Taking a look back at seven days of news across the world of Apple this week’s Apple Loop includes the death of a beloved iPhone's successor, the MacBook Pro's successful first week, Apple's secret discounts on your next iPhone, how the iPhone 7 compares to the older iPhones, where Apple's competition is coming from, the importance of Apple Music, Reddit's delayed reaction to the MacBook Pro, and a new version of Snakes and Ladders for Cupertino.
Apple Loop is here to remind you of a few of the very many discussions that have happened around Apple over the last seven days (and you can read the weekly digest of Android news here on Forbes).
Apple Kills The SE Successor
The iPhone 7 represents a push forward in Apple's design philosophy towards a minimalist smartphone. With this brave new world approaching, there was a question of what happens to the iPhone SE. Introduced in March this year, it can be seen as either a budget iPhone 6S or the ultimate iPhone 5S. Many expected the SE line to be updated in March 2017. But if you were hoping for an iPhone SE 2, noted analyst Ming-Chi Kuo has some bad news for you. Forbes' Gordon Kelly reports:
So why would Apple consider such a self inflicted wound? According to Kuo the reasoning is twofold:
1: To increase margins on the 2016 iPhone SE as its older components reduce in price
2: To reduce risk of cannibalisation that a 2017 iPhone SE could have on sales of the more profitable iPhone 7
It is well known that Apple is far more interested in profit share than market share, so on a business level both these reasons make financial sense. Given concerns over iPhone 7 sales, it also wouldn’t be great PR if future financial reports forced Apple to admit the iPhone 7 was impacted because customers preferred the company’s budget model.
More details on the end of the SE line here.
How's The MacBook Working Out For You?
How successful will the MacBook Pro be? Apple has already suggested that initial figures make it the best-selling MacBook Pro ever, and information from the supply chain suggest a ramp-up in the required components. Adding some data to the sentiment this week was Slice Intelligence. In the first five days of sales, the new MacBook Pros decimated the opposition:
The MacBook Pro has sold almost four times as many units as Microsoft’s Surface Book, nine times as many units as the Asus Chromebook Flip, and ten times the Lenovo Yoga 900.
The data comes from Slice Intelligence, who can survey a panel of 4.4 million online shoppers on their purchasing habits and digital receipts. The numbers are backed up by Apple’s reports of record online sales and supply chain reports of increased component orders
The only laptop coming close? The twelve-inch MacBook was marginally ahead but it has nineteen months of sales to try to hold back the five-day run on the new Pro.
Apple's Hidden Discount On The iPhone
One quiet addition to the online Apple Store caught the attention of many this week, and that was the appearance of the iPhone in the 'refurbished' section of the online store. If you want a discounted handset from Apple, here's your chance. But where has Apple found all of these units? It's all part of strategy that the public saw just over a year ago - the iPhone Upgrade Program:
This program started last year and allowed consumers to buy a new iPhone with twenty-four monthly payments. After one year they are presented with the option to extend the payments for a further twelve months and trade in their handset for the latest device.
I would presume that the first wave of users have now traded in for the iPhone 7, leaving Apple with a rather large number of older handsets that can be reconditioned and put back on sale as returned and refurbished stock. They could be stripped for parts or to recycle the materials (and Apple has a robot to do just that), but there’s a bigger return by selling these units back to customers with a discount on the list price by around eighty to a hundred dollars, there’s another chance to create a special relationship with a customer, and there’s another chance to bring more users into Apple’s ecosystem.
Details on the discounts here.
The iPhone 7 Fights The Refurb Handsets
On one hand you have the brand new iPhone 7, on the other the newly refurbished and fully warrantied iPhones in the Store. What are the differences, and which should you consider? Gordon Kelly is back to compare the latest iPhone to the historical competition. First up is the iPhone 6, what does the iPhone 7 offer over the 6?:
The good news is iPhone 7 design improvements are more than skin deep. It is stronger than the iPhone 6 (which is prone to bending) thanks to its use of Series 7000 aluminium, it is water resistant and able to survive for 30 minutes fully submersed, and the home button is now fixed (disguised through clever use of haptic feedback) which removes a notorious point of failure.
Then there's the iPhone SE. The smaller handset offered similar specs to the 6S in the footprint of the 5S. Apart from size, what does the 7 offer?
...the iPhone 7, while still relatively small by today’s phone standards, is more hazardous due to its curved edges and slippery finish. But it does come with a hidden bonus: dual stereo external speakers. This is a clever addition with Apple amplifying the earpiece to make it work as a second speaker. It’s not as powerful as dual front firing speakers, but it’s the easily the best external audio an iPhone has ever had.
Then again the iPhone SE retains one potentially major advantage over its more expensive stablemate: it retains the 3.5mm headphone jack which the iPhone 7 controversially removed.
Where Is Apple's Competition Coming From?
Google's Android platform may command a much larger share of the market in terms of units, but Apple's domination of the revenue and profits in the ecosystem offers it an effective weapon to slow down the opposition and create a better mobile platform. By controlling the financial resources available, Apple can spend far more on R&D, take years to work on technology, and deliver a more advanced solution. If that's the case, Apple's future competition will not come from the high-volume low-margin manufacturers, but the companies with excess revenue to spend on smartphones. Which means Google and, er, Facebook:
...I think Cnet’s assumption that Facebook is working on a mobile project is just as interesting as the Pixel. Like Apple and Google, it has the financial muscle to commit to a smartphone. While it might be little more Skunkworks than the Pixel and far less mainstream than the iPhone, Mark Zuckerberg has one of the few companies that could make a genuine difference to the mainstream view of smartphones. And with a commitment to connecting the world, a Facebook smartphone in BRIC countries might be the last chance for a new player to stake a significant claim.
The discussion continues here on Forbes.
The Importance Of Apple Music
If you had to choose which of Apple's nascent product lines was the most important, which would you choose? Seeking Alpha's Joseph Mwangi argues that with growth of 22% and more revenue that the Mac lineup, the star of Tim Coom's bullpen is Apple Music:
Roughly 90% of Apple Music subscribers are paid subscribers. Apple probably spends $3.50-$4.00 per subscriber/month on Apple Music after factoring in other costs such as R&D, implying the service is solidly profitable.
From a financial viewpoint, Apple Music is considerably smaller than the Apple Watch business. But there's one significant difference - one business is expanding rapidly while the other is shrinking and faces an uncertain future. And that's because streaming music is quickly turning from a fad for hipster college kids to a widely accepted way to enjoy your favorite music tracks.
Everything Wrong In The Past Is Wrong Once More
A tip of the hat to Jon Gruber for this one, as the long-time Apple blogger picks up on a Reddit thread about the too expensive MacBook Pro, the weak graphics card, not enough RAM, and not being designed for professionals. The catch being that the thread is from 2012. For example:
People seem to be repeatedly suggesting that "smaller is more expensive", because it's more difficult from an engineering point of view. Yes, this is true if you're trying to maintain a similar performance level in a much tighter space. But that's not what Apple have done. They've simply thrown components out (the graphics card), reduced the volume of components (e.g. batteries) or downgraded components (e.g. the cpu) in order to save space and weight. It's not miniaturization at all. All they've done is make a lower powered laptop, which aside from the screen isn't much different to a bog standard ultrabook.
The more things change.... Reddit gold here.
And Finally...
'Tim Says Roll Again!' That's just one square on The Joy Of Tech's latest cartoon, depicting the game of 'Shoots and Dongles'. Drawing inspiration from the classic 100-square Snakes and Ladders, and the latest criticisms of the MacBook dongles, Ntrozac and Snaggy have the board game to print out and play while you wait for your Apple Store order to process.
Play the game at Geek Culture's Joy of Tech series.
Apple Loop brings you seven days worth of highlights every weekend here on Forbes. Don’t forget to follow me so you don’t miss any coverage in the future. Last week’s Apple Loop can be read here, or this week’s edition of Loop’s sister column, Android Circuit, is also available on Forbes.
