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Apple Q2 2015: Record $58B revenue, 61.1M iPhones, 12.6M iPads

Apple reported its second quarter 2015 financial results today, selling 61.1 million iPhones and 12.6 million iPads. The company posted quarterly revenue of $58 billion and quarterly net profit of $13.6 billion, or $2.33 per diluted share. In Q2 2014, Apple had revenue of $45.6 billion and net profit of $10.2 billion, or $1.66 per diluted share. Gross margin was 40.8 percent compared to 39.3 percent a year ago. International sales contributed to 69 percent of this quarter’s revenue.

For Q2 2015, Apple is providing guidance of revenue between $46 billion and $48 billion, and gross margin between 38.5 percent and 39.5 percent. Apple’s earnings call will begin at 5 p.m. Eastern Time, and can be heard live on the company’s investor website.

Apple releases second iOS 8.4 beta to developers

Apple has released its second beta of iOS 8.4 to developers, a release that continues to focus on Apple’s new Music app introduced in the original iOS 8.4 beta. Featuring a build number of 12H4086d, the release is also accompanied by a new Xcode 6.4 beta to support the new APIs and development environment. The release notes for this latest beta indicate both improvements and limitations in App Extensions, CarPlay, App Store, iTunes Store, MFi GPS accessories, Videos, and WatchKit, as well as with the new Music app. Notably, the list of limitations in the Music app remains the same as in the first beta, suggesting that the development process may be proceeding more slowly than expected.

Apple posts Apple Watch User Guide

Apple has posted the Apple Watch User Guide online in an advance of tomorrow’s public release of the new device. Designed as an interactive web guide, the site provides instructions on how to use the features and built-in apps on the Apple Watch, ranging from the basics of getting started and telling the time to using the wearable device as a remote control for an Apple TV or iPhone camera. The guide provides some insight into the details of many of the features on the Apple Watch.

Apple planning to release new iPod touch later this year?

Apple may be gearing up to release a new iPod touch model this year, according to a new report from Apple Insider. Citing “a source familiar with Apple’s future product plans” the report indicates that a new iPod touch would likely be a fall release, and may retain the same four-inch screen size as the current model, although that part of the information was less definitive. Based on the previous iPod touch release, it seems likely that a new iPod touch would feature specifications in line with older iPhones, rather than breaking new ground, although it’s unclear whether Apple would choose to align it with the 2013 iPhone 5s or the 2014 iPhone 6 in terms of design, features and capabilities.

While the first three iPod touch models saw annual updates, the fourth-generation iPod touch was released in 2010 alongside the iPhone 4 — and with the same A4 CPU — but received only the addition of a white model the following year when the iPhone 4S debuted. The fifth-generation iPod touch, originally released in 2012 at the same time as the iPhone 5, mimicked the general design and screen size of its iPhone counterpart but used the A5 processor from the prior year’s iPhone 4S. Apple made an unusual addition to the lineup in 2013 with a less-featured 16GB version, but then reversed course the following spring, releasing a new 16GB model that had feature parity with the larger capacity models, while dropping prices across the board. Throughout this, however, the basic specs of the fifth-generation iPod touch remained the same as when it first debuted, despite many hoping that a larger capacity model would appear, particularly in light of Apple’s elimination of the iPod classic and release of 128GB capacity iPhone models last fall.

Apple Watch pre-orders arriving tomorrow, Apple posts more Guided Tours

With the first pre-orders of the Apple Watch expected to arrive in customer hands tomorrow, Apple has posted more Guided Tours for the new device, covering topics such as Apple Pay, activity tracking, and workouts. Meanwhile, those customers who pre-ordered the Apple Watch immediately after it became available in the early hours of April 10 have begun receiving shipping confirmation emails suggesting that their devices will arrive tomorrow. Despite tomorrow being the “launch day” for the Apple Watch to become available to the public, the device will still not be sold directly in most stores, outside of a few “select destination fashion boutiques,” according to The New York Times.

Security flaw opens iOS devices to attack using fake WiFi hotspots

Researchers at Skycure have exposed an SSL certificate security flaw allowing them to create a ‘No iOS Zone’ where most apps on iPhones and iPads running iOS 8 will crash while connecting to the Internet, even crashing the devices themselves in some cases. While the exploit is normally triggered by users manually joining these rogue Wi-Fi networks, hackers can also take advantage of the WiFiGate vulnerability to create fake Wi-Fi networks with names that iOS devices on some carriers will automatically join — for example any iPhone on AT&T will join any nearby Wi-Fi network with the name “attwifi” without requiring any user interaction. Once the device is connected, either automatically or manually by the user, apps attempting to make a secure connection with a server will crash. Heavy use of the device while it is exposed to the fake Wi-Fi location can even cause the device’s OS to crash. In some instances that crash led to a repeatable boot cycle, rendering the device useless while within range of the fake Wi-Fi hotspot. Users can avoid the problem by disconnecting from the offending Wi-Fi network and generally avoiding connecting to suspicious free Wi-Fi networks, although in the case of carrier-defined Wi-Fi networks, the user may be required to move out of range of the Wi-Fi network entirely, as many of these carrier settings cannot be overridden. Skycure has reported the problem to Apple and speculates that iOS 8.3 may have fixed some of the underlying issues. [via 9to5Mac]

Apple releases its 2015 Environmental Responsibility Report

Apple has released its Environmental Responsibility Report for 2015, providing an update on the company’s progress toward becoming more eco-friendly during the 2014 fiscal year. The report emphasizes Apple’s use of clean energy sources like solar, wind, bio gas fuel cells and geothermal to power all of its U.S. data centers and 87 percent of those worldwide, but admits the company and its suppliers still emitted 34.2 metric tons of greenhouse gases last year, mostly from manufacturing processes. Apple is designing new buildings with more efficient lighting, air conditioning and plumbing to drive its carbon footprint lower, and is encouraging employees to cut pollution from their commute.

Apple’s new headquarters is being built with 95 percent recycled materials, and last week Apple announced a partnership with The Conservation Fund to conserve more than 36,000 acres of working forests in the hopes of producing packaging for all its products sustainably. The company is also running recycling programs in 99 percent of countries where Apple products are sold, diverting more than 508 million pounds of electronic waste from landfills since 2008. Apple stores accept any Apple product for recycling free of charge.

The report also discloses that Apple has removed toxins like PVC, brominated flame retardants, beryllium and phthalates from its products and has put pressure on suppliers to identify energy savings in their own facilities, which account for 72 percent of the carbon emissions related to Apple products. Once the devices leave the supplier, Apple says its focus on efficient charging, including power-efficient hardware and smarter power management software, is reducing consumers’ carbon footprint as well. Apple claims its devices far exceed Energy Star guidelines and estimates new Apple devices have reduced the greenhouse emissions directly related to Apple devices by 61 percent since 2008.

Apple Pay coming to Canada later this year?

Apple is currently in negotiations with Canada’s six major banks about a potential November Apple Pay launch, according to a new report from The Wall Street Journal. This would mark the beginning of the expansion of the service outside of the U.S., and would be expected to enable mobile payments for both iPhone and Apple Watch users, for both credit and debit cards, according to people familiar with the matter. The banks are reportedly open to an agreement, but are balking at Apple’s current fee proposals and are wary about the security vulnerabilities that U.S. banks experienced when the service was initially rolled out last year. The six major Canadian banks – RBC, TD Canada Trust, ScotiaBank, BMO, CIBC and National Bank of Canada — together account for more than 90 percent of retail bank accounts.

Most of these banks also comprise the primary stakeholders in the Interac Association — the organization responsible for debit cards and inter-bank transaction systems in Canada. Notably, since VISA and MasterCard only provide credit card services in Canada, a Canadian Apple Pay launch would need to expand to include support for Interac Flash contactless payment standards in order to be a viable debit card solution. The banks have reportedly formed a consortium in their dealings with Apple and hired a consultancy to “help develop a security protocol for Apple Pay.” Some of the report’s sources note that the Canadian banks may require Apple Pay to incorporate a “secondary authentication” system in addition to Touch ID, perhaps requiring customers to verify their cards with a PIN or log on to a mobile banking app before cards could be used with Apple Pay. The report was unclear, however, whether this would be a per-transaction point-of-sale authentication requirement, or whether it would simply provide extra security for initially adding a card into the Apple Pay system. Contactless payment card systems are already in very widespread use within Canada, so any implementation of Apple Pay would need to provide at least as seamless an experience as using a plastic card to be practical for consumers.

Report: Apple being uncooperative with antitrust monitor

Apple has “sharply declined” in cooperating with its court-appointed antitrust monitor, Reuters reports. Michael Bromwich was appointed to monitor Apple’s antitrust compliance policies after the company was found liable in conspiring to raise e-book prices. Bromwich reported this week that Apple has been objecting to providing information and is “inappropriately” attempting to limit his activities. Although Bromwich has had a strained relationship with Apple throughout the process, he reported to the court last fall that relations with the company had improved. His latest report, however, accuses Apple of taking a more “adversarial tone” in discussions, and in fact rejecting recent requests for interviews. Bromwich notes that despite this, he has interviewed Apple’s entire board and executive team, and credits the company with making progress in developing a “comprehensive and effective” compliance program.

While Apple’s appeal to the original e-book antitrust case remains ongoing, the company also filed a separate appeal earlier this year aiming to disqualify Bromwich, accusing the monitor of having been “overly aggressive” in seeking interviews with executives and holding private discussions with the Justice Department, as well as objecting to Bromwich’s fees.

L.A. school district seeking restitution over failed iPad program (Updated)

The Los Angeles Unified School District is looking to recover millions of dollars from Apple following the failure of an iPad-based curriculum program, the Los Angeles Times reports. Developed by Pearson, an educational consulting firm working as a sub-contractor to Apple, the $1.3-billion program was intended to provide iPads to every student, teacher, and school administrator. The devices began rolling out in the fall of 2013, however, the plan got off to a rocky start with declining political support, rising costs, and the resignation of the Superintendent who had spearheaded the initiative. Claims were later made that Apple and Pearson may have had an unfair advantage in the bidding process, leading to an FBI criminal investigation that remains in progress. The district suspended its contract with Apple last August.

Earlier this week, the Board of Education for the district held a closed-door meeting with its attorneys, authorizing them to look into possible litigation against both Apple and Pearson. According to district general counsel David Holmquist, new Superintendent Ramon Cortines “made the decision that he wanted to put them on notice, Pearson in particular, that he’s dissatisfied with their product.” Holmquist sent a letter to Apple on Monday making it clear that the district will no longer accept or pay for new deliveries of the curriculum and related equipment, or any services related to the project.

Update: The federal Securities and Exchange Commission has opened an informal inquiry into the project regarding the legal use of bond funds, the Los Angeles Times reports.

Apple partners with The Conservation Fund to protect U.S. working forests

The Conservation Fund has announced a partnership with Apple to conserve more than 36,000 acres of working forests — more than 32,400 acres in Maine and more than 3,600 acres in North Carolina. Apple will receive a “steady supply of sustainably harvested timber” for its paper and packaging. Lisa Jackson, Apple Vice President of Environmental Initiatives, posted on Medium that the company “is striving to supply 100 percent of the virgin fibers used in its paper and packaging from sustainably managed forests or controlled wood sources.” Jackson calls the initiative “the beginning of a worldwide effort” for the company.

In-store sales of Apple Watch delayed until at least June

Limited availability of the Apple Watch is now expected to continue into June, according to a new report from The Telegraph. The articles quotes an internal memo from Apple retail chief Angela Ahrendts in which she notes that lack of in-store availability of the Apple Watch is expected to “continue through the month of May” and directs Apple retail store staff to advise customers to order their watches online in order to receive “the model they want earlier and faster.”

Many of you have been getting questions asking if we will have the watch available in store on April 24 for walk-in purchases. As we announced last week, due to high global interest combined with our initial supply, we are only taking orders online right now. I’ll have more updates as we get closer to in-store availability, but we expect this to continue through the month of May. It has not been an easy decision, and I want to share with you the thinking behind it.

Ahrendts goes on to explain her reasoning, mostly in marketing language, describing the Apple Watch as an “entirely new category” and putting a positive spin on Apple’s new approach to “deliver the kind of service our customers have come to expect,” and that the Watch as an “object of self-expression” complicates Apple’s ability to deliver stock in stores with the number of band and design options available, as opposed to taking online orders. Notably, Ahrendts suggests that the current situation is an exception, and that Apple does not plan to launch all future products in this manner.

 

Apple adds WWDC scholarships to promote diversity

Apple has nearly doubled the number of scholarships for this year’s Worldwide Developers Conference in an attempt to bolster diversity, Re/code reports. The company is offering up to 350 scholarships to students age 13 or older and members of organizations working to promote science, engineering, technology and math education for women and minorities. CEO Tim Cook pledged to strive for more diversity after Apple’s diversity report released last April found the company predominantly made up of white males. Since then, Apple has donated $50 million to encourage more employment diversity in technology. A spokesman for the National Society of Black Engineers said his organization has been working with Apple for the past year to help its members learn more about STEM-related fields.

Samsung creates exclusive team to build Apple screens

Samsung has created a team of about 200 employees working exclusively on displays for Apple, Bloomberg reports. The team provides screens for iPads and MacBooks, aids in product development, and only shares information about Apple’s business within the group, according to people with direct knowledge of the move. Even after years of legal fights between the two companies, Apple is Samsung’s biggest external customer, with Samsung set to produce Apple’s A9 processor for the next iPhone. LG, a rival for Apple’s display panel business, also has a dedicated team focused on Apple.

Report: Apple acquires mobile imaging company LinX

Apple has acquired camera technology company LinX, CNBC reports. The price of the acquisition appears to be around $20 million, according to sources who informed Dow Jones of the deal. The Israeli company develops high-quality imaging hardware for integration into mobile devices, and aims to “put SLR image quality” into users’ pockets, according to a press release last year announcing the company’s successful development of “miniature multi-aperture cameras designed for mobile devices.” The release notes that the camera modules are significantly smaller than typical mobile camera hardware while producing better quality results than typical smartphone cameras through various innovative technologies. It seems likely that Apple intends to use the company’s assets to help improve next-generation iPhone cameras.

Apple releases ResearchKit to medical researchers

Apple announced today it has released ResearchKit – a software framework designed to help doctors and other researchers gather health data from patients using mobile devices – to medical researchers worldwide. Apps developed with ResearchKit to study asthma, breast cancer, cardiovascular disease, diabetes and Parkinson’s disease have already enrolled 60,000 iPhone users.

Apple is hopeful that making the open source framework publicly available will expand researchers’ ability to recruit patients for studies and greatly increase the frequency and accuracy of data collected from individual patients. “Studies that historically attracted a few hundred participants are now attracting participants in the tens of thousands,” said Jeff Williams, Apple’s senior vice president of Operations. ResearchKit apps access data from iPhone sensors like the accelerometer, gyroscope, microphone and GPS to gain insight into a participant’s activity levels, motor impairments, memory and more. ResearchKit also works with iOS 8’s HealthKit health and fitness apps – with permission from the participant, ResearchKit apps can access and use data from the Health app such as weight, blood pressure, glucose levels and asthma inhaler use.

Apple Pay timeline in China unknown after negotiations stall

Sources close to Apple’s talks with Chinese banks say a disagreement over Apple’s fees has stalled Apple Pay’s rollout to China, MarketWatch reports. Despite rumors that Apple would wrap up negotiations in March, problems with UnionPay — the only company that handles inter-bank payments in China — have kept Apple Pay support for out of the iOS 8.3 Chinese release last week. An unnamed UnionPay employee said the company hasn’t made a deal with Apple or set a timetable for reaching one. Chinese banks also balked at the 0.15 percent charge Apple takes from the standard 2 percent fee on credit card transactions and the half-penny Apple collects from debit transactions in the U.S. Apple has also hit snags rolling out Apple Pay in other countries as well, including the U.K.

Apple releases iOS 8.4 beta to developers, with new Music app

Less than a week after the public release of iOS 8.3, Apple has already begun the developer beta cycle of the next iOS update, with the release of the first iOS 8.4 beta to registered developers. As expected, iOS 8.4 appears to focus primarily on a redesigned Music experience to pave the way for Apple’s upcoming streaming music service, with a number of significant changes to the built-in Music app, paralleling some iTunes features such as Now Playing, Mini Player, and support for adding to and managing the Up Next queue.

The Music app redesign is apparently being overseen by Trent Reznor, the creative head at Beats Music, who has reportedly been working on a secret project at Apple since at least last fall. This first iOS 8.4 beta, featuring a build number of 12H4074d, is also accompanied by an Xcode 6.4 beta to support the new APIs and development environment, and notes about a dozen limitations with the new Music app at present.

It is expected that most of these are just issues related to the new Music app not being entirely finished in this first beta, and the app experience should improve through the remainder of the beta cycle.

Apple announces WWDC for June 8-12

Apple has announced its 2015 Worldwide Developers Conference will run from June 8 to June 12 at Moscone West in San Francisco. The event will feature technical sessions presented by Apple engineers and give developers exclusive access to the latest features of iOS and OS X. Select sessions from the event will be streamed online from the WWDC website and the WWDC app. Apple is expected to debut a new Apple TV featuring the long-awaited addition of an App Store at the event, along with a software development kit to get developers started on the necessary apps. Apple’s revamped music service will likely also be unveiled during the event. Tickets will be assigned via lottery, with applications being accepted here from now until 10 a.m. Pacific Time on April 17.

Report: Apple Watch Sport comes with three band pieces, not two separate bands

Despite the wording on Apple’s website, Apple Watch Sport doesn’t come with two bands, according to TechCrunch. Instead, the watch will come with three band pieces of the same color — one end with a fastener and two pieces that have holes, sized small/medium and medium/large to let users choose the appropriate fit. This development has thrown some cold water on sites like Bandswapper, which sprung up to let someone exchange an “extra band” which doesn’t fit their wrist for another band of the correct size.

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