Bloomberg's Gurman Bets Against an Apple Super Cycle

I would have to say that they're either making things up or getting bad information or just trying to pump the stock price for their own self-interests. Right. The reality is that the numbers that we're seeing in terms of iPhone orders from the supply chain probably indicate an annual decline on iPhone unit shipments. Now, an annual decline doesn't necessarily mean a revenue decline. Right. Because they're adding new features for these higher end models, particularly bringing making the lower end pro model even better at that thousand dollar price point. You may be seeing people who normally would buy the 799 version, go to the 999 version, which could raise overall peace in terms of an iPhone supercycle. That normally means big hardware changes. We're not getting that this time around. It also would mean that Apple intelligence would be ready to go. But I would say it's half baked if even that a lot of the new features aren't coming until December and many more are coming until the middle of next year. So if you're anticipating an iPhone supercycle, if you believe there will ever be an iPhone supercycle again, a I would say adjust your expectations for 2024. Maybe focus on September 2025 when the iPhone 17 launches look more significant in specs. What is Apple Intelligence? Apple intelligence is artificial intelligence for Apple customers. Right? So that's the Apple branded version of their A.I. platform coming as part of iOS 18.1 sometime in October. That's including summaries of notifications. That's including phone call recording and automated transcriptions. That's including transcriptions and voice memos, including voice recording in the Notes app. It's including John McGee's, which uses artificial intelligence to create your own emoji characters, a line Dorner loves that, by the way. Like world is like she takes my phone and does the things and she makes shifts and all this stuff. Like the young kids, they love it. I think the gen mortgages are going to be incredibly popular and I think it's going to be at the center of many of Apple's advertisements for these features. But that's not coming until December, So I'm not sure how that can sell new iPhones in September if it's not going to be available until December. So I have some big questions about where analysts get their information from, why they say the things they do and why some of them are considered reputable. So I think that people need to be able to separate the signal from the noise. And that's why I'm so happy to come on here and explain and provide a dose of reality. So dumb question. So Paul gets his new phone in October. Can he just update the stuff when the cool things like the emoji stuff comes out? Yes, he can. Absolutely. And it's not a dumb question. Right. So what we're going to see are Apple intelligence features rolling out probably over the course of the next 6 to 9 months with constant software updates. And this is new for Apple. This is not something they've done in the past. Usually you get one big software update every September and you're pretty much safe for bug fixes and maybe a couple of enhancements here or there until the following September. This time around, it's going to be a gradual release. Now, why are they doing that? Because Apple intelligence simply is not ready. There's a lot of testing that needs to go into this. And the reason Apple intelligence has been behind is because they're responding late to this high praise. They really didn't start getting to work on these enhancements until the second half of 2022 after they saw launch. Right. This was really something that was developed over the course of 2023 and into the first half of 2024. And their development cycles for major new initiatives like this, these normally can take 3 to 4 years, Right. But they did it basically in half the time. So you raised a good point earlier, Marc, that there's a reasonable scenario, just given the size of the market, that there really are no super cycles, unlikely to be a supercycle again for the Apple iPhone. Is that a belief that's widely held out there? It's widely held by me, and I think it's widely held by people who really understand this stuff. You know, the last time we got a true, true iPhone supercycle was back in 2014, ten years ago, with the release of the iPhone six and six plus two reasons. That was the first time that they made substantial screen size increases through the iPhone. That was your first Apple tablet, right? Moving to the 4.7, 5.5 inch screen sizes, massive. Also, that was the same year where they struck the carrier agreement with China mobile in China, the biggest wireless carrier in the world, adding a an addressable market, an additional addressable market of 1 billion people. Right. So that is what really elicited that supercycle. And that was a two, three year thing. So that was great for Apple. We saw another big bounce in 2017 with the iPhone ten. Obviously that was major in terms of ASPs raising the starting price right by $300 from 700 to 1000. That was a big upgrade with this idea. Then we saw that again with the iPhone 12 5G, all four models at the tail end of 2020 at the top of Covid when people were splurging on money. Right. So that was a big one. But since the iPhone 12 in 2020 and the advent of 5G for Apple, we haven't seen major, major, major significant changes maybe either coming at the end of next year, maybe that will create a supercycle. But I want people to know don't expect one this year.