Some of Apple’s recent decisions regarding content distribution have sparked a debate. Is Apple embracing a new kind of strategy that elevates services at the expense of hardware? Episode 140 is dedicated to going over Apple’s content distribution strategy and how the company is looking to leverage its user base in an effort to establish one of the more formidable content distribution arms in existence. Additional topics include Apple’s history as a content distributor, how streaming is changing content consumption, misconceptions surrounding Apple’s content distribution strategy, the sudden collapse in stationary speaker buzz, Apple’s goals for its content distribution arm, and the various challenges facing the company. Receive my analysis and perspective on Apple throughout the week by becoming an Above Avalon member and receiving exclusive daily updates. To become a member, visit AboveAvalon.com/membership.   

Links:

Apple’s Content Distribution Strategy (weekly article)

Calculating the Mix of Apple Devices in Use (daily update)

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January is a great time to embrace the unknown rather than come up with predictions for the next 12 months. Episode 139 is dedicated to going over my fifth installment of Apple questions as the new year kicks off. We discuss 56 questions facing Apple in 2019. Topics include everything from big picture themes to detailed questions about Apple’s product strategy. Additional topics include Apple’s financial picture, management changes, emerging markets headwinds, R&D, and capital expenditures. Receive my analysis and perspective on Apple throughout the week by becoming an Above Avalon member and receiving exclusive daily updates. To become a member, visit AboveAvalon.com/membership.   

Links:

Apple Questions in 2019 (weekly article)

AirPods and Apple Watch Sales Estimates (daily update for Above Avalon members)

Apple’s Leadership Structure Under Tim Cook and Jony Ive (quarterly report for Above Avalon members)

Thoughts on Apple Cutting 1Q19 Guidance (daily update)

Additional Thoughts on Apple Cutting 1Q19 Guidance (daily update)

Apple Expands AirPlay 2 Support to Smart TVs (daily update)

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There will come a time when the iPhone business is in big trouble. However, that day has not arrived quite yet. Episode 138 is focused on how the sheer level of pessimism facing iPhone hit an inflection point in 2018. Things have simply become too negative. The discussion begins with the iPhone’s impact on Apple financials. We then dissect iPhone hysteria to see how pessimism has changed and centered on a new type of narrative. Additional topics include demand for $999+ iPhones, the gray market, genuine risks and concerns facing iPhone, how the iPhone business is changing, and why wearables have to be part of the iPhone discussion. Receive my analysis and perspective on Apple throughout the week by becoming an Above Avalon member and receiving exclusive daily updates. To become a member, visit AboveAvalon.com/membership.   

Links:

iPhone Hysteria (weekly article)

Above Avalon Episode 136: The Unit Sales Crutch (podcast)

Apple Outgrew Unit Sales (weekly article)

Above Avalon Episode 135: The Gray Market Factor (podcast)

The Gray Market’s Impact on iPhone Pricing (weekly article)

Apple and Dividends: A Deep Dive into Apple’s Cash Dividend Strategy (quarterly report for Above Avalon members)

Apple Earnings Model Access (for Above Avalon members)

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Given the magnitude of its buyback program, excess cash position, and free cash flow generation, no other public company is in as good of a position as Apple to benefit from stock market turmoil. Episode 137 is focused on how Apple can leverage its buyback program to take advantage of stock market dislocations. The discussion begins with my thoughts on the recent weakness in AAPL shares. We then look back at previous AAPL stock downturns to find a few similarities and takeaways. The discussion turns to Apple’s share buyback and the impact a change in stock price has on Apple’s buyback activity. Additional topics include Apple buyback scenarios, valuation, and the irrationality found in comparing a company’s stock price to its underlying health. Receive my analysis and perspective on Apple throughout the week by becoming an Above Avalon member and receiving exclusive daily updates. To become a member, visit AboveAvalon.com/membership.   

Links:

Leveraging Apple’s Share Buyback (weekly article)

Above Avalon Episode 90: Buying Back 50% of Apple (podcast)

Above Avalon Episode 41: Apple’s Record Stock Buyback (podcast)

Apple Earnings Model Access (for Above Avalon members)

Apple’s Leadership Structure Under Tim Cook and Jony Ive (quarterly report)

Above Avalon Gifts

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The most surprising part of Apple’s 4Q18 results wasn’t found with the numbers or even guidance. Instead, by announcing unit sales data would no longer be provided starting in 1Q19, management dropped a bomb on Wall Street. Episode 136 is focused on discussing Apple’s decision to move beyond unit sales. We go over how unit sales became a crutch for financial analysts. The discussion then turns to management’s new blueprint for how it wants Wall Street to judge Apple. Additional topics include Apple revenue and gross margin trends, Wall Street narratives, and Apple as a toolmaker. Receive my analysis and perspective on Apple throughout the week by becoming an Above Avalon member and receiving exclusive daily updates. To become a member, visit AboveAvalon.com/membership.   

Links:

Apple Outgrew Unit Sales (weekly article)

Above Avalon Episode 123: Apple’s New Wall Street Story (podcast)

An iPhone Slump? / A Possible iPhone Explanation (daily update)

Apple 4Q18 Earnings Review (daily update)

Apple’s Leadership Structure Under Tim Cook and Jony Ive (quarterly report)

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In episode 135, we look at how the gray market for refurbished and previously-owned iPhones is impacting Apple’s iPhone pricing strategy. The discussion begins with a closer look at iPhone ASP (average selling price) trends and my thoughts on how the gray market is impacting iPhone ASP. We then go over the three key ingredients needed to sustain a functioning gray market for iPhone. Additional topics include: iPhone durability, the iPhone Upgrade Program, iPhone residual values and depreciation, and future iPhone ASP trends. Receive my analysis and perspective on Apple throughout the week by becoming an Above Avalon member and receiving exclusive daily updates. To become a member, visit AboveAvalon.com/membership.   

Links:

The Gray Market’s Impact on iPhone Pricing (weekly article)

Size of iPhone Gray Market (daily update)

3Q18 iPhone Unit Sales Mix (daily update)

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The Above Avalon Podcast

The Netflix machine seems unstoppable. Strong paid subscriber growth and rising content budgets have given Netflix a commanding lead in the paid video streaming market. However, change is in the air. Episode 134 is dedicated to discussing Netflix’s business model and why calls suggesting Netflix has won the paid video streaming war are grossly premature. Additional topics include Netflix’s keys to success, upcoming paid video streaming competitors, lessons from the music streaming industry, and things to watch out for in paid video streaming over the coming years. Receive my analysis and perspective on Apple throughout the week by becoming an Above Avalon member and receiving exclusive daily updates. To become a member, visit AboveAvalon.com/membership.   

Links:

Netflix Isn’t Invincible (weekly article)

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Last week, Apple Watch was the star of Apple’s second major product event at Steve Jobs Theater. Episode 133 is focused on looking at the big picture following Apple’s event. The discussion begins by going over Tim Cook’s comments regarding Apple’s mission statement and then quickly puts the iPhone and Apple Watch updates into context. We then turn to my Grand Unified Theory of Apple Products. Additional topics include my user base estimates for Apple’s various product categories, my rationale for why Apple Watch and Apple Glasses will one day have a larger user base than iPhone will, and the power associated with new form factors that are capable of handling new tasks. Receive my analysis and perspective on Apple throughout the week by becoming an Above Avalon member and receiving exclusive daily updates. To become a member, visit AboveAvalon.com/membership.   

Links:

Connecting the Apple Dots (weekly article)

Episode 44: The Grand Unified Theory of Apple Products (podcast)

Apple Glasses Are Inevitable (weekly article)

Apple Event Review (daily update)

User base estimates for Apple’s various product categories (daily updates)

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Apple Podcasts

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In episode 132, we take a closer look at Apple's Project Titan. The discussion begins by going over the signs pointing to Apple expanding Titan initiatives in recent months. We then turn to Apple's goal with Titan and the automobile's changing value proposition. Tesla enters the discussion as we look at why the company isn't a realistic acquisition target for Apple. Additional topics include Tesla's struggles, poaching, Doug Field's move from Tesla to Titan, and the most interesting things to watch for in the auto space. Receive my analysis and perspective on Apple throughout the week by becoming an Above Avalon member and receiving exclusive daily updates. To become a member, visit AboveAvalon.com/membership.   

Links:

Poaching Tesla (weekly article)

Map of various Project Titan buildings and land (daily update)

Doug Field Joins Project Titan (daily update)

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The Above Avalon Podcast

Apple's latest growth story is driven by three drivers: iPhone, Services, and Wearables. In episode 131, we discuss these three growth drivers to see how they are not created equal. After going over the factors fueling Apple's growth drivers, we spend time discussing how Apple's growth story may change in the near term. The episode concludes with a big picture overview of why Apple's long-term growth story won't just be about Services. Receive my analysis and perspective on Apple throughout the week by becoming an Above Avalon member and receiving exclusive daily updates. To become a member, visit AboveAvalon.com/membership.   

Links:

Apple's Growth Story (weekly article)

Episode 126: Let's Talk Apple Services (podcast)

iPhone Installed and User Base Estimates (daily update)

Apple Watch Installed and User Base Estimates (daily update)

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Apple Podcasts

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The complete Above Avalon Podcast episode archive (131 episodes) is available here.

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Neil Cybart (host/producer)

The Above Avalon Podcast