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  • Writer's pictureGVA Research

Apple Doesn’t Need To Take 30% From Developers: Garrity on Bloomberg

Updated: Apr 23, 2021

Apple WWDC Developments – Sideshow Ahead of 5G Phone Launch

All eyes on Apple today as its first-ever virtual Worldwide Developer Conference is underway. As such events normally do, there are a range of software-related announcements that have been made such as the launch of iOS 14, the new iPadOS 14, MacOS Big Sur, TV OS and WatchOS updates as well. Bigger news is that Apple is now standardizing its devices on ARM-based chip designs in a move away from Intel. The move is intended to deliver better performance at lower power consumption than before, a (presumably) Metal-optimized graphics processor and other custom acceleration silicon. New systems will ship by the end of 2020, and the Apple silicon will roll out across the rest of the Mac line over the next two years.

Looming over the WWDC is how well will Apple be able to manage its relationships with its app-developer community going forward. At present, the third-party developers fuel a services business that generated more than $46 billion for Apple in its last fiscal year, almost 18% of the iPhone maker’s total revenue. Note that this represents a business model in which Apple has a 30% take of the revenues generated from the third-party developers apps. The company claimed last week that the App Store generated $519 billion in revenue for the global economy last year, a number that would appear to indicate that the take is more like 9% of gross revenues. Either way, it is still a high number and indicates that Apple is well-paid for playing the “troll under the bridge” when it comes to operating the App Store.

While the WWDC developments are of course of interest, the main element of interest to investors remains the prospects for the upcoming release of Apple’s 5G iPhone and the extent to which it will spark an upgrade wave by existing users so as to exploit the greater communications speed offered by 5G networks. For now, expectations are that it will catch fire and serve to unleash a 40% gain in Apple shares ahead of and during the rollout later this year.

Trump Ban On H1-B Visas Hits Tech Sector

As if almost on cue following a disastrous week-end rally in Tulsa, OK and the setback suffered last week in the Supreme Court’s decision to uphold the DACA program, the Trump Administration has decided to take another shot at the knowledge-based economy by moving to ban for the rest of 2020 the issuance of H-1B visas, a move that will keep as many as 525,000 foreign workers out of the U.S..

While the decision is utterly misguided in so many ways and clearly intended to play to Trump’s xenophobic base, the fact is that decision is perhaps largely irrelevant for the following reason: COVID has demonstrated that companies, particularly high-tech companies, can operate on a distributed basis. In this regard, the notion that workforces must be co-located is becoming obsolete. In this case, in the future the need for an H-1B visa is obviated as it is possible to have the worker in question operate from overseas. Nevertheless, the hope is that the Trump visa ban order will be lifted as it would be good for the U.S. economy to have the spending within it that H-1B visa workers would bring.

#aapl #apple #wwdc

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