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Tim Cook vs. the narrative

Moving the Market: Tim Cook has unveiled a new suite of services that expands Apple's offerings in premium television, journalism, games and financial services. The rollout, and the media's response, highlight three misconceptions about what Apple is doing and why.

Misconception #1: Apple is pivoting.

• Several journalists have implied that Apple is pivoting away from hardware (the iPhone) and toward software (services) because iPhone sales growth has slowed. The evidence: Apple cut its revenue target earlier this year because of slow iPhone sales in China.

• The truth is more nuanced: Apple's services revenue has been growing steadily for years, from $3.7 billion in Q1 2013 to $10.8 billion in Q1 2019. So it's wrong to imply that services are just an escape hatch for slowing iPhone sales. It's actually just another way of selling the iPhone.

• Moreover, the iPhone market is not saturated. The iPhone accounts for less than 20% of global smartphone sales, which means there is ample room for growth. One bad quarter in China poses a significant challenge, but it doesn't spell the end of iPhone sales growth.

Misconception #2: Apple is taking on Netflix.

• Several journalists have implied that Apple's foray into original content marks the beginning of Apple's effort to go head to head with Netflix (and Disney, Amazon, etc.) in a war for Hollywood dominance.

• The truth: Apple is not going head to head with Netflix, because original content is not their core product. It's just one part of a broader offering that also includes music, games, news, fitness tracking, mobile payments, etc. They may compete for shows and talent, but their strategies and ambitions are very different.

• Moreover, Apple doesn't need to compete with Netflix or Disney, as I noted yesterday. It doesn't need to churn out a limitless inventory of original content, license content from others or make major content acquisitions. It just needs to offer enough unique content to give subscribers added value.

Misconception #3: Apple isn't ready.

• Several journalists, including me, walked out of yesterday's event with more questions than answers about Apple's video service. The company brought out A-list talent but stayed vague on grand strategy, pricing and the content itself, leaving some with the impression that their efforts were half-baked.

• The truth is that journalists and the public care about different things. To the general public, the takeaway from the Apple event was likely: "Wow, Apple's 'next big thing' has Steven Spielberg, J.J. Abrams, Reese Witherspoon, Jennifer Aniston, Big Bird and Oprah. I'll check that out."

• In rolling out this Hollywood A-List, Apple sent a signal to the market: It has the money and the scale -- "they're in a billion pockets," as Oprah put it -- to be a force in Hollywood. Consumers really don't need to know about the price of something six months before it goes on sale.

The Big Picture: Despite all the talk of change, pivots, etc., Apple's business strategy has been consistent from the beginning: It offers integrated hardware, software and services that make the iPhone an integral part of people's lives. In the grand scheme things, that makes Apple more immune to market forces than almost any other company in the world.

• Photos from the launch.

Bloomberg/Getty

Marketing the mercenaries

Shot, via Andrew Wallenstein:

• "The blinding wattage of all the assembled stars ... at #AppleEvent is a very muscular demonstration of how 'top shelf' Apple TV+ aims to be. Very on-brand for a company that strives to be best of class in everything it does."

Chaser, via Matthew Ball:

• "Yet almost all are mercenaries also working elsewhere, with no formalized/ongoing relationship with Apple other than a cheque for a unit of service/content."

The Big Picture: Apple's ability to assemble an all-star cast of Hollywood talent is impressive, but it's not the same thing as signing exclusive, long-term deals with showrunners like Ryan Murphy and Shonda Rhimes (see: Netflix) who can provide you with a wellspring of content.

• But ... that doesn't mean Apple can't win some awards.

📱 Rally the Market 📱

TL;DW: The Verge has cut yesterday's two-hour Apple event down to seven minutes, for which they deserve a Pulitzer. Details within on Apple's new gaming platform, new credit card, etc.

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Bob Iger may stay at Apple

Big on the SJC->BUR: Disney chief Bob Iger may stay on Apple's board of directors despite the impending conflict of interest between the two companies' new streaming services, sources close to the matter tell me.

The Workaround:

• Apple's original content platform will be a small fraction of its overall business, meaning the vast majority of issues that come before the board won't pertain to areas where Apple and Disney compete.

• That puts Iger in a different position than former Google chief Eric Schmidt, who resigned from Apple's board in 2009 amid increasing competition between Apple and Google in the smartphone space.

• If and when Apple's board is asked to weigh in on matters related to original content, Iger can always recuse himself.

The Big Picture: Apple is not competing with Disney. It is investing in original content as added value (and marketing) for its core product, the iPhone.

• That said, the lines of demarcation are becoming murkier. So depending on how Apple's content play pans out, the Iger relationship could ultimately become untenable.

🗞 Market Links 🗞

• Tim Cook launches the News+ subscription service (NBC News)

• Matt Murray plans a new hiring spree at WSJ (TalkingBiz)

• Susan Chira will take over at The Marshall Project (NYT)

• Rep. Ocasio-Cortez creates her own bump (Bloomberg)

• President Trump turns Mueller on the media (NBC News)

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Jordan Peele's moment

Talk of Tinseltown: Jordan Peele's innovative filmmaking has catapulted him beyond celebrity-du-jour status and into the canon of great Hollywood auteurs, with comparisons already being drawn to Alfred Hitchcock.

• The Big Picture: Peele's meteoric rise is a reminder of film's power to innovate and influence culture even in an era of tentpole superhero movies, sequels and remakes.

Peele's Power, via Variety's Rebecca Rubin:

• "'Us' debuted to a massive $70 million in North America, nearly doubling forecasts heading into the weekend.... and [becoming] the second-best debut of the year behind just Disney’s 'Captain Marvel.'"

• "'Us' now has the largest weekend for an original horror movie, surpassing 'A Quiet Place,' as well as the biggest launch for an original R-rated film ahead of 'Ted.'"

• "The marketing campaign for 'Us' emphasized Peele’s role in creating 'Get Out.' The director was the film’s biggest selling point."

What's Next, via Vox's Aja Romano:

• Peele "recently executive produced the Amazon Prime documentary Lorena, as well as another upcoming Amazon Prime series, The Hunt. He’s also executive-producing a remake of Candyman, the cult horror movie about gentrification that influenced Get Out."

• "The series he co-created for TBS, The Last O.G., is returning for a second season; Peele also co-wrote the recent YouTube Premium sci-fi anthology series Weird City."

Top Talker: The Twilight Zone, which Peele is reviving for CBS.

• Peele to NYT's Dave Itzkoff: “If you can predict where an audience thinks it’s going to go, you can use it against them. And they’ll love you for it.”

Bonus ... via The Bill Simmons Podcast:

• Simmons: "It's much harder to get into that 'you gotta see that' word of mouth vortex that every movie really wants to get into. ... That happened with 'Get Out.' ... At some point that turned into a movie where you almost felt inadequate if you hadn't seen it."

• Ben Stiller: "I think you're right. That's one of the few times that's happened recently."

What Next: Lessons in team-building, via Jonathan Tjarks: Your big man in the middle needs perimeter players.

See you tomorrow.