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Apple Roundup: iPhones, Hollywood, Health, IP, Privacy, Hiring

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Apple (AAPL - Free Report) is making some good moves: fewer new-model phones this year, an agreement with the Writers’ Guild, a ton of original content is coming, a new health API is on the way, and more.

Apple Needs Fewer Components This Year

There was some disturbing news earlier this month about Apple shipping fewer new iPhone models this year. Japanese news outlet Nikkei was responsible for the news that Apple had told its component makers in Asia to make 20% fewer components for its three new iPhone models this year than they made last year.

The new models are widely expected to be a 6.5-inch OLED "iPhone X Plus," an upgraded a 6.1 inch version of iPhone X and a lower-cost LCD iPhone with facial recognition (called SE2, expected to sell in larger volumes).

But Apple had over-ordered last year because it feared falling short of components for the delayed launch of its new flagship iPhone X. It took time to burn off those inventories, especially since customers needed some convincing to part with the hefty $1,000 price tag.

So this time round, the company is probably being more conservative/realistic. Because although the iPhone remains popular, it’s clear that new generations of the device aren’t bringing significant improvements. So investors are taking their time upgrading.

Apple Signs Hollywood Writers Contract

Through the Apple Development LLC vehicle, Apple is laying the foundation for a full-scale entry into Hollywood style programming. With a billion dollars earmarked for the purpose, Apple Development has signed the 2017 master basic agreement (MBA) of the Writer’s Guild of America (WGA), which negotiates payments for writers and producers.

Apple’s agreement with the WGA also covers the “free to consumer” model, such as employed by Facebook. This is an industry-first and something that will likely be included in the next MBA, after the current version expires in May 2020. It hasn’t been of such great importance thus far because companies like Netflix (NFLX - Free Report) , Amazon (AMZN - Free Report) and Hulu employ a paid model.

Apple’s first attempts at original programming (both Carpool Karaoke and the documentary about Apple apps) haven’t been that popular. With iPhone demand softening, the company has renewed focus on its services business. But for that business to really take off, Apple needs compelling content to woo users. And that’s what makes this an important move.

On the Verge of First Animated Movie

Blomberg news reported that Apple is close to acquiring the distribution rights to its first animation movie from Cartoon Saloon, an Oscar-nominated animation studio based in Ireland. Apple wants to cover the U.S. and some other countries is all we know about it right now because the movie is reportedly still a year from release.

Health Record API

Apple is releasing an application programming interface that developers can use to build personalized healthcare apps covering medication tracking, disease management, nutrition planning and medical research based on health records available on a user’s iPhone.

After testing its Health Records app, a large number of healthcare organizations decided to adopt it, allowing Apple to roll out its personal Health Records function. So iPhone users with healthcare records at any of these organizations could then access their electronic medical records on their phones.

Apple just took the service a step further with the API, facilitating the development of personalized solutions.

Accused of Stealing Shortcuts Icon Design

The Shortcuts app that Apple launched at WWDC was caught in a bit of a controversy. A startup called Shift that uses blockchain technology to build websites, has accused the company of copying the Shift logo, i.e. two squares layered on top of each other (like a pointed figure eight) that resembles an “S.” It’s true that the Shortcuts app logo i.e. two round cornered rhomboids fading into each other to vaguely look like an “S” looks similar.

Shift sent a letter to Apple that included a cease and desist order or cash payment of $200,000.

Closing iPhone Security Gap

Apple is making a small change to the Lightning port used to transfer data and charge iPhones that will make it difficult to access the data through it. Apple says that the change will ensure that no one, including law enforcement, will be able to access that data an hour after the phone is shut down without entering the correct password.

Other than making the statement that it puts users’ privacy first, this action differentiates Apple services from companies like Alphabet (GOOGL - Free Report) and Facebook . But then, it also means that Siri just won’t be as effective as her peers. That doesn’t look like Apple’s intention since it recently poached a Google engineer to work on AI.

Another Google Engineer Joins Apple

Jaime Waydo, previously a senior systems engineer at Waymo, is joining Apple, presumably in the department dealing with self-driving cars. Apple has said very little about its self-driving efforts although it has made some research available recently. It has also obtained permits to test self-driving cars in California.

This is the second Google executive moving to Apple in just a few months. John Giannandrea, Google's top AI executive, jumped ship in April.

 

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Apple shares carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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