During today’s earnings call covering the second fiscal quarter of 2019 (first calendar quarter), Apple CEO Tim Cook was asked about Apple’s settlement with Qualcomm.
While Cook declined to provide color on how this will affect Apple’s development plans in the future, he did say that Apple is satisfied with the resolution.
We’re glad to put the litigation behind us and all the litigation around the world has been dismissed and settled. We’re very happy to have a multi-year supply agreement and we’re happy that we have a direct license arrangement with Qualcomm that was important for both companies. We feel good about the resolution.
Apple and Qualcomm reached a settlement in mid-April and agreed to drop all litigation in multiple countries around the world. Apple made a one-time payment to Qualcomm and inked a six-year licensing agreement to use Qualcomm’s patented technologies.
While rumors have suggested Apple is going to add 5G in 2020, Apple itself has not confirmed those plans and Cook did not provide details on Apple’s 5G timeline when asked. He did, however, say that Apple aims to get new technologies into products as soon as it can.
We look at a lot of things on the different technologies and try to look at and select the right time that things come together and get those into products as soon as we can.
After Apple and Qualcomm announced their settlement agreement, Intel said that it was dropping out of the smartphone modem chip market entirely, with no plans to manufacture 5G chips.
Toyota hit the nail on the head with the all-new CH-R subcompact crossover — a flashy, sporty and nimble entry aimed squarely at millennial sensibilities. And it’s a good thing: In its second year on the market, CH-R remains a top leader for the brand in terms of sales gains over the year before.
Union Square Ventures, a venture capital firm known for early bets in Twitter, Etsy and Tumblr, has $450 million in capital commitments to plow into the next generation of technology startups.
The capital, which comes in just above the $429 million USV filed to raise earlier this year, is divided across two new funds: $200 million for its 2019 Core Fund and $250 million for the 2019 Opportunity Fund. The two funds are larger than their predecessors, which both closed on $175 million in 2016.
USV is expanding its partnership to manage the new funds. The firm announced today the hiring of Gillian Munson as a partner. Munson was most recently the chief financial officer at XO Media, a business responsible for several brands, including wedding planning site The Knot. Additionally, USV has promoted Nick Grossman, the firm’s former general manager of special projects, to partner. Grossman focuses on cryptonetworks and blockchain technology.
Founded in 2003 by Fred Wilson and Brad Burnham, USV has been careful in expanding its partnership. Munson and Grossman mark the seventh and eighth additions to its team of partners in its 15-year history. Most recently, Rebecca Kaden joined from Maveron to become USV’s first female partner.
Apple CFO Luca Maestri today said that Apple’s Wearables, Home, and Accessories category, which includes devices like the AirPods and the Apple Watch, set a new March quarter revenue record of $5.1 billion.
According to Maestri, AirPods demands continues to be “off the charts,” and Apple is “working hard to catch up with the incredible customer demand” for the earbuds. Earlier in the call, Apple CEO Tim Cook called AirPods a “cultural phenomenon.”
Last month we introduced new AirPods, the second generation of the world’s most popular wireless headphones. Demand has been incredible. This is nothing less than a cultural phenomenon. With a new Apple-designed H1 chip, the new AirPods deliver faster connect times, more talk time, and the convenience of hands free “Hey Siri.”
As for Apple Watch, it continues to be the best selling smart watch in the world, with three quarters of Apple Watch sales during the quarter going to first time Apple Watch owners.
The Apple Watch saw its best quarterly results for a non-holiday quarter, and Apple’s wearables business saw growth close to 50 percent in Q2 2019. Apple’s wearables business has now reached the size of a Fortune 200 company, which Cook said is “an amazing statistic” since it’s only been four years since the Apple Watch was introduced.
We’ve known for a while now that Apple was going to be putting more of an emphasis on services. As the technical leaps from one iPhone/iPad/Mac generation to the next become less dramatic, product revenue has started to shrink; in response, the company is focusing on driving forward on things like the App Store, iCloud, Apple Pay, Apple Music, and its soon-to-launch games and video offerings.
This shift is already playing out in the company’s financials. While product sales dipped a bit year-over-year — down from $51.3B in the quarter that ran from January to March 2018 to $46.6B in the same quarter of 2019 — revenue from the services business climbed from $9.9B to $11.5B.
In this fiscal Q2 quarter of 2018, Apple’s total revenue came in at roughly $61.1B; in the same quarter of 2019, it dipped to $58B. This works out to services accounting for 16.1% of Apple’s revenue in fiscal Q2 2018, but nearly 20% in fiscal Q2 2019. Apple CFO Luca Maestri says services now account for “one third” of the company’s gross profits.
A big part of Apple’s services business is monthly subscriptions — the things like iCloud, Apple Music, and Apple News that make money each month from the hardware they’ve already sold. Tim Cook says Apple now has 390 million paid subscriptions across its services. Cook didn’t dive into how that breaks down service-by-service, but that’s up roughly 30 million subscribers over last quarter. The company says it expects paid subscribers to surpass half a billion by 2020 (presumably fueled by the launch of its gaming/video services.)
President Donald Trump is working to designate the Muslim Brotherhood a foreign terrorist organization (FTO), the White House said on Tuesday, which would bring sanctions against Egypt’s oldest Islamist movement.