More on Apple’s New Devices, What’s Next for iPhone?, What’s Next for Apple Watch?
Hello everyone. Yesterday, we finished our review of Apple’s event. There are a few additional topics worth visiting that aren't so much about Apple's event but rather what comes next. Where does Apple take the iPhone and Apple Watch from here? Let’s discuss.
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Deconstructing Apple’s Product Event (iPhone)
Hello everyone. We will conclude our Apple event review, focusing on the iPhone segment of the presentation.
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Deconstructing Apple’s Product Event (AirPods)
Hello everyone. We will continue our Apple event review, focusing on the AirPods segment of the presentation. Yesterday’s update was focused on Apple Watch. Monday will be focused on everything iPhone.
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Deconstructing Apple’s Product Event (Apple Watch)
Hello everyone. We will continue our Apple event review.
Yesterday’s update was focused on the big picture.
My preference is to go deep into one section (Apple Watch, AirPods, iPhone) before moving on to the next section. For today, we will focus on the Apple Watch part of the presentation. Tomorrow, we will talk about AirPods. That discussion will end up including something of a State of AirPods section that extends behind just what was announced this week. There has been a lot going on with AirPods sales. Monday will be focused on everything iPhone.
Let’s jump in.
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Apple Just Held Its Strongest September Event in Years
Hello everyone. Today’s update will go over my initial impressions from Apple’s “It’s Glowtime” event. The discussion will have more in the way of big picture takeaways. We will get to the specifics, including my thoughts on the features, on Wednesday and possibly Thursday.
Let’s jump right in.
Apple Just Held Its Strongest September Event in Years
Apple’s “It’s Glowtime” event was jam-packed with HW updates.
The Apple Watch Series 10 marked one of the more significant year-over-year improvements for a flagship Apple Watch in years. We will likely see a bump up in the non-Ultra to Ultra sales ratio.
All four iPhone flagships contained notable upgrades including A18 (for non-Pro models) / A18 Pro (for Pro models), Camera Control (touch-capacitive area with sensors and haptic motors), and improved battery life across the line.
The entire AirPods line saw updates for the first time since the line expanded to three models, with AirPods receiving a H2 chip along with fit and comfort enhancements, AirPods Pro becoming a clinical-grade Hearing Aid, and AirPods Max receiving its first change in its four-year life (USB-C and new colors).
Apple sneaked in a non-HW Apple Intelligence feature, Visual Intelligence, tied into Camera Control. Visual Intelligence provides iPhone users context for their surroundings.
After looking back at prior September events, it’s fair to say yesterday’s event was the strongest Apple September event since at least 2017 (iPhone X unveiling). That is not meant to belittle or
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Disney Earnings, Roku Earnings
Hello everyone. Given Apple’s event on Monday (1 pm ET / 10 am PT), the next update will go out on Tuesday.
As you watch the event, if you have questions or observations that you would like addressed in the daily updates, send them my way. This includes any specific questions regarding the products themselves as there will be some demo time on Monday.
Today’s update will have a video streaming theme as we circle back to cover a few remaining CY2Q24 earnings releases from last month. For both Disney and Roku, the discussion will extend a bit beyond just what was found in their respective earnings.
Let’s jump in.
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ESPN Launches “Where to Watch” Feature, A Sports App Arms Race, U.S. Judge Blocks Venu Sports Launch
Hello everyone. We begin with my thoughts on ESPN’s new “Where to Watch” app feature. The discussion then goes over how ESPN designers must have a liking to Apple’s Sports app. We conclude with a U.S. judge blocking Venu Sports, a JV involving Disney, Fox, and Warner from launching.
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Amazon Alexa to Be Powered by Claude, Charging for AI, Apple Rumored to Invest in OpenAI
Happy Tuesday. Welcome to September.
One very quick follow-up to last Thursday’s discussion involving Apple Watch. We talked about my wish for Google to be more original with smartwatches. It’s easy to be different. A much harder goal is to be better.
Today’s update will have an AI theme as we begin with Amazon, move over to AI monetization, and then conclude with Apple / OpenAI. Let’s jump in.
Amazon Alexa to Be Powered by Claude
Here’s Reuters:
“Amazon's revamped Alexa due for release in October ahead of the U.S. holiday season will be powered primarily by Anthropic's Claude artificial intelligence models, rather than its own AI, five people familiar with the matter told Reuters.
Amazon plans to charge $5 to $10 a month for its new ‘Remarkable’ version of Alexa as it will use powerful generative AI to answer complex queries, while still offering the ‘Classic’ voice assistant for free, Reuters reported in June.
But initial versions of the new Alexa using in-house software simply struggled for words, sometimes taking six or seven seconds to acknowledge a prompt and reply, one of the people said.
That's why Amazon turned to Claude, an AI chatbot developed by startup Anthropic, as it performed better than the online retail giant's own AI models, the people said.”
Last October, Amazon announced a $4B investment in Anthropic (owns Claude). The news was positioned by Amazon as a “strategic collaboration to advance generative AI.” Anthropic said it would use AWS as its primary cloud provider, which means a portion of that $4B will find its way back to Amazon, while making future foundation models accessible to AWS customers with some features coming to AWS first. It’s not clear if this rumored Alexa/Claude integration was in the works last year and was tied with Amazon’s $4B investment.
As for motives, Amazon is becoming nervous of missing the boat on whatever remaining generative AI buzz and mania is left to squeeze. A year ago, Amazon held a product event where it gave its take on generative AI. As we discussed at the time,
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My Thoughts on Google’s “Made by Google” Event, Google’s Apple Watch Copying, Project Astra and the Future
Hello everyone. We are going to change directions and talk about hardware (and AI).
Apple Event. Earlier this week, Apple sent out invites to a September 9th product event at Steve Jobs Theater (Apple Park).
The invite is giving off major Apple Intelligence vibes. New iPhones (with Apple Intelligence) and Apple Watches are expected to be the major news.
My expectation is for Apple to use the same general game plan that was used for the September 2023 event. A taped presentation would be shown at Steve Jobs Theater, followed by some time with the new products. It’s sort of like the tech version of a Hollywood movie premiere.
For today’s update, we will focus on Google’s product event that took place two weeks ago at its Mountain View campus.
For those of you who are newer Above Avalon members, my approach in reviewing these events is to look at the big picture surrounding the products and features, in addition to what the company wants the public to focus on. What is the broader narrative being pushed? How does that differ from other companies?
Let’s jump in.
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Grading Luca Maestri’s Performance as Apple CFO, Where Can Kevan Parekh Add His Touch?, More on Maestri Staying at Apple
We will continue our discussion involving the Apple CFO transition. Let's jump right in.
Yesterday’s discussion put something in my head – how would one go about grading Luca Maestri’s tenure as Apple CFO? Do we look at revenue? Margins? Product portfolio?
Selecting the right metrics for grading is crucial. For example, products like iPhone and Apple Watch can’t be graded on unit sales since Apple doesn’t chase market share. We need to make sure that the items being used to grade Maestri align with the metrics that have guided his work and attention.
After assessing Apple’s business and the various obligations that fall to the finance team to manage, three metrics jumped out at me:
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Luca Maestri to Step Down as Apple CFO, The CFO Position at Apple, Apple Succession Planning
For today's update, we will focus on the Apple CFO news. The email begins with my thoughts on Apple’s announcement that Luca Maestri will be stepping down as CFO. It’s a good time to recap the unique role finance and the CFO play within Apple. We conclude with an observation regarding how Apple seems to be handling succession.
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Microsoft 2Q24 Earnings, Ranking Big Tech’s 2Q24 Performance
For today’s update, we will examine Microsoft’s CY2Q24 earnings. This will wrap up our Big Tech 2Q24 earnings reviews. We will then recap Big Tech earnings season by ranking the companies from best to worst reports.
While there are 2Q24 earnings from a few additional companies worth checking out, we will do that after going over several Apple news items.
Just a few hours ago, Apple announced that CFO Luca Maestri will be stepping down as CFO on January 1st, 2025. He will be remaining at Apple to lead Apple’s IT, information security, and real estate portfolios. Kevan Parekh, who has been at Apple for 11 years and is currently VP - Financial Planning and Analysis, will become Apple's new CFO. There is more to say about this in the next update.
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Meta 2Q24 Earnings, Thoughts on Meta HW Sales
We will continue our 2Q24 earnings reviews with Meta. Within Big Tech, Meta may be the most interesting from a competitive standpoint relative to Apple. Let’s jump in.
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Amazon Earnings, Amazon in the Home
Prior to heading off for vacation, we went over my thoughts on the U.S. v. Google verdict (Part 1 and Part 2). The two updates covered quite a bit. On social media, there continues to be a surprising number of people claiming default distribution contracts are under attack. Considering how the judge explained such arrangements are legal, it’s clear many people didn’t bother to read the verdict.
Earlier in the month, we took a deep dive into Apple’s 3Q24 earnings. While anticipation always rises heading into September thanks to the iPhone and Apple Watch rumor mill, expectations regarding what Apple will unveil remain in check. The same can be said for Apple Intelligence. There is growing acknowledgment that the rollout will be measured and gradual.
At this point, we will circle back to reviewing CY2Q24 earnings from some of Apple’s competitors. We already went over earnings releases from:
It makes sense to begin with the remaining Big Tech companies and then work our way down into certain verticals (i.e. streaming video). Today’s update will focus on Amazon’s earnings. It’s been six months since we talked about Amazon earnings (we skipped Amazon’s 1Q24).
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Tech Observations From My Vacation
It feels good to get into the swing of things following some vacation time. As in the past, we will ease back into the daily updates. My vacation included some time in various beach / seaside locations in New England. The list included both quiet locales and somewhat high-density areas.
Some time away from screens and my usual workflows can be incredibly enlightening when it comes to technology usage. A few years back, my vacation included just iPad and iPhone usage, representing the longest stretch without using a mouse and cursor in decades. Returning to the iMac after such a break felt awkward. The time away gave me perspective on how multi-touch is more intuitive than a mouse and cursor. My confidence level is high that at some point in the future, the same will be said about eye tracking / voice / gesturing / AI vs. multitouch. But let’s not get ahead of ourselves. We will focus on some observations from my vacation as it pertained to tech gadget / app / service usage.
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Thoughts on the U.S. v. Google Verdict (Part 2)
We will continue to focus on the U.S. v. Google verdict. After reading through the 286-page ruling, my notes came out to about three updates worth of material. After a significant amount of reduction and editing, we used two updates to talk about the ruling and its potential fallout (with Apple in mind). Yesterday’s update went over all of the interesting details / tidbits from the ruling. Today’s update is focused on my thoughts on the ruling and how Apple may be impacted.
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Thoughts on the U.S. v. Google Verdict (Part 1)
Hello everyone. Happy Monday.
We are going to focus on the U.S. v. Google verdict. After reading through the 286-page ruling, my notes came out to about three updates worth of material.
After a significant amount of reduction and editing, we are going to use two updates to talk about the ruling and its potential fallout (with Apple in mind). Let’s jump in.
Thoughts on the U.S. v. Google Verdict (Part 1)
Our review will begin by going over the Google / Apple Search deal. The 286-page ruling contained a thorough explanation of deal details and how things evolved over the years. We need to go over those details to form a proper base for subsequent analysis. This will then bring us to the verdict itself.
While today’s update will have a more factual feel, tomorrow’s update will be aimed at more of my thoughts on the verdict and what it means for Apple.
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Apple 3Q24 10-Q Takeaways, A Few Interesting Tidbits About Apple’s Share Buyback, Apple’s Free Cash Flow Margin
Today’s update will wrap up Neil’s 3Q24 Apple earnings review. We will examine Apple’s 3Q24 10-Q and the latest balance sheet and cash flow trends.
Here is how our review went:
Aug 7th: Secondary themes and charts
Aug 8th: Earnings call Q&A examination
Today: 10-Q, buyback, free cash flow
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Reading Between the Lines of Apple’s 3Q24 Earnings Q&A With Analysts
Instead of just recapping the question and answer exchanges that occurred on Apple’s 3Q24 earnings call, we will go over Neil’s thoughts / response to each exchange. This will allow Neil to go beyond what was talked about on the call.
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Apple’s 3Q24 in Three Charts
Hello everyone.
While recording the podcast episode for yesterday’s update, it occurred to me that one part of our discussion could have benefited from a bit more explanation. While such explanation was added to the podcast, which does routinely happen when episodes are recorded, to ensure everyone received the explanation, the following passage was from yesterday’s update:
“Back in 2019, [Warren] Buffett trimmed a very small part of Berkshire’s Apple stake. When asked why, Buffett didn’t actually provide an answer other than to say Berkshire’s overall stake in Apple continues to move higher due to Apple's buyback program.”
Since Apple is retiring the shares that it repurchases, the overall number of shares outstanding has been declining. This means that each remaining outstanding share is entitled to a larger share of Apple’s future cash flow (and business). If Berkshire didn’t buy or sell any additional AAPL shares, their stake in Apple would gradually rise thanks to Apple’s buyback program.
If we assume that Buffett cuts Berkshire's AAPL stake so that it’s slightly larger than the next largest equity holding (say $30B fair value at 140M shares), that would equate to 0.9% of Apple. Over time, assuming Apple continues to buy back shares and Berkshire doesn’t sell any more shares, that Apple ownership percentage will rise. The buyback is a major reason why Buffett finds AAPL shares attractive.
We will continue our Apple 3Q24 earnings review. Let's jump in.
Apple’s 3Q24 in Three Charts
Last Friday, we went over how Apple’s 3Q24 earnings compared to my expectations. Results came in close to my estimates. Nearly every line item beat (HW gross margin was the only thing that missed).
We also discussed the largest takeaway from earnings: iPhone fundamentals continue to gradually improve and are becoming less of a drag on Apple's overall ecosystem growth.
Turning our attention to secondary themes from earnings, there were three:
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