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1/21/2018 Tim Cook Stumbles at His Specialty, Shipping Apple Products on Time – WSJ
https://www.wsj.com/articles/apples-latest-trend-product-delays-1515148201 1/7
As Apple Inc.’s longtime chief operating officer, Tim Cook was known for
ensuring that new products hit the market on schedule.
With Mr. Cook as CEO, though, Apple’s new gadgets are consistently late, prompting
questions among analysts and other close observers about whether the technology
giant is losing some of its competitive edge.
Of the three major new products since Mr. Cook became chief executive in 2011, both
AirPods earbuds in 2016 and last year’s HomePod speaker missed Apple’s publicly
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https://www.wsj.com/articles/appleslatesttrendproductdelays1515148201
TECH
Tim Cook Stumbles at His Specialty,
Shipping Apple Products on Time
Under CEO, the technology giant has been late delivering new devices
Updated Jan. 6, 2018 11�34 p.m. ET
By Tripp Mickle
AAPL – 0. 45% ▲
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1/21/2018 Tim Cook Stumbles at His Specialty, Shipping Apple Products on Time – WSJ
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projected shipping dates. The Apple Watch, promised for early 2015, arrived late that
April with lengthy wait times for delivery. Apple also was delayed in supplying the
Apple Pencil and Smart Keyboard, two critical accessories for its iPad Pro.
The delays have contributed to much longer waits between Apple announcing a
product and shipping it: an average of 23 days for new and updated products over the
past six years, compared with the 11-day average over the six years prior, according to a
Wall Street Journal analysis of Apple public statements.
Longer lead times between announcement and product release have the potential to
hurt Apple on multiple fronts. Delays give rivals time to react, something the company
tried to prevent in the past by keeping lead times short, analysts and former Apple
employees said. They can stoke customer disappointment and have cost Apple sales.
Production issues contributed to the company largely missing the important Christmas
shopping season with its two newest products, AirPods and HomePods. When the $349
HomePod was unveiled in June, Apple touted its superior sound and said it would be
ready in December. Then it announced in November that shipment would be delayed
Apple CEO Tim Cook, center, held an iPhone X during an event in Cupertino, Calif., in September, before its release.
PHOTO: JUSTIN SULLIVAN�GETTY IMAGES
1/21/2018 Tim Cook Stumbles at His Specialty, Shipping Apple Products on Time – WSJ
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until this year, causing it to lose out on a gift-giving season when such smart speakers
were big sellers. Apple hasn’t yet given a new arrival estimate.
Meanwhile, Amazon.com Inc. in September announced a redesigned Echo for $99 with
sound-boosting processing from Dolby Laboratories , Inc. Weeks later, Alphabet Inc.’s
Google unveiled an improved speaker of its own, the Google Home Max, for $399.
The HomePod delay was “a huge opening” for Amazon and Google to increase sales to
loyal iPhone and iPad customers, said Matt Sargent, an executive at research-based
consultancy Magid. Apple seems “to be losing step, and that’s a big strategic concern
with how they’re positioning the brand,” he said.
Apple declined to make Mr. Cook available. Apple seldom explains why products are
delayed and in the case of the HomePod said only that it wasn’t ready.
Some Apple competitors also have faced supply-chain issues. Samsung Electronics Co.
Ltd. issued a recall in 2016 for faulty batteries in the Galaxy Note 7, and Alphabet Inc.
Employees at a factory in Shanghai, China, where iPhones are manufactured. PHOTO: QILAI SHEN�BLOOMBERG
NEWS
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https://www.wsj.com/articles/samsung-investigation-blames-battery-size-for-galaxy-note-7-fires-1484906193
1/21/2018 Tim Cook Stumbles at His Specialty, Shipping Apple Products on Time – WSJ
https://www.wsj.com/articles/apples-latest-trend-product-delays-1515148201 4/7
issued a two-year warranty for its Pixel 2 after reports the smartphone was
experiencing screen burn-in.
And Mr. Cook’s tenure has been successful by other measures. Revenue has more than
doubled, despite stalling in the past two years, and Apple’s share price has more than
tripled in the past six years to record-high territory. The company has said it expects in
final three months of 2017 to hit a new sales record.
One reason for the delays could lie in the differences in approach between Mr. Cook and
his predecessor Steve Jobs. Mr. Cook announces products and shipment dates earlier
than did Mr. Jobs, who former employees said preferred waiting until a product was
ready for shipment before publicizing it, except for unique devices like the iPhone and
Apple TV.
For instance, Apple shipped its flagship handset, the iPhone X, in November, six weeks
later than it usually does with new models following production bottlenecks over the
summer.
Mr. Cook said during a November interview with The Wall Street Journal that Apple
would have preferred to ship the iPhone X, 8 and 8 Plus simultaneously in September
when the devices were introduced, but “didn’t have that choice” because the iPhone X,
which was slated to ship later, wasn’t ready. Still, he went with announcing all three
devices at the same time so that customers could choose the phone they most wanted.
The staggered schedule led many customers to hold off iPhone purchases in
September and October, triggering a 7.6-percentage point decline in U.S. market
share for smartphones in the October quarter to 32.9%, according to Kantar
Worldpanel. Mr. Cook acknowledged in the interview the release schedule may have
affected sales but was best for customers.
https://www.wsj.com/articles/iphones-summer-production-glitches-create-holiday-jitters-1504801636
1/21/2018 Tim Cook Stumbles at His Specialty, Shipping Apple Products on Time – WSJ
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Neil Cybart, who runs Above Avalon, a site dedicated to analysis of Apple, said he has
grown concerned that the delays could indicate Apple is struggling with limited time
and attention of talented engineers and executives working across so many products.
“It’s becoming much harder to brush this off as business as usual,” Mr. Cybart said of
the late deliveries.
Of the 70-plus new and updated products launched during Mr. Cook’s tenure, five had a
delay between announcement and shipping of three months or more and nine had
delays of between one and three months. Roughly the same number of products were
launched during Mr. Jobs’ reign, but only one product was delayed by more than three
months and seven took between one and three months to ship after the initial
announcement, according to the Journal’s calculations.
Updated models of its biggest products—iPhones, iPads and Macs—largely have
arrived on schedule. But in recent years, Apple has added new products at a much
faster clip than under Mr. Jobs, who engineered Apple’s revival in the early 2000s
partly by slashing its number of products. The Apple co-founder believed that sales
would rise if Apple made fewer but better devices.
Under Mr. Cook, who oversaw manufacturing and operations before becoming CEO,
Apple’s product portfolio has more than doubled since 2007, and now includes eight
iPhones, four iPads, a dozen Macs, two smartwatches, two TV-streaming devices and
an array of accessories.
Apple’s large and global customer base also add to logistical and manufacturing
challenges, former employees said. The company now has an estimated 1.1 billion
devices in use world-wide, about triple the 400 million in early 2013, according to
market-research outfit Asymco.
Former employees also cite the increasing complexity of Apple’s devices as a
contributing factor in the delays. AirPods feature lasers that detect when the device is
inserted into an ear, which has made manufacturing more difficult. With the facial-
https://www.wsj.com/articles/among-the-iphones-biggest-transformations-apple-itself-1497951003
1/21/2018 Tim Cook Stumbles at His Specialty, Shipping Apple Products on Time – WSJ
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recognition camera on
the iPhone X, Apple had
production issues partly
because its miniature,
infrared laser was so
sensitive that it could
easily be knocked out of
alignment, a person
familiar with the
production process said.
At the same time, Apple
has moved to control
more components in its
supply chain. For early models of the iPhone, Apple would buy an entire camera from
one supplier, former employees said, but in more recent years, they said the company
would source each component in a camera from lens to sensor to adhesives.
Drilling deeper into the supply chain helped Apple control costs and differentiate
devices from rivals, the people said, but also required more staff and coordination
between suppliers and assemblers. Apple has increased its number of employees
sevenfold in the decade since it launched the iPhone.
“It’s not the little Ferrari that Steve built for himself,” said Roger Kay, an analyst with
Endpoint Technologies Associates. “It’s become this big organization, and that has to
contribute to some unevenness of execution.”
Write to Tripp Mickle at Tripp.Mickle@wsj.com
Appeared in the January 6, 2018, print edition as ‘Lateness Bedevils Apple CEO Cook
New Apple Trend: Late Gear Delivery.’
The Apple AirPod PHOTO: MARCIO JOSE SANCHEZ�ASSOCIATED PRESS
https://www.wsj.com/articles/apple-iphone-x-production-woe-sparked-by-juliet-and-her-romeo-1506510189
mailto:Tripp.Mickle@wsj.com
1/21/2018 Tim Cook Stumbles at His Specialty, Shipping Apple Products on Time – WSJ
https://www.wsj.com/articles/apples-latest-trend-product-delays-1515148201 7/7
Copyright ©;2017 Dow Jones &; Company, Inc. All Rights Reserved
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CURRENT EVENT EXAMPLE (first article is assigned, second article is also assigned, last article you find on your own to summarize – do NOT use first or second article to summarize)
1. What is different about new iPhone? Apple is offering many upgrades in the new phone, such as battery life, better camera, more storage, and brighter screens. I believe that these enhancements are incremental versus revolutionary. This is one of the first times in recent history that the iPhone has not under gone a major design change.
2. How are pricing strategies of wireless carriers affecting sales? Pricing strategies of wireless carriers have resulted in declining iPhone sales recently. The strategy that affected this is that it is more expensive to upgrade your phone and people are keeping their old iPhones longer because they do not see big improvements in newer versions. This could have long lasting consequences on the industry.
3. What is WAZE? Google acquired WAZE in 2013. WAZE provides real time driving conditions from other drivers. Google is planning on having different drivers from the same companies communicate with each other regarding morning and after work commutes. They are able to share information relatively easily through WAZE.
4. Talk about role of driverless cars. The role of driverless cars at Google and Uber are attempting to revolutionize the way we use transportation. One of the main goals of driverless cars is safety. There still is much testing to be done until driverless cars are in the marketplace on a regular basis. Other companies who are pursuing this technology include GM, Ford, and Tesla.
5. Article summary – Wall Street Journal, “Global Air Travel Continues to Grow”, Cowan, Sept. 18, 2015.
According to many industry experts, air travel has grown tremendously in the last ten years. This makes sense as the economic times have been relatively good in most parts of the world. There are many new airlines in Asia which have increase the supply of flights. There are some areas of uncertainty in terms of growth of air travel. One such area is Europe where Britain’s vote to exit the European Union could decrease air travel between countries. Also, the rise of terrorist attacks around the world may keep more people closer to home. While this could cause some in the airline business to lower expectations, there are still plenty of growth opportunities in China where the number of people now able to afford air travel has increased. Oil prices also affect air travel, which has helped with keeping costs lower.
“The Cashless Society Has Arrived – Only It’s in China”, Abkowitz, Jan. 4
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1. Why are the data mobile payments companies collect so important? How is that data used? 2. How often do you pay with mobile payments, credit cards, checks or cash? Are your percentages similar to the percentages mentioned in the article? What influences the type of payment you use? 3. Mobile payments are not used as extensively in the U.S. as they are in China. What steps could a company take to encourage greater use of mobile payments in the U.S.?
“Tim Cook Stumbles at His Specialty, Shipping Apple Products on Time”, Mickle, Jan 6 |
1/21/2018 The Cashless Society Has Arrived— Only It’s in China – WSJ
https://www.wsj.com/articles/chinas-mobile-payment-boom-changes-how-people-shop-borrow-even-panhandle-1515000570 1/10
BEIJING—Soliciting handouts near a grocery store, Zhao Shenji, a slender man with
shorn hair, made giving easy for Beijing residents accustomed to relying on their
smartphones.
“Recommend using WeChat Pay,” said a placard the beggar displayed.
It was a literal sign of the times. Payment via mobile-phone services such as WeChat is
sweeping the country. After gaining a beachhead as a means to buy things online,
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https://www.wsj.com/articles/chinasmobilepaymentboomchangeshowpeopleshopborrowevenpanhandle1515000570
The Cashless Society Has Arrived—
Only It’s in China
Mobile payments surge to $9 trillion a year, changing how people shop, borrow—even
panhandle
January 4, 2018
By Alyssa Abkowitz
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1/21/2018 The Cashless Society Has Arrived— Only It’s in China – WSJ
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mobile payments moved on to store purchases and are fast becoming the way many
people in China pay for just about everything.
That includes small personal debts. Richard Lau, a young management consultant
waiting to get into the historic St. Michael’s Cathedral in Qingdao one recent day, found
he had no cash for the 20-yuan admission, so he borrowed it from another man in line
and immediately zapped him the amount by phone.
Behind the trend are internet titans Alibaba Group Holding Ltd. and Tencent Holdings
Ltd., which are elbowing aside banks to take a growing role in daily commerce. Their
success offers a glimpse of a future where technology firms drive innovations in finance
just as they have in retailing, autos and the media.
Though the U.S. saw $112 billion of mobile payments in 2016, by a Forrester Research
estimate, such payments in China totaled $9 trillion, according to iResearch Consulting
Group, a Chinese firm.
A woman scans an Alipay code to make a payment in Beijing. PHOTO: HOW HWEE YOUNG�EPA�SHUTTERSTOCK
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For Alibaba and Tencent, the payoff isn’t just the transaction fees they make from
merchants, typically 0.6%. It’s also the consumer data collected, which can transform
their apps into marketing platforms for an expanding array of services, from bike
sharing to travel.
Some of the repercussions of increasing mobile payments are just coming into
view. The payments haven’t been required to go through the central bank’s
clearing system, making it harder for China’s monetary authorities to follow capital
flows and watch for money laundering and fraud. The People’s Bank of China has
ordered a new payment-clearing platform that will require nonbank financial firms to
give it a clearer view of mobile payments by the summer of 2018.
Consumers also are being offered more pitches for loans, investments and other
financial products via smartphone. Short-term consumer credit in China soared 160%
in the first eight months of 2017 from a year earlier, according to the central bank.
Some analysts think the growing ease of borrowing is part of the reason.
Chinese, meanwhile, are making less use of old-fashioned cash, as in coins and folding
money. They spent about 66 trillion yuan (nearly $10 trillion) that way in 2016, down
about 10% in two years, according to a central-bank payments report.
The path to mobile payment was blazed by Alibaba, which hosts online shopping
bazaars where merchants sell goods to consumers. More than a dozen years ago,
Alibaba, taking a page from the U.S. company now called PayPal Holdings Inc., started a
system called Alipay as an escrow service. It would hold payments until shoppers
received their goods.
The service caught on among buyers who didn’t always trust vendors to deliver as
promised. Alipay evolved into an online- and mobile-payment service and passed
PayPal as the largest mobile-payment platform in 2013.
1/21/2018 The Cashless Society Has Arrived— Only It’s in China – WSJ
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That year, Tencent linked a mobile-payment system to its wildly popular WeChat
instant-messaging app. With Alipay already in place, the challenge for Tencent was
getting people to link their bank accounts to its service.
It devised a strategy based on the Lunar New Year, when Chinese people give red
envelopes of cash. Tencent encouraged WeChat users to send digital red packets to
friends for the 2014 Lunar New Year, letting them input a sum of money and send it to
friends, who would divide the loot.
In a clever angle, Tencent set things up so those who opened their virtual envelopes
first would get a bigger share. Over a 24-hour period, 16 million red packets were sent,
and suddenly WeChat Pay was in the mobile-payments game. It now has about 40% of
China’s mobile-payment market, versus 54% for Alipay, according to iResearch.
They work in similar ways. People link their bank accounts to the app, then can pay for
things either by scanning a merchant’s QR code or having the merchant scan theirs.
People also can transfer money by tapping on an icon in WeChat or Alipay.
At a night market in Taiwan recently, Manni Cheng, a textile saleswoman from
Shanghai, paid cash for grilled prawns but then noticed the vendor accepted Alipay.
She asked for her cash back and paid with her phone.
Ms. Cheng said she likes Alipay because it lets her track her spending and avoid
carrying a lot of cash. Money in her Alipay balance is transferred to the app’s money-
market fund.
“It’s a payment tool with wealth-management functions,” Ms. Cheng said.
The seamless use of phones as wallets rarely fails to amaze foreigners traveling in
China. Diego Merino, an education recruiter from New York, was in Beijing recently and
wanted to buy dumplings for lunch. While he asked a friend for cash, “someone else
walked up, paid with his phone and walked away,” Mr. Merino said. “It took about three
1/21/2018 The Cashless Society Has Arrived— Only It’s in China – WSJ
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seconds.”
Tencent has created a platform for businesses so customers can “follow” them for
Zhao Shenji has a WeChat code to encourage people in Beijing to give him handouts. PHOTO: ALYSSA
ABKOWITZ�THE WALL STREET
1/21/2018 The Cashless Society Has Arrived— Only It’s in China – WSJ
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news and discounts. Customers who follow Gap Inc., for instance, might be alerted to
promotions and discounts when they return to the store, potentially generating more
sales for Gap and revenue for WeChat.
Alibaba can monitor the shows people watch on its Youku Tudou video-streaming
site and push ads targeted to them, generating ad commissions and product sales
for Alibaba, plus a clearer picture of consumer behavior. While using the data within
their ecosystems, both internet giants say they don’t sell it to others.
Conditions in China made it ripe for this innovation. Credit cards never caught on in a
big way. Discretionary spending wasn’t an option for most people until recent years,
and there has long been a cultural aversion to debt in China. On top of that, the
government made it tough for Visa Inc. and Mastercard Inc. to set up shop.
The rise of tech companies as financial powers has dealt a blow to traditional banks.
China’s state-owned banks lost nearly $23 billion in fees in 2015 they might have
collected from card fees, according to a November 2016 report from EY (formerly Ernst
A worker scans a driver’s smartphone to charge a toll on an expressway that links the Chinese cities of Shanghai,
Hangzhou and Ningbo. PHOTO: VCG�GETTY IMAGES
1/21/2018 The Cashless Society Has Arrived— Only It’s in China – WSJ
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& Young) and Singapore’s DBS Bank. The report projected the annual fee loss could
widen to $60 billion by 2020.
The larger problem for banks might be that Alibaba and Tencent often know more
about their customers than they do. If a Beijing car dealer uses a bank debit card
for a business trip to Shanghai, the bank knows what airline he or she flew, as well as
the hotel and restaurants patronized. “But if the ‘customer interface’ is happening
elsewhere, the bank has zero visibility over transactions,” said James Lloyd, Asia-
Pacific FinTech Leader at EY. “That’s not a good situation to find yourself in.”
U.S. payment-processing firms have been ramping up their own digital-wallet efforts.
Visa and Mastercard both have mobile apps that allow users to pay via near-field
communication and are incorporating biometrics into their offerings. They also work
with Apple Pay and Samsung Pay.
PayPal, which allowed people to beam money to each other via Palm Pilots in the late
1990s, has formed partnerships with more than 20 other companies to extend its
mobile payments, including Alphabet Inc.’s Google and Chinese search giant Baidu Inc.
About 34% of PayPal’s payment volume is mobile, said Bill Ready, chief operating
officer.
Smartphones are vastly more common than Palm Pilots ever were, yet Apple Inc. has
struggled to get consumers to use its Apple Pay service, now accepted at more than
50% of all U.S. retail locations.
Just 19% of iPhone users have tried Apple Pay at least once, according to an estimate by
Loup Ventures, a venture-capital firm. Loup said about 35% of all new iPhones sold in
2017 have activated Apple Pay. Apple said in November that active users of the service
more than doubled, and annual transactions are up threefold.
In some parts of the world, changes that resemble China’s are taking place. In
Scandinavia, Nordic and Dutch banks have cut total branch levels by about 50% from
https://www.wsj.com/articles/paypal-profit-rises-as-user-growth-and-volume-hit-milestone-1501104645
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peak levels, and Sweden hasn’t had checks since the late 1980s, according to Citi
Research, part of Citigroup Inc.
Tencent and Ant Financial Services, the Alibaba affiliate that operates Alipay, are
forming partnerships with payment processing companies across Europe and
investing in mobile-payment firms in India, Thailand and other countries.
Ant Financial also sought to buy U.S. money-transfer firm MoneyGram International
Inc., whose 200-country network enables users to send cash through banks, stores and
kiosks. But the companies said Tuesday that a U.S. national-security panel refused to
approve the $1.2 billion deal.
WeChat Pay and Alipay are gaining attention in U.S. tourist centers after striking deals
with hotels and resorts. A group of Chinese tourists recently dined at the Bacchanal
Buffet at Caesars Palace in Las Vegas, where the menu includes T-bone Australian
lamb, chilled crab legs and handmade dim sum. They settled their bill with a
smartphone.
A payment made using WeChat in Bangkok. WeChat and rival Alipay have about 90% of the mobile-payment
market in China and want to expand in other countries. PHOTO: XINHUA�ZUMA PRESS
http://quotes.wsj.com/MGI
https://www.wsj.com/articles/moneygram-and-ant-financial-halt-merger-deal-1514931496
1/21/2018 The Cashless Society Has Arrived— Only It’s in China – WSJ
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“One couple stopped to watch the WeChat Pay transaction and asked for an
explanation,” said Bruce Bommarito, a Caesars executive. “They were surprised…and
wanted to know if this payment method was available to Americans as well.”
Americans can sign up for WeChat but can’t link it to U.S. bank accounts. Alipay isn’t
available for Americans as of now.
Tencent and Alibaba say they have no plans to
push their payment platforms to U.S. consumers.
Many Americans don’t see the need for mobile
payments, since their plastic cards and cash are
welcomed and some merchants still accept
checks.
“Any new way of paying has to prove itself to be incrementally better than any other
options you have,” said James Wester of research firm IDC Financial Insights. In the
U.S., “plastic is convenient, widely accepted and understood by the customer.”
—Junya Qian and Liyan Qi contributed to this article.
Write to Alyssa Abkowitz at alyssa.abkowitz@wsj.com
Corrections & Amplifications
An earlier version of this article included a quote from Jim McCarthy, and incorrectly
named him as a Visa executive. Mr. McCarthy is no longer with the company. (Jan. 4)
Appeared in the January 4, 2018, print edition as ‘The Cashless Society Has Finally
Arrived—In China.’
Copyright ©;2017 Dow Jones &; Company, Inc. All Rights Reserved
This copy is for your personal, noncommercial use only. To order presentationready copies for distribution to your colleagues, clients or customers visit
http://www.djreprints.com.
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1/21/2018 The Cashless Society Has Arrived— Only It’s in China – WSJ
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