How Apple Wins by Sensing and Responding

Apple no longer sits at the cool kids’ table. It runs the table. 

The company recently reported quarterly revenue of $91.8 billion, an increase of 9 percent from the year-ago quarter and an all-time record, and quarterly earnings per diluted share of $4.99, up 19 percent, also an all-time record. Apple continues to make fools of analysts who’ve questioned the company’s relevance, especially amid a slump in iPhone sales. Well, guess what: iPhone sales are doing just fine after all. And so is Apple’s stock price year over year:

Now consider this:

  • Siri, once the weak sister among smart voice assistants, has the world’s largest market share, even more than Amazon Alexa, Google Assistant, and Microsoft Cortana. Turns out the never-say-die iPhone and the release of AirPods Pro have helped propel Siri to a wider base of users.

What do all the above statistics tell you? Apple is defining its market as well as it always has, just in different ways that are perhaps not as earth shattering as the launch of the iPhone in 2007. (Let’s face it: the iPhone was like Van Gogh’s “Starry night over the Rhone” – a masterpiece and highwater mark that is seldom if ever matched again). For example:

  • Apple saw the rise of wellness care coming and positioned the Apple Watch not as a cool wearable but as a healthcare device. As CNBC reported, “Apple’s wearable category which includes the Apple Watch and AirPods wireless headphones, has been growing strongly. In the December quarter, that division brought in over $10 billion in net sales, a near 27% year-on-year increase.” In a newly published Hacker Noon article, I dig into the reasons why the Apple Watch has flourished in context of Apple’s strategy to be the data backbone of healthcare. 
  • Apple saw a growth opportunity in services (as opposed to hardware sales). Its Services division reported an all-time high in revenue growth for the most recent quarter, $12.7 billion versus $10.8 billion year over year. For its fiscal year 2019 (ended September 28, 2019), Apple reported $46.3 billion in Services, a 16 percent year-over-year increase. 
  • Apple got out in front of the rise of the voice-first world and introduced Siri in 2011, beating Amazon Alexa to the market by three years. (But Amazon completely outflanked everyone, including Apple, in the smart speaker market with the launch of the Amazon Echo in 2015.)

What’s next for Apple? Becoming a credible player in the streaming wars. Apple TV+, launched in November 2019, has a long, long way to go. Apple TV+ is being met with the same derision that Apple Music once faced. And whereas Apple Music could play catch-up by developing an formidable library of someone else’s music, Apple TV+ needs to develop original content to compete with Amazon, Prime Video, Disney+, and Netflix. 

But don’t ever underestimate Apple. The company has a huge reservoir of cash, and it’s willing to dip into it an example being the recent hiring of Former HBO CEO Richard Plepler to run Apple TV+. 

Do you really want to bet against Apple?

Why Old Hollywood Will Win at the 2020 Academy Awards

Last year at this time, the Academy Awards were buzzing with anticipation about Netflix possibly cleaning up at the Oscars. There was a very real possibility that the Netflix-produced Roma would become the first Academy Award Best Picture winner from a streaming company (which didn’t happen – although Roma won three Oscars). But even though Netflix landed 24 Oscar nominees in 2020, the 92nd Academy Awards are shaping up to be a victory for Old Hollywood studios, not the New Hollywood streaming companies.

Old Hollywood versus New Hollywood

There is a war waging between Old Hollywood and New Hollywood.

Old Hollywood is composed of well-established studios that earn their money largely by making crowd-pleasing movies distributed through traditional movie theaters. New Hollywood consists of streaming companies that finance storytellers who want to create daring, original work that sometimes challenges audiences. And they’ve joined forces with streaming companies for many reasons, such as Old Hollywood not financing their work, and New Hollywood making them lucrative offers. 

New Hollywood has steadily attracted big-name talent consisting of Old Hollywood executives and storytellers. For example, New Hollywood has attracted the likes of:

  • Storytellers such as Alfonso Cuarón (who made Roma with Netflix), Martin Scorsese (whose The Irishman was financed by Netflix), Viola Davis, and Forest Whitaker (Davis and Whitaker signed production deals with Amazon Studios in recent years).

As The Wall Street Journal reported in 2019, Netflix alone has been so successful at attracting talent that the company is changing how Old Hollywood studios compensate talent. 

It’s not accurate to say New Hollywood has disrupted Old Hollywood; more like New Hollywood has morphed out of Old Hollywood. And neither Old Hollywood nor New Hollywood has an exclusive lock on talent. All that said, Martin Scorsese’s widely reported diatribe against Marvel movies only hints at the resentment that New Hollywood artists feel about the way they’ve been treated by Old Hollywood studios. Old Hollywood companies, in turn, resent the way streaming businesses have developed movies with a streaming-first mentality, largely bypassing movie theaters and then expecting to have their films treated with the same respect and consideration accorded to films produced the traditional way. 

New Hollywood Gains Ground

New Hollywood is gaining ground when it comes to gaining artistic legitimacy. But this will not be a shining year for New Hollywood productions that have been nominated for major Oscars, most notably Netflix, which leads all studios with 24 Oscar nominations

Netflix’s most prominent noms include The Irishman (with 10), Marriage Story (six), and The Two Popes (three). The Irishman and Marriage Story are nominated for Best Picture. But being nominated and winning are not the same. In 2020, Netflix secured several Golden Globes nominations but was largely shut out. And the same thing will likely happen at the Oscars. The film pundits are predicting a poor showing for Netflix, and they’re probably right. Here’s why:

1 Netflix Faces Stiff Competition

Netflix-produced nominees are up against an extraordinary field of films, such as 1917Once upon a Time . . . in Hollywood, and Parasite. Old Hollywood studios showered the world with strong, critically acclaimed movies that also happen to be the types of movies that Oscar loves. Sony Pictures’s Once upon a Time  . . . in Hollywood is not only a career highwater mark for Quentin Tarantino, it’s also a movie about Hollywood – and Hollywood loves movies about itself. Universal/Amblin Partners’s 1917 is not only a career achievement for director Sam Mendes and cinematographer Roger Deakins, it’s also the kind of sweeping, emotional drama that wins Oscars.

By most accounts, 1917 is the front runner, which has gained momentum following major wins at the BAFTA Awards and Golden Globes. If the Academy of Motion Picture Arts and Sciences is going to reward a more daring, independent movie, look for Bong Joon-ho’s Parasite to get the nod.

Parasite wowed audiences on its release, but its popularity might have peaked too soon. In 2019, Roma showed that a foreign film could get serious consideration for Best Picture. Roma may have paved the way for Parasite.

2 Netflix Did Not Make Movies That Oscar Loves

On the other hand, Netflix’s offerings, while impressive, are not easy for the Academy to fall in love with. For example, The Irishman is long (well over three hours) and bleak (gangsters face the ravages of aging). One wonders how many members of the Academy saw The Irishman all the way through. Marriage Story is also downbeat, telling the tale of a crumbling marriage (as one Academy voter said anonymously, “ . . . it’s getting harder and harder for me to care about entitled people’s marital relationships”). The very attributes that made the films personal works for their directors have likely turned off Academy voters. Although you could argue that 1917 is bleak, the movie’s grand scale and compelling portrayal of an underdog soldier fighting the odds play well with the Academy.

3 Old Hollywood Wants to Put New Hollywood in Its Place

The identifies of the Academy of Motion Picture Arts and Sciences voters is a secret, but they’re widely perceived to represent the Old Hollywood establishment. The Academy has made changes over the past few years in an attempt to be more progressive and diverse, with mixed results. But it’s fair to assume that the Academy still represents an Old Hollywood perspective, which is decidedly anti-Netflix. As Brooks Barnes and Nicole Sperling of The New York Times wrote, “The academy’s old guard has resisted a dogged push by Netflix to join the best picture club, arguing that, since the streaming service does not release its films in a traditional theatrical manner, its offerings should be better considered by Emmy voters. (Helen Mirren, onstage at the most recent National Association of Theater Owners convention, used an expletive to refer to the company.)”

Change Is Coming

Of course, tastes are subjective. (If I could wave a magic wand, Once Upon a Time . . .  in Hollywood would win all the awards for which it is nominated.) But it’s only a matter of time before New Hollywood productions win Best Picture awards regularly. That’s because the Academy voters, whose composition is already changing, will eventually be composed of people who have grown up in New Hollywood. Meanwhile, the power holders of Old Hollywood will eventually pass away. As they do, they’ll take to the grave their animosity toward New Hollywood. As a result, streaming companies will establish a new normal for filmmaking. The question won’t be, “Can Netflix upstage the establishment?” but “Who is going to beat Netflix this year?”