and the "cheap" takes the lead.

This realignment will make more sense for the customers, and probably will keep the '11 Pro' as the least appetizing of the three, with customers opting for the super-big-and-best or the cheaper-but-newer options.


Another big question is: what will be the iPhone 11 price? iPhone sales fell sharply this year until Apple started discounting the XR price. There are two reasons for the not very good sales of the XS:

  • Longer lasting iPhones: traditional eager customers will opt for keeping their existing iPhone and instead spend their money in related-devices like AirPods and Apple Watches. 

  • Price: even the wallet-flexibility of Apple customers has its limits.

A $649 iPhone 11 would stave off the competition, which is strongest than ever. Despite that, I think Apple will still go for $749, $999 and $1,199 and call it a day. I've been burned too many times arguing for a cheaper starting iPhone. 


How many people will wait for the 2020 iPhone? If Apple focuses mainly in the camera and leaves most of the things most customers care about roughly the same (like battery life and price), it could create another flat-ish year in sales.

Like it or not, most customers care about design and appearances. Maybe the 'electric hob camera design' could convince some people, maybe not. 5G isn't coming yet to the iPhones and that could have a small effect short-term in sales, as many current customers that bought the 8, X or the XR wait it out.


Besides the new iPhones, anything is far from certain like any new Apple Watch, Apple TV, iPad or MacBook. Even iOS 13 and its weird 13.1 brother will have to wait for next week for me to talk about them. I'm not in the crystal ball biz.


What's going to happen with the home buttons? Will Apple still keep the iPhone 8 in line? The evergreen rumors of a new iPhone SE could see it coming back with a new name and new processor in the future. — Interestingly, the 'iPhone 9' name hasn't been used by the company, maybe being saved for later down the road.


It's the first 'post-Jony' event of the company. Obviously Ive and his team worked on these products, and those that will come in the next couple of years. Maybe he recorded one last 'white video from the Matrix', but I doubt we'll ever hear his voice again.


More from the orchard

  • Touch ID will come back, probably.Apple is working on their own in-screen fingerprint sensors for 2020 or later, that would work in a big part of the screen. It's mostly a supply-chain rumor, and we'll tackle it in due time.


Thank you for reading Apple Weekly. Please consider forwarding this email to your contacts. — Alex

A compelling argument

iPhone sales in the U.S grow / Railroad crossing info. / Hacker-friendlier Apple

Greetings! Coming right up, the most interesting stuff about Apple in the past week. — Please forward this email to anyone you think might find it interesting.


"I thought he made a compelling argument", said Trump about Tim Cook's chat over dinner, in which both leaders talked about trade. The U.S. side keeps flip flopping, but for now it looks like we're on the same stage as in late April:

  • Smartphones and computers will stay out of the 10% tariffs until December 15th.

  • U.S. companies will have a new 90-day extension to trade with vetoed companies such as Huawei. 

This is a huge relief for Apple, as the company can get all the products for the Holiday season. Tariffs will still affect some of Apple's products like the AirPods, HomePod and more importantly the Apple Watch, but that's peanuts. 

The second part is important because it will keep Huawei in the game for longer, pressuring the iPhone and hurting some sales. Were Huawei to be cut off from Google's (as well as Facebook's and Microsoft's) software and services, Apple could gain a bit, but not as much as Samsung or Xiaomi, which are the primary beneficiaries of the Huawei veto.

My take from all this mess:

  • I'm sure Tim Cook is tired of putting his diplomatic hat on and having to travel to DC to lobby, but it seems that his life is going to be like that at least until January 2021. 

  • Trade is a good tool of pressure, and I think we all can agree on the tough stance. The CCP must be held accountable and civil rights must be greatly expanded in China. If we need to pay higher laptop and smartphone prices, so be it.


iPhone sales in the U.S. are looking great. Contrary to the rest of the world, Apple smartphones sales increased by 14% in the country compared to last year.

  • Apple revenue only increased in “Americas” region by 2.1% last quarter. There are too many variables to this, but probably the iPhone at ASP in the U.S. fell bit then.

  • Interestingly: the iPhone 8 outsold the XS Max, XS and 8 Plus.

  • Yes: “iPhone 8 and iPhone 7 have also picked up sales this quarter”.


iPhone jailbreak is back. For some technical reasons I can't comprehend, all the iPhones with iOS 12.4 (except for the XS and XR) can be easily jailbroken again. — Which reminds me that last week I forgot to talk about an important decision by the company...


Apple will give a custom-made version of the iPhone to certain chosen hackers. Announced by Ivan Krstić, Apple's head of security engineering, the company does a 180 and will make some very good friends in the external research arena. 

It won't be the same special iPhone that Apple engineers use, but a somewhat more open and "hacker-friendly" device that you can get at the stores. Experts are really happy about this, and it seems like a smart move.


U.S. airline safety regulators bans some MacBook Pro laptops. Customers can't bring any MBP sold between mid-2015 to February-2017 in flights, as part of the regulation banning recalled batteries. — This is going to be a mess:


Apple's R&D budget just topped that of Spain. The company's growing R&D expenditure meets the country's lagging one. — I'm sure there's some inexactitudes to the comparison, but given it's my home country I can't avoid the topic. 


Map apps still don't show railroad crossings' information. A U.S. federal agency asked Apple, Google and Microsoft back in 2016 to add railroad crossings to their navigation apps, but they haven't.

  • It looks like an easy decision to add them —but i'm not sure they would avoid many accidents—, why it hasn't been the case? Probably there's not good data. 


The voice-first gold rush is not your usual gold rush. Alexa Skills keep underperforming if measured against Apple's App Store initial years. — As much as I use my smart speakers (and I have 5!), there isn't yet much of a killer app in any of them. 

Image

Apple Watch Series 6 will come in titanium and ceramic. Both new cases were revealed in some internal files of iOS 13 beta software. I'm sure aluminium and steel versions will stay, but both materials are pretty great for watches.


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Thank you for reading Apple Weekly. Please consider forwarding this email to your contacts. — Alex

That's a lot of estimates

33 or 38 million iPhones? Who knows. / Apple Watch sales hit 70 million / Siri grading paused / Apple Music growth slows

Greetings! Coming right up, the most interesting stuff about Apple in the past week. — Please forward this email to anyone you think might find it interesting.


How many iPhones then? After Apple stopped telling us how many iPhones it sold nine months ago, we only have external consultants to look for some guidance. I gathered their data:

  • IDC says 33.8 million.

  • Canalys assumes 36 million.

  • Counterpoint Research claims 36.4 million.

  • Strategy Analytics puts it at 38 million.

  • IHS says 35.3 million

That's an average of 35.9 million with a relatively high variance of 4.2 million, and it would represent a drop of 13% from a year before from the official figure of 41.3 million. iPhone revenue fell 12% so it checks out. I won't bore you anymore with words, here's in chart form:

Looking at the new line up, we know the XR leads in sales, overall the decline is clear and although things seem to be improving, as Tim Cook said and data shows, in the first half of 2018 Apple sold 93.5 million iPhones, while this year only 77 million.

Currently, iPhone sales for 2019 are on par with those in 2014 for units, and 2016 for revenue. The iPhone installed base is still growing, even if slower.

What will the iPhone 11 prices be? Lower entry price for the "R" variant? Even more expensive to increase revenue per customer? Who knows. The yuan and trade tariffs will have a say on this. More on that down below.


And the Apple Watch? We never knew how many watches the company is selling, but with a few hints from Apple and third party estimates, this is the best chart I can give you.

The last quarter data comes from a lonely report from Strategy Analytics. A total of 70 million Apple Watch units would've been sold if this data is accurate. Likely the company will hit the 100 million mark in 2021.


Apple rolls out Apple Card to a few selected users. The onboarding looks very well designed and, honestly, it could even be a good thing for the industry, at least in the U.S. where it will be exclusively launched this month. Here's a good round-up of its features.

  • My super deep take, you ask? I don't like or trust Goldman Sachs or anything that has to do with it, and anyone drooling over a "shiny card" is a fool. 


Apple paused the Siri 'grading' where humans listened to some of our conversations with Siri while the company conducts "a through review". Irish contractors were sent home for the time, I'm unsure about those in Spain.

A few points:

  • Listening to Siri conversations seems like the best way to improve the service.

  • Apple's privacy stand makes them more vulnerable to public opinion on this. Why not pay some customers then?

  • The company should also have detailed explicitly in their terms of service that actual, real humans listened to some of our conversations.


Why is Apple doing exclusive podcasts? Although the endeavor hasn't been corroborated by Apple yet, it's a good question. The key quote is "Someone that uses Apple Podcasts is more likely to use Apple Music, and so on". So, a hedge.

On this regard, one of the most interesting and misspent boosts to Apple Music is the Beats 1 radio station. I assumed they would be making a whole lot of them instead of just one focusing on the over-served "Top 40" for American and British audiences. Where are Beats Japan, Beats Latino, Beats Indie, Beats Rock, Beats China, Beats Classic, etc?

Anyway, Spotify announced new figures (108 million paid subscribers, up 31% from last year) and it keeps gaining share while Apple Music growth stalls a bit. It looks like there's room for several of these services and I could see Apple Music hitting 100 million subscribers in the very long term (that'd be a $5-6 billion business).


China is doing something with their currency. Or not. Experts disagree on how the Yuan price will affect the world economy, and what's more important, the iPhone price. Weaker yuan means Apple will pay Hon Hai fewer dollars to assemble each unit. So far it seems to be going in that direction, but it's a relatively minor change.

We also have to wait to see if the extended U.S. tariffs will affect the iPhone price come autumn. Bank of America says probably:

Apple might raise prices of iPhones by around 10%, reducing demand by 20% or around 10 million units.

While TFIS’ Kuo says Apple will take the hit:

we forecast that, in the mid-short term, Apple will absorb most of the additional costs due to tariffs.


HomePod stays the same in the U.S. according to recently released CIRP data that puts it around 5% of the total 76 million installed base for smart speakers in the country. Down a bit from 6% (of 66 million) in late 2018, and 6% (of 50 million) a year ago.

  • That translates to a total of about 3.8 million now down from 4 million six months ago. Taking error margins into account, it suggests few Americans bought a HomePod recently. Apple will probably never reveal HomePod sales or revenue figures anyway.

  • Context for those 4 million HomePods: there are over 190 million iPhones in use in the U.S. — So around 2% of American iPhone owners have a HomePod too. Probably less because I'm sure the average HomePods-per-Home is closer to 2 than to 1.


Apple locks iPhone batteries' software features if you change it yourself or with an unauthorized provider. Overall, this doesn't seem like a huge deal (the battery still works fine), but reminds me of the Error 53 blunder that Apple ended up fixing and apologizing for it.


More from the orchard


Thank you for reading Apple Weekly. Please consider forwarding this email to your contacts or hitting the like button below. — Alex

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