Now that iOS in the Car has been renamed CarPlay and will be shown off at the Geneva Motor Show, I thought it would be fun to start a discussion on what this all means to Apple, its competitors, and car drivers going forward.
The news of Facebook acquiring WhatsApp for an enormous pile of money is front and center in the mobile communication industry today, and for good reason. Having watched WhatsApp grow from nothing into a cross platform winner over the last 5 years and doing a darn good job of executing on a growth plan, I'm impressed with what they've done. And while I was shocked to see the deal's valuation, I've taken some time to think about it rationally, and it might not be that insane.
A few days ago rumors of Apple/Tesla meetings resurfaced, and conclusions were once again leapt to about a possible acquisition. It’s unfortunate that most people writing about the topic seems to have nothing but mergers and acquisitions (M&A) on the brain. I think there is absolutely no chance that happening and what's more — I think there are far more interesting possibilities to consider here.
Earlier this week analyst Benedict Evans published a chart showing how “computers” running Apple software are starting to sell at greater volume than "computers" running Microsoft software. Of course he’s counting all Macs and iOS devices as computers, just as he’s counting all Microsoft Windows PCs and Windows Mobile phones as computers. But the numbers don’t lie. In the last quarter Apple's traditional + mobile business is responsible for shipping just as many units as Microsoft. And obviously Apple is growing much faster. The blog post accompanying the chart was a mere 3 sentences. The most important sentence was:
Over at Asymco blog, Horace Dediu wrote a wonderful post that examines the size and growth of Apple’s iTunes business. This business includes the sale of music, video, iOS apps, Mac apps, and various services.
Tim Cook revealed today in an interview with the Wall Street Journal that Apple had purchased $14 billion of its own stock in the last two weeks. This brings the total buyback to over $40 billion. You might recall that back in April of 2013 Apple announced its plan to return $100 billion to shareholders by the end of 2015 including a $60 billion stock buyback. So here we are in early 2014, only 10 months later, and Apple has completed two thirds of its buyback. This is not the sign of a company lacking confidence in its future. Why?
Last night Apple released its financial results for the holiday period, which is their Q1 of fiscal 2014. If you’re into this sort of news you already know the Street reacted very strongly to the numbers … and not in a good way. The stock tanked after hours, and as I write this morning the stock is down a whopping 7.5% on a day when the overall market (and practically every tech stock) is trading higher. Wall Street hates Apple right now. But is it justified? Were the results really that bad?
Last week my wife and I left the kids in the fine care of my in-laws and headed to Playa del Carmen, Mexico. Practically every year we escape winter for a week, firmly plant ourselves into pool chairs at an all inclusive resort ,and soak up the sun. And when we do, I can't help but have my head turned... by the kind of devices people are using poolside. Hey, I'm a tech geek!
Rumors of a 13-inch iPad Pro were once again making the rounds this week, amped up by talk of a 4K Retina display. I have absolutely no idea whether or not it will ever become a real product, but I’ll happily go on record saying I don’t think 4k resolution makes a lot of sense for a tablet. It’s possible someone might put one out, and it’s definitely possible that there is a market for one, but I don’t think it’s possible for such a product to financially matter to a company like Apple in 2014. Personally, I think Apple could get more bang for the buck if they opened a game store for the Apple TV.
Tim Cook has predicted that, eventually, China would become Apple's largest market. So far so good. According to a study by Counterpoint, which is referenced in this post by Marketwatch, Apple’s share of the smartphone market in China rose to 12% in October. This is up from only 3% in September, which is an incredible increase.
Based on the pace of growth of iPhone sales in China Counterpoint said:
This might allow Apple to even reach the No. 1 smartphone player in December or January in China.
Apple’s stock price has been on a tear since July. We’ve watched it climb from less than $400 to $564 as of this morning. I’m seeing plenty of articles discussing the likelihood of Apple returning to its previous highs of about $700 but it’s lot like any of this is being driven by major news. From where I sit Apple financial news hasn’t been anything terribly exciting lately. We’ve seen a couple of quarterly reports and some pretty normal announcements about how many new iPhone models sold on launch weekend. We’ve seen the new iPad Air rollout and we’re seeing analysts speculate about how many will be sold this Christmas season.
Tim Cook made a memorable comment on the last Apple quarterly conference call. He said it would be an iPad Christmas. With exactly 3 weeks before the jolly holiday, iPad interest seems to be solid, and I suspect Tim Cook will be proven correct. This morning mobile analytics firm Localytics shared some interesting data. They tracked usage of a variety of tablets and smartphones from Black Friday to Cyber Monday and compared the data against the prior week. And guess what?
Last week CNBC ran a story about billionaire investor Carl Icahn having a “good conversation” with Tim Cook. Icahn says they both agree that Apple stock is undervalued, and that Apple is still studying Icahn’s proposal for a $150 billion stock buyback. Icahn has made it pretty clear to Cook that he isn’t going away. So, why is that exactly?
iPhone 6 is already the topic of rumors and speculation. Over the weekend Bloomberg reported on the possibility of Apple moving to larger display sizes next year. Rene Ritchie has been writing about just that here on iMore for a while now as well. Now, some of us may remember Apple bashing large screens in the past. Part of that was technology. Competitors were using OLED and PenTile subpixels to get to larger sizes, and Apple argued color saturation on those displays wasn’t good enough. Tim Cook has always been clear on the idea that they don’t want to sacrifice on quality to deliver size, whether this quality sacrifice come from color reproduction, power consumption, durability, or something else. Another part of that was one-handed ease of use, which Apple in the past equated to hardware narrowness, but which everything from BlackBerry 10 to iOS 7's gesture navigation have shown can also be handled by software. If there is one thing that’s certain (other than death and taxes), it's that technology keeps improving. Whatever compromises Apple felt users would face with a larger iPhone screen will eventually be bypassed. And when that happens, it is only logical to assume larger iPhones will follow.
Apple just finished reporting its fiscal Q4 2013 results, which ended in September. Overall it was a very solid quarter, with just under $38 billion in revenue, gross margin of 37% and earnings per share of $8.26 (fully diluted). Was it a record quarter? We have to keep in mind that Apple’s Q1 (December) is the big one every year, driven by holiday sales. But as far as comparable Q4 periods, this was a record setting quarter for iPhone sales, with 33.8 million units sold. They also tied last year’s Q4 shipments for the iPad (though no records were set on the Mac). So what does it all mean?
Before the iPad launched it was rumored to cost $1000. When Steve Jobs announced it at an Apple special event in 2010, the starting price ended up being $500. Given the expectation and the presentation, the price sounded great. Now, following the latest iPad event, and the introducing of the iPad Air and Retina iPad mini, there are grumblings that the price is too high. That Apple is blowing it. In a short, but very worthwhile blog post today, independent analyst and consultant Benedict Evans published his thoughts on iPad pricing.
In the past week there have been countless stories run about the alleged production cuts of the iPhone 5c. I say “alleged” because that’s all it is right now. Allegation. And at least one of the analysts (who I shall not name) making this allegation has a very spotty track record on all things Apple.
Last week Apple announced the iPhone 5s and iPhone 5c. They'll be shipping both starting tomorrow, and shipped iOS 7 just yesterday. Surrounding this enormous product roll out has been some of the worst Apple coverage I've ever seen. It's been clear for a number of years that many mainstream financial analysts and media outlets simply don't "get" Apple. This week made it painfully clear just how badly they don't get it, and how big of a problem that is.
Yesterday Apple made the iPhone 5s and iPhone 5c official. And Wall Street collectively shrugged at the news. Rather than simply attack Apple's strategy or dismiss investor reaction, let’s talk about Apple the company and the stock. Let’s have a discussion about what these guys are doing (or perhaps failing to do) when it comes to meeting the expectations of the market.
It looks pretty much certain that Apple will unveil a trade-up program across its retail stores soon. 9to5Mac reported on it and iMore heard it was a go as well. TechCrunch claims it's already being tested at some stores, and has even through some numbers around. They’re suggesting an iPhone 4S in good shape might fetch as much as $200.