Ads and Expectations, COVID Woes, and Cook and Cue Go To the Races

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COVID pokes the supply chain again, a few notes from the financial front, and Apple’s gonna need a new design lead. 

Zhengzhou iPhone Plant Asks Workers to Dine in Dorms to Stave Off COVID

Things may feel smoother these days, but there’s always time to mess up the supply chain. A piece from the South China Morning Post (via Apple News+) says the Foxconn plant in Zhengzhou has ratcheted up restrictions as the city deals with another outbreak of COVID-19.

Nicknamed “iPhone City,” it doesn’t sound like the plant has seen production disruptions. Rather, the facility “has banned all eating in and asked workers to take their meals back to their dormitories…” The meals will be free, though. Additionally, workers in the division that makes iPhones are being offered transportation subsidies to help with the added back and forth and “an additional 50 yuan per day bonus for reporting to work on time amid the new restrictions.” That’s just under US$7.

Aside from the dining changes, the piece says the plant “has also asked workers to wear a close-fitting N95 mask at all times except in their dorms…”  So far so good, it seems. South China Morning Post had a Foxconn spokesperson saying late last week that, “Production in the Zhengzhou campus remains normal, without a notable impact [from the Covid-19] situation…”

Cowen Sees September Beat for Apple, Decent December Outlook

Good news/bad news on Apple expectations from Cowen & Co. AppleInsider has had a look at some of the firm’s expectations for the September-quarter and beyond. 

Like everyone, it seems, Cowen expects Apple to beat the Street for the September-quarter. I know — it’s not really everyone, otherwise they’d just be expected to meet expectation. And yet, and yet, and yet… 

The December-quarter is where things start to get a little dicey in the firm’s estimation. Cowen has lowered iPhone unit sales expectations for this quarter from 83-million to 82-million. They’ve cut the March-quarter a bit more drastically, lowering expectations from 58-million units to 55-million. 

The firm is looking for good things from Apple’s Mac and iPad lines. Cowen thinks Mac sales for calendar year 2022 could grow more than 5% versus 2021. Meanwhile, AppleInsider has the firm indicating that “increasing enterprise adoption of the iPad could help offset decreased consumer demand.”

As for Apple’s Services segment, that’ll be fine for September and better in December. For last quarter Cowen is looking for growth of ~9%. For the December-quarter, it’ll be a return to double-digit acceleration, with the firm expecting ~11% year-on-year growth, driven by holiday spending in the App Store. 

Cowen & Co. has a positive rating on Apple shares. The firm’s price target on the shares is $200. 

Some Firm says Apple Watch Ultra a $10B to $38B Opportunity for Apple

Somebody is excited about the opportunity Apple has created for itself with Apple Watch Ultra — and I wish I could tell you who it was. Let’s hit what was said, then talk about who might have said it. AppleInsider quotes a note that says the firm quoted still sees long waits for the Ultra, and it likes what it sees. Quoting that note:

Apple Watch Ultra lead times have tracked anywhere between 25-45 days since initial availability, which compares to 9-30days for the Series 8 and 5-10 days for the SE variants… In our view, we believe the elongated lead times for the Apple Watch Ultra suggests early success relative to customer reception with the newer model…

The firm seems to be looking for an extra $10B for Apple from the Ultra at the low end, with $38B seen as possible. The note has:

…the low-end of the range encompassing the upgrade of consumers focused on Sports, while the high-end of the range encompasses all consumers focused on basic features, like better battery life.

As for who said it — who knows? That AppleInsider piece had the note coming from JP Morgan, while a separate piece from Apple 3.0 had the note penned by Evercore analyst Amit Daryanani. That they might think similarly is not a surprise, but this isn’t that. Both pieces quote one part of the note word for word. 

JP Morgan has a positive rating on Apple shares and a price target of $200. Evercore also has a positive rating on Apple shares and a price target of $190. Except Apple 3.0 says $200 which is incorrect, which makes me think it was that site that misattributed the note. 

We’ve all done it.

Evercore Outlines Three Opportunities for Apple TV+

Here’s one that we know is from Evercore analyst Amit Daryanani. Probably. Posted again by Apple 3.0, this one has the analyst watching Apple TV+ and trying to figure out what’s next for it. While he’s impressed by the content offered, he doesn’t think there’s enough. That’ll be taken care of though, as long as the company keeps cranking out high quality content. Assuming that, Daryanani and friends “see three interesting opportunities going forward.” 

  1. introduce an advertising supported option – we think it’s logical but lower probability in the near-term,
  2. add more live sports – higher probability and would serve to differentiate the product further, &
  3. price raises.

Evercore thinks all three will happen — starting in the middle. They see “the addition of more live sports as the most likely next step…” Quoting the note:

Live sports not only provide unique content, but they should also help solve the churn issue facing many services as the long seasons with weekly games will make it more difficult for consumers to subscribe for just a month or two out of the year. 

Raising prices and adding ads will happen further down the road, in the firm’s estimation. Apple needs more content for those to work, and that will take time.

As mentioned a moment ago, Daryanani has an “Outperform” rating on Apple shares. His price target on the shares is $190.

Apple 4QFY22 Earnings Report Set for Thursday 27 October

If you’re wondering what the deal is with all of the financial notes, Apple’s got a call coming up this week. Numbers for Apple’s Q4FY22 will be released this week via press release. That’ll happen after the closing bell on Thursday 27 October. Then, roughly half-an-hour later — 2PM Pacific/5PM Eastern — Apple execs and Apple analysts will hop on the party-line and chat it up. 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 hit lights both high and low on Friday 28 October.

Two More Ad Slots Opening in Apple’s App Store This Week

One Apple property that is getting more ads is the App Store — starting tomorrow. MacRumors ran a piece over the weekend saying that Apple had notified developers:

…that app-related ads will begin appearing in the App Store’s main Today tab and in a “You Might Also Like” section at the bottom of individual app listings starting Tuesday, October 25, in all countries except China. 

The piece points out that, until now, the Today tab has only featured content picked by the App Store editorial crew — no paid placement. As for the “You Might Also Like” section, MacRumors says “developers will now be able to promote their apps on other apps’ pages.”

Legal expert Florian Mueller does not like. He argued on Twitter that it’s just another way for Apple to charge developers more than the 15% or 30% commission they’re already paying. His concern is that developers will feel compelled “to buy ads on their own app pages” to keep competitors from stealing prospective customers.

New and Updates OS Day Today

Big day of updates today. macOS 13 Ventura and iPadOS 16.1 will both see their initial releases today. iOS will also see an update, revving up to version 16.1.  

A piece from MacRumors lists several features on the way for macOS.  Among them are Stage Manager, Continuity Camera, Handoff for FaceTime, changes for Mail, changes for Safari, and Mac apps for Clock and Weather. 

For iPadOS, Apple’s site highlights a few features. They include Stage Manager, a “reimagined” Home app, and a Weather app for the iPad. 

As for the iOS update, a piece from MacRumors runs through a few features. Among those are activation of the iCloud Shared Photo Library, Live Activities for third-party apps, Clean Energy Charging, and one that strikes me as kind of funny: Reachability Support for Dynamic Island. It’s funny because Dynamic Island was made to hid the notch at the top of the screen in a useful way. Apparently some of those ways are so useful, you need to be able to reach them one handed. So — they’re moving Dynamic Island off the notch. 

Kind of funny.

All of that, plus — you’ve got to imagine security fixes as well. 

No pushing. No shoving. Be patient.

Apple Industrial Design Lead Evans Hankey Heads Slowly for the Exit

It looks like Apple’s going to need a replacement for Jony Ive’s replacement. A number of sites, including AppleInsider, say Evans Hankey, Apple’s head of industrial design since Jony Ive’s departure, is herself departing. 

Citing a Bloomberg report, the piece says Hankey has told colleagues that she’ll be around for the next six months. No one has said anything about who will take her place, though Apple seems to be spotlighting its deep bench of talent. In a statement to Bloomberg, the Cupertino-company said:

Apple’s design team brings together expert creatives from around the world and across many disciplines to imagine products that are undeniably Apple… The senior design team has strong leaders with decades of experience.

Evans plans to stay on as we work through the transition… We’d like to thank her for her leadership and contributions.

Cook and Cue Hit Austin, TX Formula 1 Grand Prix

And finally today, a surprise appearance Sunday by Apple execs Eddy “the Butler” Cue and Tim “the CEO” Cook. 9to5Mac says the two were on-hand with a number of celebrities, including Ed Sheeran and Brad Pitt, at the Formula 1 Grand Prix in Austin, Texas. 

A leisurely Sunday afternoon? It likely had a lot to do with business. According to the report:

Although Apple has not yet secured broadcast rights for F1 races, the company has struck deals to make a series of F1-related projects for Apple TV+. This includes a documentary on [Formula 1 racer] Lewis Hamilton, and a feature film starring Brad Pitt as a racing driver, set to be directed by [Top Gun: Maverick’s] Joseph Kosinski.

Also — Cook was handed an honor that he didn’t drop exactly… but… well… Apple’s CEO was tasked with waving the checkered flag for the final lap of the race. It lacked… verve. 

You can see for yourself on YouTube. 

Today on The Mac Observer’s Daily Observations Podcast 

Jeff Butts, Managing Editor of The Mac Observer, has been playing with the new operating systems due out today. He hips us to a few new features. But first, we discuss the two new ad slots Apple’s opening in the App Store. That’s all today on the Daily Observations Podcast from The Mac Observer.

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