Tim Cook Calls for New Privacy Laws, The Intrigue Found with Apple Watch Insurer Subsidies, Thursday Q&A

Today's Above Avalon daily update includes the following topics: 

  • Tim Cook Calls for New Privacy Laws

  • The Intrigue Found with Apple Watch Insurer Subsidies 

  • Thursday Q&A

We begin today’s update with my thoughts on Tim Cook’s column in Time magazine calling for new privacy laws. The discussion includes a look at some of the criticism Cook is facing on the issue from tech journalists and pundits. The email then turns to Apple reportedly talking with private Medicare plans to subsidize Apple Watch. We go over the subtle point found in the news regarding the wrist’s importance to Apple’s health initiatives. We conclude with the latest installment of Thursday Q&A. I answer the following questions from Above Avalon members:

  • Does Apple’s 1Q19 guidance revision warrant a leadership change? 

  • Do you think the recent financial news and drop in stock price will have a major negative impact with respect to employee retention?

  • Do we have any clues about how changes in channel inventory might be exacerbating the iPhone revenue decline? 

  • Do you think Apple would ever more to a 24-month iPhone release cycle?

  • How do you plan on estimating unit sales in your reporting now that Apple has changed its disclosures?

  • Can you comment on your thought process on the effects of the Chinese economy to Apple and how you might factor that into your estimates?

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Netflix Increases Subscription Pricing, Apple’s Game Plan for Video, Wall Street’s Ongoing Fascination with Apple M&A

Today's Above Avalon daily update includes the following topics: 

  • Netflix Increases Subscription Pricing

  • Apple’s Game Plan for Video

  • Wall Street’s Ongoing Fascination with Apple M&A

We begin today’s email with my thoughts on Netflix raising subscription pricing. The discussion then turns to whether or not Netflix’s pricing move opens the door for Apple and Disney with lower-priced video streaming offerings. We also revisit Apple’s long-term game plan for video. The email concludes with why Wall Street is so fascinated with Apple M&A, especially when Apple revenue growth slows. We also go over why so much of the Apple M&A chatter on Wall Street is off the mark.

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iPhone Battery Replacement Data Leaks, NBCUniversal to Enter Streaming Wars, United Airlines Discloses Apple Travel Patterns

Today's Above Avalon daily update includes the following topics: 

  • iPhone Battery Replacement Data Leaks

  • NBCUniversal to Enter Streaming Wars

  • United Airlines Discloses Apple Travel Patterns

We begin today’s email with a closer examination of how Apple’s iPhone battery replacement program may have impacted iPhone sales in 2018. The discussion then turns to video streaming and NBCUniversal’s announcement of a new direct-to-consumer video service. The email concludes with one of the weirder Apple leaks in recent memory. Information regarding Apple employee travel patterns on United Airlines was disclosed. We look at the leak to arrive at a few takeaways regarding Apple’s global operations.

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Four Takeaways from the WSJ’s Report on New iPhones, Thoughts on CES 2019, Using Design to Think Differently and Marginalize Industries

Today's Above Avalon daily update includes the following topics: 

  • Four Takeaways from the WSJ’s Report on New iPhones

  • Thoughts on CES 2019

  • Using Design to Think Differently and Marginalize Industries

We begin today’s email with four takeaways from the recent WSJ report about Apple’s new iPhones to be unveiled later this year. The discussion then turns to CES, the largest tech trade show in the world. After briefly discussing Steven Sinofsky’s CES 2019 recap, we go over my main conclusion about this year’s CES. This brings us to a broader discussion involving wearables, smart homes, design, and how Apple uses design to marginalize industries.

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Netflix Moves Away from iTunes Billing for New Subscribers, Apple Releases Reclassified Sales Data, Thoughts on Decelerating Apple Services Growth

Today's Above Avalon daily update includes the following topics: 

  • Netflix Moves Away from iTunes Billing for New Subscribers

  • Apple Releases Reclassified Sales Data

  • Thoughts on Decelerating Apple Services Growth

We begin today’s email with my thoughts on Netflix no longer allowing new subscribers to sign up using iTunes billing. The discussion then turns to Apple’s reclassified sales data, including revised quarterly totals for Services revenue. The new numbers shine a different light on the $10.8B 1Q19 Services revenue figure that Tim Cook disclosed last week. We conclude with a look at how Apple Services revenue growth is decelerating and the two likely factors behind the slowdown.

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Deep Dive into Tim Cook’s Interview with CNBC’s Jim Cramer, Estimating Apple Watch Sales, Estimating AirPods Sales 

Today's Above Avalon daily update includes the following topics: 

  • Deep Dive into Tim Cook’s Interview with CNBC’s Jim Cramer

  • Estimating Apple Watch Sales 

  • Estimating AirPods Sales 

We begin today’s email with my thoughts on Tim Cook’s interview with CNBC’s Jim Cramer. The discussion includes my full notes from the interview. We then turn to Apple Watch and AirPods sales. Based on new comments from Cook, we have the clearest evidence yet as to how Watch and AirPods are selling. We go over my unit sales and revenue estimates for each product. In addition, we compare Apple’s wearables segment (unit sales, revenue, and ASP) to the iPad business.

This daily update is available for Above Avalon members. To continue reading, click here.


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Apple Brings iTunes to Samsung Smart TVs, Revisiting Apple’s Hardware Emphasis, Apple Expands AirPlay 2 Support to Smart TVs

Today's Above Avalon daily update includes the following topics: 

  • Apple Brings iTunes to Samsung Smart TVs

  • Revisiting Apple’s Hardware Emphasis

  • Apple Expands AirPlay 2 Support to Smart TVs

We begin today’s email with my thoughts on Apple bringing iTunes to Samsung Smart TVs. The discussion then shifts to answering a few questions including what the news means for Apple TV’s future and the prospects of an Apple television set. We then take a deep dive into why I disagree with the consensus view that this Samsung partnership signals that Apple is emphasizing services over hardware. The email concludes with a number of observations about Apple expanding AirPlay 2 support to a long list of smart TVs and what Apple is trying to accomplish with Apple TV and HomePod.

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Additional Thoughts on Apple Cutting 1Q19 Guidance

Today's Above Avalon daily update includes additional thoughts on Apple’s negative revision to 1Q19 revenue guidance. The following sections are covered in today’s 3,000-word update:

  • Revisiting Apple’s Growth Narrative 

  • Putting iPhone Sales Decline in Context 

  • Playing Devil’s Advocate

  • Other Notes

  • iPhone Sales Downside Risk 

  • Conclusion

This daily update is available for Above Avalon members. To continue reading, click here.


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Thoughts on Apple Cutting 1Q19 Guidance

Today's Above Avalon daily update is dedicated to discussing Apple’s negative revision to 1Q19 revenue guidance. The following sections are covered in today’s 3,000-word update:

  • Guidance Background

  • Tim Cook's Letter 

  • It's China 

  • Outside of China

  • Share Buyback 

  • Big Picture

  • Closing Thoughts

This daily update is available for Above Avalon members. To continue reading, click here.


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WSJ’s Apple Buyback Hit Job, Judging Apple Buyback Effectiveness, Netflix’s Bird Box Redefines Going Viral 

Today's Above Avalon daily update includes the following topics: 

  • WSJ’s Apple Buyback Hit Job

  • Judging Apple Buyback Effectiveness 

  • Netflix’s Bird Box Redefines Going Viral 

We begin today’s email with a closer look at the WSJ’s questionable article about Apple suffering massive losses from its share buyback program. Our discussion goes over some Apple share buyback mechanics and how best to grade the program’s effectiveness. The email concludes with my thoughts on how ‘Bird Box’ went viral over the holidays and what the Netflix movie’s success means for the overall video streaming space.

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iPhone Pessimism Has Hit an Inflection Point, Wall Street’s Problematic Stance on Apple Services, Thursday Q&A

Today's Above Avalon daily update includes the following topics: 

  • iPhone Pessimism Has Hit an Inflection Point

  • Wall Street’s Problematic Stance on Apple Services 

  • Thursday Q&A

We jump into today’s update with additional comments on the latest Above Avalon article, “iPhone Hysteria.” In particular, we take a closer look at the state of the iPhone business heading into 2019. The discussion then turns to two articles that jumped out at me regarding Apple Services. There are issues found with Wall Street becoming increasingly aggressive in pushing the Apple Services narrative. We also go over why I don’t think an “Apple Prime” monthly subscription that includes access to Apple services and hardware makes sense. We conclude with the latest installment of Thursday Q&A. I answer the following questions from Above Avalon members:

  • Is it possible that Apple’s iPhone battery replacement program is having a tangible, negative impact on the iPhone upgrade rate? 

  • Is Apple GiveBack a holiday promotion or a permanent fixture?

  • Will Apple’s GiveBack lead to an influx of people buying iPhones directly from Apple? Is it possible that iPhone ASP can be negatively impacted as a result? 

  • Given Apple's inability to gain traction in India over the last few years, what are your thoughts on Apple leaving the India market entirely. Should Apple implement a strategy along the lines of updating the iPhone 8 series phones with the A12 SoC / improved camera (similar to iPhone XR) and offering it at a starting price of $499 for iPhone 8 and $599 for iPhone 8 Plus?

This daily update is available for Above Avalon members. To continue reading, click here.


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iPhone Trouble in India, The NYT’s Facebook Bombshell, Apple Pushing Apple Music on Echo

Today's Above Avalon daily update includes the following topics: 

  • iPhone Trouble in India 

  • The NYT’s Facebook Bombshell

  • Apple Pushing Apple Music on Echo

We begin today’s email with a closer look at the WSJ’s article about Apple’s troubles in India. In particular, we go over the straight-forward problem facing Apple in India. The discussion then turns to news that Facebook has been giving away user data for free in order to advance its own interests. We go over my thoughts on ad-based business models built on data collection. The email concludes with Apple pushing its new Apple Music integration with Amazon Echo and Alexa. We discuss the logic behind Apple sending Apple Music notifications about Echo and rolling out the red carpet for Alexa in the App Store.

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Apple Pushes Back Against Qualcomm in China, Apple Hires Industrial Designer from Tesla, Update to App Store Trends 

Today's Above Avalon daily update includes the following topics: 

  • Apple Pushes Back Against Qualcomm in China

  • Apple Hires Industrial Designer from Tesla

  • Update to App Store Trends 

We kick off today’s email with an update on the Apple vs. Qualcomm battle in China. The discussion then turns to Apple hiring Andrew Kim from Tesla. Kim was a senior designer at Tesla focused most recently on the Model 3 interior. There’s an interesting story here, including some discoveries I came across regarding Apple’s industrial design group looking for new talent. The email concludes with a look at App Store trends on Black Friday and the top iOS apps according to revenue. We go over the numbers and then discuss a main takeaway from the data.

This daily update is available for Above Avalon members. To continue reading, click here.


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Apple’s U.S. Manufacturing Mess, Thoughts on Apple Bringing Manufacturing Back to the U.S., Apple Signs Peanuts 

Today's Above Avalon daily update includes the following topics: 

  • Apple’s U.S. Manufacturing Mess

  • Thoughts on Apple Bringing Manufacturing Back to the U.S. 

  • Apple Signs Peanuts 

We kick off today’s email with Apple and manufacturing. The NYT recently published an article about Apple’s problematic past with building Macs in the U.S. We use the article as an opportunity to have a broader discussion about Apple’s current outsourcing strategy, which includes relying on contract manufacturers to assemble its products. We go over the three primary items Apple would need to address in order to have any chance of bringing manufacturing back to the U.S. The email concludes with my thoughts on Apple signing a deal to produce new Peanuts video content.

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Apple Unveils U.S. Expansion Plans, Apple Expands Medical Staff, Thursday Q&A

Today's Above Avalon daily update includes the following topics: 

  • Apple Unveils U.S. Expansion Plans 

  • Apple Expands Medical Staff 

  • Thursday Q&A

We kick off today’s email with my thoughts on Apple’s U.S. expansion plans. We go over the differences between Apple’s and Amazon’s approach to finding and securing a new campus. The discussion also includes how Apple’s new campus and larger offices around the U.S. fit in with Apple Park and the broader Apple apparatus. The email then turns to news of Apple having dozens of medical professionals on staff. We go over why health intrigues Apple. We conclude with the latest installment of Thursday Q&A. I answer the following questions from Above Avalon members:

  • Is Apple promoting trade-ins for iPhone XR, XS, and XS Max as a tactical move to get customers off Qualcomm chips as fast as possible?

  • Is there a connection between Apple deciding not to disclose iPhone unit sales and announcements regarding reduced orders for iPhone components? Did Apple make the disclosure change knowing AAPL shares would decline, making the stock buyback cheaper? Does this open Apple up for potential legal issues?

  • Why does each individual supplier cut result in additional pressure on Apple shares? Aren’t all the reported cuts part of the same decline in sales/orders?

This daily update is available for Above Avalon members. To continue reading, click here.


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