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Apples Rate of Change — The days of enormous iPhone growth may have reached its end

Summary: Apples Rate of Change — the idea that we’ll never see an iPhone sales quarter bigger than this one, or at least not much bigger. The days of enormous iPhone growth may have reached its end.

The reports of the iPhone’s death have been greatly exaggerated.

In the wake of Apple’s recent quarterly financial results report, there’s been a lot of talk about what happens if the company has truly reached the peak of iPhone sales — and what must come next in order for Apple to keep growing.

The iPhone is a once-in-a-decade (if not once-in-a-lifetime) product, and won’t be replaced on Apple’s revenue chart any time soon. And that’s okay, for a whole bunch of reasons.

What goes up… stays up

It’s easy to assume — in part due to language commonly used by growth-obsessed investors — that the iPhone is in free fall. Not so much: iPhone sales set a record last quarter. What’s actually concerning investors is the rate of change — the idea that we’ll never see an iPhone sales quarter bigger than this one, or at least not much bigger. The days of enormous iPhone growth may have reached its end.

If you’re comparing the iPhone’s life cycle to that of Apple’s iPod, there’s reason to be terrified: The iPod sold like gangbusters for a number of years, but its decline was drastic — to the point where it got removed from Apple’s financial reports last year. That’s not going to happen with the iPhone, for a simple reason: the iPod was made largely obsolete by the smartphone. And the smartphone’s not going anywhere, not for a very long time.

That means Apple’s iPhone business is probably going to keep contributing 150 billion dollars a year for the foreseeable future. (In the last four quarters, the iPhone brought in an average of 38.9 billion per quarter. In comparison, the Mac and iPad bring in five or six billion dollars per quarter. That’s a lot of money, sure, but the two products combined pale in comparison to the phone juggernaut.) It’s enough money to make Apple one of the biggest, most profitable companies on the planet.

Could the iPhone eventually fail? The future is promised to no one, but people are going to want an internet-connected device in their pockets until there’s something even better you can stick in your ear or pop on your eyeball or connect directly to your brain.

There’s money in the ecosystem

Apple focused a lot of energy this week on communicating how well it’s doing — and how much it’s growing — in terms of services revenue. That’s the budget line covering iCloud, iTunes, Apple Music, and the App Store.

The users of Apple’s one billion active devices are all spending money on digital goods and services. It’s potentially a huge growth opportunity for the company, and it will be interesting to see what other services Apple might introduce and how much additional revenue might be generated from its existing iPhone installed base — namely, us.

But beyond offering us more content to buy, the Apple ecosystem extends outward. Consider the Apple Watch: It’s essentially an iPhone accessory, since it only works with Apple’s smartphone. It’s another product that can be marketed to existing iPhone users, generating more revenue while also tying them more tightly into the Apple ecosystem. (When an Apple Watch user considers an Android phone, they also have to consider giving up their Apple Watch — making it potentially that much easier to stick with what they know.)

There’s still room for growth

The days of rapid smartphone sales growth may well be over, and while Wall Street may not be thrilled about this, it doesn’t mean the iPhone is in any danger of disappearing. Apple still thinks there’s room for future growth, and the company’s reasons seem reasonable to me. The rapid growth of the middle class in China is creating hundreds of millions of new consumers with money to spend on brands like Apple, and products like the iPhone. Apple’s weak position in India is generally seen as a negative, but it also means there’s a huge upside if the company figures out how to crack that market.

While those of us in the most industrialized nations have benefited from fast 4G LTE cellular networks for a few years now, those networks are still rolling out in India and other emerging markets. People in those countries will buy new phones to take advantage of LTE as it comes online, and that’s a big opportunity for Apple to sell iPhones.

And then there’s switching: Apple continues to suggest that there’s a constant flow of smartphone users from Android to iPhone. It’s hard to quantify those numbers overall, but at least from Apple’s perspective, there’s a growth opportunity simply in picking up Android users who are ready for a change.

Wait for it

Okay, so the iPhone’s pretty good for now. But what about the next big thing? How does Apple ignite future growth, and protect the products it already has?

Fortunately, Apple has many, many billions of dollars in cash from its past few years of profits. And the company is investing that money in researching the next generations of products. I’m sure some of that money is going into exploring what might replace a smartphone, whether it’s a Siri-powered device that plugs into your ear, or an augmented-reality visor, or who knows what else.

In terms of finding growth, we’ve all heard the reports that Apple’s exploring the possibility of building a car. Entering new markets is never easy, but it provides huge opportunity for growth. It’s the same principle as iPhone sales in India: Apple’s current share of the automobile market is zero, which means that the sky’s the limit when it comes to gaining new customers.

The smartphone era

I’m pretty confident that when we look back to the early parts of the 21st century, we will consider this the dawn of the smartphone era. Even from the perspective of 2016, the personal computer seems to rapidly be transforming into a footnote — a technological prelude to the creation of the smartphone. Tiny devices with massive computing power and an always-on connection to a global data network, living in our pockets — they have transformed the way people live around the world, from the richest countries to some of the poorest.

Apple doesn’t need to replicate the iPhone’s success with another product to be successful, which is good, because there may not be a product as successful as the iPhone any time in the near future. (Though I’d be happy to be proven wrong when the direct-brain implants come around in 2030.) People who are searching the horizon for the next big thing as hot as the smartphone are searching in vain.

We live in the smartphone era, and considering the slowing rate of growth in smartphone sales, so does everyone else. The introduction of the iPhone was the moment this era truly began. Apple has benefited massively from that, and will continue to for the foreseeable future.


Tech’s ‘Frightful 5’ Will Dominate Digital Life for Foreseeable Future

There’s a little parlor game that people in Silicon Valley like to play. Let’s call it, Who’s Losing?

There are currently four undisputed rulers of the consumer technology industry: Amazon, Apple, Facebook and Google, now a unit of a parent company called Alphabet. And there’s one more, Microsoft, whose influence once looked on the wane, but which is now rebounding.

So which of these five is losing? A year ago, it was Google that looked to be in a tough spot as its ad business appeared more vulnerable to Facebook’s rise. Now, Google is looking up, and it’s Apple, hit by rising worries about a slowdown in iPhone sales, that may be headed for some pain. Over the next couple of weeks, as these companies issue earnings that show how they finished 2015, the state of play may shift once more.

But don’t expect it to shift much. Asking “who’s losing?” misses a larger truth about how thoroughly Amazon, Apple, Facebook, Google and Microsoft now lord over all that happens in tech.

Who’s really losing? In the larger picture, none of them — not in comparison with the rest of the tech industry, the rest of the economy and certainly not in the influence each of them holds over our lives.

Tech people like to picture their industry as a roiling sea of disruption, in which every winner is vulnerable to surprise attack from some novel, as-yet-unimagined foe. “Someone, somewhere in a garage is gunning for us,” Eric Schmidt, Alphabet’s executive chairman, is fond of saying.

But for much of the last half-decade, most of these five giants have enjoyed a remarkable reprieve from the bogeymen in the garage. And you can bet on them continuing to win. So I’m coining the name the Frightful Five.
It’s not just because I’m a Tarantino fan. By just about every measure worth collecting, these five American consumer technology companies are getting larger, more entrenched in their own sectors, more powerful in new sectors and better insulated against surprising competition from upstarts.

Though competition between the five remains fierce — and each year, a few of them seem up and a few down — it’s becoming harder to picture how any one of them, let alone two or three, may cede their growing clout in every aspect of American business and society.
“The Big Five came along at a perfect time to roll up the user base,” said Geoffrey G. Parker, a business professor at Tulane University and the co-author of “Platform Revolution,” a forthcoming book that explains some of the reasons these businesses may continue their dominance. “These five rode that perfect wave of technological change — an incredible decrease in the cost of I.T., much more network connectivity and the rise of mobile phones. Those three things came together, and there they were, perfectly poised to grow and take advantage of the change.”

Mr. Parker notes the Big Five’s power does not necessarily prevent newer tech companies from becoming huge. Uber might upend the transportation industry, Airbnb could rule hospitality and, as I argued last week, Netflix is bent on consuming the entertainment business. But if such new giants do come along, they’re likely to stand alongside today’s Big Five, not replace them.
Indeed, the Frightful Five are so well protected against start-ups that in most situations, the rise of new companies only solidifies their lead.

Consider that Netflix hosts its movies on Amazon’s cloud, and Google’s venture capital arm has a huge investment in Uber. Or consider all the in-app payments that Apple and Google get from their app stores, and all the marketing dollars that Google and Facebook reap from start-ups looking to get you to download their stuff.

This gets to the core of the Frightful Five’s indomitability. They have each built several enormous technologies that are central to just about everything we do with computers. In tech jargon, they own many of the world’s most valuable “platforms” — the basic building blocks on which every other business, even would-be competitors, depend.
These platforms are inescapable; you may opt out of one or two of them, but together, they form a gilded mesh blanketing the entire economy.

The Big Five’s platforms span so-called old tech — Windows is still the king of desktops, Google rules web search — and new tech, with Google and Apple controlling mobile phone operating systems and the apps that run on them; Facebook and Google controlling the Internet advertising business; and Amazon, Microsoft and Google controlling the cloud infrastructure on which many start-ups run.

Amazon has a shopping and shipping infrastructure that is becoming central to retailing, while Facebook keeps amassing greater power in that most fundamental of platforms: human social relationships.
Many of these platforms generate what economists call “network effects” — as more people use them, they keep getting more indispensable. Why do you chat using Facebook Messenger or WhatsApp, also owned by Facebook? Because that’s where everyone else is.

Their platforms also give each of the five an enormous advantage when pursuing new markets. Look how Apple’s late-to-market subscription streaming music service managed to attract 10 million subscribers in its first six months of operation, or how Facebook leveraged the popularity of its main app to push users to download its stand-alone Messenger app.

Then there’s the data buried in the platforms, also a rich source for new business. This can happen directly — for instance, Google can tap everything it learns about how we use our phones to create an artificial intelligence engine that improves our phones — and in more circuitous ways. By watching what’s popular in its app store, Apple can get insight into what features to add to the iPhone.
“In a way, a lot of the research and development costs are being borne by companies out of their four walls, which allows them to do better product development,” Mr. Parker said.
This explains why these companies’ visions are so expansive. In various small and large ways, the Frightful Five are pushing into the news and entertainment industries; they’re making waves in health care and finance; they’re building cars, drones, robots and immersive virtual-reality worlds. Why do all this? Because their platforms — the users, the data and all the money they generate — make these far-flung realms seem within their grasp.

Which isn’t to say these companies can’t die. Not long ago people thought IBM, Cisco Systems, Intel and Oracle were unbeatable in tech; they’re all still large companies, but they’re far less influential than they once were.

And a skeptic might come up with significant threats to the five giants. One possibility might be growing competition from abroad, especially Chinese hardware and software companies that are amassing equally important platforms. Then there’s the threat of regulation or other forms of government intervention. European regulators are already pursuing several of the Frightful Five on antitrust and privacy grounds.
Even with these difficulties, it’s unclear if the larger dynamic may change much. Let’s say that Alibaba, the Chinese e-commerce company, eclipses Amazon’s retail business in India — well, O.K., so then it satisfies itself with the rest of the world.
Government intervention often limits one giant in favor of another: If the European Commission decides to fight Android on antitrust grounds, Apple and Microsoft could be the beneficiaries. When the Justice Department charged Apple with orchestrating a conspiracy to raise e-book prices, who won? Amazon.

So get used to these five. Based on their stock prices this month, the giants are among the top 10 most valuable American companies of any kind. Apple, Alphabet and Microsoft are the top three; Facebook is No. 7, and Amazon is No. 9. Wall Street gives each high marks for management; and three of them — Alphabet, Amazon and Facebook — are controlled by founders who don’t have to bow to the whims of potential activist investors.
So who’s losing? Not one of them, not anytime soon.
JANUARY 20, 2016

Farhad Manjoo


Moving from Brand Loyalty to Experience Loyalty

Huawei at Mobile World Congress 2015 Barcelona

Huawei at Mobile World Congress 2015 Barcelona

Chinese telecoms giant Huawei posted an eye-popping 70% growth in 2015. It is now beating HTC and Sony when it comes to market share in Europe and is third only to Apple and Samsung when it comes to global smartphone sales.

Huawei’s growth is another indication of how Chinese companies are successfully moving away from their traditional strategy of producing cheaper products to attack the low-end of the market.


The world of smartphones, tablets, smart watches and connected devices of the internet of things is the new battleground to provide digital services. And Huawei has quickly announced itself as a serious player in it. Last year’s success was built on a strategy that rival Western firms have excelled in – marketing, brand building and customer service.

The race to engage

Existing brands such as Blackberry and Sony are already engaged in competitive marketing in both product and customer engagement to grab a piece of the large but finite customer base, so Huawei’s rapid rise to overtake them is very impressive. Huawei increased its global share of the smartphone market from 6.8% in 2014 to 9% in 2015 – a massive 50% gain compared to Apple’s growth of 27%.

It’s a crowded android market. TechStage, CC BY-ND

It suggests Huawei now understands how to play the smartphone market. New organisational and workforce strategies that have a laser focus on a customer-first mindset, tightly driven by the needs of the local market, have been put together. In a crowded price-sensitive android market this matters greatly where choice and brand awareness are critical.

Just competing on product functionality and a brand name is not enough when the nature of “smart” means you have connected consumers and feedback on social media is instant. Huawei understands that the mobile market is now all about the customer service experience and no longer just a telecoms commodity. Getting hold of the consumer and personalising the digital world for them with a good experience and price point that fits their needs and lifestyle choices is also critical.

Huawei is a prime example of a modern commercial mindset emerging from Chinese industries. Its marketing embraces local markets and they aggressively target consumers with sponsorship deals that include a host of big football clubs across Europe, including Arsenal, Paris Saint-Germain and AC Milan. Plus, their product portfolio spans the complete modern telecoms provider from hardware to software.

Huawei is going head to head with Apple. Kārlis Dambrāns, CC BY

Three ways to succeed

Customers cannot be taken for granted in this tough market. History shows that customers lack pure brand loyalty – they are more loyal to the experience, the community and ecosystem of services that best fits their needs. With so much choice out there, it is more about listening and socially engaging with the customer that is key.

At least three key strategies seem to be emerging in the growth of the telecoms players in the new mobile, wearables and connected internet of things services.

  1. A strong focus on “customer first” philosophy from the CEO down through the whole organisation to effectively manager customer experience 24/7.
  2. Using third parties to sell your products and a service that adds value and extends penetration into new markets. Huawei has a partner programme that drives sales across its portfolio. Recent awards in Asia in 2015 follow expansions into Australia in 2011 and similar regional strategies across Latin America, the Middle East and Europe. This federated supply chain model allows companies to extend their workforce and has accounted for more than 55% of Huawei’s growth from these third party sales. It is increasingly essential for scaling up sales regionally.
  3. Embracing international standards to get into thought leadership positions. For example by joining The Open Group, a major software standards consortium, and its Digital Business and Customer Experience (DBCX) workgroup helps Huawei define initiatives on connected customer and product design. Taking part in these kinds of groups enables firms to raise their game and influence in new markets by getting smarter in the way they interact with existing and potential customers and partners. It can then be translated into improving working practices – from managing the supply chain to service delivery – across the board.

What Huawei has done well is realise that consumers are always connected. Companies that exploit this will start to gain more ground in the battle for owning the digital market. It requires more than the specific strategies, but thinking holistically about how to transform to a digital operating model in this new world of connected things.


Money Moves From Warren Buffett

Want to end 2016 with more money than you started it with? Here’s how.


IMAGE: Getty Images

Will 2016 be the year you start building real wealth? It can be if you set your mind to it. Every year, the personal finance site GOBankingRates asks the world’s most famous financial experts for their tips for the coming year. Here are some of the best–which you can do no matter how much or how little money you have at the moment. Follow this advice and you’ll end 2016 with more money in the bank (or investments) than you have now.

These are the seven best tips from the full list on how to save money:

1. Never lose money.

This is one bit of wisdom that Warren Buffett likes to repeat. He puts it this way: „Rule No. 1: Never lose money. Rule No. 2: Never forget rule No. 1.“ What does this actually mean? Especially coming from the Oracle of Omaha, who has taken some fairly public losses on some very big investments himself–while remaining one of the most successful investors ever known?

Interpretations differ but I think it means to carefully consider the down side of any investment and to avoid investing in anything that doesn’t inspire high confidence in the value of the investment and that you don’t have a thorough understanding of. (This is why Buffett has often said he doesn’t invest in tech, and when he broke that rule by investing in IBM, he broke his rule about never losing money as well.)

2. Build a carefully balanced portfolio.

Angered by the losses ordinary people incurred due to banker misbehavior in the financial crisis, Tony Robbins went on a mission to learn what he could about finance from the best minds in the business. His advice is to create a mix of investments that adheres to the following four principles: Never lose money (see above); find investments which offers potential rewards that are greater than potential risks; create a tax-efficient portfolio so you get to keep your money instead of having to give it to the government; and diversify your investments. Do that, he says, and „you’re protected no matter what.“

3. Save. Any amount.

Bestselling author and analyst Whitney Johnson advises people to invest–no matter what. Even saving a few dollars a week can amount to a surprisingly large amount of money if you do it over many years. And to be safe in case of an unexpected financial setback, she says, you should have „at least six months of what you spend monthly in the bank. Period.“

4. Plan for how you’ll reach your financial goals.

Setting a financial goal is the easy part, says former Buffalo Bills wide receiver and personal finance author Chris Hogan. It’s like the difference between wishing you could go to the beach and loading up the car with towels and putting gas in the tank. „The necessity of a plan sounds simple, but it is the one thing that many people overlook when it comes to their money,“ he says. „And a dream without a plan is simply a wish.“

5. Negotiate everything.

Everything from your cable plan to your medical expenses can be negotiated, advises plainspoken financial expert Nicole Lapin, author of Rich Bitch. All it takes is a small investment of time and a little bit of guts.

„The worst thing they can say is no. And they usually won’t,“ she says. So, she advises, call all your providers right now and ask for better pricing. „It’s the best way to start a financially fabulous New Year.“

6. Stop spending your future wealth.

Yup, that Apple Watch is awfully tempting. But the more you give in to short-term splurges, the less wealth you’ll save in the long term, says financial coach and serial entrepreneur Josh Felber. For purchases large and small, consider whether you’d rather have that item right now or whether you can make do with something less expensive, older, or used, or something you already have.

„To create real wealth, you must quit spending your future wealth on goods and services that you want today, but deprive you of wealth long term,“ he says.

7. Learn about finances.

Don’t let someone else make the decisions about your money just because you feel like you can’t understand finance, advises Rich Dad, Poor Dad author Robert Kiyosaki.

„Don’t wait for the government, a financial adviser, or your boss to take care of you,“ he says. Instead, he says, become financially educated so that you can make informed decisions for yourself. „Take responsibility for your life and your future,“ he says. „Don’t give that right away.“


Warren Buffett’s 23 Most Brilliant Insights About Investing

Warren Buffett, the billionaire „Oracle of Omaha“ continues to be involved in some of the biggest investment plays in the world.

Buffett is undoubtedly the most successful investor in history. His investment philosophy is no secret, and he has repeatedly shared bits and pieces of it through a lifetime of quips and memorable quotes.

His brilliance is timeless, and we find ourselves referring back to them over and over again.

We compiled a few of Buffett’s best quotes from his TV appearances, newspaper op-eds, magazine interviews, and of course his annual letters.

Buying a stock is about more than just the price.

Buying a stock is about more than just the price.


Coca-Cola is one of Buffett’s most successful investments.

„It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.“

Source: Letter to shareholders, 1989

You don’t have to be a genius to invest well.

You don't have to be a genius to invest well.

Associated Press

Albert Einstein

„You don’t need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beats the guy with 130 IQ.“

Source: Warren Buffett Speaks, via msnbc.msn

But, master the basics.

But, master the basics.

REUTERS/Eric Gaillard

„To invest successfully, you need not understand beta, efficient markets, modern portfolio theory, option pricing or emerging markets. You may, in fact, be better off knowing nothing of these. That, of course, is not the prevailing view at most business schools, whose finance curriculum tends to be dominated by such subjects. In our view, though, investment students need only two well-taught courses – How to Value a Business, and How to Think About Market Prices.“

Source: Chairman’s Letter, 1996

Don’t buy a stock just because everyone hates it.

Don't buy a stock just because everyone hates it.


„None of this means, however, that a business or stock is an intelligent purchase simply because it is unpopular; a contrarian approach is just as foolish as a follow-the-crowd strategy. What’s required is thinking rather than polling. Unfortunately, Bertrand Russell’s observation about life in general applies with unusual force in the financial world: „Most men would rather die than think. Many do.“

Source: Chairman’s Letter, 1990

Bad things aren’t obvious when times are good.

„After all, you only find out who is swimming naked when the tide goes out.“

Source: Letter to shareholders, 2001

Always be liquid.

„I have pledged – to you, the rating agencies and myself – to always run Berkshire with more than ample cash. We never want to count on the kindness of strangers in order to meet tomorrow’s obligations. When forced to choose, I will not trade even a night’s sleep for the chance of extra profits.“

 Source: Letter to shareholders, 2008

The best time to buy a company is when it’s in trouble.

The best time to buy a company is when it's in trouble.


„The best thing that happens to us is when a great company gets into temporary trouble…We want to buy them when they’re on the operating table.“

Source: Businessweek, 1999

Stocks have always come out of crises.

Stocks have always come out of crises.

AP Images

New York Stock Exchange, October 1929

Over the long term, the stock market news will be good. In the 20th century, the United States endured two world wars and other traumatic and expensive military conflicts; the Depression; a dozen or so recessions and financial panics; oil shocks; a flu epidemic; and the resignation of a disgraced president. Yet the Dow rose from 66 to 11,497.“

Source: The New York Times, October 16, 2008

Don’t be fooled by that Cinderella feeling you get from great returns.

„The line separating investment and speculation, which is never bright and clear, becomes blurred still further when most market participants have recently enjoyed triumphs. Nothing sedates rationality like large doses of effortless money. After a heady experience of that kind, normally sensible people drift into behavior akin to that of Cinderella at the ball. They know that overstaying the festivities ¾ that is, continuing to speculate in companies that have gigantic valuations relative to the cash they are likely to generate in the future ¾ will eventually bring on pumpkins and mice. But they nevertheless hate to miss a single minute of what is one helluva party. Therefore, the giddy participants all plan to leave just seconds before midnight. There’s a problem, though: They are dancing in a room in which the clocks have no hands.“

Source: Letter to shareholders, 2000

Think long-term.

„Your goal as an investor should simply be to purchase, at a rational price, a part interest in an easily-understandable business whose earnings are virtually certain to be materially higher five, ten and twenty years from now. Over time, you will find only a few companies that meet these standards – so when you see one that qualifies, you should buy a meaningful amount of stock. You must also resist the temptation to stray from your guidelines: If you aren’t willing to own a stock for ten years, don’t even think about owning it for ten minutes. Put together a portfolio of companies whose aggregate earnings march upward over the years, and so also will the portfolio’s market value.“

Source: Chairman’s Letter, 1996

Forever is a good holding period.

„When we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever.“

Source: Letter to shareholders, 1988

Buy businesses that can be run by idiots.

Buy businesses that can be run by idiots.

screengrab from Dumb & Dumber

Dumb & Dumber

I try to buy stock in businesses that are so wonderful that an idiot can run them. Because sooner or later, one will.

Source: Business Insider

Be greedy when others are fearful.

Be greedy when others are fearful.


„Wall Street: Money Never Sleeps“

„Investors should remember that excitement and expenses are their enemies. And if they insist on trying to time their participation in equities, they should try to be fearful when others are greedy and greedy only when others are fearful.“

Source: Letter to shareholders, 2004

You don’t have to move at every opportunity.

You don't have to move at every opportunity.

Brian Kersey / Getty Images

„The stock market is a no-called-strike game. You don’t have to swing at everything–you can wait for your pitch. The problem when you’re a money manager is that your fans keep yelling, ‚Swing, you bum!'“

Source: The Tao of Warren Buffett via

Ignore politics and macroeconomics when picking stocks.

Ignore politics and macroeconomics when picking stocks.

REUTERS/Rebecca Cook

A car blows up on the set of „Red Dawn“ in Detroit, Michigan.

„We will continue to ignore political and economic forecasts, which are an expensive distraction for many investors and businessmen. Thirty years ago, no one could have foreseen the huge expansion of the Vietnam War, wage and price controls, two oil shocks, the resignation of a president, the dissolution of the Soviet Union, a one-day drop in the Dow of 508 points, or treasury bill yields fluctuating between 2.8% and 17.4%.

„But, surprise – none of these blockbuster events made the slightest dent in Ben Graham’s investment principles. Nor did they render unsound the negotiated purchases of fine businesses at sensible prices. Imagine the cost to us, then, if we had let a fear of unknowns cause us to defer or alter the deployment of capital. Indeed, we have usually made our best purchases when apprehensions about some macro event were at a peak. Fear is the foe of the faddist, but the friend of the fundamentalist.

Source: Chairman’s Letter, 1994

The more you trade, the more you underperform.

The more you trade, the more you underperform.

Wikimedia Commons

Isaac Newton

„Long ago, Sir Isaac Newton gave us three laws of motion, which were the work of genius. But Sir Isaac’s talents didn’t extend to investing: He lost a bundle in the South Sea Bubble, explaining later, “I can calculate the movement of the stars, but not the madness of men.” If he had not been traumatized by this loss, Sir Isaac might well have gone on to discover the Fourth Law of Motion: For investors as a whole, returns decrease as motion increases.“

Source: Letters to shareholders, 2005

Price and value are not the same

Price and value are not the same

REUTERS/Juan Medina

„Long ago, Ben Graham taught me that ‚Price is what you pay; value is what you get.‘ Whether we’re talking about socks or stocks, I like buying quality merchandise when it is marked down.

Source: Letter to shareholders, 2008

There are no bonus points for complicated investments.

There are no bonus points for complicated investments.

REUTERS/Vasily Fedosenko

„Our investments continue to be few in number and simple in concept: The truly big investment idea can usually be explained in a short paragraph. We like a business with enduring competitive advantages that is run by able and owner-oriented people. When these attributes exist, and when we can make purchases at sensible prices, it is hard to go wrong (a challenge we periodically manage to overcome).

„Investors should remember that their scorecard is not computed using Olympic-diving methods: Degree-of-difficulty doesn’t count. If you are right about a business whole value is largely dependent on a single key factor that is both easy to understand and enduring, the payoff is the same as if you had correctly analyzed an investment alternative characterized by many constantly shifting and complex variables.“

Source: Chairman’s Letter, 1994

A good businessperson makes a good investor.

A good businessperson makes a good investor.

REUTERS/Shannon Stapleton

Warren Buffett

„I am a better investor because I am a businessman, and a better businessman because I am no investor.“

Source: – Thoughts On The Business Life

Higher taxes aren’t a dealbreaker.

„SUPPOSE that an investor you admire and trust comes to you with an investment idea. “This is a good one,” he says enthusiastically. “I’m in it, and I think you should be, too.”

Would your reply possibly be this? “Well, it all depends on what my tax rate will be on the gain you’re saying we’re going to make. If the taxes are too high, I would rather leave the money in my savings account, earning a quarter of 1 percent.” Only in Grover Norquist’s imagination does such a response exist.“

Source: New York Times

Companies that don’t change can be great investments.

„Our approach is very much profiting from lack of change rather than from change. With Wrigley chewing gum, it’s the lack of change that appeals to me. I don’t think it is going to be hurt by the Internet. That’s the kind of business I like.“

Source: Businessweek, 1999

Time will tell.

Time will tell.

REUTERS/Pool/Sergei Chirikov

„Time is the friend of the wonderful business, the enemy of the mediocre.“

Source: Letters to shareholders 1989

This is the most important thing.

„Rule No. 1: never lose money; rule No. 2: don’t forget rule No. 1“

Source: The Tao of Warren Buffett

What’s Coming From Apple in 2016: Apple Watch 2, iPhone 6c, iPhone 7, Skylake MacBooks, and More

With the launch of the Apple Watch, the iPhone 6s and the 6s Plus, the new Apple TV, and the iPad Pro, 2015 was a major year for Apple. The Apple Watch introduced a whole new category, the iPhone 6s and 6s Plus saw the debut of 3D Touch, and the iPad Pro brought Apple’s largest iOS device yet.

iOS 9, watchOS 2, and OS X 10.11 El Capitan brought refinements to Apple’s operating systems, and the fourth-generation Apple TV came with a brand new operating system, tvOS. 2015 saw a huge number of new products and software updates, and 2016 promises to be just as exciting.

A second-generation Apple Watch is in the works and could launch in early 2016, while new flagship iPhones, the iPhone 7 and the iPhone 7 Plus, are coming in late 2016. Those who love smaller devices will be excited to hear a 4-inch iPhone 6c may be coming early in 2016, and Apple’s Mac lineup is expected to gain Skylake chip updates.

New software, including iOS 10, OS X 10.12, watchOS 3, and an upgraded version of tvOS are all expected in 2016, and Apple will undoubtedly work on improving services like HomeKit, Apple Pay, and Apple Music.

As we did for 2014 and 2015, we’ve highlighted Apple’s prospective 2016 product plans, outlining what we might see from Apple over the course of the next 12 months based on current rumors, past releases, and logical upgrade choices.

Apple Watch 2 (Early 2016)

A second-generation Apple Watch is rumored to be debuting in March of 2016, approximately one year after the launch of the first Apple Watch. A March event could see the introduction of the device, with shipments beginning in April 2016.

Early rumors suggest the Apple Watch 2 will perhaps include some of the sensors that were nixed from the first version, including skin conductivity, blood oxygen level, and blood pressure. The device may be thinner than the first Apple Watch, and it could include features like a FaceTime camera to allow Apple Watch users to make and receive FaceTime calls and an upgraded Wi-Fi chip that may allow the Apple Watch to do more without an iPhone.


The Apple Watch 2 could be thinner than the existing Apple Watch, with new sensors and a camera.
It is not clear if the new Apple Watch will continue to use the same lugs and bands as the first-generation Apple Watch, but given the large number of bands owned by Apple Watch users, it seems likely the device won’t require users to purchase all new hardware. There have been no rumors on the prospective hardware, aside from early analyst predictions pointing towards the thinner size.

Regardless, the second-generation Apple Watch is likely to be accompanied by the launch of bands in new colors and designs as Apple has set a precedent of changing the available bands multiple times per year.

Full Apple Watch roundup

iPhone 7 and 7 Plus (Late 2016)

The iPhone 7 and the iPhone 7 Plus will come at the tail end of 2016, likely making their debut in September in line with past iPhone launches. Apple is expected to continue offering the phones in 4.7 and 5.5-inch sizes, but we can count on a redesigned external chassis because 2016 marks a major upgrade year.

Details about the exterior of the phone and its internal updates are largely unknown at this early date, but based on past upgrades, we can expect a thinner body, an improved processor, and a better camera. Flagship features like 3D Touch and Touch ID will continue to be available, and Apple likely has additional features planned to make its latest iPhone stand out.

Taking into account past rumors and acquisitions, the camera is one area that could see significant improvements, perhaps incorporating a dual-lens system that offers DSLR quality in a compact size. Some of these rumors were originally attached to the iPhone 6s, but could have been delayed for later devices especially given the 2015 acquisition of Israeli camera company LinX.

iphone 6s_6s_plus_featured

The current iPhone 6s and 6s Plus. The iPhone 7 is rumored to be slimmer with no antenna bands and a new material composition.
Apple is expected to continue using in-cell display panels for the iPhone 7, which will allow it to shrink the thickness of the device, perhaps making it as thin as the 6.1mm iPod touch. The iPhone 7 is also likely to include a TFT-LCD display as the AMOLED technology Apple is rumored to be working on is not yet ready for use in iOS devices.

Analyst Ming-Chi Kuo, who often accurately predicts Apple’s plans, has said RAM could be a differentiating factor between the two iPhone 7 models. The smaller 4.7-inch iPhone 7 may continue to ship with 2GB RAM, while the larger 5.5-inch iPhone 7 Plus may ship with 3GB RAM.

Other rumors about the iPhone 7 have pointed towards the removal of the headphone jack in favor of headphones that attach to the device using the Lightning port, a change that may also help Apple shave 1mm off of the thickness of the iPhone.

Some early rumors out of the Asian supply chain have suggested the iPhone 7 may include a strengthened, waterproof frame that ditches Apple’s traditional aluminum casing for an all new material and does away with the prominent rear antenna bands on the iPhone 6, iPhone 6 Plus, iPhone 6s, and iPhone 6s Plus. The rumors of a waterproof, dust-proof casing are from somewhat unreliable sources and should not be viewed as fact until further evidence becomes available.

Full iPhone 7 roundup

iPhone 6c (Early 2016)

Since the launch of the larger-screened iPhone 6 and iPhone 6 Plus, Apple has been rumored to be working on an upgraded 4-inch iPhone for customers who prefer smaller screens. The „iPhone 6c“ is rumored to be launching during the first months of 2016, and it’s another device that could potentially make an appearance at Apple’s rumored March event. If the 4-inch iPhone launches in early 2016, it will be the first iPhone to launch outside of the fall months since 2011.

Apple’s 4-inch iPhone is described as a cross between an iPhone 5s and an iPhone 6, with an aluminum body and iPhone 6-style curved cover glass. There have been some sketchy rumors suggesting it will come in multiple colors like the iPod touch, but that has not yet been confirmed. KGI Securities analyst Ming-Chi Kuo has pointed towards „two or three“ color options for the device, but he did not specify which colors.

Rumors have disagreed over whether the iPhone 6c will include an A8 processor or an A9 processor, but Kuo believes Apple will use the same A9 processor that’s used in the iPhone 6s. Other rumors out of the Asian supply chain suggest Apple could also include 2GB RAM in the device, and with an A9 processor and 2GB RAM, the iPhone 6c could be on par with the iPhone 6s when it comes to raw performance.

Other features rumored for the iPhone 6c include a 1,642 mAh battery that’s somewhat larger than the battery used in the iPhone 5s, an 8-megapixel rear-facing camera with an ƒ/2.2 aperture, a 1.2-megapixel front-facing camera, 802.11ac Wi-Fi, and Bluetooth 4.1. The iPhone 6c is not expected to include 3D Touch, as it is a flagship feature of the iPhone 6s, but it is likely to include NFC to enable Apple Pay functionality.

Full iPhone 6c roundup

iPad Air 3 (Early-to-Mid 2016)

Since the iPad launched in 2010, Apple has upgraded the tablet on a yearly basis, producing a new version each fall. In 2015, Apple did not upgrade the iPad Air 2, instead focusing on releasing the iPad Pro and the iPad mini 4. Combined with the minor update the iPad mini 2 received in 2014, Apple may be signaling its intention to update its iPads on an 18-month to two-year schedule going forward.

Recent rumors have suggested that Apple is developing an iPad Air 3 that will launch during the first half of 2016. Little is known about the third-generation iPad Air at this time, but it will include an upgraded processor to improve performance. It may also offer RAM upgrades and camera improvements, but it will not include the 3D Touch feature introduced with the iPhone 6s and the iPhone 6s Plus due to manufacturing difficulties expanding the technology to a larger screen size.

Apple likely has something planned to make the iPad Air 3 stand out, but it is not yet clear what that might be.

Full iPad Air roundup

MacBook Air (Early-to-Mid 2016)

Following the launch of the Retina MacBook in April of 2015, the future of the MacBook Air became uncertain. There has been speculation that the MacBook line will subsume the MacBook Air line as component prices decrease, but some recent rumors have led to hope that the MacBook Air will continue to exist alongside the Retina MacBook and the Retina MacBook Pro, offering a compromise between performance, portability, and cost.

Though it lacks the power of the Retina MacBook Pro and the Retina display of the MacBook, the MacBook Air continues to be popular with consumers for its low price point.

Current rumors suggest Apple will continue producing the MacBook Air, with plans to launch 13 and 15-inch MacBook Air models during the third quarter of 2016, perhaps unveiling the machines around the annual Worldwide Developers Conference.

The MacBook Air’s design has remained unchanged since 2010, so a 2016 redesign that focuses on a slimmer chassis with bigger screens and revamped internals is not out of the realm of possibility. Apple has been increasing the sizes of its devices, introducing a larger 5.5-inch iPhone and a 12.9-inch iPad Pro, so a 15-inch MacBook Air also seems reasonable. The rumor does not mention an 11-inch MacBook Air, suggesting it will potentially be phased out in favor of larger screen sizes and to let the 12-inch Retina MacBook stand out as the sole ultraportable machine.


Current 11 and 13-inch MacBook Air compared to 15-inch Retina MacBook Pro
If Apple does introduce a 2016 MacBook Air, it will likely include Intel’s next-generation Skylake chips, which will offer 10 percent faster CPU performance, 34 percent faster Intel HD graphics, and 1.4 hours of additional battery life compared to the equivalent Broadwell chips in current MacBook Air models. Skylake U-Series 15-watt chips appropriate for the MacBook Air will be shipping in early 2016.

While the current rumor has suggested the new MacBook Air models will launch in the third quarter of 2016, they could potentially be ready to debut earlier in the year. The last MacBook Air update was in March of 2015 and Apple may not want to wait more than a full year before introducing a refresh.

As there haven’t been many rumors about a new MacBook Air at this time, an update should not be viewed as a sure thing. Supply chain information is not always accurate, and there’s a chance the information shared about the alleged 13 and 15-inch MacBook Air could instead apply to the Retina MacBook Pro.

Full MacBook Air roundup

Retina MacBook Pro (Early-to-Mid 2016)

Over the course of the past two years, Intel’s chip delays have significantly impacted Apple’s Retina MacBook Pro release plans, especially for the 15-inch model. Broadwell delays resulted in staggered update timelines for 13 and 15-inch models, which were last updated in March and May of 2015, respectively.

While the 13-inch Retina MacBook Pro was updated with Broadwell chips, the 15-inch machine has continued to offer Haswell processors, and Apple’s upgrade path for the 15-inch Retina MacBook Pro isn’t quite clear.

Broadwell chips appropriate for a 15-inch Retina MacBook Pro update became available in June of 2015, so Apple could release an updated 15-inch Retina MacBook Pro in early 2016 using these chips. Alternatively, and more likely, Apple could bypass Broadwell altogether in favor of a Skylake update for both the 13 and 15-inch Retina MacBook Pro.

Skylake U-Series 28-watt chips appropriate for the 13-inch Retina MacBook Pro will begin shipping from Intel in early 2016, as will 45-watt H-Series chips with Intel Iris Pro graphics appropriate for the 15-inch Retina MacBook Pro. Exact shipping timelines for the chips are not yet known, but with an early 2016 release timeline, new Retina MacBook Pro models could come within the first few months of the year, perhaps being unveiled at the aforementioned rumored March event. Should the chips come at different times, Apple could stagger the 2016 MacBook Pro updates as it did in 2015.

Aside from prospective chip updates, little is known about the next-generation Retina MacBook Pro. Given that it’s been four years since the machine was redesigned, it’s possible we could see a refreshed, slimmer body and an improved Retina display, but there have been no rumors to suggest this is the case.

Full Retina MacBook Pro roundup

MacBook (Early-to-Mid 2016)

Skylake Core M chips appropriate for a second-generation Retina MacBook are already available, meaning refreshed Retina MacBook could be introduced at any moment. The new Core M chips offer 10 hours of battery life and 10 to 20 percent faster CPU performance compared to the Broadwell chips used in the first-generation machine.

The most notable upgrade in a second-generation Retina MacBook that uses Skylake chips would come in the form of graphics improvements, as the Skylake Core M chips offer up to 40 percent faster graphics performance.

Beyond Skylake chips, it is not known what other improvements Apple might offer in a second-generation Retina MacBook. Given that the design was just introduced in April of 2015, the new machine will undoubtedly use the same chassis, but a Rose Gold color option to match the new Rose Gold iPhone 6s is a possibility.

If Apple is planning to introduce new Macs at a rumored Apple Watch-centric event in March, that may be when the new Retina MacBook will debut.

Full MacBook roundup

iMac (Late 2016)

Apple’s iMac, like its MacBook Pro, has been impacted by Intel’s chip delays. Current higher-end models already use Skylake graphics but lower-end models continue to use Broadwell chips. Given that the iMac lineup was just refreshed in October of 2015, another update may not come until late in 2016.

Apple’s future chip plans for the iMac are difficult to decipher, as Intel does not plan to introduce desktop class socketed Skylake chips with integrated Iris or Iris Pro graphics that would be appropriate for lower-end iMacs that use integrated graphics instead of discrete graphics.

With no prospective chips available for the lower-end iMacs, it is not clear what Apple is going to do in terms of processor upgrades, making it nearly impossible to predict when we might see the next iMac update or what it might include. Intel plans to release Kaby Lake processors in late 2016, but details on Kaby Lake chips appropriate for the iMac are not available, and it’s possible Kaby Lake could see delays.

There are also no rumors on other features that could be included with a next-generation iMac update, but going forward, Apple may fully drop non-Retina 21.5-inch models as hardware prices come down in favor of an all-Retina lineup.

Full iMac roundup

Software Updates

iOS 10 (Late 2016)
ios10logoEach September, Apple launches an updated version of iOS to accompany its latest iPhones. In 2016, the company is expected to debut iOS 10, the successor to iOS 9. iOS 8 and iOS 9 both focused more on features than design, so it is quite possible iOS 10 will be an update that introduces more significant design changes, similar to iOS 7.

Because iOS 9 just launched three and a half months ago, iOS 10 rumors have not yet begun. As the year progresses, we’ll get a glimpse at what to expect in September, but for now, all we know is that there’s an update coming.

Full iOS 9 roundup

OS X 10.12 (Late 2016)
osx1012mockupAlong with iOS, OS X is also updated on a yearly basis, with an update coming each fall around September or October. In 2016, we expect to see the debut of OS X 10.12, the followup to OS X 10.11 El Capitan.

El Capitan was an update designed to introduce bug fixes and build on the features that debuted with OS X 10.10 Yosemite, so it’s likely OS X 10.12 will be a bigger standalone update that includes design tweaks and new features.

Full OS X 10.11 El Capitan roundup

watchOS 3 (Early 2016)
watchos3watchOS is the software that runs on the Apple Watch, and in 2016, Apple is expected to launch a third version of the software. watchOS debuted alongside of the Apple Watch in April, while watchOS 2 came out just months later in September with iOS 9.

Apple has thus far tied its watchOS releases to iOS releases, but it’s quite possible that watchOS 3 will launch alongside an updated second-generation Apple Watch rather than alongside iOS 10 in September. A second-generation Apple Watch will potentially require some significant software updates if major hardware changes like new sensors or cameras are introduced.

New versions of the iPhone ship with new versions of iOS, so it’s logical to expect the same thing to happen with the Apple Watch, but thus far there are no rumors about the watchOS 3 update or what features might be included.

Full watchOS roundup

tvOS 10?
Apple TV software traditionally has not seen the same major software updates as iOS devices and the Apple Watch, so Apple’s plans for tvOS are not clear. So far, there have been some minor tvOS updates, but it is not yet known if Apple will push major version upgrades with new features and design changes on a yearly basis.

If Apple is planning to offer iOS-style updates for tvOS, the first major tvOS software update could come in the fall, perhaps alongside iOS 10.

Other Possibilities

Fifth-generation Apple TV
Shortly after the launch of the fourth-generation Apple TV, there was a sketchy rumor suggesting development and production had already begun on a fifth-generation Apple TV with an upgraded CPU. While it’s possible Apple has plans to release an updated Apple TV in 2016, it’s highly unlikely such a device is already in production and it’s equally unlikely Apple would release it before the fall of 2016.

Prior to the launch of the fourth-generation Apple TV, the set-top box went multiple years without a significant update. It is not clear how often Apple will update the Apple TV now that a new version has been released, so we will need to wait until later in the year for more information on the Apple TV upgrade schedule.

Full Apple TV roundup

iPad Pro 2
The iPad Pro was released in November of 2015 and Apple’s plans for a second-generation device are not yet known. For several years, Apple was updating its iPads on a yearly basis, but its more recent update timelines suggest it is potentially moving to an 18 month or 24 month upgrade cycle for iPads, making it unclear when we might see an iPad Pro 2.

With the iPad Air line, for example, Apple introduced an iPad Air 2 in 2014 but neglected to upgrade it to an iPad Air 3 in 2015. The iPad mini 2 update was similar, with a 2014 update introducing only Touch ID to the 2013 model, while the 2015 iPad mini 4 featured a more significant revamp.

An iPad Pro 2 could potentially debut in 2016 with an updated processor and other improved features, but it’s also just as likely Apple will wait until mid-to-late 2017 to introduce a second-generation iPad Pro. More information on Apple’s iPad Pro plans will come later in 2016, firming up potential release timelines.

Full iPad Pro roundup

iPad mini 5
Apple introduced the iPad mini 4 in late 2015, following the launch of the iPad mini 2 in 2013 and the minor iPad mini 3 update in 2014. With Apple seemingly shifting away from a yearly upgrade cycle for its iPad lineup, we may not see an iPad mini 5 in 2016.

Instead, 2016 may see the launch of an updated iPad Air 3, followed by an iPad mini update in 2017. Apple’s iPad sales have been flagging in recent years as customers do not update their tablets as often as their phones, which has led Apple to try different upgrade strategies and cycles. With Apple’s shifting plans, it is not yet clear when the iPad mini will see another update.

Ahead of the launch of the iPad mini 4, there were some rumors that Apple would discontinue its smallest tablet, but with the iPad mini 4, Apple has signaled its intention to continue offering the iPad in three screen sizes to meet different customer needs.

Full iPad mini roundup

Mac Pro
The Mac Pro launched in late 2013, and since then, it has not seen an update. It’s quite possible 2016 will be the year Apple will refresh the machine, as potential references to an updated Mac Pro were discovered in OS X El Capitan.

Grantley Xeon E5 V3 Haswell-EP processors appropriate for a high-end Mac Pro upgrade were introduced in 2014, but Apple may be waiting on E5 V4 Broadwell-EP chips for the top-of-the-line Mac Pro that are set to launch in the first half of 2016. E3 V4 chips appropriate for lower-end machines are already available, as are Skylake E3 V5 chips.

If this is the case, a Mac Pro launch will happen after the chips become available, with the machine perhaps seeing a mid-to-late 2016 debut.

Updated AMD FirePro graphics cards were introduced in 2015, as were cards built on AMD’s Fury platform, both of which could potentially be used in a next-generation Mac Pro. Fury graphics are more likely, and an updated Mac Pro could also include faster memory, improved storage, and Thunderbolt 3 connectivity introduced through a shift to USB-C.

In the past, prior to its 2013 redesign, the Mac Pro was updated in 2006, 2008, 2009, 2010, and 2012.

Full Mac Pro roundup

Mac mini
The Mac mini was last updated in 2014, introducing Haswell processors and features like 802.11ac WiFi and Thunderbolt 2. Given that it’s now been two years since the update, Apple could introduce new Mac mini models with Skylake processors in 2016. Two years is the longest the Mac mini has gone without a refresh.

Apple’s Mac mini line uses the same U-Series chips that are found in the MacBook Air and the 13-inch Retina MacBook Pro, and Skylake chips appropriate for an updated Mac mini will be shipping in the first months of 2016. A new Mac mini may debut in early-to-mid 2015 alongside a refreshed MacBook Air and MacBook Pro.

In the past, the Mac mini saw upgrades in 2006, 2007, 2009, 2010, 2011, and 2012 before going sans upgrade for two years after a late 2012 update.