AirPods as a financial rocket

And also a new MacBook / Apple Card drama

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 trying a new format this week.


Apple Card 

🙍‍♀️ Last week, Steve Wozniak along with entrepreneur David Heinemeir Hannson and his wife, complained about a supposed Apple Card discrimination of women and minorities in credit checks.

🗽 New York State Department of Financial Services started an investigation about it, but Ian Kar explained what was going on: "credit card approvals and credit limits are really effing complex".

💳 In a heavily regulated industry, and as much as I hate Goldman Sachs (which would be the one at fault in this case, although the one to take the hit in the court of public opinion will surely be Apple), probably both cases are nothing much more than mere coincidences. Again, read Ian's explanation, it's great.


AirPods are on a iPhone trajectory

🚀 Neil Cybart, who is as smart in his analyses as he's grumpy on Twitter, says that Apple has already sold over 61 million pairs of AirPods in its first three years. That's one million more than the iPhone did back in 2007-2010.

💰 Cybart estimates an ASP of $162, and that the majority of those sales, about 35 million (57%) have been sold this fiscal year, 10 million of which were in the last quarter. Great numbers. 

💸 Counterpoint also says 35 million for the year, but ups the figure to 15 million in Q3 counting Beats devices, with an ASP of around 150$.

🇨🇳 AirPods suppliers are doing great this year in the Chinese stock markets. Wireless audio devices or "hearables" if they're smart enough, have a "consumer demand worth billions of dollars barely tapped yet".


The new MacBook Pro 

💻 It's finally here and it's 99.99% great. The reviews are fantastic and the price is compelling. Apple hosted a small event in NYC for reporters, in which it showed the new Mac Pro too. 

⌨️ The keyboard has been fixed, and our long worldwide nightmare is over. CNET interviewed Phil Schiller and asked him why it took Apple so long to go back and honestly, it's quite interesting (tldr: keyboards are hard) but I feel like Apple fell trap of some kind of a sunk cost fallacy with the bad butterfly mechanism.

🎧 Casey Johnston, the journalist that first deeply reported the butterfly keyboard issues in the MacBooks, did a podcast with John Gruber. You should listen to it.

📅 The new Mac Pro is slated for "Fall" in the MBP 16 Press Release and "December" in the website, so it'll be here before December 22 if Apple respects the laws of the Sun.


Chart of the week

$AAPL had a major streak this week.


Trump

(Yes, he has a section in here too!)

🤒 Apple recently hired one of President Donald Trump’s "closest allies in Washington, D.C." as a lobbyist to avoid getting hit with another round of tariffs.

🤠 Trump will visit Apple's manufacturing plant in Texas on Wednesday, so get ready for some nice pictures of him and Cook pointing at stuff. — I feel for Tim Cook, because as diplomatic as he is, he must hate every minute of being with Trump.


Services

🇩🇪 Germany wants Apple to open direct access the NFC chip in the iPhones, so 3rd party developers could better integrate their payment systems. The company then warned legislators of privacy and security issues of doing so. 

📰 Over 200,000 people subscribed to Apple News+ in the first week, but then it got "stuck in neutral since that time, according to people familiar with the matter". — The company has been mute for almost six months with subscription figures.

🧠 The company is looking to push its services in Windows again, as it hires software engineers to build "the next generation of media apps for Windows". Most probably Apple TV+ and Music related, nothing about Books, Podcasts or.

🎹 Apple Music now offers business plans and a year-end review feature called Replay. It's mostly what you'd expect, but it's one of the many things that Spotify had over Apple Music.


Safari

🦁 The creators of Brave, a Chromium-based and privacy-focused browser that I really like, have published a table (PDF) comparing its security features to Safari, Chrome and Edge. Safari could do more, but not without basically going to war with the ad-industry.

🧭 Pwn2Own Tianfucup, the Chinese edition of the hacking competition, ended up with one Safari exploit being awarded


More from the Orchard

🚗 Foxconn won't build complete cars for now, it'll focus on component integration. This is interesting because Apple could need Hon Hai (or Magna! as it was previously reported) if it finally enters the car market.

👿 Another Apple Genius caught stealing intimate pictures of a customer that left her iPhone to fix. He was fired, but maybe the company should look to add a "guest mode" to iOS so this stops happening.

🔐 iOS 13.3. beta 2 brings Safari support for NFC, USB, and Lightning FIDO2 security keys. 

🏢 Interesting video of a visitor tour through the Apple Park campus, that shows zones usually not open to the public.

🔊 Huawei will launch its own HomePod-like speaker, with a very HomePod-like design.


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

The tough decisions of Chairman Cook

How do you say headache in Mandarin?

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 trying a new format this week.


Hardware

🎧 AirPods Pro are here. With active noise cancelation and they're sweat- and water-resistant. A long-desired feature. They've got wider charging box with wireless charging (no other option) and those silicone things. $249/€279 in October 30th.

👉 Now Apple has a dozen or so different headphones.

📱 The new iPhone SE looks like it's real this time. Supply analyst Kuo is certain of it, and claims the new model its entering mass production now for an early 2020 release. — It'd make sense if they call it “iPhone 9, right?

China

🇨🇳 Tim Cook met with Chinese regulators to talk, according to the govt., about "expanding investment in China, consumer rights protection and fulfilling corporate social responsibility". I'm sure other talks were had. 

🇺🇸 Apple got "bipartisanly" roasted at home by Congress members in a letter that surely was easy to write, but with no bite about Uyghur, Tibetan or Cantonese minorities. Nothing of substance, but show's Apple is a tough position.

🥺 Apple didn't want to anger China with its shows and it played the traditional Hollywood game of self censorship around Chinese matters.

🎓 After all the mess of the last two weeks, probably wasn't the best time (PR wise) to announce that Tim Cook will become "Chairman" of Tsinghua University. It's just bad optics.

Cook’s role will be to promote development of the college and make it a world-class economic management school. His mandate will last from 2019 to 2022.


Television

🤭 Apple's new shows got grilled by the critics. "For all Mankind" looks like the best of the company's four premium series. I won't pretend to understand the tv show business, so here's a recap's recap:

  • “The Morning Show”. THR says: "Broadcast Snooze' (but there's potential)". 

  • “See”. Variety claims: "a show whose elaborate look and grave tone aim for “Game of Thrones” but whose content is lower of brow and, sadly, of quality."

  • “For all Mankind”. Variety says it's "by far the strongest, especially because it makes the most of its budget and subsequent capacity to dream a bit bigger than most".

  • “Dickinson” is "'Euphoria' by way of 'Little Women' — but not in a good way" according to THR.

Pretty much a heterogeneous but imperfect start, there's something for everybody

🎞 Apple will create its own in-house movie studio with a Band of Brothers sequel as its first project. Probably a couple of years away at least.

More TV

💰 Apple TV+ could rack up over 100 million subscribers in its first year, according to Barclays.

🔥 Apple TV app now works on Amazon devices.

🌌 Foundation series has casted two main protagonists. Jared Harris will be Hard Sheldon, Lee Pace will be the Emperor. The show looks like it will be more of a lose adaptation of the original trilogy.

🤝 Apple has finalized a multi-year overall deal with Alfonso Cuarón for exclusive content.

💻 Netflix won't port the iPad app to Mac with Catalyst for some reason.

🔌 Apple hid a Lightning connector for debugging in the Apple TV 4K’s ethernet port


Music

🎶 Spotify keeps outperforming Apple Music after adding 5 million more subscribers in the last quarter: 113 million vs 60 million for Apple Music as last reported. Here's a bunch of charts.

🎧 Also worrying for Apple: Spotify is gaining share of the podcast market, hours streamed up 39% over last quarter.

💸 Apple gets more money per subscriber than Spotify according to Counterpoint Research, which puts Apple's share of the revenue at 25% with only 20% of worldwide subscribers, versus Spotify's 31% revenue with 35% subscribers.


Money

🇪🇺 European Union questions Apple Pay, asking "providers, banks and app businesses" about how its devices may favor Apple Pay over other payment solutions.

📈 Apple Pay overtook Starbucks as the most used mobile payment app in the U.S. According to eMarketer, Apple will have 30 million users, five million more that Starbucks' own app.

📉 Reminding people of subscriptions increases cancel rate.App Store new protections in iOS 13 remind customers to cancel active payments to apps when uninstalling, causing a 60% drop in some lower value subscriptions.


More from the orchard

🎮 Apple Arcade has an indie rival in the App Store: GameClub offers more than 50 games for 5$ a month.

📕 WSJ's Tripp Mickle is writing a book about Apple after Steve Jobs.

🇬🇧 Apple finds a new temporary home in the UK while it waits for the redevelopment of Battersea.

🎵 Shazam financials reveal it added 78m users last year and closed 2018 with 478 million active users.

🤩 Longtime Apple employee Ricky Mondello explained how AutoFill "magic" works and how it came to be.


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

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

Loading more posts…