Above Avalon Episode 69: Apple's Music Ambitions

July 15, 2016 by Neil Cybart

Apple's ambition in music continues to be misunderstood. In episode 69, we look at Apple's overall plan to own the entire music industry. We begin with a brief history of Apple's involvement in music over the past 15 years in order to understand management's current motivation. The episode then goes over the four steps required to grab mindshare in the music industry in order to eventually be in a position of power. Apple will look to leverage its balance sheet to capture music streaming revenue share. We then discuss some of the headwinds and risks Apple faces with music, and this is followed by a brief discussion of why Apple is so interested in music in the first place. More information on Above Avalon memberships can be found at AboveAvalon.com/membership.

Show Notes:

Apple's Plan to Own the Entire Music Industry - Above Avalon

Why Apple Even Bothers with Music, Spotify Is Moving the Goalposts - Above Avalon (daily update sent to Above Avalon members)

More information on Above Avalon memberships - Above Avalon

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Above Avalon Episode 68: The $10 Billion Apple Watch

July 01, 2016 by Neil Cybart

In episode 68, we take a closer look at the Apple Watch business. After going over my estimates for Apple Watch revenue and unit sales since launch in April 2015, we discuss how much the Apple Watch business would currently be worth if it were a stand-alone company. It turns out that the Apple Watch is actually a paradox. Expectations seemed to fall off a cliff heading into WWDC despite several positive signs. More information on Above Avalon memberships can be found at AboveAvalon.com/membership.

Show Notes:

Apple Watch Is Already a $10 Billion Business - Above Avalon

Apple Watch's Future Will Include Smart Watch Bands - Above Avalon

The Apple Watch Paradox, Math and Logic Behind My $10B Apple Watch Valuation - Above Avalon (daily update sent to Above Avalon members)

More information on Above Avalon memberships - Above Avalon

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Above Avalon Episode 67: Apple's Post-iPhone Era

June 24, 2016 by Neil Cybart

This week's episode is focused on what will come after the iPhone. Using clues found throughout Apple's WWDC keynote, we discuss what this post-iPhone product era will look like and its driving forces. This new Apple Experience era will be a new chapter for Apple in which consumers are given the option to personalize their computing experience like never before. More information on Above Avalon memberships can be found at AboveAvalon.com/membership.

Show Notes:

WWDC Clues Hint at Apple's Post-iPhone Era - Above Avalon

Above Avalon Podcast Episode 66 - "Back from WWDC" - Above Avalon

The Grand Unified Theory of Apple Products - Above Avalon

Above Avalon Podcast Episode 44 - "The Grand Unified Theory of Apple Products" - Above Avalon

More information on Above Avalon memberships - Above Avalon

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Above Avalon Episode 66: Back from WWDC

June 17, 2016 by Neil Cybart

I am back from San Francisco, and Episode 66 is dedicated to Apple's WWDC keynote. We discuss the five most interesting items from the keynote that are still at the top of my mind days after the event. These five items are a mix of new features, products, and ideas that help to show where Apple is headed in terms of both software and hardware. More information on Above Avalon memberships can be found at AboveAvalon.com/membership.

Show Notes:

Above Avalon Podcast Episode 58 - "Apple Watch's Future" - Above Avalon

Apple Watch's Future Will Include Smart Watch Bands - Above Avalon

Apple's "New Beginnings" Video from WWDC - YouTube

WWDC 2016: Major Themes - Above Avalon (for members)

WWDC 2016: Detailed Thoughts and Observations - Above Avalon (for members)

More information on Above Avalon memberships - Above Avalon

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Above Avalon Episode 65: Getting Ready for WWDC

June 10, 2016 by Neil Cybart

As I get ready to fly out to San Francisco to attend Apple's WWDC keynote, this episode begins with a quick business update about Above Avalon and my recent first year anniversary of launching Above Avalon memberships. We then move to WWDC and an unusual kind of preview. We go over the backdrop of this year's developer conference and compare things to last year's conference. The episode concludes with a look at why many peers no longer envy Apple's business model and what it may mean for Apple's software and service ambitions. More information on Above Avalon memberships can be found at AboveAvalon.com/membership.

Show Notes:

Above Avalon Is Officially Sustainable - Above Avalon

No One Wants to Be Apple - Above Avalon

iPhone Warning Signs - Above Avalon

More information on Above Avalon memberships - Above Avalon

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Above Avalon Episode 64: A New Apple M&A Phase

June 03, 2016 by Neil Cybart

In this episode, we take a closer look at how Apple's M&A strategy is evolving. After analyzing 19 years of Apple M&A transactions, a number of patterns become visible. Apple M&A is closely related to Apple's functional organizational structure as both place the product above all else. We then discuss why Apple's $1 billion investment in Didi Chuxing should be compared to M&A and how the Didi deal marks the beginning of a new M&A phase. More information on Above Avalon memberships can be found at AboveAvalon.com/membership.

Show Notes:

Apple M&A Is Entering a New Phase - Above Avalon

More information on Above Avalon memberships - Above Avalon

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Above Avalon Episode 63: Speed Dating Didi

May 20, 2016 by Neil Cybart

Apple's $1 billion investment in Didi Chuxing is an important deal, marking the beginning of the company's official pivot into transportation. In this episode, we go over Didi's ridesharing business and the three primary reasons Apple decided to buy a stake in Didi. This is an unusual deal for Apple, indicative of significant change ahead for the company. More information on Above Avalon memberships can be found at AboveAvalon.com/membership.

Show Notes:

Apple Invests in Didi Chuxing (Above Avalon member update) - Above Avalon

More information on Above Avalon memberships - Above Avalon

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Above Avalon Episode 62: Apple Is Going to Pivot

May 13, 2016 by Neil Cybart

Apple is projected to report more than $10 billion of research and development expense in 2016. Unlike most of its tech peers, Apple remains very quiet about future plans. However, upon closer examination, there is only one explanation as to what Apple has in store with its R&D and the future: a pivot into personal transportation. In this episode, we take a closer look at why other explantations for rising R&D expense don't mesh with Apple, how Apple can actually pivot into new industries, and why Project Titan is not like any other R&D project. Project Titan is something different. More information on Above Avalon memberships can be found at AboveAvalon.com/membership.

Show Notes:

Apple R&D Reveals a Pivot Is Coming - Above Avalon

iPhone Warning Signs - Above Avalon

Above Avalon Podcast Episode 60: The Car's "iPhone" Moment - Above Avalon

Above Avalon Podcast Episode 27: Thinking About Cars - Above Avalon

Apple Is Building Its Largest Startup Ever - Above Avalon

More information on Above Avalon memberships - Above Avalon

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Above Avalon Episode 61: iPhone Warning Signs

May 06, 2016 by Neil Cybart

With Apple's 2Q16 earnings in the rearview mirror, we focus on the iPhone business and what appears to be a number of warning signs regarding growth and profitability. The iPhone business is slowing, and it appears that Apple management is still trying to get ahead of a deteriorating demand environment. In this episode, we discuss what is going on with the iPhone and the various warning signs beginning to appear. We then turn to the things to look out for when thinking about the path forward for iPhone and end with a big picture takeaway on where things stand in Apple's grand iPhone plan. Even though the iPhone business isn't imploding, it is time to become more skeptical about the iPhone's growth story. More information on Above Avalon memberships can be found at AboveAvalon.com/membership.

Show Notes:

iPhone Warning Signs - Above Avalon

iPhone SE Is Apple's $30 Billion Bet on 4-Inch Screens - Above Avalon

The Changing iPhone User Base - Above Avalon

The Pixar iPhone - Above Avalon

More information on Above Avalon memberships - Above Avalon

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Above Avalon Episode 60: The Car's "iPhone" Moment

April 22, 2016 by Neil Cybart

This episode is focused on rethinking the car. We begin by looking at how Apple positioned the iPhone to change our perception of the phone. This helps us discover what will be the auto industry's "iPhone" moment, or idea that leads us to think about the car differently. After discussing electric cars, autonomous driving and smart dashboards, we go over why rethinking the car seat ends up being the secret to rethinking the car. If we begin to think of a car as a personalized room on wheels instead of simply a box on wheels, our definition of a car will change. We conclude by looking at the competitive landscape to see who is best positioned to capitalize on this transformation. More information on Above Avalon memberships can be found at AboveAvalon.com/membership.

Show Notes:

Above Avalon Podcast Episode 27: Thinking About Cars - Above Avalon

The Car's "iPhone" Moment - Above Avalon

Marc Newson's website - Link

More information on Above Avalon memberships - Above Avalon

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Above Avalon Episode 59: Apple Dividends

April 15, 2016 by Neil Cybart

Episode 59 is dedicated to Apple's dividend. In two weeks, Apple's board will authorize an increase in the quarterly cash dividend. We take a comprehensive look at Apple's quarterly cash dividend, including growth trends and forward trajectories. The episode goes over some of the background regarding Apple paying a cash dividend, how share buyback impacts dividends paid to shareholders, and how tracking Apple's dividend strategy can provide clues as to how management is thinking about future prospects. More information on Above Avalon memberships can be found at AboveAvalon.com/membership.

Show Notes:

Examining Apple's Dividend Strategy - Above Avalon

More information on Above Avalon memberships - Above Avalon

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Above Avalon Podcast

Above Avalon Episode 58: Apple Watch's Future

April 08, 2016 by Neil Cybart

Apple will celebrate Apple Watch's one-year anniversary later this month. In this episode, we look at Apple Watch's first year, including the ups and downs. We then look forward to where the Apple Watch is likely headed from a product perspective. The focus should be placed on Watch bands and not watch cases. After going over my Wrist Real Estate theory, we look at ways that Apple can better utilize our wrists to push the wearable category forward. With Watch bands still on our minds, we look at what will likely be Apple Watch's financial drivers in the future. The episode concludes with brief words on Apple Watch development paths. More information on Above Avalon memberships can be found at AboveAvalon.com/membership.

Show Notes:

Above Avalon Podcast Episode 53: Learning from Tesla - Above Avalon

Apple Watch's Future Will Include Smart Watch Bands - Above Avalon

Apple Watch band data - Wristly

Apple Watch modular band patent - U.S. Patent & Trademark Office

New Apple Watch Hermès bands - iMore

More information on Above Avalon memberships - Above Avalon

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Neil Cybart

Above Avalon (weekly posts)

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Above Avalon Podcast

Above Avalon Episode 57: The iPhone 5s Successor

April 01, 2016 by Neil Cybart

Episode 57 is dedicated to the iPhone SE. After a few comments on Apple's "Let us loop you in" keynote, we begin to address the "what" behind the iPhone SE. We look at Apple VP Greg Joswiak's primary goals in announcing Apple's new 4-inch iPhone on stage and who Apple is targeting with the iPhone SE. Next, we look at how the iPhone SE is manufactured, finding clues that explain the rationale behind the device's $399 price. The episode concludes with a look at Apple's broader iPhone strategy based on screen size differentiation. More information on Above Avalon memberships can be found at AboveAvalon.com.

Show Notes:

Above Avalon Podcast Episode 55: Let's Talk 4-Inch iPhones - Above Avalon

iPhone SE Is Apple's $30 Billion Bet on 4-Inch Screens - Above Avalon

Apple March Keynote (video) - Apple

Apple iPhone SE Teardown - Chipworks

The Apple Keynote: Thoughts and Observations (Above Avalon member email) - Above Avalon

Additional Musings from Apple's Keynote (Above Avalon member email) - Above Avalon

More information on Above Avalon memberships - Above Avalon

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Above Avalon Podcast

Above Avalon Episode 56: Competing with Facebook

March 18, 2016 by Neil Cybart

In this episode, we discuss the rivalry between Facebook and Apple and the degree to which Facebook is an Apple competitor. We begin by discussing my Facebook experiment. I stopped using Facebook properties for six months in order to analyze the product. After going over my five primary observations from the experiment, we tackle the debate about whether or not messaging apps will eventually threaten mobile operating systems. Next, we look at Facebook and Apple's relationship and why they are not competitors, but actually partners. The episode concludes with a look at how the Facebook vs. Apple relationship could change in the future based on each company's mission. More information on Above Avalon memberships can be found at AboveAvalon.com.

Show Notes:

A Facebook Experiment - Above Avalon

Quartz's first news app for iPhone - Quartz

Samsung (and Facebook) at Mobile World Congress - Above Avalon (member email)

More information on Above Avalon memberships - Above Avalon

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Above Avalon Podcast

Above Avalon Episode 55: Let's Talk 4-Inch iPhones

March 11, 2016 by Neil Cybart

In this episode, we discuss the "why" behind Apple releasing a new 4-inch screen iPhone at its upcoming product event. We take a closer look at the changing iPhone user base and the two primary factors contributing to a more diverse base with varying opinions and attitudes towards small screen iPhones. The episode then shifts to why things changed once the iPhone 6s and 6s Plus launched, making the case for a 4-inch iPhone that much more compelling. We conclude by briefly discussing the iPhone's future and what it means to have screen size be the primary differentiating factor. More information on Above Avalon memberships can be found at AboveAvalon.com.

Show Notes:

The Changing iPhone User Base - Above Avalon

Calculating the iPhone Installed Base and User Base (Above Avalon member email) - Above Avalon

Introducing New Above Avalon Memership Features and a Slack Team - Above Avalon

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Above Avalon Podcast

Above Avalon Episode 54: Tim Cook's Legacy

February 26, 2016 by Neil Cybart

We have learned a great deal about Tim Cook's motivation and leadership these past two weeks from following the FBI iPhone case. In this episode, we take a closer look at what is becoming Tim Cook's legacy as Apple CEO. After giving various examples of Cook's defining moments, we shift and talk about how Cook works with Jony Ive to create products that push Apple forward. The episode concludes with a look at who holds the most power in and out of Apple and how Cook is literally defining the Apple CEO position. More information on Above Avalon memberships can be found at AboveAvalon.com.

Show Notes:

The Tim Cook Legacy - Above Avalon

The New York Times "iEconomy" series - N YT

Tim Cook/ABC News interview - ABC News

Tim Cook on Privacy (Charlie Rose) - YouTube

Macy's Thanksgiving Day Parade Info - Wikipedia

The Jony Ive Promotion - Above Avalon

The Key Power Brokers at Apple (story sent to members) - Above Avalon

Information on Above Avalon Memberships - Above Avalon

Introducing New Above Avalon Memership Features and a Slack Team - Above Avalon

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Neil Cybart

Above Avalon (weekly posts)

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Above Avalon Podcast

Above Avalon Episode 53: Learning from Tesla

February 19, 2016 by Neil Cybart

After a few brief words on Tim Cook's message to customers regarding iPhone security and the San Bernardino case, Episode 53 is dedicated to the car industry. Beginning with a look at Tesla's most recent earnings report, we discuss the progress Tesla has been making as an auto manufacturer and why the company has a balance sheet dilemma. Next, we take a closer look at why suggestions that Apple should buy Tesla are off base. The second half of the podcast is focused on the car and why auto production is the single biggest factor to watch in the changing auto industry. More information on Above Avalon memberships can be found at AboveAvalon.com.

Show Notes:

Standing on Tesla's Shoulders - Above Avalon

Tim Cook's "A Message to Our Customers" - Apple

Tesla 4Q15 Shareholder Letter - T esla

Apple Expands Autonomous Driving Team - Above Avalon (member email)

Introducing New Above Avalon Membership Features and a Slack Team - Above Avalon

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Neil Cybart

Above Avalon (weekly posts)

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Above Avalon Podcast

Above Avalon Episode 52: The iPhone Reality Distortion Field

February 12, 2016 by Neil Cybart

In this episode, we take a closer look at how the iPhone has changed the definition of success for Apple. Using three examples (Apple Watch, Apple Music and Apple accessories), we highlight how the iPhone business has been able to twist reality when it comes to the judging of Apple's newest products and how much success the company is actually seeing. The secret to understanding Apple success is to focus on the product. More information on Above Avalon memberships can be found at AboveAvalon.com.

Show Notes:

The iPhone Reality Distortion Field - Above Avalon

Above Avalon Episode 51: Apple's Broken Narrative - Above Avalon

The Grand Unified Theory of Apple Products - Above Avalon

Above Avalon Episode 48: People Love Accessories - Above Avalon

Introducing New Above Avalon Membership Features and a Slack Team - Above Avalon

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Above Avalon Podcast

Above Avalon Episode 51: Apple's Broken Narrative

February 05, 2016 by Neil Cybart

Apple's Wall Street narrative is broken. The metrics long used to judge Apple's success are now turning negative, and management is trying to use new data points as a way to measure Apple's progress. In this episode, we take a closer look at why narratives are important on Wall Street and why Apple's old narrative is no longer effective. We then take a deep-dive into management's new narrative, including how Apple looks at its service revenue. The episode concludes with a look at what a new Apple narrative needs in order to be effective. More information on Above Avalon memberships can be found at AboveAvalon.com.

Show Notes:

Apple's Broken Narrative - Above Avalon

Above Avalon Episode 50: iPhone Turbulence - Above Avalon

Above Avalon Episode 48: The Two Apples - Above Avalon

AAPL Is Trading Like a Junk Bond (Above Avalon Premium) - Above Avalon

1Q16 Earnings Supplemental Material - Apple

Introducing New Above Avalon Membership Features and a Slack Team - Above Avalon

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Above Avalon Podcast

Above Avalon Episode 50: iPhone Turbulence

January 29, 2016 by Neil Cybart

In this post-Apple earnings episode, we discuss what happened to the iPhone business at the end of 2015. Taking a closer look at Apple management's comments on the conference call and analyzing a few new iPhone platform data points, we arrive at the most likely cause for the latest amount of iPhone turbulence. We then look ahead at the near-term strategy Apple is most likely to use for navigating the iPhone business through this turbulence. Finally, we mark the 50th episode of the Above Avalon podcast by discussing the most pleasantly surprising Apple product to have come out since the start of the podcast in 2014. More information on Above Avalon memberships can be found at AboveAvalon.com.

Show Notes:

Apple 1Q16 Earnings Recap and Observations (sent to Above Avalon members) - Above Avalon

Apple Earnings Release - Apple

1Q16 Earnings Transcript - iMore

Introducing New Above Avalon Membership Features and a Slack Team - Above Avalon

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