Apple iPhone X: We’ll soon know if Tim Cook’s gamble paid off

Preorders for the iPhone X start this Friday. And that should provide some clues for investors who have been holding their breath to see what impact the unusual rollout of Apple’s new flagship smartphone will have on consumer interest and sales.

In recent years, under the leadership of CEO Tim Cook, Apple had fine-tuned a rhythm for rolling out its new iPhones: Hold big splashy launch event near the start of September; start shipping new iPhones later that month. Investors and consumers were conditioned to a degree of predictability that allowed them to comparison shop and set expectations around sales.

This year, Cook  threw that playbook out.

The iPhone 8 and 8 Plus went on sale in late September, as usual. But the pricey iPhone X would not start preorders for another month. That may have been driven more by necessity than choice, given there were numerous reports of problems with components and production. Still, it was a departure from recent tradition, and a big one.

In addition, Apple continued to sell a far wider range of older models than it typically does after new iPhones are released, and at deeper discounts. Apple execs didn’t really explain why they did this, though analysts have been clamoring for “cheaper” iPhones for years. With Apple Services exploding, there’s some logic to placing a bit more emphasis on market share. And with Apple struggling against cheaper smartphones in China, having a bigger choice might help sales stabilize in the region.

Still, this move introduced two unknowns to the upgrade cycle. The result, according to this story from Reuters:

Apple Inc’s older iPhone 7 models are outselling the recently launched iPhone 8 ahead of the early November debut of the premium iPhone X, broker KeyBanc Capital Markets said, citing carrier store surveys.

That’s completely logical, given that there weren’t radical changes between the 7 and 8. This would also seem to be bad news for Apple earnings in the quarter ending Sept. 30 (Apple’s Q4 2017) and the current Q1 2018 that ends Dec. 31. The new phones tend to only to be on sale the last week or two of Q4, so they don’t have a huge impact on earnings. Apple reports Q4 2017 earnings on November 2, so we’ll know more then.

Still, if the new iPhones didn’t stoke impact and consumers are buying much cheaper iPhones, that would have some impact, no?

Even worse, that sluggishness, according to Reuters, is carrying over to this quarter. Apple will have at least one month in Q1 2018 in which consumers are favoring a cheaper phone. And, based on previous reports, when the iPhone X does go on sale, it’s going to be constrained in terms of availability. This could spell trouble for the holiday quarter, always Apple’s biggest.

It remains to be seen just what kind of demand exists for the iPhone X. A survey from brokerage firm Bernstein said that while people are curious about the new iPhone, the intention to buy one is much lower.

“The excitement surrounding the iPhone X appears to be magnitudes higher than actual purchase intent — 48 percent of respondents agreed/strongly agreed that they were ‘excited for the iPhone X’,” Bernstein wrote in a report obtained by Reuters.

Of course, there may be such limited supply that even with lower demand, Apple will be able to say its inventory is sold out. And when Q1 2018 earnings are disclosed in late January or early February, Apple will likely say that it can’t meet all the demand, whatever that demand actually is.

If people really are choosing the discounted iPhone 7 over the new models, that could have a big impact on the company’s holiday revenues. The question will be: Can Apple make and sell enough of the high-end iPhone X to keep the overall average selling price from dropping too much?

The good news for Apple is that investors generally cut the company a lot of slack. The stock continues to trade around record highs, even amid this uncomfortable uncertainty. Investors want to believe, and given the company’s track record over the past decade, they’ll continue to believe until there is absolute proof that something has gone off the rails.

But when preorders start Friday, investors should be able to start balancing their faith with some facts. And we’ll see whether one of Cook’s biggest gambles was worth the risk.

Ted Cruz & Patrick Leahy slam Tim Cook for removing VPN apps from Chinese App Store

Earlier this year, Apple was forced to remove several VPN apps from the App Store in China due to regulatory reasons. At the time, Tim Cook explained that he would rather not remove them, but was forced to comply.

Now, United States Senators Ted Cruz and Patrick Leahy are pressing Apple for more information…

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In a letter sent to Tim Cook, Cruz and Leahy say Apple may be “enabling the Chinese government’s censorship and surveillance of the Internet,” noting that China has an “abysmal human rights record.”

Specifically, Cruz and Leahy pointed to Cook’s acceptance of the Newseum’s 2017 Free Expression Award. While receiving the award, Cook remarked that Apple “enables people around the world to speak up.” The senators, however, argue that Apple’s removal of VPN apps in China do the exact opposite of that:

While Apple’s many contributions to the global exchange of information are admirable, removing VPN apps that allow individuals in China to evade the Great Firewall and access the Internet privately does not enable people in China to “speak up.” To the contrary, if Apple complies with such demands from the Chinese governments, it inhibits free expression for users across China, particularly in light of the Cyberspace Administration of China’s new regulations targeting online anonymity.

The two senators also point to Apple’s past concessions to the Chinese government: removing the New York Times from the App Store and shutting down the iBooks Store and iTunes Movies.

Cook and Leahy outline a list of questions they want Cook to answer. The two ask for more details regarding how the removal of the VPN apps came about, as well as whether or not Apple has made formal requests with the Chinese government to bring the apps.

Cruz and Leahy also want Cook to “provide copies of any statements that Apple has issued either promoting freedom of speech in China or condemning the Chinese government’s censorship and surveillance mechanisms.”

Following the removal of the VPN apps, Cook remarked that he is “hopeful” the Chinese government will loosen Internet restrictions:

“We would obviously rather not remove the apps, but like we do in other countries, we follow the law wherever we do business. We strongly believe in participating in markets and bringing benefits to customers.

We’re hopeful that over time the restrictions we are seeing are loosened.”

The full letter from Cruz and Leahy can be found here on Ted Cruz’s website. We’ll be sure to keep you updated if Cook responds.


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Apple CEO Tim Cook Talks to Students at Oxford University

Apple CEO Tim Cook today headed over to Oxford University for the opening of The Oxford Foundry, a new “innovation space” that’s open to all University of Oxford students.

Cook was on hand to cut the ribbon at the new location, and afterwards, he sat down for a Q&A session with Oxford students alongside Oxford professors and administrators.



Because he was speaking to a group of students, Cook talked about his early life experiences, how he began to hunt for a job after leaving college, and his decision to join Apple. Early on, he said, his goal was to find a job that he loved. “I wanted to love the work I did,” he said. “I no longer have that goal.”

I realized the purpose of life wasn’t to love your job, it was to serve humanity in a broad way. And the outcome of doing that would mean you love your job. I realized I wasn’t in a place to do that, so sometime thereafter, I switched companies. […]

It was only after joining Apple where my values and my work aligned, and that has made all the difference for me.

Cook says it wasn’t an easy decision to join Apple. Everyone he talked to, his list of pluses and minuses, and his spreadsheets told him to stay where he was, but his intuition said something different, and he ended up going with intuitition. “That was one of the most important decisions of my life,” he said. “Maybe the most important.”

On designing products, Cook told students to “make products that you want to use” and the rest will follow.

You can bet if you love it, there are many other people out there that are going to love it too. That fundamental saying drives Apple.

Cook went on to explain that it’s important to “stick close” to customers, listening to them and making yourself accessible to them. Cook said that’s one of the reasons why Apple has retail stores, and it’s also the reason why he gets up at “ungodly hours.” “I like to spend my first hour going through customer emails,” he said. “Because I want to know what they’re saying. I want to know what they’re feeling.”

Cook said he takes inspiration from the artists, doctors, musicians, and others who use Apple products to change the world in some way. On failures, he says students just need to have faith that it will pass.

There will be times that you fail on a spectacular basis. I certainly have. You have to have the faith that it will pass. Look in the mirror and watch the person breathe. It didn’t kill you. You’re not dead. It’s not the biggest thing in the world. It will pass. And I do that many times a day sometimes. Do that for a while and you won’t have to remind yourself anymore. You’ll be able to take these failures… and in fact, you’ll view them not as failures but as things learned, and it won’t be so detrimental.

Cook’s interview, which can be watched above, also covered some of his thoughts on Steve Jobs, what he learned from working with Jobs, his view of augmented reality and the future, and his thoughts on who his heroes are.

Tim Cook touts the future of AR, says the technology isn’t there yet for AR glasses

During his current trip in Europe, Apple’s Tim Cook sat down with The Independent for a wide-ranging interview. The primary focus of the talk was on ARKit and how Apple has implemented it in iOS and where else it augmented reality could be useful…

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Cook explained that one of the biggest benefits of the iOS ecosystem is how Apple can do the “heavy lifting” by building a framework like ARKit, and then letting developers implement it throughout their apps.

“The way that you get lots of great ideas is for us to do the heavy lifting of the complexity of locational things and software, and put those in the operating system,” says Cook. “And then you have all the developers that are able to put their energy into their passion.”

The ecosystem further helps Apple when in competing with other smartphone manufacturers, Greg Joswiack says:

“Our competitors are trying to mimic what we’ve done,” says Greg Joswiack, Apple’s vice president for iOS, iPad and iPhone marketing. “But they just don’t have that scale we bring to it.”

Cook also noted that Apple has an advantage in that it controls both the hardware and the software o the iPhone, a level of control that competitors don’t have:

That gives Apple an especially strong position because its competitors “don’t control the hardware and software”, Cook says. “It goes to what Apple is about – the integration of those two things, with the App Store on the server side. I think it’s going to be hard for other folks.”

The conversation then shifted primarily to augmented reality in general. Cook likened AR’s affect to that of the App Store, saying that it will be just as “dramatic” as the App Store was for mobile technology. The Apple CEO also noted of how ARKit become “the largest AR platform” instantly because of the existing iPhone user base.

“If it were on a different device then you would never have a commercial opportunity, and without the commercial opportunity you’d never have 15 million people that say, ‘I want to design my passion with AR’.”

By putting it on iPhone, Apple was able to “instantly overnight become the largest AR platform”, Cook says.

Cook also vaguely addressed the rumors that Apple is building a pair of augmented reality glasses, saying that the technology to create such a product isn’t there yet, while noting that Apple doesn’t care about being first.

“But today I can tell you the technology itself doesn’t exist to do that in a quality way. The display technology required, as well as putting enough stuff around your face – there’s huge challenges with that.

“The field of view, the quality of the display itself, it’s not there yet,” he says. And as with all of its products, Apple will only ship something if it feels it can do it “in a quality way”.

“We don’t give a rat’s about being first, we want to be the best, and give people a great experience,” he says. “But now anything you would se on the market any time soon would not be something any of us would be satisfied with. Nor do I think the vast majority of people would be satisfied.”

Apple CEO Tim Cook visits France’s Eldim, the company providing iPhone X optical recognition technology

Before a meeting with French president Emmanuel Macron today, Apple CEO Tim Cook made a surprise visit to a small company that’s providing crucial optical recognition technology for the iPhone X.

Eldim, based near the Normandy town of Caen, has been making various types of display technology for more than 30 years. More recently, this has evolved into making components that allow for “optical analysis of angular characteristics.” Apparently, a version of this technology is one of the critical components being used in the new Face ID system for the iPhone X.

Local reporters were invited to tag along for the visit, which they documented on Twitter and blog posts. A reporter for Ouest-France noted that executives said the two companies had actually been working together for almost a decade, mostly in an R&D capacity. It was only with the release of the iPhone X that the facial recognition system is being baked into a product, however.

Eldim CEO Thierry Leroux told reporters that working with Apple was “an incredible adventure,” but added that there have also been huge technical challenges over the years. “For us, it was a little like sending someone to the moon,” Leroux told reporters. Cook responded, “It’s great what you have done for us.”

The visit was no doubt a thrill for Eldim’s 42 employees. It was also likely a diplomatic move by Cook, who is scheduled to meet with Macron at 4:15 p.m. CET today. The official agenda for their meeting has not been disclosed, but it’s likely to cover the question of Apple’s tax payments in France, and in Europe in general.

While Macron has cultivated a pro-tech and pro-entrepreneur reputation, he also has been fiercely critical of American tech companies not paying sufficient taxes. Apple is facing a demand to pay $15 billion in taxes to Ireland following a European Union investigation that found the company’s tax structure there violated EU competition rules.

Macron is among the European leaders pressing the EU to develop a new taxation scheme for tech giants that would make it more difficult for them to duck taxes by creating elaborate systems of corporate shell companies.

Cook and other leaders have been eager to highlight the positive economic impact their companies provide in terms of job creation across Europe. The visit to Eldim serves as just one such example.

Cook got a little ribbing by the French on Twitter for this tweet.

It should read: “Bravo pour votre travail!” He deleted that one and posted a corrected version:

The French are pretty hardcore about this language stuff.