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.

  • 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.”

Prince Composing Music on a Mac SE in 1990’s ‘Graffiti Bridge’ 

Ahead of his time, as ever.


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. 


European Commission Charges Google With Abuse of Android’s ‘Dominant Position’ 

Mark Scott, reporting for the NYT:

Google has long stressed that Android, its popular mobile software, is open for anyone to use, including its rivals.

But the company’s claims are now under threat after Europe’s antitrust authorities on Wednesday charged the company with unfairly using Android to promote its own services — like mobile search — over those of its rivals. In doing so, regulators brought particular scrutiny to Google’s relationships with some of the world’s biggest cellphone makers, which have helped expand the reach of Android.

Margrethe Vestager, the European Union’s antitrust chief, said Google had required some of the cellphone manufacturers to preinstall the company’s services, including its Google Play smartphone application store, and had given them unfair financial incentives to favor Google’s services on their mobile devices. Those practices undermined competition and consumer choice, she said.

Does Google play hardball? Yes. That’s the game. This seems like a bunch of bullshit. I agree with Nilay Patel here: “The EU’s idea of ‘potentially superior versions of Android’ is some real magical thinking.”

Researchers: Dyson Hand Dryers Spread Viral Germs 

Beth Mole, reporting for Ars Technica:

By far, the jet dryer was the biggest viral spreader in all measurements.

Clumping the data from all six heights together, the Dyson produced 60 times more plaques than the warm air dryer and 1,300 times more than paper towels. Of the viruses launched by the jet dryer, 70 percent were at the height of a small child’s face.

Looking across the distances tested, most of the jet dryer-launched viruses landed about 0.25 meters away. But at three meters, the number of plaque-forming viruses spread by the jet dryer was 500-fold greater than that from the warm air dryer (paper towels launched zero to this distance). In total across the distances, the jet dryer spread 20 times more viruses than the warm dryer and more than 190 times more than the paper towels.

It’s just one research project, but it seems pretty compelling. I’ve always preferred paper towels to any sort of air dryer. Speaking of which, from the DF archive: “How to Use a Paper Towel” — one of my favorite links ever.

Jason Snell on the Speed-Bump Update to the MacBook 

It’s faster, but the biggest change is that it’s now available in rose gold. Still just one port, and that port is USB-C, not Thunderbolt 3.

‘Humanae’ — A Color Palette of Human Skin Tones 

Photographer Angélica Dass’s Humanae is an ongoing project, matching portrait photos with Pantone colors of their skin tones. Perhaps someone should show this wide range of colors to Samsung’s marketing department. (Via Kottke.)

Manton Reece: Don’t Give Up on WWDC 

Manton Reece:

I think it’s possible to go out to WWDC without spending a fortune. You can attend AltConf, find an Airbnb room for $150/night, and stay a few days instead of all week. I downgraded my expectations for WWDC and booked a cheaper hotel room a couple of months ago. It’s about how much you want to be there.

In fact, I’d still argue that it’s less expensive to “attend” WWDC now because it has been proven how much you can get out of AltConf and other events without the $1600 conference ticket. When I went to my first WWDC back when it was held in San Jose (and the same could be said for the early years in San Francisco), hotels and flights were cheaper but it was pointless to attend without a ticket.

The problem with Manton’s idea is that there aren’t many Airbnb options within a walkable distance of Moscone. (Even if you don’t have a conference ticket, most of the social stuff you might want to attend is in the general area of SOMA or Union Square.) I count 83 results at this moment, and some of them are “shared rooms” (gross) and others are just as expensive as a decent hotel room.

WWDC as Community Hub, in the Face of San Francisco’s Hotel Prices 

Joe Cieplinski:

Folks say that WWDC is the one time where everyone in our community can get together, but frankly, the price of hotels in San Francisco has made that statement a bit disingenuous. Many — if not most — of us can’t afford to make it to this party, so maybe this is no longer the party for “everyone.” Maybe it’s time we acknowledged that WWDC has become a bit of a luxury, as much as that pains me to say.

San Francisco hotels have gotten really expensive. Looking at Priceline, four-star hotels in the general vicinity of Moscone are double — if not more — the price they were just a few years ago. To name just one example, the Parc 55 cost me around $250/night in June 2013. In 2011, I booked a room at the Parc 55 through Hotwire for $115/night. That seems downright comical today. This year, rooms at the Parc 55 are running over $400/night. That’s a lot of money for the whole week — particularly considering that the Parc 55 really stretches the definition of “4-star”.

It costs more to book a decent hotel in San Francisco now than it does in Manhattan.

Update: San Francisco hotels aren’t just expensive — according to Bloomberg they are now the most expensive in the entire world. Thanks to Chris Mohajer.

Ken Auletta on Bill Campbell 

Ken Auletta, writing for The New Yorker:

In the world capital of engineering, where per-capita income can seem inversely related to social skills, Campbell was the man who taught founders to look up from their computer screens. He was known throughout the Valley as “the Coach,” the experienced executive who added a touch of humanity as he quietly instructed Steve Jobs, Jeff Bezos, Larry Page, Sergey Brin, Marc Andreessen, Ben Horowitz, the founders of Twitter, Sheryl Sandberg, and countless other entrepreneurs on the human dimensions of management, on the importance of listening to employees and customers, of partnering with others. His obituary was not featured on the front of most newspapers, or at the top of most technology news sites, but it should have been.

San Francisco Mono 

Apple’s WWDC 2016 website is sporting a “source code” theme, and is typeset using what appears to be a monospaced variant of San Francisco. Looks pretty good — I hope this is something they’re going to release at WWDC. I’d wager that it is.

(The parentheses should be rounder, and thus more distinctive, though. Compare the relatively flat parentheses on the WWDC 2016 site with the parentheses in a few of my favorite monospaced fonts. I wonder if this is simply a decorative decision made by the designers of the site. I wouldn’t be surprised if, at smaller sizes typically used by developers while actually editing code, the parentheses are rounder.)

Harriet Tubman to Replace Andrew Jackson on the $20 Bill 

Jackie Calmes, reporting for the NYT:

The Treasury Department will announce on Wednesday afternoon that Harriet Tubman, an African-American who ferried hundreds of slaves to freedom, will replace the slaveholding Andrew Jackson on the center of a new $20 note, according to a Treasury official, while newly popular Alexander Hamilton will remain on the face of the $10 bill.

Other depictions of women and civil rights leaders will also be part of new currency designs.

The new designs, from the Bureau of Engraving and Printing, would be made public in 2020 in time for the centennial of woman’s suffrage and the 19th Amendment to the Constitution. None of the bills, including a new $5 note, would reach circulation until the next decade.

The Hamilton musical is so wildly popular that it changed the course of this decision — the original plan was to put Tubman on the $10 bill, not the $20. Whatever the reason, this is a much better outcome — Jackson was opposed to paper currency. Good riddance to a terrible “great President”.

1986 in Photos 

Great collection of photos from 1986. Check out the watch on Woz in photo 6.

I’m more sports-minded than most, but it seems almost criminal not to include a shot of 46-year-old Jack Nicklaus tearing up the back nine at Augusta, en route to winning The Masters for the sixth time. Larry Bird’s Boston Celtics should have been in there too. Update: And Diego Maradona’s infamous “hand of god” goal in the World Cup.

Intel to Cut 12,000 Jobs, Forecast Misses Amid PC Blight 

Ian King, reporting for Bloomberg:

Intel Corp. will eliminate 12,000 jobs, or 11 percent of its workforce, embarking on the deepest cutbacks in a decade to gird for a fifth year of declines in the personal-computer market.

The world’s biggest maker of semiconductors said it’s shifting focus to higher-growth areas, such as chips for data center machines and Internet-connected devices. Intel also posted disappointing first-quarter revenue and gave a second-quarter sales forecast that fell short of analysts’ estimates.

Shipments of PCs, a market that provides Intel with more than half of its sales, fell to their lowest level in a decade in the first three months of 2016.

Intel’s decline has been rapid. They missed the boat on the mobile revolution. Microsoft — Intel’s partner during the go-go “Wintel” years — has missed the mobile boat, too, but has thrived by diversifying into areas such as cloud services. Intel can only thrive by selling chips, and they still don’t make the chips that device makers want for mobile devices.

I’m not counting them out yet, but this is ominous. Intel needs something new, because PCs have entered a permanent decline.

‘Coach’ Bill Campbell Dies at 75 

John Markoff, writing for the NYT:

Bill Campbell, one of the most influential background players in Silicon Valley, who was known as “coach” there for his work advising technology industry stars like Steve Jobs at Apple and Larry Page at Google, died on Monday at his home in Palo Alto, Calif. He was 75.

His family said the cause was cancer.

It’s almost impossible to overstate how influential Campbell was in Silicon Valley:

Mr. Campbell was an Eastman Kodak executive in Europe when he was recruited to Silicon Valley in 1983 by Apple’s chief executive at the time, John Sculley. Mr. Sculley named him vice president of marketing. Mr. Campbell later played a significant role in Apple’s spectacular turnaround when Steve Jobs, who had been fired by Mr. Sculley, returned to the company in 1997. Apple went on to revamp its Mac computer line and introduce the iPod, iPhone and iPad.

Mr. Campbell was an Apple director from 1997 until 2014.

It was Mr. Doerr who brought Mr. Campbell to Google to serve as an informal adviser to the two founders, Mr. Page and Sergey Brin. Mr. Campbell was instrumental in the hiring of Eric Schmidt to be Google’s chief executive in August 2001.

Strikingly, Mr. Campbell’s advisory role was often unpaid, at his insistence; he said he wanted to pay back what he felt was a debt to the nation’s technology region.

At Google, for example, he helped shape its leadership for a generation or more but, except for a single stock grant, never had a formal financial relationship with the company, according to Mr. Schmidt, who is now Google’s chairman. “Google would not be the company it is today without the influence of Bill Campbell,” Mr. Schmidt said, “and my guess is Apple wouldn’t be, either.”

Remember Claris? That was Bill Campbell:

Mr. Campbell was deeply involved in Silicon Valley’s start-up culture as well. In 1987 he led a group of Apple executives in setting up a software subsidiary, Claris, with the ultimate goal of spinning the company off as a start-up. When Apple decided not to let Claris become a separate public company, many of the executives, including Mr. Campbell, left.

Apple has a nice tribute on their home page today.

WWDC 2016: June 13 Through 17 

Apple PR:

Monday’s kickoff events, including the keynote address, will be held at the Bill Graham Civic Auditorium. The rest of the week’s conference sessions will take place at Moscone West. […]

Developers can apply for tickets via the WWDC website (https://developer.apple.com/wwdc/register/) now through Friday, April 22 at 10:00 a.m. PDT. Tickets will be issued to attendees through a random selection process, and developers will be notified on the status of their application by Monday, April 25 at 5:00 p.m. PDT. For the second consecutive year, there will be up to 350 WWDC Scholarships available, giving students and STEM organization members from around the world an opportunity to earn a ticket to meet and collaborate with some of the most talented developers of Apple’s ever-growing app ecosystem (https://developer.apple.com/wwdc/scholarships/). Additionally, this year, we will provide travel assistance to up to 125 scholarship recipients to ensure aspiring developers with financial limitations have an opportunity to participate.

Interesting that they’re moving Monday’s events to the Bill Graham Civic Auditorium. That’s where they held the iPhone 6S/iPad Pro event last September. It’s a bit of a hike from the Moscone-area hotels, but it’s a really big space.

Apple’s Penchant for Consumer Security 

Ben Bajarin, on a security “deep dive” briefing he got from executives at Apple last week:

Apple is attempting something that seems unprecedented at an industry level. To bring industry leading security but do so by actually enhancing the user experience. Prior to Touch ID for example, many organizations required eight, and sometimes longer, PIN numbers. Imagine entering that many numbers every time you pick up your smartphone. To emphasize this point, Apple shared a great statistic: their average users unlocks their phones 80 times a day. Other reports state people look at their phones upwards of 130 times a day but those are less of the average and more the heavier users. Regardless, the simple act of logging into our phone via a secure form of login like passcodes or fingerprints is now taken for granted in much of Apple’s ecosystem when, just a few years ago, anyone could have stolen my phone and have access to my personal information. Here again, Apple shared that 89% of their users with a Touch ID-capable device have set it up and use it.

‘Never Never Never’ 

Kanye West, two months ago:

My album will never never never be on Apple. And it will never be for sale… You can only get it on Tidal.

Six weeks later, the album was on Apple Music and Spotify.

Today:

A Kanye West fan on Monday sued the rapper and the streaming service Tidal claiming they duped users into subscriptions based on the promise of being the exclusive outlet for West’s latest album.

The proposed class action lawsuit filed in U.S. District Court in San Francisco by Justin Baker-Rhett contends West fraudulently promised fans that his album, “The Life of Pablo,” would only be available on Tidal. The site charges users at least $9.99 a month, but West’s album has since been released for free on Apple Music and Spotify.

Keep in mind that West isn’t just an artist on Tidal — he’s a stakeholder. I tend to see lawsuits like this as frivolous, but anyone who signed up for Tidal based on West’s statements was flat-out duped.

iPad Multitasking’s Effect on MLB At Bat Viewership 

Sarah Perez, writing for TechCrunch:

During these first two weeks, MLB fans spent 20 percent more minutes per day, on average, watching live video on iPad compared with the 2015 season, when multitasking was not available. (MLB says that any form of multitasking behavior was counted here, not just spilt-screen viewing.)

In addition, fans who were using the new multitasking features and watching live video of MLB games in the At Bat application were spending 162 minutes per day on average consuming MLB.TV on iPad. That’s an increase of 86 percent from the 2015 season.

Watching two games at once on the new Apple TV is pretty sweet too.

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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 i

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