Apple today reported its fiscal third quarter 2019 earnings, earning $53.8 billion in revenue and earnings per share of $2.18. That revenue is a 1 percent jump year over year. iPhone revenue was $25.99 billion compared to $29.47 billion a year ago. That means the iPhone represented under half of Apple’s revenue for the first time since 2012.
The all-important services unit took in $11.46 billion in revenue. Wearables saw a big boost, likely thanks to Apple’s second-generation AirPods. CEO Tim Cook said that when the services and wearables / home / accessories divisions are combined, they approach the size of a Fortune 50 company. Revenue from Mac sales was $5.82 billion, and iPads were $5.023 billion, up from $4.634 billion last year at this time.
“This was our biggest June quarter ever — driven by all-time record revenue from services, accelerating growth from wearables, strong performance from iPad and Mac and significant improvement in iPhone trends,” Cook said in a press release. “These results are promising across all our geographic segments, and we’re confident about what’s ahead. The balance of calendar 2019 will be an exciting period, with major launches on all of our platforms, new services and several new products.”
NEW IPHONES AND SERVICES ARE COMING IN THE FOURTH QUARTER
Analysts were expecting earnings per share of $2.10 and revenue to come in at $53.4 billion, with the iPhone making up $26.5 billion of that.
Apple’s next financial quarter will draw much more attention, as it will be the first to include sales for the 2019 iPhone lineup and potentially two new subscription services: Apple TV+ and Apple Arcade. The company is forecasting Q4 revenues between $61 and $64 billion.
The new iPhones are expected to include more advanced camera technology and a third camera lens for ultra-wide photos on the two most premium models that will succeed the iPhone XS and XS Max.
But with consumers holding on to their phones longer and upgrading less often, new iPhone launches don’t spur sales in the same way they once did. That’s why Apple has put such a focus on its consumer services; the company dedicated an entire event to a range of them back in March. iCloud, the App Store, Apple Music, Apple Pay, and the new services are all viewed as crucial to Apple’s future growth and diversification. Services represented 19 percent of Apple’s revenue last quarter.
Both Apple TV+ (the company’s answer to Netflix) and Apple Arcade (a subscription gaming service) are scheduled to roll out in the fall, but Apple hasn’t yet announced more specific timing. An Apple-branded credit card, developed in partnership with Goldman Sachs, is due to launch by the end of summer.
APPLE’S STRATEGY TO DIVERSIFY IS WORKING
As for the Mac line, it’s been rumored that Apple could introduce a high-end 16-inch MacBook Pro in the fall that would begin the company’s move away from the butterfly keyboard mechanism on current Apple laptops, which has a miserable reputation for reliability.
Earlier this month, Apple made a request to the US government to exclude components for its upcoming Mac Pro from the ongoing trade war with China, but it was denied by President Trump on Friday. Apple claims that the current tariffs against goods imported from China will “result in a reduction of Apple’s US economic contribution” and “tilt the playing field in favor of our global competitors.” The company has warned that some of its products could increase in price due to the situation.
Today’s earnings come after Apple made two major announcements in recent weeks: its longtime design chief Jonathan Ive will leave the company later this year. Ive’s influence will continue to be seen in products in Apple’s current product pipeline, but he’s moving on to start a design firm with friend Marc Newson and handing his responsibilities at Apple to current design team members Evans Hankey and Alan Dye. Both will report to Apple SVP Jeff Williams, who “will spend more of his time working with the design team in their studio,” according to the company.
Apple also just purchased Intel’s 5G modem business and, upon the transaction’s closing, will bring over 2,200 Intel employees. The move will eventually help Apple become even more self-reliant in producing the chips and technology inside iPhones and cellular iPads. Cook said the Intel deal, Apple’s largest-ever acquisition in terms of employee count, adheres to the company’s “long-term strategy of owning and controlling the primary technologies behind the products that we make.”
Prior to the Intel buy, Apple had reached a settlement with Qualcomm earlier this year, bringing an end to an ugly feud and securing a multiyear chipset supply agreement and six-year licensing pact. But self-made modems are certainly Apple’s overall plan for the future. Rumors have indicated that Apple will release its first 5G-compatible iPhones in 2020.
72% OF GLOBAL 5G SMARTPHONE REVENUE COMES FROM CHINA
Counterpoint Research reported that in the second quarter of 2020, 5G smartphone shipments increased, accounting for 10% of global smartphone shipments.
REVENUE AND ASP OF 5G SMARTPHONE
In the second quarter of this year, 5G smartphone revenue accounted for 20% of global smartphone revenue. Among them, China is the largest contributor to 5G smartphone sales. It is reported that 72% of global 5G smartphone revenue comes from China. Most of them comes from 5G smartphones released by Huawei. In addition, the average selling price of the Chinese smartphone market also increased by 12% year-on-year.
According to the report, the Asia-Pacific region, China, Europe, the Middle East and Africa, North America and other regions contributed 10% of the overall growth rate in the average sales price in the second quarter of 2020. However, Latin America is the only country where average sales prices have fallen 5% year-on-year. Although the new coronavirus has had an impact on the entire market, the high-end segment has not fallen sharply. Compared with the overall market decline, it only faces a year-on-year decline of 8%.
The report also shows that in the second quarter of 2020, the average selling price (ASP) of the global smartphone market increased by 10% year-on-year. With the exception of Latin America, average selling prices increased in all regions. This is because many 5G phones sold well in the second quarter. The increasing demand for education, work, games, and entertainment is also a factor in users’ preference for high-end smartphones.
Overall, due to the economic impact and the closure of offline retail stores, the market’s demand for low-priced devices has decreased. Coupled with the resilience of the high-end market and the growth of 5G smartphone sales (especially in China), this quarter’s increase in the average selling price of smartphones.
THE BOTTOM LINE
At the same time, smartphone shipments fell 23% year-on-year, reaching a record high. Although most OEM’s smartphone shipments declined in the second quarter of 2020, Apple’s shipments increased by 3% year-on-year, while iPhone revenue increased by 2% year-on-year. But we should also point out that Apple still has no 5G iPhone. The first models will come to the market only this year. Once this happens, and 5G appears on lower models, it will be quite interesting to see how the proportion changes.
Former Blizzard CEO Mike Morhaime announces new game company
Two years after stepping down as CEO at Blizzard, the game company he co-founded in 1991, Mike Morhaime is back with his next venture. It’s called Dreamhaven, and it’s a combination of a publisher and developer, with “a common goal to empower creators, help bring their ideas to life, and create original gaming experiences that foster meaningful connections between players.”
As part of the announcement, Dreamhaven also revealed its first two internal studios: Moonshot Games and Secret Door. Moonshot is headed by a trio of Blizzard veterans, including former Hearthstone lead Jason Chayes, StarCraft II director Dustin Browder, and Hearthstone creative director Ben Thompson. “Though it’s very early days, when we think about Moonshot, we imagine a studio that celebrates curiosity and courage,” Chayes said in a statement. “We aspire to be bold in our approach, and we think the best way to do that is to create a culture centered around trust.”
Secret Door, meanwhile, is similarly led by a team of former Blizzard developers, including Chris Sigaty (executive producer on Hearthstone), Alan Dabiri (technical director on Warcraft III and StarCraft II), and Eric Dodds (designer on World of Warcraft and Starcraft). No projects have been announced for either studio.
Morhaime stepped down as CEO of Blizzard in 2018, though he stayed on in a consultancy role until last year. In an interview with The Washington Post, he said that one of the goals of the new company was to build an environment focused on creators — something that was likely a challenge under Activision, which became Blizzard’s parent company in 2008.
“We’ve learned a ton about what goes into creating an environment that allows creators to do their best work, and we were very successful doing that for many years at Blizzard,” Morhaime told the Post. “We reached a crossroads where we reassessed what we want to do with the rest of our lives.”
Apple Loop: Shock iPhone 12 Details, Massive iOS 14 Problems, Macbook Pro Delay
Taking a look back at another week of news and headlines from Cupertino, this week’s Apple Loop includes surprising iPhone 12 benchmarks, big problems with iOS 14, two new iPads, Apple ignores MacOS, the “good/better/best” of the Apple Watch, the controversy around Apple One, and the Macs’ never changing system System Preferences.
Apple Loop is here to remind you of a few of the very many discussions that have happened around Apple over the last seven days (and you can read my weekly digest of Android news here on Forbes).
Just How Fast Is Your Next iPhone?
We might not have seen the iPhone 12 family as part of Apple’s virtual September launch event this week, but we have seen the benchmarks pop up on the AnTuTu website. That gives us a raw comparison of the numbers from last year’s iPhone to this year’s. Philip Michaels reports some pretty shocking numbers:
“Leaked benchmarks from Antutu, purportedly showing off an iPhone 12 Pro Max’s performance, may help fill in some of the blanks. MySmartPrice spotted the leaked numbers, which claim to show off a device with 6GB of RAM and 128GB of storage running iOS 14.1.
“According to the leaks, the iPhone 12 Pro Max tallied a score of 572,333 on Antutu’s test, which is a 9% gain over the iPhone 11 Pro Max’s 524,436 result on the same test. MySmartPrice says the iPhone 12 Pro Max’s reported tally would be the highest score ever posted by an iPhone, which you’d hope given that it’s a new model.
The Big Problem With iOS 14
Apple may not have announced a release date for the iPhone, but it did announce the release date of iOS 14. And that has caused problems. Normally Apple will provide a week’s worth of ‘heads up’ time to Developers so they can ensure their apps are ready for the jump up to the next major version of iOS. Not this year… developers had less than a days notice, and they are not happy. Matt Binder reports:
““Gone are the hopes of being on the store by the time users install the new iOS 14 and are looking for new apps. Gone is the chance to get some last-minute fixes into your existing apps to make sure they don’t stop working outright by the time users get to upgrade their OS,” explained Steve [Troughton-Smith from High Caffeine Content.”
““There are some developers who have spent all summer working on something new, using the latest technologies, hoping to be there on day one and participate in the excitement (and press coverage) of the new iOS,” he continued. “For many of them, they’ll be incredibly upset to have it end like this instead of a triumphant launch, and it can dramatically decrease the amount of coverage or sales they receive.””
Take Two Tablets And Call Your iPhone In The Morning
Taking the flagship spot away from the ‘missing presumed having a good time’ iPhone 12 was Apple’s new iPad Air. Beating the smartphone as the first device with Apple’s new A14 ARM-based processor. Samuel Axon and Jim Salter report for Ars Technica:
“The iPad Air gets the new A14 Bionic CPU, built on 5nm process technology. It’s a six-core CPU with two high-performance cores and four lower-power, more efficient cores for simpler background tasks. The A14 Bionic offers a 30 percent GPU performance boost compared to previous generations, and Apple says it puts up double the graphics performance of typical laptops.”
As well as the increased power, 2020’s iPad Air has a new design; USB-C has been added, the bezels have been trimmed away, the home button has been removed, and TouchID has been integrated into the power button. It;s not the only new iPad, as the entry-level iPad moves up rom the A10 to the A12 Bionic processor. Benjamin Mayo reports:
“The jump from A10 to A12 means Apple’s cheapest iPad will feature the Neural Engine for the first time. Apple says the A12 chip offers more than twice the performance of the top selling Windows laptop, 6x faster than the top-selling Android tablet and 6x faster than the best-selling Chromebook.
“The 8th-generation iPad keeps the same price as the 7th-gen: that’s $329 for general sale and $299 for education.”
Will Mac Owners Be Satisfied With Safari After macOS Delay?
If you were waiting for MmcOS Big Sur to drop for your Mac or MacBook, then you are out of luck. Apple’s event saw updates to iOS, iPadOS, tvOS, and watchOS… but macOS has been delayed. The ‘Big Sur’ release is still in the future, but a small crumb (perhaps from a cookie) has been handed to Mac fans in the form of Safari 14, presumably to offer cross-OS support with other devices. Juli Clover reports:
“Safari 14 brings improved performance, customizable start pages, a Privacy Report to see which cross-site trackers are being blocked, and a new tab bar design that provides tab previews so you can see what you have open at a glance. Today’s update also removes Adobe Flash.”
The Apple Watch Strikes Three
Two new Apple Watch models were launched, and as the Apple Watch Series 3 remains, there is now a low-, a mid-, and a high-level smartwatch in the classic triplet that Apple was once famous for. Todd Haselton looks over the Series 6 Apple Watch for CNBC, including the headline ‘wellness’ features:
“The Series 6 also has Apple’s most advanced sensors. You can run the ECG app for an electrocardiogram, for example, a feature that’s not on the Apple Watch SE or Series 3. It’s also the only model with the new blood-oxygen app. I tried that and it told me my blood oxygen was 96%, which seems good.
“…Apple is careful to explain that this isn’t a medical device. You can use it if you’re curious about your blood oxygen when you’re hiking at high altitudes, but Apple isn’t making any promises about detecting low oxygen should you fall ill with coronavirus.”
Meanwhile, Apple has brought the ‘SE’ brand to the Apple Watch, again with the promise of a cheaper ‘mid-range’ slice of hardware that still delivers the core Apple experience. Chris Velazco has spent some time with the wearable to try and work out where it fits into the portfolio:
“For one, the SE uses the same S5 system-in-package (or SIP) that we got in last year’s Series 5, which in turn contains the same dual-core processor as the Series 4. Meanwhile, Apple has confirmed that the SE has the same compass and always-on altimeter as the Series 6, along with a very similar screen.
“From what I can tell, it’s the same bigger display we got in the Series 5, just without the always-on functionality enabled. And while the Series 4 was the first Apple Watch to come with heart-sensing ECG support, you simply don’t get that here. Ditto for the Series 6’s new blood oxygen measurement features.”
Bouquets and Brickbats For Apple One
Also announced alongside Apple’s hardware, and perhaps an indication of where Apple wishes to focus on the future, were new options for the various subscription services offered by Cupertino. Apple One takes the popular options and bundles them together while offering a discount. Brian Heater reports:
“It’s not quite mix and match yet, but there are three pricing tiers. Individual offers Apple Music, TV+, Arcade and iCloud for $15 a month. The Family version will get you those four services for $20 a month. For the hardcore, there’s the $30 a month Premier tier, which bundles iCloud, Music, TV+, Arcade, News+ and [the new service] Fitness+.“
“For those who have been putting off a given Apple subscription, such a bundle could certainly sweeten the pot — and make it even harder for users to escape the pull of the Apple software ecosystem.”
More at TechCrunch. Given Apple’s market position, using one service to pptentiallybolster another through a bundle has drawn the eye of the competition. Spotify – which has already filed an anti-trust complaint with the European Commission against Apple – drew attention to the issue shortly ager the end of the event.
“Once again, Apple is using its dominant position and unfair practices to disadvantage competitors and deprive consumers by favoring its own services. We call on competition authorities to act urgently to restrict Apple’s anti-competitive behavior, which if left unchecked, will cause irreparable harm to the developer community and threaten our collective freedoms to listen, learn, create, and connect.”
The look of the MacOS user interface has evolved since OSX was announced in 2000. One area has stayed relatively contestant, but the small changes highlight the thinking behind the OS over the years.
“The interface started glassy and skeuomorphic, mimicking the materials used on Macs. Over the decades, it went through significant revisions. One thing that seems to have remained relatively unchanged over the years is the System Preferences screen.
“But, at a closer glance, we’ll see that this mundane part of the operating system has changed quite a bit and hides some fun easter eggs and surprises.”
Apple Loop brings you seven days worth of highlights every weekend here on Forbes. Don’t forget to follow me so you don’t miss any coverage in the future. Last week’s Apple Loop can be read here, or this week’s edition of Loop’s sister column, Android Circuit, is also available on Forbes.
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