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Continuity, cannibals, and Apple Pay: 6 key takeaways from Apple's Q4 earnings

Susie Ochs | Oct. 23, 2014
The news was nearly all sunshine during Apple's fourth-quarter 2014 earnings call on Monday, with sluggish iPad sales the one black spot on the otherwise blazing sun of record-setting revenue.

He went on. "I would look at what we talked about last week. Things like Continuity, and if you use your imagination and think about where that goes, there's no other company that can do that. Apple is the only one. I think this becomes so incredibly important moving forward, for customers living in an environment where they're using multiple devices. I would look at the skills, the capabilities, the passion of the company. The creative engine has never been stronger."

Emphasis ours, because yowza, let's think for a second about where that really could go. Apple already has you covered with computing devices and a phone--the next step is handing off directions from a mobile, personal device like an iPhone or an Apple Watch to HomeKit-compatible devices all around your house. We already see it in CarPlay--since the data walks around with you, on your phone, there's no logging in to apps in the car or having to enter your home address. It just knows you.

Watch out for Apple Pay
But Cook wasn't even done with Munster's question yet. "Apple Pay is classic Apple, taking something that is incredibly old, outdated, kludgy, where everyone is focused on everything but the customer, and putting the customer at the center of the experience and making something elegant. I would look at those things, and as an investor I'd feel great."

Earlier in the call, Cook was asked if Apple Pay would be a standalone business over time, or if Apple saw it as a feature to sell products. Why not both? Cook said it's not only the kind of feature they think will sell phones, but like the App Store, the more it's used, the more Apple's cut adds up.

"We see huge issues with the security of the traditional credit card system," Cook said. "Many people who have entered mobile payments are doing so in a way that they want to monetize the data that they collect from customers. And we think that customers in general don't want this. That they like to keep the data private. So we wanted to have ease of use, security, and privacy, and maximize all three. By doing this stuff, we think we will sell more devices because we think it's a killer feature."

"We do not charge the customer for the benefit. We do not charge the merchant for the benefit. However there are commercial terms between Apple and the issuing banks. But we're not disclosing what they are. Like any other contractural arrangement, those are a private sort of thing." Apple will report Apple Pay revenue in the Services category, alongside the billions of revenue the iTunes unit is already raking in.


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