iPhone Development 101, Thoughts on iPhone 7 Rumors
Today's Above Avalon stories:
- iPhone Development 101
- Thoughts on iPhone 7 Rumors
We kick off today's email by discussing iPhone development, namely the four primary drivers responsible for the vast majority of change seen year to year in the iPhone business. This "iPhone Development 101" course allows us to then look at the latest iPhone 7 rumors with a different perspective. With increased attention put on slower iPhone upgrade rates and longer iPhone life cycles, many are becoming nervous that the iPhone 7 may not lead to any significant improvement in demand trends. In an effort to address that concern, we look at Apple's likely motivation with the iPhone 7 and why we need to consider Apple's iPhone plans in 2017 and 2018 to completely understand the iPhone 7.
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Alphabet Partners with Fiat Chrysler for Self-Driving Cars, GoPro Is Up to Something
Today's Above Avalon stories:
- Alphabet Partners with Fiat Chrysler for Self-Driving Cars
- GoPro Is Up to Something
We begin today's email by taking a closer look at news of Alphabet partnering with Fiat Chrysler to make self-driving cars. We look at the motivation guiding each company in this partnership and why I remain skeptical. Next, we compare Alphabet's strategy for self-driving cars to Apple's and Tesla's strategies. We are getting a number of clues as to how various new players are thinking about the auto industry. The email then turns to GoPro's 1Q16 earnings. Even though GoPro is facing a number of daunting challenges given the current environment, it appears GoPro may be looking to change its camera strategy for long-term survival.
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Elon Musk Doubles Down on Manufacturing, Fitbit 1Q16 Earnings, Thursday Q&A
Today's Above Avalon stories:
- Elon Musk Doubles Down on Manufacturing
- Fitbit 1Q16 Earnings
- Thursday Q&A
We begin today's email by taking a closer at Tesla's 1Q16 earnings call. Elon Musk had plenty to say about the Model 3 production and his goals for Tesla. We discuss Musk's desire to double down on auto manufacturing, including why he made that decision and the implications for Apple's electric car project, Project Titan. We then switch over to discuss Fitbit's 1Q16 earnings. Fitbit remains the best company to observe clues about the wrist wearables market. After comparing some Fitbit vs. Apple Watch metrics, I explain why I think the Fitbit and Apple Watch dynamic is changing.
The email concludes with Thursday Q&A, where I answer questions from Above Avalon members. This week's member question/topic:
You have consistently said the iPhone's biggest competitor is last year's iPhone. Is it possible that the iPhone 6s just hasn't competed well versus the iPhone 6? If the rumor is that the iPhone 7 won't be too different from the iPhone 6s, why should we be confident that the iPhone 7 will compete any better with the iPhone 6s or even the iPhone 6?
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Tim Cook's Questionable Interview with Jim Cramer, Apple Hits Another Roadblock in India
Today's Above Avalon stories:
- Tim Cook's Questionable Interview with Jim Cramer
- Apple Hits Another Roadblock in India
We begin today's email by taking a closer at Tim Cook's interview with CNBC's Jim Cramer. Cook wanted a second chance to explain Apple's 2Q16 earnings. However, the interview just didn't hit the mark. We also discuss an observation I had regarding how Cook handles financial-related questions. This trend may explain why Apple seems to be having such a difficult time coming up with a new Wall Street narrative. The email then turns to news that Apple's application to sell remanufactured iPhones in India has been rejected. We go over the implications of this development and what it may mean for Apple's plans in India.
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The iPhone Story Has Become Complicated, The Math Behind My FY2016 and FY2017 iPhone Estimates
Today's Above Avalon stories:
- The iPhone Story Has Become Complicated
- The Math Behind My FY2016 and FY2017 iPhone Estimates
We begin today's email by continuing the discussion raised by my weekly article "iPhone Warning Signs." We go over my thought process that led to the article and why Apple management's narrative surrounding iPhone growth reminds me of the way Apple discussed iPad's growth a few years ago. The email then turns to the math behind my iPhone unit sales estimates for FY2016 and FY2017. We also go over my calculations used to show that the iPhone upgrade cycle is getting longer.
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FY2016 and FY2017 AAPL Estimates, AAPL's Current Valuation, Takeaways from AAPL's 2Q16 10-Q
Today's Above Avalon stories:
- FY2016 and FY2017 AAPL Estimates (Mac and Apple Watch unit sales, Revenue, EPS)
- AAPL's Current Valuation
- Takeaways from AAPL's 2Q16 10-Q
We begin today's email by going over my Mac and Apple Watch unit sales, overall revenue, and EPS projections for FY2016 and FY2017. Last Thursday's email went over my iPhone and iPad projections. The email then turns to AAPL valuation metrics and my thoughts on what type of iPhone unit sales growth is reflected in Apple's share price. We conclude with key takeaways from Apple's 2Q16 10-Q filed late last week.
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Apple 2Q16 Earnings Review: Details, New iPhone and iPad Sales Estimates, Thursday Q&A
Today's update is the second part of my Apple 2Q16 earnings review. Yesterday's update was focused on the major themes.
We begin by focusing on the more granular details from Apple's earnings call. Ten topics are covered, including:
- iPhone upgrade rates
- Apple's iPhone channel inventory reduction
- China and India commentary
The update then turns to my revised iPhone and iPad unit sales estimates for FY16 and FY17. We go over the numbers and why I am becoming more cautious across the board when it comes to Apple hardware sales. The update concludes with Thursday Q&A and a question from an Above Avalon member:
"Where will iPad sales bottom?"
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Apple 2Q16 Earnings Review: Major Themes
Today's Daily Update is focused on reviewing Apple's 2Q16 earnings. Along with a big picture overall of the quarter and management's outlook, the email covers four major themes from the report and conference call:
- Apple's 2Q16: Pretty Brutal
- Walking Back the Services Narrative
- Increasing iPhone Doubt
- iPad's Ongoing Implosion
- Apple Watch Sales Miss
- A Few More Things...
Tomorrow's Daily Update will include additional thoughts and observations on Apple's tough quarter.
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Apple Watch 2.0 to Include Cellular Connectivity?, iPhone Upgrade Program Expands Online, The Music Industry Is Broken
Today's Above Avalon stories:
- Apple Watch 2.0 to Include Cellular Connectivity?
- iPhone Upgrade Program Expands Online
- The Music Industry Is Broken
We begin today's email by taking a closer look at the WSJ's claim that Apple is working on including cellular connectivity in its next-generation Apple Watch. We go over the reasons that initially give me pause believing this rumor, followed by one factor that makes the claim a bit more believable. We then discuss Apple's iPhone Upgrade Program being extended to Apple's online store and why this is such a big deal for Apple's ability to extract iPhone profit from the smartphone industry. We conclude with a few thoughts on how album exclusives show that the music industry is broken.
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Apple Watch's First Year: Lessons & Observations, Apple's Services Roadblock in China
Today's Above Avalon stories:
- Apple Watch's First Year: Lessons & Observations
- Apple's Services Roadblock in China
We kick off today's email by marking the one-year anniversary of Apple launching Apple Watch. We go over my five primary lessons/observations I've reached over the past 12 months concerning Apple Watch, the smartwatch category, and Apple's entry into new product categories. The email then shifts over to news of China cracking down on Apple's iBooks Store and iTunes Movies. We go over the main takeaway from this development and what it may mean about Apple's business in China.
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Rethinking the Car, Apple Car 1.0, Thursday Q&A
Today's Above Avalon stories:
- Rethinking the Car
- Apple Car 1.0
- Thursday Q&A
We kick off today's car-focused email by continuing the discussion raised by my "The Car's 'iPhone' Moment" article. We go over additional thoughts about the topic and my previous experiences that convinced me the secret to rethinking the car is found by looking inside at the passenger compartment. The email then dives into my musings about an Apple Car 1.0. We go over how I am thinking about Apple's first automobile offering. What would be the car's primary features? Who would be initial target market? We conclude with Thursday Q&A and the following question submitted by an Above Avalon member:
- Is it fair to say that the iPad Pro doesn't appear to be "saving" the iPad?
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AAPL 2Q16 Earnings Preview
Today's email is dedicated to previewing Apple's upcoming earnings report. The email contains the following sections:
- Complete 2Q16 Estimates
- iPhone
- iPad & Mac
- Apple Watch
- Services
- Conclusion
Along with going over the methodology and thought process behind all of my financial estimates, this preview sets the stage for what Apple management will try to accomplish with its 2Q16 earnings release and conference call.
The AAPL 2Q16 Earnings Preview is available for Above Avalon members. To continue reading, click here.
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New Project Titan Revelations from Germany, Apple Pursuing Hollywood
Today's Above Avalon stories:
- New Project Titan Revelations from Germany
- Apple Pursuing Hollywood
Today's email takes a closer look at a new report from German newspaper F.A.Z. concerning Apple's electric car project. We discuss the three key elements of the report: employee hires, contract manufacturing and car business models. We are getting a growing number of clues as to how Apple will actually sell an electric car. The email then turns to the topic of Apple pursuing Hollywood in a much more aggressive way than initially thought. A new report from Fast Company depicts Apple as wanting to become another Netflix. We discuss the implications from such a move.
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Apple Contemplating Paid Search for App Store, New iPhone Production Cuts
Today's Above Avalon stories:
- Apple Contemplating Paid Search for App Store
- New iPhone Production Cuts
We kick off today's email by discussing Bloomberg's report that Apple is thinking about bringing paid search to the Apple Store. We go over paid search in context of mobile apps and app install ads. We need to go back to last year's WWDC to get the much needed perspective on what I suspect is Apple's grand vision concerning search and the App Store. There are better alternatives than just simply placing sponsored apps throughout the App Store. We then turn to news from the Nikkei saying Apple has cut iPhone production for FY3Q16. I have a number of questions regarding the primary implication found in the report.
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Key Apple Designer Joins GoPro, Dire Apple Watch Sales Projections, Thursday Q&A
Today's Above Avalon stories:
- Key Apple Designer Joins GoPro
- Dire Apple Watch Sales Projections
- Thursday Q&A
We kick off today's email by discussing Apple designer Danny Coster joining GoPro as VP of Design. While there are only a few people that are in a position to know the full story, we go over some of Coster's background, observations about Apple's industrial design team, recent management changes regarding Jony Ive and Richard Howarth, and my theory on what happened. We then shift over to Apple analyst Ming-Chi Kuo's dire prediction that Apple Watch sales will fall by 50% on an adjusted basis this year. We discuss Kuo's numbers and then go over my quarterly Watch unit sales estimates. We conclude with Thursday Q&A and the following question submitted by a member:
- Is Fitbit doing better than expected given recent Blaze sales disclosure?
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