Follow Apple’s Suppliers 

Bloomberg’s Tim Culpan has an interesting bull take on iPhone sales — their two major Taiwanese suppliers, Hon Hai and Pegatron, took their stock hits months ago and have now leveled off:

The short-interest chart hints at what’s really going on. Bearishness on stocks of both suppliers peaked in January and February, with the 159 million shorted shares of Hon Hai on Feb. 16 being the highest in at least five years. […]

A wise investor would avoid making decisions based only on such correlations. But it’s worth at least asking why the companies that rely the most on Apple seem nonplussed by the bad news out of Cupertino.

(That’s the modern informal nonplussed, of course.)

If You See Slowness, They Blew It 

Nilay Patel:

Here’s the problem with the Apple Watch: it’s slow.

It was slow when it was first announced, it was slow when it came out, and it stayed slow when Watch OS 2.0 arrived. When I reviewed it last year, the slowness was so immediately annoying that I got on the phone with Apple to double check their performance expectations before making “it’s kind of slow” the opening of the review.

Posit: The things on Apple Watch that people actually like and use are the things that aren’t slow (notifications, activity tracking and goals, Apple Pay, complications, maybe Glances) and the things that are slow are the things people don’t use (apps, especially). Apple should have either cut the slow features from the original product, or waited to launch the product until all the features were fast.

I would vote for launching when they did, with the slow features cut — there is value in what Apple Watch already does well.

Apple’s Plan for Refurbished iPhones Is Rejected in India 

Speaking of Apple and India, here’s Saritha Rai, reporting for Bloomberg:

India has rejected Apple Inc.’s request to import and sell refurbished iPhones to the world’s second largest mobile population, a telecommunications ministry official said Tuesday.

The U.S. company’s application has been turned down, the official said, asking to not be identified, citing official policy. Apple has been seeking permission to import and sell used phones to court price-conscious consumers with a similar proposal rejected in 2015 by the environment ministry.

Apple’s new phones are too expensive for most Indians, and they’re not allowed to sell cheaper refurbished iPhones.

Apple’s Prospects in India 

Roopesh Chander:

I think Tim Cook’s outlook on the Indian market is a little too optimistic.

Firstly, iPhone sales in India were never really hampered by the unavailability of LTE (or 4G as they call it here in India). Anyone who can afford an iPhone in India has access to a fast broadband internet either at home or at work, probably both. The LTE rollout speeded up only this year here in India (earlier, only one network operator, Airtel, offered LTE), but LTE support is a standard feature among high-end devices being sold here for a while. At present, LTE is supported by even sub-$150 devices from big brands. The spread of LTE in India is not going to suddenly make iPhones more desirable, nor is there any significant upgrade cycle coming because of LTE. […]

Third, India is indeed looking a bit like how China was in 2005 in terms of GDP per capita, but India has far less number of people who can afford an iPhone than China does. The addressable market for Apple in India is tiny, and is growing quite slowly. Of that, those who can afford the current year flagship will constitute a minuscule number compared to China.

Under-Promising and Over-Delivering 

Shira Ovide, writing for Bloomberg:

Here’s what Cook didn’t say: 1) Apple has been misjudging its own business, and that makes it tough to believe what executives say; and 2) The company failed to prepare investors for an inevitable slowdown in growth — even if that slowdown proves temporary. If one duty of public company executives is to under-promise and over-deliver, Apple has flopped in that job.

This is fair and astute criticism of Cook and Apple’s executive team. The problem isn’t the drop in iPhone sales so much as forecasting them accurately.

Inside Facebook’s ‘Trending News’ Team 

Michael Nunez, reporting for Gizmodo:

But if you really want to know what Facebook thinks of journalists and their craft, all you need to do is look at what happened when the company quietly assembled some to work on its secretive “trending news” project. The results aren’t pretty: According to five former members of Facebook’s trending news team — “news curators” as they’re known internally — Zuckerberg & Co. take a downright dim view of the industry and its talent. In interviews with Gizmodo, these former curators described grueling work conditions, humiliating treatment, and a secretive, imperious culture in which they were treated as disposable outsiders. After doing a tour in Facebook’s news trenches, almost all of them came to believe that they were there not to work, but to serve as training modules for Facebook’s algorithm. […]

That said, many former employees suspect that Facebook’s eventual goal is to replace its human curators with a robotic one. The former curators Gizmodo interviewed started to feel like they were training a machine, one that would eventually take their jobs. Managers began referring to a “more streamlined process” in meetings. As one former contractor put it: “We felt like we were part of an experiment that, as the algorithm got better, there was a sense that at some point the humans would be replaced.”

If news curation can be automated, there’s nothing inherently wrong with it. Progress in the industrialized world has always involved previously labor-intensive jobs being replaced by automated machinery. We’ve gotten to the point now where some of this work is white collar, not blue collar, and some journalists seem offended by the notion. Their downfall is their dogmatic belief in not having a point-of-view, of contorting themselves to appear not to have a point of view — which, as Jay Rosen has forcefully argued, is effectively a “view from nowhere”. The irony is that machines don’t have a point of view — they are “objective”. Over the last half century or so, mainstream U.S. journalism has evolved in a way that has writers and editors acting like machines. They’ve made it easier for themselves to be replaced by algorithms. Most readers won’t even notice.

I do two things here at DF most days: find interesting things to link to, and comment on them. An algorithm may well beat me at finding interesting links. My job then, is to be a better writer — smarter, funnier, keener, more surprising — than an algorithm could be. When I can’t do that, it’ll be time to hang up the keyboard.

Update: Kevin van Haaren:

@gruber Computers algorithms aren’t objective they reflect the point of view of their creators. It’s a reason diverse teams should make them.

I didn’t mean to imply otherwise, but this is a good point. What I’m saying is more If what you do can be replaced by a robot (whether hardware or software), it will happen — and modern U.S. news journalism’s brand of “objectivity” feels algorithmic.

The App Store Educational ‘Discount’ 

Michael J. Tsai has a collection of links regarding the App Store issuing refunds to educational customers after years of using hundreds of copies of an app.

Luma Loop 3: Special Edition 

I’ve been a happy customer of Luma Loop camera straps for years — it really is one of the nicest, most rugged, most comfortable pieces of kit I’ve ever owned. Every single detail is considered, and this new special edition model sounds even better. Once I got used to the over-the-shoulder style, I could never go back to wearing a traditional around the neck strap for an SLR-sized camera.

Climate Scientists Tell Jimmy Kimmel: ‘Why Would We Fuck With You?’ 

Great piece on Jimmy Kimmel last night.

Daring Fireball RSS Feed Sponsorship Openings 

Two notes about the DF RSS feed sponsorship schedule:

First, the sponsor originally scheduled for this week needed to reschedule at the last moment. If you can pull the trigger quickly, let’s make a deal.

Update: Done.

Second, I’ve had this system in place for almost nine years now, and it has worked wonderfully as a business model. I make a good living writing DF. Sponsors are happy with the results, and frequently return for subsequent sponsorships. And you, the readers, seem to be happy, with what are truly non-intrusive (small downloads, no animation, no JavaScript) messages from sponsors who I think might truly be of interest to you. And it’s pretty cool that my model has paved the way for other indie writers to do the same thing.

But the ebb and flow of the schedule still surprises me. Back in January I was only sold out a week or two in advance. But in February I pretty much sold out through the end of April in a three-day stretch. Now, the schedule for May and June is pretty much wide open. (Some years June sells out before April and May do, in anticipation of WWDC.) So, as I always say in these reminders: If you’ve got a cool product or service you want to promote to the DF audience, please get in touch.

Bob Lefsetz Calls for Apple Board to Fire Tim Cook 

Bob Lefsetz:

And what does society want?

Something new and different that not only titillates its fancy, but demonstrates extreme utility.

Unlike the Apple Watch, which was good in theory yet dead on arrival, or after twenty four hours, when it ran out of juice. You had to recharge it, was it worth the effort, or were you better off just putting it in a drawer? And like a cult band from the eighties which hits a wall and goes no further, there was no word of mouth on the Apple Watch, some owners testified, but the rest of the populace just ignored it.

Tim Cook needs to be replaced. Apple doesn’t need a traffic cop, it needs a visionary. Execution is important, but it’s secondary to inspiration. The idea is king, never forget it.

Lefsetz has been banging the “Apple is doomed without Steve Jobs” drum ever since he died. Either he was right all along, or he’s fitting the facts to his narrative. Time will tell. But he’s a pretty high profile columnist (in the music and entertainment industry, specifically) to go so far as to call for Cook’s ouster.

This reads like reactionary crazy talk to me. He speaks of the Apple Watch as though it’s been pulled from the market, and equates current iPad sales (10 million units and $4.4 billion in revenue in the just-completed “bad” quarter) to those of the iPod:

Kind of like the iPad, replaced by the phablet, the large phone.

The iPad was killed by the phablet the same way the iPod was killed by the iPhone. What did Cook and company do? They doubled-down on the iPad, creating a Pro version with a stylus that was a marvel of technology but is something most people just don’t need. Meanwhile, there was this canard that the device was a desktop replacement when the truth is it’s nothing of the sort.

Here’s an interesting fact: the iPod never generated more than $4 billion in revenue in a quarter, including holiday quarters. The iPad generated more revenue for Apple last quarter than the iPod ever did, even in its heyday. Lefsetz has a point — one contributing factor to decreased iPad sales is the rise of large phones. But to go all the way to “killed” is a hell of a stretch.

GoPro vs. Phone Cameras 

Georgia Wells and Jack Nicas, reporting for the WSJ (paywalled, alas; a referral from Google search results might let you through):

Now GoPro is trying to expand into the mainstream. But the trouble is most people already have smartphones that are nearly as small and light as GoPro’s devices and come with cameras just as good.

Last year, GoPro bungled its attempt to reach mainstream customers by setting the price too high on its first everyman camera and not resolving kinks that make it difficult to use. It is now trying again, urging other companies to integrate GoPro cameras into products from cars to baby bouncers.

The stakes are high: GoPro expects its sales this year could fall by as much as 17% after rising to $1.62 billion last year, its first decline since it started selling its flagship product in 2010. GoPro could swing to a $167 million loss this year after reporting $36 million in profit last year, according to S&P Global Market Intelligence analysis.

Remember the Flip camcorder? That’s what’s happening to GoPro. Don’t bet against the phone, in any product category.

The Economist: ‘Craig Steven Wright Claims to Be Satoshi Nakamoto. Is He?’ 

The Economist:

This mystery may finally be solved: Craig Steven Wright — a 45-year-old Australian computer scientist and inventor who was outed against his will and with dubious evidence as Mr Nakamoto in December last year — now claims he is the real Satoshi. On May 2nd he published a blog post offering what he says is cryptographic proof that he is indeed the creator of bitcoin.

It’s an intriguing mystery, but I’d heavily emphasize the may in “may be solved”. Wright’s story still seems fishy to me.

Still, questions remain. Mr Wright does not want to make public the proof for block 1, arguing that block 9 contains the only bitcoin address that is clearly linked to Mr Nakamoto (because he sent money to Hal Finney). Repeating the procedure for other blocks, he says, would not add more certainty. He also says he can’t send any bitcoin because they are now owned by a trust. And he rejected the idea of having The Economist send him another text to sign as proof that he actually possesses these private keys, rather than simply being the first to publish a proof which was generated at some point in the past by somebody else. Either people believe him now — or they don’t, he says. “I’m not going to keep jumping through hoops.”

Such statements will feed doubts.

I don’t understand why Wright won’t sign another text, provided by The Economist. And there’s still no explanation for the backdated GPG key that was exposed last year. The backdated key doesn’t prove anything conclusively, but it sure is suspicious.

Update: Security researcher Dan Kaminsky cries foul:

Yes, this is a scam. Not maybe. Not possibly.

Update 2: The Economist is now backpedaling.

Procreate 

My thanks to Procreate for sponsoring this week’s DF RSS feed. Procreate is an advanced, beautifully-designed painting app for iPad. It works with any iPad, of course, but with an iPad Pro and Apple Pencil it is simply amazing. If you’ve got an iPad Pro and Pencil, you owe it to yourself to get Procreate. This is one of those apps that is simply pushing the limits of “pro” app design.

And: it’s yours for a one-time $6 purchase. No subscription model or anything like that. You pay $6, you get an amazing, professional painting app.

Instagram Is Testing a New Black-and-White Design 

Looks like a great redesign. I’ve been using Instagram since the day it shipped, and I’m still thrown off by the way the camera tab always looks selected because it has a blue background.

Rovi Buys TiVo for $1.1 Billion 

Tony Maglio, reporting for The Wrap:

Entertainment technology company Rovi has purchased original DVR service TiVo for $1.1 billion, or $10.70 per share. Talks of such an acquisition heated up last month, and now it’s official — pending customary regulatory approval, of course.

That $10.70 per-share price represents a premium of approximately 40 percent over TiVo’s closing stock price of $7.66 on March 23 — the last trading day prior to media speculation about a possible transaction. It breaks down into $2.75 in cash and $7.95 in the new company’s common stock. Rovi stockholders will have an easy 1-for-1 swap for their own new stock.

The merged firms will be led by Rovi CEO Tom Carson, though it will adopt the TiVo brand as the new company name.

We’ve had a TiVo for the last 16 years. I really hope this isn’t the end of the line for TiVo as we know it. Crazy cool feature they added recently: they index the commercial breaks in many popular shows, and for those shows, you can precisely skip the entire commercial break with one button. Press the button, fun noise plays, and boom, your show is back on.

Carl Icahn Sells His Shares in Apple 

CNBC:

Icahn said China’s attitude toward Apple largely drove him to exit his position.

“You worry a little bit — and maybe more than a little — about China’s attitude,” Icahn said, later adding that China’s government could “come in and make it very difficult for Apple to sell there … you can do pretty much what you want there.” He added, though, that if China “was basically steadied,” he would buy back into Apple. […]

Last May, Icahn said he had a $240 per share price target on Apple when it traded around $130 per share. As recently as September, Icahn told CNBC he considered buying more of the company’s stock, saying it looked cheap.

Engadget: ‘Apple iPhone Sales and Revenue Finally Decline’ 

Finally, a headline where finally is actually apt.


Apple and the Terrible, Horrible, No Good, Very Bad Drop in iPhone Sales

Some much needed perspective on Apple’s first year-over-year quarterly sales drop since 2003, from Daisuke Wakabayashi for the WSJ:

Apple’s revenue and profit for the fiscal second quarter ended March 26 both missed analysts’ expectations. The company also projected that revenue in the current quarter would fall far short of expectations.

Worth noting that Apple’s actual results were very nearly in line with the company’s own guidance for the quarter, given three months ago. (Revenue was within guidance, but gross margins were slightly low.) A year-over-year decline is never good news, and is a possible harbinger of a sustained decline, but these numbers, along with Apple’s guidance for the June quarter, should not have been a surprise to anyone paying attention. Certainly not enough to justify today’s 6.25 percent drop in the company’s stock price, which knocked about $40 billion off the company’s market cap. That’s more than the value of Netflix. Welcome to the casino.

Wakabayashi continues:

But for all of the concerns about Apple’s growth, the company still generated profits in the March quarter that are expected to exceed the combined earnings of technology peers Alphabet Inc., Facebook Inc., and Amazon.com Inc.

Amazon isn’t expected to announce results until Thursday, and they famously strategically forgo profit for the sake of revenue growth. So let’s take them out and replace them with a company with a history of enormous profits, Microsoft. It’s still true: with $10.5 billion in profit, Apple earned more in the quarter than Alphabet ($4.2B), Facebook ($1.5B), and Microsoft ($3.8B) combined. That’s what happens after an almost unfathomable streak of over 50 consecutive quarters of year-over-year growth — you reach an altitude at which even an indisputably very bad quarter still leaves you with enormous, industry-leading profits.1

A concerning quarter? Yes.

Surprising? Shouldn’t have been.

Alarming? Not even close.


What explains the hysterical response — both from investors, and from the business and tech news media? I long ago gave up trying to understand it. But I am reminded of the Stanford Marshmallow Experiment. Wikipedia:

The Stanford marshmallow experiment was a series of studies on delayed gratification in the late 1960s and early 1970s led by psychologist Walter Mischel, then a professor at Stanford University. In these studies, a child was offered a choice between one small reward provided immediately or two small rewards (i.e., a larger later reward) if they waited for a short period, approximately 15 minutes, during which the tester left the room and then returned. (The reward was sometimes a marshmallow, but often a cookie or a pretzel.) In follow-up studies, the researchers found that children who were able to wait longer for the preferred rewards tended to have better life outcomes, as measured by SAT scores, educational attainment, body mass index (BMI), and other life measures.

I think an awful lot of investors and members of the news media are like those kids who couldn’t wait: no ability whatsoever to look past the next few months.


Dr. Drang, writing three months ago:

But look at how things were going before the iPhone 6. Had the trend of 2012–2014 continued through 2015, iPhone sales last quarter would have been 65–70 million. Instead they were just under 75 million. It’s only in comparison to the huge holiday quarter of 2014 that last quarter looks dull.

I’m reminded of the devotion climate change deniers had to the year 1998. Because of an intense El Niño that year, global temperatures rose well above the trend line, and it remained the hottest year on record for several years. Deniers hit upon this fact, and claimed that global warming had stopped, even though the overall warming trend had continued. The iPhone 6 was Apple’s El Niño.

If sales don’t improve with the iPhone 7, I’ll be willing to believe we’ve reached “peak iPhone.” Until then, the only problem I see is that the iPhone 6 was too successful.

His post has a good chart, too.

I think Dr. Drang nails it. We might be seeing “peak iPhone”. But it could just be a statistical blip, caused in large part by the iPhone 6’s exceptional popularity, along with other factors like the economy in China and currency exchange rates. There’s simply not enough data to know. (It’s worth focusing on the iPhone here, because it accounts for two-thirds of Apple’s revenue. For the next few years, at least, as the iPhone goes so goes Apple.)

The iPhone has always been a seasonal product, but the seasonality changed with the iPhone 4S, which debuted in October 2011. The first four iPhones debuted in June/July, and the Verizon/CDMA iPhone 4 debuted in January 2011. Let’s call the 4S the beginning of the modern iPhone seasonality era — those released in September or very early October, with support for more carriers. October through December is “Q1” in Apple’s financial calendar, and in this modern era, that’s the biggest selling quarter. First, because it’s the quarter in which the new phone arrives, and tens of millions of people want to buy them immediately. There is no product in the world that generates “opening weekend” sales like the iPhone. I can’t even think of another product where people even talk about opening weekend sales, other than other Apple products like iPads and the Watch. The second factor is that it’s the holiday quarter.

Q2 — January through March — has always shown a decline from Q1. Here are the numbers for Q2 iPhone unit sales in the modern era (and 2011 thrown in for comparison):

Unit Sales (Millions)
Q2 2011 (iPhone 4) 18.7
Q2 2012 (iPhone 4S) 35.1
Q2 2013 (iPhone 5) 37.4
Q2 2014 (iPhone 5S) 43.7
Q2 2015 (iPhone 6) 61.2
Q2 2016 (iPhone 6S) 51.2

The same numbers (minus the pre-modern-era 2011) in a chart:

In chart form, you can see what an anomaly last year was with the iPhone 6. But given that you can almost draw a straight line connecting the other four points in the chart, I’m not willing to call it a peak yet. But even if we see a return to growth, it might take several years before we see another Q2 with over 60 million units sold. 


  1. Another bit of perspective, from Shira Ovide at Bloomberg: “Apple by any measure — except for its own historical standard — is an incredible company. Its $10.5 billion in net income for the last three months was more than the yearly profits of all but 15 companies in the S&P 500 index, according to Bloomberg data.” ↩︎


Twitter’s Ad Problem 

Peter Kafka, writing for Recode:

And to be very clear: Twitter now has an ad problem because of its user problem. It doesn’t have enough scale to compete with Facebook and Google.

For a while, this didn’t matter, because Twitter and its ad boss, Adam Bain, had done a very good job of courting big brand advertisers and the ad agencies that spend their money. They got them to take a flier on Twitter. But Twitter isn’t novel anymore, and brands and agencies who want to play with a new shiny object can go to Snapchat. […]

Twitter’s answer to all of this is the same answer that everyone else on the web has: We’ll fix it with video.

Ugh.

Japanese Magazine Publishes Purported Schematics of Next iPhone, Showing Smart Connector 

Juli Clover, writing for MacRumors:

Schematics featuring the dual-camera 5.5-inch iPhone 7 Plus or “Pro” that’s set to launch in the fall of 2016 have been published in the June issue of Japanese magazine MacFan, reiterating many of the design details that have been previously rumored for the device. […]

Also depicted in the schematic is the dual camera setup that’s rumored for the 5.5-inch iPhone 7 Plus, a Smart Connector, and the absence of a headphone jack. Apple is planning to remove the headphone jack in its 2016 devices, with headphones instead connecting via Lightning or Bluetooth. Though some rumors have suggested the iPhone 7 will include stereo speakers, the design drawing features a single speaker.

I’ve ignored the rumors about a Smart Connector on the next iPhone until now. But now there’s enough smoke for me to wonder about it. If it’s true, what would it be used for? The iPad Pro Smart Connectors seem perfectly suited to the purpose of attaching keyboards. Is that what this is for on the iPhone? Maybe a magnetic charger, similar to (but incompatible with) that of the Apple Watch? I’m stumped on this one.

Anyone?

Update: Best ideas so far:

  • A battery case that uses this connector could be thinner and simpler (no “chin”). The problem I see with this idea is that they’d have to announce the battery cases along with the new iPhones, which would open Apple to accusations that the built-in batteries are too small and “need” $80 battery cases. I think the quiet November debut of the iPhone 6S Smart Battery Case was planned. But maybe now that they’ve broken the ice on first-party battery cases, it’s not a marketing problem to introduce better ones?

  • If the new iPhone charges via this magnetic connector, it would allow you to charge the device while using the Lightning port for your headphones. Or vice-versa: maybe we’ll see Smart Connector headphones?

  • Cases with camera peripherals, like external microphones and lenses? Or a waterproof “camera case”?

Yankees Manager Joe Girardi Wants MLB to Ban the Shift 

Andrew Marchand, writing for ESPN:

If New York Yankees manager Joe Girardi were the commissioner of baseball, he says he would ban the shift.

“It is an illegal defense, like basketball,” said Girardi, referring to defensive three seconds in the NBA. “Guard your man, guard your spot. If I were commissioner, they would be illegal.”

I like Girardi a lot — he’s a good manager, and a smart guy (he has an industrial engineering degree from Northwestern). But this is the dumbest thing I’ve ever heard him say.

The rules have never said where the fielders need to stand, and infield shifts date back to the 1870s. Beating the shift is simple: Hit ’em where they ain’t.

Yours Truly on This Week’s Episode of The Dalrymple Report 

Fun show. We talked about the iPhone SE, new iPad Pro, and Apple Watch.

‘This Is Tim’ Q2 2016 

Rene Ritchie and Jason Snell transcribe Tim Cook and CFO Luca Maestri’s remarks from today’s analyst phone call.

Games for Apple Watch 

Some days my best material is on Twitter.

Demand for iPhone SE Exceeds Apple’s Expectations 

Tim Cook, during today’s analyst conference call:

“We’re thrilled with the response that we’ve seen on it. It is clear that there is a demand there even much beyond what we thought. That is really why we have the constraint that we have.”

I find it a little alarming that Apple was taken by surprise on this. Only a little, though, because I don’t think it’ll take them long to get supply in balance. Maybe even by the end of this quarter.

Apple Reports Q2 2016 Results 

Apple press release:

The Company posted quarterly revenue of $50.6 billion and quarterly net income of $10.5 billion, or $1.90 per diluted share. These results compare to revenue of $58 billion and net income of $13.6 billion, or $2.33 per diluted share, in the year-ago quarter. Gross margin was 39.4 percent compared to 40.8 percent in the year-ago quarter. International sales accounted for 67 percent of the quarter’s revenue.

A year-over-year decline for the first quarter in 13 years, but right in line with their guidance for this quarter three months ago. A streak like this had to end eventually.

Update: A slew of charts from Six Colors.

The Encryption Farce 

Scathing editorial from the WSJ in the wake of the Department of Justice dropping another last-minute “never mind”, this time with an iPhone in a drug case in Brooklyn:

Such assertions were as false in Brooklyn as in San Bernardino. Two hours and a half before a deadline on Friday night, the government withdrew the case after “an individual provided the passcode to the iPhone,” according to legal filings. This second immaculate conception in as many months further undermines the FBI’s credibility about its technological capabilities. Judges ought to exercise far more scrutiny in future decryption cases even as Mr. Comey continues to pose as helpless. […]

Yet forgive us if this “conversation” now seems more like a Jim Comey monologue. The debate might start to be productive if the FBI Director would stop trying to use the courts as an ad hoc policy tool and promised not to bring any more cases like the one in Brooklyn.

The Obama administration does not escape their attention:

Meanwhile, the White House has taken the profile-in-courage stand of refusing to endorse or oppose any encryption bill that Congress may propose. If the Obama team won’t start adjusting to the technological realities of strong and legal encryption, they could at least exercise some adult supervision at Main Justice.

The Talk Show: ‘The Greatest Mic Drop I’ve Ever Seen’ 

New episode of America’s favorite three-star podcast, featuring special guest Guy English. Topics include Ben Thompson’s argument that Apple’s functional organizational structure is hindering their efforts in online services, recalling our first Apple computers and the elegance of the classic Mac OS’s conceptual design, Prince (and his early use of Macs for creating music), WWDC 2016, and yours truly’s youthful foray into on-the-job vandalism.

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Casey Chan on Abandoning His Apple Watch 

It’s Gizmodo so there’s a heavy dollop of clickbait in the headline, but Casey Chan’s critique of the Apple Watch makes several salient points:

First, I still don’t know what the buttons do. This is ridiculous (and probably very stupid on my part) because, well, there are only two buttons, the digital crown and the side button. Most of the times, pressing the digital crown acts like an iPhone home button. But sometimes it’s a back button (like when you’re in the Favorites contact screen). It gets more confusing because you can scroll through a list with the crown but you can never select, you have to tap the screen for that to work. Most of these things you eventually figure out, but these little inconsistencies just add to the frustration of using it.

“When do I use which button and what do the buttons do?” needs to be obvious for the Apple Watch to truly feel Apple-y. And it fails. The longer I own mine the more obvious it is that Apple dropped the ball on the buttons:

  • Single-press on the crown takes you to the app screen. I almost never launch any apps from the “home screen”.
  • Single-press on the bottom button takes you to the “favorite contacts” screen. I almost never use this.

My hope is that Apple does more than just make the second generation watch faster/thinner/longer-lasting, and takes a step back and reconsiders some of the fundamental aspects to the conceptual design.

A Rolex-Sized Flop 

MG Siegler:

Last year, Rolex did $4.5 billion in sales. A solid year for the premium watchmaker. Of course, it was no Apple Watch. That business did roughly $6 billion in sales, if industry estimates are accurate.

The point here isn’t to compare the two devices — an Apple Watch is just about as comparable to a watch as an iPhone is to a phone. But it does provide an interesting context for Apple’s fledgling business — a new product category which has come under a lot of scrutiny since its launch a year ago. Many have called it a “flop,” which, again, is interesting in context.

Apple Watch, One Year In 

Daisuke Wakabayashi, writing for the WSJ:

Apple Inc. sold twice as many Watches as iPhones in each device’s debut year. Yet the smartwatch is dogged by a perception that seems premature given the history of Apple’s most popular devices: disappointment.

As the Watch marks its first anniversary on Sunday — two days before Apple’s quarterly earnings announcement — the product’s fate is critical to the company. It is Apple’s first all-new product since the iPad and a test of its ability to innovate under Chief Executive Tim Cook, when sales of iPhones are slowing.

​So far, the numbers appear solid. Apple doesn’t disclose sales, but analysts estimate about 12 million Watches were sold in year one. At an estimated average price of $500, that is a $6 billion business — three times the annual revenue of activity tracker Fitbit Inc.

Apple Watch can’t be neatly summarized with a one-word description like “hit” or “flop”. It has some serious, deep flaws, but it has sold well — especially considering those flaws. And the people who own one tend to really like it.

It’s a misconception that what Apple does best is unveil mind-blowing new products. What Apple does best is iterate year after year after year — exactly what Apple Watch needs.

On that front, Wakabayashi writes:

There are relatively easy fixes for some concerns. Apple is working on adding cell-network connectivity and a faster processor to its next-generation Watch, according to people familiar with the matter.

LeEco CEO Jia Yueting Says Apple Is ‘Outdated’ 

CNBC:

Apple is “outdated” and losing momentum in China, billionaire entrepreneur Jia Yueting told CNBC in his first international television interview.

Jia is chief executive and chairman of Chinese conglomerate LeEco (formerly LeTV), which is best known for being the “Netflix of China,” but has a product range that includes smartphones, televisions, mountain bikes and, most recently, electric vehicles.

As Michael Simmons quipped, that’s pretty rich coming from “the guy wearing gray sneakers, long-sleeved black t-shirt, and jeans.”

Panic’s Lost 1982 Artwork 

Worth a re-link, in light of the aforelinked The Art of Atari — Panic’s “alternate-universe, time-warped re-imaginings” of their Mac apps.

‘The Art of Atari’ 

I dare you to keep me away from this upcoming book. I dare you.

Imprint 

This week’s DF RSS feed was sponsored by Imprint, a new curated retailer and lifestyle publication offering weekly collections of exclusive products for the modern gentleman.

Put differently, rather than selling thousands of different items, Imprint sells only 10-20 core products per month, presented alongside beautiful independent photography and storytelling. And rather than selling flash-sale leftovers, Imprint works with top brands to source, produce, and sell a truly limited and exclusive selection of top notch clothing, literature, coffee, and more.

Last week, Imprint also launched on iOS — both for iPhone and iPad — allowing customers to shop internationally with Apple Pay, consult with Imprint’s on-demand stylists, and more. The website is good, but the app is really great.

Daring Fireball readers keen to try Imprint — on web or iOS — can use the promo code “BASEBALL” to save 20 percent. Shipping is free within the U.S. and a flat-rate abroad, and all returns are free.

Looking at the Future 

Craig Hockenberry, writing about the new iPad Pro display’s expanded color gamut:

After using this iPad for a couple of weeks, I’ve realized it’s like the advances of Retina in an important way: I never want to use a lesser display again. And as with higher density, I think it’s obvious that Apple will eventually update all its products to use this improved screen technology. I can’t wait!

It also wouldn’t surprise me to see these wider color gamuts coming to the cameras in our devices. All iOS devices currently create images in the sRGB gamut, while professional gear can produce images in ProPhoto or AdobeRGB. High dynamic range (HDR) photos need a wider range of color, too.

iTunes Movies and iBooks Store Shut Down By Chinese Government 

Paul Mozur and Jane Perlez, reporting for the NYT:

For years, there has been a limit to the success of American technology companies in China. Capture too much market share or wield too much influence, and Beijing will push back.

Apple has largely been an exception to that trend. Yet the Silicon Valley company is now facing a regulatory push against its services in China that could signal its good relations in the country may be turning.

Last week, Apple’s iBooks Store and iTunes Movies were shut down in China, just six months after they were started there. Initially, Apple apparently had the government’s approval to introduce the services. But then a regulator, the State Administration of Press, Publication, Radio, Film and Television, asserted its authority and demanded the closings, according to two people who spoke on the condition of anonymity.

China being China.

Microsoft’s Android Patent-Licensing Revenue Is Falling 

Matt Rosoff, reporting on Microsoft’s fiscal results:

In the release, Microsoft noted that its patent-licensing revenue was down 26% from a year ago. And it’s because of Android. […] Suh also noted that not every Android manufacturer has a licensing deal with Microsoft. He didn’t name names, but Chinese phone makers typically take a very loose approach toward licensing American intellectual property, and as those inexpensive phones take over the world, Microsoft doesn’t benefit as much.

At one point, Microsoft was reported to be booking $2 billion a year from licensing its patents and other intellectual property to Android handset makers like Samsung and HTC. Microsoft has never confirmed that number, but it’s probably a drop in the bucket compared to the overall Windows business, which booked revenue around $4.2 billion this quarter. (“Windows revenue decreased $292 million or 7%,” the release says.)

Still, the Android gravy train is slowing down for everybody.

Patton Oswalt’s Advice to His Fellow Bernie Sanders Supporters 

Maxwell Strachan, writing for The Huffington Post:

In anticipation of the special, The Huffington Post caught up with the comedian to discuss his stand-up tips, the state of the Internet, and, of course, the 2016 Election. Oswalt has been a supporter of Democratic presidential hopeful Bernie Sanders, but made it clear in the interview that he’s not “Bernie or bust.”

“I will vote for whoever the Democrats nominate against either of those two psychopaths,” he said. “I think they’re both equally dangerous and backward-facing for this country.”

Asked what he would say to a Bernie supporter who would rather not vote than cast a ballot for Hillary Clinton in the November general election, Oswalt replied, “Well, then you’re a fucking child.”

Amen.

Virginia Governor Terry McAuliffe Restores Voting Rights to Felons 

Sheryl Gay Stolberg, reporting for the NYT:

Gov. Terry McAuliffe of Virginia used his executive power on Friday to restore voting rights to more than 200,000 convicted felons, circumventing his Republican-run Legislature. The action overturns a Civil War-era provision in the state’s Constitution aimed, he said, at disenfranchising African-Americans.

This passage from the end of her report floored me:

In researching the provisions, advisers to the governor turned up a 1906 report quoting Carter Glass, a Virginia state senator (and later, a member of Congress who was an author of the 1933 Glass-Steagall Act that regulated banks) as saying they would “eliminate the darkey as a political factor in this State in less than five years, so that in no single county of the Commonwealth will there be the least concern felt for the complete supremacy of the white race in the affairs of government.”


The App Store and Retail Co-op

Marco Arment has a good piece today on last week’s Bloomberg report about a “Google-like” (Bloomberg’s description) paid search results program.

I’ve been meaning to write more about this. Perhaps comparisons to Google search are a red herring, and the right comparison is to Amazon, and retail co-op. Pay for placement, just like in grocery stores. Amazon has done this forever, and in the markets where they’re dominant (like books) they really turn the screws on manufacturers and publishers with the co-op fees. Think of search terms as being like the aisles in a grocery store, and the paid promotions are the endcaps. The retail co-op argument also fits better with the purported 100-person team size. Most of them would be sales people, not engineers or designers.

If Apple does it right, I think it’s just a new thing in the App Store that won’t make anything worse — but won’t address any of the longstanding problems, either.

If they do it wrong, they’ll allow shitty things like buying your competitor’s app’s name.

Also, Arment raises a good question, wondering about the motivations of whoever leaked the story to Bloomberg:

Either to warm us up to the idea so we’re not so mad in June, or by someone inside who doesn’t think it’s right and wants ammo to win the argument internally.

I’ve been wondering about this too. I don’t think it makes sense that it’s a trial balloon from someone in favor of the program. Apple doesn’t care about “warming us up” to changes. They don’t care. I think it makes more sense as a leak from someone opposed to it, and who foresaw that it wouldn’t go over well. Damn curious either way, though. 


The iPhone SE

Not as clumsy or random as a blaster. An elegant weapon, for a more civilized age.” —Obi-Wan Kenobi


After WWDC last June, I wanted to spend some time testing the iOS 9 betas without installing them on my iPhone 6. I used my year-plus old iPhone 5S instead. I’ve done this in years past, as well, but this time was different. In previous years, this has always been borderline torture. Each new iPhone since the 3G1 has always made the previous year’s model feel slow, and installing a beta version of iOS on the year-old phone has sometimes exacerbated that.

But I had a very different experience going back to my 5S. I liked it. I didn’t stick with it for more than a few weeks, because it was slower, and the camera wasn’t as good, but I sure did like how it felt in my hand.

Apple has called the Watch their “most personal device ever”, but I would argue that the iPhone remains the most personal. For one thing, I doubt there’s anyone who spends more time interacting with their Watch than their iPhone. For another, it’s the device we hold in our hands. The one we touch the most.

Feel matters. And to me, the classic 4-inch display form factor shared by the iPhones 5, 5S, and now SE feels the best in hand. This is obviously highly subjective, but in my mind it’s not even a close call. There are obvious reasons to prefer the larger 4.7- and 5.5-inch models, but how they feel in your hand isn’t one of them.

I prefer the flat sides. (It stands up!) I prefer the small circular volume buttons. I prefer the power button at the top, rather than directly opposite the volume-up button. I absolutely loathe the camera bump on the 6/6S; the lack of said bump on the SE feels downright luxurious in contrast.

There have been six basic iPhone form factors to date. (Seven, if you choose to count the Plus-sized 6 and 6S separately.)

  • The aluminum original iPhone (3.5-inch, non-retina)
  • The plastic iPhone 3G and 3GS (3.5-inch, non-retina)
  • The glass-backed iPhone 4 and 4S (3.5-inch, retina)
  • The aluminum iPhone 5, 5S, and SE (4-inch, retina)
  • The plastic multi-colored 5C (4-inch, retina)
  • The aluminum iPhone 6 and 6S (4.7- and 5.5-inch, retina)

With the introduction of the new iPhone SE, the iPhone 5-style industrial design is the first to be used for three separate product generations. But it’s worth noting that this form factor skipped a generation — there was no 4-inch iPhone with iPhone 6-class internals. It truly says something that an industrial design first introduced in 2012 remains utterly modern and relevant in 2016.


In my real-world use, the iPhone SE is very much exactly what I was hoping it would be: a 4-inch iPhone with iPhone 6S performance and camera quality. There are some differences:

  • The iPhone SE has a slower first-generation Touch ID sensor. I don’t mind this at all in practice, and I actually enjoy being able to use the home button to see the lock screen. (As I noted in my iPhone 6S review, the second-gen Touch ID sensor is so fast that it’s difficult to use to show the lock screen — it unlocks the phone with even the briefest tap. You have to use a fingernail or unregistered finger.)

  • The iPhone SE display remains unchanged from that of the 5S, with a contrast ratio of 800:1. The iPhone 6S has a contrast ratio of 1400:1. Noteworthy, but by no means a deal-breaker.

  • The iPhone SE has a significantly inferior front-facing camera. I almost never use this camera, so again not a deal-breaker.

  • The iPhone SE lacks a barometer, which is used for more accurately measuring the flights of stairs you ascend and descend.

  • No 3D Touch. After almost two weeks of using the SE, I almost forgot to mention this.

  • A detail that does not appear on Apple’s iPhone tech specs comparison page: according to Geekbench, the A9 CPU in the iPhone SE runs at only 1.77 GHz; on the iPhone 6S it runs at 1.85 GHz. I consider that 6.5 percent difference negligible, though.

    Update: Looking at Geekbench’s public results for “iPhone8,4” (the SE’s model number), they’re all running at 1.85 or 1.83 GHz. Not sure why it’s showing 1.77 on mine. Let’s call the difference literally negligible — the SE really seems to be just as fast as the 6S. Update 2: Turns out GeekBench’s clock speed numbers are only estimates. The SE really is just as fast as the 6S.

The technical limitation of the SE that makes the most difference for me, personally, is that its largest storage capacity is only 64 GB, instead of 128. My iPhone 6S is using just under 90 GB of storage. I was able to restore my SE review unit from a backup of my personal 6S, but after it finished downloading and restoring everything, there wasn’t any space left at all. It was easier for me to just wipe the phone and start clean.

Ultimately, the biggest reason to prefer the 6S over the SE is the glaringly obvious one — the larger display, which can either show more content, or (in Zoom mode) show the same content at a larger size.

If your eyesight is strained by the smaller 4-inch screen, that alone might seal the deal. Another advantage to the bigger display: a bigger on-screen keyboard that makes typing faster and less error-prone. I’ve been using the iPhone SE for close to two weeks, and the single most surprising thing to me is how many more errors I make while typing compared to the 6S. For anyone who does a lot of typing on their iPhone, that could be the deciding factor.

Me, though, I typically don’t do a lot of typing on my iPhone. I do a lot of reading, and I tend to flag things to deal with later, when I’m on a Mac. And for that, the smaller 4-inch display is actually better, simply because I can easily reach from corner-to-corner with my thumb while holding the phone in one hand. The iPhone SE is a credible one-handed device. The iPhone 6/6S, not so much. The iPhone 6/6S Plus, not at all.

It’s all about trade-offs, of course. But one-hand-ability is so nice a feature that Apple even dedicated a Jeff Daniels-narrated TV commercial to it when the iPhone 5 shipped. “Pretty sure it’s the common sense thing”, indeed.

I also find the smaller size and flat sides make me feel much more sure-handed when using the iPhone SE camera.


There’s another significant difference between the 6S and SE — price. The 16 and 64 GB versions of the iPhone 6S cost $650 and $750, respectively. The same capacity versions of the SE are only $400 and $500. Those are extraordinary price points for an iPhone with the current top-tier A9 SoC and camera. You save an entire third of the price by choosing a 64 GB iPhone SE over a 64 GB 6S. You save $150 and get far more storage by choosing a 64 GB SE instead of a 16 GB 6S.

Yes, it has a smaller display with fewer pixels (and, as noted above, a lower contrast ratio). Yes (again, as noted above), there are a few other technical aspects that are inferior to the 6S. But these are noteworthy, groundbreaking price points for the iPhone.


The iPhone 6S and iPhone SE are both great products, and both have great sizes — but for entirely different reasons. The SE is easier to pocket, easier to hold, and easier to use one-handed. The 6S displays more content, and is better for two-handed use — particularly when it comes to thumb-typing. Judging between these two devices, with no consideration for future devices, I personally am completely torn. But I lean toward the SE.

But therein lies the rub: there are future iPhones coming, and my guess is that the 4-inch size will soon again be relegated to the second-tier, spec-wise, in the product lineup. When Apple introduces new iPhones in September — presumably the “7” and “7 Plus”, but you never know when Apple will change its naming scheme — I expect only 4.7- and 5.5-inch models. Nor do I expect an updated 4-inch model with 7-class specs in March next year.

For anyone with an iPhone 5S (or older) who has been holding out on an upgrade in the hopes of a new top-tier “small” iPhone, the iPhone SE is cause for celebration. If you are such a person, run, don’t walk, to buy one. You will be delighted.

If you’ve already upgraded to an iPhone 6 or 6S and have made peace with the trade-offs of a larger, heavier, less-grippy-because-of-the-round-edges form factor, the appeal is less clear. Me, I talk the talk about preferring the smaller form factor, but ultimately I’m a sucker for top-of-the-line CPU/GPU performance and camera quality. For the next six months or so, the iPhone SE stands on the top tier. After that, it won’t — I think — and it’ll be back to the 4.7-inch display form factor for me. So why bother switching back for just a few months? I keep asking myself.

And then I pick up the iPhone SE, and hold it in my hand. 


  1. The iPhone 3G had the same CPU as the original iPhone. Kind of a weird fact, in hindsight. ↩︎


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