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00:00So you take a look at IDC numbers. This was a record-breaking quarter for Apple in terms of shipments.
00:06But then you take a look at revenue for the iPhone, Nubila, coming in at $49 billion.
00:12That is just shy of estimates. And I wonder how one record didn't translate into another.
00:20Well, you know, that's a really good question, I think, because obviously there's lots of different pieces.
00:25Definitely the iPhone makes a huge part of Apple's total revenue, right? Majority of 50% share.
00:33But if you just focus on iPhone, I think this is a phenomenal year, like you said.
00:37And like you see in our data, this is the record high, you know, highest Q3, calendar Q3 ever for Apple.
00:43And this is, I think, exceptional because given, you know, everything that we've been dealing with, right?
00:49And you can see, obviously, the economic challenges, the headwinds, the geopolitical challenges.
00:53And this was a phenomenal launch.
00:56And, of course, 17, and there's a lot of chatter about the 17 and how well it's been doing.
01:01And, of course, a little bit of challenges with the air.
01:03But we can't deny, right, coming out in this economic climate with all the uncertainty and inflation,
01:10for Apple to come out with a record-breaking quarter and also ahead of the total market curve.
01:16So the total smartphone market grew at about just over 3%, but Apple came in at about 4% growth.
01:21But, again, record high shipments. So I think that's pretty good news.
01:25And especially given in China, we're seeing positive growth. So it's looking good.
01:30But even still, Nabila, I mean, let's talk about China a little bit more.
01:33And I should point out that Apple actually flipping into positive territory right now.
01:37But when it comes to greater China revenue, it came in well below consensus.
01:41It was a massive miss, really.
01:43And overall revenue coming in about 12% below the consensus estimates.
01:48I mean, how much does Apple right now need China?
01:52Gil-Loria's perspective is that it's becoming less important.
01:55All it contributes is volatility.
01:57I would love to hear your thoughts.
01:58Sure. You know, I think nobody can deny, no matter how much Apple,
02:03and Apple is trying, right, with strong growth, double-digit growth in emerging markets.
02:08Its growth in China has been challenged.
02:10Like I said, right, this was the first quarter after it was eight, almost two years of negative growth.
02:16So it is finally coming into positive territory.
02:18But no one can deny that China remains the largest market for Apple.
02:23And competition is really heavy there, right, with a lot of loyalists and towards Huawei and overall competition.
02:31And, of course, a lot of consumer favoritism towards AI.
02:35So I would say the AI piece is also hurting Apple in China, rather than when you compare it to the rest of the world,
02:41where Apple is really growing much stronger.
02:44Well, but how do they get that back, Nabila?
02:46I mean, you had the refresh of the phones, and I understand that that typically is a catalyst.
02:52I understand that the upgrades that we had this time around weren't necessarily life-changing.
02:56But when you start to look at some of the phones, a lot of phones that actually aren't available here in the U.S.,
03:00particularly some of the Huawei phones and others, and you look at the features there,
03:03I am just curious as to what that catch-up looks like.
03:07If people in China and some of the other non-U.S. nations become so entrenched in the non-Apple products,
03:13what is the catch-up ability that they have?
03:18You know, I think this is a broad statement to say that globally that we're seeing other consumers being entrenched into non-Apple products, right?
03:28Apple still maintains a really dominant share of the premium market.
03:33And they haven't lost hold of that.
03:36Of course, certainly competitors are coming up.
03:38But I think the biggest competition that Apple sees is certainly in China.
03:43But overall, globally, we see really strong growth in the segment that Apple plays, which is the premium.
03:49And they've maintained that ASP.
03:50We see, you know, year-over-year ASP growth in iPhone.
03:54And I think this is what is going to help drive, and especially next year,
03:57if you look at the portfolio up ahead with, you know, when the fold comes out,
04:01this will really also help Apple break through, especially also in China, where foldables are doing quite well.
04:07Well, let me add an addendum to that question.
04:09And this is more just about the growth overall in the smartphone market, not just for Apple products, but overall.
04:16And when we talk about the ability for additional growth,
04:20most of the discussion that I've heard has been about, obviously,
04:23some of the third-world nations that are still on non-smartphones, if you will.
04:27And the idea that once you start to see people upgrading to more advanced designs,
04:31that will benefit potentially Apple and, obviously, the Android makers as well.
04:35Are you seeing that as well?
04:39We know.
04:39We're seeing overall, like, the smartphone, you know, definitely there's –
04:44we don't see movement from across Oasis as much,
04:49but certainly more from Android coming into iOS rather than from iOS going into Android.
04:55And this is, again, very interesting and kind of –
04:57it's not – I don't think counterintuitive, but it's counter to what the headlines are saying, right?
05:03That because – and I do agree that the Android phones and Android players are phenomenal
05:07in terms of what they have brought, especially with the latest and greatest AI feature.
05:12But what Apple has done this quarter, at least,
05:14and what I think will help them continue to drive growth in the holiday quarter, especially,
05:18is gone back to the basics, right, with design and product differentiation
05:22and trying to hit different demographics.
05:25And the simple thing is, you know, design changes to the back of the Pro Max,
05:29as well as bringing the base model, you know, more premium features than ever.
05:35That's really helped move the needle for Apple,
05:39and I think that's what has been the game-changer here for Apple, right?
05:43And I think overall, as technology is moving really fast,
05:47Apple still has some time, we believe, to catch up.
05:49So, you know, we will see how this holds into next year.
05:54Right. It's really interesting to see the after-hour share movement right now.
05:57Now up 1.7 percent.
05:59Remember, the initial read, the first blush move to these numbers was to send the stock lower.
06:04Different story right now.
06:05Nabila, you think about what's coming from Apple in terms of the pipeline,
06:09and when it comes to the iPhone, of course,
06:11we have this lineup that Tim Cook and company have been talking up.
06:16Does a foldable phone excite you?
06:18Is that going to be part of Apple's growth story going forward?
06:22You know what's really interesting and excites me
06:25is to see how much that Apple's entrance is going to change this market.
06:31So we've been seeing foldables from the Android players for, what, about six, seven years now, right?
06:36And finally, this year, we saw increased momentum with the Samsung Fold 7
06:40really breaking through some of those barriers in terms of, you know,
06:45the changes it had.
06:46It was really well-received.
06:48But Apple, whenever, but the overall foldable market still is a niche segment, right?
06:53But when Apple comes in, this is what I'm excited to see that, you know,
06:57I don't think the foldable itself will be very different from what the Android players are offering,
07:02but it's what it's going, Apple is going to do to the overall segment.
07:05I think it's going to bring a lot more excitement, a lot,
07:07and definitely double the size or, you know, significant growth to the overall market.
07:12So that's what I'm interested to see.
07:14And even in our survey results, when asked consumers,
07:17would you be interested in Apple foldable,
07:20the interest continues to grow with almost 40% of consumers in the U.S. market
07:24saying that, yeah, they are interested in seeing that.
07:27So that was, you know, so that's why I'm excited to see the impact on the overall segment
07:32and turning it from a niche to possibly more.
07:35We should point out just real quickly here for our viewers as we were speaking,
07:39Apple shares had originally dropped on the back of that earnings report.
07:43The shares now have reversed firmly in the green, now up about 3% here.
07:47In addition, of course, to what has been a record quarter in terms of sales,
07:51$102 billion in revenue, the best September quarter that it's ever had
07:57in the first September quarter here.
07:58Remember, they're on that fiscal year that we've seen above that $100 billion mark, Nabila.
08:04It gets to this idea of how much you even need to grow in terms of on a percentage basis.
08:09Is this when you start to look at either refresh from existing customers
08:13or new adoption by new customers here,
08:15what types of percentage increases are you sort of modeling going forward?
08:22So, you know, if you, you know, this is a great question.
08:24I'm really glad you brought up install the base
08:26because that's what is really going to help Apple move forward.
08:30Aside from the interesting product lineup that they have
08:33and the, you know, the strong updates or innovation,
08:36we have about 500 million units of iPhones
08:41that were bought in between 2020 and 2021.
08:44And that's when the last bump happened, right?
08:46The largest growth that we saw in the last five years for Apple,
08:50as well as the overall market.
08:52And given the average lifecycle of smartphones,
08:54especially Apple, is about four to five years,
08:57this is literally about the time where most of those consumers,
09:01again, half a, I meant half a billion, not half a million,
09:05but 500 million iPhones that are, you know, trying for upgrade.
09:10And that is what's going to drive growth in the next two years.
09:13So, yes, maybe developed markets might be a little bit flat,
09:16but we're going to continue to see strong.
09:18I mean, we saw in our data over 20, 30 percent growth
09:22in markets like India, almost, again,
09:25very strong double-digit growth from markets like Turkey
09:28and other Asia markets.
09:30So emerging markets will continue to drive the growth
09:33as well as, you know, coming from strong installed ways of refresh.
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