The Above Avalon Podcast
The Above Avalon podcast takes a weekly look into Apple. By examining Apple from both a Wall Street and Silicon Valley perspective, Above Avalon provides unique insight and perspective as to how Apple thinks about the world.
To listen and download individual episodes, select from the list below.
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*NEW* Episode 147 - A Faster Bumper Car. In episode 147, we take a look at the changing competitive landscape facing the giants (Amazon, Apple, Facebook, Google, and Microsoft). Comparing the situation to bumper cars, we discuss why Google and Facebook have the slower cars that are no longer able to hide within the traffic. Additional topics include deep dives into three competitive battles in particular: Apple vs. Google, Apple vs. Facebook, and Amazon vs. Facebook vs. Google.
Episode 146 - Tackling Apple’s Excess Cash. In what has become an annual trend, Apple uses FY2Q earnings to also update its share buyback authorization and quarterly cash dividend. In episode 146, we preview the changes Apple will likely announce to its capital return program. The discussion begins by going over how Apple has adjusted its buyback pace following U.S. tax reform and why the company will eventually have to cut back on buyback. We then go over my expectations for what Apple’s board will approve in terms of increases to the buyback authorization and quarterly cash dividend. Additional topics include the debate surrounding Apple capital return and why the company has so few viable options for spending excess cash.
Episode 145 - It’s All About Curation. At Apple’s recent event at Steve Jobs Theater, the company unveiled its revamped content distribution arm. Episode 145 is dedicated to discussing Apple’s new content distribution services: Apple News+, Apple Arcade, and Apple TV+. Instead of just announcing services for consuming more content, Apple unveiled a strategy for curating content for its user base of a billion people, something that I am calling “Curation for Casual.” The discussion also goes over how curation explains Apple’s move into original content. Additional topics include a few surprises unveiled at Apple’s Services event, the history behind Apple’s video distribution strategy, the changing content consumption landscape, and Apple’s content distribution arm eventually being considered a core technology powering Apple devices.
Episode 144 - Checking Up on iPad. In recent years, the iPad line has undergone transformational changes. In episode 144, we look at Apple’s broader iPad strategy to add context to the newest updates involving the iPad mini and iPad Air. The episode kicks off with my thoughts on the new devices. The discussion then turns to the three sales phases that have come to define the iPad business over the years. Additional topics include Peak iPad mini, how Apple is following an iPhone / Mac hybrid approach when it comes to iPad updates, whether the iPad line is too complex or complicated, and observations on the current iPad line.
Episode 143 - Look at the Capex. For the first time in 16 years, Apple expects its capital expenditures (capex) to decline during the current fiscal year. Episode 143 is dedicated to discussing capex and how the financial metric provides a different look at how Apple is unique in comparison to its largest peers. Additional topics include defining capex, the theories behind Apple’s declining capex, the dramatic capex shift occurring among the Wall Street giants, and how capex shines light on a company’s cash-generating machine.
Episode 142 - Rethinking the Smart Home. In one word, the smart home has been disappointing. Episode 142 is focused on why the way we think about digital homes is in need of a major reset. After going over my thoughts on the current state of the smart home, we take a closer look at Apple’s vision for the home and why the company is likely looking to revamp its broader home strategy. Additional topics include how Amazon and Google have used voice to hijack the smart home in order to push alternative visions and Apple hiring Sam Jadallah to lead its various home initiatives. We also discuss how Apple can revamp its home strategy and why the smart home path is going to be bumpy going forward.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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 in the auto space.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
Episode 121 - Controlling Sound. In Episode 121, Neil discusses Apple's strategy for controlling sound in our lives. The discussion begins by going over Apple's motivation for controlling sound and the central role music plays in it. The episode then turns to the two parts of Apple's strategy: sound on the go and sound in the home. Neil goes over how iPod, iPhone, AirPods, and now HomePod, play a role in Apple's strategy for controlling sound. The episode concludes with a few reasons why Apple's sound in the home strategy appears to be much more precarious than its sound on the go plans.
Episode 120 - An iPhone Turning Point. Episode 120 is focused on how Apple's dramatic change in strategy regarding larger iPhones was driven by the realization that iPad mini was the wrong bet. After discussing the early iPad years, Neil goes over the background behind how the iPad mini came to be. Neil then discusses how Apple found itself flat-footed with larger smartphone screens and how a different perspective toward smartphones and tablets ultimately led Apple to a stronger iPhone vision and strategy. The episode concludes with three lessons to be taken from the situation.
Episode 119 - The iPhone's Goldilocks Era. The unit sales growth era that had defined iPhone for years is over. Episode 119 is dedicated to discussing the iPhone's new era that can best be characterized as status quo. After discussing iPhone sales trends, Neil goes over six headwinds that have come together to create a much less friendly iPhone sales growth environment. The discussion turns to how the dynamic between the two main iPhone sales drivers show a more resilient business. Neil then goes over how key iPhone fundamentals will trend during the Goldilocks era. The episode concludes with a look at the risks and wildcards to the iPhone business.
Episode 118 - Apple Watch Is a Bridge to the Future. Something is changing when it comes to the way people are thinking about Apple Watch. We are witnessing nothing short of a revolution with Apple Watch. In Episode 118, Neil discusses how Apple Watch has become a bridge between the present and future. The device holds the potential to become more disruptive to the current computing paradigm than even Apple may want to acknowledge.
Episode 117 - Lots of Questions. January is a great time to embrace the unknown found with a new year. Episode 117 is focused on going over my list of questions for Apple in 2018. We cover more than 60 questions on subjects that range from Apple's major product categories to various managerial and organizational topics.
Episode 116 - Grading Apple's 2017. Episode 116 is dedicated to reviewing Apple's performance in 2017. After briefly discussing my methodology for grading Apple, we discuss the various milestones and issues that impacted the company in 2017. My grading process is broken into seven categories (iPad, Apple Watch, iPhone, Mac, Accessories, Services, Financial Strategy). The episode concludes with my overall grade for Apple in 2017 and a few closing thoughts on what turned out to be a very busy year for management.
Episode 115 - Betting on Hardware. Apple isn't a hardware company. Nevertheless, hardware's importance to Apple continues to grow. Episode 115 is dedicated to discussing Apple's growing bet on hardware. The episode begins by going over Apple's hardware strategy and includes a brief history of Apple's approach to hardware. The discussion then turns to Apple's hardware scale as we go over the company's overall product sales. We conclude with how Apple is doubling down on hardware in order to become the most powerful software provider in the wearables era.
Episode 114 - The End to Apple's Cash Dilemma. The probability of a U.S. corporate tax overhaul has never been higher. Episode 114 is dedicated to discussing how upcoming changes to the U.S. corporate tax code will impact Apple. We begin by going over Apple's current cash dilemma. The discussion then turns to the two significant changes that will take place with Apple's cash and balance sheet strategy assuming the U.S. corporate tax code is overhauled. The rest of the episode is dedicated to talking about Apple's excess cash and the options to spend the excess cash that Apple faces.
Episode 113 - It's a Smart Speaker Mirage. We are in the midst of a massive mindshare bubble involving stationary smart speakers in the home. Episode 113 is dedicated to discussing stationary smart speakers powered by digital voice assistants. After going over my Amazon Echo sales estimate, we look at why certain companies are placing big bets on stationary smart speakers and why there are already signs that the rosy and optimistic narrative facing the product category is off. The discussion then turns to the three distinct possibilities as to the stationary smart speaker's future. We end with how smart speakers ultimately end up competing with wearables.
Episode 112 - The Art of Disclosure. The fourth season of the Above Avalon Podcast kicks off with a discussion focused on Apple Watch sales disclosure. We take a closer look at the debate surrounding disclosure to see how Apple now stands to benefit more from disclosing Apple Watch sales than from keeping them hidden. The discussion goes over the four major changes that have swung the disclosure debate in favor of Apple providing Apple Watch data. We look at one possible path that Apple can use going forward to disclose Apple Watch sales on a quarterly basis. The episode concludes with a broader look at financial disclosure at public companies and how Apple manages its financial disclosure strategy.
Episode 111 - Let's Talk iPhone X. Apple was faced with a choice: Stick with the familiar and milk the iPhone business for all it’s worth, or throw familiarity out the window to pave a new iPhone journey for the next 10 years. Apple chose the latter, and iPhone X is the byproduct. Episode 111 is dedicated to discussing iPhone X. We begin by going over Apple's motivation behind iPhone X. The discussion then turns to my initial impressions and thoughts from using the device. We go over Apple's strategy regarding iPhone X reviews and conclude with Apple's ultimate goal with iPhone X.
Episode 110 - A Double Standard. Apple is a Silicon Valley and Wall Street leader with a bull's-eye on its back, and rightly so. Leaders should be held to a higher standard. Episode 110 is dedicated to discussing how Apple is being held not only to a higher standard, but also to a double standard. We begin by going over what it means for Apple to face a double standard. The discussion then goes over examples of how companies not named Apple are being graded on a curve. After looking at how Apple's double standard impacts the company's Apple Watch and China narratives in the press, we go over my three theories for why a double standard is being applied to Apple. The episode concludes with a few solutions for removing this double standard.
Episode 109 - Apple's Grand Vision. Apple's product strategy has been receiving more attention lately as voice-first and AI-first become buzzwords in Silicon Valley. Episode 109 is dedicated to discussing the vision behind Apple's product strategy. We begin by analyzing Apple's current product strategy and how the company's four major product categories are connected to each other. The discussion then turns to Apple's shifting product priorities. This brings us to Apple's grand vision and how there is a role for design to play in entirely new industries. After discussing issues and roadblocks Apple has faced following its grand vision, we conclude with how HomePod marketing sheds light on Apple's inevitable product path.
Episode 108 - iPhone Courage. The amount of risk Apple is taking with iPhone X should not be underestimated. Episode 108 takes a closer look at how Apple is displaying courage by not letting fear of change and customer rejection dictate iPhone design decisions. The discussion begins with my iPhone X impressions. We then go over how the iPhone X fits within Apple's overall iPhone strategy. We go over examples of how Apple has displayed courage with iPhone in the past and why design has such a large impact on iPhone's future. The episode concludes by comparing Apple's approach to design with Samsung's approach.
Episode 107 - Back from Apple Park. Episode 107 is dedicated to discussing Steve Jobs Theater. We begin with my impressions from attending Apple's inaugural event at Steve Jobs Theater. The discussion then turns to how Steve Jobs Theater is an Apple product, and a closer look at the building uncovers a side to Apple that few have seen before. We go over additional items that stood out to me about the theater and Apple Park, including why the most crucial takeaway ends up being about Jony Ive.
Episode 106 - Getting Ready for Steve Jobs Theater. Apple's largest product event in years is just a few days away. In episode 106, we look at the big picture ahead of the inaugural event at Steve Jobs Theater. We begin by going over the top three trends taking place in the smartphone market. The discussion then turns to the major themes in the wearables market, followed by TV, and then the home. The goal is to set the stage for Apple's upcoming product announcements.
Episode 105 - Apple in China. In episode 105, we focus on Apple's business in China in an effort to answer whether the country represents more of an opportunity or risk for Apple. The discussion begins by going over some of the numbers, including those that show Apple's volatile performance in China. We then look at the major trends unfolding in the smartphone market in China, which leads to a deep dive into the major issues impacting Apple in China. After going over the WeChat versus Apple debate, we discuss the various positive signs reappearing in Apple's Greater China operating segment. The episode concludes with a look at some strategy adjustments Apple can make in order to leverage the most opportunity from China.
Episode 104 - Obscene Amounts of Cash. Episode 104 is dedicated to discussing how Apple's business model predisposes the company to cash generation unlike that of any other firm in Silicon Valley. The discussion begins by comparing Apple's financials to those of the leading consumer-facing technology companies. We then take a closer look at Apple's business model to see just how the company is able to generate so much free cash flow. The stationary speaker market is used as an example to demonstrate how Apple plans on making money differently than others in the space. We conclude by going over questions regarding Apple's cash machine in the future.
Episode 103 - Apple Glasses Are Inevitable. Episode 103 marks the introduction of a brand new topic to the Above Avalon podcast: augmented reality glasses. All of the pieces are coming together for Apple to sell glasses. We begin the episode with the reason why now is the time to talk about Apple Glasses. The discussion then turns to the seven reasons why Apple Glasses are inevitable. This sets the scene for the big picture (a deep dive into glasses as a device, Apple's evolving thought process about glasses, and an overview of how Apple would actually sell AR glasses).
Episode 102 - Apple Cash Influence. Episode 102 has a financial tone as we discuss how Wall Street is thinking about Apple in a new way. After breaking up the last five years of Apple stock performance into four eras, we go over my theory on why Wall Street now looks at Apple's excess cash as the most influential factor impacting the stock. This means that the iPhone business is losing influence over the stock. We go over the four reasons why I think investors are now valuing Apple's future cash flows at a higher level. The episode concludes with three implications of Wall Street giving more attention to Apple's balance sheet, excess cash, and share repurchases.
Episode 101 - iPhone Turns Ten. This week marks the tenth anniversary of Apple launching the iPhone. Episode 101 is focused on how ten years of iPhone sales changed Apple. After going over three sets of data that stand out when thinking about the iPhone, we take a closer look at three lessons Apple learned from iPhone (ambition, control, platform). The episode concludes with a discussion of how the iPhone's legacy is already beginning to appear.
Episode 100 - A Glimpse of the Mac's Future. The 100th episode of the Above Avalon podcast is dedicated to how WWDC contained clues hinting at the Mac's future. We begin by discussing how management's WWDC keynote marked a turning point in the awkward Mac stretch that has been unfolding over the past few years. We then compare the Mac portion of the keynote to the iPad portion in order to see the significant difference in tone and strategy. This difference ends up helping us map the Mac's direction. After going over some of the possible changes to the Mac line, we conclude the episode by talking about why this is unchartered territory for Apple.
Episode 99 - HomePod. I am back from San Jose and WWDC. Episode 99 is focused on the most intriguing new product at this year's WWDC: HomePod. The discussion begins with an overview of the expectations heading into last week's HomePod unveiling. Apple's sales pitch for HomePod caught quite a few people by surprise. We then go over my impressions from listening to HomePod play various music genres. The episode then turns to HomePod's value around augmented hearing in the home and the broader strategy behind the product. After discussing HomePod pricing and a few challenges Apple faces with the product, we conclude by going over Apple's overall goal for the device.
Episode 98 - iPhone Evolution. The iPhone's role in our life doesn't remain static, but rather it evolves. Episode 98 is focused on how the iPhone has evolved over the past 10 years. We cover the major implications this ongoing evolution will have on iPhone pricing, screen size preference, upgrade trends, and demand for other Apple products. The episode concludes with a discussion on the item responsible for breeding the evolutionary process found with iPhone. Receive my analysis and perspective on Apple throughout the week via exclusive daily emails.
Episode 97 - Apple Wearables Are a Thing. In episode 97, we discuss one of the major themes from Apple's 2Q17 earnings report. There were a number of interesting observations found in the "Other Products" line item. In particular, Apple wearables (Apple Watch, AirPods, Beats headphones) sold quite well. After going over the methodology I used to derive 2Q17 Apple Watch and AirPods unit sales, we discuss the best way to put Apple wearables sales into context. It turns out Apple wearables outsold iPhone over the first two years on the market. We also discuss why the wearables discussion should be about more than just Apple Watch and the impact a wearables platform will have on adoption trends. The episode concludes with some thoughts on Apple wearables sales over the upcoming year.
Episode 96 - Defining Apple. Apple continues to be misunderstood. Episode 96 is focused on how best to define Apple. The discussion begins with all of the labels used to describe Apple over the years. We then go over the major clues that help us define Apple, and this takes us to my thesis that Apple is a design company. We go over what design means and the difference between a design and tech company. The discussion concludes with a few examples of how Apple, as a design company, approaches core technologies. We use these examples to map where Apple is headed in the future.
Episode 95 - A Mac Headache. In episode 95, we discuss how the Mac business has become a headache for Apple management. We begin by going over Apple's recent private meeting with outside journalists to talk about the Mac product pipeline. We then assess Apple's success with Mac by comparing it to the rest of Apple's business. The discussion turns to Apple's Achilles' heel and why the tail end of Apple's product line is beginning to pose a challenge. Apple's decision to come up with a new Mac Pro, while likely the right move, raises a number of red flags. After looking at each red flag, we end with a big picture view of why the Mac will have trouble fitting within Apple's longer-term mission.
Episode 94 - Getting Aggressive with iPad. In episode 94, we discuss how Apple is pulling out all the stops when it comes to selling iPad. We begin by going over the significant changes to iPad strategy unveiled last week. The discussion then turns to the reasoning behind the changes, which involves taking a closer look at iPad sales according to screen size. This brings us to how Apple's aggressive iPad actions are related to the company solving its Mac dilemma. The episode concludes with how Apple plans to return the iPad business to growth.
Episode 93 - Underpricing Luxury. As Apple pushes deeper into luxury brand territory, the company is making its products more accessible through lower pricing. Apple is underpricing AirPods and Apple Watch. In episode 93, we discuss Apple's evolving pricing strategy. We begin by looking at AirPods and Apple Watch pricing and why I think the products are underpriced. The discussion then turns to three possible theories on Apple's wearables pricing strategy. After analyzing each theory, we take a closer look at how Apple is using pricing to grow its user base. The episode concludes with a number of things to look for when it comes to future Apple products and how Apple is using lower pricing to redefine luxury.
Episode 92 - Wearables as a Platform. In episode 92, we discuss the changing wearables market. There has been a sea change involving the top wearables companies. Apple has become the new wearables leader according to unit sales. After discussing the driving force behind Apple's move to the lead, we take a closer look at why it's time to begin thinking about wearables as platforms containing a number of products. The episode concludes with a look at how competition is changing in the wearables space.
Episode 91 - Netflix Chatter. Calls for Apple to buy Netflix are getting louder. In episode 91, we break apart the argument for why Apple should buy Netflix. By observing how Apple thinks about music streaming, we are in a better position to judge the approach Apple will likely take to video streaming. We also go over Apple's M&A philosophy to determine how Apple treats holes in its content strategy. The episode concludes with a big picture view as to why Apple doesn't need to own Netflix in order to accomplish its video content goals.
Episode 90 - Buying Back 50% of Apple. Apple management is buying back shares like there's no tomorrow. In episode 90, we discuss how a path has appeared where Apple management can realistically buy back 50% of AAPL's outstanding shares within three years. After first going over some basics concerning share buyback, we address a few myths that have been circulating about share repurchases. We then go over the steps Apple management would need to follow to repurchase 50% of its shares. The episode concludes with a big picture view of Wall Street's reaction to Apple and its buyback program.
Episode 89 - The iPad Asterisk. In episode 89, we take a deep dive into one of the major themes found in Apple's 1Q17 earnings report. Apple's reported iPad sales number was quite weak, leading some to make assumptions about the product's fundamentals. We go over the results, including all of the moving pieces behind the scenes. The discussion also includes a broader reflection on the iPad's seventh anniversary and its place within Apple's changing product line. The episode concludes with a look at whether or not 1Q17 results changed my overall view that the iPad business has already turned the corner and is continuing to stabilize.
Episode 88 - Grading Tim Cook. Tim Cook is a different type of CEO leading a different kind of company. In episode 88, we tackle the difficult task of grading Tim Cook's performance as Apple CEO. The discussion includes a broader look at Apple's leadership structure and evidence that Cook relies on an inner circle to lead Apple's operations and corporate strategy. The episode concludes with a closer look at seven key criteria used to judge Apple's performance, including a report card for Cook's inner circle.
Episode 87 - Change Is in the Air. Episode 87 is focused on how the competitive landscape in tech is changing. As Apple celebrates the tenth anniversary of the iPhone unveiling, the battle for our attention is broadening into a massive land grab for the most valuable real estate in our lives. After going over the winners in the current tech landscape, we look at some of the key factors that are redrawing the competitive lines. We then spend time focused on the three main areas of competition: the body, automobile, and home. The episode concludes with a discussion of this new landscape from the perspective of Apple.
Episode 86 - Apple Questions for 2017. January is a great time to embrace the unknown found with a new calendar year. One way of doing this is to come up with a list of questions for the new year. In episode 86, we discuss my list of Apple questions for 2017. Topics include iPhone, Apple Watch, AirPods, Mac, iPad, Apple TV, iOS 11, Apple Music, Services, Project Titan, Wall Street, Apple Industrial Design, and a few wildcards.
Episode 85 - AirPods and the Battle for Our Ears. In episode 85, we go over how AirPods kick off Apple's battle for our ears. After discussing Apple's motivation behind AirPods, we go over my initial impressions from using AirPods for the past week. We then follow a few additional points, including my thoughts on AirPods sales estimates and how AirPods represent a window into a wearables world. The episode concludes with a look at how AirPods are Apple's flagship weapon in its quest for our ears.
Episode 84 - The Elephant in the Smartwatch Room. Episode 84 is focused on analyzing the smartwatch industry. Apple is consolidating power within the smartwatch industry at an alarming rate. We begin with a refresher as to the motivation and rationale for smartwatches in a smartphone world. The discussion then turns to smartwatch industry sales data with a closer look at the winners and losers. Next, we go over the four factors that best explain why Apple Watch is the best-selling smartwatch. The episode concludes with my thoughts and observations on new developments that will impact where the smartwatch market is headed.
Episode 83 - Milking the iPhone. Apple is betting now is the time to double down on the iPhone to build one of the world's most formidable tech ecosystems. Episode 83 begins with a discussion of Apple's iPhone strategy. The company has learned from mistakes made with the Mac in the early 1990s. We then discuss Apple's quest for new users and why Tim Cook shouldn't be judged as a product visionary or salesperson. The episode then discusses the cracks forming at Apple's edges and why it feels like something is off with Apple. Additional topics include the major risk Apple is facing by doubling down on the iPhone and the company's need to attack itself in order to remain relevant.
Episode 82 - Above Avalon 101. In this special edition episode, the focus is on Above Avalon. I recently celebrated the second-year anniversary of launching Above Avalon. Topics include the motivation behind starting Above Avalon, business models, and my philosophy on Apple analysis. The episode then covers my top five Apple observations since launching Above Avalon in 2014. We conclude with a brief discussion on the changing media landscape, including the Apple rumor/news cottage industry.
Episode 81 - Skating to the Apple Car Puck. Episode 81 is focused on Apple's changing Project Titan strategy. We begin by discussing Apple's initial car strategy and early momentum. The episode then discusses the various problems that began to appear with Project Titan at the end of 2015. We introduce the infamous "skate to where the puck is going to be, not where it has been" quote and how it can be applied to electric cars. The episode concludes with a look at all of the change taking place within the car industry and how Project Titan has been impacted. Apple miscalculated the car puck and is in the process of resetting its goals to reflect the changing environment.
Episode 80 - Let's Talk the New MacBook Pro. I am back from Cupertino and Apple's Mac keynote. Episode 80 is focused on the new MacBook Pro. We begin the episode with a few observations I had after attending the presentation. The conversation then turns to defining the Mac within Apple's product line. The Grand Unified Theory of Apple Products is revisited to assess how the Mac has been doing in relation to the iPad and iPhone. After going over three possible paths forward for the Mac, we spend time discussing which option Apple chose and why the new MacBook Pro is such a big bet for Apple. After discussing Microsoft Surface Studio, the episode concludes with a look at The Apple Innovation Feedback Loop that ties everything together.
Episode 79 - Apple's Trojan Horse into Hollywood. Episode 79 is focused on Apple's video content strategy. Signs point to Apple building its own Hollywood arm dedicated to original content. After going over Apple's long history of trying to rethink TV and video content, we discuss why video content is so important to Apple. We then discuss Apple's current video strategy, which includes a twist involving Apple Music and a dedicated Apple Studios division within Apple. The discussion then turns to the question of whether or not Apple should acquire Netflix to kick its video strategy into high gear. We conclude with a big picture view of how Apple looks at original video content within its boarder product lineup.
Episode 78 - Apple Is Going After Fitbit. There is only one genuine battle for the wrist, and it is between Fitbit and Apple Watch. Episode 78 is all about Apple Watch Series 2 and Apple putting Apple Watch on a fitness detour. We begin by going over the impressions I get from using Apple Watch Series 2 for the past few weeks. The discussion turns to the strategy behind the new Apple Watches. We then take a deep dive into the Apple Watch's competitive landscape and why Fitbit is being underestimated. The episode concludes with a closer at why Fitbit is succeeding and Apple's goal in going after Fitbit.
Episode 77 - Let's Talk iPhone 7. Episode 77 is all about iPhone 7. Since the iPhone 7 should not be discussed in isolation, we begin the episode by going over some of the major themes impacting the iPhone business over the past year. The discussion turns to the impressions I get from using a Jet Black iPhone 7 Plus for the past two weeks. We then take a deep dive into the dual-camera system found with the Plus model and go over why I think the feature is such a big deal. The episode concludes with some big picture ideas as to how we will look back at the iPhone 7 in a few years.
Episode 76 - AirPods. I am back from San Francisco. In episode 76, we discuss the most intriguing new product to be unveiled at Apple's keynote. AirPods are not just a pair of bluetooth headphones or an iPhone accessory. Instead, AirPods represent Apple's second wearables platform. After going over my experience using AirPods, we dive into the strategy behind the product. We discuss how Apple will likely expand AirPods into a platform as they did with Apple Watch. The discussion then turns to my view on the upcoming Apple Experience era and where AirPods fit into Apple's future product portfolio.
Episode 75 - The Apple Services Myth. The narrative surrounding Apple Services has taken on a life of its own. In episode 75, we dispel the myth that Apple is becoming a services company. After discussing how this myth began, we take a closer look at the actual story involving Apple services. The episode then covers Apple's long-standing goals for services and why Apple will end up doubling down on hardware in order to grow its services business. Additional topics include the logic behind Apple getting involved with music and video, "Apple as a service," and Project Titan's potential involvement with services down the road.
Episode 74 - Jony Ive Is Making People Uneasy. Episode 74 is dedicated to discussing how Jony's power and control within Apple is increasingly making people uncomfortable with the company's direction. Apple has doubled down on its design-led philosophy. We go over the history of why Steve Jobs gave power to Apple's industrial designers and why this is now leading to Apple receiving a growing amount of criticism from some of its most loyal users. We then take a closer look at Apple's product line to see how some of the most widely-held points of criticism ultimately lead back to Jony.
Episode 73 - The Art of Simplicity. Apple Watch and Apple Music shared something in common with each other in the beginning. They lacked simplicity. After going over the definition of simplicity, we dissect where Apple Watch and Apple Music lack simplicity and what I suspect contributed to this situation. We then look at Apple's WWDC keynote this past June to see how Apple plans on addressing this lack of simplicity.
Episode 72 - Let's Talk iPad. The iPad has turned the corner. In episode 72, we take a look at the iPad business and the factors that give me confidence that fundamental elements of the business are beginning to improve. The episode begins with an overview of the iPad's early days and vast promise. This is followed by a discussion of why the iPad mini marked a turning point that kicked off the product's dark days. After going over the iPad's problems in recent years, we discuss the three reasons that give me confidence the iPad is moving to a point of stabilization.
Episode 71 - Apple's Earnings Surprise. In this special edition episode, we discuss the primary theme from Apple's 3Q16 earnings. Even though Apple reported its weakest quarter in 15 years, AAPL shares increased as the company beat Wall Street expectations. Upon closer examination, it would appear that this expectations surprise had more to do with near-term results than 2017 trends. We then look at the iPhone business with a focus on the company's channel inventory drawdown and 4Q revenue guidance to reach a deeper understanding of how Apple management may be navigating Wall Street's expectations.
Episode 70 - The Wall Street Expectations Game. Episode 70 takes a closer look at how expectations guide Wall Street. We discuss AAPL's transformation from a growth stock to a value stock, focusing on the contributing factors that led to the reset. We then discuss the framework underpinning Wall Street's expectations game and how management teams have a better chance at succeeding in the game. We conclude with implications resulting from Apple becoming a value stock.
Episode 69 - Apple's Music Ambitions. 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.
Episode 68 - The $10 Billion Apple Watch. 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.
Episode 67 - Apple's Post-iPhone Era. 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.
Episode 66 - Back from WWDC. 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
Episode 65 - Getting Ready for WWDC. 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.
Episode 64 - A New Apple M&A Phase. 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.
Episode 63 - Speed Dating Didi. 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.
Episode 62 - Apple Is Going to Pivot. 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.
Episode 61 - iPhone Warning Signs. 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.
Episode 60 - The Car's "iPhone" Moment. 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.
Episode 59 - Apple Dividends. 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.
Episode 58 - Apple Watch's Future. 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.
Episode 57: The iPhone 5s Successor. 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.
Episode 56: Competing with Facebook. 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.
Episode 55: Let's talk 4-Inch iPhones. 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.
Episode 54: Tim Cook's Legacy. 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.
Episode 53: Learning from Tesla. 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.
Episode 52: The iPhone Reality Distortion Field. 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.
Episode 51: Apple's Broken Narrative. 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.
Episode 50: iPhone Turbulence. 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.
Episode 49: Moving Beyond the iPhone. Apple has spent the past four years planting the seeds for doing the seemingly impossible: moving beyond the iPhone. In this episode, we discuss what it means to Apple to be the iPhone company and the strategy Apple has undertaken to position itself as the driver of the next technological era. After analyzing how the wearables market performed in 2015, we conclude with how Apple is thinking about the iPhone's future and the danger of losing relevency.
Episode 48: The Two Apples. There are two Apples: AAPL, the stock, and Apple, the company. In this episode, we discuss the difference between the two Apples. What are the parameters guiding Wall Street's view of AAPL in comparison to Apple management's long-term goals for the company? We discuss AAPL's remarkable underperformance in 2015 and why Apple, the company, had a much more successful year. We conclude with one way Apple management can take this divide between Wall Street and Silicon Valley and use it to their advantage.
Episode 47: Apple Questions for 2016. In this episode, we discuss Apple's business prospects for 2016. By focusing our attention on 20 different topics including Apple Watch, iPhone, iPad, Mac, Apple Music, AAPL financials, management, and product wildcards, we embrace the unknown to reach a better assessment of Apple's priorities and opportunities. We then discuss new Above Avalon features for 2016, including an Above Avalon team in Slack and a new archive for members.
Episode 46: Selling Apple Watch Buzz. The Apple Watch and iPad are being positioned as the top tech gadget gifts of the season. In this episode, we take a closer look at Apple's fourth quarter and why third-party retailers are betting on Apple products. With Best Buy and Target offering significant discounts on Apple Watch and iPad, we go over the rationale behind such sales and why retailers want access to tech gadgets with the most buzz. We conclude with a look at where Apple products are sold and how product promotions impact the Apple brand.
Episode 45: People Love Accessories. In this episode, we take a closer look at the accessory market and the driving factors behind Apple's decision to continue down the path of selling iPhone, iPad, and Apple Watch accessories. We then tackle the debate that has been building in recent months over questionable Apple design decisions when it comes to certain accessories including the Magic Mouse 2, Apple Pencil, and iPhone Smart Battery Case. Upon further examination, we end up with an explantation for what may really be going on inside Apple. These accessories serve as a vital piece to a puzzle involving Apple, Jony Ive, design, and personal technology.
Episode 44: The Grand Unified Theory of Apple Products. Apple management has relied on various product theories over the years to explain its product portfolio. In this episode, we go over these theories, including Apple's newest product theory as recently explained by Phil Schiller. This "Grand Unified Theory of Apple Products," as I term it, gives both goals and descriptions for each of Apple's product categories. We use this theory to reach three important takeaways about Apple's future product plans. We conclude with a brief discussion of my "Peak iPad Mini" theory and why the product has seen its best days.
Episode 43: Apple TV Is Different. The new Apple TV stands out from Apple's other products. In this episode, we discuss the Apple TV and the path taken to get to today's version, its three most important features from a strategic perspective, and where it can fit into our lives in the future. Additional discussion topics include why it's not likely Apple will change its mind and ship an Apple-branded television and where Apple obtains the most value from an Apple TV box.
Episode 42: The North San Jose Investigation. Over the past four months, Apple has spent more than $300 million quietly purchasing or leasing land in North San Jose. In this episode, we review these land transactions and possible reasons behind the deals. We then discuss why all signs point to an Apple Car R&D facility as the most likely reason for Apple's North San Jose activity. After going over some of the data used to reach this conclusion, we take a broader look at Apple's growth trends and what they may mean for Apple's culture. We conclude with how a North San Jose R&D facility may fit structurally within Apple's organization as well as its connection to Apple Campus 2.
Episode 41: Apple's Record Stock Buyback. Tim Cook and Luca Maestri were busy buying back AAPL shares this past summer. In this episode, we take a closer look at Apple's share buyback program. We answer three questions: Why is Apple buying back its stock? How is Apple buying back stock? Does it make sense for Apple to buy back its stock? We then focus on Apple's record pace of stock buyback this past August and September and what it suggests about management's view on Apple's future.
Episode 40: How Is Apple Doing? An Apple's earnings report represents a snapshot of how business has performed over the previous three months. In this week's episode, instead of going over all of the numbers and details from Apple's 4Q15 earnings report, we ask a very simple question: How is Apple doing? By looking at the iPhone, iPad, Mac, and Apple Watch, we reach some conclusions regarding how Apple is doing in its quest to make technology more personal. We also briefly discuss 2016 financial trends, including slowing growth metrics. We conclude with my grand theory on what is happening to Apple in today's society and where the most risk to Apple resides.
Episode 39: The iPhone Mission. The smartphone industry is once again showing signs of change. The speed at which the U.S. has embraced annual smartphone upgrades, in addition to the new smartphone landscape in China, show that the market is neither static nor set in stone. In this episode, we go over the three goals that comprise Apple's iPhone mission. What are the things that drive Apple's long-term vision for iPhone? We discuss how Apple thinks about personal technology, cheap vs. used iPhones, and keeping the iPhone experience alive. We conclude with a brief discussion on Apple's upcoming earnings and why these quarterly reports have taken on a different feel lately. More specific expectations for iPhone and Apple Watch unit sales are also referenced.
Episode 38: Good Design Changes the World. Apple has thrust the topic of design into today's society. In Episode 38, we take a closer look at how design can marginalize industries and in the process change the world. After briefly discussing what constitutes good design, we use the iPhone, iPad, and Apple Watch as case studies for how Apple positions design as a way to alter an industry's value proposition. We also connect good design to the start-up mentality found with Project Titan (Episode 36) to explain Apple's secrets to success. Additional commentary found in this episode includes Dieter Rams' 10 principles of good design, Elon Musk's recent criticism of Apple resulting from frustration, and reasons why good design needs to include a high level of risk.
Episode 37: Don't Underestimate Apple Watch. The Apple Watch was unveiled to the world a year ago. Since that time, expectations for the first new product category in the Tim Cook/Jony Ive era have seen a complete reversal. What was once deemed Apple's next big product after the iPhone is now looked at as a toy that missed the mark. In this episode, I take a closer look at the drivers behind this dramatic shift in expectations and the trends taking place that suggest many are underestimating the Apple Watch. Not only does the Apple Watch have potential and promise in a world where the iPhone is our most important computer, but Apple's Watch retail rollout, revised marketing strategy, and focus on watch bands reveal that the Watch is misunderstood and greatly underestimated.
Episode 36: Apple's Largest Startup. There continues to be a debate over what makes Apple so successful. While some may think the answer remains elusive, looking at the way Apple is building Project Titan will help provide clues and answers as to how Apple thinks about success. The more important discussion takes place not by focusing on certain technologies or industry data, but by looking at the ingredients required to build great teams. We compare Apple Car development to the way the iPhone and Apple Watch were developed to note both similarities and differences. We conclude with some of my observations as to where Project Titan may proceed and how it may look in the future.
Episode 35: Buying a New iPhone Every Year. Along with launching new iPhones, Apple began a new service in the U.S. called the iPhone Upgrade Program. Episode 35 takes a closer look at the program and what it was like to purchase an iPhone 6s Plus through the new service. After discussing some of the lesser-known details of the plan, I then look at how leasing instead of buying iPhones impacts Apple. Ultimately, leasing and upgrading iPhones every year has a major impact on the iPhone development cycle, a cycle which I view as similar to the one Pixar uses when developing films. We conclude with a talk on the financial implications of leasing phones including why revenue may be deferred and how residual iPhone values could change due to grey market supply/demand.
Episode 34: Back from San Francisco. This episode begins with some of my observations from Apple's latest keynote from the perspective of being a first-time attendee. With only three public events in 2015, this latest keynote was pretty important. Instead of covering a laundry list of details and new features/products from the keynote, I take a step back and look for clues from the past three keynotes to see where Apple is headed in the coming years. We are entering a new Apple era. The iPhone's growing power, apps, and the changing defintion of work will lead Apple to create new platforms that allow personal technology to guide more of our lives beyond just the iPhone.
Episode 33: Packing Up for the Apple Event. I am getting ready to fly out to San Francisco for the Apple event. In this episode, we begin by discussing the Bill Graham Civic Auditorium and why it is such an intriguing venue. Next, we go over the big picture themes for the upcoming event including new iPads, iPhones, and Apple TV. We conclude the episode by discussing news that Apple is thinking about getting into original video programming. Instead of thinking of reasons why it makes sense, the focus should be on the reasons it would be a mistake and why Apple may have slightly different plans in place for original video content involving YouTube content creators.
Episode 32: Do You Carry Apple Watch? Episode 32 takes a look at three topics impacting Apple this past week. We kick things off by going over Best Buy's earnings report and news that Apple Watch demand was so strong that its rollout has been accelerated. There may be some lessons to learn about Apple Watch retail. We next talk about news that Jeff Bezos has decided to curtail his consumer hardware ambitions and what it may mean for the smartphone and tablet space. The episode concludes with some perspective on the cable bundle and how Apple can rethink the bundle to fit into today's mobile world.
Episode 31: Finding iPad's Future. There is something about the iPad that just doesn't sit right with me. The iPad is still selling at the pace of 10 million units a quarter, but broader trends point to specific use cases being preferred over others. In Episode 31, we go over the latest trends in the tablet market, why I still have concerns about iPad's future, and why a new form factor is needed at the high-end of the market to regain relevancy. Tablet computing was sold as the future of computing. However, the iPad's future needs to embrace a world where the iPhone is the most important computing device in our lives.
Episode 30: The Wild Week on Wall Street. We take a closer look at what may be driving some of the recent volatility on Wall Street. There were a number of observations to make for how Wall Street responded to AAPL earnings. The discussion then shifts over to the volatility impacting Disney and nearly every company associated with the legacy TV paradigm. There were signs of market fear and panic in the media space last week, driven by the idea that ESPN and many of the current cable TV players are in trouble. These fears may be overblown.
Episode 29: Let's Talk Apple Music. Episode 29 is dedicated to talking about Apple Music strategy. The discussion begins by going over how Apple got to be in a position where a $3 billion acquisition of Beats contained the most upside potential for rethinking the music industry. There are quite a few interesting parts to Apple Music, including Beats 1 being positioned as the new iPod, but the service isn't operating in a vacuum. Outside factors such as free music streaming present risks that Apple will need to overcome.
Episode 28: The iPhone Is Taking Over Apple. In this episode, we discuss why Apple will be the iPhone company for the foreseeable future. While it is obvious that the iPhone is important to Apple, it is crucial to analyzing the ramifications of iPhone taking over not just Apple's financials, but also Apple's business. While such power presents Apple with a few benefits, it also includes risks, many of which have ruined other companies. We conclude with a few words on how focusing too much on disruption theory is not a good thing.
Episode 27: Thinking About Cars. Episode 27 is the official beginning of my journey into talking about the future of the automobile. It is now time to begin moving the discussion beyond whether Apple will enter the automobile industry and toward how Apple will get involved with personal transport. Additional talking points include the iPhone's success and how it gives us clues as to how Apple thinks about the car market and the changing value proposition in the automobile industry. We will also discuss why Uber and Apple will increasingly compete with each other and how Tesla may stay a pioneer in the electric car market.
Episode 26: WWDC Strategy Session. We discuss some of the major strategic takeaways from Apple's WWDC keynote presentation. I analyze why Apple Music, News app, and Spotlight and Siri improvements are indicative of Apple being on the offense, and not defense, in its battle vs. Google and others. Additional topics include the "why" behind these new apps and services, and how they fit with Apple's mission of having technology become more personal.
Episode 25: Sustainability Is Important. In this episode, we take a closer look at the Jony Ive promotion and then shift over to explain some of the background and motivation behind why I founded Above Avalon and my goals for a new Above Avalon membership offering.
Episode 24: I'm Back and Wearing a Watch. The Above Avalon podcast is back and this episode is all about Apple Watch. The discussion begins with how the Watch is truly unique compared to other watches and the iPhone, followed by observations on the sports band, Marc Newson, durability and battery life. Additional topics include the Watch's three primary value propositions, third-party apps and the user interface.
Episode 23: The Amazing iPhone in China. Episode 23 is focused on reviewing Apple's 2Q15 earnings, including strong iPhone trends in China. The discussion begins with a line-by-line discussion of my Apple earnings model, including revenue, gross margins, EPS, product unit sales, and average selling price (ASP). Additional topics include Apple Watch margins, the capital return program, R&D implications, Apple Pay updates, and China Mobile's significance to Apple financials.
Episode 22: Apple's 2Q Earnings Preview. This special episode is all about getting prepared for Apple's upcoming earnings (which will be released Monday, April 27th). Topics include iPhone sales estimates, why the iPad and Mac won't matter much to earnings, Apple's capital return program changes, the strong dollar, iPhone ASP, Apple Watch sales, and how to classify Apple's quarter as strong or weak.
Episode 21: Apple's M&A Strategy. A look into Apple's M&A strategy and why big acquisitions aren't in Apple's DNA. Additional topics include Apple's LinX acquisition, Lisa Jackson's post about partnering with The Conservation Fund to buy forests, and why Apple doesn't need $178 billion of cash to change the world. The episode concludes with a theory about how to tell if Apple's culture is changing.
Episode 20: My Apple Watch Try-On Experience. We go over my recent trip to the Apple Store to observe the Apple Watch try-on process including time with the Apple Watch demos. This episode includes various observations and thoughts on Apple Watch, Apple retail, and the larger wearable market.
Episode 19: Selling the iPhone Killer. In this episode, we discuss David Pierce's Apple Watch article published in Wired as well as Apple's broader Apple Watch marketing strategy. Additional topics include the strategy behind a new 4-inch screen iPhone, and how Chanel's move to embrace e-commerce reflects the continued changing luxury retail landscape.
Episode 18: Thinking About Design. We discuss three topics that help describe Apple's design and product culture. Topics include Tim Cook's interview with Fortune about leadership and Apple's new HQ, rethinking design with electric and self-driving cars, and the Spoon Project, which involves carving 365 spoons out of wood by hand in a year.
Episode 17 My Perfect TV. With new reports that Apple is looking to push ahead with its television plans, we discuss my perfect television: a streaming video content service. With vast amounts of content and software that supports proper curation, discoverability, and search, this seemingly utopian service may actually not be a far stretch after all.
Episode 16: The Apple Watch Is Almost Here. We go over my notes from Apple's "Spring forward" keynote including thoughts on Apple TV, Jeff Williams, ResearchKit, the new MacBook, and everything Apple Watch. Towards the end of the episode, we address some of the debate that seems to be occurring over the watch and Apple's move into luxury.
Episode 15: Previewing the Apple Watch Keynote. In this special episode, we take a look at my expectations for Apple's upcoming Apple Watch keynote. The discussion includes how important an Apple keynote is to conveying a specific message to the public, Apple's goals for the keynote, and a few questions to keep in mind.
Episode 14: Priorities. In this episode, we focus on Apple's top priorities over the next five years. From the iPhone and Apple Watch in the near-term (2-3 years), to Apple's "automobile" secret project in the long-term (3-5 years), I describe why these products and projects are so important to Apple. We also discuss my current thoughts on an Apple television set and what a cheap iPhone would suggest about Apple's future.
Episode 13: Apple Wants to Design a Car. With nearly every major business news publication reporting Apple is looking to design its own car, we take a closer look at the polarizing issue and why there seems to be so much disagreement among industry observers. The episode also includes discussion on what Apple's goal would be by entering the automobile industry, concluding with a few minutes of speculation as to what Apple R&D may be focused on.
Episode 12: The Trick of Downplaying Hardware. In this episode, we focus on Tim Cook's recent presentation at the Goldman Sachs Technology and Internet Conference and his comments on Apple software and hardware. Additional topics include a brief background on investor conferences and why Apple attends such events, Wall Street's behavior towards tech hardware and software, and how hardware is positioned to play a factor with Apple's plans in the home, car, health, and finance industries.
Episode 11: Setting the Stage for Beats. Episode 11 is all about Apple's new music strategy. With music streaming continuing to gain popularity, we discuss how Apple will navigate the current music landscape with Beats. Additional topics include how Apple can obtain value from content without directly owning it and how a Beats for Android app can actually benefit the iOS ecosystem.
Episode 10: The Amazing iPhone. After a quick review of Apple's strong earnings report, we look at why most of the post-earnings reaction was off the mark. The episode concludes with a few big picture views about iPhone and why the product is so misunderstood.
Episode 09: Let's Talk about Mindshare. We talk about the ongoing battle in technology for mindshare ranging from Microsoft's HoloLens unveiling to Amazon, Google, Samsung, and Apple.
Episode 08: Apple's Plan for iPad. Episode 8 is all about iPad. We discuss my iPad sales expectations for Apple's upcoming earnings release.
Episode 07: Apple Questions for 2015. We discuss my list of Apple questions that I will be looking to answer in 2015. Topics include: Apple Watch, iPhone, iPad, Apple Pay, Mac, Beats, Apple Retail, Apple TV, financials, and special random musings.
Episode 06: Jony Ive. In this episode, we discuss my theory behind Jony Ive being the most powerful person at Apple, including how Jony got that power, and what it may mean for Apple's future.
Episode 05: Apple's Accelerating iPhone Business. We take a closer look at my iPhone sales estimates, and why Apple’s iPhone business is experiencing a renewed growth spurt, even in the face of growing competition.
Episode 04: Let's Talk about Apple Stock. In Episode 4, we discuss my views on AAPL and the three main lessons learned from following the equity markets for the past seven years. Additional topics include AAPL crossing the $700 billion market cap threshold and a deeper look into Apple's stock repurchase program.
Episode 03: Apple Watch. We discuss Apple Watch's rumor history, potential Apple Watch use cases, and financial projections.
Episode 02: Apple's Plan for Beats and Music. We discuss why Apple bought Beats, the music industry's current problems, and how Beats can help solve those problems.
The Very First Episode: Introductions. In the first episode of the Above Avalon podcast, we discuss my new Above Avalon site and AAPL Orchard, a new daily email focused on Apple. The episode concludes with a discussion on Apple Pay.