Tim Cook Says Apple Plans to Participate in the 'Breakdown of the Cable Bundle' With AirPlay 2, Original Content and More

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Apple CEO Tim Cook today commented on the opportunities Apple sees in the video market, though he declined to provide details on the company's specific plans.

Cook said that Apple sees "huge changes" taking place in customer behavior, which the company expects to "accelerate as the year goes by." Specifically, Cook said that Apple is expecting an acceleration of the breakdown of the cable bundle. "I think it'll likely take place at a much faster pace this year," he said.


Apple plans to "participate in that" in a number of ways, including the Apple TV, which offers support for apps so customers can watch television content on a per-app basis, and AirPlay 2, which will soon support third-party television sets. Cook said Apple is "excited" about the expansion of AirPlay 2 compatibility to third-party television companies because it will make the experience with people using Apple products in the living room "even better."

Cook said that third-party video subscriptions available on the App Store provide another opportunity for Apple that could "accelerate in the future" as customers are likely to buy multiple services, and finally, Cook pointed towards Apple's own work on original content.

Finally, original content, where we will participate. We've signed a multi-year partnership with Oprah. Today I'm not really ready to extend that conversation beyond that point. We've hired some people we have a super amount of confidence in, and they're working really hard. We'll have more to say on that later.

Rumors have suggested Apple is working on a full streaming television service to distribute both its original content and content from third-party providers such as HBO and STARZ. At least some of the content Apple is creating could be available for free, and Apple is said to be planning to integrate the service and the new TV shows into its TV app.

Apple has more than two dozen original television shows in the works, many of which are in the casting stages, with filming likely set to begin soon. Apple has also purchased movies and inked deals with well-known industry talent including Jason Katims and Justin Lin.

Apple is aiming to have its streaming television service ready for a mid-April launch, and has been telling its launch partners to prepare for that date. An actual release could come right around that target date.

Related Roundups: Apple TV, tvOS 12

Tag: Apple's Hollywood ambitions

Buyer's Guide: Apple TV (Don't Buy)

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Apple CEO Tim Cook 'I Do Think Price is a Factor' in Declining iPhone Upgrades

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During today's earnings call for the first fiscal quarter of 2019, Apple CEO Tim Cook was asked whether he thought that the pricing of the iPhone XR, XS, and iPhone XS Max was too high.

In response, Cook said that while he didn't feel that was as much of a factor in the United States, it was an issue in emerging markets.


The iPhone XS is priced the same as the iPhone X at $999, while the iPhone XS Max, a new device, was $100 more. The XR, at $749, was priced to be right in the middle of the entry level iPhone 8 and iPhone 8 Plus models. Cook said that's a "pretty small difference in the United States compared to last year."

In emerging markets, however, iPhone pricing was an issue due to the strength of the dollar. Foreign exchange rates amplified the pricing increases leading to weaker sales. Cook says that in January, in some locations, the company has absorbed all or part of the currency movements compared to a year ago, getting closer to local price compared to a year ago.

Cook in an interview with Reuters earlier today said that Apple is lowering iPhone prices in some emerging markets.

In developed markets, like Japan, a lack of subsidies has also become a major factor. Even in the U.S., where subsidies have been phased out for several years, Cook said that a person who last purchased an iPhone 6 or 6s for $199 when subsidies were still in place may be reluctant to upgrade to a device that costs upwards of $749 without subsidies.

Apple is working to address the subsidy issue with trade-ins and installment payments.

Cook in a separate statement said all of Apple's devices are designed to last. "We do design our products to last as long as possible," he said. Some customers choose to hold on to those products for as long as possible, while some trade them in. Apple's product cycle has indeed extended and upgrades were less than anticipated last quarter, but Cook says he doesn't know where that will go in the future.

"I'm convinced that making a great product that is high quality is the best thing for the customer. That's the way we look at it."

Tag: earnings

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Apple CEO Tim Cook: Customers Are Holding on to Older iPhones 'a Bit Longer' Than in the Past

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Apple saw lower than expected iPhone sales during its first fiscal quarter of 2019 (aka the 2018 holiday quarter) and one explanation provided by Apple was lower quarterly iPhone upgrades. During today's earnings call, Apple CEO Tim Cook delved into the reasons why Apple is seeing fewer upgrades.

First and foremost, he named foreign exchange rates. The strength of the U.S. dollar has made the iPhone much more expensive in many parts of the world, which is why Apple today said that it plans to lower prices in some emerging markets. In Turkey, for example, the iPhone became so expensive due to exchange rates that revenue fell $700 million from the previous year.


Cook also said that iPhone subsidies are becoming increasingly less common, which is impacting upgrade rates. In Japan, for example, it used to be common to have subsidies for smartphones, but local regulations have eliminated many of those. According to Cook, less than half of iPhones sold in Japan were subsidized compared to 3/4ths a year ago. The total value of subsidies has declined as well.

Cook's third reason for fewer iPhone upgrades was the battery replacement program that Apple offered across 2018, allowing customers to swap out the battery in their iPhones for $29. Cook said that this made it inexpensive and efficient to replace iPhone batteries and hold on to older iPhones for a longer period of time.

According to Cook, while analysts suggested Apple shouldn't do it, the company "strongly believes it was the right thing to do for [its] customers."

To combat fewer upgrades, Cook pointed towards Apple's trade-in program, which drives down the price of new devices when trading in older devices, and he highlighted the monthly payment options that Apple recently started promoting on its trade-in page. This page provides details on the monthly price of the iPhone XR and iPhone XS when trading in an older device.


Lower than anticipated iPhone sales along with troubles in China led to a 15 percent decline in iPhone revenue year over year.

Cook says that while iPhone upgrades were lower than anticipated in China in particular, the company's business grew in the rest of the world, setting new records in the U.S., Canada, Mexico, Germany, Italy, Spain, and Korea.

According to Cook, investors should be aware of three factors long term: a loyal and satisfied customer base, a large and growing active installed base, and Apple's deeply ingrained culture of innovation.

Tag: earnings

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Apple's Services Revenue Up 19% Year-Over-Year in Q1 2019, Hits New All-Time High

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Apple's services category, which includes iTunes, the App Store, the Mac App Store, Apple Music, Apple Pay, and AppleCare is an increasingly important revenue driver for Apple amid stagnating iPhone sales, and services growth is once again hitting an all time high.

During the first fiscal quarter of 2019, Apple's services segment brought in $10.9 billion in revenue, up from the $9.1 billion services earned in the first quarter of 2018.


In all five of its geographic regions, including China, Apple saw new December quarter revenues record for the services category.

Apple hit a December quarter record for AppleCare, and nearly 16 years after launching iTunes Store, it saw its highest quarterly revenue ever thanks to Apple Music. The App Store also saw record results propelled by record sales on Christmas and New Years.

Over 1.8 billion Apple Pay transactions were made during the quarter, 2x more than the previous quarter, and Apple News set a new record with more than 85M monthly active users.

Apple has more than 360 million paid subscribers across its services, an increase of 120 million compared to the year-ago quarter. Apple CFO Luca Maestri said that the company expects the total number of paid subscribers to surpass half a billion in 2020.

Apple is aiming to reach $14 billion in services revenue per quarter by 2020, and it is well on its way towards reaching that goal.

Apple is working on bolstering its services category in 2019, breaking into the television industry. Apple is has more than two dozen original television shows in the works right now, which will be distributed through a TV streaming service set to debut early in 2019.

An Apple News subscription service is also in the works and could come out around the same time, with Apple planning to offer access to magazines for a monthly fee, and there have been rumors Apple is considering a gaming subscription service as well.


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Apple Now Has 1.4 Billion Active Devices Worldwide

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Apple CEO Tim Cook today announced that its active installed base of devices has hit 1.4 billion, a milestone the company hit at the end of December.

Apple's active installed base includes the iPhone, iPod touch, iPad, Mac, Apple TV, and Apple Watch models in use around the world.


The new 1.4 billion milestone comes nearly a year after Apple announced that it had 1.3 billion active devices back in December 2018, and the growth comes despite a Q1 2019 decline in iPhone sales.

On the strength of that active installed base, Apple's services category set new all-time records, seeing a 19 percent growth in revenue year-over-year.


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Apple Lowering iPhone Prices in Some International Markets to Boost Sales

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Apple CEO Tim Cook today told Reuters that the company is "rethinking" iPhone prices outside of the United States. Setting prices in U.S. dollars has made phones more expensive in local currencies, so Apple is planning to lower prices.

Cook says that in some international markets, after assessing macroeconomic conditions, Apple will go back to pricing that's "more commensurate" with what local prices were last year to boost sales.

"When you look at foreign currencies and then particularly those markets that weakened over the last year those (iPhone price) increases were obviously more," Cook told Reuters. "And so as we've gotten into January and assessed the macroeconomic condition in some of those markets we've decided to go back to more commensurate with what our local prices were a year ago in hopes of helping the sales in those areas."

Apple has already started lowering the price of the iPhone for third-party distributors in China, and price cuts could also be introduced in other areas like India and Brazil, where the iPhone is prohibitively expensive and has seen stalled growth due to high pricing.

Related Roundups: iPhone XS, iPhone XR

Buyer's Guide: iPhone XS (Neutral), iPhone XR (Buy Now)

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Apple's 'Wearables, Home and Accessories' Category Now Bringing in More Revenue Than iPad, and Soon Mac

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Apple's "Wearables, Home, and Accessories" category, which used to be called the "Other" category, has surpassed the iPad in revenue and is closing in on the Mac lineup as well.

The Wearables, Home, and Accessories category brought in $7.3 billion during the quarter, compared to $6.7 billion for iPad and $7.4 billion for Mac. Overall, Wearables, Home and Accessories category growth was up 33 percent compared to the $5.5 billion it earned in the year-ago quarter.


Apple Watch, HomePod, Apple TV, AirPods, Beats products, iPod touch, and Apple-branded and third-party accessories are included in the category, but it's Apple's wearables that have been driving growth.

The wearables category has been setting regular quarterly revenue records thanks to the strength of Apple Watch sales. In Q4 2018, for example, Apple saw wearables growth over 50 percent, and we're likely to hear more about wearables during today's earnings call.

As Asymco's Horace Dediu pointed out at the beginning of January, the Apple Watch is also now a "decidedly bigger business" than Apple's iPod ever was, based on historical revenue records and estimated Apple Watch sales.


Apple does not break down Apple Watch sales individually, lumping the data in with sales of other products in the Wearables, Home, and Accessories category, but the company does often give hints on how well the Apple Watch is selling.

With iPhone sales stagnating somewhat, Apple will be increasingly relying on revenue from its wearables category to drive growth. The company will also be looking to its services category, which has been bringing in more revenue than the iPad and the Mac categories for quite some time now.

Tag: earnings

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