00:06:18 · Mark Gurman, Anurag Rana, Tim Stenovec, Carol Massar
[00:06:18] S1: U.S. [00:06:18] S3: Is a saturated market in terms of unit growth. China, they have a good market share. But it's still an area where they can gain more market share down the road. India is another area, but I think the per capita income in India is a lot lower than it is in China. So in India, it's only the middle class. And when that goes up, that's really the big story there. So China for me is one of the more important. [00:06:42] S2: What's their entry into India? I mean, for so many years, we talked about a cheaper iPhone being that entry into different emerging markets. But is it that newish laptop that's just a few hundred bucks? [00:06:54] S3: No, it is the phone. I mean, to be very honest, the product is always the phone. Let me be very, very candid about it. It's a very expensive phone. Yeah, but the thing is, like, the base model is there. You have refurbished models. You know, India is becoming a lot more affluent when it comes to the middle class. And Apple is an aspirational brand over there. And that's the discussion there. We have a lot. I mean, they have opened so many stores in the last few years. So, you know, India is becoming an extremely important part of the pie. But again, the overall contribution to Apple is still very small. And I think, you know, over the next 10 years, yes. But in the near three years, I think China remains the most important growth driver. [00:07:34] S0: What's your top question to the C-suite when it comes to Apple?
00:07:34 · Carol Massar, Anurag Rana, Tim Stenovec
[00:07:34] S0: What's your top question to the C-suite when it comes to Apple? [00:07:40] S3: Gross margins. You know, tell me how are you going to maintain gross margins over the next I would say three to four quarters with memory prices up going so high. And then what are you doing with your supply chain to ensure that people have and get the phones that they need in the right amount of time? [00:07:55] S0: All right, so appreciate it. Anurag Rana, thank you so much, of course, of our Bloomberg Intelligence team, and we'll be looking for all of his research on it. Now we've got to go to our own Mark Gurman, of course, who knows the insides and outsides of, I feel like, Apple. He is Bloomberg News Managing Editor for Global Consumer Tech, joining us from the LA Bureau. Mark, we keep reading everything you've got on the blog. [00:08:17] S2: I don't know how he's doing it. He's live blogging. He's on TV. He's on radio. [00:08:20] S0: It's his digital twin. [00:08:21] S2: He's doing it all. [00:08:22] S0: Maybe it's his digital twin. [00:08:23] S2: No, that's really Mark Gurman, I think. [00:08:25] S0: Where should we go? Where should we start when it comes to the Apple story right now?
00:08:25 · Carol Massar, Mark Gurman
[00:08:25] S0: Where should we go? Where should we start when it comes to the Apple story right now? [00:08:28] S1: Well, let me give the backdrop. No regular iPhone 18. The iPhone 18 Pro is the most minor year-over-year upgrade we've seen in a long time. Nobody can find an iPhone Duo. No iPhone Air 2. All the major fall products, the MacBook Pro with Touch, the Home View, the HomePod Mini, the Apple TV, the OLED iPad, none of them launched until the holiday quarter. Yet they still beat And they beat because of the iPhone 18 Pro. Likely also from continued demand for the iPhone 17 Pro Max and all the carrier deals you saw earlier in the quarter. So this is a phenomenal report for Apple. The big news, which I think will be less phenomenal, is the guidance for the December quarter. Given the backdrop of everything I explained, it all comes down to how the iPhone Duo is going to perform. And so far, the iPhone Duo supply is very difficult to understand. New pre-orders didn't come, aren't launching until the end of January for many buyers. You can't get them at retail stores right now unless you're an AI bot. So I'll be interested to see the commentary there and what the numbers actually turn out to be. The other piece here is Greater China and services, both either a big fall or a strong deceleration.
00:08:28 · Mark Gurman, Tim Stenovec
[00:08:28] S1: Well, let me give the backdrop. No regular iPhone 18. The iPhone 18 Pro is the most minor year-over-year upgrade we've seen in a long time. Nobody can find an iPhone Duo. No iPhone Air 2. All the major fall products, the MacBook Pro with Touch, the Home View, the HomePod Mini, the Apple TV, the OLED iPad, none of them launched until the holiday quarter. Yet they still beat And they beat because of the iPhone 18 Pro. Likely also from continued demand for the iPhone 17 Pro Max and all the carrier deals you saw earlier in the quarter. So this is a phenomenal report for Apple. The big news, which I think will be less phenomenal, is the guidance for the December quarter. Given the backdrop of everything I explained, it all comes down to how the iPhone Duo is going to perform. And so far, the iPhone Duo supply is very difficult to understand. New pre-orders didn't come, aren't launching until the end of January for many buyers. You can't get them at retail stores right now unless you're an AI bot. So I'll be interested to see the commentary there and what the numbers actually turn out to be. The other piece here is Greater China and services, both either a big fall or a strong deceleration. [00:09:40] S2: Okay, so yeah, a big miss when it comes to China. We'll get to that in just a minute. First, though, I want you to help us with the math. When we do get that guidance about halfway through the call, as you remind everybody on the live blog, Mark, that we're going to get, how do we know the share of Duo in there based on the number that we get?
00:09:40 · Tim Stenovec, Mark Gurman, Carol Massar
[00:09:40] S2: Okay, so yeah, a big miss when it comes to China. We'll get to that in just a minute. First, though, I want you to help us with the math. When we do get that guidance about halfway through the call, as you remind everybody on the live blog, Mark, that we're going to get, how do we know the share of Duo in there based on the number that we get? [00:09:58] S1: Oh, we have no idea. And they're not going to tell us. So it's going to be difficult to discern. [00:10:04] S2: But a bigger number will... It's a $ 2, 000 phone. So a bigger number. [00:10:08] S1: Yeah, a bigger number will mean that there's quite a big uptake for the iPhone Duo. But they don't register revenue, or at least they traditionally have not registered revenue until the consumer actually receives the device. An order being placed doesn't mean we're going to add that to the numbers. It has to be the person has received the phone, has kept the phone, etc. The good news for Apple could be that we're going to see a very strong tailwind because of the supply chain shortages and give them positive numbers into Q2, Q3, Q4 of next year, given how hard this phone is going to be to get for quite a while now. [00:10:40] S0: Will that ultimately hurt them? You know, it's great to have pent up demand, right? It makes for a great story, great headlines.
00:10:40 · Carol Massar, Mark Gurman, Tim Stenovec
[00:10:40] S0: Will that ultimately hurt them? You know, it's great to have pent up demand, right? It makes for a great story, great headlines. [00:10:47] S1: I don't think it'll hurt them. I think what Apple is trying to do anyways, especially under Ternus, is create more consistent revenue across the year. For a long time, Apple has pushed everything into the very back part of the year and now spreading things across, whether that was the intention or not for the duo, is them hitting a goal they've had for quite some time. [00:11:07] S2: Um, Mark, I, I'm, I'm wondering about the, I mean, like a week ago, one of the most read stories in the terminal sitting here was the story you were writing about, um, the crack screens on the duo. Has that issue gone away? Do we expect it to be addressed at all? I imagine an analyst will, or two will ask about this.