00:00When we start to talk about Apple as a variety of products, do we look at this company as a variety of products, or should I just be looking at it as an iPhone company?
00:09Well, it's an iPhone company because the variety of additional products you mentioned, people only buy them because they have iPhones, so they all play together very nicely as well.
00:19Wall Street had been anticipating that wearables, home, and accessories business to continue sputtering going into this earnings call.
00:27But maybe they forgot that a big chunk of the sales from that unit come from AirPods, and Apple released some pretty good new AirPods Pro 3 a few weeks ago as part of their September launch.
00:39There's also the new Apple Watches.
00:41The new baseline Apple Watch SE for a couple hundred bucks is actually pretty excellent, maybe for most people the one to buy this year.
00:48If you're new to the Apple Watch, especially for that price point and some of the changes you got to the display and health sensors, new Apple Watch Ultra 3 is fairly compelling with 5G and satellite connectivity.
01:01The Apple Watch Series 11 is a wash if you've got the Series 10 last year.
01:06But they did some good stuff in the wearables business, and that segment, which also includes things like HomePods, is going to get a little bit more juice next year.
01:13Security camera, smart home hub, so there's a lot to like for that unit, and this is a much-needed turnaround that we're seeing begin to come into place.
01:22Well, that's where I wanted to go, Mark, because as you mentioned, the category is called wearables, home, and accessories.
01:28So let's talk about the latter half, home and accessories.
01:30You say that next year is going to be an important year in the context of Apple.
01:35I mean, how high are the hopes here in terms of what they might contribute there?
01:40Oh, I don't think the hopes are high at all, right?
01:44I mean, we were getting to numbers well north of $10 billion a quarter for this segment, and I think that these new smart home devices will do little to do that.
01:54I don't think there's a ton of demand for the smart home devices that Apple is cooking up, at least in the near future.
02:00Amazon and Google, they really own and have cornered that market.
02:04So it's going to be a pretty difficult one for Apple to break into, but they just need it from an ecosystem approach to keep people locked in, to keep people from going who are already into the Apple ecosystem out to those competing devices who are launching a series of other products that are competing with the iPhone and the Apple Watch and what have you.
02:20So as we move out deeper into next year, I guess Apple's already in its new fiscal year, but into the next calendar year, Mark, talk to us a little bit about maybe what realistically we should expect.
02:30I know there's all this talk about a foldable phone, but I'm also curious about the company's chip strategy, which came into focus once again earlier this week with that potential combination between Skyworks and Corvo, as well as a few other products that have kind of been lingering out there that I think people would get excited about if it actually comes to market.
02:47So they're going to roll out a new M5 MacBook Air in March, a new M4 iPad Air in March, a new A18, these are all in-house chips, entry-level iPad in March.
03:04You're going to see the smart home devices in the March-April time frame.
03:08You're going to see an updated AI strategy in the June time frame.
03:13You're going to see some changes integrating AI into some of the services products in the September time frame next year as well.
03:22A more significant update to the mid-tier Apple Watch at the end of next year.
03:26Aside from that, not a ton, 2027, you're going to see the rollout of smart glasses, the rollout of a tabletop robot.
03:35You're going to see a higher-end Vision Pro device, 2029.
03:40You're going to see, towards the end of the decade, a foldable iPad with a gigantic screen.
03:45So from a product pipeline standpoint, there's a lot in the tank.
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