The Tim Cook Profile in GQ, Cook and China, Cook Provides More Mixed Reality Headset Clues (Daily Update)
Hello everyone. Welcome to Monday. Today’s discussion will be dedicated to discussing GQ's Tim Cook profile. Let’s jump right in.
(Go UConn as they play for their fifth national basketball championship tonight.)
The Tim Cook Profile in GQ
As we head deeper into spring, and soon developer conference season, this is a good time for companies to draw attention to topics that either have been under attack in the press or which can be leveraged to support upcoming product unveilings.
With that in mind, GQ is out with quite the Tim Cook profile. Not only did Zach Baron sit down (and walk around) with Cook at Apple Park, but there were also interviews with Eddy Cue (SVP services) and Lisa Jackson (VP environment, policy, and social initiatives).
With "Tim Cook on Shaping the Future of Apple," here’s Baron:
“In his tenure as CEO, Cook has rarely missed an opportunity to decry, usually with a fair amount of heat in his voice, what he describes as the 'data-industrial complex'—a complex built of companies (and Apple competitors) who profit from the use and sale of their consumer’s personal information and data. This practice, Cook said in another public moment, 'degrades our fundamental right to privacy first, and our social fabric by consequence,' and helps build an ecosystem full of 'rampant disinformation and conspiracy theories juiced by algorithms.'
If you ask Cook, a notoriously private person himself, why this subject is so important to him, he will pivot the conversation back to Apple. 'It’s personal for Apple in that we’ve been focused on it from the start of the company,' he told me the first time we met, for an interview in 2021. In Cook’s tenure, Apple has adopted a set of public values and practices that are particularly rigorous around privacy. 'We feel privacy is a basic human right,' Cook says. 'And so we try to design our products to where we collect the minimum kind of data, and as important, that we put the user in the control chair, where it’s the user’s data and they’re deciding what they want to do with it.'"
GQ’s 6,600-word profile was among one of the better ones that have been published about Cook. Instead of picking the profile apart and including large sections of it in this update, it is best to find some time and read the profile in its entirety.
It’s not easy to summarize a 6,600-word profile. GQ covered a long list of topics, although a few subjects weren’t discussed (which we will talk about in greater detail shortly).
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Apple Announces WWDC 2023, WWDC 2023 Artwork Clues, Early Expectations for WWDC 2023 (Daily Update)
Today’'s update (March 30th) is dedicated to discussing Apple’s WWDC 2023. After going over the WWDC 2023 format, we look at this year’s WWDC artwork for some clues as to what may be discussed during the keynote. This brings us to a broader discussion involving Neil’s expectations for WWDC 2023 regarding a mixed reality headset.
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The Amazon/AMC Rumor, Amazon Sidewalk Opens to Developers, Revisiting Amazon’s Play for Neighborhoods (Daily Update)
Hello everyone. We will begin today’s update with a follow-up to our theatrical release discussion from earlier in the week. The discussion then turns to Amazon. Amazon Sidewalk is up there as one of the more interesting initiatives within Amazon. It’s multiple times more interesting to Neil than what is found with Alexa.
The Amazon/AMC Rumor
Over at The Intersect, here’s Joe Bel Bruno:
“Amazon founder Jeff Bezos has dispatched his investment advisors and top entertainment chiefs to explore acquisition plans for embattled theater chain AMC Entertainment, according to multiple senior sources familiar with the discussions.
The thinking is that Amazon can use AMC’s nearly 600 theaters across North America, Europe and the Middle East as ‘marketing weigh stations,’ said one Amazon insider. This would be used for promoting Amazon Prime movies for awards contention, cross-selling services such as grocery delivery, serving as local distribution hubs, and collecting crucial data from AMC’s annual 200 million moviegoing customers.
It would also throw a lifeline to AMC, the world’s largest theater chain whose financials were torpedoed by the COVID pandemic chased by Hollywood’s cut-throat pivot to their own streaming services. The cinema chain – whose stock traded a year ago at $34 and now languishes at about $4 – can be scooped up cheaply (and without a major premium) for just a few billion dollars."
One wonders if those “senior sources familiar with the discussions” happen to be investment bankers itching for a deal. Also, it seems like Bel Bruno refers to AMC as “cheap” merely because the stock price is down. That is not how that works.
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Apple Announces Friday Night Baseball Changes, Apple Acquires WaveOne, Tim Cook Visits China (Daily Update)
We kick things off by going over all of the changes found in the second season of Apple’s Friday Night Baseball. The update then goes over Apple’s WaveOne acquisition which flew under the radar. We conclude with Neil’s thoughts on Tim Cook visiting China and meeting with Chinese government officials.
Hello everyone.
The Apple Music Classical app is now available.
One of the first things I noticed is that my classical music collection successfully made the jump from Apple Music to Apple Music Classical. The pieces are displayed in a more listener-friendly manner. They also remain available in the Apple Music app. There were some fears that Apple would somehow remove classical music from the primary Apple Music app and instead require subscribers to use the Apple Music Classical app. That is not the case.
When searching for classical music within the Apple Music app, Apple highlights the Apple Music Classical app (shown below) in addition to continuing to give classical music playlists and selections.
We will now jump into today's update.
Apple Announces Friday Night Baseball Changes
“Today Apple and Major League Baseball (MLB) announced that ‘Friday Night Baseball,’ a weekly doubleheader, will be available to all Apple TV+ subscribers on Fridays throughout the regular season. Fans in 60 countries and regions can enjoy two marquee matchups over 25 weeks with no local broadcast restrictions. “Friday Night Baseball” will begin the 2023 season on Friday, April 7, with the Texas Rangers at the Chicago Cubs for the inaugural “Friday Night Baseball” daytime game at Chicago’s Wrigley Field, and the San Diego Padres at the Atlanta Braves. Apple and MLB also announced the 'Friday Night Baseball' schedule for the first half of the season, through June 30.
‘We can’t wait for ‘Friday Night Baseball’ to start up again, and we’re excited for fans to experience everything new we’re bringing this season,’ said Eddy Cue, Apple’s senior vice president of Services. ‘Apple TV+ truly has something for everyone, from two live baseball games every Friday night, to an incredible slate of award-winning original films and series — there’s never been a better time to sign up.’”
With the first season of Fright Night Baseball, Apple began its journey into live sports programming. Instead of just being a distributor of sports content from other companies, Apple had the ability to change / impact how sports (baseball in this case) is consumed.
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Apple Reportedly Pursuing Movie Theater Releases, Streamers Embracing Movie Theaters, TVOD vs. Theatrical Releases (Daily Update)
We kick things off with Neil’s thoughts on Apple reportedly thinking of putting blockbuster movies through theatrical releases. The discussion includes a broader look at how streamers have embraced movie theaters. We then examine the argument that theatrical releases remain a viable way to bring in extra revenue, and how those prospects compare to the TVOD (transactional video on demand) route in streaming.
Hello everyone. Welcome to Monday.
Let's jump right in.
Apple Reportedly Pursuing Movie Theater Releases
“Apple Inc. plans to spend $1 billion a year to produce movies that will be released in theaters, according to people familiar with the company’s plans, part of an ambitious effort to raise its profile in Hollywood and lure subscribers to its streaming service.
Apple has approached movie studios about partnering to release a few titles in theaters this year and a slate of more films in the future, said the people, who asked not to be identified because the plans are private. The list of potential releases includes Martin Scorsese’s Killers of the Flower Moon, which stars Leonardo DiCaprio; the spy thriller Argylle, from director Matthew Vaughn; and Napoleon, Ridley Scott’s drama about the French conqueror. A spokesperson for Apple declined to comment.
The investment is a significant increase from years past. Most of Apple’s previous original movies have either been exclusive to the streaming service or released in a limited number of theaters. The company has pledged to put movies in thousands of theaters for at least a month, said the people, though it hasn’t finalized any plans.”
One may read Bloomberg's article and conclude Apple is looking to place a big bet on movie theaters. That does not look to be the case.
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Should Microsoft Go After Google and Try to Win Apple’s iPhone Search Deal? (Daily Update)
We are going to do something different today.
A few days ago, a Business Insider article about Microsoft Bing caught my attention. A former Google executive who used to run the company’s advertising business thinks now is the time for Microsoft to wage war against Google search. We are going to take a closer look at the topic and address the question: Should Microsoft go after Google and try to win Apple’s iPhone search deal?
(Not to give spoilers, but for those of you who are long-time members, you may know that I am quite familiar with Betteridge’s law of headlines which states any headline that ends in a question mark can be answered by “no.” I like to prove his theory wrong from time to time.)
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Google Releases Bard, Apple and Chatbots, DPReview to Shut Down (Daily Update)
Hello everyone.
We will kick off today's update with some chatbot discussion. Neil’s stance continues to be to approach chatbots with caution. We will talk more about that today. The discussion concludes with some additional comments about Amazon shutting down DPReview. There is more to that story than what we briefly alluded to yesterday.
Let's jump right in.
Google Releases Bard
“Google just announced that the company is releasing its ChatGPT competitor Bard. But chances are you won’t be able to access the product right away as the company is starting with a limited public rollout.
Users in the U.K. and the U.S. can head over to bard. google .com and join a waitlist. The company calls Bard an ‘early experiment that lets you collaborate with generative AI.’
Like OpenAI’s ChatGPT and Microsoft’s Bing chatbot, Bard is a chatbot based on a large language model. You can interact with Bard to ask questions and refine the answer with follow-up queries.
‘You can use Bard to boost your productivity, accelerate your ideas and fuel your curiosity. You might ask Bard to give you tips to reach your goal of reading more books this year, explain quantum physics in simple terms or spark your creativity by outlining a blog post,’ Google VP of Product Sissie Hsiao and Google VP of Research Eli Collins wrote in a blog post.
When Google first unveiled Bard last month, there wasn’t much to see other than a lengthy blog post written by Google CEO Sundar Pichai. The model used in Bard is based on Google’s own LaMDA (Language Model for Dialogue Applications) — the company is using a lightweight and optimized version of LaMDA.”
Google went with a “lightweight and optimized version of LaMDA” in order to get it out in the wild without facing a financial strain in terms of computing power needs. One benefit in doing so is being able to build buzz on social media.
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Slim Cable Bundle Illusions, Live Sports Stickiness, Amazon Announces More Layoffs (Daily Update)
Hello everyone.
Yesterday, we discussed how YouTube is increasing TV pricing by $8/month (to $73/month). In today’s update, we will continue the discussion by going over a few things that have been on Neil’s mind. The update then turns to Amazon announcing another 9,000 layoffs. The company’s explanation for why it didn’t announce all of the layoffs at the same time raises more questions than answers.
Slim Cable Bundle Illusions
For much of the 2010s, the tech industry dedicated resources and attention to rethinking the TV experience. Frustrations with the big cable bundle had reached unsustainable levels.
Some people thought Netflix, HBO, and Hulu would cause the cable bundle to implode. Others expected sports leagues to go direct to fans, removing oxygen from cable bundles. À la carte became a popular phrase for describing how the cable bundle could potentially be unbundled into individual channels or even shows. In addition to positioning apps as the future of TV, Apple looked at a few ideas such as offering a bundle consisting of a few dozen existing cable channels.
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YouTube TV's Price Hike, FTC Finalizes Epic Games Fine, Foxconn's 2023 Outlook (Daily Update)
Hello everyone. Happy Monday. Let's jump into a new week of updates.
We begin with Neil’s thoughts on YouTube announcing another price hike for YouTube TV. There are two broader debates surrounding the price increase. The discussion then turns to the FTC finalizing its (second) fine against Epic Games for deceptive business practices. We conclude with Foxconn’s latest comments on 1Q23 and 2023 business trends.
YouTube TV's Price Hike
In a series of tweets published last Thursday, here’s YouTube TV:
“An update for our members. As content costs have risen and we continue to invest in our quality of service, we’ll be adjusting our monthly cost, after 3 years, from $64.99/mo to $72.99/mo, in order to bring you the best possible TV service.
New members will see this new price today, while existing members will see this pricing change beginning 4/18. Additionally, we are lowering the price of our 4K Plus add-on from $19.99/mo to $9.99/mo.
We are committed to offering a premium way for you to stream TV, but understand this new price may not work for you. We do hope YouTube TV continues to be your service of choice, but we want to give you the flexibility to cancel at any time.”
The $8/month hike is the latest price change in what has been a somewhat consistent trend of periodic increases.
2017: $35 launch
2018: $40 (+14%)
2019: $50 (+25%)
2020: $65 (+30%)
2023: $73 (+12%)
13% CAGR (compound annual growth rate) from 2017 to 2023)
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Q&A About Apple’s Investment Portfolio, Apple Unveils Apple Music Classical, Apple’s Music Focus
In Monday’s update, we talked about Apple’s fixed income investment portfolio. The discussion led to a few incoming questions from members, which we will address in today’s update. We then turn to Neil’s thought on Apple Music Classical and Apple’s broader strategy for Apple Music. There are key differences between how Apple is approaching music streaming and the strategy at play with iTunes. We also compare the strategies of Apple Music and Spotify.
Hello everyone.
One clarification regarding Meta’s new round of layoffs. The 10,000 layoffs that Zuckerberg just announced don’t include 5,000 open positions that will be left open. Accordingly, Zuckerberg is on track to cut 25% of Meta’s workforce. In yesterday’s update, a 20% percentage was referenced. It’s an even more startling figure that reflects Meta has become bloated and is now trying to resize itself to respond more quickly to market developments. My expectation is that once Zuckerberg has concluded his efficiently reset, Meta will again look to add to its ranks.
Let’s jump into today’s update.
Q&A About Apple’s Investment Portfolio
In Monday’s update, we talked about Apple’s fixed income investment portfolio. The discussion led to a few incoming questions from members, which we will address below.
Given how rates have risen over the past year or so, do you see Apple returning to the bond market to raise funds to pay off maturing bonds or do you think they would use cash for these payouts? or a mix of both?
My expectation is for Apple to slow the pace of debt issuance. As existing debt rolls off – Apple has about $11B that comes due in FY2023 – management won’t look to replenish the debt with new debt 1 for 1. With that being said,
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Meta Announces Another Massive Round of Layoffs, Zuckerberg Discovers Efficiency, How Apple Avoided Significant Layoffs
We kick things off with Neil’s thoughts on Mark Zuckerberg announcing another massive round of Meta layoffs. The discussion goes over Zuckerberg’s efficiency plans. We conclude with an examination of how Apple has been able to avoid significant layoffs.
Happy Wednesday.
One quick follow-up to yesterday’s discussion about Tim Cook and mixed reality headsets. The expectation that Cook will say yes to a product that goes against Apple’s user-first ideals is misplaced. Recall comments that Cook made last year about the importance of keeping humanity at the center of AR headsets. Cook was answering a question about AR headsets succeeding in the consumer market. Here's Cook:
"I am incredibly excited about AR as you may know. And the critical thing in any technology, including AR, is putting humanity at the center of it. And that is what we focus on every day."
The "humanity at the center" wording was a subtle reference to Apple addressing long-held concerns found with a face headset.
Let's jump into today's update.
Meta Announces Another Massive Round of Layoffs
“Meta Platforms Inc. said it would cut roughly 10,000 over the coming months, the Facebook parent’s second wave of mass layoffs in what it says is an effort to be more efficient in a difficult economy.
Meta Chief Executive Mark Zuckerberg said in an email to staff on Tuesday that the company would in the coming months conduct multiple rounds of job cuts, as well as cancel some projects and reduce hiring rates as part of what he has dubbed the ‘year of efficiency.’
Company recruitment teams will be cut first, followed by restructuring and layoffs in its technology groups in late April, Mr. Zuckerberg said. Business teams will face layoffs in May, he added. The company will also stop hiring for about 5,000 open positions.
Mr. Zuckerberg said his company must cope with a longer term change in the economy, marked by the end of low interest rates, growing geopolitical tensions and costly new regulations.
‘At this point, I think we should prepare ourselves for the possibility that this new economic reality will continue for many years,’ Mr. Zuckerberg wrote. ‘Given this outlook, we’ll need to operate more efficiently than our previous headcount reduction to ensure success.’
Meta said in a securities filing Tuesday that it expects to lower its annual expenses by roughly $3 billion from an estimated range it gave on Feb. 1. It now expects to spend a total of $86 billion to $92 billion this year, including the costs of its layoffs and restructuring, which it said could total $3 billion to $5 billion.”
The 10,000 layoffs are in addition to the 11,000 layoffs that Meta announced in late 2022. This would mean Zuckerberg will have cut Meta’s workforce by 20% within just a few months (the job postings being kept open are excluded from the 20%). While it is true that Meta added significantly to its ranks from 2020 to 2022, to cut 20% of staff is a staggering percentage that should draw into question a number of key assumptions that have been found with Meta and Big Tech.
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The Financial Times on Tim Cook's Mixed Reality Bet, My Issues With FT’s Report (Daily Update)
Hello everyone. There were a few incoming questions about Apple’s investment portfolio objectives and actions. If there are any additional questions regarding yesterday’s update, send them my way, and all will be addressed at the same time.
For today’s update (Tuesday, March 14th), we will focus on a Financial Times article published on Sunday about Tim Cook and Apple’s upcoming mixed realty headset. As we approach WWDC, the chatter and rumors regarding Apple's headset will grow. We will soon take a much more in-depth look at Apple’s upcoming headset.
The Financial Times on Tim Cook's Mixed Reality Bet
Over at the Financial Times, here are Patrick McGee and Tim Bradshaw:
“When Tim Cook unveils Apple’s new ‘mixed-reality’ headset later this year, he won’t just be showing off the tech giant’s latest shiny gadget.
The Apple chief will also be guaranteeing his legacy includes the launch of a next-generation hardware product that some inside the company believe might one day rival the iPhone.
After seven years in development — twice as long as the iPhone — the tech giant is widely expected to unveil a headset featuring both virtual and augmented reality as soon as June.
The stakes are high for Cook. The headset will be Apple’s first new computing platform to have been developed entirely under his leadership. The iPhone, iPad and even Watch were all originally conceived under Apple’s co-founder Steve Jobs, who died in 2011.”
This isn’t the first time that the FT has published an article looking at Tim Cook’s legacy. Back in January, the FT ran two articles about Apple and China, a relationship that Cook played a very big role in creating. The thinking put forth by the FT was that Apple finds itself “beholden” to China with Cook having no good alternative.
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Silicon Valley Bank Collapses, Apple and the Big Banks, Apple’s Interest Rate Risk (Daily Update)
Hello everyone. Welcome to a new week.
The Silicon Valley Bank saga deserves its own daily update. Accordingly, we will dedicate today’s discussion to the topic. While we will quickly go over what happened, the broader points will deal with Apple.
Silicon Valley Bank Collapses
Last week, Silicon Valley Bank (SVB), known for its long-term relationships with tech VCs and start-ups, imploded. The FDIC (Federal Deposit Insurance Corporation) took over the bank on Friday.
Yesterday, the Treasury, Federal Reserve, and FDIC announced various actions to avoid financial contagion.
“Today we are taking decisive actions to protect the U.S. economy by strengthening public confidence in our banking system. This step will ensure that the U.S. banking system continues to perform its vital roles of protecting deposits and providing access to credit to households and businesses in a manner that promotes strong and sustainable economic growth.
After receiving a recommendation from the boards of the FDIC and the Federal Reserve, and consulting with the President, Secretary Yellen approved actions enabling the FDIC to complete its resolution of Silicon Valley Bank, Santa Clara, California, in a manner that fully protects all depositors. Depositors will have access to all of their money starting Monday, March 13. No losses associated with the resolution of Silicon Valley Bank will be borne by the taxpayer.
We are also announcing a similar systemic risk exception for Signature Bank, New York, New York, which was closed today by its state chartering authority. All depositors of this institution will be made whole. As with the resolution of Silicon Valley Bank, no losses will be borne by the taxpayer.
Shareholders and certain unsecured debtholders will not be protected. Senior management has also been removed. Any losses to the Deposit Insurance Fund to support uninsured depositors will be recovered by a special assessment on banks, as required by law.
Finally, the Federal Reserve Board on Sunday announced it will make available additional funding to eligible depository institutions to help assure banks have the ability to meet the needs of all their depositors."
Unfortunately, the term “bailout” has become a subjective one. What the U.S. government is doing with SVB, Signature, and the entire banking sector for that matter, is a far cry from the drastic steps taken during the subprime mortgage crisis of the late 2000s. With that said, there are questions that politicians
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Spotify’s Stream On Event, Humane Raises Another $100M, What Is Humane Working On? (Daily Update)
Today’s update kicks off with Neil’s thoughts on Spotify’’s Steam On event in LA. We go over why Neil thinks there is an opening for Apple Music to win share against Spotify in countries where the two services go head-to-head. The update then turns to Humane. We go over why the company is grabbing so much buzz and what the company is likely working on.
Hello everyone. Happy Thursday. Apple announced it will launch its standalone classical music app on March 28th. We will likely talk about the app next week.
Spotify’s Stream On Event
Yesterday, Spotify held an event in LA aimed at creators (music and podcasts). The company had various content creators, including some YouTubers, go on stage to talk about why Spotify is the place to be. The main message was that Spotify cares about creators and the company wants musicians and podcasters to call Spotify home.
Spotify founder and CEO Daniel Ek kicked off the hour-and-a-half presentation by saying how the music industry is doing great with streaming. He's right when it comes to music rights holders. However, music artists? Not so much.
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Apple’s Spring Product Refresh, The Best-Selling Smartphone Models of 2022, Dark Sky Anger Builds (Daily Update)
Hello everyone. Today’s update kicks off with Neil’s thoughts on Apple’s spring product refresh announced yesterday. The discussions then turns to new estimates from Counterpoint regarding the best-selling smartphones in 2022. We conclude with a look at the controversy surrounding Apple’s decision to sunset the Dark Sky weather app.
Let's jump right into today's update.
Apple’s Spring Product Refresh
Yesterday, Apple unveiled a number of new products / SKUs. In addition to a new yellow color finish for the iPhone 14 and 14 Plus, Apple unveiled four new Silicon Case colors, nearly two dozen new Apple Watch bands, and a handful of AirTag accessories.
As for the yellow iPhone, one can say Apple has had some experience with the color yellow.
These updates are minor when compared to Apple launching entirely new iPhones or product categories. However, we should not underestimate the impact that refreshed color options and accessories can have on both product sales and Apple’s overall business.
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Number of ATMs Decline, Apple Pay’s Long Game, Roku 4Q22 Earnings (Daily Update)
Hello everyone. Today’s update (Tuesday, March 7th) kicks off with Neil’s thoughts on the number of ATMs declining in the U.S. The discussion goes over cash usage trends and includes some of Neil’s personal observations and behavior change regarding cash use. There are takeaways involving Apple Pay and long-term payment trends. The update concludes with a look at Roku’s 4Q22 earnings.
Number of ATMs Decline
With an article that grabbed my interest yesterday, here is the WSJ:
“The slow move toward a cashless society is helping to send the ubiquitous ATM into decline around the U.S., presenting challenges for those who still largely rely on cash.
After peaking at 470,000 ATMs in the U.S. in 2019, the number of machines has declined annually over the past few years to 451,500 at the end of 2022, according to data tracked by research firm Euromonitor International. The reason: Many people quit using cash during the pandemic and haven’t gone back, said Kendrick Sands, consumer finance research manager for the London-based firm.
‘There was that scare that the virus was transmitted by paper, plus the trend of just buying everything online,’ said Mr. Sands, who is based in Chicago. ‘That dealt almost a death blow to cash, especially for younger people.’
Cash and checks are forecast to fall to 14% of total payments this year from 42% in 2010, with the most precipitous drop coming just after the pandemic started in 2020, according to Euromonitor estimates.”
In what was news to me, the number of ATMs in use is something that firms need to estimate and project. While the Federal Reserve publishes various statistics and data points regarding currency use, there does not appear to be a central database for the number of ATMs in use.
Accordingly, it shouldn’t have been much surprise that the ATM trade association is questioning Euromonitor International’s figures showing a decline in both the number of ATMs and cash usage saying that cash “is still the payment method of choice for in-person transactions of $25 or less.” That statement doesn’t take anything away from the assertions found in the WSJ’s article.
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Apple Invests Another $1B in Germany, The Factors Behind iPhone’s Increasing Sales Share, Competing With Cool (Daily Update)
Hello everyone. Welcome to a new week. Today’s update (Monday, March 6th) kicks off with Neil’s thoughts on Apple investing another $1B in Germany. The update then turns to the iPhone, which continues to see higher sales share around the world. We look at the factors behind the iPhone’s momentum. In particular, we address the idea of the iPhone seeing inroads with younger demographics outside the U.S. and the role Apple’s brand has with giving the company an advantage over its competitors.
Let's jump right with a news item from Apple.
Apple Invests Another $1B in Germany
In a press release issued late Thursday, here’s Apple:
“Apple today announced it will invest an additional 1 billion euros in German engineering over the next six years as part of its Silicon Design Centre expansion in central Munich. This is on top of the company’s previous 1 billion euro investment commitment from 2021, when Apple established Munich as the headquarters to its new European Silicon Design Centre. Munich is already Apple’s largest engineering hub in Europe, and the engineering teams there are integral to the new innovations that delight Apple customers around the globe.
‘Our Munich engineering teams are on the cutting edge of innovation, helping imagine new technologies at the heart of the products we make,’ said Tim Cook, Apple’s CEO. ‘Apple has been in Munich for more than 40 years, and we’ve never been more excited about what the future holds here.’
Building on Apple’s longstanding presence in Germany and growing investments across Europe, the company will design and construct a state-of-the-art research facility at Seidlstrasse. With significant lab space, cutting-edge design, and a central location, the space will enable Apple’s R&D teams to come together in new ways, enhancing collaboration and innovation.”
Apple released the following drawing of where the new buildings will be located in Munich.
The building names are based on the street names. Karlstrasse is part of Apple’s initial $1B investment announced in early 2021. Seidlstrasse, Denisstrasse, and Marsstrasse represent new buildings that will comprise Apple's hub.
Europe / Israel continues to be a major source of hardware and related technologies R&D for Apple.
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Peter Stern Departs Apple, Apple’s Services Reorganization, My Concern With Warner Bros. Discovery (Daily Update)
Hello everyone. Today’s update kicks off with Neil’s thoughts on Peter Stern departing Apple. The discussion then expands to talk about Apple’s Services reorganization. We conclude with some qualutiative takeaways from Warner Bros. Discovery’s most recent earnings call. Neil has a concern with the company’s strategy. Let's jump right in.
Peter Stern Departs Apple
In an article published back in January, here’s Claire Atkinson over at the Insider:
“One of Apple's top subscriptions executives is exiting the company.
Peter Stern, who had been helping establish Apple's presence in sports rights in addition to running Apple TV+, has informed colleagues that he is exiting Apple to spend more time on the East Coast, according to a source close to the executive. Stern, whose title is VP Services, is leaving at the end of the month.
Apple is reorganizing its Services unit, and Stern's responsibilities will be split into three separate divisions, according to two people familiar with internal conversations at Apple. The shape of the restructure is still being negotiated, but one of those executives will be Oliver Schusser, who is currently in charge of Apple Music; another is Robert Kondrk, whose current title is VP, Apple Product Services and Design.
Stern, who was widely tipped as a possible successor to Apple's SVP Services, Eddy Cue, was in charge of a broad swath of the company's subscription businesses and was largely responsible for building the business operations of Apple TV+. He is one of about 20 direct reports under Cue.
During his six-year tenure at Apple, Stern helped build subscription products such as Arcade, Books, and Apple One, News+, Fitness+, iCloud+. Before that, he was an exec Tim Warner Cable.”
We will talk about Apple’s Services reorganization shortly.
It’s not clear where the “widely tipped as a possible successor to Apple’s SVP Services, Eddy Cue…” comes from. Yes, Stern was a VP and Apple made him available to speak to outsiders/press. However, claiming Stern was some kind of de facto Cue successor feels off.
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Apple Lends $250M to Globalstar, Why Doesn’t Apple Get Into Satellites?, EU Narrows Apple Probe (Daily Update)
Hello everyone. Today’s update kicks off with Neil’s thoughts on Apple lending $250M to Globalstar. The discussion then expands to talk about Apple getting into the satellite business itself. We conclude with a closer look at the EU narrowing its Apple probe to focus on anti-steering.
Let’s jump right into today’s update.
Apple Lends $250M to Globalstar
Over at SpaceNews, here’s Jason Rainbow:
“Globalstar said Feb. 28 that Apple is lending the company $252 million to help cover upfront costs for replenishing its low Earth orbit (LEO) constellation.
Apple is providing the funds as a prepayment for using the network to upgrade satellite services launched last year for its latest iPhone, which can connect with one of Globalstar’s existing 24 satellites in LEO for emergency services outside cellular coverage.
Globalstar picked MDA and Rocket Lab in February 2022 to supply an initial 17 satellites for launch by the end of 2025 in a contract worth $327 million. The contract includes an option for up to nine additional satellites at $11.4 million each.
The satellite operator intends to fund any upfront costs not covered by Apple’s prepayment with its own cash.
Apple has already agreed to reimburse Globalstar for 95% of the constellation; however, it previously required the satellite operator first to raise third-party financing to fund the manufacturing contract.
Removing the need to raise this financing amid challenging macroeconomic conditions clears a significant degree of uncertainty for Globalstar’s constellation plans.”
With interest rates continuing to rise and prospects of securing third-party financing getting dim, Globalstar was in trouble. Apple decided to jump in and loan Globalstar the required cash to keep moving forward (to construct and deploy satellites for Apple). The use of “decided” may be charitable as Apple probably didn’t have much choice other than to step in and bail Globalstar out. Without the loan, Globalstar may not have been able to launch the satellites that Apple needs.
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Sonos FY1Q23 Earnings, Sonos Hints Again at Entering New Product Category, Sonos vs. Big Tech (Above Avalon Daily)
Hello everyone.
Today’s update has a Sonos focus. We begin with Neil’s thoughts on Sonos FY1Q23 earnings (October to December). The discussion then turns to Sonos management once again hinting at the company entering a new product category. We discuss what that product category likely is and the challenges facing Sonos. The update concludes by examining a Sonos comment regarding Big Tech not doing a whole lot in the speaker space.
Sonos FY1Q23 Earnings
Back on February 8th, Sonos reported FY1Q23 earnings (covering October to December).
Revenue was up 1% (7% excluding currency impact) with speaker unit sales up 4% (to 2.5M). Sonos speaker demand was driven by promotional activity. Management called out sales around sets (more than one speaker) as being especially effective with promotions. Sonos talked about speaker share gains. It would not be surprising to find out those gains are coming against Amazon, Google, and traditional speaker companies (Bose, Samsung/Harman, Sony).
Here is Sonos speaker sales on a TTM basis to remove the seasonality associated with the holidays:
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