Product review-less review of the Apple September 2018 launch

I watched the entire Apple product event yesterday (big hat tip to Sam Sheffer and his live stream on Twitch. Well done.), and while of course I’d like to upgrade right away to the XS Max and the new Apple Watch, I… might not. They’re just expensive, and I think I might be able to hold out with my 6+ for one more cycle.

And while I won’t get into a review of each of the products – there are already plenty of good ones out there – here are my thoughts on the event, from a bit of a different perspective. Where does the product and timing of the iPhone Xr, iPhone XS, and iPhone XS Max stand in the upgrade cycle? Will all those iPhone 6 and 7 holdouts finally make the leap with this new line of iPhones?

Demand: I think Apple is clearly trying to position itself across a massive swath of the market. Just look at this chart, tweeted by Horace Deidu this morning

Apple is making a serious move to cut across a lot of price points here – from entry-level users who just (probably) want to be on iMessage, all the way up to the price insensitive buyers who are using the XS Max with 512 GB of storage for basically anything under the sun you can imagine a phone doing.

However, I think that if we were to compare this with the past upgrade cycles, this would be huge step up. But I just don’t think that is going to happen this time. First, it’s just a S-level upgrade, so all those iPhone X buyers are probably fine waiting for the next upgrade cycle. Second, those of us with iPhone 7s or 6s are just waiting longer to upgrade.  As I wrote a few weeks ago in Samsung Note 9 vs Apple iPhone X vs You’re probably not going to upgrade anyway

These kids, who are doing summer internships at Morgan Stanley and are thus likely well-remunerated (I’ll hold off from any family wealth assumptions), are using their current devices for longer and longer. The most popular phones were the iPhone 7/7+, then the 6, then the 8, then the X.

On a device payment plans? See fewer promotions? Just opting to replace your battery? Or just riding a phone until the wheel completely fall off? You’re not the only one, and that is weighing on upgrade rates.

And while the XS Max has the biggest display ever, I can’t see it generating the same kind of buzz we saw with the iPhone 6+. It’s bigger and better, but is if fundamentally different?

The “cheap” iPhone Xr: I think the Xr is going to be the biggest hit of the cycle. Apple’s in-house estimates (in-house, so take with a boulder of salt) show 50% of iPhone users, which is around 700M to 825M customers, could look to upgrade to the Xr in the next year and a half to two years. Even if just a fraction of those users do that, that’s big for Apple – at least in units moved. That lower price is a big selling point for consumers – at least relative to the high-end iPhone models. That $750 price tag is more than the highest end models just a few cycles ago. For all the talk about ASPs, Apple has done a great job making people think $749 is cheap for a phone.

Usage: The biggest step forward seemed to be with the new Watch, with the focus on health and fitness. Fall detection and ECG? How many people are going to be getting these for their aging parents? I can see these being a bigger hit than past models, and a lot of people who had been on the fence about the Watch might finally see some real-world uses that might finally push them over the edge. 

The new iPhones though? They are fantastic – just look at the chip upgrades, the camera and camera software. But I just don’t think there’s that much new with them. Some of the biggest improvements that people might use day-to-day – the portrait mode with adjustable bokeh comes first to mind – are software upgrades, not hardware upgrades. You can buy an iPhone 8 that is going to do 99% of what the Xr will do for $150 less (though I don’t doubt people would pay that kind of premium to have a salmon-colored iPhone).

If anything, this fact hammers home the fact that services – and not devices – are the future of Apple’s future revenue growth.

So that’s my quick product review-less review of the Apple launch.

Leave a Reply

Your email address will not be published. Required fields are marked *