Apple Fiscal Q2 2014 Earnings

24 April 2014

Apple:

Apple today announced financial results for its fiscal 2014 second quarter ended March 29, 2014. The Company posted quarterly revenue of $45.6 billion and quarterly net profit of $10.2 billion, or $11.62 per diluted share. These results compare to revenue of $43.6 billion and net profit of $9.5 billion, or $10.09 per diluted share, in the year-ago quarter. Gross margin was 39.3 percent compared to 37.5 percent in the year-ago quarter. International sales accounted for 66 percent of the quarter’s revenue.

Earnings were good. iPad performance is an ongoing concern, despite Cook’s assurances that it’s still on fire. There was some hints about some new stuff coming for iPad (i.e. iPad maxi), but it didn’t sound imminent.

The most interesting stuff this time around is what is traditionally the most boring stuff. The numbers. The investor crap. Apple is announcing a seven-to-one stock split, beginning in early June. The last time they did a stock split was two-for-one in February 2005.

At current prices, this would set Apple stock at about $80. The whole point of splits is to make it easier for smaller institutions to buy stock.1 The downside is this attracts speculative investors who are largely driven by the potential of turning short-run profits than long-term investments.

In fact, thinking about it, the company juiced their stock in pretty much every way possible this quarter. They announced the split, increased share buybacks by $30 billion, increased dividends to $3.29 per share and pledged to increase dividends on an annual basis. If that doesn’t improve Apple’s P/E ratio, I don’t know what will.

Don’t worry. Despite all of this additional capital expenditure, it still has $150 billion in cash. No big deal.

1 It will also allow $AAPL to enter some indexes it is currently too big to be part of.

Apple Releases New iPhone 5s 'Powerful' Ad

23 April 2014

Apple, YouTube:

With the power of iPhone 5s, you’re more powerful than you think.

Acceptable ad, but a bit dull for my liking.1 The clip of the heartbeat app (which reads your pulse through the back camera) sticks out like a sore thumb. Perhaps, this is a response to the S5’s heart-rate sensor. It’s a weird thing for Apple to highlight — it’s often inaccurate and is sorta inelegant.

1 By contrast, this is Apple’s best ad in recent memory.

Padbury's Atelier Playing Cards

22 April 2014

Kickstarter:

For my entire career, everything that I have designed has been for digital products. When I left my full time job last year, I wanted to design something that you could hold in your hand.

So I decided to design a Deck of Playing Cards.

I think I can offer a valid perspective here — I own a lot of cards, after all. I don’t like how Padbury has opted to make the cards’ almost entirely blank. Inherent to a deck’s design is its regulation size … doing nothing with the card faces is just wasteful.

As pieces of art, they are beautiful. As decks of cards, they are silly. Needing to look at the small corner pips to identify a card is stupid. There’s a whole canvas of space going unused. The backs of these cards feature a beautiful pattern — the faces deserve the same level of attention and finesse.

Nike To Stop Making Wearable Fitness Bands

19 April 2014

CNET:

Nike is gearing up to shutter its wearable-hardware efforts, and the sportswear company this week fired the majority of the team responsible for the development of its FuelBand fitness tracker, a person familiar with the matter told CNET.

I bet Tim Cook is happy.1 No potential for awkward encounters at Nike board meeting anymore.

1 Not that I think he had anything to do with this.

Sarah Perez On iMessage

17 April 2014

TechCrunch:

Apple’s platform offers read receipts, typing indicators, support for rich media, and most importantly, no SMS charges when messaging with another iMessage user. Good stuff, but maybe not very exciting anymore.

iMessage doesn’t need to be “exciting”. As a built-in experience, iMessage needs to be a seamless replacement for SMS. Its boringness is its brilliance. For most users, it subjugates SMS without them even realising it is happening.1 You get the benefits of iMessage (read receipts, free picture messaging, group messaging) by doing absolutely no work. That’s the beauty of it. Users wanting novelty features, like Snapchat’s ephemerality, can go to the App Store.

1 iMessage’s has reliability issues that need addressing, of course.

Samsung Introducing An Android Wear Smartwatch Later In The Year

16 April 2014

Reuters:

Samsung dropped Android and switched to Tizen for the second version of its Gear smartwatch which went on sale last week, and the company wants its Gear smartwatches eventually to become compatible with all Android-based smartphones built by other companies, which will put Tizen directly up against Android.

Even so, Samsung plans to introduce Android-based smartwatch later this year, Yoon said.

So, Samsung will soon have three different smartwatches on sale running three different operating systems. I think many would agree this isn’t ideal. As Vlad Slavov comments so eloquently, Samsung is “simultaneously supporting and competing with Android”.

TechCrunch On Amazon's Upcoming Face-Tracking Phone

16 April 2014

TechCrunch:

At launch, there will be just a couple of added gestures built into the operating system that utilize this system.

Apparently, the OS simply does not leverage the head tracking in a meaningful way and reportedly does not lend to the device’s usability.

The timetable for this launch is unknown. Apparently Amazon hopes that it will spawn a new breed of games and applications. According to the WSJ, Amazon has already showed the device off to key developers in San Francisco and Seattle so it’s likely the device will launch with third party support.

These statements contradict each other. Amazon isn’t utilising the software itself but is actively encouraging a “new breed” of applications? TechCrunch seems to be implying that Amazon will downplay a feature that they have dedicated a lot of hardware resources towards making possible.

I don’t think Amazon is stupid. They must know that if you go to the effort of fitting something with special sensors, it is wasteful not to (tastefully) exploit it everywhere possible. In contrast, BGR’s report (which includes pictures of a prototype unit1) claims Amazon is aggressively applying the 3D feature across the system.

1 In fact, you can see one of the 3D-enabled wallpapers in this photo from BGR.

Frequency Of IRS Audits Falling Due To Lower Budgets

15 April 2014

AOL:

Koskinen said the IRS could scrutinize more returns – and collect billions more in revenue – with more resources. The president’s budget proposal says the IRS would collect an additional $6 for every $1 increase in the agency’s enforcement budget.

Koskinen said he makes that argument all the time, but for some reason, it’s not playing well in Congress.

Governments are weird.

Windows Phone 8.1's Clever Background Masks

14 April 2014

Windows Phone Central:

So with 8.1, users now have the ability to basically skin the Tiles by overlaying an image of their choice. That’s not entirely accurate though as what is really happening is some Tiles are becoming transparent, with the user image showing through the Tile.

How it works is if an app uses the ‘Iconic design’ for its Live Tile, it will show the image behind it. If the tile uses a ‘Flip layout’, any area of the background that is transparent will show the background image. As a result, some apps will have a ‘see through’ ability with the new background images, while others will remain a solid, preselected color e.g. Facebook.

As long as all your tiles support the appearance, the effect is really really slick. By contrast, iOS 7’s parallax wallpapers feels gimmicky and cheap. I’m really happy to see Microsoft experimenting here.1

The importance of wallpaper customisation cannot be understated. Users love setting images of their pets or loved ones as their background. A common iPhone behaviour is for users to put all their apps into one folder, just to maximise the amount of wallpaper they can see.

Unfortunately, apps like Facebook or Twitter (which currently stick to their own branding regardless of user options) spoil the illusion somewhat. It’s particularly disorientating when you scroll; there is a visual clash between the static backgrounds and the one that tracks the panning.

1 I am reminded of the time when Steve Jobs spent several painstaking minutes demoing custom wallpapers with iOS 4. There wasn’t anything flashy about these either — they were just static images.

Analyst Says Apple Could Subsidise iWatch Prices Through Health Insurance Providers

12 April 2014

Investors.com:

Apple could be looking to health insurance companies to help subsidize its rumored iWatch fitness bands in the same way that wireless carriers subsidize the cost of smartphones.

That speculation comes from Timothy Arcuri, an analyst with Cowen & Co. He raised the possibility on Friday in a research note that discussed possible product launches, including the iWatch, later this year from Apple.

“We continue to believe it is possible the product (iWatch) is backstopped by some sort of insurance subsidization model similar to the carrier subsidization model for iPhone,” he wrote.

Do you think Apple likes the subsidy model for iPhones? Apple was basically forced down that route with the iPhone because the market was already entrenched such that subsidies were expected. If the market was a clean slate1, I don’t believe that Apple would have wanted to instate a relationship in the market that was so reliant on the carrier.

Therefore, in the watch/band market, I think subsidy models are the last thing in Apple’s mind. If Apple can ship the product for a reasonable price2 without any strings attached, then that’s what they are going to do.

Dealing with middlemen is too much complexity and frustration. As an outsider, the concept of collaborating with health insurers sounds messy. I would hate to organise something like that and I don’t think Apple would like it either.

Down the line, perhaps there is the potential for health insurance rebates but that can’t be the the primary go-to-market strategy. It just can’t be.

1 Like it is in the smartwatch market.

2 The latest rumours suggest a $260 price point, which I would classify as reasonable.

Android TV Leaks

6 April 2014

The Verge:

You use a remote control with a four-way directional pad to scroll left and right through different suggestions, or up and down through different categories of content, each with their own shelves. Much like on other set top boxes, each item will be like a miniature movie poster or book cover, and you’ll pick the one you want. The controller will also have Enter, Home, and Back buttons to help get around, and there will be “optional” game controllers.

Android TV will also support voice input and notifications — though Google is encouraging developers to only use notifications in very limited cases. In total, Android TV is remarkably similar to Amazon’s just-released, Android-based Fire TV.

It looks exactly like Fire TV. I wouldn’t be surprised if Amazon raced to market with a nearly-identical feature set after learning about Google’s plans.

Of course, due to their similarity, Android TV is set to disappoint me as much as Fire TV did when it finally gets unveiled. New products and platforms may be launching — but TV innovation is as stagnant as ever.

Amazon Announces Fire TV

2 April 2014

Amazon:

Amazon Fire TV is a tiny box that connects your HDTV to a world of online entertainment. With a huge selection of TV episodes and movies, voice search that actually works, plus exclusive features like ASAP and Amazon FreeTime, it’s the easiest way to enjoy Netflix, Prime Instant Video, Hulu Plus, low-cost movie rentals, music, photos, games, and more.

I am disappointed by this announcement. The product is satisfactory but it’s not the big-leap forward in television I am waiting for. The Fire TV is nearly identical to what’s already on the market. It’s like an Ouya from a brand someone actually recognises.1

For example, in the presentation, they scolded Apple TV by showing some scathing reviews about its awkward D-Pad based input. Yet, the product they are offering isn’t much of an advancement. The Fire TV remote does have an inbuilt microphone for performing searches via voice recognition, but its primary input method is still a D-Pad.

1 Like the Ouya, I don’t expect Fire TV sales to rock the boat. Obviously, it will do better than Ouya. Pretty much anything could do better than Ouya.

Apple To Hold Fiscal Q2 Earnings Call On April 23rd

1 April 2014

Apple Investor:

Apple plans to conduct a conference call to discuss financial results of its second fiscal quarter on Wednesday, April 23, 2014 at 2:00 p.m. PT / 5:00 p.m. ET.

Normally, the Q/A sessions on earnings calls are really dull. Apple’s messaging is usually so vague that Apple leadership can easily dodge questions. However, in the last year, Cook has made some statements that include firm dates. It’s a lot harder to evade questioning on something that involves deadlines.

Obviously, what I’m getting at is here is Cook’s quote about new product categories.

We’ve got some really great stuff coming in the fall and across all of 2014.

‘Across 2014’ would imply new products spread across the year. If Apple doesn’t do something new by the 23rd1, investors actually have something concrete to press Cook on. Should be fun.

1 Chinese LTE iPads, 8 GB iPhone 5c’s and last-generation iPads don’t count.

Excessively Tagging On Instagram Shown To Increases Likes

29 March 2014

Max Woolf:

Instagram photos which have the maximum of 30 #tags receive, on average, about three times as many Likes than photos with only a few tags. Most of the averages are well-bounded, too, which indicate that the per-tag-Like-averages are well-representative of all Instagram photos.

A comparison between Twitter and Instagram would be interesting here. I don’t think you would see the same correlation on Twitter between number of tags and number of interactions. In fact, Twitter recommends that you do not use hashtags or mentions if you are trying to maximise conversion rates on links inside a tweet.

Free Office 365 Promotion At Microsoft Stores Today

28 March 2014

Mike Beasley, 9to5Mac:

This sure seems like a fairly effective way to get people into the store, even if they are carrying a competitor’s tablet and walking out without actually buying anything.

Yeah. Very doubtful that this promotion will have any long term upside. I suppose it’s about awareness?

Kickstarter Backers Complain About Facebook's Acquisition Of Oculus

26 March 2014

Wall Street Journal:

About 18 months after accepting $10 investments repaid with thanks (and with some venture capital investments along the way) the company today sold itself for $2 billion to Facebook.

Those almost 10,000 early investors on Kickstarter participated in one of history’s most lucrative funding rounds from the perspective of the people receiving the funding: a $2.4 million early-stage investment in what would become a $2 billion business in a year and a half, in return for 0.0% equity.

Kickstarter backers donated. They are not shareholders and they shouldn’t expect to be. Expecting a return upon acquisition is as preposterous as expecting a dividend next time you buy an iPhone.

As long as you received your reward1, you can’t complain. Kickstarter is weird because people feel like they are investors; the ‘backers’ terminology certainly doesn’t help. There are sites that let you crowd-invest (like Seedr), but Kickstarter isn’t one of them. It’s something people have to just get used to.

1 You could argue that you shouldn’t expect that either.

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