AAPL - Apple Inc.

[fareastwarriors]

Apple in takeover talks with carmaker McLaren

 

Tech giant is considering full takoever of sports car firm as it works towards a self-driving car

 

http://www.irishtimes.com/business/technology/apple-in-takeover-talks-with-carmaker-mclaren-1.2799937

[rkbabang]

Apple in takeover talks with carmaker McLaren

 

Tech giant is considering full takoever of sports car firm as it works towards a self-driving car

 

http://www.irishtimes.com/business/technology/apple-in-takeover-talks-with-carmaker-mclaren-1.2799937

 

 

That is kind of an odd choice to get into the auto market.  McLaren has no mass-production experience or facilities.  I'm sure Apple is planing to sell more than 1000 cars per year.

[Liberty]

Apple in takeover talks with carmaker McLaren

 

Tech giant is considering full takoever of sports car firm as it works towards a self-driving car

 

http://www.irishtimes.com/business/technology/apple-in-takeover-talks-with-carmaker-mclaren-1.2799937

 

 

That is kind of an odd choice to get into the auto market.  McLaren has no mass-production experience or facilities.  I'm sure Apple is planing to sell more than 1000 cars per year.

 

McLaren has said that they are not in talks with Apple.

 

But if they did something, it would be for the technology. A manufacturing guy I follow on Twitter says that they are basically a R&D operation that makes expensive cars on the side, they have world-leading expertise in all kinds of areas including carbon fiber, etc. So they wouldn't have McLaren make cars for them, but maybe they were interested at some point in having them work on some techs or in licensing some existing tech. Who knows if that'll go somewhere now, though.

[johnny]

Johnny - you seem to be forgetting that the carriers have always had massive promotions for iPhones.  Don't you remember the years when carriers would subsidize the phone down to a $200 price point (in effect offering a $450 subsidy for customers)? In my opinion promotional activity has gotten less aggressive over the years, not more.

 

Subsidies of the past were a different animal; the service pricing was higher to recapture the value of the subsidy. Or, more accurately, there was essentially an installment plan transaction where the phone payments weren't itemized in the bill.

 

The removal of traditional subsidies was more about making the device payment an explicit line item then massively altering the economics of the business. The previous cell phone bills were basically split into a "service" bill and a "installment" bill to create the new model. The flow of cash was pretty much the same, IMO.

 

Now we have T-Mobile (and others) keeping the line item separation, and totally wiping it out with a bill credit. I would say that this a much more aggressive subsidy than what we had in the past. My current family plan with T-mobile comes out to something like $25 per person (for service), and now the EIP is going to be wiped clean for all of the iPhones 7 I'm adding. That feels very aggressive to me, but maybe I'm just lucky?

 

If you believe the carriers are absorbing all of this, you'd have to wonder why they seem to be so enthusiastic about absorbing losses on this device specifically. Why are they not similarly enthusiastic about offering generous discounts on the flagship launches of all of the Android vendors? Do the carriers perceive it to be in their interest to push even more people towards iPhone use? That doesn't sound right to me.

 

Occam's razor here is on the side of some amount of cooperation from Apple.

[DeepSouth]

Carriers have been subsidizing and fighting over high ARPU iPhone users for a decade, the carriers are competing more intensely than at any point in five years and you think Occam's razor suggests Apple is rebating carriers for the first time ever? Could be the truth, but doesn't seem like the simplest explanation to me.

[johnny]

you think Occam's razor suggests Apple is rebating carriers for the first time ever?

 

I certainly didn't say that. :)

 

I don't think there is evidence to suggest that the ARPU for an iPhone user in 2016 is substantially higher than the ARPU of a similar-tier Android phone. Again the question is why we are seeing aggressive subsidies for one and not the other. If you have something on this I'd love to see it though, I've been sort of bummed about the lack of usable data in this area.

 

The last time I remember hearing things about iPhone ARPUs, it was in the early iPhone days when Android was a totally nonviable solution (Android didn't become remotely usable until at best 2011 or 2012). I also remember hearing things like $80-90 as the ARPU range. This is why I mentioned my T-Mobile bill and referenced the prior subsidy model. At $90 ARPU monthly, you can play a lot of games with subsidies. At $30, the math is a lot different and the subsidy is therefore, far more aggressive.

[brendanb22]

anybody considering / own any LEAPS in the stock? Looking at 2018 expirations around $80 strike

 

What's the thesis to get in the money leaps?

 

I expect the motive (not necessarily thesis) is non-recourse leverage.

 

IMO AAPL is a very stable company, generating high free cash flow, with a customer base that's stickier than people are giving it credit for. With the pessimism likely to subside, in the money leaps in AAPL around 85 or so, could generate a great return

[LongTermView]

Fortune.com says Aetna will subsidize Apple Watch purchases: http://fortune.com/2016/09/27/insurer-apple-watch-fitbit/

[Liberty]

So Samsung has halted production of the Galaxy Note 7. Even the replacement phones were having issues. Seems like a fatally flawed design.

 

That can't hurt Apple, right?

[Jurgis]

So Samsung has halted production of the Galaxy Note 7. Even the replacement phones were having issues. Seems like a fatally flawed design.

 

This is sad. Let's hope Samsung can work out a solution for some kind of Note 7 reboot.

[tng]

This is sad. Let's hope Samsung can work out a solution for some kind of Note 7 reboot.

 

At this point, they might as well skip the 7 and go to the Note 8 next year. They are probably halfway through that development cycle already. It might be a good idea to re-brand it and not call it the "Note" any more.

[Jurgis]

This is sad. Let's hope Samsung can work out a solution for some kind of Note 7 reboot.

 

At this point, they might as well skip the 7 and go to the Note 8 next year. They are probably halfway through that development cycle already. It might be a good idea to re-brand it and not call it the "Note" any more.

 

You may be quite right. :)

[DCG]

This is sad. Let's hope Samsung can work out a solution for some kind of Note 7 reboot.

 

At this point, they might as well skip the 7 and go to the Note 8 next year. They are probably halfway through that development cycle already. It might be a good idea to re-brand it and not call it the "Note" any more.

 

 

They should just buy the 'Fire' naming rights from Amazon.

[Jurgis]

They should just by the 'Fire' naming rights from Amazon.

 

YES.

 

;D  8)  ;D  8)

[rkbabang]

This is sad. Let's hope Samsung can work out a solution for some kind of Note 7 reboot.

 

At this point, they might as well skip the 7 and go to the Note 8 next year. They are probably halfway through that development cycle already. It might be a good idea to re-brand it and not call it the "Note" any more.

 

 

They should do a re-make of "Get Smart".  Maxwell Smart can get his messages from Chief on a Note 7, then after he reads it he'll hear "This Note will self-destruct in 5 .... 4 ..."

 

[Liberty]

Good read:

 

http://atomicdelights.com/blog/why-your-next-iphone-wont-be-ceramic

 

At peak production, Apple is manufacturing roughly 1 million iPhones per day. More importantly, every single one of those phones is sculpted to 10 micron tolerances, from a single block of aluminum, as is every Mac, iPad, Watch and many of the accessories. It is difficult to convey to folks without a manufacturing background how insane this is, but let me try.

 

Your typical phone has a stamped metal frame that gets placed into a mold to have the plastic outside shell injected around it. Total cycle time per phone of perhaps 20 seconds, and it isn't like this makes a chintzy part - the same process is used to make the frame of a Glock. To build a million phone enclosures a day, you would need a few hundred machines and could fit the entire operation into a healthy sized Shenzhen industrial building. You can, of course, add some glitz and finishing processes to gussie up your plastic phone a bit, but those additions don't add very much time.

 

An iPhone however, starts as a block of aluminum and is faced, milled, drilled, tapped, and de-burred in a bevy of machining operations, getting passed (mostly by hand, but increasingly by robot arm) through a series of mills, each set-up with precision fixtures that hold one side of the phone to face the spindle. Just the interior cavity of an iPhone requires 3-4 minutes of takt time while micro end mills carve out the tiny details and features that the interior components will locate against and fasten to. Just that one operation requires 3000 CNC mills to meet the 1 million per day demand. Add more machines to do the other sides of the phone, plus the crazy high-tech multi-axis lathes that make the buttons, plus production for iPads,and iMacs, and MacBooks, and Watches, and many of the accessories.

 

This high cycle time is why Apple is the world's largest owner of CNC milling machines and swiss style lathes. Rumors are that the number is around 40,000 with about half dedicated to iPhone production. I've seen pictures of one shop with acres of Fanuc Robodrills making iPhones, and that was only one of about a dozen such facilities. Apple is such a huge buyer of a particular kind of mill (BT30 spindle drill-tap centers) that Fanuc, Brother and DMG Mori each have factories dedicated to building machines exclusively for Apple.

[johnny]

I love this guys blog; wish he posted more frequently. His argument that it is implausible to shift the entire line over makes perfect sense to me

 

That said, I think there's a very real possibility that Apple could easily decide to offer a Ceramic Version (or whatever) of the phone without making the entire model-year ceramic only. I think this year's "Special finish" iPhone being offered only on non-base units is not an aberration but the beginning of a new pattern that will allow them to price discriminate -and- work in more elaborate materials and processes manageably. I'd say they pretty much have to do that now, given the volumes in play.

 

[portfolio14]

It doesn't mean Apple won't add a model with a new material. Introducing Jet black (which requires some new manufacturing/processing techniques) doesn't mean switching from gold/rose gold/silver.

 

I think he missed the most obvious factor. After Apple announced the ceramic Watch 2, the first thing I did was to check its material density vs Al. It is Zirconia if I'm not mistaken. It is twice as heavy as Al. This will be the biggest hurdle to make iPhone (particularly the plus) in ceramic as they are already quite heavy for single-handed use.

 

p.s. I foresee Jet Black and Black will be available in the next iterations of MacBook and iPad.  :)

 

Good read:

 

http://atomicdelights.com/blog/why-your-next-iphone-wont-be-ceramic

 

[Liberty]

I love this guys blog; wish he posted more frequently. His argument that it is implausible to shift the entire line over makes perfect sense to me

 

That said, I think there's a very real possibility that Apple could easily decide to offer a Ceramic Version (or whatever) of the phone without making the entire model-year ceramic only. I think this year's "Special finish" iPhone being offered only on non-base units is not an aberration but the beginning of a new pattern that will allow them to price discriminate -and- work in more elaborate materials and processes manageably. I'd say they pretty much have to do that now, given the volumes in play.

 

I agree, I think it's very possible that they could offer an "edition". But I also think that this might not be as easy as it seems since the iPhone was designed from the ground up to use AL in its frame and structure (not just finish), and replacing that with something completely different like ceramic might be difficult. They did it with the Watch, but the iPhone has a very different X-Y-Z ratio and faces different stresses.

[johnny]

Yeah, they'd basically be making two phones, though sharing design language between them. The more I think about it the more questionable it seems to me. Especially since I still don't quite understand the appeal of ceramic as a case material.

[Liberty]

Looks like Project Titan might be going through a rough period:

 

https://www.bloomberg.com/news/articles/2016-10-17/how-apple-scaled-back-its-titanic-plan-to-take-on-detroit

[fareastwarriors]

Looks like Project Titan might be going through a rough period:

 

https://www.bloomberg.com/news/articles/2016-10-17/how-apple-scaled-back-its-titanic-plan-to-take-on-detroit

 

so what's next instead?  VR?

[Liberty]

Looks like Project Titan might be going through a rough period:

 

https://www.bloomberg.com/news/articles/2016-10-17/how-apple-scaled-back-its-titanic-plan-to-take-on-detroit

 

so what's next instead?  VR?

 

I think Apple is constantly looking at various thing and they'll keep working on cars and have probably been working on VR for a while. When they decided that they have something good enough to ship in either area is another question.

 

Creating something isn't a linear process, and when they were making the iPhone they actually had two teams in the early stages, one taking the approach that ended up winning, and the other trying to build a phone based on the iPod platform (which didn't end up shipping).

[LongTermView]

It's too bad the NFL can't use ipads: http://www.usatoday.com/story/sports/nfl/patriots/2016/10/18/bill-belichick-tablet-rant-new-england-patriots-microsoft-surface/92362100/

[Spekulatius]

Looks like Project Titan might be going through a rough period:

 

https://www.bloomberg.com/news/articles/2016-10-17/how-apple-scaled-back-its-titanic-plan-to-take-on-detroit

 

so what's next instead?  VR?

 

I think Apple is constantly looking at various thing and they'll keep working on cars and have probably been working on VR for a while. When they decided that they have something good enough to ship in either area is another question.

 

Creating something isn't a linear process, and when they were making the iPhone they actually had two teams in the early stages, one taking the approach that ended up winning, and the other trying to build a phone based on the iPod platform (which didn't end up shipping).

 

I heard the (unverified) story that Apple went through 7 iterations, which took roughly 7 years, before they (Jobs?) decided the product is good enough to be launched. I expect that the car project, which is way more complex, to go through a similar process. The product needs to be impressive from the get go, imo.