Apple Loop: The End of Apple, Massive iOS Security Problems, Stunning AirPods 2 Revealed

Taking a look back at another week of news and headlines from Cupertino, this week’s Apple Loop includes Apple’s quarterly figures, falling iPhone sales, rising Apple services, FaceTime security problems, a triple-lens iPhone leaks, Apple leak confirms AirPods 2, and the screw that cripples US manufacturing.

Apple Loop is here to remind you of a few of the very many discussions that have happened around Apple over the last seven days (and you can read my weekly digest of Android news here on Forbes).

The Halo Slips In Quarterly Revenue

This week saw Apple announce its quarterly earnings. Following the profits warning, investors and analysts were expecting a significant drop, which has arrived. CEO Tim Cook highlighted economic issues, the Chinese trade war with US, and the lack of upgrades from existing users for the fall. Samuel Axon reports:

China’s general economic slowdown and trade tensions with the US were also credited. Additionally, Cook said that iPhone owners just aren’t upgrading as much as expected. He pointed to Apple’s cheap battery-replacement program as one reason iPhone upgrades were down, but he also noted that smartphone subsidies which made it easier for consumers to take the leap have been reduced or eliminated in some countries like the United States and Japan.

Customers browse inside an Apple Inc. store in on January 3, 2019 in Shenzhen, China (Photo by Billy H.C. Kwok/Getty Images)GETTY

How It Ends… Will The iPhone Follow Palm, Nokia, And Psion?

With iPhone sales falling, is there any good news for Apple’s smartphone? One bright spot comes from noted analyst Ming-Chi Kuo who believes that Q2 2019 shipments will pick up compared to the Q1 shipments. But it puts pressure on sales in the second half of the year, because unless they pick up significantly, the iPhone will be echoing many ’number one smartphone manufacturers’ who have come before. I looked at these issues earlier in the week:

Following a number of years of relatively flat sales, the iPhone sales curve has started the downwards trend that will be hard to break. It’s a curve familiar to historians of Nokia, Motorola, Palm, and other historical smartphone innovators that became the incumbent.

The question now is if Apple’s risky decision to look at revenue from its software and services to cover the expected shortfall from the loss of iPhone revenue over the next two to three years will succeed.

Read more here on Forbes.

Can Services Rise In Time To Save Apple?

Although iPhone revenue was down fifteen percent, Apple’s other products including the oft-mentioned saviour of services showed a nineteen percent rise. Dave Lee for the BBC:

That bad news was balanced out – perhaps even cancelled out – by the good news on services. A big increase compared to this time last year – 19% – and a very healthy gross margin of 62.8%. Apple is transitioning, slowly, into a different kind of company that isn’t so reliant on hardware, and these numbers show that so far that transition is going well.

Just remember that the services side only delivered $10 billion of the $84 billion revenue… there’s a lot of ground to make up before it can equal the dominance of the iPhone in its budget.

FaceTime Security Problems Exposed

Meanwhile Apple is facing up to a massive bug in FaceTime that allows conversations to be heard before a call is answered. It is under investigation and server-side fixes are in place, with client side tweaks expected in the next week. Tom Warren reports:

A bug in Apple’s FaceTime video calling feature has allowed anyone to call a phone or Mac and listen in before the other person picks up. The flaw works by adding yourself to a FaceTime call before the recipient picks up, tricking FaceTime into thinking it’s an active call and forcing the person you’re actually calling to start transmitting audio.

Apple has now disabled the Group FaceTime feature on the server side, and reports suggest this has fixed the security flaw for most people. Some are still able to reproduce the flaw, but it’s likely that Apple is still in the process of replicating this across multiple servers. Apple is also planning to fix this on the client side with a software update later this week.

More at The Verge.

Three Lenses In Your iPhone Camera… If You Can Afford It

Writing for Bloomberg, Mark Gurman and Debby Wu report on the latest leak around 2019’s new iPhones. It looks like Tim Cook will finally be equipping one iPhone with a triple-lens camera. But with the release not expected until September 2019, that’s going to be eighteen months after the competition.  Is it all too late?

Once more Cook’s Apple will be looking to technology that has become commonplace on competitors handsets, and charge a significant premium to the iOS-powered faithful. The inclusion of AR overlays and the use of the third camera and associated sensors will no doubt make for a solid demo come the launch in September, but Apple will be playing catch-up in the software stakes as well as the hardware stakes.

More here on Forbes.

A pair of the new Apple AirPods are seen during a launch event on September 7, 2016 in San Francisco, California (Photo by Stephen Lam/Getty Images)GETTY

Apple Leak Confirms AirPods 2

Also showing up in the leaked/coming soon stakes this week were the second generation of AirPods. The wireless earphones are expected to gain ‘Hey Siri’ voice activation capabilities when they are released later in the year. David Phelan has the details:

The latest leak comes from Apple itself, so is hard to dismiss. In the latest beta version of Apple’s iOS operating software, iOS 12.2, which has been released to developers but not the public yet, there is a set-up screen. This was reported by the ever-resourceful Guilherme Rambo at 9to5Mac.

The set-up screen is hidden for now, unless you, like Guilherme, know where to look. This is what the set-up screen says: “Talk to Siri with your AirPods or iPhone by saying ‘Hey, Siri’.”

Read more here on Forbes.

And Finally…

For the want of a screw… Jack Nicas recounts the problems of getting the right screw for the Mac as he illustrates why Apple may not be rushing to bring any major hardware assembly lines ‘back’ to America from China:

Tests of new versions of the computer were hamstrung because a 20-employee machine shop that Apple’s manufacturing contractor was relying on could produce at most 1,000 screws a day.

The screw shortage was one of several problems that postponed sales of the computer for months, the people who worked on the project said. By the time the computer was ready for mass production, Apple had ordered screws from China.

The challenges in Texas illustrate problems that Apple would face if it tried to move a significant amount of manufacturing out of China. Apple has found that no country — and certainly not the United States — can match China’s combination of scale, skills, infrastructure and cost.

More in the New York Times.

Apple Loop brings you seven days worth of highlights every weekend here on Forbes. Don’t forget to follow me so you don’t miss any coverage in the future. Last week’s Apple Loop can be read here, or this week’s edition of Loop’s sister column, Android Circuit, is also available on Forbes.