Apple’s Services Business Is Growing Like The ‘FANG’ Stocks, Should It Be Valued Like One?

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Apple’s Services business has also seen robust growth, emerging as the company’s second largest segment in terms of revenue. Apple’s Services revenues grew by 21% in calendar year 2016 (the company’s fiscal year ends September 30) to a little over $25 billion, making it almost as large as Facebook. However, Apple, and its Services operations, aren’t valued like other high-profile Internet companies such as the so-called “FANG” stocks – Facebook, Amazon, Netflix and Google (Alphabet). In this note, we take a look at some of the key drivers of Apple’s Services business and its valuation.

We have a $164 price estimate for Apple, which is slightly ahead of the current market price.

Why Apple’s Services Valuation Lags Other Internet Companies

We currently value Apple’s Services segment at about $150 billion (excluding Apple’s net cash position), using our discounted cash flow model. This translates to a forward revenue multiple of about 5x. This is well below Netflix (valued at ~7x forward revenues), Facebook (13x) and Google (6.3x). While this is partly due to slightly lower growth rates and potentially lower margins, there are also some other factors that limit Apple’s Services business from being valued like other Internet stocks. For one, Apple’s Services revenues are tied to the sales of its devices, and there could be a slowdown in sales if Apple’s hardware shipments falter. For instance, customers tend to buy the AppleCare plan at the time of their device purchases, while potentially loading up on more paid apps earlier in the life cycles of their devices. Moreover, Apple has been reluctant to leverage user data – which is extremely valuable for Internet companies – as it focuses on the privacy aspect of its devices. In contrast, Google, Amazon and Facebook have shown a willingness to work with user data from their search, e-commerce and social media operations to grow their businesses.

Apple Still Has Ambitious Plans For Services

Apple has set a target of effectively doubling its Services revenues by 2020 (~18% CAGR between 2016 and 2020). While the company has grown Services revenues at an average rate of around 23% per year over the last five years, driven by an expanding iOS user base (we estimate that the user base grew 3x between 2011 and 2016), it’s unlikely to see similar growth rates in its installed base going forward. Instead, the company will have to primarily rely on expanding its Services ARPU to meet its targets. We estimate that its ARPU (considering only iOS devices) stood at about $33 last year.

There could be multiple avenues for Apple to improve its services ARPU. Firstly, App store revenues are expanding, and there may be further scope for growth as Apple launches new developer kits such as the augmented reality-focused ARKit, which could enable a richer Services experience. Apple also earns a commission (typically 15% to 30%) from third-party subscriptions on its platform, and it could be a big beneficiary of trends such as cord cutting and a shift towards streaming music services. For instance, the number of paid subscriptions on its platforms, including both Apple and third-party services, now exceeds 185 million, marking an increase of 20 million in the last three months alone. The Apple Pay business could also see revenues accelerate (albeit from a very small base) over the next few years, as Apple has already done much of the heavy lifting in terms of building out the requisite infrastructure in many developed markets. The company’s push to capture more budget-conscious users with devices such as the $329 iPad and the iPhone SE could also help it to expand its installed base and, in turn, drive Services revenues. While we expect the Services business to be a major driver of the company’s long-term growth, its relative discount compared to the “FANG” companies does seem warranted.


Where the Conservatives should look for inspiration

Theresa May speaking at the Conservative party annual conference in Birmingham, October 2016

Kate Maltby’s analysis of the Conservative party’s disarray (My party has gambled away its reputation, 17 July) fails to see that its neoliberals are the equivalent of what the Trotskyists were in the Labour party of the past. Neoliberals are an entryist group standing for a body of economists’ ideas that can’t be implemented in a real, living diverse society with complex people in it, because it is a simple imaginary theory, totally anti-statist and individualist, as opposed to the far-left totally statist and collectivist version. Both are essentially authoritarian, not democratic.

What Maltby ought to recommend to the Conservative party is paying more attention to the continental version of conservatism, which has continued its success as exemplified in modern Germany, strongly statist to ensure a hierarchical integrated society with a powerful but decentralised state to provide the social and logistical infrastructure for the economy of modern business and industry as well as social order for the population.

The real political distinction in the UK at present is the conservatives’ unequal social and economic hierarchy (and individualised competition everywhere, partly under neoliberal pressure) versus the left’s focus on equalities (and equal rights and collaboration). That would give us plenty of political difference in policies to fight about, without all the authoritarian neoliberal economic theorising to confuse the arguments.
John Veit-Wilson
Newcastle upon Tyne

 Can I suggest another conservative political philosopher other than Edmund Burke that should be essential reading for the political reformers of the Conservative party and that is Michael Oakeshott. He would have been horrified that the party he loved had embarked on a reckless period of social experimentation known variously as either public choice theory, neoliberalism or Randian economics. He said “to be a conservative … is to prefer the familiar to the unknown, to prefer the tried to the untried”.

When the party of traditional values abandons them in the name of social revolution, it can be no surprise that it is unable to speak with authority on the great issues of the day. The ethos of constant changes fits ill with the party of tradition. It is now the party of fractious groups all competing to claim ownership of the party. The result is the unappealing squabble of a group of largely middle-aged men and women over who has ownership of a set of policies that were the revolutionary policies of their youth, not realising that time has passed them by.


Sony should do more to boost cross-platform gaming

Sony should do more to boost cross-platform gaming

Halfway through 2017, gamers have a new console from Nintendo to enjoy, a high-end option from Microsoft to look forward to, and increasing interest in VR titles. With these advances in hardware, it seems silly that Sony is pedaling backwards with its decision to keep PS4 gamers away from enjoying cross-platform titles.

Speaking to Eurogamer earlier this month, Jim Ryan, head of global sales and marketing for PlayStation, explained the company’s position:

We have a contract with the people who go online with us, that we look after them and they are within the PlayStation curated universe.

Exposing what in many cases are children to external influences we have no ability to manage or look after, it’s something we have to think about very carefully.

Xbox chief Phil Spencer isn’t buying the argument. In an interview with Giant Bomb, he pointed out that Microsoft owns one of the most family-friendly games around, and noted:

The fact that somebody would kind of make an assertion that somehow we’re not keeping Minecraft players safe, I found — not only from a Microsoft perspective, but from a game industry perspective — like, I don’t know why that has to become the dialogue. Like, that doesn’t seem healthy for anyone.

It’s odd to see Sony avoiding participating in an important phenomenon in the future of multiplayer gaming. Heck, even Nintendo’s getting in on the action: earlier this month, American studio Psyonix announced that it’s bringing its beloved soccer-but-with-cars game, Rocket League, to the Switch this holiday season, with cross-platform support in tow.

The title works between PC and Xbox One, and between PC and PS4 – it’s just that the consoles currently can’t talk to each other, because Sony won’t allow it. According to Psyonix, if Sony gave the go-ahead, it could have Rocket Leaguerunning across platforms in “less than an hour.”

Psyonix’s Jeremy Dunham told Engadget that while Microsoft and Nintendo were quick to work with Psyonix to support cross-platform play, Sony has been stalling the conversation.

Of course, it almost certainly has to do with money: Sony is hammering Microsoft in sales, with a global install base of 60 million PS4s as of June vs. 26 million Xbox Ones that were last reported in January. As the market leader, it may not want to risk losing out on any customers buying a PS4 so they can remain in the PlayStation universe.

But it’s hard to be sure that that’s just how things will go. Last October, the Xbox One outsold the PS4 for the third month in a row in the US. Sony probably knows something we don’t about the future of console sales. The trouble is, that doesn’t help players.

As Dunham explained, granting gamers access to each other across networks would translate into faster matchmaking, better matches and access to better opponents, and therefore, more time spent on consoles and more chances to sell them things like DLC and cosmetic items.

Instead of fighting to stay exclusive, Sony would do well to explore ways in which it can capitalize on the opportunities that cross-platform gaming will present – increased longevity for multiplayer titles, bigger audiences for niche games, and more word-of-mouth promotion of games between owners of various consoles.


‘Sahara Life should not procure new business’

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Return to frontpage ‘Sahara Life should not procure new business’
‘Sahara Life should not procure new business’
UPDATED: JUNE 23, 2017 21:13 IST

Someone filling out Restraining Order.
IRDAI order allows company to service existing business

Insurance regulator IRDAI, which earlier this month had appointed an administrator to manage the affairs of Sahara India Life Insurance, on Friday directed the company not to procure new business.

The company is directed “not to procure/collect proposal deposits/underwrite new business with immediate effect, i.e., close of business on June 23, 2017,” the regulator said in its order.

Advising Sahara India Life to inform all concerned such as agents and intermediaries of the direction, it said the company should ensure that it did not conduct new insurance business immediately on receipt of the order.

However, the company is directed to “continue to collect and account for renewal premium; and service the existing business and policyholders, unhindered,” the Insurance Regulatory and Development Authority of India said.

IRDAI had on June 12 appointed its General Manager (F&A-NL) R.K.Sharma as administrator of the company and asked him to file a report on the most advantageous course of action in the interest of the policy holders. There were reasons to believe that Sahara India Life “is acting in a manner [that is] likely to be prejudicial to the interests” of the policy holders, the regulator had stated.


Opinion: TellTale Games Should Make An Overwatch Series

Opinion: TellTale Games Should Make An Overwatch Series

One editor addresses what could very well be a perfect project for TellTale Games to tackle next, pointing to none other than the immensely popular Overwatch as a prime candidate.

As someone that has thoroughly enjoyed the bulk of what TellTale has produced in recent years, I was eager to speak with a friend about the quality of the team’s latest project, Batman. As he ran me through the intricacies present in the first portion of the episodic content, I was immediately drawn in by the second-hand storytelling that was being presented to me. As the topic naturally progressed to which franchises the studio should tackle next, we passed by the rumored Mr. Robotproject before speculating on what might be on the horizon. It was then that an epiphany struck me with all the force of a Wilson using Primal Rage: TellTale should make an Overwatch series.

Those that are familiar with Overwatch will know all too well that its understated narrative is one of the most intriguing aspects about the multiplayer-centric title. These nuggets of backstory are present throughout every environment – with random dialogue between heroes painting a larger picture for those curious enough to begin piecing it together – and it fleshes out the characters more than a multiplayer-only shooter like this ever has. While it does a great job at creating questions for story-hungry gamers, the universe is so rich that there’s room for an almost endless stream of stories to be told. In a perfect world, this is where TellTale could lend its expertise.


Now, this isn’t to say that this is a likely scenario by any means. It’s known that the developer behindOverwatch, Blizzard, is incredibly protective of its IP – and rightfully so. The firm almost certainly has a solid strategy in place that will flesh out the narrative of the franchise in the ensuing months and years (along with a wealth of additional content at no charge), and the cinematics that are still being rolled out post-launch help fill in some of the plot. While these animated shorts are incredibly engaging, they are very far and few between. The longest one to-date has a run time of eight minutes and one second, the Winston-centric ‘Recall’, but there are so many questions now that one has to wonder just how long Blizzard plans on releasing these videos to appease curious gamers.

This is where TellTale can step in and lend its universe-expanding expertise. Again, setting aside the fact that Blizzard undoubtedly has plans to properly introduce backgrounds to each hero and villain on the title’s roster – that much is evident by the developer’s continued desire to crank out animated shorts after the game’s release – the world that Overwatch immerses players in is capable of containing an nearly unfathomable number of stories. In this light, the developers don’t even have to decide which hero an alleged series would follow, as it can simply create its own.

Much like Minecraft (another gaming property tackled by TellTale), Overwatch can take players down an entirely different path with a never before seen protagonist, allowing users to find their own way through the property’s world. Perhaps players can weigh the benefits of joining Overwatch against the motives of the terrorist organization Talon, with ample drama coming about from the robotic ethics intimately thread into the fabric of what little we actually know about this universe. The beauty of the ongoing canon is that it allows every opportunity for TellTale to explore the branching, character-driven arcs that it loves to offer fans, and it would permit those that have fallen in love with the title to have their own impact on the universe.


Blizzard is notorious for the quality of its products, and issues that have bogged down TellTale games in the past (namely severe rendering issues, amongst others) would have to be addressed by the firm. With that said, a partnership between Blizzard and TellTale Games could be a better pairing than chocolate and peanut butter. Mind you, this would be food for the gamer’s soul more so than the tried and true Reese’s, but I digress.

In this imaginary scenario that I’ve dreamt up, fans get exactly what they want from Blizzard and Overwatch – more story. To see these heroes and villains tangle in canon-backed fashion has been reserved solely for videos thus far, and it serves the interest of everyone involved to allow gamers to become more immersed in the lore of the series. Maybe it’s just a pipe dream for the time being, but the blockbuster IP currently at the disposal of TellTale Games certainly lends well to the studio’s ever-impressive pedigree. Perhaps, in that light, a deal can be made amongst the pair of devs.

For now, however, it will remain a fleeting idea brought up in a conversation between myself and a friend of mine.



[Source: Gamerant]

Should you upgrade to Windows 10? How Microsoft’s OS could be good for you

Should you upgrade to Windows 10? How Microsoft's OS could be good for you

Is Windows 10 for you? Well, there’s a better chance that it brings something to your life than not, whether you use a computer for 10 hours or 10 minutes a day.

The thing is, time is running out to upgrade from Windows 7 or 8.1 to Windows 10 for free. Specifically, you have until the end of today. It’s not a decision that you should simply gloss over, as the current price is around $120 (£100 or AUS$160). That’s enough for 10,000 penny sweets, and we’re particularly fond of the chewy fried egg ones.

I don’t know about you, but when I think about the burning core of my being, it’s in terms of being a bunch of easily-categorisable stereotypes. Which is handy, as it means I can make a purchasing decision entirely on the basis of said arbitrary categorisation. Am I a frequent flier, a parent, a gamer, or a paranoid survivalist hermit living in wildest Orkney? There’s a reason to own Windows 10 for all of you.

(Well, apart from the hermit, but then I’m frankly amazed he’s reading TechRadar rather than a 19th century almanac, or scrawling on his bathroom wall with turnip juice.) To see how Windows 10 will probably fit into your life, click (or tap) on ahead.

This article is part of TechRadar’s Windows 10 week. Microsoft’s latest operating system turns from a free to a paid upgrade on July 29, and we’re looking to answer the question of whether it’s good for you.


[Source: Techrader]