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Japan is a growing market for Apple
The Wall Street Journal reports that Apple is doing extremely well in Japan. So well, in fact, that Japan is now one of Apple's fastest-growing markets. One factor that has helped boost Apple sales is the company's recent iPhone deal with DoCoMo, Japan's largest mobile carrier. Frustrated with subscriber churn on account of not carrying the iPhone for so long, DoCoMo recently began offering attractive deals to bring in new customers and keep existing customers from defecting to rival carriers like KDDI and SoftBank. In turn, these competing carriers were forced to offer consumer-friendly deals of their own. The end result is that the iPhone in Japan is now a more attractive value proposition than ever before. Interestingly, the Journal relays that there are a number of other factors behind Apple's popularity in Japan. For one, the Apple brand is viewed by the Japanese as being akin to other and more traditional luxury brands like Louis Vuitton and Burberry. Second, there are some underlying geopolitical factors at play. One unique factor in Japan is the relatively small presence of Samsung Electronics Co., the world's largest smartphone maker. Samsung ranks fourth in Japan behind Apple, Sony and Sharp Corp., in part because of a Japanese consumer bias that works against many Korean brands. All told, Apple sales in Japan increased by 27 percent during Apple's 2013 fiscal year. By way of comparison, Apple sales in the entire Asia Pacific region increased by just 4.1 percent during the same period. The Journal also adds that Apple's margins in Japan check in at a whopping 50 percent, making it Apple's most profitable market. As a final note, Japan may be graced with a new Apple retail store sometime in early 2014, bringing the total number of Apple stores in the country up to eight.
Apple to open Arizona manufacturing facility to make sapphire materials
Apple has announced its plans to open a new facility in Arizona to manufacture sapphire materials, according to PocketLint. The Mesa, Ariz., complex will be built and run in partnership with GT Advanced, which is helping Apple manufacture the sapphire. Apple currently uses sapphire in its camera lenses and the Touch ID sensor in various iOS devices. Acknowledging the new factory after it was reported in the news earlier in the day, Apple told PocketLint: "We are proud to expand our domestic manufacturing initiative with a new facility in Arizona, creating more than 2,000 jobs in engineering, manufacturing and construction. This new plant will make components for Apple products and it will run on 100% renewable energy from day one, as a result of the work we are doing with SRP to create green energy sources to power the facility." The factory will be Apple's second in the United States, coming after Apple opened up a plant in Fort Worth, Texas that will be manufacturing the Mac Pro.
Apple's Campus 2 will feature a 1,000-seat, all-glass keynote auditorium
Apple Gazette has found out something pretty cool about Apple's Campus 2. In addition to being the future flying saucer-like headquarters of Apple we're all familiar with by now, the campus will actually feature a second, independent building on the grounds entirely dedicated to media and staff events. As Apple Gazette notes: Apple Campus 2 comes with its own detached structure built specifically for media-filled keynote presentations of new products (though I imagine it will be used for plenty of staff events, too). This new theater will seat 1,000, and get this: the auditorium itself will be underground. Visitors will reach the underground theater by entering a large, round lobby with a disc-shaped metal roof and circular walls made entirely of glass. As you can see from these artists' renderings, the resulting structure strongly resembles a slender flying saucer floating in a forest. The lobby also boasts a pair of cylindrical glass elevators, like the one inside New York's 5th Avenue Apple Store. You can see one of them in the rendering at the top; it's on the left side next to a staircase. The 1,000-seat capacity means that the auditorium will surely replace media events at both Apple's Town Hall meeting rooms and the Yerba Buena Center where product launches for iOS devices and Macs take place now. It will also give Apple the added advantage of more secrecy as people will not be able to get up close and photograph banners going up like they do now at the public Yerba Buena Center. But WWDC shouldn't move however, as 1,000 seats is nowhere near enough room to house everyone who attends.
During the last 4 months, Apple paid out $25 million per day to iOS developers
During yesterday's media event, Tim Cook gave us his typical update on all things App Store. Specifically, Cook informed us that the App Store now houses more than 1 million apps and has seen more than 60 billion downloads. But there's one data point in particular that's worth some extra attention, namely that Apple has thus far paid out US$13 billion to iOS developers. Now anytime you're talking about "billions," you're clearly talking some serious business. Indeed, the $13 billion figure is so large it's easy to casually gloss over its significance. To help put the figure into perspective, here are some facts about Apple's App Store payouts to developers over the past five years. 1. The App Store has grossed $18.57 billion, with Apple keeping $5.57 billion of that. With the $13 billion figure, and Apple's 70/30 revenue split, it's easy to deduce how much money Apple has grossed and netted. Since the App Store first opened up for business in July of 2008, Apple has netted $18.57 billion. Of that total, $13 billion was paid out to developers with Apple keeping the remaining $5.57 billion. 2. Apple's monthly payout to developers are not just increasing, they're also accelerating. It took Apple nearly two years (June of 2010) to reach the $1 billion payment threshold to developers. Since then, the number of iOS devices has exploded, and naturally, the payouts to developers have increased at an accelerated rate. From January 2012 to January 2013, Apple's payout to developers increased from $4 billion to $7 billion. That payout comes out to an average of $250 million a month to developers over the 12-month timeframe. From June 2012 to June 2013, Apple's payout to developers increased from $5 billion to $10 billion, representing a cool $5 billion in payments in 12 months. That comes out to about $416 million per month in developer payouts during the 12-month timeframe. From June 2013 to October 2013, Apple's payout to developers jumped from $10 billion to $13 billion. That's an increase of $3 billion in just four months. Translation? During the last fourth-month period, Apple has been paying out an average of $750 million per month to developers. 3. Over the last four months, Apple has paid out $25 million PER DAY to developers. An average of $750 million per month comes out to $25 million per day in developer payouts. Again, that's $25 million every single day. 4. In one month, Apple pays to developers more money than the cumulative 2013 payroll of the three Major League Baseball teams with the highest payrolls. The 2013 payroll for the New York Yankees was $228 million. The Dodgers come in second with $216 million, while the Phillies come in third with $165 million. If you add that all together, Apple could cover those teams' entire 2013 payroll with just one month of developer payouts.
What it's like to work Apple retail on iPhone day
Apple retail stores are typically crowded. On iPhone release day, however, they turn into absolute zoos, with stores packed to the brim and lines often extending out of the store. Now that the iPhone is more than 6 years old, the hysteria surrounding an iPhone launch has subsided a tad. Still, it's an event unto itself and Gizmodo recently ran a piece from an anonymous Apple retail store employee who describes in exquisite detail what it was like to be on the front lines in the days preceding and following the iPhone 5s and 5c launch. The anonymous employee, who writes under the name J.K. Appleseed (perhaps Johnny Appleseed's long lost brother?), notes that his Apple retail store began receiving truckloads of iPhones about 12 hours before opening on launch day. With 10 minutes to go until the doors open, it was time for a store pep talk: We make a big blue huddle. Black curtains block the view into our glass wall. We can't see them, but they're all out there, waiting. The customers. The camera crews. The police. Our store manager has really amazing hair. It doesn't move while he delivers an earnest, if predictable pep talk. How are we feeling, have fun, make each customer count, don't talk to the media, remember we catered lunch, this is what it's all about-and have fun. Two minutes to go and the scene on the inside is seemingly as hectic as it is on the outside. Party music blasts. Don't casinos flood gambling floors with oxygen? We should do that. Some employees dance. Most clap. I don't want to clap at first, but there are some very cute co-workers I haven't met before-I guess we must be on different work schedules-and they're clapping, so I find myself clapping when two managers suddenly sweep back the curtains and open the door. 3... 2... 1... ZERO! We all clap and cheer the first customer through the doors. He looks young. He's stuffed his camping gear into a backpack, and he raises his fists to receive the ovation. We keep on clapping for the next 20 or 30 shoppers who file in, subtracting one clapper per customer. My hands start to sting. As the clapping finally fades, one customer comes in and does a little touchdown shimmy, which raises just enough temporary applause to be slightly awkward. The entire piece is well worth a read as our anonymous Mr. Appleseed details some behind-the-scenes happenings that occur during launch day and also covers what it's like inside Apple retail in the days following a huge product launch. All in all, the article provides some cool insight into a world that we don't often hear about from the inside out.
Ireland aims to close tax loophole Apple has exploited
If the Irish government's plans come together, the tax loophole that Apple, Microsoft, Google and other companies have been using for years will be closed up. Reuters and other news services are reporting that the Irish Government intends to close the loophole, although another will remain. Last May, a US Senate investigation revealed that Apple had sheltered billions in assets by declaring companies registered in the Irish City of Cork as not tax resident in any country. Michael Noonan, the Irish Finance Minister declared Tuesday that he was going to make it against Irish law for an Irish-registered company to have no tax domicile anywhere. Apple and the other companies could still avoid big tax bills by nominating Bermuda, for example, as its tax residence, or any other country that does not charge corporate income tax. During the Senate hearings Senator Carl Levin said Apple had achieved "...the 'Holy Grail' of tax avoidance." Apple's tax avoidance policies were also defended by some current and past members of the Senate, saying there was nothing illegal in the practice, but Ireland was welcome to change its laws. Now, it appears, that will happen. [via Reuters]
Devs can now use all iPhone 5s colors in marketing
Apple has updated its developer guidelines to allow developers to use all colors of the iPhone 5s in product marketing. Previously developers were only officially allowed to use the black iPhone likeness for marking, though many developers ignored this rule and used the white iPhone as well, suggesting Apple rarely enforces this rule. Now however, developers have Apple's official blessing to use whatever color iPhone 5s body they want in their app promo shots: Space Gray, White and Silver, or Gold. Something tells me Gold is going to be particularly popular. Developers can download the latest product image templates here.
Apple buying back many shares of AAPL
Last April, Apple announced plans to increase its share repurchasing program from US$10 billion to $60 billion. Apple at the time noted that this represented the "largest single share repurchase authorization in history." While the full buyback program is slated to be finished by the end of 2015, Apple has already began buying back shares. Philip Elmer-DeWitt of Fortune reports: By my calculation, the company spent $16 billion last quarter ($4 billion in cash, $12 billion through the so-called accelerated share repurchase program) to purchase 36 million of its own shares at an average price of just over $444. Coupled with Apple's dividend payments, which now stand at $3.05 a share, Apple over the course of three years will be spending $100 billion as part of its initiative to return money to shareholders and buy back its own shares.
Apple made £68 million in the UK last year, paid £0 corporation tax
Apple is once again under fire in the UK for paying no taxes last year, even though the company earned £68 million (US$103 million) in the country. Apple got around paying UK taxes by offering employees £40 million worth of stock, which the company could then write off as a business expense, thus lowering its taxable income. The company has also carried a £3.8 million tax deduction forward for next year. It should be noted that Apple's tax activities are entirely legal, even though its moral and ethical implications leave a bad taste in the mouth. Multinational corporations have increasingly come under fire in the UK and the rest of the EU. Companies like Starbucks, Facebook, Amazon, Google and Apple are now receiving extreme scrutiny from government regulators over their unscrupulous, but apparently legal, tax practices. Many feel (including myself) that in an age of austerity where public budgets are being cut from almost every facet, it is not fair that companies are avoiding paying taxes on an estimated $21 to $32 trillion a year -- an amount that could effectively wipe out global poverty, global hunger and provide free education for every person on earth. Apple may make great products, but that doesn't mean it shouldn't be held to the same standards as the individuals who buy its products.
Now Apple files for iWatch trademark in Mexico, Taiwan, and Turkey
Just yesterday word spread through the technology sphere that Apple had filed for an iWatch trademark in Japan. The news seemed to give some limited credence to earlier rumors that Apple had filed for the same iWatch trademark in Russia. Now, less than 24 hours after that Japan trademark surfaced, trademark registrations for iWatch have appeared in Mexico, Taiwan and Turkey, according to MacRumors. As I wrote yesterday, a trademark registration does not mean the imminent arrival of Apple's fabled smartwatch. However, the fact that Apple is registering iWatch in countries across the globe does now seem to strongly suggest that work on the device is well underway and we may see it early next year. But only time will tell.
Apple updates Chinese homepage with earthquake donations and support offers
Apple has updated its Chinese homepage in recognition of the earthquake that struck parts of the country over the weekend. A translation by Engadget reads: Our deepest condolences to those who were taken away by the Sichuan Yaan earthquake, and respect to all the rescuers. May those who have passed away rest in peace, and may the survivors stay strong. Apple has also released a statement pledging cash donations and donations of new Apple devices to help schools that have been hit by the quake: In this difficult time our hearts are with the Sichuan earthquake victims. In addition to cash donations to help the victims ride out the storm, we will also commit to donating brand new Apple equipment to some of the schools in the affected region, and the local Apple staff will be on standby to provide support. Apple has reportedly offered US$8 million in aid in total.
Apple licenses 'worthless' Palm patents
Japanese blog Macotakara has uncovered documents published on Access (formerly PalmSource) that show Apple has licensed US$10 million worth of patents from a number of former technology companies, including the now defunct Palm. Interestingly, as 9to5Mac points out, Steve Jobs once told then Palm CEO Ed Colligan in an email exchange that Palm's patents were essentially worthless. There's not much word on what patents were licensed, but given that they "only" cost $10 million, they probably don't represent groundbreaking tech. The announcement letter refers to the patents as "foundational patents." Microsoft reportedly licensed the patents as well.
Apple retail exec John Browett's departure not surprising
When the first wave of news was breaking about Apple and its executive shuffle, the initial focus was on Scott Forstall leaving even though that's not actually happening until 2013. According to the Wall Street Journal, both Forstall and John Browett, Apple's vice president of retail, were asked to leave with Browett's departure an immediate one. Perhaps the reason this didn't get more initial attention is because it was hardly surprising. First, he came to Cupertino with a less-than-stellar résumé. Previously, he had been CEO of Dixons, a UK retail electronics company not known for excellent customer service. To put it mildly, he was considered a surprising choice, particularly by those who'd actually shopped at Dixons. Once he settled in at Apple, he promptly ignored advice about staffing levels and started making staffing cuts and other changes to turn Apple retail into the same sort of suboptimal experience people can have at any number of other places. When word got out that Browett was attempting to strip Apple retail of its Apple-ness, the staffing order was rescinded. This adds a bit of retroactive speculation about why the Annual Retail Conference was cancelled on such short notice. Did the head of retail cancel it as part of his quest for cost-cutting? Or was it killed because of bonus product announcements last week? Or was it because the head of retail wouldn't be there since he was back in California cleaning out his desk? We will probably never know. What's telling is that recruiting someone to head up retail will take time, and Apple would rather let the retail division spend some -- or all -- of the holiday season without a leader than let it go on under Browett.
Apple acquires HTML5 design shop Particle
According to a report in CNET, Apple has quietly acquired Particle, a consulting company that specializes in web and HTML 5-based marketing projects. The company has worked with high-profile companies like Google, Motorola, Amazon, Yahoo and even Apple. It's also known for its celebrity backer, Justin Timberlake, who invested in Particle and helped fund its digital calling card service, Robo.to. The acquisition went through last month and most of Particle's employees are now working for Apple as "creative technologists." The team is expected to work on Apple's product pages, iCloud.com and iAD, all of which rely heavily on HTML 5 to deliver content.
Scott Forstall and Maps, Siri issues
The recent criticism about Apple's iOS 6 Maps app has prompted some analysts and pundits to lay the blame on Scott Forstall, Apple's Senior Vice President of iOS Software. A recent post by Philip Elmer-DeWitt of Apple 2.0 points out that both Maps and Siri, two recent projects that fall under the leadership of Forstall, have been a disappointment. DeWitt isn't alone in pointing out Apple's latest shortcomings. In his recent Monday Note, Jean-Louis Gassée, says the backlash against Apple after the release of iOS Maps is self-inflicted. Rather than point out both the strength and weaknesses of Maps, Apple chose to promote the product as the "most beautiful, powerful mapping service ever." Gassée notes that the demonstration of the Maps app earlier this year at WWDC showcased a product that was seemingly flawless in its execution. Customers, who were expecting an improved or at least equal experience with iOS 6 Maps, were disappointed when they noticed limitations and errors that were not mentioned by Apple. Apple wasn't wrong to pursue a new mapping solution, Gassée argues, but it did make things harder by "failing to modulate its self-praise."
Apple changes Maps copy, no longer "most powerful"
Apple toned down the description for its new Maps app and no longer claims that the app is "the most beautiful, powerful mapping service ever." As noted by CNET, Apple's website now says that Maps features "a beautiful vector-based interface that scales and zooms with ease." This revision follows an apology letter from Apple CEO Tim Cook, who said Apple fell short on its commitment to "make world-class products that deliver the best experience possible to our customers." He added that the company "will keep working non-stop until Maps lives up to the same incredibly high standard." The apology and website changes are in response to criticism of the Maps app in iOS 6, which replaced the Google-based Maps in iOS 5. The latest version of Maps includes turn-by-turn directions, but lacks the robust POI information and street level details found in the Google version of Maps.
Apple's recent apologies
Apple CEO Tim Cook's apologetic letter to iOS 6 customers is the third large-scale apology the company has issued in so many months. Now the web is wondering: is this evidence of a more "human" Apple, or a company with a problem? On July 13, Apple posted a letter from then senior vice president of hardware engineering Bob Mansfield (currently "senior vice president") regarding the EPEAT rating system. Earlier that month, the company had removed its products from the EPEAT system and announced that it would not be submitting future hardware for evaluation. Concerned city and government accounts announced their intention to avoid Macs without EPEAT certification. Apple issued one statement confirming its position before pulling a total reversal, just a week after the initial announcement. Mansfield's letter read, in part: "We've recently heard from many loyal Apple customers who were disappointed to learn that we had removed our products from the EPEAT rating system. I recognize that this was a mistake. Starting today, all eligible Apple products are back on EPEAT." Meanwhile, Apple's retail chief, John Browett, told the company's retail employees that the company "messed up" when it implemented new staffing formulas that resulted in shift cuts and general disarray among workers. While not a public apology, Browett's message represented Apple implementing another rapid, 180-degree policy change. Today, Tim Cook is apologizing to all iOS 6 customers for the current state of its Maps app. For many, the apology was warranted. Users in the UK especially are having a hard time with Maps. It's very unusual for Apple to release a public product that's subpar for so many. What happened? Aside from the obvious Herculean task of creating a global mapping application from scratch, that is. Liz Larson, writing for Fast Company, asks: "How should companies evaluate which functions are better outsourced and which should be maintained in-house? These often mission-critical decisions -- when made out of haste or hubris -- can be enough to put brand reputation and loyalty at stake." She goes on to say that Apple's strength is in creating an elegant, aesthetically pleasing experience, not cartography: "The inner workings of digital cartography don't directly fall under either of these camps. Based on the public's consensus of the revamped maps, that much is clear." Rene Ritche at iMore has another take on what happened. Or, what continues to happen inside Apple: "This isn't a case of measuring a response to an unforeseeable situation twice and cutting it loose to the press and public once. This is a case of risk assessment and mitigation gone wrong, and of brand currency expended. Apple doesn't only have to fix maps, they have to fix the process that resulted in Tim Cook having to write this letter." While it's unusual for Apple of all companies to be so publicly apologetic, it's satisfying to feel that complaints are acknowledged and generating action within the company. Thanks, Apple. Now, fix this thing.
iPhone revenue greater than all of Microsoft's
The next iPhone is expected to launch next week and CNN Money decided it was a good time to run a list of superlatives related to the financial impact of Apple's smartphone. To start out with, Apple's iPhone business unit could be a Fortune 50 company on its own. That business unit is already bigger than all of Microsoft in terms of revenue. From June 2011 until June 2012, the iPhone generated $74.3 billion in revenue for Apple. By comparison, all of Microsoft's business units together generated $73 billion in revenue. CNN Money notes that if you take all of the revenue that Apple generates from the iPad, various iPod models, iTunes, the Mac and the 30 percent take of all apps sold, it still doesn't add up to the revenue stream from the iPhone. A year-by-year comparison of the impact of the iPhone to Apple's bottom line shows that in 2008 -- one year after the first iPhone was launched -- the device accounted for 9 percent of Apple's total revenue; now that figure is 53 percent. Of course, there's always the question of what "worth" means, as Forbes pointed out a few weeks ago. In this case, we're talking about sales, and that's a pretty fluid thing. Nokia's Lumia 920 could be a huge hit, for example, and the iPhone is no longer the "number one" smartphone according to one survey. Way back in Februrary Ed Bott did a breakdown of how Apple, Google and Microsoft make their money. Of course the iPhone was a major component of Apple's business, versus Microsoft's more distributed revenue streams, and Google's lopsided revenue stream (advertising). As MG Siegler points out, even if you took away the iPhone from Apple's chart, the remainder is still bigger than Microsoft's total business. That's significant. Apple is always good at showing off the numbers at its events, so we can count on even more amazing financial statistics next week.
How Apple's North Carolina data center got built
This week GigaOM took an extensive look at North Carolina and its many data centers. The fourth and final installment in this series focuses on Apple's new data center in Maiden, North Carolina and covers some of the early negotiations between Catawba county officials and the Cupertino company. Interestingly enough, Apple almost walked away from Maiden when the Catawba County Economic Development group tried to get the company to build its data center in a small mill building. You can read more about this background discussion on GigaOM's website and catch all four articles in the series here.
Apple responds to EPEAT move
Apple responded to the controversy surrounding its request to remove its products from the EPEAT green electronics registry. In a statement provided to The Loop, Apple representative Kristin Huguet confirmed the Cupertino company's commitment to the highest environmental standards and pointed out that "Apple products are superior in other important environmental areas not measured by EPEAT." You can read the full statement and Jim Dalrymple's analysis on The Loop's website.
