Headlines from last week included analysts weighing in on Apple’s AAPL services and iPhones, Facebook FB shopping for independent gaming studios for Oculus-exclusives, Intel INTC dropping its patent auction, Amazon AMZN applying for FCC permission, PC shipments and more.
Morgan Stanley analysts led by Katy Huberty are excited about Apple’s new credit card (issued by Goldman Sachs on the Mastercard network). They mention three ways it will help the company: first, because it will generate traffic to its stores instead of telecoms and other retailers, where margins are higher; second, because it will make Apple Wallet look good and stimulate use of Apple Pay; and third, App Store, AppleTV and AppleNews revenue will be boosted. They expect that easier comps and higher services revenue will boost sales in the second half of the calendar year.
Amit Daryanani of Evercore ISI expects app store developer revenue and renewed rebound in China growth to be key catalysts for the to-be-reported third quarter.
iPhone sales will of course slow down in the second quarter, as people typically put off buying a new phone until the next quarter when the new model typically launches. Jun Zhang of Rosenblatt Securities expects new iPhones to be disappointing, leading to fundamental deterioration in the next 6-12 months. He therefore downgraded Apple shares to Sell.
Separately, locally-assembled iPhone XR and XS devices will reportedly go on sale in India in August. Minus the customs duty, the phones will be more affordable and also help Apple meet government criteria for independent stores in the country. Independent stores will help branding and sales.
Facebook is reportedly looking for small independent gaming studios that could deliver something exclusive and original for Occulus. There’s also an unconfirmed rumor that it has a deal with Ubisoft for Occulus-exclusive VR versions of “Assassin’s Creed” and “Tom Clancy’s Splinter Cell.” If true, this will join an Oculus-exclusive Star Wars game from Lucasfilm and another exclusive title from Electronics Arts-owned Respawn Entertainment.
Just as Apple gears up to fend off developers claiming that it takes an unfair 30% cut of revenue from app store apps, Facebook is getting ready to take 30% of video subscription revenue on the social network. At the Vidcon conference for video creators, the company said that “fan subscriptions”, a feature that allowed video creators to charge $4.99 from followers for exclusive content would not be free from Jan 2020 onward. The program was introduced on a test basis last year.
Intel has hit pause on the auction of its 8,500 5G modem patents. James Kovacs, an Intel executive, emailed the bidders about the decision. He said that despite “very strong market interest” in the portfolio, the bidding process was stopped because it was negotiating an agreement with a single, unnamed bidder. This is very likely to be Apple, which has reportedly been angling for the assets for long.
German Economics Minister Peter Altmaier is planning a German cloud service that wouldn’t be dependent on American or Asian providers. This, it is believed will bring privacy and data sovereignty to Europeans, especially given the advent of AI, geopolitical tensions and the current environment of tariffs and trade wars. Government representatives are talking to SAP SE, Deutsche Telekom and other companies that have to get back within a few months. This is the second attempt to build an independent German cloud service. The first one, by Deutsche Telekom wasn’t successful.
Amazon has applied to the Federal Communications Commission (FCC) for permission to launch 3,236 low-orbit (370-to-390 miles or 590-to-630 kilometers) communications satellites under the Kuiper brand. The satellites are expected to provide fixed broadband to tens of millions of consumers and businesses particularly in rural and hard-to-reach areas, as well as high-throughput mobile broadband connectivity services for aircraft, maritime vessels, and land vehicles.”
Pop star Lady Gaga is exclusively launching a new line of beauty products on Amazon. The products will launch under the Haus Laboratories brand in September. Amazon appears to be increasing focus in the are of late having launched the Belei private label skincare brand in March. The company sells 12 products under the brand, including a charcoal balancing mask and dark spot solution serum.
According to IDC, the top 5 companies in the last quarter were Lenovo, with a 25.1% share, followed by HP HPQ with 23.7%, Dell Technologies with 17.9%, Acer with 6.6% and Apple with 6.3%. IDC, which includes chromebook sin the calculation, says overall sales grew 4.7%, unlike Gartner, which says that sales grew 1.5%. End of life for Windows 7 (from Jan 2020), the easier availability of some Intel chips that were in short supply in the previous quarter and excess shipments in anticipation of higher U.S. tariffs on China-made items drove sales, according to both firms.
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