A 10 year-long debate resurrects

Spotify vs Apple, a look at Apple's capex, more bad news from China

Salutations! Coming right up, the most interesting stuff about Apple in the past week. Only 8 days until the Apple News and TV event in Apple’s HQ. — Please forward this email to anyone you think might find it interesting.


Spotify vs Apple vs Reality

Spotify open letter is here, signed by Mr. Ek himself, while Apple's response twodays later can be found here. I'll be digesting what both companies claim, point by point, but be aware that both companies talk about very different issues:

(1) "Choice" vs "security"

  • Spotify: In recent years, Apple has introduced rules to the App Store that purposely limit choice and stifle innovation at the expense of the user experience (...) acting as both a player and referee to deliberately disadvantage other app developers.

  • Apple: At its core, the App Store is a safe, secure platform where users can have faith in the apps they discover and the transactions they make.

  • Reality: both companies aren't even talking about the same thing. Or at least focusing in the same thing. Spotify would like more openness, while Apple argues that would bring unsafer choices for their users. This is a decade long discussion that won't be solved here by not addressing each others' points.

(2) Operators

  • Spotify: (1) Apple operates a platform that, for over a billion people around the world, is the gateway to the internet. Apple is both the owner of the iOS platform and the App Store (2) they continue to give themselves an unfair advantage at every turn. (3) We should all be subject to the same fair set of rules and restrictions—including Apple Music

  • Apple: Spotify is free to build apps for — and compete on — our products and platforms, and we hope they do..

  • Reality: Spotify wants to have all the features of Apple's own music streaming service. Apple doesn't do that because their own apps doesn't go through the same vetting process. Apple apps can use custom APIs and obviously, don't pay the 30% cut to themselves.

(3) Physical vs digital

  • Spotify: We simply want the same treatment as numerous other apps on the App Store, like Uber or Deliveroo.

  • Apple: Apps that sell physical goods — including ride-hailing and food delivery services, to name a few — aren’t charged by Apple.

  • Reality: would be great if Apple extended this to a broader category of digital services, and not only physical goods. But this could be chaotic to distinguish what's what. 

This won't solve anything

Spotify, and many others', point that Apple can not fairly operate the App Store while also using it, has technical merit, but legally this is on murky grounds. After a decade, the U.S. Supreme Court is looking at it at the moment, and now, the EU Commission. 


Apple's declining capex

Neil Cybart is intrigued by the company's reasons behind the 13% drop in capital expenditures for 2019. For the first time in 16 years, Apple expects its capex to decline during the current fiscal year. He offered a follow-up in his paid articles.

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By the time 2019 closes the actual figure could be different, but Cybart offers the most probable four points if Apple ends up spending "only" $14 billion: (1) fewer new Apple Stores, (2) less tooling and machinery spending, (3) Apple overspent in the past, and (4) they're wrong.


More bad news from China

The number of searches for the iPhone on Chinese search engine Baidu cratered by 48% in February after dropping 50% in January, according to Longbow Research"searches also have an 82 percent correlation to iPhone shipments into China"


China's mobile phone market plunged nearly 20% year-on-year in February. Neil Shah from Counterpoint says "Apple and Xiaomi continue to be the biggest losers whereas Huawei, Vivo and OPPO continue to grab more share away".


According to IDC, iPad shipments in China still lead, but “were about 8.37 million units, down 6.4% year-on-year, accounting for 37.8% market share". underperforming a market that shrunk just by 0.8%.


Tim Cook to get a biography

Unauthorized, of course, but "The Genius Who Took Apple to the Next Level" will focus on Cook's time as the CEO of Apple, what makes him different from Steve Jobs and his stance on privacy. It comes out on April 16.

The author, Leander Kahney, has two more books, one about Jony Ive and another about Steve Jobs, which I haven't read. 


Apple bought Laserlike

A small startup founded by Google veteransLaserlike tech could improve Siri and add plenty of human talent John Giannandrea's staff in Apple.


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AirPods in perspective

Apple Music vs the rest, Qualcomm trials starts & Bob Iger's place in the board

Good morning. Coming right up, the most interesting stuff about Apple in the past week. Only 15 days until the Apple News and TV event in Apple’s HQ. — Please forward this email to anyone you think might find it interesting.


AirPods in perspective

Last week IDC published a new "wearable" panel which amalgamates Apple Watch with Apple's ear-worn devices such as the AirPods and the Beats headsets. Having IDC data for the Watch we can easily infer the AirPods figures:

It’s an estimate, but it does say a lot.


Apple Music vs the rest

U.S. Copyright Royalty Board ruled to increase payouts to songwriters to 44% for streaming services. Spotify, Pandora, YouTube and Amazon are protesting by appealing the decision, while Apple sits idly, accepting the outcome. This, in turn, reflects very well on how the industry is going.


U.S. Senator Elizabeth Warren wants to break-up Apple

And the other American big tech companies such as Google, Facebook and Amazon. For Apple, she says

it should not get to both run the App Store and distribute apps in it. “It’s got to be one or the other,” she said. “Either they run the platform or they play in the store. They don’t get to do both at the same time.”

More of a shake up than a break up for Apple. Her message got quite a good reception in SXSW.


Qualcomm dispute with Apple enters the "entertaining" stage

Qualcomm seeks $1.41 per infringing iPhone sold in the U.S. since mid 2017, when the lawsuit was filed. “We have a dispute,” Qualcomm attorney David Nelson told the jury in his opening statement. “We can’t resolve it.” 

Bonus: Apple is adding 1,200 employees in San Diego in the next three years, to lure employees from Qualcomm.


Apple execs meddling with their move producers

“Tim Cook is giving notes and getting involved,” said a producer who has worked with Apple. One of the CEO’s most repeated notes is “don’t be so mean!,” the source said. — This sounds like every TV or studio owner to me.


Should Disney's Bob Iger resign from Apple's Board?

Disney+ and Apple Video (or whatever it's going to be called) will make the two companies competitors, and Iger should step down. He was recently reelected.


Apple fixed the ‘Flexgate’ issue

With a silent MacBook Pro redesign that added 2 millimeters more to the flex cable that was wearing and tearing, giving the backlight cable more room to wrap around the board.


Siri Head of Explaining needed

Apple is looking for someone to gather public comments and present them to its leadership team, and what fixes should or could be done. The new position is aptly called "Siri Social Media Analysis & Marketing Production".


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

Apple Watch sales records

Good news, bad news for the iPhone in the U.S

Apple Watch sales surged in 2018 to over 20 million units

According to Strategy Analytics' data it’s 22.5 million. Up from around 18 million the year before. — Apple still leads the overall smartwatch market with 50% share, which looks every year more similar to the tablet market.

I got some charts for you:


Good news, bad news for the iPhone in the U.S. 

A survey reveals that 67% of people who plan to purchase a smartphone in the next 2 years say they'll get an iPhone. — Up from 60% last year. Actual sales quota isn't near any of those figures anyway, it’s closer to 45%.

The bad news is only 15% of those asked say they're planning to get a new phone at all.


Apple is hiring more software people than hardware people

For the first time in years. Apple push into services warrants more people for software.


Wall Street thinks Apple will sell more mid-range iPhones 

It looks like the XR and iPhone 8 models are outperforming, according to their supply chain estimates, lowering overall ASP to sub $700 figures in the ongoing quarter.


Foxconn slashes employees salaries and benefits as iPhone orders dry up

In depth article reports many troubling signs for Apple production figures from one of Foxconn's biggest factories.

From the article:

  • August is usually the start of the peak season, one month before Apple launches its newest generation of iPhones, and the increase in production usually lasts for four to five months.

  • "A Foxconn worker told the Post that the peak production season last year lasted only about 20 days.

  • Foxconn plans to slash production costs by 20 billion yuan (US$3 billion) in 2019 with a “very difficult and competitive” year expected.


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How would a foldable iPhone look like?

A case about ratios and screen sizes

Foldable screens are a thing now. And many people, fans of Apple or not, wonder if the company that makes the iPhone would dare to go this route. If they do, it’ll probably take Apple a few years. While we wait, let’s have some fun wondering about such an hypothetical device.

There are many benefits to a foldable phone (and lots of drawbacks). The main advantage is that you could get a small phone that unfolds into a big phone, or a big phone that transforms into a tablet-like device. Both ideas are worth entertaining.

Case #1: small to big phone

A device with an iPhone 8-like screen (4.7”, 16:9) could unfold to make for a a bigger 6.8” screen and a 4:3 ratio, with a total area 2.3 times bigger. It would have a screen that’s almost 75% as big as an iPad Mini (with smaller bezels), that could fold back into a “iPhone 8” size. That’s enticing.


Case #2: big phone to tablet

For people that doesn’t mind having a big phone, they could convert it into a full blown tablet. A phone with a screen similar to the iPhone XS (5.8”, 19.5:9) could hide a 7.9” screen with an unusual ratio of 10:9 of 200 sqcm. A bigger screen, like the one in the iPhone XS Max (6.5”) could become a 8.8” after unfolding.


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To fold or not to fold

That is the new question

Foldable and 5G phones were all the rage this week after Huawei and Samsung showed theirs. The devices themselves look more like a prototype with several compromises, and reception is mixed. 

Apple looks like it's been working on their own foldable tech, and has been doing so for a few years. They have patents going back to 2014, and not a year ago Bank of America told investors "Apple is working with suppliers on a foldable phone (that potentially could double up as a tablet) for launch in 2020" after meeting several Apple suppliers in Asia.

Goldman Sachs, on the other hand, doesn't see Apple going for the foldable market soon, and sees in those phones a "challenge" to Apple for the premium high end market.


Apple won't have a 5G iPhone this year at least until 2020, but you can bet there's plenty of Apple engineers in Barcelona right now roaming through the Fira's floors, and execs meeting with partners.


Apple wants to save car project with electric minibusaccording to german media. Apple is making a new attempt to design its own electric vehicle "in the form of an electric van", which should also be able to drive autonomously, but it is unlikely that it could be launched before 2023.


Jeff Williams is "very aware of" consumers' concerns about Apple prices. Apple's COO took questions from Elon University students“The stories that come out about the cost of our products [have been] the bane of my existence from the beginning of time, including our early days." (...) "We do not want to be an elitist company. That’s not — we want to be an egalitarian company, and we’ve got a lot of work going on in developing markets"


Apple will offer interest free deals to Chinese buyers through Alipay. The deal could —hopefully for the company— boost sales in the country, which is their 2nd biggest single market.


Apple has sold around 4 million HomePod devices to date (or around $1.4 billion), still lagging behind Alexa and Google offerings, and even Sonos by units. The data is compiled from Canalys and Strategy Analytics, and doesn't display Chinese manufacturers, which are selling more than the HomePod as well.


Even more Q4 sales data reveal a wider downturn besides China, which was obviously the bigger by sheer size. Added Japan, Spain and Thailand, three countries where Apple sells around 20-23 million iPhones every year.


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