Thoughts on Apple's Upcoming Keynote, Apple vs. Facebook Competition, Thursday Q&A
Today's Above Avalon stories:
- Thoughts on Apple's Upcoming Keynote
- Apple vs. Facebook Competition
- Thursday Q&A
We begin today's email by going over my thoughts headed into Apple's product keynote this coming Monday. We then shift over to yesterday's "A Facebook Experiment" post and go into more detail on the topic of Apple and Facebook competing with each other. The email concludes with this week's Thursday Q&A (questions from members). This week's Q&A include the following questions/answers:
- Why is Apple using Google Cloud Platform?
- Does Apple have any reason to be concerned about the Samsung S7 in the U.S.?
- What app can you not live without? Am I going to reinstall the Facebook app?
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Apple Music Partners with Dubset Media, Monetizing EDM (Electronic Dance Music) Remixes/Mixes, SoundCloud Suffers Big Blow
Today's Above Avalon stories:
- Apple Music Partners with Dubset Media
- Monetizing EDM (Electronic Dance Music) Remixes/Mixes
- SoundCloud Suffers Big Blow
Today's email has a music theme. We begin by going over the Apple Music/Dubset Media partnership announced yesterday. This is one of the bigger developments related to Apple Music since the service was launched last year. The key to this deal is understanding EDM (electronic dance music). We go over both EDM and implications from the partnership. We then discuss how Dubset Media plans to monetize DJ remixes/mixes on Apple Music and why that matters to music streaming. The email concludes with a closer look at SoundCloud, including my views on the company, thoughts on Apple & SoundCloud M&A suggestions, and why the Apple/Dubset Media partnership is a negative development for SoundCloud.
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Apple's Quest for Perfection, HBO Now Is Succeeding
Today's Above Avalon stories:
- Apple's Quest for Perfection
- HBO Now Is Succeeding
We begin today's email by taking a closer look at how Apple thinks about success. By placing perfection as an end goal, Apple is able to shake off any negative attributes associated with strong sales, such as satisfaction and contentment. We look at the iPhone and Apple Watch and discuss key aspects where this practice of striving for perfection provides clues as to where Jony and team will focus future development. We then look at new HBO Now subscriber numbers and reach several conclusions about what a successful HBO Now product means for the future of video content and Apple's presence in the space.
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Jony Ive Talks Money, Business, and Life After Apple, GM Acquires Cruise Automation
Today's Above Avalon stories:
- Jony Ive Talks Money, Business, and Life After Apple
- GM Acquires Cruise Automation
Today's email begins with a look at the incredibly interesting Charlie Rose interview with Jony Ive. While the interview took place this past September, Rose just published the full talk a few days ago. Jony discusses a range of topics from money and business to how he describes his role at Apple and what he would be doing if he wasn't working at Apple. We look at a few of his most important answers and then go a bit deeper in terms of interpretation and perspective. Next, we go over news that General Motors will acquire Cruise Automation. We look at why Cruise sold to GM and why GM bought Cruise. Welcome to the next era of the auto industry as legacy automakers prepare to battle the tech giants.
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iPhone Sales Trends in January, Setting the Stage for a New 4-Inch iPhone, Thursday Q&A
Today's Above Avalon stories:
- iPhone Sales Trends in January
- Setting the Stage for a New 4-Inch iPhone
- Thursday Q&A
We begin today's email by taking a look at the latest Kantar smartphone data for the month of January. We discuss three major themes found in the data including iPhone sales in China, older iPhone sales and Android switching rates. Next, we discuss the background to the "The Changing iPhone User Base" post that was published yesterday including why Apple has no other choice but to release a 4-inch iPhone. Today's email concludes with two questions from members for Thursday Q&A:
- How would an iPhone 7 that lacks many visible upgrades impact the Apple narrative?
- Should Apple pursue international soccer [football] streaming rights instead of the NFL?
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Fiat Chrysler CEO Marchionne on Apple's Auto Ambitions, Apple Passes on NFL Streaming Rights, $25 Apple Watches
Today's Above Avalon stories:
- Fiat Chrysler CEO Marchionne on Apple's Auto Ambitions
- Apple Passes on NFL Streaming Rights
- $25 Apple Watches
We kick off today's email by discussing Sergio Marchionne's latest comments on Apple's car ambitions. The debate taking place in the automobile industry centers on the role legacy auto manufacturers will play in an industry run by technology companies. We take a closer look at Marchionne's suggestions for Apple and why he is too optimistic in his claims. Next, we discuss Re/code's report that Apple has passed on the latest NFL streaming rights deal while Amazon is increasingly interested in live sports. We conclude with a closer look at a new deal by Vitality Group, a health-service firms, that offers $25 Apple Watches to employees as long as they meet their employer's monthly fitness/health goals. There is reason to be skeptical that this development is the start of something big.
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SuperPhone and Apple's Future Content Strategy, Best Buy Is Betting on iPhone 7
Today's Above Avalon stories:
- SuperPhone and Apple's Future Content Strategy
- Best Buy Is Betting on iPhone 7
We begin today's email by discussing Ryan Leslie's start-up, Disruptive Multimedia, and his SMS-based customer relationship management and direct sales tool called SuperPhone. Upon closer examination, the ideas underpinning SuperPhone match what I suspect is Apple's long-term content strategy for music, video, and even the App Store. Next, we look at Best Buy's most recent earnings conference call where smartphone growth in 2016 was a hot topic. Best Buy is a key retail partner for Apple and it would appear that Best Buy is betting that consumers (and smartphone growth) will return with the iPhone 7 launch. We also go over Best Buy CEO Hubert Joly's perspective on what drives smartphone upgrade cycles.
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Thoughts on a 9.7-Inch iPad Pro, Craig Federighi's Op-Ed in The Washington Post
Today's Above Avalon stories:
- Thoughts on a 9.7-Inch iPad Pro
- Craig Federighi's Op-Ed in The Washington Post
We kick off today's email by discussing the prospects of Apple releasing a 9.7-inch iPad Pro at its upcoming media event. Labeling a new 9.7-inch screen iPad as a "Pro" isn't just about marketing. After going over the drawbacks of the current iPad line, we discuss five long-term iPad implications from the introduction of a different-sized iPad Pro. Needless to say, we may be in store for an incredible amount of change to the iPad line. We then discuss Craig Federighi's big op-ed in The Washington Post concerning user security. There is no better way to analyze a company than to understand what motivates its executives.
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Calculating the iPhone Installed Base and User Base, The LG G5, Thursday Q&A
Today's Above Avalon stories:
- Calculating the iPhone Installed Base and User Base
- The LG G5
- Thursday Q&A
We begin today's email by going over my calculations and methodology for obtaining iPhone installed base and iPhone user base estimates. After discussing the difference between the two (one is used for iPhone upgrade rates, the other for service adoption rates), we go over the key variables that are required for this exercise. We conclude by going through the calculations step by step ending with my estimates. Next, we discuss the LG G5, which was the most interesting smartphone introduced at Mobile World Congress this week. We conclude with Thursday Q&A and the following two questions from Above Avalon members:
- When you started analyzing Apple, did you think it would lead to being an auto industry analyst?
- Are we in a fitness bubble thanks to Fitbit and other fitness wearables?
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Tim Cook's Legacy (continued), The Apple Pencil Uprising, Longer Smartphone Life Cycles
Today's Above Avalon stories:
- Tim Cook's Legacy (continued)
- The Apple Pencil Uprising
- Longer Smartphone Life Cycles
We kick off today's email by discussing a few additional points from my "The Tim Cook Legacy" post from yesterday. In particular, we address the criticism that Cook is focusing on data privacy and security for marketing purposes. Next, we shift over to news that Apple will restore Apple Pencil functionality in the next beta of iOS 9.3. We discuss the background to this issue and why I suspect Apple changed course. We conclude by looking at new Kantar data that points to longer smartphone life cycles due to users not upgrading their devices as frequently. We go over the data and discuss a few theories as to what may be occurring at a more granular level.
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Tim Cook Q&A, Fitbit Earnings
Today's Above Avalon stories:
- Tim Cook Q&A
- Fitbit Earnings
We begin today's email by going over Tim Cook's interview with Fortune's Adam Lashinsky. We focus on three primary themes found in the Q&A: Apple's sales downturn, R&D and automobile contract manufacturing. We then take a deep-dive into Fitbit's 4Q15 earnings. Fitbit has implications on the broader wearables category given its market-leading position in the fitness and health space. The report contained a number of worrying signs for both Fitbit and the broader dedicated wearables category.
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Samsung (and Facebook) at Mobile World Congress, Bloomberg Profiles Apple's Chief Chipmaker, Apple Retail Employee Rewards Program
Today's Above Avalon stories:
- Samsung (and Facebook) at Mobile World Congress
- Bloomberg Profiles Apple's Chief Chipmaker
- Apple Retail Employee Rewards Program
We kick off today's email by looking at Samsung's keynote at Mobile World Congress. After going over the Galaxy S7 and S7 Edge, looking at ways the phones may impact the smartphone market, we discuss Mark Zuckerberg's appearance to discuss Facebook's VR partnership with Samsung. A number of things made me raise a few eyebrows. Next, we look at Bloomberg's big profile of Johny Srouji, Apple SVP for hardware technologies. There were a few future product observations from reading in between the lines. We conclude by discussing Apple launching a new retail program that rewards Apple Store employees for strong iPhone sales. At initial glance, such a program sounds incredibly worrying for Apple. We go over the likely motivation for such a program and if that worry is warranted.
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Tim and Jony in Vogue, Decoding Apple's Interest in Cars, Thursday Q&A
Today's Above Avalon stories:
- Tim and Jony in Vogue
- Decoding Apple's Interest in Cars
- Thursday Q&A
We begin today's email by discussing the Tim Cook and Jony Ive interview in Vogue. We go over why design matters so much to Apple and Jony's latest comments about Apple Watch and wearables. Jony (and Marc Newson) continue to make strong public statements concerning wearables and personal technology. We then take a deep-dive into one specific part of my "Standing on Tesla's Shoulders" post concerning the fundamental reason Apple is interested in the automobile industry and the way Apple will look to add chaos to the industry. We conclude with Thursday Q&A. This week's question: What do I think of Quartz's new iPhone app?
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Tim Cook's Message to Customers, Apple's Large Debt Sale, New Spotify Subscriber Data
Today's Above Avalon stories:
- Tim Cook's Message to Customers
- Apple's Large Debt Sale
- New Spotify Subscriber Data
We kick off today's email by discussing Tim Cook's message to Apple customers regarding security. The FBI wants Apple to "build a backdoor to the iPhone." This is the start of a long discussion that will play out over months and years. It's important not to miss the obvious reasons behind Cook's message. We then shift over to Apple's $12 billion debt sale. In addition to going over the deal, we compare this raise to previous Apple debt issuances in terms of quantity and investor attractiveness. The email concludes with a look at new Spotify subscriber data and two observations from recent trends.
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Eddy Cue and Craig Federighi Speak, Calculating the Apple User Base, Apple Developing Scripted Video Series
Today's Above Avalon stories:
- Eddy Cue and Craig Federighi Speak
- Calculating the Apple User Base
- Apple Developing Scripted Video Series
We begin today's email by discussing the Eddy Cue and Craig Federighi interview with John Gruber on his 'The Talk Show' podcast. We go over three observations from the interview including the much bigger topic of Apple's changing public relations strategy, the goal behind such a interview, and the effectiveness of Cue's comments about Apple services. Next, we focus on two data points (active installed base and the number of iCloud users) to reach estimates for the Apple user base in terms of total users and product mix. Along with a few interesting observations, these estimates form the basis for measuring Apple success in new ways other than hardware sales growth. We conclude by taking a deep-dive into reports that Apple is getting into original programming with a scripted Dr. Dre series. Such a move isn't about TV.
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