Apple

Apple Violated Qualcomm Patent, U.S. Trade Judge Rules

26 March 2019

When it rains,

From The Wall Street Journal:

A U.S. trade judge recommended that some iPhones be barred from import on Tuesday after finding that Apple Inc. violated a patent held by Qualcomm Inc., handing the mobile-phone chip giant a victory in its long-running feud with its erstwhile business partner.

The decision from the U.S. International Trade Commission judge means that Apple, which has its iPhones assembled overseas before sending them to the U.S. and other markets, could be barred from selling iPhones that infringe on a Qualcomm patent covering strategies for conserving power and improving battery life. The judge’s two-page order didn’t specify which iPhone models it covered.

The decision by ITC administrative law judge MaryJoan McNamara, however, is subject to review by the full six-member ITC as well as by the Trump administration, either of which could change the findings and reverse the recommended ban. Presidents have vetoed ITC moves before, including in 2013 when the Obama administration prevented an ITC ban on the sale of some iPhones and iPads from taking effect after Samsung Electronics Co. won a case there.

. . . .

Qualcomm’s complaints against Apple—including another ITC case where a final decision was expected later Tuesday—are part of a world-spanning legal battle between the companies. The fight came to a boil in early 2017, when Apple sued Qualcomm in federal court in San Diego, alleging the chip maker extracted extortionate rates for patent licenses by leveraging its dominance in the modem-chip market. That case is set to go to trial next month.

The U.S. Federal Trade Commission also filed suit against Qualcomm in 2017, focusing on the chip company’s allegedly monopolistic practices. Qualcomm, which denies the claims and says its pricing practices are fair, has countered by alleging that Apple violated its patents in Germany, China, the U.S. and other jurisdictions.

. . . .

In a separate case brought by Qualcomm, a jury in San Diego this month found that Apple violated the same Qualcomm patent that the ITC found issue with in the case set for a decision later Tuesday. The jury awarded Qualcomm $31 million in damages for Apple’s violation of three patents in that case.

Link to the rest at The Wall Street Journal 

Wall Street Calls Apple Event a Dud

26 March 2019

From CNBC:

Analysts were left with more questions than answers about Apple’s new services that were unveiled at a press event.

. . . .

“Apple’s services reveal was materially different than we had anticipated,” said Goldman Sachs analyst Rod Hall. “With small calculated impacts from these, ‘other services’, we expect the focus to return to the slowing iPhone business post this event,” Hall said.

Link to the rest at CNBC

And iBooks?

26 March 2019

PG did a quick Google search and couldn’t find any mention of iBooks in Apple’s big “moving to services” announcement yesterday.

Is there any reason to think Apple is going to pay much attention to iBooks going forward? Anything Amazon should be worried about?

Apple Doesn’t Have Prime’s Number

26 March 2019

From The Wall Street Journal:

 Apple ’s extravagant unveiling on Monday of AppleTV+, its new video content streaming service, unveiled very little. Celebrities talked about their must-see shows without showing any clips. Apple executives trumpeted their plan to offer a bundle of content from different content partners without offering any details on pricing. So what to make of this newest entrant into the fiercely competitive and crowded streaming race?

Apple’s service will offer original shows in addition to content from companies like HBO, Starz, and Showtime. In that respect, it looks a lot like what consumers get on Amazon Prime—a mix of original and partnered content—curated by a tech company that has decided to maximize its current business by leveraging mass desire for incessant entertainment. For Amazon Prime members, however, viewing is free; Apple’s service almost certainly won’t be.

And does it make sense for the iPhone maker to be getting into content anyway? The company first put out its streaming box in 2007, but it has never commanded much market share. (Around 13% of connected TV users use the Apple box, according to eMarketer). The new service is mostly a way to draw more revenue out of Apple’s existing users.

That said, Apple is going to be writing big checks. The main point of its glitzy event seemed to be to showoff the talent it already has signed: names like Steven Spielberg, Oprah, Reese Witherspoon, Jennifer Aniston, M. Night Shyamalan and J.J. Abrams.

. . . .

If Netflix investors were worried, however, they didn’t show it. At the end of the big day, Apple shares were down 1.21% and Netflix’s were up 1.45%. Beneath all the glitz and fanfare, that may be the core takeaway: Apple is late to the game, and Netflix has an enormous lead. The newcomer also will be competing against media stalwarts such as Disney , Hulu and CBS. Consumers opt in and out of services with a few clicks, tuning in for a show on one service only to drop it after a few weeks in favor of another.

Link to the rest at The Wall Street Journal

Apple Felt like a Totally Different Company Today

26 March 2019

From Fast Company:

While I sat inside the Steve Jobs Theater watching Big Bird talk to a hand puppet on the stage, I realized Apple was not the same company I knew not long ago.

No new devices were announced. There were no slides filled with impressive specs or performance metrics. No oohs and ahhs. No “one more thing.”

Yeah, yeah, I know: Apple, under CEO Tim Cook, is becoming a services company to account for flagging iPhone sales growth. What we saw today, at Apple’s “It’s show time” event in Cupertino–maybe for the first time–is the public face of that new company.

Part of the reason the presentation felt so different is because it was as much about other companies as it was about Apple. It was about Apple putting an Apple wrapper on a bunch of content and services made by third parties.

. . . .

All these announcements came in the first hour of the presentation. With that much time left I wondered if Apple had some tricks up its sleeve after all. But no: It had simply reserved an entire hour to talk about its original video content, which it has branded “TV+,” and which won’t be available until next fall.

What followed was a string of Hollywood people talking about the shows and movies they’re making for Apple. The uneasy mix of Hollywood and Silicon Valley cultures was on full display. Reese Witherspoon, Jennifer Aniston, and Steve Carrell were there to boost a show they’re making about TV news personalities, but they came off like they were trapped under glass.

Steven Spielberg came out to a warm welcome and talked about his reboot of the Amazing Stories series for television. A dramatic video came on about how we desperately need more conversation among people with different viewpoints. Then the lights went down, and when they came up Oprah Winfrey was there.

. . . .

The question is the company’s identity. At Apple events we’re used to seeing people like Kevin Lynch (Apple Watch) and Craig Federighi (iOS) who you know live and breathe core “Designed in California” products.

Today the company made a big deal of announcing a bunch of third-party content and services, with only passing references to the hardware that made it famous. Should Apple really identify itself with products that its own creative hand never really gets close to?

Link to the rest at Fast Company

TPV isn’t a tech blog, but PG has worked with a variety of tech companies in the past and, although he’s a Windows guy, has always admired Apple’s sense of mission and used iPhones almost forever.

The successor of a talented and creative CEO has a tough job in Silicon Valley. After a quick mental review, PG thinks far more successors at significant tech companies have failed than have succeeded.

Steve Jobs took Apple through some perilous times, but he always pushed the envelope and announced interesting new products. Under Jobs, Apple certainly had some product failures, but it never seemed like a company that was resorting to lame strategies. When things got tough, Apple thought big.

As the OP reflected, after stumbling with the pricing/features of its latest iPhones, yesterday’s announcement seemed to represent, “We’ve got to do something! Let’s copy what other companies are doing, but use Apple branding. Apple has a great brand that we need to exploit.”

PG suggests that brand equity is a precious commodity that needs to be preserved and cultivated with impressive new accomplishments, fostering the assurance that customers can continue to receive great benefits from the company and its products. It needs to feel cool by the standards of its industry.

In the tech world, where real technology talent is always in short supply, newly-graduated engineers from top universities are often attracted to employers who promise the opportunity to work on the cutting edge.

For all of Tesla’s financial ups and downs and Elon Musk, its frenetic CEO, engineers working there feel like they’re inventing the future. Amazon has felt like a serious innovator for a long time and can attract tech and marketing talent based upon that reputation and the opportunity to work on something new and different. (PG hopes Bezos’ marital problems aren’t Amazon’s version of Jobs’ pancreatic cancer.)

If Apple’s reputation becomes, “The company is not what it used to be and shows no signs of turning around,” adverse consequences will appear from many different directions.

 

Walmart Tipped to Take on Ipad with Its Own Android Tablet

16 March 2019

From Slashgear:

Walmart plans to launch an Android tablet designed to compete with the cheapest iPad model, according to a new report. The sources claim Walmart’s tablet will be ‘kid-friendly’ and sold under the retailer’s ONN store brand. The company has confirmed plans to offer this tablet, but didn’t provide any official details about it, such as price and launch date.

Walmart already offers a number of electronics under its ONN brand, though they are primarily accessories like headphones. The company reportedly plans to focus on electronics and home items over the following year, at least according to alleged senior management presentations leaked by Bloomberg.

Among its alleged tablet plans is said to be a model designed for — or at least capable of being used by — kids. This model will supposedly undercut Apple’s cheapest iPad model, which is currently priced at $329 USD. It’s unclear whether the model will offer anything special as an attractive lure from Apple’s 9.7-inch slate.

. . . .

It’s unclear whether Walmart’s kid-friendly tablet will target older kids or come with the same protection features and parental controls as the Amazon Kindle Fire Kids Edition.

Link to the rest at Slashgear

Antitrust, the App Store, and Apple

28 November 2018

From Stratechery:

Yesterday the Supreme Court held a hearing in the case Apple Inc. v. Pepper. “Pepper” is Robert Pepper, an Apple customer who, along with three other plaintiffs, filed a class action lawsuit alleging that App Store customers have been overcharged for iOS apps, thanks to Apple’s 30% commission that Pepper alleges derives from Apple’s monopolistic control of the App Store.

There are three points to make about this case, and they are captured in the title:

  • First, the specific antitrust doctrine at question
  • Second, the question of whether the App Store is a monopoly
  • Third, what the very existence of these questions say about Apple

In my estimation, these three points move from less certain to more certain, and from less important to more important. In other words, whatever the Supreme Court decides matters less than what the very existence of this case says about the state of Apple and its future.

Antitrust and Standing

The question before the Supreme Court is whether or not Pepper et al. have standing to sue Apple for antitrust violations at all; in other words, the case — which was launched in 2011 — hasn’t even started yet. The Clayton Antitrust Act of 1914 stated that “any person who shall be injured in his business or property by reasons of anything forbidden in the antitrust laws” can bring an antitrust action, but in the 1977 case Illinois Brick Co. v. Illinois, the Supreme Court held that only direct purchasers of illegally priced goods had standing to sue.

The specifics of the Illinois Brick case are helpful in parsing out what makes the Apple case complex; specifically, the Illinois Brick value chain was very straightforward: concrete block makers (including the eponymous Illinois Brick Company) were accused of colluding to fix prices for concrete blocks, which were bought by masonry contractors; masonry contractors in turn submitted bids to general contractors for construction projects, which were ultimately paid for by the State of Illinois. The State of Illinois sued for damages, alleging that the higher prices resulting from the price fixing had been passed through to the State of Illinois.

. . . .

In this value chain it is obvious who the direct purchasers were: masonry contractors; to the extent the State of Illinois suffered harm it was indirect pass-through harm. Thus, the Supreme Court ruled that the State of Illinois did not have standing; if every party in the value chain were to sue, the infringing party could be subject to duplicative recovery for damages (and parsing out the share of damages would be extremely difficult).

Apple vs Pepper

The question in Apple vs. Pepper, then, is who is directly harmed by Apple’s alleged monopolistic practices. According to the plaintiffs, the value chain looks the same as the concrete block manufacturers:

In this case Apple is in between developers and customers; the plaintiffs explain in their petition:

Apple charges apps purchasers a 30% commission on each app sale (unless it is a free app). The price paid by purchasers for an app is the amount set by the apps developer, plus Apple’s own supra-competitive 30% markup, both of which are paid directly to Apple, the alleged monopolist, every time an app is purchased. Apple keeps the entire supra-competitive portion of the purchase price for itself and remits the balance to the apps developers. The apps developers do not sell their apps to iPhone customers or collect any payment from iPhone customers, and iPhone customers are the only purchasers in the entire chain of distribution.

The plaintiffs argue that this makes consumers “direct purchasers”, giving them standing to sue:

Since Illinois Brick was decided 40 years ago, courts throughout the nation have had no trouble applying its “direct purchaser” standing requirement to various factual settings, including cases in which some form of payment is made to an alleged monopolist prior to the monopolist’s sale of a product.

Apple’s argument is that this misrepresents the transaction; the company wrote in its petition:

There is no basis for Respondents’ argument that pass-through damages claims are permitted whenever there is direct interaction between the plaintiff and alleged antitrust violator. This argument openly exalts form over substance by turning entirely on the formal identification of a “direct purchaser” and prohibiting any “further inquiry into the specifics of a case.”

Rather, Apple argues that the value chain looks like this:

Specifically, the company argues that “Apple does not buy and resell apps”:

Respondents suggest for the first time that Apple “has adopted the role of a retailer functionally buying from developers as wholesalers and selling to iPhone owners as consumers.” But their complaint does not allege that. And Respondents have repeatedly acknowledged that only consumers buy apps; Apple does not. The Apple developer agreements cited by Respondents confirm this: developers “do[] not give Apple any ownership interest in [their] [a]pplications.” So Apple is fundamentally unlike a traditional retail store.

Rather, Apple acts as an “agent” for developers:

As Respondents note, [the Developer] Agreement confirms that “Apple acts as an agent for App Providers in providing the App Store and is not a party to the sales contract or user agreement between [the user] and the App Provider.” Thus, Respondents concede that the direct sale is actually between developers and consumers, facilitated by Apple as an agent and conduit.

Along those lines, Apple argues that developers set the price of their apps, which determines Apple’s 30% cut, and to the extent developers set prices higher to compensate for that cut they are passing on alleged harm to consumers — which means consumers don’t have standing to sue.

Link to the rest at Stratechery

PG says there’s nothing more bracing in the morning than a bracing dose of antitrust law. It tones up the mind and prepares it for broad gauge analytical work in any field.

Amazon Looking To Challenge Apple In Payments War

27 November 2018

From Seeking Alpha:

Amazon is aggressively pursuing market share growth in mobile payments. WSJ reports that Amazon is asking gas stations and restaurants to offer Amazon Pay options to customers. Amazon also will be increasing the presence in brick and mortar stores with whom it does not directly compete for retail sales. On the other hand, Apple also is looking to gain a decisive market share for its own digital wallet platform.

A recent Bloomberg report mentioned that Apple Pay is in second position, behind PayPal in number of active users using the digital wallet. However, Amazon has a significant benefit due to its online retail business, Prime membership and further growth in the brick and mortar space. Amazon also is investing heavily to increase the market share of Amazon Pay in international regions. As the mobile payments market matures, we should see two or three major players grabbing a big chunk of the market share.

. . . .

Amazon Pay has been around since 2007. However, Amazon has only recently started making aggressive investments to increase the market share of its digital wallet. It’s now asking brick and mortar stores with whom it does not compete to allow Amazon Pay options for customers. It’s not clear whether Amazon Pay will use QR codes or NFC technology which is used by Apple Pay. QR codes are generally preferred by smaller business owners as they can print and tape the codes without any big investments in NFC terminals.

Link to the rest a Seeking Alpha

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