Apple’s new iPhone – Does anyone care?

Sascha: [00:00:00] From Equity Mates Media, this is the dive. I'm your host, Sascha Kelly. Last week we saw the biggest news on Apple's calendar. That's Apple's announcement of the new iPhone in spring. Once upon a time when that happened, the world sat up and marvelled at what Steve Jobs and his team had managed to squeeze into the palm of our hand.

Audio Clip: [00:00:24] Today, we're introducing three revolutionary products of this class. 

Sascha: [00:00:31] Now it's a pretty routine update. New colour, better camera, faster chip, rinse and repeat. See you all again this time next year. So last week, as we saw the round of headlines announcing the iPhone 15, we shrugged. It's Wednesday, the 20th of September. And today I want to know what Apple announced last week? And does anyone really care to talk about this? Today, I'm joined by my colleague here at Equity Mates. It's Alec Renehan. Alec, welcome to The Dive. 

Alec: [00:01:03] Sascha, good to be here. 

Sascha: [00:01:03] First question, are you an Apple user? Do you have an iPhone? 

Alec: [00:01:07] Yeah. I had a brief dalliance with a Google pixel back in the day, but back on the iPhone, I felt I was missing out on too many iMessage group chats and jumped back across

Sascha: [00:01:20] Your messages with Green. 

Alec: [00:01:23] That's network effects for you. That's hard to break. 

Sascha: [00:01:27] Yeah. And which one do you have? 10, 12, 13. Oh, Oh. 

Alec: [00:01:31] No idea. Who like that? I have to go into my settings and to jump ahead to the end of this episode, that is kind of the point these days. 

Sascha: [00:01:40] Yeah. So let's get into it. What did Apple announce? 

Alec: [00:01:44] So Tim Cook stood up at Apple's Wanderlust event. And yes, Sascha, I had to double check. I thought it was maybe reporters being weird. Maybe it was a joke that was going over my head. But yes. Apple called their product announcement Wanderlust. Make it out what you will. But at their Wanderlust event, they announced a few new products. This is the sort of once a year product announcement that we get from Apple every year. Headlining it was the iPhone 15, as you mentioned. We also saw the Apple Watch nine, time flies were up to iteration nine and also the Watch Ultra two. And then a couple of other smaller announcements. They announced a new tech style fin woven that will be used instead of leather in its products. This textile is made from 68% recycled material, and it was just one of the environmental credentials that Apple really tried to push as part of their Wanderlust event. The Apple Watch nine is the first carbon neutral product in Apple's Line-Up. So again, really leaning into the environmental credentials of their products. And then, Sascha, the final announcement was Apple are changing all their charging ports to Usb-a say they're getting rid of the lightning. Is it lightning bolt cable or just a lightning cable? Either way, they're getting rid of hurkacz.

Sascha: [00:03:06] And that's pretty interesting because last year the European Union ruled that all phones in the region must use Usb-c to allow for the universal use of charging cables. I personally have a little pencil case with all my different charging cables that I carried around, but Apple, I mean, a sign of a business that really knows how to do PR, They pitched it as their own. 

Alec: [00:03:30] Yeah, that's right. So the last few years, Apple has strongly resisted the use. Proposed rule changed. They argued it would reduce innovation in charging technology, but the EU passed the rule anyway and said all electronic devices mobile phones must have usb-c charging. Apple made the decision that instead of creating a specific device that captured the requirement for the region. So, you know an EU phone with usb-c charging and then the rest of the world fine with whatever they wanted. As a charging cable, Apple made the decision to just globally change to USB, saying they're making this change right before just a couple of months before the European Commission's 2024 deadline. So they had to do this. Yeah, but as you said, Sascha, they are good at marketing. And Apple presented the idea that the switch was its own doing at their wanderlust event. 

Sascha: [00:04:28] Well, well done to Apple for finally coming up with something that's going to be a solution to make carting around all my different charging cables. Let's drill down on the iPhone though, Alec, Does it do anything particularly special? 

Alec: [00:04:42] Well, all iPhones do things particularly special. I think the smartphone is going to be probably the defining piece of technology of our lives, at least about it. It's definitely been about life so far. But in terms of the step up from the 14 to the 15. Nothing major. So the usb-c charging port, as we have discussed, a slightly better camera, a slightly better screen, a slightly faster chip. They're kind of par for the course for these announcements now. Exciting news for any Bobby Cool fans out there. Apple announced there will be a new pink colour available. 

Sascha: [00:05:23] High Barbie.

Alec: [00:05:24] Barbie. Hi, Barbie. So now the iPhone 15 will have five options Pink, yellow, green, blue and black. Okay, If that doesn't get lines outside the Apple store, I don't know what will. I think probably the major changes were a new titanium frame and then also an action button. So the button where we currently if you have an iPhone, you can turn sound on and off like the mute flipping switch that's going to be replaced with an action button where we can program it to, you know, do whatever action we want, you know, open your camera, open your calendar, whatever it is. 

Sascha: [00:05:59] Or turn it on mute. 

Alec: [00:06:00] Button. Yes, exactly. 

Sascha: [00:06:03] It's quite a handy button. I don't want to change it. 

Alec: [00:06:06] A couple of other features. The iPhone 15 and 15 plus will have the ability to stay in six metres of water for upwards of 30 minutes. I guess gone are the days when we need to put it in a bucket of rice. We'll tell our kids we used to do that and they'll just shake their head and say, What are you talking about? And also, perhaps not surprisingly, a record high price in the US. You're paying about 1200 dollars for an iPhone pro max 15, or if you want a terabyte of storage, that's a lot of storage. You're paying $600. So I guess to wrap it all up, Sascha. Slightly better, but not different. 

Sascha: [00:06:46] Well, that's a really good wrap up. And, you know, I know that the point wasn't to sell the upgrade, but it has got me thinking about all those colour options. But what was the reaction from the stock market? Are they going to go crazy for Barbie? Cool. Like I am.

Alec: [00:07:00] Investors were unimpressed. I guess that's probably too harsh. Investors shrugged. Just like consumers. Just like us. Everyone shrugged. Apple's stock was down 2%. That had less to do with the Wanderlust event and the product announcements and more to do that. A rumour at that stage that China would be banning the iPhone for government workers. That ban, I believe, has now gone into effect. So, I mean, it shows that new product announcements weren't even in front of Apple investors' minds on the day that they were announced. 

Sascha: [00:07:37] So the formula is a real formula at this point. It's every year Apple announces a new phone. It's quite similar to last year's and the previous year and the year before that and kind of the year before that. And every year, Apple ships a couple of hundred million phones around the world to be purchased by millions and millions of people. As you said, it's all a little bit maths. We're all starting to shrug our shoulders at this stage. But after the break, Alec, you're going to explain to us why. That's exactly the point. Welcome back to The Dive. Today. We're talking about Apple's new iPhone announcement. The iPhone is undoubtedly, as you said, like one of the defining features of technology of our lives. If you could go back and tell 12 year old Sascha that she'd be carrying around a little mini computer in her pocket that was coloured, that could do basically everything. I mean, how many times did a teacher say to you, it's not like you're going to have a calculator on you all the time in your life? Well, I do. 

Alec: [00:08:45] That is true. 

Sascha: [00:08:46] Yeah, but Apple, the world's most valuable company, announced the most cutting edge version of the iPhone with some of the most amazing technology that fits into the palm of our hands. And we shrugged. Alec, you're telling me that Apple doesn't actually really care, that that's our reaction. The shrug is the point. 

Alec: [00:09:07] This is my theory at least. I'm sure Tim Cook would probably want more viewers at the Wanderlust event. But yeah, the shrug is the point. Apple has built a brand. As technologists, there's a level of trust that Apple's products have the best of everything that you buy an Apple product, it is cutting edge. And that brand and that trust means we don't have to think. And every year they put this big show on highly produced with a name like One Day Lost, and it entrenches that perception in our mind. They're doing this big song and dance because they have something big to announce and maybe we don't care about it, but it again reinforces that trust that Apple are on the cutting edge. But they want us to shrug. Sascha The shrug is the point, because if we interrogate that idea, what we start to realise is that Apple technology perhaps isn't as cutting edge as we think. Over the last few years, it's smartphone competitors have really caught up. Samsung users will always go on about better battery life and fast charging. That's indisputable at this point. Apple announced with the iPhone 15 that they're looking at a new titanium body. Samsung have already publicly said that they're looking at using titanium the camera iPhone 15 pro max, top of the line comes with a 12 megapixel telephoto camera. The Google Pixel seven has a 50 megapixel camera. Apple's iPhone 15 pro max has a five times optical zoom. Samsung's Galaxy S20 three Ultra has ten times optical zoom people far smarter than I can argue about Apple's A6 chip versus Samsung's Exynos 2200. But the point is that there's an argument like the WHO has the most cutting edge technology is now up for debate. And that's why the shrug is the point. Because as long as we think that Apple is the cutting edge and the best, whenever we go to buy a new phone, we're going to buy an Apple phone. Yeah, most of us. And the fact is, if you look at Apple as a business, it's gone under a massive transition. Over the last few years, Apple has become less reliant on iPhone sales. Their goal these days is to keep the perception of being on the cutting edge and to have a great iPhone. They're ready for you when you want to buy it. But ten years ago, the business relied on us upgrading from the iPhone five to the iPhone six. Its key revenue driver was iPhone sales. Apple's revenue, it's still about 50% from iPhone sales. So it's still a massive revenue driver and things aren't going to be good in Cupertino, California, if no one buys the iPhone 15, But it's not as reliant. Apple is built a business today and it continues to grow this business that doesn't care if we're using the iPhone 15, keeping our iPhone 12 or using a hand-me-down iPhone eight. 

Sascha: [00:12:20] Yeah, and that's because of the services business that we hear so much about. And when we were talking about this subject today, it did get me thinking, you know, I bought my Apple Mac in 2020, I bought my phone lost in 2020. But I've been giving Apple money for a couple of years through that TV service, through upgrading my storage. They've just sent me a reminder if I want to get back onto the AppleCare system. So I've definitely been still handing them money for the last three years despite not upgrading any of my hardware.

Alec: [00:12:54] Yeah, that's it. This is the services business. That's really all of the Apple ecosystem, all of the subscriptions that we pay for iCloud storage, Apple TV, Apple Music, Apple News, plus Apple Fitness. If you've got a smartwatch, there's one here called Apple, one that I actually don't even know what it is. Apple has a game. Subscription that you can use if. I don't know if many people do, but they have it. Apple are a tech ecosystem company now. They are less and less a hardware company. They want us using an Apple smartphone, an Apple Watch and an Apple laptop. They care less and less about which version of the phone, watch or laptop we're using because if we're paying for services, it's all good in the world of Apple. To put some numbers to it, Sascha. In 2022, 900 million iOS users subscribe to one or more apps on the platform, an increase of 20% on the previous year. That's more than a 10th of the world subscribed in some way to the Apple ecosystem. How to talk to that growth? In 2015, it was 30 million by 2019 480 million by 2020 to 900 million. So the growth rate there is pretty incredible. 

Sascha: [00:14:12] Yeah. 

Alec: [00:14:14] And some of their biggest services have massive subscriber bases. Apple Music has 88 million subscribers, and if they keep offering me free six month subscriptions, I may eventually make that one more. But they held out to date. Apple TV has over 75 million subscribers. These are big subscription businesses in their own right.

Sascha: [00:14:38] Yeah, I'm such a sucker for Apple TV because if morning was, I'd keep telling myself I'm going to cancel it, but I just go to find out what happens to Jen Aniston and Reese Witherspoon. 

Alec: [00:14:48] Well, Sascha, that is the attitude that keeps Apple ticking away. Regardless of when you last bought yet Apple products. To talk to the revenue story. So as I said earlier, about half of Apple's revenue still comes from device sales. But the services revenue, the subscription revenue is growing. Last year it was 19% of their revenue. But to talk to the growth in Apple's Q3 2023 so the most recent quarter we have numbers for. They brought in $21.2 billion in services revenue in the quarter. So it's about an 80 billion a year run rate five years earlier. Q3 2018, 9.5 billion in revenue. So it's more than doubled in five years. Five years before that, Q3 2013 $3.9 billion. So this is an incredibly fast growing area for Apple. And this is why we're saying the shrug is the point, because as long as we keep buying Apple devices when we're ready to go and buy them, and between those times where we buy the devices, we're paying monthly subscriptions for all manner of Apple products and services, then that's okay for Apple. So as long as we don't switch to a Samsung or a Google phone when we're ready to upgrade, that's the game that they're in now. 

Sascha: [00:16:17] Yeah, except that pixel seven with the 50 megapixel camera that's really got me thinking about whether that's going to be my next upgrade. Alec, every time I hear these stories, I think about how I'm the ultimate consumer. I just hand over money without questioning it. It's so depressing.

Alec: [00:16:33] That's right, Sascha. I think spending money on your phone, you know, it's definitely the most important piece of technology that we use these days. So I don't know how to make you feel better. Stop spending on other things.

Sascha: [00:16:45] Yeah. How else am I going to do all those math calculations that I was promised. Anyway, let's leave it there for today. If you're thinking about a way that you can help us here at the dive, well, I've got the solution for you. You need to go into a podcast player, whatever it is, Apple, Spotify, your podcast player of choice, and give us a five star review and write some really nice words plays as well. It actually really helps us get in front of other new listeners and that's what we love most of all. Alec, thanks so much for joining me on The Dive today.

Alec: [00:17:20] Thanks, Sascha. 

Sascha: [00:17:21] I'll be back in your feeds on Friday. Until then.