Analysts mixed about Apple's prospects for Beats
Even after Apple confirmed long-standing rumors that it planned to acquire Beats on Wednesday, industry analysts lacked any harmony in their impressions of the deal, with some singing its praises and some cracking sour notes.Morgan Stanley came out in favor of the $3 billion deal, saying a possible acquisition of the popular headphones business and subscription streaming music service was justified because of its low risk but potential for high return. Taking in to account Beats' 30 percent revenue growth and gross margin that is likely to best Apple's, Morgan Stanley said it viewed the acquisition's valuation as fair, especially given the potential for further revenue growth from pairing Beats with Apple's global distribution network."Subscription music service could make the deal a home run, with every 1% penetration of Apple's 800M account base equating to $960M of revenue," Morgan Stanley wrote. "Apple believes Beats offers the right strategy for streaming music as it leverages both algorithms and 200 human curators to create playlists, which differentiates it from competitors."RBC Capital Markets was also positive on the proposed deal, noting that Apple will acquire access to a leading music subscription service and the company's high-margin hardware business, which the analyst firm estimates to be sustaining more than 70 percent gross margins. But another key will be the acquisition of creative management talent in the form of Beats co-founders Jimmy Iovine and Dr. Dre."In our view, the iTunes/music strategy, which has been challenged recently, could benefit from the new hires,"RBC Capital wrote. "Notably, Iovine was one of the first industry executives to anticipate the download business's decline and advocate for subscription and streaming services as music's future."While Wells Fargo Securities said it was willing to give Apple "some benefit of the doubt" based on its historical success, the analyst firm took a more bearish position.The analysts viewed the music-related acquisition as defensive and posited that "Apple should be focusing on more offensive assets to better position itself."RELATED STORIESApple finally confirms it's buying Beats for $3BApple iTunes head Cue and Beat's Iovine: Apple's going to put Beats on steroidsWoz on Beats: Apple's 'getting back to some cool roots'Noting that Beats' premium headphones business likely enjoys high margins, Wells Fargo Securities worried that the acquisition was a shortsighted effort to drive accessory revenue. The analyst said it saw more benefit in the opportunity the deal presented for growth in an ad business."However, we believe Beats lacks the scale Apple would need and, frankly, driving apps for plain old in-app banner ads is not the differentiation and innovation we expect Apple to bring to this model," Wells Fargo Securities wrote.Pointing out that the offer for Beats was by far Apple's acquisition, International Strategy & Investment Group also noted that the purchase price represented a little more than 2 percent of Apple's cash on hand. The analysts said they viewed the deal as a "head scratcher" but said there was potential for Beats' nascent music subscription service to give a boost to Apple's iTunes Radio offering. But in one of the odder concerns voiced Wednesday by analysts, ISIG suggested that Apple's new "spaceship" campus currently under construction would have to undergo a major architectural redesign to ensure talent retention. "Since 1996 and enacted through Proposition 215, medical marijuana has been legal in the state of California," the analyst firm wrote. "However, based on our knowledge, there are no plans to house a medical marijuana dispensary in AAPL's new 'spaceship' campus... Considering Dr. Dre's debut solo album in 1992 was called The Chronic (slang for powerful marijuana), AAPL may want to reconsider the construction plans."
iPad globe-trots, gets symphonic in new Apple ads
iPad globe-trots, gets symphonic in new Apple ads
Apple wants us to become well versed in the iPad Air's benefits. The company launched on Sundaytwo new ads for the iPad Air as part of its Your Verse campaign. The marketing push first launched in January with an ad that featured a snippet of a monologue by Robin Williams from "Dead Poet's Society." "The powerful play goes on and you may contribute a verse," Williams intoned in the first ad. Then he, and Apple, asked: "What will your verse be?" See alsoApple brilliantly waxes poetic in new iPad Air adApple’s iPad sales are not so magical after allCNET's take on the iPad Mini with Retina Display Apple is now answering that question with its new TV ads, slated to air during primetime viewing Sunday evening. Unlike the prior ad, the current spots don't feature any talking, aside from an example of a translation. Instead, classical music plays in the background as the subjects go about their daily lives -- using an iPad, of course. Like many of its ads, the new spots from Apple seem more like short films than marketing.One features Esa-Pekka Salonen, a classical music conductor and composer who works as the principal conductor and artistic adviser of the Philharmonia Orchestra in London and as conductor laureate of the Los Angeles Philharmonic. Salonen composes music using an iPad Air as he travels from place to place. Thesecond features Cherie King, a travel writer who also happens to be deaf. She uses the tablet as she jets across the world, taking photos, translating conversations, making FaceTime calls, and composing her blog posts. "iPad has allowed me to become a more adventurous and spontaneous traveler," King said on Apple's site. "And I'm just getting started." For both, Apple has created 30-second and 60-second versions. Users also will be able to learn more about the subjects on Apple's website and through iTunes. Esa-Pekka Salonen uses his iPad Air to compose music in one of the latest ads from Apple.Apple The ads come as Apple faces a bit of aslowdown in iPad sales. The company sold 16.4 million iPads in its fiscal second quarter -- an amount that would be amazing for many tablet makers but was a disappointment for Apple. The company had sold 19.5 million iPads in the year-earlier quarter, and analysts had expected it to sell 19 million iPads this time around. The iPad is Apple's second biggest money maker after the iPhone and accounts for about a fifth of sales. iPad sales have been erratic over the past several quarters amid tougher competition and market saturation. Apple posted its biggest period ever in the holiday quarter ended December 28, with sales of 26 million iPads. However, that's one of only two quarters (out of the past five) that iPad demand rose. Shipments of the tablet, including the larger-screen iPad and the iPad Mini, have averaged a quarterly decline of 4 percent year-over-year since the June 2013 quarter. It's clear that the blockbuster days of 50-percent-plus growth are over, but what's troubling is whether growth will cease all together. Apple will kick off itsWorldwide Developers Conference on June 2. However, the company isn't expected to launch any new iPads at the event, instead following its recent plan for releasing new tablets in the fall. Apple iPad AirSee full gallery1 - 4 / 14NextPrev
Apple wants us to become well versed in the iPad Air's benefits. The company launched on Sundaytwo new ads for the iPad Air as part of its Your Verse campaign. The marketing push first launched in January with an ad that featured a snippet of a monologue by Robin Williams from "Dead Poet's Society." "The powerful play goes on and you may contribute a verse," Williams intoned in the first ad. Then he, and Apple, asked: "What will your verse be?" See alsoApple brilliantly waxes poetic in new iPad Air adApple’s iPad sales are not so magical after allCNET's take on the iPad Mini with Retina Display Apple is now answering that question with its new TV ads, slated to air during primetime viewing Sunday evening. Unlike the prior ad, the current spots don't feature any talking, aside from an example of a translation. Instead, classical music plays in the background as the subjects go about their daily lives -- using an iPad, of course. Like many of its ads, the new spots from Apple seem more like short films than marketing.One features Esa-Pekka Salonen, a classical music conductor and composer who works as the principal conductor and artistic adviser of the Philharmonia Orchestra in London and as conductor laureate of the Los Angeles Philharmonic. Salonen composes music using an iPad Air as he travels from place to place. Thesecond features Cherie King, a travel writer who also happens to be deaf. She uses the tablet as she jets across the world, taking photos, translating conversations, making FaceTime calls, and composing her blog posts. "iPad has allowed me to become a more adventurous and spontaneous traveler," King said on Apple's site. "And I'm just getting started." For both, Apple has created 30-second and 60-second versions. Users also will be able to learn more about the subjects on Apple's website and through iTunes. Esa-Pekka Salonen uses his iPad Air to compose music in one of the latest ads from Apple.Apple The ads come as Apple faces a bit of aslowdown in iPad sales. The company sold 16.4 million iPads in its fiscal second quarter -- an amount that would be amazing for many tablet makers but was a disappointment for Apple. The company had sold 19.5 million iPads in the year-earlier quarter, and analysts had expected it to sell 19 million iPads this time around. The iPad is Apple's second biggest money maker after the iPhone and accounts for about a fifth of sales. iPad sales have been erratic over the past several quarters amid tougher competition and market saturation. Apple posted its biggest period ever in the holiday quarter ended December 28, with sales of 26 million iPads. However, that's one of only two quarters (out of the past five) that iPad demand rose. Shipments of the tablet, including the larger-screen iPad and the iPad Mini, have averaged a quarterly decline of 4 percent year-over-year since the June 2013 quarter. It's clear that the blockbuster days of 50-percent-plus growth are over, but what's troubling is whether growth will cease all together. Apple will kick off itsWorldwide Developers Conference on June 2. However, the company isn't expected to launch any new iPads at the event, instead following its recent plan for releasing new tablets in the fall. Apple iPad AirSee full gallery1 - 4 / 14NextPrev
Apple marketing chief jabs Android security on Twitter
Apple marketing chief jabs Android security on Twitter
Apple marketing chief Phil Schiller has been a semi-regular Twitter user since 2008, though mostly tweets about things like music, movies and sports.But that changed earlier today with a post linking to F-Secure Labs' latest quarterly Mobile Threat report, with a casual mention to "be safe out there." The 29-page report's (PDF) key finding is that malware on Google's Android is getting worse, in part because of the platform's brisk growth and a new variant of malware that spread using SMS."Android malware has been strengthening its position in the mobile threat scene," the report's executive summary said. "In the fourth quarter alone, 96 new families and variants of Android threats were discovered, which almost doubles the number recorded in the previous quarter."Apple's iOS, Blackberry and Windows Mobile were also targets for malware threats, but were typically a part of broader, multi-platform attacks, the report said. iOS has not been immune to security attacks, including recent exploits that allowed access to certain personal data through a secured lockscreen password. However it's been less prone to malware than rivals because there is no out of the box option to install software without going through Apple's App Store. Software that is submitted to Apple is scanned and goes through a human review before it goes live, a system designed to weed out malware. That system is not perfect though. Last June, security firm Kaspersky Lab discovered an app called "Find & Call," that turned out to be a trojan that uploaded a user's contact list to its servers. The app was yanked from both Apple and Google's digital stores, but not before some users downloaded it.Before the Find & Call incident, security researcher Charlie Miller published a proof of concept app that could grab unsigned code from third-party servers and add it to an app even after it was approved by Apple. Miller managed to slip it by Apple's security checks, though the move resulted in him getting his developer credentials revoked for a year. Schiller is not the only Apple exec to take to Twitter, an unusual habit for the very secretive company. He's joined by iTunes, iCloud and App Store boss Eddy Cue, who has published 33 tweets since early 2007. Apple's former iOS software chief Scott Forstall meanwhile has not tweeted once since joining the service in mid-2010, and continues to follow only one other user -- comedian Conan O'Brien. Be safe out there: f-secure.com/static/doc/lab...â€" Philip Schiller (@pschiller) March 7, 2013
Apple marketing chief Phil Schiller has been a semi-regular Twitter user since 2008, though mostly tweets about things like music, movies and sports.But that changed earlier today with a post linking to F-Secure Labs' latest quarterly Mobile Threat report, with a casual mention to "be safe out there." The 29-page report's (PDF) key finding is that malware on Google's Android is getting worse, in part because of the platform's brisk growth and a new variant of malware that spread using SMS."Android malware has been strengthening its position in the mobile threat scene," the report's executive summary said. "In the fourth quarter alone, 96 new families and variants of Android threats were discovered, which almost doubles the number recorded in the previous quarter."Apple's iOS, Blackberry and Windows Mobile were also targets for malware threats, but were typically a part of broader, multi-platform attacks, the report said. iOS has not been immune to security attacks, including recent exploits that allowed access to certain personal data through a secured lockscreen password. However it's been less prone to malware than rivals because there is no out of the box option to install software without going through Apple's App Store. Software that is submitted to Apple is scanned and goes through a human review before it goes live, a system designed to weed out malware. That system is not perfect though. Last June, security firm Kaspersky Lab discovered an app called "Find & Call," that turned out to be a trojan that uploaded a user's contact list to its servers. The app was yanked from both Apple and Google's digital stores, but not before some users downloaded it.Before the Find & Call incident, security researcher Charlie Miller published a proof of concept app that could grab unsigned code from third-party servers and add it to an app even after it was approved by Apple. Miller managed to slip it by Apple's security checks, though the move resulted in him getting his developer credentials revoked for a year. Schiller is not the only Apple exec to take to Twitter, an unusual habit for the very secretive company. He's joined by iTunes, iCloud and App Store boss Eddy Cue, who has published 33 tweets since early 2007. Apple's former iOS software chief Scott Forstall meanwhile has not tweeted once since joining the service in mid-2010, and continues to follow only one other user -- comedian Conan O'Brien. Be safe out there: f-secure.com/static/doc/lab...â€" Philip Schiller (@pschiller) March 7, 2013
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