Positive End of Quarter Signals from China for Apple: Milanesi

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00:00Were you surprised by the overall sales growth when many thought that iPhone 17 wasn't gonna

00:06be the catalyst that we'd hoped for? I wasn't. And the reason is because, as I talked to you

00:14in the past, hardware refresh, when the actual hardware looks different, always drive upgrades.

00:22People still want to rely on the device that is in their pocket 24-7, but make it look

00:29different. And this year, we got that with the Air, which is not the main seller for Apple,

00:38but it doesn't matter, is getting people back in the stores to see the rest of the portfolio.

00:43It was really interesting yesterday that Cook mentioned that supply issues on the 16 model,

00:50not just on the 17. And that is a good reminder that a new model every September brings people

00:58back in stores and upgrade to previous models as well. It's not just the latest. It's the portfolio

01:05with maybe some price adjustment and some carrier promotions that drive that upgrade.

01:12Fewer upgrades going on in China, though. What did you make of the pullback, the surprising pullback

01:18in that particular region? I think part of it is the economic

01:23situation in China. We have seen hot and cold from a consumer perspective. The timing was later

01:30in the quarter, so it takes a little bit longer from a supply chain perspective. We also need to

01:35remember the supply chain has moved away from China, so there is some adjustment to make as well

01:41because of the U.S. and the production shifting to India. But the most important thing is what

01:52Tim Cook said, which is signals towards the end of the quarter was positive. People were going back

01:59into the stores. But the big quarter for China is always Q1. That is Chinese New Year. By then,

02:07there's hope that the supply constraint that Apple has had, especially in the higher models,

02:11which is usually where China gravitates towards, will be resolved. And that's where the big quarter

02:17should come in. And if it doesn't, that's when I'm going to start worrying. But for now, I'm not

02:23worried. And I digest the eSIM situation as well. I spy a Cowboy Carter memorabilia behind you. I love

02:29that tour too. Let's just talk about the services side. The music side is part of that. But services

02:34really is what drove the strength at the moment. Can that be reliable going forward when we think about

02:39the regulatory pressure on the App Store, for example? I think it can because more and more

02:45is really content and is also advertising. We've seen Apple close the deal with F1. So they'll start

02:53streaming F1, which is becoming more and more popular in the U.S. and across the globe with a

02:59demographic that Apple is really, really keen in keeping and growing, which is Gen Zers and younger

03:06millennials. So I think that that is real. The opportunity for Apple is on the content side,

03:13is the engagement side. And that also over time will come into play with Apple Vision Pro.

03:21I mean, very briefly, what about the AI side?

03:24Well, we have been promised an improved Siri coming in 2026. And as we discussed before,

03:31Apple has some time to figure this out. I think that most of us have figured out what AI can

03:38do for us in a productivity setting, but not yet on a personal way. And I think that's where Siri

03:46is going to play the most.