Kicking off Apple’s investor conference call following the company’s announcement of quarterly numbers for Q3 2016, Apple CEO Tim Cook reported that while the earnings numbers are slightly down from last year’s quarter, the results reflect stronger customer demand and business performance than Apple anticipated 90 days ago, and that there are several encouraging signs. Cook noted that revenue was near the high-end of Apple’s guidance range for the quarter, and gross margin was actually at the top of the guidance range. The global launch of the iPhone SE in this quarter was very successful, and Cook noted that demand for the new iPhone outstripped supply for most of the quarter, with additional capacity required to achieve balance as Apple enters the next quarter. Cook referred to initial sales data revealing that the iPhone SE has been very popular in developed and emerging networks, and that the percentage of iPhone SE sales going to customers who are new to the iPhone is greater than Apple has seen in several years. Apple had millions of first-time smartphone buyers in the June quarter, and Cook reported that switchers from other smartphone platforms accounted for the highest iPhone sales numbers Apple has ever measured.
Speaking about Apple’s services business, Cook stated that they saw strong increases in Apple Music, iCloud, and AppleCare, with a growth of 19 percent to a record $6 billion in services revenue, up almost $4 billion year-over-year to $21.3 billion in total. Cook explained that services revenue is expected to be the size of a Fortune 100 company by itself by next year, and it continued to be fueled by Apple’s active installed base of devices, making it clear that Apple is continuing to provide services with the goal of gaining ongoing revenue from existing iPhone users rather than relying on year-over-year hardware upgrades and purchases. Cook also highlighted the release of the 9.7” iPad Pro, noting that half of iPad Pro purchase are being bought for work purposes, and touched on the Apple Watch continuing to be the best selling smartwatch, ranking highest in customer satisfaction. Citing the recent launch of Apple Pay in Switzerland, France, and Hong Kong, Cook explained that Apple Pay adoption outside of the U.S. has been “explosive,” with half of Apple Pay transaction value coming from non-U.S. markets.
Apple reported its third quarter 2016 financial results today, with 40.4 million iPhones and 10 million iPads sold. The company posted quarterly revenue of $42.4 billion and quarterly net income of $7.8 billion, or $1.42 per diluted share. In Q3 2015, Apple had revenue of $49.6 billion and net income of $10.7 billion, or $1.85 per diluted share. Gross margin was 38 percent compared to 39.7 percent a year ago. International sales contributed to 63 percent of this quarter’s revenue. For Q4 2016, Apple is providing guidance of revenue between $45.4 billion and $47.5 billion, and gross margin between 37.5 percent and 38 percent. Apple’s earnings call will begin at 5 p.m. Eastern time, and can be heard live on the company’s investor website.
Researchers have discovered a number of flaws in the Osram Lightify lighting system that could leave a user’s WiFi network open to attack, ZDNet reports. In an email advisory, security firm Rapid7 said one of the worst flaws allows an attacker to “take control of a product” to launch browser-based attacks against a user or identify the home wireless network’s password. Where a home network’s password is as strong as the homeowner chooses to make it, the Osram bulbs use short, eight-character codes that can be easily cracked within a matter of minutes. Deral Heiland, principal security consultant at Rapid7, said Osram has indicated that it plans to fix most of the flaws his firm uncovered in the next round of patches, but it’s unclear if those fixes will fully resolve the security problems.
Chicago police have arrested six people in connection with “an organized criminal enterprise” using stolen credit cards at various Apple stores, the Chicago Tribune reports. The suspects were using identities and credit card numbers stolen from victims throughout the country to make fraudulent purchases, police said. The suspects, all of whom were from New York state, would fly into O’Hare International Airport, rent a car and visit local Apple stores to buy merchandise. Police successfully recovered more than $10,000 in stolen Apple products from the suspects, who were all charged with multiple felonies.
Apple is relaxing its controls on autoplay videos in Safari with the release of iOS 10, allowing silent or muted videos to start automatically. A post on the WebKit blog explains the rationale behind the changes as an effort to keep up with new display needs, as developers integrate more video elements into their sites. Some of those pages don’t work on iOS 9 due to user gesture requirements, so Apple is relaxing its restrictions. Silent or muted video will be allowed to play, while video with an audio track will load but be paused.
Apple has brought in one of its most highly regarded former executives to head up its secret automobile project, The Wall Street Journal reports. Bob Mansfield, who joined Apple in 1999 and was a top executive under Steve Jobs, lead the development of some of Apple’s biggest products, including the MacBook Air, iMac and iPad. After announcing his retirement in 2012 only to reverse course and stay with Apple working “on future products” just 2 months later, Mansfield moved from his post heading the company’s hardware engineering teams to lead a new group that later produced the Apple Watch. Mansfield made another public exit from Apple’s executive team in 2013, but earlier this month employees at the company began noticing all of the senior managers on the Project Titan car project were now listed as reporting to Mansfield. Neither Apple nor Mansfield responded to requests for comment about the move.
Following through on its pledge from earlier this year, Ford has announced its entire 2017 line of cars, SUVs, light trucks and electric vehicles will offer Apple CarPlay, with future, over-the-air updates via Wi-Fi to keep it up-to-date with the latest technology. CarPlay will work with Ford’s in-house SYNC 3 connectivity platform, making it “smartphone-ready” and providing access to Siri voice controls, Apple Maps, Apple Music, Phone, Messages and third-party apps like Spotify and Pandora. “Ford is not taking the traditional approach of introducing Apple CarPlay and Google Android Auto on a few piecemeal models or as an expensive option on luxury vehicles only,” said Jeffrey Hannah, Director of North America for global automotive technology research firm SBD. “The guesswork for consumers is over – if you buy any 2017 Ford vehicle with SYNC 3, you drive off the lot with both of these innovative technologies ready to go.”
Just to clarify, this refers to the retail release, not the launch event. To be even more specific, it should happen on Friday, Sept. 16th.— Evan Blass (@evleaks) July 23, 2016
Well-known leaker Evan Blass has sent out a series of tweets claiming the new iPhone will be released on Sept. 16, which would be slightly earlier than recent history. Apple released the iPhone 6s/6s Plus on Sept. 25 of last year — also a Friday, which is typical.
Meanwhile, German site Apfelpage has its own big prediction about the new iPhone, with its sources inside a Chinese manufacturer claiming the new device will be named the “iPhone 6 SE.” The source said packaging has already entered production under that name, but also claimed they had only seen information related to the 4.7-inch phone, shedding no light on how the company would handle naming its new 5.5-inch device, which at least some sources have claimed would be dubbed the “iPhone Pro.”
Two photos allegedly leaked by workers in the Chinese supply chain purport to show a new 12.9” ‘iPad Pro 2,’ Apple Insider reports. An anonymous source said the photos came from an Apple supplier currently working on an iPad Pro model scheduled to enter production in late September — but as noted, the images don’t provide much to verify their authenticity. While the pictures show devices bearing a previously unseen model number that is consistent with Apple’s numbering convention, the device identifier could have been forged. And even if they are legitimate, the display shows the device to have only 12GB of storage, which seems to hint at it being a prototype rather than a finished product, if anything. Improvements like a faster processor, better camera, and the addition of the True Tone display technology seen in the 9.7” iPad Pro would all seemingly make their way into a new 12.9” iPad Pro, but there’s been no word on a potential launch timeline at this point, as the rumor mill has been relatively quiet on the iPad front this summer.
Apple is planning to jump on board the fashion trends for the 2016 Olympic Games with a lineup of special edition Apple Watch bands representing the flags of fourteen of the major countries who will be participating in the Games. A new report in GQ reveals that the new limited-edition nylon bands will be sold exclusively at the Apple Store, VillageMall in Barra da Tijuca for $49 beginning in early August, and will include bands for the U.S.A., Great Britain, Canada, Australia, Brazil, China, France, Germany, Jamaica, Japan, Mexico, New Zealand, South Africa, and The Netherlands.
A new research note from Deutsche Bank (via Business Insider) reports that the next-generation iPhone will include a “Lightning-to-audio dongle” in the package rather than a set of Lightning-equipped EarPods. Although the research note confirms several other recent rumors about the upcoming iPhone, including the elimination of the 3.5mm audio jack in favor of a Lightning connection, it cites supply chain sources claiming that Lightning headphones will not be included in the package; however it’s unclear whether this means Apple will simply continue to include the 3.5mm EarPods of prior versions, or eliminate the headphones from the packaging entirely.
Former NSA contractor turned whistleblower Edward Snowden is designing a device to help prevent unauthorized monitoring of iPhone signals, Wired reports. The proposed device, which has been developed in cooperation with hardware hacker Andrew “Bunnie” Huang, is a case-like accessory that connects into the iPhone’s internals via its SIM card slot to monitor the signals sent to the iPhone’s internal antennas. The add-on would constantly check on whether the iPhone radios are transmitting, and Huang and Snowden suggest that it’s an “infinitely more trustworthy method” of ensuring that no unauthorized radio signals are being sent than simply using “Airplane Mode” which can be hacked or spoofed. By designing this device, which they’ve duebbed an “introspection engine,” Snowden and Huang are looking to provide strong privacy guarantees to iPhone users who would need to shield their iPhones from “government-funded adversaries with advanced hacking and surveillance capabilities,” such as reporters working in hostile foreign countries who want to shield their locations.
A detailed profile in The Information (via Macrumors) of three brothers allegedly working on Apple’s new car initiative, codenamed “Project Titan,” notes that the rumored 2020 launch date may be slipping to 2021 due to a number of challenges that the team has encountered. According to people “briefed about aspects of Titan,” the group has been struggling, and the January departure of Apple VP of Product Design Steve Zadesky, who was believed to be heading up the project since 2014, has not helped both in terms of direction and morale. Despite this, however, the project remains at an early stage, and with another several years of research and development ahead, it would not be unexpected for Apple’s roadmap to change even further — last fall the Wall Street Journal reported that the Apple Car was targeted to ship as early as 2019.
Corning has announced Gorilla Glass 5, the fifth-generation of the chemically-strengthened glass that has been used in iPhones, iPod touches, and iPads. The latest version promises to protect against even higher drops, and has been tested to survive 1.6-meter shoulder-height drops onto hard, rough surfaces up to eighty percent of the time — an improvement by a factor of four over competing glass solutions. Corning also notes that despite the improved toughness, Gorilla Glass still retains the same damage resistance, optical clarity, and touch sensitivity as prior generations. To date, Corning Gorilla Glass has been deployed in 4.5 billion devices worldwide across more than 1,800 product models and 40 major brands, and the company’s announcement notes that the new glass is “expected to be on product models from leading global brands later this year,” suggesting the possibility that it might make it into the next-generation iPhone. [via iPhone in Canada]
A new class action lawsuit has been filed in California alleging that Apple is not living up to the terms of its AppleCare+ service plan by providing refurbished service stock replacements to customers rather than new devices. The suit takes specific issue with Apple replacing damaged devices with refurbished devices, focusing on the clause in the AppleCare+ terms that state that devices replaced under the program are “equivalent to new in performance and reliability” with lawyers for the plaintiffs arguing that refurbished means “a secondhand unit that has been modified to appear to be new” and therefore can’t be considered to be equivalent to a new unit in durability or functionality.
A new report by Macrumors suggests that Apple may be behind the recent acquisition of Omnifone, a cloud-based music provider behind the MusicStation service as well as providing the foundation for mobile partnerships through companies including Samsung, Vodafone, LG, Blackberry, Sony, and others, powering Samsung’s Milk, Sony’s Music Unlimited and Blackberry’s BBM Music services. A report earlier this month in Music Ally indicated that Omnifone’s tech business and assets had been purchased by a “mystery buyer” in the U.S. for $10 million, and sources back in May of this year suggested to Music Ally that Apple was believed to be interested in the company. Despite earlier reports that Apple might purchase Omnifone for its patent portfolio, documents covering the sale note that the patent portfolio was excluded, as were all debts and investments, although the terms did include a “royalty bearing license” that the company claims will help it to determine the value of its patent collection; Omnifone holds a number of patents related to downloading music, digital rights management, and generating recommendations that would likely appeal to streaming music companies.
Update: Jim Dalrymple of The Loop notes that although the original report does indicate a “mystery buyer” of Omnifone, his sources have told him that Apple is not the buyer.
Apple has released the second public beta of iOS 10 through its Apple Software Beta Program. Corresponding to the third beta released to developers earlier this week, the latest public beta continues enhancements to Music, Maps, Messages, and News, the new lock screen, today widget, and notification system, and on-device intelligence for face, scene, and object recognition in the Photos app on 64-bit devices. iPhone 6s, iPhone 6s Plus, and iPhone SE users in the United States should also now be able to take advantage of the new beta transcription service in the Visual Voicemail app. Users who have already signed up for the Apple Software Beta Program should be able to log in and download the new versions now; users who haven’t signed up can do so at the same site.
Prime Minister Narendra Modi’s cabinet is finally clearing the way for Apple to open retail stores in India after a series of delays hampered the company’s plans for expansion into the country, Bloomberg reports. People familiar with the discussions said the cabinet is likely to approve a three-year exemption to the country’s requirement that single-brand retailers obtain 30 percent of their products’ materials locally, overruling the country’s Foreign Investment Promotion Board, which ruled in May that Apple had to comply with all of the restrictions. To justify the exemption, the government is making it easier for foreign companies like Apple to meet the criteria to be listed as a provider of “cutting-edge technology,” according to sources who asked not to be identified because they weren’t authorized to talk to the media.
Just a few hours after going live in France, Apple Pay became available for customers in Hong Kong as well. Apple’s website lists the Bank of China, Hang Seng Bank, DBS, HSBC and Standard Chartered as participating partners at launch. Users can link Visa, Mastercard and American Express credit cards issued by those banks to their Apple Pay accounts, with the company promising future agreements with BEA and HKT. Apple has been ramping up its efforts to expand Apple Pay in recent months, with a particular focus on Asian countries.
Apple is adding an additional incentive for Apple Store customers in the U.S. and U.K. to activate Apple Pay by offering a $5/£5 iTunes Gift Card, according to a new report by Macrumors. Customers making an in-store purchase will be asked by Apple Store staff whether they will be paying with Apple Pay, and customers who do not already have Apple Pay set up on their iPhones and wish to do so will be taken through the process by the Apple Store employee and receive an iTunes Gift card in return for setting up Apple Pay and using it to make their purchase. The promotion will be available for any purchase made in an Apple Store, regardless of whether the customer is purchasing an Apple product, third-party accessory, or even an Apple Store or iTunes Store gift card.