Positive notes on Apple, news on Apple’s mixed reality plans, and where on earth was iPhone’s first satellite save?
Positive Notes on Apple from Evercore
Firm Notes Shorter Waits for iPhone 14 Pro/Pro Max
On the phone, despite the plethora of production problems outlined here over the past several weeks, Apple and Foxconn are shrinking the gap between supply and demand in Daryanani’s estimation. That said, it’s still a pretty big gap. Back on 23 November waits stood at between 35 and 42-days. As of last week, they were down to between 25 and 29-days. There are a couple of caveats to his note though: The first – Waits in Japan are still pretty long, standing at about 39-days. As for the second – Daryanani entertains the possibility that it’s shrinking demand rather than growing supply that’s causing the two to draw closer together. Quoting the analyst:
Although we note that demand has remained strong and demand destruction has been minimal (demand deferred vs. lost), there is a possibility that the situation in China getting worse negatively impacts consumer demand.
As for what’s been lost or deferred, that’s all over the map. Evercore thinks missed iPhone units for the quarter will be between 5-million and 8-million. Consensus is running closer to 10-million units, according to the firm, with particularly bearish takes seeing 15-million units missed.
All of that could mean a bad quarter, though Daryanani thinks those sales will be made up. Or – at the very least – buyers won’t buy anything besides an iPhone. While Apple may take a revenue hit as high as $8B this quarter, the analyst seems to think most of that will push out to the March and June quarters. “Given the consistently strong demand for the iPhone 14 Pro/Pro Max and the stickiness of the AAPL eco-system,” writes the analyst, “we continue to view this as revenue deferred vs. lost.”
Moving Manufacturing Around
How does Apple make sure something like this quarter never happens again? Diversify the supply chain. A piece over the weekend from the Wall Street Journal, highlighted by AppleInsider, indicates that the Cupertino-company is getting serious about that. The report on the report says Apple has “accelerated plans” to move some production from China to other countries, with India and Vietnam named as the primary beneficiaries. The piece says Apple is “now reportedly informing suppliers to ‘plan more actively’ for assembly elsewhere in Asia,” including those two countries.
This is something for which Apple watchers have called for a long time, though indications are that the cluster-thing around iPhone City has sped that up. There are difficulties doing it, though. China knows how to roll out brand new products. Like – category defining products. While India and Vietnam could be brought up to speed on that, that takes time. And now’s not a great time for it. Given the current economic climate, “with hiring slowdowns and a slowing global economy,” Journal sources say, “it’s harder for Apple to allocate workers to deal with [New Product Introduction] with new suppliers in new countries…”
So yes, Apple is looking to diversify the supply chain. And yes, it’s going to take time.
Possible Improvements in the App Store
As for Evercore’s second up-note… it’s kind of positive. You know, like when people see something bad and say, “could’ve been worse.” Quoting Daryanani’s other note:
App Store revenue growth remained negative in November with a 4% decline, but this is the first month since April-22 when growth rates have moved in the right direction. The improvement is modest relative to the -6% decline in October, but it is encouraging to see things heading in the right direction.
Could’ve been worse!
That said, it doesn’t sound like the App Store is seeing more business. Rather, the people doing business there are paying more to do it. Quoting his note again:
The drivers of the improvement likely include a weaker dollar and the price increase pushed through by Apple starting in early October. The price increase impacted all countries using the Euro as well as South Korea and Japan, and these are some of the countries where we saw the largest improvement in growth rates. Korea was the most notable improvement going from flat in October to +9% in November.
If foreign exchange rates continue to improve, the App Store could be in for truly good times. Daryanani’s not ready to put money on that, though. “This is a positive data point,” notes the note, “but we remain cautious on the App Store and would not make a call on a single months data.”
Daryanani has an “Outperform” rating on Apple shares. His price target on the shares is $190.
One Step Forward, One Step Back for Apple’s Mixed Reality Headset
Reports have Apple’s mixed-reality headset taking one step forward and one step back. On the advance, Bloomberg’s Mark Gurman (via MSN) says Apple has renamed the device’s operating system. The operating system was reportedly called realityOS. The new name, according to secret insiders, is xrOS.
According to the piece:
The new software name is a nod to the headset’s mixed-reality capabilities. “XR” stands for extended reality, a term that encompasses both augmented and virtual reality.
It’s not just talk from insiders that has Gruman taking the xrOS talk seriously.
Are we gonna call it crossOS? We’re gonna call it crossOS, right? I don’t like the potential religious confusion around that, but xrOS is a mouthful, without saying a lot.
Anyway, it’s not just talk from insiders that has Gurman taking the xrOS talk seriously. According to the piece:
…a secretive shell corporation named Deep Dive LLC filed to trademark the brand “xrOS” in several countries internationally and is trying to secure the name in the US.
Gurman says Apple “plans to introduce the headset as early as next year,” which makes it sound not like early next year. And now, we get to the one step back.
TF International analyst Ming-Chi Kuo took to Twitter on Sunday to say anticipate Apple’s mixed reality headset, but don’t hold your breath yet. In one Twitter post he says the market had expected mass shipments of Apple’s headset in the second-quarter of 2023. Now, another Twitter post says he thinks the whole thing may be pushed to the second half of 2023. And that may push hearing anything official from Apple. In another Tweet in the thread, the analyst says a media event to announce the new device/platform had been expected in January 2023. If the device is pushed out, he expects that event will be pushed out as well.
Goldman Sachs Preps Terms for Apple Card Savings Account
A sign of life for Apple Card’s high-yield savings account. “In October,” says a piece from MacRumors:
…Apple announced that Apple Card users would soon be able to open a new high-yield savings account from Goldman Sachs and have their Daily Cash cashback rewards automatically deposited into it, with no fees, no minimum deposits, and no minimum balance requirements.
Since then, nothin’. Until Friday. That’s when MacRumors ran its piece saying that Goldman Sachs had updated its Apple Card customer agreement with a mention of the savings account feature. What it does not mention is when, unless you count “upcoming” as when. According to the report:
The savings account was listed in the release notes for the iOS 16.1 Release Candidate, but it did not end up launching with that update. The savings account has not been present in any iOS 16.2 betas, so it’s unclear when it will become available…
Apple TV+ Orders Second Season of ‘Surface’
Look for the Apple TV+ series Surface to resurface. AppleInsider says the psychological thriller has been picked up for a second season. Starring and executive produced by Gugu Mbatha-Raw, the show’s first season told the story of Sophie – a woman trying to piece her life together in the face of “extreme memory loss following what appeared to be a suicide attempt.”
Season two will take Sophie to London as she looks deeper into her past. Viewers can follow along, though no telling when. While all eight episodes of season one are available to stream now, there’s no announced timeframe for the second season’s release.
Alaska Snowmobiler First Individual Saved by Emergency SOS via Satellite
And finally today, if you follow Apple-related news, you kind of had to wonder where and when the first rescue story around Emergency SOS via Satellite would hit. Activated in the middle of November, it took a tiny bit longer than one might have expected, though not long at all in the grand scheme.
A piece from 9to5Mac says a snowmobiler in Alaska was saved by the service, in what’s thought to be the first such save for Emergency SOS via Satellite. In a short report the State of Alaska Department of Public Safety said:
On December 1, 2022, at around 2:00 am, the Alaska State Troopers were notified that an adult male traveling via snowmachine from Noorvik to Kotzebue had activated an Apple iPhone Emergency SOS via satellite on his iPhone after becoming stranded.
Working with local search and rescue teams, the Apple Emergency Response Center, and the Northwest Arctic Borough Search and Rescue Coordinator, the [authorities] deployed four volunteer searchers to the […] area directly to the GPS coordinates provided by the Apple Emergency Response Center.
A MacRumors report on the incident says, “[t]roopers who helped with the rescue were ‘impressed with the accuracy and completeness of information included in the initial alert…’” Plus – it was rescue, not a recovery. I don’t want to put words in the man’s mouth, but you’ve gotta figure the they guy they went out and got was pretty impressed as well.
Active now in the U.S. and Canada, Emergency SOS via Satellite is set to go live in a few more countries before year’s end. 9to5Mac says iPhone 14 users in France, Germany, Ireland, and the UK are expected to have access to the service later this month.
Today on The Mac Observer’s Daily Observations Podcast
I told you about the Bloomberg and TF International takes on Apple’s mixed reality headset. TMO Managing Editor Jeff Butts joins me to discuss that. Plus the Sunbird messaging app, Eufy video storage, and Elon Musk are in for Mailbag Monday. That’s all today on the Daily Observations Podcast from The Mac Observer.