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Big Quarter for Apple, Record Share Price, Apple Laying Groundwork for a Huge Future

Too many articles simply don't get the emphasis right or leave out key issues entirely so, from the top down, here's what is shaping Apple's results over the recent quarter.

1) Far and away, Apple benefitted from Samsung's failure this quarter.  Once again, Apple executed with startling precision to keep quality products stocked, as needed.  This is something that so many manufacturers fail on.  Samsung was the biggest pothole but even Google has under supplied the Pixel with all models currently sold out. Clearly however, the epic fail is Samsung's inability to get the issue with it's batteries corrected.  A full product line was pulled for one whole cycle.  That is as epic as a fail can be.  Apple benefitted.  

2) Today, we also have to ask how corp tax change may help Apple.

3) Everything else Apple is doing is essentially on plan.  The iPad business is down -- expected.  We still don't know what a replacement cycle looks like for iPad.  Apple knows, we don't know.  Services are solid. Apps are solid.  The ecosystem is very very very solid and yet has so much more potential.  The Mac had a soft but decent showing.  Way down the list, the Watch business was not ever expected to be a big hitter and it's not.  But Apple is learning a lot with Watch and that's important.

"Being on plan" for Apple is like "Being on Plan" for Coke in the 1970's or any other major consumer Brand.  That is how to think about Apple.

As you know, I'm not a big fan of the newly revised MacBook line with the fewer ports.  I classify them as large screen ultra light products, not as Pro products.  That said, they will appeal to 80-90% of all users.  I just don't like the loss of the USB ports or SD card slot.  I use them ALL the time on my 2015 MacBook Pro.  To me, the big tell about how the current line is being recieved is how the older model sells post launch of the new model.  That will tell Apple all it needs to know about the importance of those ports to the segment of customers most impacted by the simpler chassis of the new model.  Not that Apple will re-introduce those ports even if there is demand for it.  Apple is pushing things forward now.

Within the MacBook range though, and this is a new realization, I am a massively huge fan of the idea of the enhanced touch bar.  

I don't really like the current implementation of it that much but I like the 'idea' of an iOS-based ARM chip helping do things for the MacBook while it's in power hibernate.  

The reason I like this? It's a feature that's very hard for the rest of the industry to copy.  Windows can't follow because Windows is not going to put an Android powered touch bar on a Windows PC.  Windows would have to come up with their own hardware and software solution and it would add so much complexity to current Windows laptop builds.  I doubt Windows and their hardware partners could do it and I doubt even more that they could do it well.  

And Google can't follow because Google does not have a desktop OS with a big following.  So, it's really a place where Apple can differentiate the Mac in a massive way AND continue to tie the Mac much more closely to the iPhone and other iOS devices.  This is a win.  This is Apple being as smart as Apple has ever been.

The enhanced touch bar is also a bow shot aimed at Intel.  It's says to Intel, 'We're going to use you less.  We're going to make a lot of things happen without you.'  

So, for these reasons, Apple is in a solid place.  Clearly, not everything will work out for Apple as well as this quarter did.  I don't expect Samsung to always faulter but, we also have to ask, how much was the reputation or Brand of premium Android handsets harmed by the problems with it's leader -- Samsung.  I believe there will be a significant hangover for Android and, even if some consumers continue to purchase Samsung, there is much less margin for error now than there was.  

It's an interesting time for Apple and the industry.  Much more interesting than expected for Apple given that the big product move was the Sept intro of an iPhone that's without a headphone jack and that's newly water resistant.  I saw that and immediately went and got a 6S Plus and I have not been disappointed.  I could even use a larger phone now that I've had the Plus.  I'm sure Apple knows this too.  Bigger things are coming.

- FW