Posts Tagged ‘iPhone’

Apple demanded $1 billion for chance to win iPhone chip contract, Qualcomm CEO says

January 12, 2019

Qualcomm sought to become the sole supplier of modem chips for Apple’s iPhone to recoup a $1-billion “incentive payment” that Apple insisted on, not to block rivals from the market, Qualcomm’s chief executive testified on Friday.

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The payment from Qualcomm to Apple — part of a 2011 deal between Apple and Qualcomm — was meant to ease the technical costs of swapping out the iPhone’s then-current Infineon chip with Qualcomm’s, CEO Steve Mollenkopf testified at a trial with the US Federal Trade Commission.

Under the 2011 deal, Qualcomm was named Apple’s sole supplier of modem chips. (Reuters)

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While such a payment is common in the industry, the size of it was not, Mollenkopf said.

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Under the 2011 deal, Qualcomm was named Apple’s sole supplier of modem chips, which help mobile phones connect to wireless data networks, in exchange for which Qualcomm agreed to give Apple a rebate — the exact nature of which has not been disclosed. Apple could choose another supplier but it would lose the rebate, effectively increasing the cost of its chips.

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Antitrust regulators have argued the deal with Apple was part of a pattern of anticompetitive conduct by Qualcomm to preserve its dominance in modem chips and exclude players like Intel.

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At a federal courthouse in San Jose, California, Mollenkopf testified that Apple demanded the $1 billion without any assurance of how many chips it would buy, which pushed the chip supplier to pursue an exclusivity arrangement in order to ensure it sold enough chips to recover the payment.

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Qualcomm was not aiming to block rivals like Intel, he said.

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“The risk was, what would the volume be? Would we get everything we wanted, given that we paid so much in incentive?” Mollenkopf testified.

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Earlier in the day, Apple supply chain executive Tony Blevins testified that it was Apple’s practice to pursue at least two suppliers and as many as six for each of the more than 1,000 components in the iPhone.

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The company stopped trying to place an Intel modem chip in the iPad Mini 2 because losing the rebates on Qualcomm’s chips would have made the overall cost too high, he said.

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“They made it very unattractive for us to use another chip supplier,” Blevins said of the rebates. “These rebates were very, very large.”

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Privacy becomes a selling point for Apple at tech show

January 7, 2019

Apple is not among the exhibitors at the 2019 Consumer Electronics Show, but that didn’t prevent the iPhone maker from sending a message to attendees on a large billboard.

“What happens on your iPhone stays on your iPhone,” Apple says in the message to be seen by tens of thousands attending the Las Vegas tech show.

The message comes as gadget makers are concerned about data protection scandals and in many cases looking to make their own point about respect for privacy.

Vegas Ad

Source: Chris Velazco via Twitter

Some of the companies offered better ways of protecting internet routers or services without a need a for an internet connection to reduce the potential for data leaks and breaches.

Dutch startup Scalys is showing its Trustbox, a router that aims to protect the user’s connection as well as devices using it.

Another router from Chicago-based Winston stops tracking and surveillance and can also block ads and geolocation.

The data scandals “are like Christmas presents for us,” by prompting more consumers to look for better security, said Winston founder Richard Stokes.

“As we see more things being connected I think that you’ll definitely hear people talk about security more and really looking at how would you secure the data,” said analyst Carolina Milanesi of Creative Strategies.

“More companies are going to take kind of a cue from the marketing that Apple has been doing.”

– Extra layers of protection –

An estimated 74 million Americans have smart speakers, according to the research firm eMarketer, with Amazon and Google controlling the lion’s share of the market.

One of the fears of customers is that these devices are always listening, potentially putting privacy at risk.

One device being launched at CES is called Mute from a startup called Smarte, creating a layer of protection to stop the devices from picking up conversations not intended for queries.

French startup Snips is offering its own digital assistant which can be installed on a device without an internet connection.

“Customers are turning to us because they don’t want to depend on Big Tech,” said Snips founder Rand Hindi.

Hindi said the argument from tech firms that they need user data to make things work is false.

“The only reason they need your data is to target you (with ads) to the maximum,” he said.

Analyst Bob O’Donnell of Technalysis Researchers said more companies are starting to wake up to issues surrounding privacy and data protection in light of the revelations on Facebook and others over the past year.

“We’ve all started to become painfully aware of how big (and far-reaching) the problem of data privacy is,” O’Donnell said.

AFP

See also:

Apple plasters privacy ad on billboard near Las Vegas Convention Center ahead of CES 

https://appleinsider.com/articles/19/01/04/apple-plasters-privacy-ad-on-billboard-near-las-vegas-convention-center-ahead-of-ces

Apple and the Art of Guidance

January 5, 2019

CEOs and their finance chiefs are in a tight spot this month as they report quarterly financial data, aiming for a delicate balance of realism and optimism.

Image result for Tim Cook at an Apple store in Shanghai in October, ALY SONG, picture

Apple CEO Tim Cook at an Apple store in Shanghai in October. PHOTO: ALY SONG/REUTERS
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Among the things having as good a decade as the U.S. economy is Apple’s iPhone. Rummage through the pockets and purses of your workmates, and chances are you’ll find one.

The health of the near-ubiquitous smartphone and the economic engine it has helped drive and ride are both under a growing cloud, though. Apple Inc. AAPL 4.27% slashed its revenue target this week as iPhone sales slumped, a development that tests the nerves of investors already on the lookout for signs of the first American economic downturn since 2009.

If there is a list of executives we’d expect to be capable of soothing concern, Apple Chief Executive Tim Cook is on it. After the guidance cut Wednesday, Mr. Cook sat for a televised interview and published a letter to investors. He pinned Apple’s problems on “mounting uncertainty” and promised to do better.

Mr. Cook’s explanations were met with the suspicion that the iPhone’s problems are deeper than the company is letting on. Shares plunged on Thursday and finished the week down 5.1% even after mounting a recovery Friday.

Mr. Cook is the first executive to face the firing squad this year, but he won’t stand alone. CEOs and their finance chiefs are in a tight spot as they start reporting the most recent quarter’s financial data this month. For a few years, they’ve been cheerleading for the economy, arguing that employment, spending, tax cuts and underlying fundamentals indicate all is well. When they didn’t have an answer ready for a tough question, they would point to economic or political uncertainty.

The art of guidance is always a delicate dance between realism and optimism, but a misstep in these febrile times can lead to a fall. Anything cautious that a CEO or CFO says about consumer demand, supply chains, inventory or credit conditions could be read as proof the sky is falling.

When making predictions about the economy, “you don’t want to be the guy that sticks his head above the water and all the sudden, two months later, have The Wall Street Journal writing about how wrong your comments were,” said Ken Goldman, Yahoo’s former CFO.

While earnings growth is expected to remain steady and 2019 outlooks should be rosy, analysts say a sense of impending doom lingers.

“Scores of recent client meetings indicate that many investors believe the U.S. economy will enter a recession in 2020,” Citigroup ’s chief equity strategist David Kostin wrote in a research note distributed before Christmas. The firm’s pessimistic scenario calls for investors to start pricing in a potential recession later this year—an unwelcome prediction following the market’s recent swoon.

Investors aren’t the only ones getting anxious. Duke University’s quarterly CFO survey, released in December, reported half of respondents expect a recession to start late this year. In an email, Duke economist and professor John Graham said respondents assigned significantly higher probability of recession than they did when similar questions were asked in 2015 and 2016.

C-Suite executives serve as companies’ main spokespeople, and walk a fine line when talking about the broader economic environment. Even if they agree there could be trouble on the horizon, they often default to only addressing specific operating strategy and the immediate economic conditions when addressing the public. This is safe, but lacks the authenticity investors crave.

Elena Gomez, CFO at customer-service company Zendesk Inc., said analysts and investors expect her to be consistent but also be “a realist.”

Zendesk has been pursuing a $1 billion annual revenue goal for several years, for instance, and analysts often fixate on that benchmark as a barometer for the company and the sector. Ms. Gomez says that goal is important, but just a “stop on the journey” to growing from its current $600 million in annual sales to becoming a multibillion-dollar enterprise. Still, she welcomes the scrutiny and realizes Wall Street needs specifics to judge the company by.

“You can be transparent about as much as you can to give confidence in the outlook without being tone deaf,” she said. “I appreciate a CFO is in a seat where every word you say can influence the outcome.”

This dance is well under way.

Companies reporting earnings in the week before Christmas, for instance, saw their executives—including Carnival Corp.’s Arnold Donald and Worthington Industries’ President Andy Rose—downplaying concerns and focusing on the positive. Mr. Rose, formerly a CFO, said “the economy is strong and showing no signs of extended showdown.”

The message isn’t always getting through. Carnival’s Mr. Donald was frustrated with investor reaction to the cruise-ship operator’s results, saying in a CNBC interview that analysts were overly concerned about yields and comments about weakness in Europe, discounting the company’s focus on profit growth. He said the company will maintain its strategy.

Charles Holley, a former Walmart Inc. senior executive, faced plenty of heat while running the retail giant’s finances. He said the 2015 decision to invest $2 billion in e-commerce was criticized by analysts, but the decision panned out.

“You’ve got to make sure the company is standing up to Wall Street, [which] may not like what you are telling them at times,” Mr. Holley, now consulting for Deloitte, said Thursday. Still, because many companies—including his former employer—have pulled back on certain disclosures, transparency is increasingly valued by investors, he said.

Mr. Holley was Walmart treasurer when the company stopped publishing monthly sales during the last recession.

A decade later, analysts want executives to understand the need for clarity.

During Cintas Corp.’s conference call an analyst asked whether the work-uniform company is doing anything differently given investor jitters.

“I feel like every business leader, their comments are extremely scrutinized right now in terms of how they feel,” Northcoast Research Partners’ John Michael Healy said on the call. CFO Michael Hansen responded by pointing to improved guidance and better-than-expected results.

Even if executives don’t want to talk about their view on a recession, their audience may force them to. Office furniture maker Steelcase Inc. fielded questions about the likelihood of a prolonged downturn and how that would affect demand for a company dependent on business spending.

Instead of deflecting, executives reassured callers demand is strong and then described how the timing and reasons for downturns are hard to predict.

“It kind of depends on what the nature of that recession is,” CEO James Keane said in a lengthy response during the conference call. “If it’s consumer-driven, it may affect us differently. If it’s a credit crunch affecting small companies, it could affect us differently. If it’s big companies, we know what that looks like.”

Write to John D. Stoll at john.stoll@wsj.com

Appeared in the January 5, 2019, print edition.

https://www.wsj.com/articles/apple-and-the-art-of-guidance-11546664459

Apple Loses Ground to China’s Homegrown Rivals

January 3, 2019

“The others are a little closer to the pulse of what matters to Chinese consumers” — Despite developing more features to woo Chinese consumers, Apple’s market share has stagnated

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BEIJING– Apple Inc. AAPL -8.69% brought the high-end smartphone to China. Now it is sputtering as homegrown rivals win over consumers by offering similar designs and features at far lower prices.

While Tim Cook, Apple’s chief executive, blamed China’s economic slowdown for weakening sales that hurt its global revenue in the past quarter, the company’s problems run deeper than that. The Cupertino, Calif., tech giant may have underestimated how competitive domestic smartphone makers have become, analysts say.

Once a top-seller in China, Apple has slipped to the fifth-biggest phone seller in that country, trailing four domestic producers that have all been growing in popularity. Despite developing more features targeted at Chinese consumers, Apple’s market share has stagnated.

Chinese rivals including Huawei Technologies Co. and Oppo and Vivo, which are owned by BBK Electronics Corp., have rolled out popular features such as camera functions designed for users to take better selfies.

Image result for Oppo, China, products, photos

“The others are a little closer to the pulse of what matters to Chinese consumers,” said Mark Natkin, managing director at Marbridge Consulting in Beijing.

Moreover, Apple’s iOS operating system is proving less “sticky” for Chinese consumers than in other markets because smartphone users spend a large chunk of their phone time inside WeChat , a chat, payments and social-media app from Tencent Holdings Ltd.

Chinese consumers who won’t pay for the status of brandishing the top-priced iPhone model are considered more fickle when it comes to brands, said Mo Jia, a Shanghai-based analyst at market-research firm Canalys. As the economic slowdown pushes consumers to tighten their purse strings, such consumers are generally more inclined to consider cheaper, non-Apple smartphones, Mr. Jia said.

Apple on Wednesday slashed its quarterly revenue forecast for the first time in more than 15 years. In a letter to investors, Mr. Cook said the revenue shortfall stemmed from lower-than-anticipated iPhone sales in Greater China.

The worse-than-expected performance in China adds to pressure on Isabel Ge Mahe, who was appointed in 2017 to oversee the crucial market that accounts for almost 20% of Apple’s global sales. Apple posted sales growth in the Greater China region for five consecutive quarters until the quarter that ended Sept. 29.

Overall smartphone shipment volume in China has been falling for seven consecutive quarters, data from Canalys show. For Apple, its volume for the nine months to the end of September declined 11.8% from the previous year, even as its market share grew 0.2 percentage point to 7.8%.

Apple’s current struggle in China is illustrated by the iPhone XR, one of the three handsets that Apple released last year.

Apple had placed big orders for the iPhone XR to be sold in China before it went on sale last October, anticipating strong demand, a person familiar with the matter said. Now it is grappling with excess inventory, the person said.

The XR—the lowest priced among the three latest models—starts at a still-hefty 6,499 yuan ($945). By comparison, one competing Huawei model, Mate 20, which was also launched last year with the latest chipsets, starts at 3,999 yuan.

Sales of Apple’s more extravagant handset, the iPhone XS Max, with a starting price of 9,599 yuan ($1,400), have been more resilient, according to Mr. Jia of Canalys.

Global smartphone sales have fallen over the past year, reflecting sticker shock over new phone prices and a lack of show-stopping features to persuade consumers to upgrade. Global shipments fell 7% for the three months ended Sept. 30 versus the prior year, the fourth straight quarter of declines, according to Canalys, a market research firm. Meanwhile, China, the world’s largest smartphone market, tumbled even more at 15%, Canalys said.

Apple has taken steps to court Chinese customers—its latest models introduced a dual-SIM support feature popular with the country’s phone users, though most Chinese rivals had already offered that. In the past, Apple has also enabled iPhone owners to use their phone number as Apple ID as many people don’t frequently use email, and offered the iPhone in rose gold color.

In an effort to boost sales, Apple in recent weeks started to offer discounts in China for trade-ins with used phones, according to its website.

Mr. Cook also cited China’s rising trade tensions with the U.S. as a factor affecting China’s economy. The company hasn’t faced significant anti-Apple sentiment; indirectly, some three million people work in China at suppliers as well as outlets that sell Apple goods, Apple has said.

Still, pockets of resistance have emerged.

Following the arrest in Canada last month of the Huawei’s chief financial officer Meng Wanzhou at the behest of U.S. prosecutors investigating sanctions violations, some Chinese companies have openly encouraged their employees to purchase Huawei phones.

Apple has also received some cancellations from Chinese companies for iPhone orders, which are sometimes given out as year-end bonuses, though they haven’t had a major impact on Apple’s business, a person familiar with the matter said.

Write to Yoko Kubota at yoko.kubota@wsj.com

https://www.wsj.com/articles/apple-loses-ground-to-chinas-homegrown-rivals-11546524491

Apple Will Wait Until at Least 2020 to Release a 5G iPhone

December 3, 2018
  • Next IPhone won’t connect to new faster networks, people say
  • Company risks falling behind as rivals push speedier service
Photographer: Simon Dawson/Bloomberg

Apple Inc. plans to hold off until at least 2020 before offering an iPhone that can connect to the next generation of high-speed phone services coming next year, according to people familiar with its plans.

The delay may make it easier for rivals like Samsung Electronics Co. to win over consumers to phones that connect to 5G networks, which will provide a leap forward in mobile data speeds when they are introduced in 2019.

As with 3G and 4G, the two previous generations of mobile technology, Apple will wait as long as a year after the initial deployment of the new networks before its main product gets the capability to access them, said the people, who asked not to be identified discussing the company’s plans.

Apple’s previous calculations — proven correct — were that the new networks and the first versions of rival smartphones would come with problems such as spotty coverage, making consumers less compelled to immediately make the jump. This time, 5G boosters argue the switch is a much bigger speed upgrade, making Apple’s decision to wait riskier. The networks will open the floodgates to new types of mobile computing, 5G advocates say.

The decision to sit on the sidelines may be related to the company’s feud with Qualcomm Inc., the leader in 5G-enabled chips, and its alliance instead with Intel Corp., which won’t have chips available in time to support 2019 phones.

Apple didn’t respond to requests for comment.

In the past, it hasn’t been a problem for the Cupertino, California-based company to wait a year after much of its competition to release phones compatible with the latest wireless networks. The original iPhone in 2007 was so far ahead of rivals that its slower connection, known as 2G EDGE, wasn’t a deal breaker for early adopters. Even the iPhone 4S with its flashy features like a stainless steel frame and the promise of Siri were enough for some to ignore its lack of true 4G LTE speeds.

But going into 2019, the stakes have changed: the leap from 4G to 5G is significant enough that it may become a major selling point for new devices. Samsung plans to have 5G phones in its Galaxy range next year. And in China — the largest market for smartphones — major producers Oppo and Huawei Technologies Co. also have indicated they plan to offer 5G phones.

“Apple has always been a laggard in cellular technology,” said Mark Hung, an analyst at Gartner Inc. “They weren’t impacted in the past, but 5G is going to be much easier to market. But if they wait beyond 2020, then I think they’ll be impacted.”

Apple also is under more pressure to keep its iPhone customer base. The company has lost a fifth of its value the past two months amid a tech stock rout and reports of suppliers cutting forecasts, signaling the new models introduced in September aren’t selling as well as anticipated. While the global smartphone market has declined for four consecutive quarters, according to industry analyst IDC, the iPhone accounts for almost 60 percent of Apple’s revenue and is the foundation of the company’s push for sales in consumer services such as music, video and cloud storage.

Wireless carriers like Verizon Communications Inc. and AT&T Inc. are likely to prioritize the marketing of 5G phones in order to get customers to migrate over as soon as possible. The new networks will take advantage of a greater range of radio frequencies and be capable of carrying much higher-speed data. That provides an incentive to move traffic to the speedier networks because it will lower the costs for the wireless carriers. Think of the difference in the number of cars a multi-lane freeway can accommodate versus a single-lane regular road.

To be sure, for some existing Apple customers, the lack of 5G connectivity next year won’t be a deterrent. A portion of consumers upgrade their current iPhones to the new models regardless of the changes to the device. Given that hardware upgrade cycles are slowing overall, a 2020 launch for 5G could create a super cycle of upgrades from iPhone users who would still be using an iPhone X or XS two years from now.

Since 2011, Apple has debuted all major new iPhone models in either September or October. The company, however, has released mid-cycle updates like the Verizon iPhone 4 in February 2011, geared toward specific networks. It also launched a smaller model, the iPhone SE, in March 2016.

Huawei and Samsung can build 5G modems — not just Intel and Qualcomm. But Apple is unlikely to use chips from competitors, and the companies may also struggle to produce enough supply for the iPhone’s huge volumes — more than 200 million a year.

Apple Suppliers Tumble on New Signs of Weak iPhone Demand

November 12, 2018

Major suppliers to Apple Inc.’s iPhone fell Monday as investors fretted that one of the most important product lines in the technology sector was seeing weak demand.

Image result for Apple store, photos

The latest warning sign was Lumentum Holdings Inc. cutting its second-quarter outlook after one of its largest customers asked to “meaningfully reduce shipments” for previously placed orders. Lumentum didn’t name the customer, but Apple is its biggest, according to Bloomberg supply-chain data. Shares of Lumentum plummeted a record 30 percent while Apple dropped as much as 4.1 percent. Oclaro Inc., which is being bought by Lumentum, lost 11 percent, on track for its biggest drop since April.

Image result for iPhone X, Photos

“We think investors should consider Lumentum’s updated guide as reflecting as much as a 30% cut in Apple orders,” Wells Fargo analyst Aaron Rakers said in a note to clients.

Loop Capital Markets also said the customer is likely Apple. The development “is not entirely surprising” but “it seems very likely to us that the market for 3D sensing-related light sources and other components is going to be smaller next year than previously anticipated,” analyst James Kisner said in a research note.

Among other Apple suppliers, Cirrus Logic Inc. dropped 10 percent at 9:49 a.m. in New York. Qorvo Inc. slid 7.3 percent, Skyworks Solutions Inc. fell 2.8 percent, Finisar Corp. dropped 4.7 percent and Broadcom Inc. fell 5.3 percent. Semiconductor stocks were broadly lower with the Philadelphia Semiconductor Index down 3 percent.
Lumentum’s outlook comes a week after Nikkei reported that Apple was canceling a production boost for its iPhone XR line, and less than two weeks after Apple’s fourth-quarter results showed tepid unit sales growth. The company also said it would stop providing unit sales for iPhones, iPads, and Macs in fiscal 2019, a step Nomura Instinet said raised “the specter of a sustained iPhone downturn.”

Skyworks Solutions

Adding to Monday’s negative news, Longbow Research cautioned that Apple is facing weak iPhone demand in China. And Citi downgraded Skyworks to neutral and slashed its price target to $85 from $116, citing both “disappointing iPhone XR unit sales” and “broad smartphone weakness.” Last week, Skyworks gave a first-quarter outlook that missed expectations because of smartphone weakness, prompting at least two other downgrades.

Citi also cut its target on Qorvo on Monday due to iPhone XR weakness.

— With assistance by Kamaron Leach

Too much screen time for kids may lead to serious health woes as adults: study

November 7, 2018

Children who spend too much time browsing smartphones and tablets are at risk for a lifetime of health issues, including cancer-causing obesity and eyesight problems, according to new studies.

A recent review by the World Cancer Research Fund found “sedentary behaviors” — like staring at an iPhone — are among the contributing causes to excessive weight gain.

The WCRF’s global “Third Expert Report” linked being overweight and obesity to several types of cancer, including bladder, breast, cervical, pancreatic and stomach, saying that physical activity decreases that risk.

“New technologies have encouraged people to increase the time they spend engaging in sedentary behaviors such as sitting in cars and watching television as well as using computers, electronic entertainment and mobile phones,” the report said. “Insufficient levels of physical activity have been linked to a number of health problems including cardiovascular disease, stroke, diabetes, obesity, poor bone health and depression.”

The report said 14.1 million people across the globe were diagnosed with cancer in 2012 and 8.2 million died from cancer, but that about 40 percent of cancer cases are preventable.

“This global cancer burden is expected to increase to 21.7 million cases and 13 million deaths by 2030,” it said.

WRCF, a cancer prevention charity based in the UK, also warned that with lack of physical activity comes the likelihood of the “passive overconsumption” of snacks.

It said an estimated 1.97 billion adults and more than 338 million children and adolescents around the world were considered overweight or obese in 2016.

Meanwhile, kids who love playing video games or scrolling on a tablet are at a greater risk for developing “digital myopia,” a separate study by King’s College London found, according to the UK’s Telegraph.

For every hour a child plays video games, their risk for short-sightedness increases by 3 percent.

The number of children suffering from myopia has doubled over the last 50 years, from 7.2 percent to 16.4 percent — and experts are blaming the staggering statistic on too much screen time.

https://nypost.com/2018/11/07/too-much-screen-time-for-kids-may-lead-to-serious-health-woes-as-adults-study/

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“Maybe I did a better job because I’m good with the Twitter”

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Jack Dorsey, CEO of Twitter

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Young people

The study found widespread apprehension about the future. Seeking intimacy? Or isolation?

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Social media is making children regress to mentality of three-year-olds, says top brain scientist

Facing iPhone Troubles, Apple Tries to Change the Story

November 4, 2018

Apple hopes services and higher-priced devices can make up for flat or declining unit sales

The company plans to stop reporting unit sales as it pushes its services business

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Image result for Tim Cook, Photo, BEBETO MATTHEWS/ASSOCIATED PRESS

CEO Tim Cook says Apple’s decision to stop reporting unit-sales data better reflects how the company’s business has evolved in the wake of its new pricing strategy. PHOTO: BEBETO MATTHEWS/ASSOCIATED PRESS
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When Steve Jobs took a swipe at Amazon.com Inc.’s Kindle in 2009, he pointed to the online retailer’s decision not to report unit sales of its reading device as evidence it wasn’t selling many.

Nearly a decade later, Apple is following a similar path. The company said it would stop disclosing data on the number iPhones, iPads and Macs it sells, eliminating a performance metric it has provided since the 1980s.

The change comes as growth in the number of iPhones sold slows, with customers increasingly holding on to smartphones longer. Apple has responded by promoting software and services across its devices and raising prices on new gadgets.

Investors balked at the reporting change, and at revenue projections that fell short of Wall Street estimates. On Friday, the elimination of unit-sales data contributed to shares falling 6.6% as the company shed $71.19 billion in market value in a single day.

Apple’s “privacy commitment now extends to iPhone unit disclosure,” Amit Daryanani of RBC Capital Markets wrote in a note to investors. In an interview, he said the change means many shareholders now believe Apple is hiding something. “It’s a monkey on their back,” he said.

Mike Levin, co-founder of Consumer Intelligence Research Partners LLC, a market-research firm that surveys Apple customers, said the change shows Apple executives are thinking about their business in ways they haven’t wanted to say aloud.

“When Apple was doing great, unit sales told a wonderful story. Now that the story isn’t so good, they’re saying, ‘Let’s change it,’” he said.

Mr. Jobs might agree. “Usually, if they sell a lot of something, you want to tell everybody,” the Apple co-founder told the New York Times nine years ago when criticizing Amazon’s Kindle.

Apple remains an immensely profitable company and rode recent price increases to its best year ever. Chief Executive Tim Cook told analysts Thursday the change better reflects how Apple’s business has evolved in the wake of its new pricing strategy. When a cashier rings up a shopper, the register doesn’t show how many units the shopper buys—only what the shopper spends, he said.

Other companies also have altered the way they report longstanding business metrics.

In April, General Motors Co. abandoned a decades-old practice of reporting monthly vehicle sales and joined Tesla Inc. in reporting such figures quarterly. Walmart Inc. and Target Corp over the past decade have moved to reporting same-store sales quarterly instead of monthly to eliminate volatility.

“This is new territory,” said Peter Bible, chief risk officer at accounting advisory firm EisnerAmper LLP and former accounting chief at GM. “Whether it be monthly unit sales of cars or unit sales of iPhones or iPads, are they afraid it’s not going to be favorable?”

Apple finance chief Luca Maestri, who previously worked at GM, said Apple would continue to provide “qualitative commentary,” such as noting that unit sales of flagship iPhones are strong and attracting customers with new features.

Apple will now report gross margins separately for its hardware and services.

How gross margins perform between hardware and services will become an important metric, said Gene Munster, managing partner at Loup Ventures, an investment and research firm.

Investors will look at the margins in hardware to determine the health of iPhones. “All Apple needs to do is keep hardware gross margins stable,” said Mr. Munster, who thinks the reporting changes are positive for investors because of the recurring revenue the services business offers.

The change also forces Apple’s fast-growing services business to center stage.

Apple has 1.3 billion iPhones and other devices in active use and earns an estimated $30 for each device annually from app sales, music subscriptions and other offerings, according to Morgan Stanley. The firm expects services to account for about 60% of Apple’s revenue gains over the next five years. By contrast, the iPhone accounted for 86% of sales growth in the previous five-year period, it estimates.

Over the past year, services grew by 24% to $37.19 billion. Still, they represented only about 14% of Apple’s total revenue of $265.6 billion in fiscal 2018. Apple hasn’t broken out revenue for its various services.

Pushing the business forward will test Mr. Cook, an operations expert who turned Apple into a profit-spewing machine by controlling hardware costs and inventory. Now, the company’s direction increasingly will depend on the leadership of Eddy Cue, who is in charge of internet software and services, and Phil Schiller, who oversees the app store.

It could take a year or more before Mr. Cook’s team shows services and higher-priced devices can make up for flat or declining unit sales, said David Yoffie, a professor at Harvard Business School, who has written Apple case studies. “Apple obviously wants to change the narrative on the Street, but lower transparency will reduce confidence in the short run,” he said.

Write to Tripp Mickle at Tripp.Mickle@wsj.com

https://www.wsj.com/articles/facing-iphone-troubles-apple-tries-to-change-the-story-1541253601

Turkey has recordings of Saudi journalist’s death — “The moments when Khashoggi was interrogated, tortured and murdered were recorded in the Apple Watch’s memory.”

October 13, 2018

Turkey’s investigation into the disappearance of prominent Saudi journalist Jamal Khashoggi has revealed recordings made on his Apple Watch purportedly indicating he was tortured and killed, a Turkish newspaper reported on Saturday.

People hold signs during a protest at the Embassy of Saudi Arabia about the disappearance of Saudi journalist Jamal Khashoggi, Wednesday, Oct. 10, 2018, in Washington. (AP Photo/Jacquelyn Martin)

People hold signs during a protest at the Embassy of Saudi Arabia about the disappearance of Saudi journalist Jamal Khashoggi on Oct. 10, 2018, in Washington.   (Jacquelyn Martin / AP)

The report in the pro-government Sabah daily, which could not immediately be verified, emerged after a delegation from Saudi Arabia arrived in Turkey for a joint investigation into his disappearance.

“The moments when Khashoggi was interrogated, tortured and murdered were recorded in the Apple Watch’s memory,” the paper said, adding that the watch had synched with his iPhone, which his fiancee was carrying outside the consulate.

Image result for Murdered by MBS poster, photos

Two senior Turkish officials previously told Reuters that Khashoggi had been wearing a black Apple watch when he entered the consulate and that it was connected to a mobile phone he left outside.

However, it was not clear whether data from Khashoggi’s watch could have been transmitted to his phone outside, or how investigators could have retrieved it without obtaining the watch themselves.

Sabah, which cited “reliable sources in a special intelligence department” for its report, said Khashoggi was believed to have turned on the recording feature on the phone before entering the consulate.

The paper said Saudi intelligence agents had realized after he died that the phone was recording and they used his finger print to unlock it, deleting some files, but not all of them. The recordings were subsequently found on his phone, it said.

On Thursday, Turkey said it and Saudi Arabia had agreed to form a joint working group – at Riyadh’s initiative – to investigate the case. A Saudi source said a senior royal, Prince Khaled al-Faisal, had visited Turkey that day.

Khashoggi entered the Saudi consulate in Istanbul on Oct. 2to get documents for his forthcoming marriage. Saudi officials say he left shortly afterwards but Turkish officials and his fiancee, who was waiting outside, said he never came out.

Turkish sources have told Reuters the initial assessment of the police was that Khashoggi, an outspoken critic of the Saudi government, had been deliberately killed inside the consulate. Riyadh has dismissed the claims.

SPA said on Friday that Saudi Arabia’s interior minister, Prince Abdulaziz bin Saud bin Naif, condemned the “lies and baseless allegations” against the kingdom, although he praised the joint investigation with Turkey.

The Saudi delegation, which arrived in Turkey on Thursday, is meeting a Turkish prosecutor investigating the case as well as representatives from the Justice Ministry, Interior Ministry, police and the national intelligence agency, one source said.

On Tuesday, the Turkish foreign ministry said the Saudi consulate in Istanbul would be searched as part of the investigation.

Reporting by Daren Butler; Editing by Gareth Jones

Reuters

Related:

Jamal Khashoggi ‘dragged from consulate office, killed and dismembered’ — Middle East Eye

October 11, 2018

Turkish sources tell MEE they know when and where the missing Saudi journalist, last seen entering the Saudi consulate in Istanbul, was killed

CCTV footage shows Khashoggi arriving at the consulate on 2 October (AFP)
Last update:
Thursday 11 October 2018 15:13 UTC

Jamal Khashoggi was dragged from the consul general’s office inside the Saudi consulate in Istanbul last Tuesday before he was brutally murdered by two men who cut up his body, sources close to the investigation have told Middle East Eye.

Turkish officials say they know when and where in the building the veteran Saudi journalist was killed and are considering whether to dig up the consul-general’s garden to see whether his remains are buried there.

Khashoggi, 59, has been missing since last Tuesday when he entered the consulate to obtain paperwork so he could remarry, and has not been seen since.

Saudi officials have strongly denied any involvement in his disappearance and say that he left the consulate soon after arriving. However they have not presented any evidence to corroborate their claim and say that video cameras at the consolate were not recording at the time.

We know when Jamal was killed, in which room he was killed and where the body was taken to be dismembered. If the forensic team are allowed in, they know exactly where to go

– Turkish source

“I would like to confirm that… Jamal is not at the consulate nor in the Kingdom of Saudi Arabia, and the consulate and the embassy are working to search for him,” the Saudi consul-general, Mohammad al-Otaibi, said on Saturday after the consulate was opened to Reuters journalists. “We are worried about this case.”

But a Turkish source with direct knowledge of the investigation has given MEE a detailed account of what investigators say happened in the consulate last Tuesday.

“We know when Jamal was killed, in which room he was killed and where the body was taken to be dismembered. If the forensic team are allowed in, they know exactly where to go,” he said.

Khashoggi first went to the consulate on 28 September and met with a Saudi diplomat in an attempt to get the papers he needed.

The Saudi diplomat passed him on to a member of Saudi intelligence who said the consulate would be unable to provide what he needed that day, but he could return the following week, the source said.

Khashoggi left the building on Friday with the telephone number of the intelligence official.

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On Tuesday morning, Khashoggi called and asked if he should still come to the consulate and was told that the papers were ready for him, the source said. His appointment was for 1pm.

Half an hour before then, during the lunch break held at the consulate, all local staff members left for their usual lunch break which lasts an hour. As they left, they were told to take the afternoon off because a high-level diplomatic meeting was planned for the afternoon in the consulate, the source said.

As a time-stamped photo first published by the Washington Post has shown, Khashoggi walked into the consulate less than an hour later at 1.14pm.

He was greeted by an official, and led into the consul-general’s room. Shortly afterwards, two men entered the room and dragged Khashoggi out of the office and into another room where they killed him, the source said, without elaborating how he was killed.

Khashoggi’s body was then dragged into a third room and dismembered, he said.

A Saudi source told Reuters that British intelligence believed there had been an attempt to drug Khashoggi inside the consulate that culminated in an overdose.

He said the information came from a British intelligence source. Contacted by Reuters, British intelligence did not comment. Asked about this account, a Saudi official said: “This death is not true.”

Digging up the garden

There are around 22 cars which are registered to the consulate of which between three and four are of interest to the murder inquiry.

One of them left the consulate building at 3:15pm and went several hundred metres to the nearby consul general’s home, the source said.

MEE understands that the prosecutor general is now considering whether to dig up the consul general’s garden to see whether Khashoggi’s remains are buried there.

A separate Turkish source told MEE that the consul general has not left his house for the past three days and has cancelled all of his appointments.

This source also said that the Turkish police want to search the residence and also take all the cars which are registered to the consulate to a secure location to examine them, but the Saudis have not allowed this.

A source also told MEE the Saudis took all the hard drives from the security camera room at the consulate with them when they left the building.

The Saudis on Tuesday rescinded an offer they made originally to allow Turkish forensic experts onto the premises. Their offer was withdrawn after Turkish media outlets published a list of 15 Saudis who arrived in Istanbul on the same day Khashoggi disappeared.

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Full coverage of Jamal Khashoggi

The source who outlined the account of how Khashoggi was killed said that police investigators were confident they already had enough forensic evidence from searches of the sewage network connected to the building.

A second Turkish source with knowledge of the investigation told MEE that the Turks had video and audio evidence of the killing. However, they have not revealed how they obtained this evidence.

But particular attention is being paid to the Apple watch that Khashoggi was wearing when he entered the building. This is synced electronically to the iPhone that he gave his fiancee before entering the building.

MEE has sought comment from the Saudi embassies in the UK and US.

This article is available in French on Middle East Eye French edition.

https://www.middleeasteye.net/news/exclusive-1433170798