Parsing the latest Apple earnings.

Business Insider is not my favorite source for Apple news, they are one of those sources who have a pretty obvious anti-Apple bias, and still post advice on how Apple would be so much more successful if they did business more like Dell, HP, and Microsoft.  

This piece sticks to the facts, though.    

The hype for iPhone 8 has definitely slowed down current handset purchases, but one thing that seems to be missing from a lot of analyses is the dramatic change in how carriers offer handsets in the US since the iPhone 6 introduction.   Most of the US carriers are no longer fully subsidizing phones, which means that the old cycle of automatically getting a new phone when you are eligible is no longer a factor.  

Personally, I’m overdue for an upgrade.   I want a better camera, I want the M2 motion processor so that I can include stair climbing in my Health app, and I want force-touch and Apple Pay.   However, now, it’s much more confusing to buy a new phone, so I’ve held off on replacing my iPhone 5S, which still runs iOS 10 like a champ.   Do I wait for the new announcements or get something now?   Should I wait until WWDC at least?

Let’s face it, most of our devices are good enough these days.   If it isn’t effortless and free to upgrade, we aren’t going to do it without a substantial benefit for our trouble.   The market is different now from the days of explosive iPhone sales growth, and I think analysts are overlooking Apple’s ability to sell some of their devices twice via their own phone plan and high-quality refurbishing program.

So, I’m not panicking about the stock, even if the price goes down, Apple has the lowest P/E ratio in their sector and a pretty solid and profitable business.   But I still can’t make up my mind about when I’ll replace my current phone.

New Apple App Store Rules

Daring Fireball has a piece today announcing changes to Apple’s App Store.    Apparently there is so much to be announced at WWDC that they didn’t have time to discuss this in the keynote.

Apple has been quietly changing the App Store under the hood for a while — approval times are now dramatically lower, and the tools for submission and management of apps have been actively changing for months.   I personally have noticed changes to the iTunes Connect user interface and features, sometimes in the middle of a day.

Their major change is long overdue, and will help make independent development more viable.  The main feature is the expansion of subscription pricing to a wider range of apps, and support for different tiers of subscriptions.  The system will make it possible to offer trail versions, for one thing, and the revenue split on subscription apps will be 85/15 for subscriptions over a year old.

In addition, there will be the ability to pay for ad placement in search results.  This, of course, will benefit large publishers a lot, but it also helps even the playing field for indie apps.

It’s always been challenging to make a living from an independent app on the App Store.  The ‘pay once’ model has made it tough for developers to set a price and build a sustainable business — raising the potential revenue per customer makes it possible to build a high quality app and keep improving it over time.

 

 

Digesting the new Apple Announcements

Was on my way back from Burning Man when the latest Apple announcements came out. The iPad Pro plus Apple Pencil combination looks like it will give Wacom some heartburn. The larger form factor of the iPad Pro combined with the 3D touch should enable some new forms of interaction; it will be interesting to see what developers do with this, but it’s going to take a while before the ecosystem gets comfortable.

Same goes with WatchOS 2.0 and the new tvOS. That’s a lot of stuff for devs to embrace, especially when they are scrambling to prepare for the iOS 9 release. I know I have a lot of woodshedding to do, including an update to iBuddha for iOS 8 compatibility, and perhaps an iBuddha for Apple Watch.

I don’t think the expansion of the ecosystem is a bad thing at all, and it’s likely to weed out a lot of casual hobbyist developers. The companies most able to take advantage of this explosion of alternatives will be bigger companies, but that also creates an opportunity for someone to provide smaller developers with tools for building apps that can run appropriately across all the platforms. Games are going to go crazy on the new Apple TV, especially if you can handoff from your iPhone or iPod. These announcements are the fruit of the Handoff work that was done in Yosemite; Apple is playing a long game, and it’s not obvious how any one move is supposed to stack up.

More when I’ve had a chance to digest the announcements further and look at docs on the new OS offerings.

Mobile Links for week ending April 5, 2014

An analysis of apps in the Apple App store by price, ratings, etc. Some interesting insights, including that 60% of the apps in the app store have no ratings.

WWDC 2014 tickets will be offered via a lottery You have until 10am PDT April 7 to register for a chance to attend, and people will be notified that evening. Given the limited size of the conference, which has maxed out at 5000 attendees to maintain a 5 attendees-per-Apple-engineer ratio, this is my first chance to go in years.

This analysis of Apple’s Arm processor micro architecture suggests that there is a lot of untapped power that iOS apps aren’t using yet.

This new tool provides a quick way to generate code to animate iOS transitions.

With Amazon’s new Fire TV and a rumored new offering from Google soon, this may very well be the year that iOS apps move to the Apple TV. The LA Times compares the current crop of TV boxes here.

Clearly the streaming media race is heating up: Amazon is rumored to be going after Spotify with a new streaming subscription service soon.

Speaking of Spotify, their newest version on iOS is beautifully designed, and very in-line with the iOS 7 aesthetic, with a content-forward look-and-feel. I haven’t had time to completely explore it, but really like what I see so far.

Microsoft has announced Cortana, their answer to Siri and Google Now. While the reference to the character from Halo probably resonates with the Xbox crowd, it seems like an obscure choice to pick for an already underdog mobile platform. I had no idea who Cortana was myself, having never played Halo. The interesting thing about the feature is that it’s powered by Bing — this may be the time for Bing to actually shine, the Bing team has some great technology that has been largely ignored, but maybe mobile is the right venue.
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Is a less expensive iPhone in the works? Why Apple might do this.

We’ve heard this rumor before, usually in the WSJ:   Apple is planning to introduce a lower-cost iPhone so they can expand their market share, particularly in the Third World.  This one also has the questionable stamp of approval of Digitimes, who usually get these things wrong.

It hasn’t made much sense in the past.  iPhones have been selling briskly, about as fast as Apple can make them, and the high margin has kept Apple at the top of the heap in profits from mobile.   Why would Apple need to sweeten the deal, so to speak, by shaving hundreds of dollars off of their margin? Apple has traditionally not been concerned with market share over profit margin.  Furthermore, it’s not clear what compromises in the design could lower the cost without compromising user experience, other than the outer shell, a small portion of the manufacturing cost.

There are some recent shifts that may make this a good move now, however:

Apple wants to accelerate uptake of its new Lightning connector. Apple is obviously serious about transitioning its devices to Lightning as quickly as possible; it’s introduction of a 4th-generation Retina iPad with a spec bump and Lightning risked alienating a lot of the folks who had bought the iPad 3, but they did it anyway.  All of their iPod products have also been updated to eliminate the old connector.  This movement to Lightning is being slowed down by the continued offering the iPhone 4 and iPhone 4s as lower-cost models, committing Apple and its OEMs to another 2 years of supporting and offering accessories for the old, tired iPod connector.

T-Mobile is eliminating device subsidies, and planning to offer the iPhone for the first time. A lower-priced iPhone makes sense here, as T-Mobile customers are not likely to be as enthusiastic about paying $649 for the iPhone 5 out of their own pockets.   Furthermore, a new iPhone model with a less expensive $199/$299 price point, different materials, etc.  would serve the need without necessarily cannibalizing sales of the fancier subsidized model at other carriers.    Other US Carriers are waiting to see the results of T-Mobile’s experiment , so whatever move Apple makes here will need to anticipate a future where people are paying out-of-pocket for their own phones.?  IMHO, Apple could get away with a slightly higher price point for the non-subsidized phone, but they are going to have to reduce the premium paid for their product in this market — an iPhone selling at twice the price of an unlocked Galaxy Nexus 4 would be a non-starter for many people.

The iPhone 4 is kind of off the table for T-Mobile, because it doesn’t support LTE,  though T-Mobile does say that they already have 1.9 million iPhones on their network.

Apple could get a lot of mileage out of retrofitting the iPhone 4S with Lightning and using a polycarbonate back, preferably in colors. It would be a hoot to see Bondi Blue and some of the other iMac colors make a return.    At the right price point, this could be a serious switcher device to lure back people burned by the lackluster Android phones on T-Mobile.   However, it’s not clear where Apple can cut the corners on its newer devices to even hit a price point like $199, given estimates for the build cost of the iPhone 5 at around $200.

Some of the other speculation, like larger screens, makes very little sense given the needs of the developer ecosystem.   It’s going to be at least another year or two before developers switch their apps to the new iOS6-only method of automatically managing app screen layout, because the technology does not gracefully extend to iOS 5.  Given that many apps (including my own) have not been updated for the new iPhone 5 screen size even now, this isn’t realistic.