Siri cofounder suggests Apple’s ambition and execution caused disappointment

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Apple’s release of its HomePod smart speaker and Amazon’s success with its rival Echo products recently reignited discussion over flaws in the digital assistant Siri, and one of Siri’s cofounders has explained why the feature is so disappointing. In an interview with Quartz, Norman Winarsky suggests that Apple may have given Siri an overly ambitious collection of responsibilities and hasn’t made the feature reliable enough.

Just after Apple acquired Siri from Winarsky’s company, he said he believed that Apple would use Siri to start another revolution but claimed not to know any specific plans. He optimistically expected that Siri would learn more about its users over time, predict what they needed, and become better at conversation — apparently to the point of eliciting classic Apple “surprise and delight” from users. But he says that element “is kind of missing right now,” as Siri has fallen short of his predictions.

Above: The original version of Siri, launched as a free iOS app before Apple acquired it.

Image Credit: Jeremy Horwitz/VentureBeat

According to Winarsky, Siri was originally designed to serve solely as an entertainment and travel concierge, and indeed the company’s short-lived iOS app offered only a handful of features. It had the ability to look up restaurants, movies, events, and local points of interest on request and to read the weather, call a taxi, check flight status, and dictate tweets to post on Twitter. After the acquisition, Apple decided to launch Siri as a full-fledged assistant for all areas of a user’s life, which Winarsky said was a bigger challenge that would clearly take longer to perfect.

The original vision for Siri was to do a few things “flawlessly,” for instance automatically handling a cancelled flight by offering you a route home by car or a hotel room ready to book for the night. Once Siri mastered the nuances of handling each specific task, it could be expanded to another task, growing organically. Instead, Apple radically expanded Siri’s list of capabilities and didn’t fully flesh any of them out. “They’re probably looking for a level of perfection they can’t get,” opined Winarsky. “These are hard problems, and when you’re a company dealing with up to a billion people, the problems get harder yet.”

Beyond the issues Winarsky cites, Apple’s dramatically heightened focus on user privacy certainly had an impact on Siri’s development. Rivals such as Google and Microsoft have leveraged user permission to search cloud-based data that their assistants can use to anticipate user needs, a step Apple refused to take because of privacy considerations. Instead, Siri relies heavily on the smaller subset of user data stored on the iOS device, to its predictive disadvantage. The article notes that between its greater access to data and superior problem-solving skills, Google Assistant has already surpassed Siri’s ability to navigate travel — just one of several areas where Apple had an early lead.

Apple – VentureBeat

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iPhone X shipments this quarter could be a big disappointment

Apple has reportedly reduced its number of iPhone X orders for the January-March quarter from a maximum 50 million to “20 million or fewer,” a new report claims. Further reductions are possible for the April-June quarter. The figures are having a knock-on effect on Apple’s suppliers. Samsung, which makes OLED displays for the iPhone, saw […]

(via Cult of Mac – Tech and culture through an Apple lens)

Cult of Mac

How Apple’s iPhone X can be the world’s best-selling phone and a Wall Street disappointment


As the world’s most valuable company, Apple faces unusual scrutiny when it comes to earnings. The company is tight-lipped in the best of times, so every utterance during its quarterly public earnings call is carefully dissected for the most minute of clues.

This time around, the bottom line is that the bottom line rocked: Apple posted record revenues for the holiday quarter. But it was the fate of the iPhone X that had analysts and journalists sifting the tea leaves to try to resolve a growing disconnect: On the one hand, reports had pegged the iPhone X as the world’s best-selling smartphone in the holiday quarter; on the other hand, numerous reports indicate that Apple was ramping down production of the device for the current and future quarters.

Which of these is true?

The answer, unsatisfying in a world that craves instant judgement, is that they are likely both true. And to make the muddled verdict even worse, it probably doesn’t really matter in terms of the company’s overall health.

Speaking generally, Apple’s earnings report for the recent holiday quarter was highly unusual and complicated. iPhone sales were down, but with an asterisk: This quarter had 13 weeks, rather than 14 weeks like last year. Yet … revenues still fell short of analysts’ expectations. Yet … the company still saw a big bump in iPhone revenue and average selling price. What we’re left with is multiple arrows all pointing in different directions.

Naturally, CEO Tim Cook offered a very straightforward analysis. The iPhone X is a huge hit. End of story.

He told analysts: “iPhone X was the best-selling smartphone in the world in the December quarter, according to Canalys, and it has been our top-selling phone every week since it launched,” adding that the “iPhone 8 and iPhone 8 Plus rounded out the top three iPhones in the quarter. In fact, revenue for our newly launched iPhones was the highest of any lineup in our history, driving total Apple revenue above our guidance range.”

No doubt this is 1,000 percent true. But still, what does it really mean for a device to be Apple’s best-selling phone? Less than it would appear at first glance.

Apple’s introduction of new iPhones this year was unique. First, because it introduced two new flagship phones, the iPhone 8 generation, and the iPhone X. But also because rather than trimming its lineup to 3 generations of phones, it decided to continue selling the iPhone 6s generation, along with SE, iPhone 7 generations, and of course, the new ones. With deeper discounts on older versions, Apple was offering some stellar deals on phones that are far from out of date.

This means a couple of things. First, iPhone sales are spread across a wider range of versions. That lowers the bar to being the best seller a bit. In addition, the iPhone 8 and 8 Plus went on sale in September, and so the initial rush of demand for the versions would have subsided by the time the iPhone X went on sale in early November.

No doubt, Apple still sold a lot of iPhone X units, the main factor in driving up the average selling price. The company said iPhone ASP increased to $ 796 from $ 695 a year ago in the holiday quarter. But with some versions going for more than $ 1,200, it wouldn’t take a gigantic number to skew that figure up.

Another nugget worth noting: Cook said supply has already caught up with demand.

“The team did a great job of getting into supply demand balance there in December,” Cook said. The question, of course, is whether that means Apple fixed any manufacturing issues, or whether demand just slacked off. Cook also said iPhone X continued to be the best-selling phone throughout January. But Apple doesn’t have a backlog of demand as it heads into the current quarter.

What about the stories floating around about how production of the iPhone X going down? In part, that’s a natural phenomenon. The big rush of sales for a new version normally tapers off after the holidays. This year, given no backlog, that will be even more true.

In addition, Apple CFO Luca Maestri explained that sales of the iPhone X will see the biggest slowdown this quarter, along with the iPhone 8s, which means the average selling price is going to take a bigger hit than usual.

“As we reduce inventories of these newest products, the overall ASPs for iPhone in Q2 will naturally decline sequentially by a higher percentage than we have experienced historically,” he said.

The result is that Apple guided to between $ 60 billion and $ 62 billion in the quarter, below analysts’ estimates of $ 65 billion. That means Apple’s revenue might only grow up to 17 percent from the same quarter a year ago — a “problem” literally every company on the planet would love to have.

But…

Depending on the actual ASP Apple expects, that could also mean the number of iPhones Apple sells in the quarter remains flat or even drops from the 50.76 million it sold last year.

In Q2 2017, iPhone sales represented 63 percent of total revenue. Assuming this held true for the current Q2 2018, that amounts to $ 39 billion for iPhone revenue out of the projected $ 62 billion revenue.

For Q2 2017, ASP for the iPhone was $ 655. That could put the low-end of iPhone sales this quarter at 56 million units. If Apple was still close to the $ 796 ASP from last quarter, that would imply 46 million iPhones sold.

Of course, the number is more likely to be in the middle, or just around the 50.76 million units from last year.

And this is likely what is throwing Wall Street analysts. The number of iPhones Apple has sold has been roughly flat over the past two years. Analysts had convinced themselves stretching back a year that the rumored iPhone X would trigger a “super-cycle.” This was what happened in fiscal year 2015, when Apple introduced the iPhone 6 generation, with its bigger screens.

The number of units the company sold in the holiday quarter that year soared 46 percent. It was such a rocketship that the iPhone 6s year would see the company’s first annual dip in iPhone sales. Things improved with iPhone 7, but revenue and units were still below the magic of 2015.

It’s clear Apple is going to see revenue go up for the current fiscal year 2018. But iPhone shipments may be roughly flat, or even down a bit, which has analysts, who love to love Apple, rationalizing new definitions of “super-cycle.” Maybe the super-cycle is not a one-year thing, but a three-year thing?

Maybe.

But what’s also likely is that there isn’t really any rumored catalyst in the near-term pipeline that would boost the number of iPhones sold. Surely the cost of the iPhone X will drop in the coming months, and that may tempt more buyers. But smartphones also last longer, so the rush to upgrade to new versions doesn’t have the same immediacy it did a few years ago.

The final twist in all of this is that none of it may matter to Apple.

The company’s making more money from selling the same number of smartphones. It’s seeing strong growth in services, as the economic leverage of its ecosystem continues to kick in. It owns the smartwatch market, such as it is. And it’s got the HomePod coming soon. The result is that the company continues to print more money than it knows how to spend.

The only real drama is whether shareholders will find that story satisfying and continue to ride. My guess is that with growing dividends and share buybacks and steady revenue increases, Apple won’t to be hearing too many complaints from investors for years to come.

Apple – VentureBeat

Why Investors Think iPhone X Is a ‘Disappointment’ (for Now)

In the months leading up to its November 3 launch, Apple analysts had prophesied that the company’s high end iPhone X would be a catalyst in reversing years of slow-but-steadily declining iPhone sales. And while initial demand for the flagship would indicate the company indeed has a winner on its hands, a slew of recent analyses appear to suggest that demand for the flagship could be wearing off now..

Citing “signs of lackluster demand at the end of the holiday shopping season,” Bloomberg News published a compilation of insider and analyst reports indicating a bearish outlook for iPhone X in 2018.

What Are They Saying?

Citing weaker than anticipated demand, Zhang Bin of Sinolink Securities Co. officially lowered his iPhone X sales estimates for this quarter, suggesting in a research note out this week that Apple may ship 10 million fewer than the the 45 million units he initially predicted.

“After the first wave of demand has been fulfilled, the market now worries that the high price of the iPhone X may weaken demand in the first quarter,” Zhang wrote.

Analysts with JL Warren Capital, LLC. appeared to echo those sentiments, suggesting that Apple could ship even fewer units: 30 million during the holiday quarter of 2017 and just 25 million during the first quarter of 2018.

Interestingly, the New York-based research firm indicated that its lowered estimates largely reflect “weak demand because of the iPhone X’s high price point and a lack of interesting innovations.”

“Bad news here is that highly publicized and promoted X did not boost the global demand for iPhone X,” the firm concluded in a research note to investors.

Cowen & Co. analysts, meanwhile, flat out suggested that Apple didn’t “add enough new technology into the iPhone X to justify a $ 999 price tag,” cautioning that the availability of lesser-expensive iPhones such as 7/7Plus, 8/8 Plus, and SE could be “filling the gap” left by consumers uninterested in iPhone X or its flashy TrueDepth camera.

Supply and Demand

Bloomberg’s analysis follows an earlier, Economic Daily News report, which claimed that Apple has decided to reduce its own iPhone X sales forecasts from 50 million units down to just 30 million during the first quarter of 2018.

Citing “unidentified supply chain officials,” Economic Daily News noted specifically that Apple’s iPhone manufacturing partner, Foxconn, has ceased recruiting new workers at its main iPhone production plant in Zhengzhou, China.

Shares of Apple (NASDAQ: AAPL) tumbled slightly last week following these reports, shedding about 4 percent of its value in one trading day prior to rebounding incrementally over the last week or so.

AAPL is currently trading at $ 173.02/share as of Thursday morning, which is up from their December 29th low of $ 169.23/share.

Spokespeople from Apple and Foxconn, respectively, declined to comment on Bloomberg’s report, with the latter indicating in an emailed statement to the publication that “company policy prevents it from commenting on such matters.”

A Brighter Future?

Even despite the ho-hum sales picture these reports paint, some analysts remain hopeful about the long term potentiation of iPhone X sales. Jia Mo, analyst with Shanghai, China-based Canalys said that Apple’s efforts to ramp up iPhone X production ahead of its launch ultimately resulted in a “fairly balanced” supply and demand for the flagship.

“The market will still hold high expectations for Apple’s 2018 products if Apple introduces more devices with iPhone X’s key features to cover a wider price range,” Mo added.

Fortunately, that may very well be the case for Apple in 2018, as multiple reports suggest the company has even bigger, bolder plans for iPhone X development in the year to come.

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Sega Forever… Amazing, or Amazing Disappointment? – The TouchArcade Show #312

This show starts quick and keeps rocking the whole way to the finish line. We kick things off with a listener email about the new Sega Forever games, and breaking down the whole timeline of hype teasing to release, along with what we think of the games sinks up the first half of the show. Other than that, we talk about two other games, the classic re-released puzzler Cash Cow: Anniversary Edition [$ 2.99] and Fidget Spinner: Journey of Secrets [Free] which we’re pretty sure there’s something more to… Additionally, as usual, we chat about some of the big news stories then call it a day!

Don’t forget to shoot us emails with any questions, feedback, or anything else relevant or irrelevant to podcast@toucharcade.com. We read ’em all, and love decoding messages written entirely in emoji. As always, you can listen to us with the links below… And if you like what you hear, please subscribe and/or drop us a review in iTunes. Much appreciated!

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