Thursday, October 31, 2019

Data Sheet: How Apple pleased the Street

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October 31, 2019

Apple published a case study in the meaning of investor expectations Wednesday. In short, it beat them, despite its sales for the most recent quarter growing a puny 2% over the year-earlier period. Profits had dipped 3%, a showing that simply isn't the Apple of old.


So much is new. iPhones are becoming a smaller part of the mix. And Apple attributed its better-than-expected phone sales to having cut prices, particularly in China. The world's second largest economy is a bright spot, another new development.


Speaking of price cuts, it's an odd turn of events that Apple is competing so aggressively at the low end. Its services business is made up of tiny ka-chings, like selling songs and storage and subscriptions. Some of its lowest-priced gadgets—watches and headphones—are its strongest sellers. When Apple's TV streaming service launches this week, it will be the cheapest in the market, including the big-name services that are coming. Apple always was the high-price, low-market-share king.


None of this bothers investors, who seem relieved Apple simply has its act together.


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I shopped at an Amazon Go cashier-less convenience store for the first time this week. It's a great experience. You have to scan a code from your Amazon Shopping app on your phone to enter. Then, once you've picked your merchandise—food and drink are the only options—you simply walk back out through the same turnstile. A receipt arrives by email some hours later.


Amazon's web site says it currently has a total of 15 locations in four cities—Chicago, New York, San Francisco, and Seattle—with five more on the way. This is obviously a great way to shop. I was surprised for years that so few retailers adopted the checkout techniques Apple uses in its stores. Now I wonder how long it will take streetfront retailers to catch up to Amazon.


Adam Lashinsky


On Twitter: @adamlashinsky


Email: adam_lashinsky@fortune.com


This edition of Data Sheet was curated by Aaron Pressman.


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NEWSWORTHY


Invasion of the Bodysnatchers. In a surprise tweet storm (of course), Twitter CEO Jack Dorsey announced that Twitter would stop accepting any political advertising. "We believe political message reach should be earned, not bought," he explained. The move could pressure Facebook to copy the move, as the world's largest social network is still struggling with its policy allowing politicians, or even just people who say they are candidates for office , to lie with impunity. Hollywood writer Aaron Sorkin (who wrote The Social Network) penned an op-ed calling for Mark Zuckerberg to do better.


Young Frankenstein. The Department of the Interior grounded most of its fleet of drones, reacting to fears that the unmanned aerial vehicles with parts made in China might pose a threat to U.S. national security. Interior Secretary David Bernhardt said drones not currently being used for emergency measures‚ such as combating wildfires, would be grounded pending further review.


Psycho. This one's a true Halloween fright. Just as excitement was building that Apple's rumored 16-inch MacBook Pro would include a redesigned keyboard, word comes that, no, we're still going to be stuck with the horrible butterfly design of other MacBooks. Like getting a box of raisins while trick or treating. Blech.


Hour of the Wolf. Going back to his old high school, Microsoft co-founder and mega-philanthropist Bill Gates had many words of wisdom for the kids. "For the curious learner, these are the best of times," he told the gathered students at Lakeside School in Seattle during his visit earlier this month.


Get Out. Content moderators on social networks like Facebook have a horrible task and poor working conditions and, oh yeah, they don't get paid much, either. Now comes news that one of the top outsourcing providers of such services, Cognizant, will exit the business by the end of next year.


Little Shop of Horrors. In addition to Apple, there were also quarterly results from Facebook, Lyft, and Samsung on Wednesday. Facebook said revenue increased 29% to $17.7 billion, better than Wall Street expected. The social network's shares, already up 44% this year, gained another 4% in pre-market trading on Thursday. Lyft reported a 63% revenue gain, to $956 million, and raised its forecast for the year . Its shares, previously down 39% from its March IPO, also gained 4% in premarket trading. Samsung said its third quarter revenue fell 5% to $53.4 billion, as strong phone sales were more than offset by weak prices for memory chips.


FOOD FOR THOUGHT


As the political "techlash" against Facebook, Google, and Amazon rolls through Washington, D.C., one senator not running for president may lead the way. Missouri Republican Sen. Josh Hawley has shown he can draw bipartisan support for his legislative proposals, making him one to watch on the techlash beat, according to Recode reporter Emily Stewart. In a profile of Hawley, she examines how he's approaching the subject.


Hawley's position as an anti-tech crusader is getting him attention both inside and outside of his own party, on Capitol Hill, and in the boardroom. He represents a marked shift away from the laissez-faire attitudes that allowed companies such as Facebook, Google, and Amazon to flourish. He's seen a political opening to attack Big Tech and he's capitalizing on it. Silicon Valley should be nervous, not only because of Hawley himself, but because his rise could signal more politicians will emerge with a similar attitude toward Silicon Valley. One tech industry insider put it succinctly: "If you don't take him seriously or find him to be really smart, you're not watching the right television show."


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Content From Target

Meet the Next-Gen Startups Fresh from Target Incubator
How Target is empowering young entrepreneurs who are driving global change. 


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IN CASE YOU MISSED IT


Apple's 'Pro' Products May Be a Cash Grab, But Analysts Say They're What Customers Really Want By Don Reisinger


Artificial Intelligence Can Now Beat Nearly Everyone at Video Game Starcraft 2 By Jeremy Kahn


Will Social Media Buzz Help Decide the Oscars? By Paula Bernstein


Exclusive: The Makers of BarkBox Are Moving Into an Often Overlooked Space in Pet Wellness By Rachel King


With 'No Music for ICE,' 1,000 Artists Boycott Amazon Over Its Ties to Government Surveillance By Dan Reilly


Video-Streaming Subscribers Are 'Frustrated and Confused.' Here's Why By David Z. Morris


Apple TV+ Hits Friday. Its Series (Mostly) Miss By Isaac Feldberg


BEFORE YOU GO


Baseball fans could not have asked for a more thrilling finish to the World Series. Just as the momentum seemed to have swung in favor of the Houston Astros, those pesky Washington Nationals broke open a close Game 7 with six runs in the last three innings to take the championship for the first time ever. Nationals catcher Yan Gomes was seen stashing the baseball used to make the final out. Experts say it could be worth half a million dollars, in part because Nats fans are so excited to finally be winners. Let the bidding commence.


Aaron Pressman


On Twitter:@ampressman


Email: aaron.pressman@fortune.com



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