Apple Bores the Street

ByDon

Apple’s quarterly financial results were basically boring for those Wall Street analysts. Yeah, what is exciting about $52.9 billion in sales and $2.10 earnings per share? The street expected another couple hundred million in sales but were pleasantly surprised by the extra $0.08 per share in profit.

Apple shipped 50.8 million iPhones which was down slightly from last year’s 51.2 million but if you take the first two quarters together, Apple shipped 129 million iPhones which is 0.79 million more than expected for the 6 months. Also Apple reduced channel inventory by quite a bit and that does not show up in the iPhone sales numbers (it was already accounted for). That is an enormous number of iPhones. All these rumors about the iPhone 8 certainly have cut into sales. No one wants last year’s phone if they think the new one will have better features.

Apple’s services business continues to grow and is a huge business on its own. With 18% growth year over year driven by the App tore. With services income at around $7 billion this sector alone is the size of some Fortune 500 companies. The other products category which includes things like Beats, Apple Watch and AirPods saw explosive growth with 31% increase year over year.

iPad sales continued to decline which is a common trend for tablet sales, however Apple did manage to sell 8.9 million iPads which represents about 83% of the whole tablet market for tablets over $200. The Mac business saw year over year growth with sales of 4.2 million Macs and an increase in the average sales price of Macs driven by the new MacBook Pros. It was good to hear Tim Cook say that Apple is “investing aggressively in its future”.

Of interest to shareholders and a good indication of the health of Apple, Apple increased its share repurchase authorization by $50 billion and declared about a 10% increase in the dividend paid to shareholders. Taken together Apple has returned over $211 billion to shareholders.

Apple’s guidance for the next quarter was pretty tepid. It is normally the slowest quarter of the year so Apple is projecting sales of $43.5 billion to $45.5 billion. This is a pretty good indication that new products like the iPhone 8 will probably fall into the later part of the year.

While Wall Street yawned a bit about the results, but I am much more bullish. Apple is seeing double digit growth in sectors that provide around a third of their revenue and that is not iPhone. Apple is spending a lot of money on R&D with spending in this quarter increased to $2.8 billion and around $5.7 billion for the first six months of the year. Apple’s product pipeline is at least well-funded and I can’t wait to see what’s next.

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  • Insulate!

    If I started to talk about insulation, what would be the first thing that comes to mind? A down coat? The pink stuff in the walls of your house? Something else? Actually, I won’t be talking about any of those things here. Within electrical engineering, insulation is sort of the less-glamorous sibling of all of the flashy electron goodness we normally talk about.

    We normally don’t think about insulation but it’s critical to both how all of our electronics function as well as our own safety. The opposite of an insulator is a conductor. Conductors conduct electricity, insulators insulate electricity. The difference isn’t so clear cut though because technically speaking, everything can be a conductor…if the voltage is high enough. I’m sure I’ve mentioned this in relation to other topics before but I think it’ll be worthwhile to really dig into it specifically here.

    In many previous articles, I’ve mentioned how voltage can be thought of as analogous to pressure in a water system. What creates the pressure in a water system though? Typically the pressure is created by some kind of gradient across which there is some difference in potential energy. Think of a water tower. Water is pumped high up into the tank at the top. While the water is sitting there, it has potential energy. If the pipe to the tank is opened, gravity will push the water down. Once the water dissipates at ground level, it has no more potential energy. As the water flows in the pipe, pressure will be exerted on the pipe walls, as well as at the end nozzle.

    Electricity doesn’t work exactly the same way because it’s not a fluid, but the key element is the potential energy gradient. We refer to this gradient as voltage in electrical systems. The higher the gradient, the higher the pressure. In our water tower, say we had a valve at the bottom of the pipe. That valve is able to withstand and hold back some amount of pressure, but at some point, if the pressure became great enough, the valve would fail. There is ??always?? some amount of pressure where the valve would fail. It might be really, really high, but it does exist.

    Electricity functions basically the same way. Insulators don’t allow electricity to flow, just like our water valve, but just like our water valve, if the pressure (voltage) becomes great enough, the valve (insulator) will fail. This property is something engineers pay very close attention to, in both design and safety aspects. A printed circuit board, for example, has lots of tiny wires placed very close to each other. Their functionality depends on the electricity being isolated to those wires and not jumping between wires. This doesn’t happen because the plastic substrate onto which the wires are etched is an insulator that doesn’t allow electricity to flow. Engineers may test circuit board designs by applying varying amounts of voltage to see where the insulation breakdown occurs to make sure that under normal operating voltages, the circuit will function normally.

    Obviously there are safety aspects to this as well. If you were working near open conductors, you might want gloves that would sufficiently insulate your hands from the electricity. These kinds of properties are known for all sorts of materials and conditions. Some materials (rubber, glass, air, Teflon, diamonds, wood) are very good insulators for normal uses. Some materials are just ok insulators (graphite, sea water), but then you start to switch back into things we commonly refer to as conductors such as copper, iron, tungsten, etc. Obviously for some voltages there won’t be a practical insulator available. Sometimes instead of trying to insulate against the full force of some voltage, engineers will channel the electricity elsewhere. Examples of this are lightning rods and faraday cages.

    As with so many things, it’s interesting to find that electricity is not merely insulators and conductors but the entire gradient of those materials.

  • Beware of Counterfeit Cables!

    Earlier this week I had a customer asking me about an inexpensive cable for their Mac. Their current charging cable had finally stopped worked and they were looking for a replacement. I honestly can’t tell you how many times over the years I have had to answer the question about what other option besides the Apple branded charging cable for their Mac, iPhone or iPad. The short answer is there are very few. When it comes to your MagSafe charger the answer is pretty straight forward. You absolutely want to buy the Apple charger. If your shopping on the internet or walk into a store and find a killer deal on a charger it’s very likely it’s a knock off and there are legitimate dangers with these too-good-to-be-true chargers.

    I’ve seen in our service department over the years a handful of Apple lookalike MagSafe chargers. It’s usually a minor detail in the manufacturing that tips us off it’s not authentic. The real problem with these chargers and iOS chargers is the risk of fire. Eventually many of us will end up with cables that need replacing. With both your computer’s MagSafe and your iOS charging cable a common failure is the wires becoming frayed and exposed. Once the wires become exposed you do want to replace them rather than trying to repair or just cover them with electrical tape. The electrical tape trick can work for a little bit, but you’re still at risk for a short and in extreme cases you can end up damaging your charging port or even worse cause the device to catch fire.

    When you are looking to replace your cables, there are alternatives besides the Apple Lightning or 30pin charger, but you want to make sure you can “identify a counterfeit or uncertified cable”:https://support.apple.com/en-us/HT204566 before making the purchase. Another tip for purchasing a non-Apple cable for your iOS device is to stick with a manufacturer you have heard of like Belkin or Griffin.

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    Lastly you can do a few things to try and extend the life of your cables as long as you can. Proper cable management is often not discussed. Some of us prefer to keep cables neat and tidy, others just throw them in a drawer and when we find a place to plug them in just make sure the device can reach the port. It’s very important to make sure that you don’t wrap your cables too tight and force tension right at the connector. I’m forever reminding my kids not to use their devices while charging in a manner that the wire right at the lighting cable is bent at a 90 degree angle. This will surely cause the cable to bend and fray in no time. It’s also important to disconnect the cable by grabbing it right at the plug verses just grabbing it from any old spot and tugging.

    Follow these quick tips and steps and you’ll be sure to continue safely charging your devices. Our charging cables go through a lot in a lifetime and they are ultimately fragile accessories.