Analyst Take: It's A Mixed Showing For Apple On iPhone Launch Day

Patrick Moorhead

I had the opportunity to attend Apple’s fall event in Cupertino today. Coming on the heels of the IFA Berlin event which analyst Mark Vena covered here, Apple’s fall event signals what the company will be selling for the western holidays and in Q1. While Apple has been successfully diversifying its business over the last two years, its business success is very much tied to the vaunted iPhone franchise. While many good journalists have already covered the news, I wanted to focus more on my opinion and meaning of the announcements.  Overall, when I look across iPhone, iPad, Watch, Apple TV+ and Arcade, I believe Apple moved the needle inside its own ecosystem, but not with Android, Windows or Chromebook users.

Apple Arcade

The news: Arcade will be available on the App Store on Thursday, September 19 with iOS 13. For $4.99 per month, users get the unlimited family (6 members) access to the entire catalog of over 100 exclusive games, playable across iPhone, iPad, iPod touch, Mac and Apple TV.

Analyst take: The family-friendly titles and cross Apple platform are nice, but I believe the biggest news was the $4.99 per month price point for an all-family plan. For premium Apple customers, this will be a no-brainer.  I see Apple selling many of these subscriptions to families with an assortment of iDevices.

Potential limiters, though, are the lack of support for Android and Windows and Xbox and PlayStation devices, the two highest-volume smartphone, PC and gaming console platforms on the planet. With that lack of support, I view this more of a platform enhancement or lock-in to make the platforms stickier.

Apple TV+

The news: Apple TV+, priced at $4.99 per month, will launch November 1 in over 100 countries and regions. Highlighted original shows included “The Morning Show,” “Dickinson,” “See,” “For All Mankind” and “The Elephant Queen.” It will be on the Apple TV app on iPhone, iPad, Apple TV, iPod touch, Mac, and via a web browser. Starting today, customers who purchase any iPhone, iPad, Apple TV, iPod touch or Mac can enjoy one year of Apple TV+ for free. Like Arcade, the sub includes up to six family members.

Analyst take: Like Arcade, the biggest news was the $4.99 price point for what look to be some unique titles. I do believe Apple will have at least one hit across the catalog, like The Handmaid’s Tale for Hulu, making it a no-brainer for customers in every ecosystem.  I applaud web access to Apple TV+ but would have preferred an Android and Windows app. Lack of an Android app will limit uptake, and I believe over time, Apple needs to add this like its Music app.

Apple iPad

The news: Apple announced its 7th-gen iPad, a 10.2” Retina Display tablet supporting the full-sized Smart Keyboard ($159) and Pencil 2 ($129). It starts at $329 (32GB model), is $429 for a  (128GB model) and is powered by the A10 Fusion chip, introduced in 2016 with the iPhone 7. It is orderable today will be in stores on Monday, September 30.

Analyst take: I applaud Apple in improving its game on multitasking features with iOS13, but I don't believe it will move the needle at $329 versus lower-priced Windows notebooks or Chromebooks. When one factors in the extra cost for an optional pencil ($99-$129), keyboard case ($159), and extra storage ($100) the low-priced iPad becomes much more expensive. At 10.2” there’s only so much work that can get done on it. Since the inception of iPad, the Windows 10 and Chromebook experience has improved considerably which makes it harder to justify the unique iPad experience over a broad array of use cases.  Apple also presented that this iPad was much more performant than the leading notebook PC. That PC wasn’t cited, nor was its configuration or the benchmarks used to make the claim. I believe Apple could engender more trust if it made those claims and provided the backup at the time of the claim.

Apple Watch

The news: Apple announced the Watch Series 5 with an always-on Retina display, compass, and international emergency calling. Watch Series 5 is available in aluminum, stainless steel, ceramic, and all-new titanium and with watchOS 6, offers menstrual Cycle Tracking, Noise tracking, and Activity Trends. The company also announced a new health study app to facilitate three new studies. While not in the press release, Watch Series 3 will start at $199.

Analyst take: Watch is the company's largest mid-term opportunity beyond services and offers a unique and valuable experience. The biggest news to me was the $199 price point for Watch Series 3. While it doesn't have all the bells and whistles as Watch 5, it will attract many first-time buyers. The always-on Watch display and compass are useful features delivering better experiences, but I don't believe they will result in current customers upgrading.  I love strategically where Apple is going with its health and safety capabilities but was disappointed to not see a sleep study or feature mentioned. Lack of sleep is the new smoking and needs to be addressed.  Sleep is hard, but hard problems are what Apple solves, right?

Apple iPhone 11, iPhone 11 Pro, iPhone 11 Pro Max

The news: The 6.1” display iPhone 11 includes a dual-camera system (wide and ultra-wide) with photo Night mode and supports 4K 60 video using Smart HDR using machine learning to improve the output. The new camera assembly and glass backing is one piece of milled glass. The smartphone is powered by the new Bionic 13 chip, and Apple claimed up to 20 percent faster CPU and GPU than A12 and new Machine Learning Accelerators in the CPU providing 1 terraops.

The iPhone 11 Pro and iPhone 11 Pro Max leverages the same Bionic 13 chip in the lower-priced iPhone 11 and adds what the company calls its “Super Retina XDR” OLED display (2M:1 CTR, 1200 nits) and a third telephoto camera with an f/2.0 low light aperture.  Battery life was quoted as an extra 5 hours of battery life the Pro Max provides over the Xs Max

Patrick Moorhead)

Analyst take: I believe Apple raised its game to keep most of its current premium iPhone customers happy. The most significant features of Pro were its improved camera with the third, wide-angle lens (Pro), a night mode, and huge battery life (Pro). The new A13 Bionic is impressive with its performance gains, but it sure would have been nice to know how these claims were tested. I asked Apple and am awaiting a response. I do believe, and I need to test this myself to be sure, that the Pro will provide the industry’s best video capture experience. Finally, while I didn't expect it, I think the lack of a sub 6Ghz 5G modem option will hurt Apple premium sales in China. I do not see the new lineup driving many to switch from premium Android as many of these already had triple cameras and all have 5G supported by the 150 5G models Qualcomm announced at IFA.

Patrick Moorhead

Wrapping up

All in all, Apple presented some puts and takes across hardware, software, and services. When I step back, I think Apple will keep most of its current customers happy and staying put.

The $199 Series 3 Watch will drive a ton of volume. The $4.99 service price points seemed low. One the downside, I believe, is the lack of 5G on its Pro line. With 150 competing 5G smartphones on the way enabled by Qualcomm, its hard for me to imagine Apple not losing some business in Q4 in China, where 5G is a state mandate. In Q1, I may be saying this for Western Europe and in Q2 I may be saying this for North America.

">
Patrick Moorhead

I had the opportunity to attend Apple’s fall event in Cupertino today. Coming on the heels of the IFA Berlin event which analyst Mark Vena covered here, Apple’s fall event signals what the company will be selling for the western holidays and in Q1. While Apple has been successfully diversifying its business over the last two years, its business success is very much tied to the vaunted iPhone franchise. While many good journalists have already covered the news, I wanted to focus more on my opinion and meaning of the announcements.  Overall, when I look across iPhone, iPad, Watch, Apple TV+ and Arcade, I believe Apple moved the needle inside its own ecosystem, but not with Android, Windows or Chromebook users.

Apple Arcade

The news: Arcade will be available on the App Store on Thursday, September 19 with iOS 13. For $4.99 per month, users get the unlimited family (6 members) access to the entire catalog of over 100 exclusive games, playable across iPhone, iPad, iPod touch, Mac and Apple TV.

Analyst take: The family-friendly titles and cross Apple platform are nice, but I believe the biggest news was the $4.99 per month price point for an all-family plan. For premium Apple customers, this will be a no-brainer.  I see Apple selling many of these subscriptions to families with an assortment of iDevices.

Potential limiters, though, are the lack of support for Android and Windows and Xbox and PlayStation devices, the two highest-volume smartphone, PC and gaming console platforms on the planet. With that lack of support, I view this more of a platform enhancement or lock-in to make the platforms stickier.

Apple TV+

The news: Apple TV+, priced at $4.99 per month, will launch November 1 in over 100 countries and regions. Highlighted original shows included “The Morning Show,” “Dickinson,” “See,” “For All Mankind” and “The Elephant Queen.” It will be on the Apple TV app on iPhone, iPad, Apple TV, iPod touch, Mac, and via a web browser. Starting today, customers who purchase any iPhone, iPad, Apple TV, iPod touch or Mac can enjoy one year of Apple TV+ for free. Like Arcade, the sub includes up to six family members.

Analyst take: Like Arcade, the biggest news was the $4.99 price point for what look to be some unique titles. I do believe Apple will have at least one hit across the catalog, like The Handmaid’s Tale for Hulu, making it a no-brainer for customers in every ecosystem.  I applaud web access to Apple TV+ but would have preferred an Android and Windows app. Lack of an Android app will limit uptake, and I believe over time, Apple needs to add this like its Music app.

Apple iPad

The news: Apple announced its 7th-gen iPad, a 10.2” Retina Display tablet supporting the full-sized Smart Keyboard ($159) and Pencil 2 ($129). It starts at $329 (32GB model), is $429 for a  (128GB model) and is powered by the A10 Fusion chip, introduced in 2016 with the iPhone 7. It is orderable today will be in stores on Monday, September 30.

Analyst take: I applaud Apple in improving its game on multitasking features with iOS13, but I don't believe it will move the needle at $329 versus lower-priced Windows notebooks or Chromebooks. When one factors in the extra cost for an optional pencil ($99-$129), keyboard case ($159), and extra storage ($100) the low-priced iPad becomes much more expensive. At 10.2” there’s only so much work that can get done on it. Since the inception of iPad, the Windows 10 and Chromebook experience has improved considerably which makes it harder to justify the unique iPad experience over a broad array of use cases.  Apple also presented that this iPad was much more performant than the leading notebook PC. That PC wasn’t cited, nor was its configuration or the benchmarks used to make the claim. I believe Apple could engender more trust if it made those claims and provided the backup at the time of the claim.

Apple Watch

The news: Apple announced the Watch Series 5 with an always-on Retina display, compass, and international emergency calling. Watch Series 5 is available in aluminum, stainless steel, ceramic, and all-new titanium and with watchOS 6, offers menstrual Cycle Tracking, Noise tracking, and Activity Trends. The company also announced a new health study app to facilitate three new studies. While not in the press release, Watch Series 3 will start at $199.

Analyst take: Watch is the company's largest mid-term opportunity beyond services and offers a unique and valuable experience. The biggest news to me was the $199 price point for Watch Series 3. While it doesn't have all the bells and whistles as Watch 5, it will attract many first-time buyers. The always-on Watch display and compass are useful features delivering better experiences, but I don't believe they will result in current customers upgrading.  I love strategically where Apple is going with its health and safety capabilities but was disappointed to not see a sleep study or feature mentioned. Lack of sleep is the new smoking and needs to be addressed.  Sleep is hard, but hard problems are what Apple solves, right?

Apple iPhone 11, iPhone 11 Pro, iPhone 11 Pro Max

The news: The 6.1” display iPhone 11 includes a dual-camera system (wide and ultra-wide) with photo Night mode and supports 4K 60 video using Smart HDR using machine learning to improve the output. The new camera assembly and glass backing is one piece of milled glass. The smartphone is powered by the new Bionic 13 chip, and Apple claimed up to 20 percent faster CPU and GPU than A12 and new Machine Learning Accelerators in the CPU providing 1 terraops.

The iPhone 11 Pro and iPhone 11 Pro Max leverages the same Bionic 13 chip in the lower-priced iPhone 11 and adds what the company calls its “Super Retina XDR” OLED display (2M:1 CTR, 1200 nits) and a third telephoto camera with an f/2.0 low light aperture.  Battery life was quoted as an extra 5 hours of battery life the Pro Max provides over the Xs Max

Patrick Moorhead)

Analyst take: I believe Apple raised its game to keep most of its current premium iPhone customers happy. The most significant features of Pro were its improved camera with the third, wide-angle lens (Pro), a night mode, and huge battery life (Pro). The new A13 Bionic is impressive with its performance gains, but it sure would have been nice to know how these claims were tested. I asked Apple and am awaiting a response. I do believe, and I need to test this myself to be sure, that the Pro will provide the industry’s best video capture experience. Finally, while I didn't expect it, I think the lack of a sub 6Ghz 5G modem option will hurt Apple premium sales in China. I do not see the new lineup driving many to switch from premium Android as many of these already had triple cameras and all have 5G supported by the 150 5G models Qualcomm announced at IFA.

Patrick Moorhead

Wrapping up

All in all, Apple presented some puts and takes across hardware, software, and services. When I step back, I think Apple will keep most of its current customers happy and staying put.

The $199 Series 3 Watch will drive a ton of volume. The $4.99 service price points seemed low. One the downside, I believe, is the lack of 5G on its Pro line. With 150 competing 5G smartphones on the way enabled by Qualcomm, its hard for me to imagine Apple not losing some business in Q4 in China, where 5G is a state mandate. In Q1, I may be saying this for Western Europe and in Q2 I may be saying this for North America.

Follow me on Twitter or LinkedIn. Check out my website.

Patrick was ranked the #1 analyst out of 8,000 in the ARInsights Power 100 rankings and the #1 most cited analyst as ranked by Apollo Research. Patrick founded Moor Insi...