Estimating iPhone SE's Profit Margin, Microsoft Build & Conversation as a Platform, Thursday Q&A
Today's Above Avalon stories:
- Estimating iPhone SE's Profit Margin
- Microsoft Build & Conversation as a Platform
- Thursday Q&A
We kick off today's email by estimating the iPhone SE's profit margin. After taking a closer look at Chipworks' iPhone SE teardown report, we discuss the primary drivers of iPhone SE's overall cost profile and how it relates to the iPhone 5s. We then compare the iPhone SE's profit margin to other iPhone models. Next, we look at the big picture coming out Microsoft's developer conference and the "conversation as a platform" subject. Where does Apple fit in this future? We conclude with Thursday Q&A and the following two questions submitted by members:
- When will the iPhone Upgrade Program begin impacting Apple's financial results?
- Do you think Apple is working on a multi-room home audio system, similar to a cross between Sonos and Amazon Echo?
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Spotify Showing Signs of Trouble, Apple Partners with MLB for iPads
Today's Above Avalon stories:
- Spotify Showing Signs of Trouble
- Apple Partners with MLB for iPads
We begin today's email by discussing why Spotify's $1 billion convertible debt transaction is yet another sign that music streaming is a complete mess right now. We take a closer look at Spotify and what I suspect is the company's biggest problem (and most likely path) going forward. Next, we shift to news that Apple will be partnering with Major League Baseball to put 12.9-inch iPad Pros in the dugouts. There are differences between this partnership and Microsoft's Surface/NFL multi-year deal. We conclude with a few takeaways as to why Apple is doing this partnership besides routine marketing.
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My iPhone SE Theory, Early iPhone SE Demand Trends in China, New Apple Watch Marketing
Today's Above Avalon stories:
- My iPhone SE Theory
- Early iPhone SE Demand Trends in China
- New Apple Watch Marketing
We kick off today's email by looking at my simple theory about the iPhone SE. Is it appropriate to assume the SE serves as a hint for future changes to the iPhone line? Next, we discuss some of the iPhone SE's financial implications on Wall Street. What do the early iPhone SE demand trends in China point to regarding sales and Apple's 3Q16 earnings? We conclude with a closer look at some of the marketing changes found with Apple's Apple Watch website overhaul. By tracking Apple Watch marketing changes, we can stay up to date as to how Apple is thinking about the product.
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No Signs of iPhone Tick-Tock Cycle, Apple's First Original TV Series, Trying to Transplant Apple Culture Outside Apple
Today's Above Avalon stories:
- No Signs of iPhone Tick-Tock Cycle
- Apple's First Original TV Series
- Trying to Transplant Apple Culture Outside Apple
We begin today's email by discussing the latest round of iPhone rumors and the fact that there are very few signs of the iPhone tick-tock cycle where a major design update every other year is followed by refinements in the 'S' years. After circling back to my "The Pixar iPhone" article where I theorized the iPhone tick-tock cycle died years ago, we go over two important implications related to an iPhone line that no longer follows the tick-tock "S" cycle. Next, we shift to reports of Apple developing its first original TV series. This builds off our email from Thursday where we discussed Apple quietly building a video streaming service. Today's email concludes with a look at Tony Fadell/Nest serving as the latest example of a former Apple executive trying to recreate the Apple culture outside of Apple. We look at why this is actually an impossible feat.
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Apple Is Quietly Building an Exclusive Video Content Service, Nike HyperAdapt Is a Big Deal, Thursday Q&A
Today's Above Avalon stories:
- Apple Is Quietly Building an Exclusive Video Content Service
- Nike HyperAdapt Is a Big Deal
- Thursday Q&A
We kick off today's email by looking at news that Apple is offering a new video series from Vice for Apple Music. It's becoming quite clear that Apple is going after exclusive video content and Apple Music membership is its vehicle of choice for building this new content strategy. We go over why Apple feels the need to get into video, including a look at the changing music streaming landscape. Next, we shift to Nike announcing the shoe industry's "iPhone" moment last week. We discuss adaptive lacing and my conviction that Apple's future includes adaptive clothing. The email concludes with Thursday Q&A (this week's Q&A relates to Liam the robot).
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Additional Musings from Apple's Keynote, iPhone SE Priced at a Premium Internationally
Today's Above Avalon stories:
- Additional Musings from Apple's Keynote
- iPhone SE Priced at a Premium Internationally
Yesterday's update went over the five major themes from Apple's keynote. Today, we go over my full detailed notes and musings from Apple's presentation including everything that jumped out at me or seemed a bit unusual. In addition, we go over some of the math and numbers behind 4-inch iPhone sales and 9.7-inch iPad popularity. Next, we shift over to iPhone SE pricing and what appears to be a deliberate Apple strategy to price the iPhone SE at a premium internationally, even after taking into account taxes and exchange rates. We discuss what such a move suggests about Apple's iPhone SE strategy.
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The Apple Keynote: Thoughts and Observations
Today's Above Avalon story:
- The Apple Keynote: Thoughts and Observations
Yesterday's "Loop You In" keynote was unusual. We begin with an overview of why and how this event felt different from more recent Apple keynotes. We then break out the five most important topics from the event. There was plenty to discuss from a business analysis perspective.
Sections:
- Elephant in the Room
- The Apple Experience
- The "Why" Behind iPhone SE
- The Tricky 9.7-Inch iPad Pro
- Apple Watch Pricing
- Say Hello to Liam
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Growing iPhone Optimism on Wall Street, Apple Raises More Debt for Buyback, Apple's Project McQueen
Today's Above Avalon stories:
- Growing iPhone Optimism on Wall Street
- Apple Raises More Debt for Buyback
- Apple's Project McQueen
Today's email has a finance theme. We kick off today's email by discussing a few recent iPhone developments on Wall Street and why it seems like iPhone optimism is on the rise. We then shift over to Apple raising another $3.5 billion of debt to fund its share buyback program. My confidence in my FY2016 buyback estimates (included in the email) is rising. We conclude by discussing Project McQueen, Apple's rumored plan to control its destiny by owning cloud infrastructure.
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Thoughts on Apple's Upcoming Keynote, Apple vs. Facebook Competition, Thursday Q&A
Today's Above Avalon stories:
- Thoughts on Apple's Upcoming Keynote
- Apple vs. Facebook Competition
- Thursday Q&A
We begin today's email by going over my thoughts headed into Apple's product keynote this coming Monday. We then shift over to yesterday's "A Facebook Experiment" post and go into more detail on the topic of Apple and Facebook competing with each other. The email concludes with this week's Thursday Q&A (questions from members). This week's Q&A include the following questions/answers:
- Why is Apple using Google Cloud Platform?
- Does Apple have any reason to be concerned about the Samsung S7 in the U.S.?
- What app can you not live without? Am I going to reinstall the Facebook app?
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Apple Music Partners with Dubset Media, Monetizing EDM (Electronic Dance Music) Remixes/Mixes, SoundCloud Suffers Big Blow
Today's Above Avalon stories:
- Apple Music Partners with Dubset Media
- Monetizing EDM (Electronic Dance Music) Remixes/Mixes
- SoundCloud Suffers Big Blow
Today's email has a music theme. We begin by going over the Apple Music/Dubset Media partnership announced yesterday. This is one of the bigger developments related to Apple Music since the service was launched last year. The key to this deal is understanding EDM (electronic dance music). We go over both EDM and implications from the partnership. We then discuss how Dubset Media plans to monetize DJ remixes/mixes on Apple Music and why that matters to music streaming. The email concludes with a closer look at SoundCloud, including my views on the company, thoughts on Apple & SoundCloud M&A suggestions, and why the Apple/Dubset Media partnership is a negative development for SoundCloud.
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Apple's Quest for Perfection, HBO Now Is Succeeding
Today's Above Avalon stories:
- Apple's Quest for Perfection
- HBO Now Is Succeeding
We begin today's email by taking a closer look at how Apple thinks about success. By placing perfection as an end goal, Apple is able to shake off any negative attributes associated with strong sales, such as satisfaction and contentment. We look at the iPhone and Apple Watch and discuss key aspects where this practice of striving for perfection provides clues as to where Jony and team will focus future development. We then look at new HBO Now subscriber numbers and reach several conclusions about what a successful HBO Now product means for the future of video content and Apple's presence in the space.
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Jony Ive Talks Money, Business, and Life After Apple, GM Acquires Cruise Automation
Today's Above Avalon stories:
- Jony Ive Talks Money, Business, and Life After Apple
- GM Acquires Cruise Automation
Today's email begins with a look at the incredibly interesting Charlie Rose interview with Jony Ive. While the interview took place this past September, Rose just published the full talk a few days ago. Jony discusses a range of topics from money and business to how he describes his role at Apple and what he would be doing if he wasn't working at Apple. We look at a few of his most important answers and then go a bit deeper in terms of interpretation and perspective. Next, we go over news that General Motors will acquire Cruise Automation. We look at why Cruise sold to GM and why GM bought Cruise. Welcome to the next era of the auto industry as legacy automakers prepare to battle the tech giants.
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iPhone Sales Trends in January, Setting the Stage for a New 4-Inch iPhone, Thursday Q&A
Today's Above Avalon stories:
- iPhone Sales Trends in January
- Setting the Stage for a New 4-Inch iPhone
- Thursday Q&A
We begin today's email by taking a look at the latest Kantar smartphone data for the month of January. We discuss three major themes found in the data including iPhone sales in China, older iPhone sales and Android switching rates. Next, we discuss the background to the "The Changing iPhone User Base" post that was published yesterday including why Apple has no other choice but to release a 4-inch iPhone. Today's email concludes with two questions from members for Thursday Q&A:
- How would an iPhone 7 that lacks many visible upgrades impact the Apple narrative?
- Should Apple pursue international soccer [football] streaming rights instead of the NFL?
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Fiat Chrysler CEO Marchionne on Apple's Auto Ambitions, Apple Passes on NFL Streaming Rights, $25 Apple Watches
Today's Above Avalon stories:
- Fiat Chrysler CEO Marchionne on Apple's Auto Ambitions
- Apple Passes on NFL Streaming Rights
- $25 Apple Watches
We kick off today's email by discussing Sergio Marchionne's latest comments on Apple's car ambitions. The debate taking place in the automobile industry centers on the role legacy auto manufacturers will play in an industry run by technology companies. We take a closer look at Marchionne's suggestions for Apple and why he is too optimistic in his claims. Next, we discuss Re/code's report that Apple has passed on the latest NFL streaming rights deal while Amazon is increasingly interested in live sports. We conclude with a closer look at a new deal by Vitality Group, a health-service firms, that offers $25 Apple Watches to employees as long as they meet their employer's monthly fitness/health goals. There is reason to be skeptical that this development is the start of something big.
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SuperPhone and Apple's Future Content Strategy, Best Buy Is Betting on iPhone 7
Today's Above Avalon stories:
- SuperPhone and Apple's Future Content Strategy
- Best Buy Is Betting on iPhone 7
We begin today's email by discussing Ryan Leslie's start-up, Disruptive Multimedia, and his SMS-based customer relationship management and direct sales tool called SuperPhone. Upon closer examination, the ideas underpinning SuperPhone match what I suspect is Apple's long-term content strategy for music, video, and even the App Store. Next, we look at Best Buy's most recent earnings conference call where smartphone growth in 2016 was a hot topic. Best Buy is a key retail partner for Apple and it would appear that Best Buy is betting that consumers (and smartphone growth) will return with the iPhone 7 launch. We also go over Best Buy CEO Hubert Joly's perspective on what drives smartphone upgrade cycles.
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