The firm believes that Google will pay Apple about $3 billion this year, up from $1 billion just three years ago, and that Google’s licensing fees make up a large bulk of Apple’s services business.
Apple has been touting its services business as a quickly growing segment of the company, noting that it expects that branch alone will soon be as large as a Fortune 500 company.
“Court documents indicate that Google paid Apple $1B in 2014, and we estimate that total Google payments to Apple in FY 17 may approach $3B,” Bernstein analyst A.M. Sacconaghi Jr. said. “Given that Google payments are nearly all profit for Apple, Google alone may account for 5% of Apple’s total operating profits this year, and may account for 25% of total company OP growth over the last two years.”
Bernstein sees pros and cons in the payments.
Sacconaghi said that Google might decide to back away from paying Apple any licensing fees if it feels confident enough that its search engine is so popular Apple won’t include any other option by default.
On the other hand, Sacconaghi said that Apple’s iOS devices contribute about 50 percent to Google’s mobile search revenue, which means Google might be too afraid to walk away from its licensing deal with Apple. In this case, it’s a win-win for Apple and Google.
Bernstein has an outperform rating on Apple with a price target of $175.
iPhone to launch much later in 2017 than expected
A new suply chain report claims that Apple is planning to use OLED for every iPhone model by 2019, with the company expected to adopt OLED panels for 60 million units of the iPhone 8 later in 2017, equating to around 40 percent of its total manufacturing run (via The Bell) [Google Translate]. Apple will double the adoption of OLED panels for the 2018 iPhone before completely migrating over to OLED-only models for 2019.
The same report claimed that both Samsung and Inteflex are currently gearing up production for flexible printed circuit boards (FPCB) for this year’s iPhone 8, with Samsung specifically beginning an expansion of its Electro-Mechanics plant in Vietnam to account for the increased Apple supply quota this year.
For the 2017 iPhone line, Apple is expected to stick with LCD panels for two of the iPhones — currently referred to as the “iPhone 7s” and “iPhone 7s Plus” — while making the “iPhone 8” its first-ever mobile device to include an OLED screen. Today’s supply chain report said that Apple will use three suppliers to produce OLED panels, and orders for each will be decided and placed when production is started around April or May.
The iPhone 8 is currently rumored to include an edge-to-edge OLED display with an integrated Touch ID fingerprint sensor embedded within the screen. The OLED display is widely agreed to measure 5.8 inches, while the primary area of user interaction will be 5.15 inches, and below that there will be a “function row.” The other two models are believed to keep the same aluminum design of current-model iPhones.
Apple could be forced to pay millions of pounds in extra taxes in the UK after losing a legal battle over whether its smartwatch straps are an accessory that should be taxed individually or part of the device.
Ending a months-long legal battle, a tax tribunal in London has ruled that the straps are “pieces of plastic” and an “accessory”, not part of the technology.
For years Apple has insisted the plastic straps, sold with its smartwatch but imported separately, are an integral part of the electronic product.
Products imported into the UK are subject to import duties between 0pc and 17pc, with electronics generally being duty free. Apple doesn’t currently pay import taxes on its smartwatches and smartphones.
The decision, which ratifies HM Revenue and Customs’ classification of the strap as an “other plastic”, means Apple could lose its import tax exemption, with HM Revenue and Customs being able to levy duties of 6.5pc on the £49 sport wristband.
The iPhone 8 (some claim it will be called the “iPhone X”), is going to be the most radical redesign of Apple AAPL -0.81%’s smartphone range to date. And now a major source has just revealed its biggest new feature and most painful drawback…
Nikkei, the world’s largest financial newspaper, has reported that Apple will launch three configurations of iPhone in 2017. Two of these are expected to be incremental updates on the iPhone 7 and iPhone 7 Plus (with iPhone 7S and iPhone 7S Plus branding), and an iPhone 8 with an all-new OLED display measuring a massive 5.8-inches.
This would mean the iPhone 8 has the largest display of any iPhone ever made and is significantly larger than any current mass-market smartphones (though the Galaxy S8 and Galaxy S8 Plus will change that). The good news for those worried the iPhone 8 will be too big is corroborating reports say Apple will shrink the top and bottom bezels to make it smaller than the iPhone 7 Plus.
Interestingly the news sees Nikkei reverse its previous position. In October, the paper claimed the iPhone 8 would sport a 5-inch display meaning the phone would sit between the standard and Plus models. But as new information has come in, there is a credible explanation for how this original report came about.
Again Kuo has the answer as he also claims the iPhone 8 will have a 5.8-inch display but only 5.15-inches will be usable. The rest of the space will feature a “function area” akin to the Touch Bar on the new MacBook Pro line which adapts to whatever the user needs based on what they are doing. This move will pave the way for Apple to remove the iconic home button.
This won’t be the only exciting feature to be cut from the iPhone 8, but it is shaping up to be a smartphone that will motivate customers to reach more deeply into their pockets than ever before. With Samsung about to dramatically up the pressure it also can’t come soon enough…