The Six Five team discusses Weak iPhone Sales?
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Transcript:
Daniel Newman: Another fun one, only because of their great success do we sometimes enjoy picking on Apple a little bit, but I think you and I both said this. I know I said this for sure, but to our plays came out with a report that said that there’s some cuts in production, some forecast cut production, cuts on the iPhone 16 basically it’s not that hot. So we’ve heard this cycle, super cycle, the next wave commentary. My first take on when I saw the report was, “Duh.” Okay, I’m just going to be candid. Besides the little button on the side, do you have one of these yet, the 16?
Patrick Moorhead: No, no. We’ll talk about that as we get in there.
Daniel Newman: Yeah. I just picked up my Pro Max 13. I’m a techie, what can I say?
Patrick Moorhead: I love it.
Daniel Newman: But in all serious, people aren’t that convinced. And look, I can anecdotally say, people I’ve talked to aren’t that convinced. I can also say, less anecdotally that the numbers now that are coming in suggest the same thing. Even on the day of the announcement, Pat, we heard the lines weren’t as long, that they were typically around a certain corner in New York and they did the big spiel. And Pat, here’s what I think is going on is we’ve entered the first cycle where software is more important than hardware. You could argue that’s been the case for a long time, but in terms of what was being promised to the market, it was software driven. Apple intelligence from the 15 pro forward will work on all those devices. And so if you’re sort of a spectator and you have a 14 or a 13 or even a 15 regular edition to run out and buy the 16, really besides an incrementally better camera, nominally different battery life, which most of us have not really found to be a real thing in the real world. We’re waiting for some Apple intelligence killer app to hit, something that we would be like, “Oh my gosh, I will use this every day.”
And the thing is, none of the Apple intelligence features really shipped out of the gate. So, I’m thinking there’s probably a somewhat meaningful part of the market path that’s sitting idly waiting to see Apple intelligence features in the wild being used and then finding that thing that they’re like, “I really want to do that. I really need the device that’s capable of doing that.” So I’m thinking maybe in elongated cycle rather than that sort of instantaneous. Now, holidays of course might tell another stories. We’re heading into holidays, Pat, but interestingly enough we said it was a nothing burger and it turns out that we might be right.
Patrick Moorhead: Yeah, Dan, there were a lot of decent features that I think enthusiasts would like the four x microphone, which by the way, that could be the one thing that could pull me in if it does better recordings. So when I’m listening to a keynote for instance, I’m sitting there, I want to do speech to text, I want to do transcriptions. And if that can do a better recording, I will probably buy that. There’s 4K 120 capture, which again really awesome camera and video aficionado analyst of my natural SOG is like, “I am all in, this is important to me. Let’s do that.” Keith on your side was really stoked about the four microphones so he can do his video podcasts every day. So yeah, there’s a lot to really like. The challenge though is for the normies, right? They want better battery life and I would’ve really respected Apple if it came out and really leaned into better battery life than the iPhone 15, which by the way, that battery life blows, okay? I can tell you it’s nowhere near where it was before. And Dan, I know you’re not a boomer, but you got the Boomer phone on the 13. If you want better battery life, do not upgrade because that is an amazing battery life system there. And then there is the AI part, the Apple intelligence that I think you articulated it well in terms of where we are. I want to bring this back to… When I did consumer products. It’s called the law of if-then.
If you have to have too many if-then statements to get the benefit, it’s not going to land. And I think what I learned is that if it’s greater than two if-thens, if you do this, if you do that, then you get the benefit. It’s not going to land without some radical form of marketing and promotion. And what are some of the, if-thens, right? If you have this handset, if you go to the beta then you can do this. If you can actually find that AI feature. There’s some analysts that I do respect who I agree with, which is it’s hard to actually find the AI features that are in there already, but we’ll see. I don’t think it’s going to have a long-term effect on Apple. Where this really matters is outside of North America and Western Europe where Android is very much king and that is where this conversation will matter. A company like Apple has about, they have to goof up or screw up for five straight years. There’s so much equity banked into their brand and to the experience and the lock-in they have on all of the add-ons. And quite frankly Apple Watch and AirPods are a lot more compelling and differentiated than iPhone.
