Above Avalon Episode 141: Viral AirPods

There’s a remarkable story found with AirPods. Nearly two years after launch, AirPods began to go viral at the end of November 2018. In December, search interest was up 500%. This is unprecedented for an Apple product. In episode 141, we take a deep dive into the AirPods phenomenon and how the product became part of culture. Additional topics include AirPods unit sales, the size of the AirPods user base, the keys to success in wearables, and thinking of wearables as battles for real estate on our wrists, ears, eyes, and body. Receive my analysis and perspective on Apple throughout the week by becoming an Above Avalon member and receiving exclusive daily updates. To become a member, visit AboveAvalon.com/membership.   

Links:

AirPods Have Gone Viral (weekly article)

Inside Edition video (YouTube)

AirPod “Airings” (Twitter)

Estimating AirPods Sales (daily update)

Calculating the Mix of Apple Devices in Use (daily update)

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Above Avalon Episode 140: Let's Talk Content

Some of Apple’s recent decisions regarding content distribution have sparked a debate. Is Apple embracing a new kind of strategy that elevates services at the expense of hardware? Episode 140 is dedicated to going over Apple’s content distribution strategy and how the company is looking to leverage its user base in an effort to establish one of the more formidable content distribution arms in existence. Additional topics include Apple’s history as a content distributor, how streaming is changing content consumption, misconceptions surrounding Apple’s content distribution strategy, the sudden collapse in stationary speaker buzz, Apple’s goals for its content distribution arm, and the various challenges facing the company. Receive my analysis and perspective on Apple throughout the week by becoming an Above Avalon member and receiving exclusive daily updates. To become a member, visit AboveAvalon.com/membership.   

Links:

Apple’s Content Distribution Strategy (weekly article)

Calculating the Mix of Apple Devices in Use (daily update)

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Above Avalon Episode 139: Thinking About Apple in 2019

January is a great time to embrace the unknown rather than come up with predictions for the next 12 months. Episode 139 is dedicated to going over my fifth installment of Apple questions as the new year kicks off. We discuss 56 questions facing Apple in 2019. Topics include everything from big picture themes to detailed questions about Apple’s product strategy. Additional topics include Apple’s financial picture, management changes, emerging markets headwinds, R&D, and capital expenditures. Receive my analysis and perspective on Apple throughout the week by becoming an Above Avalon member and receiving exclusive daily updates. To become a member, visit AboveAvalon.com/membership.   

Links:

Apple Questions in 2019 (weekly article)

AirPods and Apple Watch Sales Estimates (daily update for Above Avalon members)

Apple’s Leadership Structure Under Tim Cook and Jony Ive (quarterly report for Above Avalon members)

Thoughts on Apple Cutting 1Q19 Guidance (daily update)

Additional Thoughts on Apple Cutting 1Q19 Guidance (daily update)

Apple Expands AirPlay 2 Support to Smart TVs (daily update)

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Above Avalon Episode 138: iPhone Pessimism Gone Too Far

There will come a time when the iPhone business is in big trouble. However, that day has not arrived quite yet. Episode 138 is focused on how the sheer level of pessimism facing iPhone hit an inflection point in 2018. Things have simply become too negative. The discussion begins with the iPhone’s impact on Apple financials. We then dissect iPhone hysteria to see how pessimism has changed and centered on a new type of narrative. Additional topics include demand for $999+ iPhones, the gray market, genuine risks and concerns facing iPhone, how the iPhone business is changing, and why wearables have to be part of the iPhone discussion. Receive my analysis and perspective on Apple throughout the week by becoming an Above Avalon member and receiving exclusive daily updates. To become a member, visit AboveAvalon.com/membership.   

Links:

iPhone Hysteria (weekly article)

Above Avalon Episode 136: The Unit Sales Crutch (podcast)

Apple Outgrew Unit Sales (weekly article)

Above Avalon Episode 135: The Gray Market Factor (podcast)

The Gray Market’s Impact on iPhone Pricing (weekly article)

Apple and Dividends: A Deep Dive into Apple’s Cash Dividend Strategy (quarterly report for Above Avalon members)

Apple Earnings Model Access (for Above Avalon members)

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Above Avalon Episode 137: A Cheaper Buyback

Given the magnitude of its buyback program, excess cash position, and free cash flow generation, no other public company is in as good of a position as Apple to benefit from stock market turmoil. Episode 137 is focused on how Apple can leverage its buyback program to take advantage of stock market dislocations. The discussion begins with my thoughts on the recent weakness in AAPL shares. We then look back at previous AAPL stock downturns to find a few similarities and takeaways. The discussion turns to Apple’s share buyback and the impact a change in stock price has on Apple’s buyback activity. Additional topics include Apple buyback scenarios, valuation, and the irrationality found in comparing a company’s stock price to its underlying health. Receive my analysis and perspective on Apple throughout the week by becoming an Above Avalon member and receiving exclusive daily updates. To become a member, visit AboveAvalon.com/membership.   

Links:

Leveraging Apple’s Share Buyback (weekly article)

Above Avalon Episode 90: Buying Back 50% of Apple (podcast)

Above Avalon Episode 41: Apple’s Record Stock Buyback (podcast)

Apple Earnings Model Access (for Above Avalon members)

Apple’s Leadership Structure Under Tim Cook and Jony Ive (quarterly report)

Above Avalon Gifts

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Above Avalon Episode 136: The Unit Sales Crutch

The most surprising part of Apple’s 4Q18 results wasn’t found with the numbers or even guidance. Instead, by announcing unit sales data would no longer be provided starting in 1Q19, management dropped a bomb on Wall Street. Episode 136 is focused on discussing Apple’s decision to move beyond unit sales. We go over how unit sales became a crutch for financial analysts. The discussion then turns to management’s new blueprint for how it wants Wall Street to judge Apple. Additional topics include Apple revenue and gross margin trends, Wall Street narratives, and Apple as a toolmaker. Receive my analysis and perspective on Apple throughout the week by becoming an Above Avalon member and receiving exclusive daily updates. To become a member, visit AboveAvalon.com/membership.   

Links:

Apple Outgrew Unit Sales (weekly article)

Above Avalon Episode 123: Apple’s New Wall Street Story (podcast)

An iPhone Slump? / A Possible iPhone Explanation (daily update)

Apple 4Q18 Earnings Review (daily update)

Apple’s Leadership Structure Under Tim Cook and Jony Ive (quarterly report)

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Above Avalon Episode 135: The Gray Market Factor

In episode 135, we look at how the gray market for refurbished and previously-owned iPhones is impacting Apple’s iPhone pricing strategy. The discussion begins with a closer look at iPhone ASP (average selling price) trends and my thoughts on how the gray market is impacting iPhone ASP. We then go over the three key ingredients needed to sustain a functioning gray market for iPhone. Additional topics include: iPhone durability, the iPhone Upgrade Program, iPhone residual values and depreciation, and future iPhone ASP trends. Receive my analysis and perspective on Apple throughout the week by becoming an Above Avalon member and receiving exclusive daily updates. To become a member, visit AboveAvalon.com/membership.   

Links:

The Gray Market’s Impact on iPhone Pricing (weekly article)

Size of iPhone Gray Market (daily update)

3Q18 iPhone Unit Sales Mix (daily update)

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Above Avalon Episode 134: Let's Talk Netflix

The Netflix machine seems unstoppable. Strong paid subscriber growth and rising content budgets have given Netflix a commanding lead in the paid video streaming market. However, change is in the air. Episode 134 is dedicated to discussing Netflix’s business model and why calls suggesting Netflix has won the paid video streaming war are grossly premature. Additional topics include Netflix’s keys to success, upcoming paid video streaming competitors, lessons from the music streaming industry, and things to watch out for in paid video streaming over the coming years. Receive my analysis and perspective on Apple throughout the week by becoming an Above Avalon member and receiving exclusive daily updates. To become a member, visit AboveAvalon.com/membership.   

Links:

Netflix Isn’t Invincible (weekly article)

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Above Avalon Episode 133: The Big Picture from Steve Jobs Theater

Last week, Apple Watch was the star of Apple’s second major product event at Steve Jobs Theater. Episode 133 is focused on looking at the big picture following Apple’s event. The discussion begins by going over Tim Cook’s comments regarding Apple’s mission statement and then quickly puts the iPhone and Apple Watch updates into context. We then turn to my Grand Unified Theory of Apple Products. Additional topics include my user base estimates for Apple’s various product categories, my rationale for why Apple Watch and Apple Glasses will one day have a larger user base than iPhone will, and the power associated with new form factors that are capable of handling new tasks. Receive my analysis and perspective on Apple throughout the week by becoming an Above Avalon member and receiving exclusive daily updates. To become a member, visit AboveAvalon.com/membership.   

Links:

Connecting the Apple Dots (weekly article)

Episode 44: The Grand Unified Theory of Apple Products (podcast)

Apple Glasses Are Inevitable (weekly article)

Apple Event Review (daily update)

User base estimates for Apple’s various product categories (daily updates)

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Above Avalon Episode 132: Titan vs. Tesla

In episode 132, we take a closer look at Apple's Project Titan. The discussion begins by going over the signs pointing to Apple expanding Titan initiatives in recent months. We then turn to Apple's goal with Titan and the automobile's changing value proposition. Tesla enters the discussion as we look at why the company isn't a realistic acquisition target for Apple. Additional topics include Tesla's struggles, poaching, Doug Field's move from Tesla to Titan, and the most interesting things to watch for in the auto space. Receive my analysis and perspective on Apple throughout the week by becoming an Above Avalon member and receiving exclusive daily updates. To become a member, visit AboveAvalon.com/membership.   

Links:

Poaching Tesla (weekly article)

Map of various Project Titan buildings and land (daily update)

Doug Field Joins Project Titan (daily update)

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Above Avalon Episode 131: Growth Drivers

Apple's latest growth story is driven by three drivers: iPhone, Services, and Wearables. In episode 131, we discuss these three growth drivers to see how they are not created equal. After going over the factors fueling Apple's growth drivers, we spend time discussing how Apple's growth story may change in the near term. The episode concludes with a big picture overview of why Apple's long-term growth story won't just be about Services. Receive my analysis and perspective on Apple throughout the week by becoming an Above Avalon member and receiving exclusive daily updates. To become a member, visit AboveAvalon.com/membership.   

Links:

Apple's Growth Story (weekly article)

Episode 126: Let's Talk Apple Services (podcast)

iPhone Installed and User Base Estimates (daily update)

Apple Watch Installed and User Base Estimates (daily update)

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Above Avalon Episode 130: What's a Computer?

Episode 130 is dedicated to discussing how Apple has become comfortable in accepting, and even embracing, the awkwardness that exists between the iPad and Mac. The discussion begins with a closer look at the fascinating juxtaposition between Apple's recent Mac campaign and its iPad ads from earlier this year. We go over what the ads tell us about Apple's thought process regarding the iPad and Mac. Things then turn to how the iPad vs. Mac juxtaposition hasn't been static over the years. After briefly recapping the post-PC era debate, the episode concludes with my thoughts on where Apple will bring the iPad and Mac platforms and why the company faces a large screen paradox. Receive my analysis and perspective on Apple throughout the week by becoming an Above Avalon member and receiving exclusive daily updates. To become a member, visit AboveAvalon.com/membership.   

Links:

The iPad vs. Mac Juxtaposition (weekly article)

Behind the Mac - Mac ad (YouTube) 

What's a computer - iPad Pro ad (YouTube)

Homework - iPad ad (YouTube)

Apple 3Q18 Earnings Preview (daily updates)

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Above Avalon Episode 129: Giants on Wall Street

A select group of corporate giants have been gaining influence and investor dollars on Wall Street. Episode 129 is dedicated to discussing today's corporate giants (Apple, Amazon, Alphabet, Microsoft, and Facebook) including the key differences and similarities between the five. The second half of the episode goes over why I think odds are good that today's giants won't be tomorrow's giants. The episode concludes with a closer look at Apple's quest to do the seemingly impossible - remain relevant. Receive my analysis and perspective on Apple throughout the week by becoming an Above Avalon member and receiving exclusive daily updates. To become a member, visit AboveAvalon.com/membership.   

Links:

The Race to a Trillion (weekly article)

Episode 123: Apple's New Wall Street Story (podcast) 

Valuing Wall Street Giants (daily update)

Episode 122: An Apple R&D Bonanza (podcast)

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Above Avalon Episode 128: Figuring Out What's Next

One of the major takeaways from this year's WWDC keynote was found with something not announced on stage. Apple finds itself announcing new technologies that make more sense on form factors that don't yet exist. Episode 128 includes a discussion of this year's WWDC, which demonstrated how Apple is figuring out what comes next. After quickly recapping the major WWDC 2018 announcements, Neil discusses how Apple is setting the stage for smart glasses. The second half of the episode goes over Apple's motivation for looking beyond current success to figure out what's next. Receive Neil's analysis and perspective on Apple throughout the week by becoming an Above Avalon subscriber and receiving exclusive daily updates. To subscribe, visit AboveAvalon.com/membership.   

Links:

Apple Is Figuring Out What's Next (weekly article)

Episode 126: Let's Talk Apple Services (podcast) 

Episode 103: Apple Glasses Are Inevitable (podcast) 

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Above Avalon Episode 127: Let's Go Behind the Scenes

Last week, Neil celebrated the third anniversary of launching Above Avalon subscriptions. Episode 127 provides a behind-the-scenes look at Above Avalon and includes a discussion of Neil's business model and the broader paid subscription industry. Neil then goes over some of the highlights and challenges from the first three years of Above Avalon subscriptions. The episode concludes with a closer look at Above Avalon's place in the Apple blogosphere and the major changes that have unfolded in the space. Receive Neil's analysis and perspective on Apple throughout the week via exclusive daily updates. To subscribe, visit AboveAvalon.com/membership.   

Links:

Above Avalon Subscriptions Turn Three (weekly article)

Episode 82: Above Avalon 101 (podcast) 

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Above Avalon Episode 126: Let's Talk Apple Services

Apple's services business is remarkably strong yet surprisingly mysterious. A closer look at Apple Services reveals an apparatus, which can easily qualify as a Fortune 100 company, that isn't what it seems from the outside. In episode 126, Neil puts together a few pieces of the Apple Services puzzle. After going over the five categories that comprise Apple Services, Neil goes over his financial estimates for each category. This leads to an overview of Apple's Services strategy and a look ahead at where Services growth will likely originate. Receive Neil's analysis and perspective on Apple throughout the week via exclusive daily updates. To subscribe, visit AboveAvalon.com/membership.   

Links:

The Apple Services Machine (weekly Above Avalon article)

Episode 75: The Apple Services Myth (Above Avalon podcast) 

Demystifying Apple Services, Apple Services and Hardware Dependency, Estimating Apple's Paid Subscription Mix (Above Avalon daily email)

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Above Avalon Episode 125: How's the iPhone X Doing?

In this special edition episode of the Above Avalon podcast, Neil goes over Apple's 2Q18 earnings. The discussion is dedicated to analyzing iPhone results. Along with going over his iPhone X sales estimates, Neil discusses the latest iPhone ASP and iPhone channel inventory adjustment trends. The episode concludes with Neil's theory as to why iPhone supply chain rumors have been off when it comes to iPhone X. Receive Neil's analysis and perspective on Apple throughout the week via exclusive daily updates. To subscribe, visit AboveAvalon.com/membership.   

Links:

The Goldilocks Era for iPhone Has Begun (weekly article)

My 2Q18 Apple earnings review - major themes and full notes (available exclusively to Above Avalon subscribers)

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Above Avalon Episode 124: Doubling the Buyback

In Episode 124, Neil discusses how Apple's capital allocation goals will require the company to double the pace of share buyback from current levels. The episode begins by going over the various updates Apple has pushed through to its share buyback and cash dividends. Attention then turns to Apple's excess cash position, which plays a key role in any discussion involving capital return. The episode concludes with Neil going over one possible path Apple can follow to reach an optimal capital strategy in a timely manner. Receive Neil's analysis and perspective on Apple throughout the week via exclusive daily updates. To subscribe, visit AboveAvalon.com/membership.   

Links:

Making the Case for Doubling Apple's Share Buyback Pace (weekly article)

The End to Apple's Cash Dilemma (weekly article) 

Above Avalon Episode 59: Apple Dividends (podcast)

My 2Q18 Apple earnings preview (available exclusively to Above Avalon subscribers)

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Above Avalon Episode 123: Apple's New Wall Street Story

Episode 123 takes a closer look at Apple's capital allocation story on Wall Street. After discussing why narratives are so important on Wall Street, Neil goes over the core tenets of a capital allocation story and how the narrative does a good job of describing Apple's design-led culture. Neil then goes over a number of implications found with Apple possessing a capital allocation narrative on Wall Street. The episode concludes with a discussion regarding Apple's valuation trends relative to the market. Receive Neil's analysis and perspective on Apple throughout the week via exclusive daily updates. To subscribe, visit AboveAvalon.com/membership.   

Links:

Above Avalon Episode 102: Apple Cash Influence (podcast)

Apple Found a Wall Street Narrative (Above Avalon weekly article)

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Above Avalon Episode 122: An Apple R&D Bonanza

After a brief lull, Apple's R&D expenditures are once again exploding higher. In Episode 122, Neil analyzes the latest Apple R&D trends. After discussing three drivers for R&D growth, Neil goes over the two new products likely responsible for the recent surge in R&D expenditures. The episode concludes with Neil's grand theory on Apple R&D. Receive Neil's analysis and perspective on Apple throughout the week via exclusive daily updates. To subscribe, visit AboveAvalon.com/membership.   

Links:

An Apple R&D Bonanza (Above Avalon weekly article)

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