Covid-19 International Dashboard April 22

The Covid-19 case rate for 94 selected countries and the EU. Apple Mobility Trend provided for 55 countries.

Background color coding: 

  • Green: Late Stage (>50% post-peak)
  • Blue: Middle-Late Stage (~50% post-peak)
  • Orange: Middle-Early Stage (peaked)
  • Pink: Early Stage [or indeterminate] (pre-peak)
Red line is case rate in cases/day starting at 30 cases/day.
Black line is Stringency Index which is inverse of Apple Mobility Trends (lower bound means no change in mobility, upper bound is zero mobility).
All points are 7-day averages.
Click on images for higher resolution or download.

Sources: Cases data from European Centre for Disease Prevention and Control (ECDC) via Our World In Data. Mobility data is sourced from Apple Mobility Trends which tracks change in Apple Maps routing requests.

Covid-19 US Dashboard April 21

The Covid-19 case rates for 48 selected US States or Territories. All data is 7-day average.

Case rate is cases/day starting at 30 cases/day.

Link to full-size image: https://www.asymco.com/wp-content/uploads/2020/04/Screen-Shot-2020-04-21-at-3.14.00-PM.png

Color coding: 

  • Green: Late Stage (>50% post-peak)
  • Blue: Middle-Late Stage (~50% post-peak)
  • Orange: Middle-Early Stage (peaked)
  • Pink: Early Stage [or indeterminate] (pre-peak)

US States data is sourced from US CDC via The New York Times.

Covid-19 International Dashboard April 21

The Covid-19 case rate for 55 selected countries and the EU including Apple Mobility Trends for driving. All data is 7-day average.

Red line is case rate in cases/day starting at 30 cases/day.

Black line is Stringency Index which is inverse of Apple Mobility Trends (lower bound means no change in mobility, upper bound is zero mobility).

Color coding: 

  • Green: Late Stage (>50% post-peak)
  • Blue: Middle-Late Stage (~50% post-peak)
  • Orange: Middle-Early Stage (peaked)
  • Pink: Early Stage [or indeterminate] (pre-peak)

Download link for full resolution: https://www.asymco.com/wp-content/uploads/2020/04/Screen-Shot-2020-04-21-at-9.57.06-AM.png

Sources: Data is sourced from the European Centre for Disease Prevention and Control (ECDC) via Our World In Data. Mobility data is sourced from Apple Mobility Trends which tracks change in Apple Maps routing requests.

Covid-19 US Dashboard April 20 (Updated)

The Covid-19 case rates for 48 selected US States or Territories. All data is 7-day average.

Case rate is cases/day starting at 30 cases/day.

Link to full-size image: https://www.asymco.com/wp-content/uploads/2020/04/Screen-Shot-2020-04-20-at-10.21.00-AM.png

Color coding: 

  • Green: Late Stage (>50% post-peak)
  • Blue: Middle-Late Stage (~50% post-peak)
  • Orange: Middle-Early Stage (peaked)
  • Pink: Early Stage [or indeterminate] (pre-peak)

Sources: US States data is sourced from US CDC via The New York Times.

Covid-19 International Dashboard April 20

The Covid-19 case rate for 55 selected countries and the EU including Apple Mobility Trends for driving. All data is 7-day average.

Red line is case rate in cases/day starting at 30 cases/day.

Black line is Stringency Index which is inverse of Apple Mobility Trends (lower bound means no change in mobility, upper bound is zero mobility).

Color coding: 

  • Green: Late Stage (>50% post-peak)
  • Blue: Middle-Late Stage (~50% post-peak)
  • Orange: Middle-Early Stage (peaked)
  • Pink: Early Stage [or indeterminate] (pre-peak)

Download link for full resolution: https://www.asymco.com/wp-content/uploads/2020/04/Screen-Shot-2020-04-20-at-10.15.13-AM.png

Sources: Data is sourced from the European Centre for Disease Prevention and Control (ECDC) via Our World In Data. Mobility data is sourced from Apple Mobility Trends which tracks change in Apple Maps routing requests.

Lasts Longer (2.0)

About a year and a half ago in Lasts Longer I noted that “keeping iPhones in use” became a top priority for Apple’s design for sustainability. I considered this provocative because it prioritizes usage and users over units sold, in contrast to how the company was perceived by investors. This new focus was reinforced by the company’s dropping of unit shipments data and the addition of Services data including subscriptions count and gross margins.

Apple effectively transformed itself into a services company with customer acquisition, subscriptions (measured by average revenue per user) and retention/satisfaction as key operating metrics. The 1.5 billion active devices and ~1 billion active iPhones and 500 million paid subscriptions are the new data points rather than units sold.

To succeed with this new Lasts Longer strategy, one of the objectives should be that devices become more durable and their durability should in-turn result in more minutes of use and thus more return on initial purchase price. But how can we measure this? We don’t have precise data on the use time. We have some anecdotes but no official data. We do know the iOS operating system is now designed to work on older hardware but that does not give us a measure of what is in use.

Luckily we now have an indicator that can help: Bank My Cell published a new data set on various used phone prices. This is a gold mine.

The data consists of prices for about 220 used phone models that changed hands in 2019. The prices are given for the beginning of the year (earliest date when the model was sold) and the end of the year (latest date when the model was sold.)

It’s thus possible to see how various models from a number of companies changed in price during the year. The date of initial release of the phones is also given (though initial selling price isn’t. It’s a bit tricky to determine initial selling price because the model may have been sold for an extended period of time and discounted through that period.)

What we do have allows comparisons between different manufacturers to see, especially for recent (late) models, just how big the drops have been in prices.

I recommend reading the original post to see some of the comparisons between brands. In addition I chose to illustrate some of the differences with the graphs below.

These graphs show phone model prices at the beginning of 2019 (blue) vs. the end of 2019 (red). The models are not individually identifiable but they are shown by the year of introduction. So, in the case of the iPhone, the 2019 cohort (those released around September 2019) are the top line, then the 2018 group is shown in the second line and on down. Thus the oldest iPhones traded during 2019 were iPhones 5, initially released in 2012.

To read the graph, you can scan each line to see the gap between the red and blue triangles to see how much the phones roughly fell in value. The comparison above is between Apple, Google and Samsung.

Here are some patterns I noticed:

  • Google phones had larger drops during the year than equivalent iPhones. Just how much the drops were is listed by the original post: “Google lost an average of -51.68% between Jan-Dec 2019. The Pixel 3 (2018) was the fastest depreciating and highest value loss at -56.70% (-$267)”.
  • The overall picture of Samsung’s phones is hard to discern. Flagship Android phones ($700+) dropped in value roughly twice as fast as Apple’s. But the the overall picture is messy. Budget phones are mixed with premium and the average pricing seems to quickly go near zero.
  • iPhones have a more valuable “mid-range” for models more than 2 years old. Android phones fall hard in the mid range and cluster around zero quickly. This is the heart of the “old but valuable” proposition.

Depreciation rates might seem academic but depreciation is an indicator of a real perception of value and that in itself is a reflection of utility. Users are likely to pay for a used product only if they think it can still be useful in proportion to the price. New product buyers might pay for other things like prestige, status signaling or just wanting to be first. But used buyers are more mindful of what the product can do–they are less likely to benefit from signaling.

Analogously, the used car market often shows the underlying quality or reliability of a car model. If a luxury car plummets in value it means that it becomes a huge burden to late usage, usually due to servicing costs. In previous decades luxury cars were also durable cars but with complexity they became money pits.

In the used phone market hardware repair and maintenance are less consequential but there is a concern for software support, security and privacy. The serviceability of the battery, the camera quality and the fit and finish of the body matter.

Buyers are not stupid. The market speaks words of wisdom. A phone that is worth more will reflect more inherent utility. Remember that a phone is unlocked more than 80 times a day. If it has 4 years of use then it get unlocked 116,000 times. That’s not “uses” but unlocks. Actual usage in terms of taps, swipes, or glances could be triple that figure. There are phones on the list that are 7 years old. It’s not unreasonable to assume that a moderately well used iPhone has enabled a quarter million interactions.

Remember that phones are used all day, every day. At home and at work. In cars and in planes.

Even on weekends, and on holidays. And even when you’re “social distancing”.

In fact, the more physically isolated you are the more likely you are to rely on the phone as your social lifeline. In difficult times the product people turn to first and last isn’t one of luxury or frivolity. It’s a product that keeps you informed, connected, lets you help others and may even keep you alive.

It’s in difficult times that the true character of a product shines through. The smartphone, derided, mocked and blamed for all kinds of societal ills is what we turn to first to avoid getting ill.

Carry On

Exactly one month ago Apple reported their highest quarterly revenue ever. They also guided to growth of between 8.6% and 15.5% into the current (1st calendar) quarter. This guidance is illustrated as the right-most bar in the following graph:

Note that the growth is relative to the year-ago quarter. The quarter was almost a third over by the time the issuance of guidance but less than three weeks later the company withdrew their guidance. The company did not issue new guidance.

The reasons given were both a restricted supply and a disruption in demand due to the COVID-19 viral outbreak. That outbreak paralyzed China and in the 10 days since has come to threaten the world.

Apple was the first company to warn about the impact of the virus on its business but not the last. The market reaction was muted. Mysteriously, the market seems to be reacting to the outbreak at this later time even though the dynamics of the epidemic were foreseeable.

The question of impact on the business is still open but I’d like to reflect a bit on the impact of any number of possible disasters or “acts of God” on any business.

The greatest catastrophes in history were wars and pandemics. In the 20th century in particular there were two world wars and one large pandemic in 1918. Add to that a depression and you would think that century was cursed.

And yet, these crises merely delayed technologies. They did not eliminate them or the companies which introduced them. For example, the introduction of Television was delayed by WWII and the adoption of the automobile was paused. At the same time new innovations were introduced including plastics, radar and microwaves and jumps in manufacturing productivity. The 1918 flu was followed by the roaring 20’s and WWII by the post-war boom years. The 20th century came to be celebrated as the most innovative time in history, a time when standards of living and prosperity exploded.

It’s not prudent to ignore a pandemic but it’s not prudent to contemplate an apocalypse will follow. Demand deferred is not demand destroyed. Civilization is fundamentally able to absorb these shocks and it’s useful to look to history to see exactly how we managed to do so.

The Triumph of the Walled Garden

During 2016 Apple services revenues were $25.6 billion. In January 2017, just after the end of that year, Tim Cook said “We feel great about this momentum, and our goal is to double the size of the services business in the next four years”.

If Apple were to hit that target, during calendar year 2020, Apple’s services revenues should exceed $50 billion. In 2017 they were $32 billion, in 2018 they were 41.5 billion and so far this year they are 23 billion. If, as has been the case during 2017 and 2018 (see graphs below,) Apple were to maintain 30% growth in Services during the rest of this year they will have revenues of $51 billion in 2019; reaching the doubling tarted a year sooner than predicted.

Apple will have doubled Services in 3 years to a level equivalent to a Fortune 63 company (right behind Goldman Sachs).

Keep in mind that the reported revenues are not billings or what consumers actually spend. That figure is at a run rate of over $71 billion. You can see the difference between billings and reported revenues in the graphs above.

So what made this possible and what is the source of growth in the future?

As my estimates above show, the growth came from apps and licensing and other revenues. Apps include many third-party subscriptions and licensing includes Google TAC and other income includes Apple’s own subscription services and a few additional items like Apple Pay, AppleCare and iCloud.

What Apple is launching this year will boost this even further with TV+, Card, Arcade and News+. These are a new set of specific services that, apart from Card, will require subscriptions and will deliver Apple-specific content. Unlike previous Music and TV offerings, what Apple has embarked on is a high degree of involvement in the content creation process. These will be Apple TV shows, Apple video games and Apple-directed News feeds.

This is quite the watershed moment. Apple, a company dedicated to providing tools to content makers and content consumers, choosing to be involved in the lottery-like game of choosing and backing winners in creative works.

Can a company with good taste about devices and software successfully extend that capability to content? That seems to be the question many are asking: How good is Apple at creating hits? The process of hit creation is difficult but it’s not completely random. There are many individuals who have skills or taste. And Apple’s approach seems to be to hire people with such skills. These “executives” then proceed to attach people with great track records in hits and who may have the star power to attract audiences. It’s not a matter of complete guesswork. It’s actually the approach most “streamers” have: They hire studio executives, attach talent to projects and spread bets.

This is why there has been a rush by streamers to secure programs and A-listers. There might be a variety of subscriptions users are likely to pay for but there is a fixed number of bankable names in the business.

But let’s pause here to think more deeply about what is happening. Without much notice, we are seeing a content world where distributors are locking up talent and creating a studio model where production, talent and distribution and display are under one roof. This is exactly where the movie industry was in the so-called golden age of Hollywood. The era of the studio system. An era that ended with divorcement—the complete separation of exhibition interests from producer-distributor operations or the forced divestiture of theaters by production/distribution.

Another observation to be made is that the bundling and binding of content into specific distributors creates a walled garden effect. This extends beyond video content to games (a larger business than film, at least at the box office, see below) and to apps. Arcade games are Apple-exclusive. Many apps which depend on Watch, AR and other unique technologies become exclusive, and of course unique titles.

As far as consumers are concerned this might be just fine. There are very implicit lock-in effects of ecosystems, from UX muscle memory, switching costs for data, network effects from friends/family/co-workers in the same system. The extension of this to cultural content, news curation, music curation and privacy curation could be the comfortable default for many.

In this world-view the proposition Apple offers is very attractive. Look at the preference vacationers have toward packaged experiences. Look at the popularity of cruises. Look at the way features are packaged in cars. Look at meal delivery and the packaging of ingredients into something you can cook at home. Look at fitness and the packaging of instruction with the exercise venue. The examples are plentiful.

A garden is lovely after all. The walls are there to keep danger and chaos away as much as to keep you in it. The constraints simplify as much as they restrict. Though it may be contrary to some modular and interoperable utopias which paralyze with choice, we might well be experiencing a triumph of the walled garden.

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Apple Car(d)

The old cliche is that we were promised flying cars but ended up with x where x is something trivial or mundane. Perhaps the best “x” is “140 characters”. This statement is meant to de-value the technologies developed in the last few decades. Instead of building grand things, we build trivialities. The irony is that x is often wildly popular and ubiquitous. x also generates a lot of profits and is likely to change behavior. Indeed, the flying car alternatives are almost always better ideas.

Flying cars are an example of “extrapolated technology” where we take a trajectory of improvement and expect it to continue forever. x are examples of “market creating” technologies which create new behaviors and which allow more people to do more things that they could not do before.

The flying car dream comes from a century of improvements in cars, and airplanes. The idea that cars must continue to get better and flying must come to personal transportation. When they are faster than what roads and human reaction times can allow and when they have more space than we can fill and when they have more cupholders than we can drink from it’s time to look for a new domain–the sky–for them to enter.

The alternative is literally unthinkable to the extrapolator: that we might drive less or not at all.

The promise of super-fast computers on every desktop and every living room of the 1990s is countered by an acceptance of a computer in every pocket and a tablet in every living room in the 2010s.

So in many ways the grandest technological revolutions are a study in humility rather than ambition.

Humility as a business model or as an operating principle is one of, if not the most most powerful tools for a manager . The queen of the virtues is most elusive but most enabling.

And so here we are, the Apple Card has arrived. And the Apple car hasn’t. The contrast is deliciously ironic. The cynics are out and having their fun. The users are out ordering the product. The cycle repeats.

Except the Apple Card demands explanation. It’s not explained by Apple sufficiently. It sounds like a slightly easier credit card. Perhaps a bit easier to keeps tabs on, perhaps a bit easier to manage payments and easier getting bonuses. It sounds, well, easier.

But easier doesn’t rock anyone’s world, they say.

It’s just another card, they say.

How can this change anything?

Here’s the thing: follow the integration. First, Apple Card comes after Apple Pay, more than 4 years ago. Apple Card builds on the ability to transact using a phone, watch and has the support of over 5000 banks. Over 10 billion transactions have been made with Apple Cash. Over 40 countries are represented.

I am quite sure Apple considered their card entry at the same time they considered Pay entry. The extension to a credit instrument is only logical as an addition the the Wallet.

The emphasis is on convenience, ease of use, integration and assistance. It’s what a credit card should be if you invented it today.

The application process is easy. It’s designed for the iPhone. No delays, no paper, no signatures.

It promises “A healthier financial life” through help in understanding your spending and acting on it. The goal is not to keep users in debt but to keep them loyal. Think about the asymmetry here.

The partner, Goldman Sachs, is chosen for their willingness to also align on incentives.

But more than anything the release of the Apple Card brings into question what could be next. The Card may not have been on everyone’s mind four years ago when we first saw Pay.

Now the die is cast. Apple’s goals seem to include enhancing financial and physical health. These are mundane goals, perhaps.

Or perhaps not. What matters more?