Foxconn Plays It Safe While Apple Bets the App Store

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Foxconn is playing it safe, while Apple’s new ads gamble with our goodwill. More Apple Stores in Target, and waiting for Apple’s earnings call. That’s a glimpse of what we see from the Observation Deck today.

Foxconn’s iPhone City “Relatively Stable” as COVID Hits Again

Remember that story from a few days ago that had Foxconn asking workers at its “iPhone City” plant in Zhengzhou, China to eat their meals in their dorms and to wear N95 masks outside their dorms and here’s seven-bucks a day for all the inconvenience? It doesn’t sound like it’s over. 

CNBC ran a piece Wednesday under the headline, “Foxconn’s iPhone factory in China — the world’s largest — hit by Covid outbreak.” I’ve gotta say, that sounds a bit worse than “don’t sit together at lunch.” The headline says “hit by Covid outbreak.” The body of the article says “a small Covid outbreak.” And a Foxconn spokesperson says work in the facility is “relatively stable with health and safety measures for employees being maintained.”

Gotta love that word “relatively,” huh? The spokesperson went on to say:

For the small number of employees affected by the pandemic, Foxconn, in compliance with local epidemic prevention policies, is providing the necessary guarantees for livelihoods, including material supplies, psychological comfort and responsive feedback…

Man, I miss psychological comfort. 

CNBC had Foxconn calling that the impact on affected workers “controllable.” As for the making and the shipping, the company says the outlook for the December-quarter has not changed.

Apple’s App Store Gambling Gamble

If you’re like me, you spent the first part of the week wondering how the App Store using world would take to the addition of new ad slots in the App Store. Who expected to worry about the kind of ads? 

What we’d heard late last week (via MacRumors) was that Apple was putting one ad slot in the “Today” tab in the App Store. The company was also opening one ad slot in the “You Might Also Like” section on individual app pages. The complaint at the time was that app developers might feel compelled to buy ads on their pages for other apps in order to box out competing apps and developers. 

We didn’t expect to worry about the kind of ads. 

AppleInsider ran a piece Wednesday saying:

There are more ads in the App Store, including gambling apps next to kids applications — and worse yet, next to gambling addiction recovery ones.

That gambling apps might end up kids-app-adjacent seems odd. However, the AppleInsider piece explains:

Apple (…) provides a demographic filter for the app advertisers to choose a country, gender, or age range for their ads. The ads aren’t necessarily targeted at kids, but they could appear connected to kids’ apps, at least on accounts not bound by age restrictions or parental controls.

Ads for gambling apps showing up at the bottom of pages for apps meant to help fight gambling addiction? “Algorithm run amok,” one could say. One could also say, “Cynical and sick to the core.” 

A piece from MacRumors on the same issue says: 

The presence of gambling ads in the App Store as a whole has prompted some criticism, with some accusing Apple of being greedy and moving away from policies that the company upheld under former CEO Steve Jobs. Apple earns revenue from both the ad placements and its 15% to 30% cut of in-app purchases in gambling apps.

And they were seriously turning up everywhere. AppleInsider had developer Simon Stovring saying that gambling ads were appearing on pages for his apps 30% of the time at one point. Famed developer Marco Arment tweeted his displeasure, saying in part:

Now my app’s product page shows gambling ads, which I’m really not OK with… Apple shouldn’t be OK with it, either.

For now — Apple is not. Wednesday afternoon/evening, MacRumors updated its story. “In a statement,” the update said, “Apple said it has ‘paused ads related to gambling and a few other categories on App Store product pages.’”


You gotta know when to hold ‘em, know when to fold ‘em, I guess.

Apple Stores in Target Stores Grow to 150 Locations

Target stores are getting more Apple Stores. CNET says nearly two-years after starting their store-in-a-store partnership, the two retailers “are growing the venture by rolling out more shops, deals and products.” If you’ve not seen one, CNET says, “Apple’s shop-in-shop at Target is a dedicated space within the store that features the brand’s devices, accessories and a trained consultant.” 

While there are more of the store-in-a-store stores, it’s still pretty hit or miss. Target’s website says there are currently 1,938 stores in the U.S. CNET says there are currently 150 Apple Stores in Target Stores. “To find out if your local Target has an Apple shop,” the report says, “you can use the store locator function on the retailer’s website, and filter by ‘Apple.’”

Expectations Ahead of Apple Q4FY22 Earnings

So today is the thing: Apple is set to report numbers for the fourth-quarter of fiscal year 2022 — aka the September-quarter. CNBC ran a piece earlier this week, outlining some analyst expectations. Apple 3.0 borrowed from that, and now I will borrow from Apple 3.0. Here is what three analysts are saying:

JPMorgan analyst Samik Chatterjee thinks investors are expecting too little from Apple. While the company’s not immune to macroeconomic issues, he and his think the demand for the Pro end of the iPhone 14 line and the high revenues they generate will “deliver results that demonstrate resiliency above the low bar of investor expectations at this time.” While he does not expect Apple to offer financial guidance on the call, he thinks commentary will likely point to a healthier supply chain, “improving growth in Services and lower FX headwinds…” Chatterjee has a positive rating on Apple shares. His price target on the shares is $200. 

Cowen & Co analyst Krish Sankar likes Apple for its free cashflow and the $90B to $100B he expects Apple to give back to shareholders in calendar year 2023. Sankar has a positive rating on Apple shares and a price target of $200. 

And finally, Morgan Stanley analyst Erik Woodring says just about everybody thinks “services revenue growth should accelerate” this quarter. Makes sense. I know times are tough, but the holidays are looming. That means new iPhones, new iPads, and lots of spending on apps and services. If he sees weakness, and he seems to, it’s in Wearables. He and his:

…believe Wearables are the most discretionary product in Apple’s portfolio and therefore most prone to the pullback we are seeing in consumer electronics spending.

Interesting. iPhone’s fared well. He’s watching for worry in AirPods and Apple Watch. Woodring has a positive rating on Apple shares. His price target on the shares is $177.

Is It Time Yet?

And now we wait, though not for long. Numbers for Apple’s fourth-quarter will go out via press release after the closing bell today. Then at 2PM Pacific/5PM Eastern — Apple CEO Tim Cook, CFO Luca Maestri, and a whole host of financial folk will get on the phone to talk the numbers over and out. You can listen to that as it happens on Apple’s site. The company will make it available as a podcast soon after. And — of course — we’ll go over the big points right here tomorrow.

Today on The Mac Observer’s Daily Observations Podcast

TMO writer Nick deCourville joins me to discuss Apple’s App Store gambling gamble. Plus — How Apple is learning from accidental Emergency SOS notifications. That’s all today on the Daily Observations Podcast from The Mac Observer.

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