A series of charts pulled together by Jason Snell, a great collection of data I look forward to after every Apple quarterly results call.

The first chart gives a real sense of how important iPhone sales are to Apple’s bottom line. No hiding it, Apple remains an iPhone company. But look how big the Services pie chart slice has gotten.

To see this growth more clearly, scroll down to the Services Revenue chart (about 2/3 way down the post). On the left side of the chart (about 4 years ago) Services revenue is at $7.6 billion, steady, steady growth to last quarter’s $17.5 billion.

This tells an important story, of Apple diversifying their way out of dependence on iPhone sales growth. If you haven’t already, take a look at the Jean-Louis Gassée post from yesterday. As Apple shifts from dependence on hardware sales, leaning more and more on services revenue, how will their culture change?

First things first, props to Jason Snell for pulling together the call transcript and the charts collection (which I’ll post next). Thanks, Jason.

As to the transcript, lots to read, too much to highlight, but I will post one quote, this from Apple CFO Luca Maestri, when asked about the impact of the pandemic on Apple’s results:

Well of course, we don’t have the crystal ball that tells us exactly what these different variables, how they impacted our business. We do know that on the positive side of the ledger, obviously, especially during the periods of extreme lockdowns, digital services did very well because entertainment options were limited. And so obviously our digital services did really, really well.

Obviously with more people working from home, more people studying from home, we know that iPad and Mac demand was very, very strong. On the other side, we had certain services like advertising, because of the reduced economic activity, AppleCare, because our stores were closed, they were affected negatively. And certain products like the iPhone or the Watch that are maybe more complex types of sales because of the complexity of the transaction.

They were also affected because so many points of sale were closed all around the world, not only our stores, but also our partner stores, right? So we had that dynamic throughout COVID. And now some of these businesses are rebounding.

I mentioned advertising and AppleCare. IPad and Mac, it’s difficult for us to gauge because we’ve been constrained for quite a long period of time, and the reality is that maybe the new normal after we exit COVID may be different from the past. For example, maybe there’s going to be hybrid models around work, for example.

And so it’s difficult to tell you on a net basis what that is. And this is very fluid, because it tends to change over time. I can certainly tell you that we’re all looking forward to a COVID-free world. I think that that would be very good for us and for our customers as well.

I broke Luca’s answer into paragraphs, just to make it easier to read. I find it interesting to be able to separate Apple’s long term trending/direction as a business from the shorter term (I hope) effects brought about by the pandemic.

Jean-Louis Gassée:

Once upon a time, Apple offered an easy-to-understand business model. The company made personal computers, small, medium, and large. Successfully positioned in the affordable luxury market sector, Apple devices sold well with healthy margins. Those margins helped finance strong R&D investments and took good care of employees, investors, and Uncle Sam.

All of Apple’s other services and accessories had but one raison d’être: raise the sales volumes and margins of the company’s personal computers.

And:

In Fiscal Year 2006, the year before the iPhone, iPod sales exceeded Mac revenue $7.7B to $7.4B. Before it became the iPhone company, Apple was all about the iPod.

Most importantly:

Behind the scenes, the iPod blazed the trail for the iPhone. Culturally, it created a taste for miniaturized devices; technically, it drove the Supply Chain Management discipline and connections that would become essential for the success of the iPhone.

The iPod marked a shift in Apple’s workings as a company and, of course, set them on an incredible growth path. Tim Cook joined Apple as Senior VP for worldwide operations in March 1998, bringing in a critical understanding of supply chain management. The iPod shipped in October 2001, the first real test of those skills.

Then the iPhone happened and Apple insiders had an almost religious epiphany: iPhone apps are digital files, not unlike a song in the iTunes Store. Somehow, everything had been preordained to work for an Apple store: The infrastructure, the payment system and, just as important, customer behavior. The iTunes Store begat the iPhone App Store.

Another shift:

The App Store became more than an iPhone support function, it became a gigantic business in itself. One that Apple doesn’t disclose but bundles into the Services category. The Services number includes much more than the undisclosed App Store revenue, it encompasses services such as iCloud and Music revenue, Apple Care, and the more visible Apple TV activities.

And:

The iPhone’s phenomenal success created a problem by weighing too much in Apple’s books: too seasonal, too risky because a so-so or worse model would have too much of a negative impact. Adding all sorts of services to the exploding App Store created the perception of recurring, sticky, less-seasonal revenue that would buffer Apple’s financials against iPhone uncertainties.

The shift toward services raises this question:

What happens to priorities, to company culture? What will be sacrificed and what will be preserved? For example, if budgetary restrictions are needed, what will be prioritized: the next Ted Lasso or the next Apple Silicon processor? Crises always happen and almost always come out of nowhere, a big intellectual property lawsuit, a mediocre iPhone, a big Augmented Reality flop, a stillborn Apple Car… In reality, a crisis tends to be something no one could have imagined, otherwise it would have been handled preventively.

And:

I naively hope Apple won’t lose its device-centered culture, where the sharpest tech candidates still dream of working on the next iOS version or the next Apple Silicon processor, as opposed to working on Hollywood deals.

Jean-Louis does a terrific job capturing Apple’s shifts over time, raising significant questions about Apple’s priorities as it evolves. A great read.

From this roundup from 9to5Mac’s Ben Lovejoy on analyst expectations:

Ahead of tomorrow’s AAPL Q3 2021 earnings report, analysts are expecting good news. The Wall Street consensus is that the Cupertino company will report fiscal Q3/calendar Q2 revenue of $72.93B – up from 59.69B in the same quarter last year.

They expect earnings per share to reflect both this dramatic revenue growth and continued stock buybacks that effectively increase the value of each remaining share.

Certainly a core issue on the call will be Tim Cook’s comments on the pandemic, both in the previous quarter and in terms of its impact on future performance.

Juli Clover, MacRumors:

Apple has made so many improvements to the Maps app in iOS 15 that it’s almost an entirely different experience. There are better driving directions, improved transit directions, and more immersive AR-based walking directions.

And:

The Maps design has once again been updated, and you can see everything at an incredible level of detail that wasn’t available before, especially in cities and in places where there was no detail before. This guide walks through all of the changes that have been introduced in the Maps app in ‌iOS 15‌.

First off, props to these iOS 15 guides Juli has been pulling together. I love the content, love the format. Easy to scan, get a sense of what’s new.

In this case, it’s all about Apple Maps in iOS 15. The changes here are excellent. Don’t miss the Globe View, a great addition to Maps.

AppleScoop:

It has been ten years since Apple last attended the National Association of Broadcasters Show, better known as the NAB Show. To the surprise of many, the NAB has announced in their exhibitor list – out of the blue – that Apple will be attending this years show after a decade of absence.

And:

Just over ten years ago, Apple held its last fated announcement at the NAB Show. On April 12, 2011, Apple announced Final Cut Pro X at the Final Cut Pro User Group Supermeet, an event held at the NAB Show. While it is unknown why Apple has decided to attend this year, their previous years were related to Final Cut, with Final Cut Pro X being announced at the NAB show in 2011 (to much criticism).

Here’s a link to the National Association of Broadcasters’ NABShow site.

Scroll down a bit to The Who’s Attending This Year section. In the first of the three-page slideshow, there’s Apple, between ABC and CBS.

The show starts on October 9th. It’ll be interesting to see what Apple has up its sleeve.

Ian Sherr, CNET:

A London-based entrepreneur is hoping to set off a competition between the physical and digital worlds, putting a 1973 job application filled out by Steve Jobs up for auction. The form Jobs apparently filled out for an unspecified position at an unspecified company will be available to buy either as a purportedly authenticated physical good or in digital form, as a nonfungible token, or NFT.

Interesting to watch Steve’s original job application go up in value, from $18K in 2017, to $175K in 2018, then in March to $222K.

If you’ve not seen it before, go to the official auction web site and check out the high res scans.

A twist to this version of the auction is the addition of an NFT version of the application. Might be old man yelling at a cloud, but this feels like pure money grab. I thought the purpose of an NFT is to benefit an artist, allow them to keep ownership even as their work is resold again and again. But the artist, in this case, is Steve Jobs. And the seller is just a 3rd hand buyer/reseller. Am I missing the point?

Juli Clover, MacRumors:

Apple in July 2021 began offering beta firmware for the AirPods Pro, with the software available for Apple Developer program members.

I don’t recall past AirPods firmware being distributed in this way.

‌AirPods Pro‌ firmware betas are limited to developers and are quite tricky to install, with an installation guide available below.

And:

Installing the firmware in an unauthorized way can put the ‌AirPods Pro‌ into an unusable state that necessitates an out-of-warranty repair, so non-developers should not attempt to install the software.

And, most importantly:

Apple says that once the ‌AirPods Pro‌ firmware has been installed, it’s important not to put un-updated earbuds into the charging case because they may be updated with the firmware.

This firmware features “FaceTime Spatial Audio and Ambient Noise Reduction”.

If you’re new to the NSO Pegasus spyware controversy, here’s a post that’ll get you caught up.

With that in mind, this from The Verge’s Mitchell Clark:

Amnesty International — part of the group that helped break the news of journalists and heads of state being targeted by NSO’s government-grade spyware, Pegasus — has released a tool to check if your phone has been affected. Alongside the tool is a great set of instructions, which should help you through the somewhat technical checking process. Using the tool involves backing up your phone to a separate computer and running a check on that backup.

Here’s a link to Amnesty’s instructions. A bit techie, but not too hard to follow if you are OK using Terminal.

José Adorno, 9to5Mac:

Over the past few weeks, 9to5Mac has been covering how criminals in Brazil are stealing people’s phones and using them to drain user’s savings in just a moment. Over the weekend, my iPhone 12 was stolen, but iOS 15 and many other precautions were very helpful and ensured that the situation was not as bad as it could have been.

This SIM replacement trick is troubling. If you’ve not read about this exploit and Apple/Google’s response, take a minute to read this 9to5Mac post.

Back to José’s stolen iPhone:

One of the greatest features available on iOS 15 is the ability to make the iPhone findable even after being turned off or factory reset as long as Activation Lock is enabled. Turns out, this really works in real life, as I still have access to the iPhone’s position even though I factory reset it.

Read the article, some good preventative takes (how to protect your iPhone before being stolen) and response advice (iPhone stolen: what to do next?)

If you do nothing else, create a PIN for your SIM. Easy to do, great layer of protection.

Good look at what’s changed with Notifications by Juli Clover, MacRumors.

What struck me most about this redesign is the notification tuning made possible in the Notification Summary interface:

For Notification Summary, you can select specific times for notifications to be delivered, and decide which app notifications will be relegated to the Notification Summary. You can choose just a handful of apps or all of your apps.

This is definitely worth experimenting with if you feel a bit overwhelmed with notifications, need to rein them in a bit.

Ben Lovejoy, 9to5Mac:

If you’re finding that your iPhone doesn’t unlock your Apple Watch after updating to iOS 14.7, it’s not just you. Apple has admitted that there’s a bug in the latest public release of iOS that affects iPhones with Touch ID instead of Face ID.

Not to be confused with errors unlocking your iPhone using Apple Watch, something folks with masks are finding incredibly useful.

But no, this is an issue for folks who use their iPhones to unlock their Apple Watch:

The Apple Watch automatically locks when you remove it from your wrist, an important security measure given that you can use it to make contactless payments without authentication, as well as access personal data in your apps.

When you first put your Watch on, there are two ways to unlock it: Enter your passcode on the Watch, or unlock your iPhone. The latter is often easier, so many people choose to do this.

If you are encountering this issue, make sure you have Unlock with iPhone enabled. To do this:

• Launch the Watch app on the iPhone paired with your Apple Watch
• In the My Watch tab, scroll down to Passcode
• Make sure Unlock with iPhone is enabled

Here’s an Apple support document with all the details.

CNBC:

Taiwan electronics manufacturer Foxconn said Wednesday that its factory in Zhengzhou — known as the world’s largest iPhone assembly plant — has not been impacted by major flooding in the city.

And:

Zhengzhou in China’s central Henan province has been hit with torrential rain. Authorities said it rained more in an hour on Tuesday than it normally would in an average month.

And this from Tim Cook:

“Our thoughts are with everyone affected by the flooding across Henan province, and the first responders helping people to safety,” Cook said, adding that Apple will be donating to support the relief effort.

How secure is the MagSafe Battery Pack attachment? Will it pop off easily, say, when I’m pulling it out of my pocket?

Watch the video. My takeaway, this puppy’s not coming loose too easily. That magnetic connection is solid.

Tim Hardwick, MacRumors:

In iOS 15, Apple introduced a new Focus feature that aims to help reduce distractions and let you zone in on a single thing. Focus does this by filtering notifications based on what you’re doing.

If you don’t have access to the iOS or iPadOS 15 beta, this is worth a look. Tim Hardwick does a nice job walking through the new Focus interface, exploring the full tree of options.

A short read, but it’ll give you a sense of how to set up and enable a Focus once you do have access.

Reddit:

I’m generally prone to losing things, but I actually hadn’t lost my wallet in a couple of years. I was overdue. I was on my way back from my first concert since the pandemic started, it ended in Bushwick around 4am and then I had to walk 30 minutes to the Metropolitan G (there weren’t any Ubers out at that time). By then, I was barely alive, and my wallet must have slipped out of my pocket into the train sometime between 4:30-5:30am. Most of the time if you lose your wallet on the subway, your chances of getting it back are so slim you don’t even try, but I had luck, a kind stranger, and airtags on my side.

Good story, and a real-world use case showing AirTags living up to their potential.

Salman’s blog:

USB-C was supposed to be the answer to the chaos that is charge and data cable compatibility. And to an extent it was. It unified ports and reduced the amount of cables and chargers I need to travel with. The cables themselves, however, turned out to be a mess. They come in many varieties with obtuse names, confusing markers, and unclear compatibility rules. Yet they all look exactly the same.

I couldn’t agree more.

What are the 8 different USB-C to USB-C cable assemblies? From Benson Leung’s post, we have:

1. USB 2.0 rated at 3A
2. USB 2.0 rated at 5A
3. USB 3.2 Gen 1 rated at 3A
4. USB 3.2 Gen 1 rated at 5A
5. USB 3.2 Gen 2 rated at 3A
6. USB 3.2 Gen 2 rated at 5A
7. USB4 Gen 3 rated at 3A
8. USB4 Gen 3 rated at 5A

Salman took Benson Leung’s post and used some nail polish to create easily identifiable cables. To see the result, follow the headline link, scroll to the bottom for a picture. One stripe for a 3A cable, two stripes for 5A.

This is a brilliant idea. I hope it gets some traction. As is, USB-C cables are a bit of a guessing game.

Washington Post:

The text delivered last month to the iPhone 11 of Claude Mangin, the French wife of a political activist jailed in Morocco, made no sound. It produced no image. It offered no warning of any kind as an iMessage from somebody she didn’t know delivered malware directly onto her phone — and past Apple’s security systems.

Once inside, the spyware, produced by Israel’s NSO Group and licensed to one of its government clients, went to work, according to a forensic examination of her device by Amnesty International’s Security Lab. It found that between October and June, her phone was hacked multiple times with Pegasus, NSO’s signature surveillance tool, during a time when she was in France.

And:

Pegasus can collect emails, call records, social media posts, user passwords, contact lists, pictures, videos, sound recordings and browsing histories, according to security researchers and NSO marketing materials. The spyware can activate cameras or microphones to capture fresh images and recordings. It can listen to calls and voice mails. It can collect location logs of where a user has been and also determine where that user is now, along with data indicating whether the person is stationary or, if moving, in which direction.

And all of this can happen without a user even touching her phone or knowing she has received a mysterious message from an unfamiliar person — in Mangin’s case, a Gmail user going by the name “linakeller2203.”

The instance described above is the tip of the iceberg, one story among many, a small part of a massive story that broke over the weekend. A few reads to get a sense of this:

• Here’s Amnesty International’s original report, filled with detail, the source of much of this information.

• This post from The Guardian dives into details on the hack, with a map (about halfway down) that shows in what parts of the world these hacks were concentrated.

From that Guardian post:

NSO has always maintained it “does not operate the systems that it sells to vetted government customers, and does not have access to the data of its customers’ targets”.

In statements issued through its lawyers, NSO denied “false claims” made about the activities of its clients, but said it would “continue to investigate all credible claims of misuse and take appropriate action”. It said the list could not be a list of numbers “targeted by governments using Pegasus”, and described the 50,000 figure as “exaggerated”.

And:

The Guardian and its media partners will be revealing the identities of people whose number appeared on the list in the coming days. They include hundreds of business executives, religious figures, academics, NGO employees, union officials and government officials, including cabinet ministers, presidents and prime ministers.

And, regarding iPhone specific attacks:

Guarnieri has identified evidence NSO has been exploiting vulnerabilities associated with iMessage, which comes installed on all iPhones, and has been able to penetrate even the most up-to-date iPhone running the latest version of iOS. His team’s forensic analysis discovered successful and attempted Pegasus infections of phones as recently as this month.

Looking forward to official Apple comment on this situation.