The Daily Observations

Morgan Stanley senses the dawn, a look at Big Tech’s big layoffs, and news of a couple of App Store investigations. 

Morgan Stanley Puts Apple at Top of Anticipated IT Turnaround

Here’s something we haven’t heard a lot lately: Positivity around the tech sector. Seeking Alpha has notes on a note from Morgan Stanley analyst Erik Woodring. The way he sees it, the world is not out of the woods yet when it comes to hardware sales, but it’s close. According to the piece, Katy Huberty’s successor thinks “the hardware sector is entering the ‘final innings’ of a late, middling cycle before the start of an industry rebound.” And you’ll never guess who he likes in that of course you will it’s Apple. 

According to Seeking Alpha, Woodring has named Apple “his top IT hardware pick for 2023,” calling the Cupertino-company, “a rare best of both worlds outperformer.” While warning that Apple “is not fully immune from deteriorating consumer electronics demand,” there is a lot going for it. The way he sees it, “The underlying drivers of Apple’s [business] model–a growing installed [customer] base and spend[ing] per user–remain intact.” Additionally, he says “the strength [and] stability of Apple’s ecosystem remains undervalued.”

Mr. Woodring has an “Overweight” rating on Apple shares. He’s set Morgan Stanley’s 12-month price target on the shares at $175.

Looking at Layoffs in Big Tech

Here’s a weird sort of statement: Things are better than they were before the pandemic, but not as good as at the height of it. What ghouls these mortals be, that there’s a way to see things in such a light. And yet, a piece from TechCrunch indicates that many more people are employed by “big tech” today than were at the start of 2020. 

That’s not the point of the piece. Reports by TechCrunch, CNBC, and many, many other sites spent line after line addressing layoffs at the likes of Alphabet, Amazon, Meta, and Microsoft. Each juxtaposed those with the apparent absence of layoffs at Apple. 

Dig this list: According to TechCrunch, while Amazon has laid off 18,000, that’s against the 800,000 the company hired over 2020 and 2021. The 12,000 Alphabet laid off is against the 52,000 it hired. Meta’s cut of 11,000 may be the worst, landing against the 27,000 it hired. And the 10,000 axed by Microsoft is against the 58,000 it hired. While most seem ready to praise Apple for having no layoffs, it was conservative in its hiring — adding just 17,000 to its workforce from 2020 to 2021 — 10,000 fewer than Meta, 35,000 fewer than Alphabet, 41,000 fewer than Microsoft, and 783,000 fewer than Amazon.

Layoffs at Apple Are ‘Practically Unheard Of’

The TechCrunch piece indicates that layoffs are practically unheard of as far as Apple’s concerned. The company did layoff 4,100 workers in 1997. That was a decision made by then returning Apple exec Steve Jobs. In mid-August of 2022, a piece from Bloomberg (via MSN) had Apple cutting “100 contract tech recruiters.” At the time, that was seen as notable not because of the 100 jobs lost (though that does stink), but because those jobs were tied to recruiting and hiring other people. Bloomberg saw that as support for an article it had run the month before saying “that [Apple] was decelerating hiring after years of staffing up, joining many tech companies in hitting the brakes.”

“…years of staffing up,” albeit slowly. Slowing hiring is “exactly what happened” according to TechCrunch, “when the company announced a hiring freeze in November.” Not to be that guy, but Apple never announced a hiring freeze in November. According to a piece from The Mac Observer, Insider announced a hiring freeze for Apple, as did Bloomberg. What Apple said was:

…due to the “current economic environment,” it has taken a deliberate approach in some parts of its business.

Apple said to Insider, “We are very confident in Apple’s future and are investing for the long term. We want to be thoughtful and make smart decisions that enable us to continue fueling innovation for the long term.”

Also worth noting, even Bloomberg said at the time that the alleged freeze did “not cover job roles related to research and development,” according to TMO, particularly those working on future devices and long-term initiatives.

But — you know… let’s keep saying Apple announced a hiring freeze anyway. 

HoloLens Hollowed Out?

It does not sound like R&D and emerging technologies are being spared by Microsoft. A piece from AppleInsider says the layoffs by Microsoft “effectively kill HoloLens & mixed reality projects.” That may change the cyberspace space. The way the report puts it:

Culling major teams behind the AR and VR efforts may indicate Microsoft isn’t interested in leading the way with the “metaverse” concept, leaving the field open for Meta’s established efforts and Apple’s long-rumored [AR/VR plans].”

Apple Adjacent Layoffs?

There is a report out there about Apple layoffs as well. You know how Apple runs stores inside other stores? What happens when customers stop frequenting those other stores? 

AppleInsider says the Cupertino-company “has started to lay off non-seasonal employees in its retail channel outside of Apple Stores.” The piece refers specifically to Apple’s retail presence in Best Buy locations. Quoting the report:

The layoff news was first disclosed from an email to AppleInsider. The email — which [the site says it has] since verified through other sources — says that some Apple retail channel employees who work in places like Best Buy stores have received a thirty-day notice about their rights as it pertains to a layoff.

The piece says this is not the usual end to seasonal work that follows the holiday shopping season. Those jobs are said by AppleInsider to be gone already. According to piece:

It’s not clear what percentage of the workforce is affected. It’s a notable enough volume of firings to be able to glean the information from multiple sources, however.

So far, there’s no official announcement from anyone about those jobs. 

Apple Seeks to Have UK Investigation into App Store Stopped on Technicality

The goofy quote of the day award goes to tech regulation expert Zach Meyers. MacRumors has Apple trying to stall an investigation in the United Kingdom against the Cupertino-company. According to the report, last November, the Competition and Markets Authority (CMA) in the U.K. started looking into “cloud gaming and mobile browser restrictions” put in place by both Apple and Google. Apple’s lawyers say there was a set timeframe for the investigation and the CMA missed it. The lawyers say, with time having elapsed, the investigation should be tossed. That prompted Mr. Meyers to say, “Apple’s complaints are purely about procedural niceties” and this “suggests that Apple wants to play hard-ball.” 

Apple regularly fights fines it could pay with money it makes before breakfast. Apple is bothered by shareholders telling Apple how Apple should do Apple. What “suggests that Apple wants to play hard-ball” is that it’s Apple and it doesn’t play. 

Also — missing the window may not mean much to the CMA. Even if the investigation is negated, MacRumors has FossPatents’ Florian Mueller indicating that:

If Apple wins, the CMA may simply wait for the UK’s new digital competition bill to enter Parliament next month, which could provide even greater oversight and far-reaching regulatory powers.

Brazil Investigating Apple Over Alleged Anti-Competitive App Store Practices

One continent and one hemisphere away, regulators in Brazil are also looking into App Store dealings. A piece from AppleInsider says antitrust authorities in Brazil are looking into alleged anti-competitive practices in Apple’s App Store. 

The Argentinian e-commerce company MercadoLibre filed a complaint with Brazilian regulators in December. AppleInsider has the company arguing that:

…Apple imposes restrictions on the distribution of digital goods and in-app purchases, such as requiring developers who offer digital goods or services inside an app to use Apple’s payment system, which is an Apple requirement.

The piece has the Brazilian regulating body saying, “Similar investigations are being conducted by antitrust authorities in other jurisdictions…” No word on which other jurisdictions they’re referring to, nor on how long the Brazilian investigation is likely to take. 

Today on The Mac Observer’s Daily Observations podcast

TMO Managing Editor Jeff Butts and I consider Big Tech’s big layoffs, including a sort of inspiring message from the head of Nintendo back a decade ago. Plus — a short Mailbag Monday on supply chain diversification. That’s all today on the Daily Observations Podcast from The Mac Observer.

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