Apple is crushing it, and it's all thanks to AirPods (The Daily Charge, 1/29/2020)
The Daily Charge
Apple reported a monster quarter with record revenue in earnings.
It's all thanks to air pods.
Stay tuned for your Daily Charge.
Good morning, and welcome to the Daily Charge.
It's Wednesday, January 29.
I'm Ben Fox Reuben.
And I'm Scott Stein.
And here are today's headlines.
The knock on Apple is that it's no longer innovative and its phones have gotten boring.
A year ago the company stock was slumping and its sales in China were down.
Well guess what?
Since then the stock doubled and people are buying more of those boring quote unquote iPhones.
Scott, what do you make of all this?
Well, I mean, the iPhone 11 got less expensive, compared to the iPhone XR.
And I think that just became a little more practical.
But I mean, I think it's not just the iPhone, as we know, it's the Airpods, and the Watches.
And also the lower-cost Apple Watches, things like the Series 3. It's all that collected stuff.
So let's start with the iPhone, though.
You reviewed the latest iPhone-
It was little cheaper.
It's like $50 cheaper.
It's still $700.
So it's not like an impulse buy or anything like that.
But from your impressions, did you think it was more polished?
Did you think it was a little bit better?
Is there something about the phone that you think really incited a lot of people to buy it this time around?
I think battery life.
I think that that that made an impact for people.
The idea that better life would be better.
We get over that hump and when reviews were showing that I think that mean camera always matters.
But, you know, I always think that the changes are pretty incremental, but it seems like you know, this generation around, things like that wide angle, things like that night vision mattered,
but I am pretty surprising to me,
I was watching.
I was watching that presentation in September and they first revealed it And it seemed like a snooze to me.
So seeing And granted, this is just one quarter.
This is just one quarter and a lot can happen over the course of a year.
But record revenue and profits.
That's exactly what we used to say about Apple just basically like clockwork, every single quarter.
They just kept doing better and better.
And what was it?
The iPhone six?
When they came out, they blew the doors off like they absolutely crushed it.
So it does kind of feel like they're getting their mojo back, foreshadowing.
More on that to come.
Yeah, it is surprising to me too and I don't really have anything really concrete to say about that because it feels like.
They're continuing the same path that they're always been doing, which is like the--
Slow and steady.
Yeah, incremental, interesting, sometimes more obvious, sometimes more in the weeds updates each year.
And you don't need to update each year.
And we're not doing a foldable, we're not doing a foldable.
We're not doing 5G.
No foldable, no 5G stuff.
We've been on this show multiple times saying, hey this is getting a little stale, this is getting a little dusty.
Apparently people are pretty comfortable with.
What their expectation is, if anything, Apple is really good at giving you a product that works, that you know how it is and maybe not changing it up that much makes sense.
I am a little surprised.
But hey, even the numbers are the numbers.
It's been a very practical product.
But it's also funny because in the last year, iOS 13 had a lot of bugs going on.
So i 12 to 13.
I feel like we've had the all these little incremental updates.
Be able to talk about things that have been a little wonky about it.
So it's just interesting.
Cuz when that all shakes out, you're like, yeah, everything seemed to be just fine.
But I do think there's something to be said for the consistency in the product line.
Cuz I look at the 5G stuff, okay But particularly, the foldable stuff.
Regardless of whether or not you wanna buy one, it's also, the price is so high.
So I think people are so price-sensitive that, you gotta get those prices down more.
So particularly for an Apple-
You don't want any more expensive, I don't want a more expensive iPhone, we really need less expensive.
And there's the talk about whether they'll do the iPhone 9, or the SE 2 In the spring to go against like a pixel for a are these other more affordable phones like that's the direction that needs to happen for Apple so like don't look, I wouldn't look like up the ramp I want to look to like I totally sees down
From a consumer.
I totally agree we have a lot to cover.
So let's keep moving.
The Mac and the iPad revenue is down in both of those lines.
So all is not well an apple world.
It's worth mentioning that so what are your thoughts about that?
Do you kinda feel like The iPad really is still facing challenging times.
What do you think that they can do about that.
It was a weird year for that stuff.
Well, first of all, there was no iPad, new iPad Pro last year, and the new iPad, the iPads that came out were these iterative like iPad Mini and then the, a newer version of the base iPad, and they still haven't resolved the difference between the iPads and the rest of the Mac line.
Which Microsoft's done a while ago exploring surface and things that.
So, we've been waiting for that.
Apple's just taking its time with that, some people think that's fine.
Other people really think that's not okay.
I get really annoyed at all the ways that the iPad is not my full everyday machine, not to say that it can't do a lot of other things on a daily basis.
But then you have to use it in connection with another device you have lying around.
Yeah, and you're paying a lot of money for that.
So that is frustrating.
At $300 for an iPad, okay.
But then you get into iPad Pro territory, well you want that to do everything.
So I still feel like that needs to be resolved.
And then for the Macs [LAUGH] It's like you know, the keyboards, like they had something perfect with the Air a long time ago and now there's just like all these different versions I feel like and people have issues about one or the other and I've never liked the touch bar.
So I just feel like it all needs to be Kinda redesign-
Make it familiar-
Similar to the iPhone.
Put touch in there, get rid of the touchbar-
So let's get to the-
Converge to the iPad, yeah.
So this is the sweet spot, specifically for this quarter.
Was wearable in services and when we talk about services, that includes the App Store, Apple Music, Apply Pay, iCloud.
For wearables it looked like the bell of the ball was very specifically Air Pods.
I wanna call out a Bernstein analyst because Apple doesn't provide this information.
A Bernstein analyst predicted Air Pods generated.
About $6 billion in revenue for Apple in 2019, nearly double the 2018 level.
I mean, you look at wearables a lot.
Are there any other wearables that come even close to the AirPods?
Why do you think they're so popular?
Where did this come from?
I remember wearing them and having an awkward look on my face in 2016, [LAUGH] how far things have would change.
I mean, well, first of all they're headphones so like, it's a very practical market.
So there's always an interest in that stuff but it really spiked in and drove it forward.
But I think it starts from there because a lot of times you think well what am I gonna do with blank?
Where am I gonna use it?
And then you'll use headphones especially if you can slide them in your pocket easily.
So I think that already made them really functional and really interesting.
And they work.
I have AirPods, too.
They were super functional.
I was resistant to AirPods for a long time because I had all these other headphones lying around that I got every single time I bought a new Apple phone.
And, you know, I eventually just barked and decided to spend the what is it $130 for the original AirPods and I use them all the time now they are it really fits A very basic function this is the Apple promises is that, if you buy the product you're gonna be spending more money on it but it works, and you don't have to like bother with all sorts of nonsense.
Yeah, it did a really good job of like Bluetooth stuff is annoying but it doesn't perfect all of it, but it really smooths over a lot of that stuff to make it.
The least annoying version of that, right?
So and that's like that's what you need to like, pick it over plugging something in.
Plus, like the disappearance of headphone jack or a lot, you know, like trying to figure out whether you want the lightning or the dongle and you just go I'm going to get the air pods and it connects to that and it says sort of like It's not far off from from our really expensive battery case expect a accessory type of thing.
It's upwards of that it's 100 you're on 160 right?
I was surprised that how many AirPods
It is expensive [INAUDIBLE]
People have been in, you know, buying the pros and have you noticed people upgrading to the pros because that would actually I've seen a lot of people-
Be even more money in Apple's pocket.
I've seen people in the city wearing them.
I've seen the Pros.
But New York City is its own story.
But it's like an AirPod city.
[LAUGH] It really is.
It's everywhere, yeah.
What does it mean to see a New Jersey commuter wearing them?
That's a different As a subset.
But I also think there's something about the price of that.
It lines up with the price of what the iPod used to be.
It's like accessory, I always think accessory prices.
What will you buy as an addon?
And the watch has been getting in that zone, too.
Apple watch gained to one ninety-nine.
That's like the Amazon Echo price.
It's like the price-
Not exactly, but I hear what you're saying, is just that-
But Echo was 199.
It gets closer to-
Being a useful add-on, a useful accessory.
Where it's not super cheap but-
Yeah, I feel-
For Apple it is less expensive.
Like from 200 or less is the part where I go, that's a lot of money.
But I could maybe spontaneously think about going for something.
But more, just for me getting to more than that gets into its own device, its own commitment.
So I don't know, maybe it's something of that.
They found some zone.
Cuz the Apple Watch at $400 is its own consideration.
That's a lot of money.
You creep down to 199 or eventually go to less to compete with Fitbits and others.
I feel like that Series 3 is what people are really interested in in the watch, like in the bigger scale.
That good sweet spot.
People wanna own the other one, but that's the price you'd wanna pay for it.
For the Daily Charge, I'm Ben Fox Rubin.
And I'm Scott Stein.
Thanks for joining us.