Company / division: Apple
Apple Says Affiliate Fee Cut Will Now Only Apply to In-App Purchases (May 8, 2017)
I’m seeing this change generally being reported as a clarification (including in the piece I link to here) but this is a change from the original wording here, which explicitly said the cut in affiliate fees announced a couple of weeks ago applied to both “app and in-app content” and didn’t include apps in the list of content types to which the change would not apply. Unless that was just really terrible wording, it does seem as though there has been a change in policy here. Applying the change just to in-app purchases again makes me wonder whether there might be some change to Apple’s cut of App Store revenue in this category, announced at WWDC in a few weeks. We don’t know quite how much of Apple’s App Store revenue comes from IAP, but games dominate total revenues, and IAP is the dominant model for games, so there’s a good chance that it’s 30% or more. As such, any cut to Apple’s share of revenues would dent overall App Store growth and Apple’s ambitions to double its overall Services revenues over four years from 2016 to 2020. So I’m somewhat skeptical, but changing the cut for IAPs would certainly go a long way to addressing the long-standing complaint from content companies like Spotify that Apple takes too much of their fees, given that those are charged through IAPs. And it would potentially open the door to Amazon’s arrival on the Apple TV too.
via MacStories
Apple Devices Added to HP’s Enterprise Device-as-a-Service Offering (May 5, 2017)
Apple has done a deal with HP to allow the latter to include its devices in its enterprise device-as-a-service offering for enterprises. This is the latest in a string of deals between Apple and various enterprise-centric partners over recent years – a sign that the enterprise is an increasingly important source of growth for Apple as the consumer market reaches saturation for smartphones and upgrade cycles lengthen. HP will be a channel for all Apple devices, but the two companies are also working together to create some guidelines for various industries in deploying those devices and making the most of them in various applications. Apple’s strategy for the enterprise continues to be mainly leveraging these various third party channels rather than growing its own substantial business sales force, which is smart given Apple’s expertise (and the gaps in it).
via HP
★ European Firms Including Spotify Sign Letter to EU Asking for Action Against “Gatekeepers” (May 5, 2017)
This content requires a subscription to Tech Narratives. Subscribe now by clicking on this link, or read more about subscriptions here.
Amazon Video App May Finally Come to Apple TV in Q3 (May 5, 2017)
This content requires a subscription to Tech Narratives. Subscribe now by clicking on this link, or read more about subscriptions here.
IDC Says Q1 Tablet Shipments Were Down 8.5% Year on Year (May 5, 2017)
This content requires a subscription to Tech Narratives. Subscribe now by clicking on this link, or read more about subscriptions here.
App Annie Reports People Spend More Time in Apps, Use 10/Day, 30/Month (May 5, 2017)
This content requires a subscription to Tech Narratives. Subscribe now by clicking on this link, or read more about subscriptions here.
Apple Provides Better Source Insights to App Developers (May 4, 2017)
Apple has been criticized for not giving developers good enough insights on how their apps perform and especially for not allowing developers to know where new users come from. That’s now changing with an update to Apple’s analytics platform for developers, which will be particularly useful in light of the paid ads which now run in Apple’s App Store search function. Developers need to know whether those ads are being effective in gaining new users and downloads, and how they measure up relative to other lead generation methods. The incremental steps Apple has taken to expand the range of business models open to developers, to share more of the revenue with those developers, and to improve analytics over the past couple of years are all checking important boxes in the wish lists of developers and cementing the status of iOS as the platform to develop for, despite Android’s larger user numbers.
via TechCrunch
Counterpoint Says Apple has 80% Share of Premium Smartphones in China Despite Overall Fall (May 4, 2017)
Counterpoint, which I’ve referenced previously here as a solid source on smartphone market share and so on, especially in Asian markets, has an update on Q1 smartphone performance in China. The headline is that Apple, Xiaomi, and especially Samsung saw their shipments drop significantly year on year, while local companies Oppo, Vivo, and Huawei did better, in a market that grew just 4% year on year. The Apple drop is worth noting because China performance has been a major talking point on its recent earnings calls (including this week) and there are lots of explanations flying around about why it’s struggling there. I linked to this piece a while back, and Ben Thompson had an interesting piece this week on Stratechery about the role WeChat plays in China and how that impacts Apple. But it’s worth noting the details on the premium market in China in this Counterpoint post. It argues that Apple’s performance in China (as elsewhere) is highly cyclical, but that it consistently takes 80% of the $600+ market. In other words, Apple’s share remains very strong in the segment where it competes, but much of the activity in China is at lower levels where Apple doesn’t compete. In that sense, there’s nothing new here, and the growth of the sub-premium segments is to be expected in a maturing market that’s reaching lower income tiers of the population. But if the premium segment is actually shrinking in real terms rather than just relative terms, that’s more problematic because it would indicate consumers who could afford iPhones are nonetheless choosing to buy the cheaper alternatives. So far, I’ve seen little evidence of that, but it’s worth watching future numbers from Counterpoint and elsewhere to see if that pattern starts to emerge. For now, I’m still more inclined to read what’s happening in China as part of a cycle which is already starting to correct and should do so more meaningfully later this year.
via Counterpoint
Imagination Technologies Looks to Escalate Patent Argument with Apple (May 4, 2017)
This content requires a subscription to Tech Narratives. Subscribe now by clicking on this link, or read more about subscriptions here.
Apple Announces $1 billion US Manufacturing Investment Fund (May 3, 2017)
This content requires a subscription to Tech Narratives. Subscribe now by clicking on this link, or read more about subscriptions here.
Qualcomm Reportedly Seeking to Ban US iPhone Imports Over Apple Non-Payment (May 3, 2017)
This content requires a subscription to Tech Narratives. Subscribe now by clicking on this link, or read more about subscriptions here.
★ Apple Reports Continued Revenue Growth, Slight Dip in iPhone, Strong Services (May 2, 2017)
Apple’s results for calendar Q1 (its fiscal Q2) were out today, and they largely continued the trends from the December quarter. Revenue growth continued and actually accelerated despite the lack of the extra week which made last quarter’s numbers slightly harder to parse, but the connection between iPhone growth and revenue growth was broken as iPhone shipments dipped slightly (though a change in inventory patterns from last year eliminates some of the dip). Notably, Tim Cook said Apple is starting to see a pause in iPhone buying ahead of a big anticipated upgrade this Fall, which is bad news in the short term but potentially feeds the super-cycle narrative that’s become so popular lately if Apple is able to deliver. Other things worth noting: continued rapid iPad declines, though entirely in the Mini size (revenues from the rest of the lineup grew); strong Apple Watch sales, up nearly double year on year (likely around 3.2-3.5m), with total wearables (Watch, AirPods, and Beats sales) likely around $6 billion for the last four quarters combined. Services continues to be the strongest growth driver by far, up 18% for the second straight quarter driven by 40% App Store growth and likely strong Apple Music revenue growth too. Overall, this is a solid quarter for Apple, with nothing out of the ordinary or too unexpected – all the existing trends are ticking over nicely, with the iPhone roughly flat (up slightly on revenue, down slightly on shipments), and some of the growth drivers delivering well, while the iPad and China continue to be a drag. Next quarter’s guidance is going to be fascinating because it will have to address the issue of what new devices will launch, when, and at what prices without explicitly mentioning any of that!
via Apple (as usual, I live tweeted earnings with tons of charts which you can see in this thread, and I’ll have my earnings deck on Apple up for Jackdaw Research Quarterly Decks Service subscribers in the next little while)
Apple Watch Loses Google Maps, Amazon, eBay Apps (May 1, 2017)
This piece does a good job digging up the news that several iPhone apps from high-profile names have quietly ditched their Apple Watch companion apps. I’m seeing some spin this as a sign that the Apple Watch isn’t working for people, but the reality is that we’re seeing two rather different things at play here. Firstly, apps on the Apple Watch were one of the big misjudgments on Apple’s part: as a group, they really haven’t taken off, not least because in their first couple of iterations they were painfully slow to use. Performance of apps has improved markedly in watchOS 3 and on the Series 2 hardware, but that leaves us with problem number two: many of the apps launched for the Watch simply don’t provide enough utility either on a standalone basis or as alternatives to the iOS versions to be worthwhile. And what we’re seeing now is some of those failed experiments going by the wayside.
We’re still figuring out what works and what doesn’t on the Watch, although a glance at the official App Store for the Watch gives you some idea of what Apple thinks: health and fitness apps dominate the first screen, followed by games, news, sports, and finally utilities. Apple obviously has its own play for navigation, which works particularly well for walking directions, and the Amazon and eBay apps were always a bit of a stretch. The eBay app is a great example of a use case that doesn’t actually need its own app but can work perfectly fine with interactive notifications or a widget on the iPhone. So we’re likely to continue to see apps come and go from the Watch, not least because developers now have many possible areas of investment around iOS apps, including watchOS, tvOS, iPad support, support for the unique hardware features on the iPad Pro line, and so on. As such, some are likely very wise to prioritize other features and platforms over the Apple Watch, while others will do well putting their investment on people’s wrists.
via Apple Insider
Apple’s AirPods Have a 98% Customer Satisfaction Rating (May 1, 2017)
This content requires a subscription to Tech Narratives. Subscribe now by clicking on this link, or read more about subscriptions here.
★ Apple Siri Speaker Could Debut at WWDC in June (May 1, 2017)
KGI, which as I’ve noted before has a decent track record on future Apple products, says there’s a 50/50 chance that Apple’s entry in the connected home speaker market could debut at WWDC next month. There’s scant detail in the report other than that Apple’s speaker will have better audio hardware than the Echo, which has been criticized as being sub-par as a speaker despite its effectiveness as a voice-activated assistant device. I would certainly expect such a device to combine Siri, AirPlay, HomeKit device control, and possibly some kind of WiFi connectivity, but it’s very unlikely Apple could do all that well and still make its usual margin at the $130-180 price point that the full Echo and Home devices sell for. It’s more likely this would be sold in the range of the larger Sonos speakers (which Apple has been selling in its stores for the last little while), which would mean $300-500. That puts it in a different category from what’s out there today, which wouldn’t be unusual for Apple but would put it well out of impulse buy territory for most people and limit sales quite a bit. One big question is whether Siri is yet good enough for such a speaker, and what upgrades Apple might have in store for Siri at WWDC this year to help it get there. As I’ve suggested in the past, Siri’s shortcomings are at least in part hardware-based: more often than not, the problem is wrongly interpreting what’s said because of the tiny mics being used for voice recognition, and a big device should help a great deal with that. But Siri can also be frustrating even when it does understand what you say, and its more conversational elements are still pretty limited, which could be a big shortcoming on a device without an alternative input mechanism. I’m sure Apple will have some other special sauce in mind so this isn’t just another Echo or Home but something a bit different. But there’s a good chance this ends up being yet another new product category for Apple which sells a few million a year and which critics therefore contend is a flop, while it quietly generates a decent amount of revenue and profit for Apple (see also the Apple Watch and AirPods).
via 9to5Mac
Apple Asks California DMV to Tweak Reporting Requirements for Autonomous Driving (Apr 28, 2017)
Apple has filed a letter with the California DMV requesting some changes to its reporting requirements for the testing of self-driving cars as well as some of the definitions it uses, in response to a request for feedback from the DMV in March. Apple formally received permission to test its cars a couple of weeks back, and is now taking a more active role in helping to shape policy around the topic, partly because at the end of the year it’ll have to report its performance to the DMV and the public. Apple’s biggest request relates to the reporting requirements for disengagements, the name given to a situation in which a driver has to take over from the autonomous system. Apple wants the definition of a disengagement to be narrowed to include only those necessary to avoid either crashes or traffic violations, and to exclude cases which are pre-determined (such as driving through a construction zone) or for which the technology explicitly isn’t designed. That would have the effect of reducing significantly the number of disengagements reported, which would further Apple’s stated goal (as outlined in the letter) of increasing public confidence in autonomous systems. It would also have the side effect of making Apple’s first year of testing look better than the first years of other companies which began testing earlier under the current definitions. The other changes Apple proposes are relatively minor and mostly appear intended to provide greater clarity and remove unintended restrictions on reasonable testing.
via CA DMV
★ Qualcomm Announces Apple is Withholding Payments, Reduces Guidance (Apr 28, 2017)
In commenting on Qualcomm’s recent earnings report, I mentioned that if Apple and its suppliers continued to hold back royalty payments as part of their dispute, Qualcomm would be affected more severely in future quarters than in Q1, and that has now proven to be the case. In Qualcomm’s original guidance for this quarter, it had said that its guidance range didn’t include a scenario where it received no payments at all from these companies, but it now appears that’s the scenario that’s playing out. Apple has said it won’t make any payments until the dispute is resolved and new royalty rates set, which is a great way to put pressure on Qualcomm to either settle quickly or at least move the court case along swiftly, but means Qualcomm will be severely impacted in the meantime. It’ll be very interesting to hear Apple’s commentary on all this on its earnings call next Tuesday because it will have to set aside at least some of the amounts due as a contingency, and I’m curious to see how that affects its reported costs and margins.
via WSJ
Apple Partners with Musical.ly, Supplying Songs and Promoting Apple Music (Apr 28, 2017)
Musical.ly is one of the few big app hits in recent years that didn’t come from one of the big established players and isn’t a game, while also being that rare example of a Chinese tech company that’s done well in the West. It’s popular with teenagers, who use the app to create short music videos using original songs, and Apple will now be the supplier of those songs, replacing a small UK-based provider. It will also therefore be able to promote Apple Music within the service, and will integrate with Apple Music for paying subscribers. Recode notes that the app has declined in popularity recently as measured by App Store rankings, but the reality is that its ranking has been extremely volatile, rising as high as 11th and as low as 92nd over the past six months. That volatility is driven almost entirely by the day of the week, with the app peaking over the weekend and dropping during the week – had Recode written its piece last Saturday, for example, the app would have been ranked #41. Given Musical.ly’s popularity within its target segment, Apple is smart to strike a partnership that allows it both to drive additional revenue and market to the app’s users. I’m almost surprised Apple didn’t just acquire the company and app outright, given Apple’s recent investment in creative and content apps with News, Music, and Clips.
via Recode
Apple Planning Up To Ten Pieces of Original Video Content This Year (Apr 27, 2017)
This content requires a subscription to Tech Narratives. Subscribe now by clicking on this link, or read more about subscriptions here.
★ Apple is Considering Launching P2P Payments and a Debit Card (Apr 27, 2017)
This content requires a subscription to Tech Narratives. Subscribe now by clicking on this link, or read more about subscriptions here.