Blanchard: "No Reluctance" in iPhone Duo Preorders, Siri AI Will Lead Future Growth

Nicole (0:00)

Olivier Blanchard, Research Director, Futurum Group. And look, we're seeing the hair, and we saw Evercore ISI talking about the strong orders, the pre-orders for the Duo. So it's off to a good start. Starts at basically $2,000 for the basic piece. I guess you can upgrade it and move upwards. What do you think of that?

Olivier Blanchard (0:23)

No, it's solid, Nicole. So thanks for having me on. And yeah, no, it's a good day to be AAPL, especially when you look at, you know, how a lot of the other tech stocks are performing. So broadly, what you're looking at is sort of a softening of the handset market in general, but mostly that's focused in the lower price tiers. And what Apple has done is it's really kind of like refocused itself into the premium tier. And so we're actually seeing Apple shipments potentially reaching 260, 270 million units, and a lot of that steering towards premium, or at least the mix favoring premium. And the Duo lands exactly at the right time for this to happen. So as you mentioned, it's a $2,000 phone for like the base version.

And still it's sold out in minutes. And the intelligence that we're getting is that it's backlogged for about three months. So we could see like fairly decent volume, nothing compared to just other iPhone volume, the foldables is a different category. But it's kind of in that premium group.

And there doesn't seem to be any kind of reluctance to buy that particular phone and that form factor.

Nicole (1:32)

Yeah, because when I started the segment, I was quoting one report that was saying that the orders were slipping back to November. But as your point here is that the pre-orders are underway. We know it's sold out pretty much almost immediately in the shipping lead times quickly slipping into late January, 2027 I mean, I had a friend who always used to say, a friend on the floor here, a trader, used to say, you never short Apple in the fourth quarter. It wasn't long ago we were talking about the Apple ecosystem, right? The new TV, the floodlights, the doorbell, the cameras that you can do, the thermostats, there was just a lot that we could continue to see with Apple.

The Duo being the high priced luxury item, is that taking away from the 18 Pro? Because the Pro now has shorter wait times, maybe four days, than the prior year. So is it that maybe they have more interest in the Duo, or is there something wrong? Is the shorter wait times, meaning more supply, less buyers, is that how simple we can look at it? Does that really tell us the story? Maybe they're even turned off by the higher prices, because memory chips are costly.

Olivier Blanchard (2:41)

Right, a little bit. So there's a little bit of an interesting story there, and we've seen reports that the guidance for manufacturers or the Pro, the 18 Pro and Pro Max have been asked to scale back a little bit. And there are two things going on. One, yes, I think there's a little bit of carryover. Some people who would have normally bought an 18 Pro or Pro Max are transitioning into the Duo. And so you're seeing a little bit of attrition there. It's not a problem for Apple. Obviously, they're just kind of like moving to a higher ASP or just kind of like changing their mix a little bit. It's not going to affect their bottom line. The revenue is still going to look strong. It's just a change of the mix.

So you might see a little bit of softness in the 18 series because of that. The other thing though is, as you may recall, Apple decided to have sort of like a dual launch strategy for the 18

So the Pro and the Pro Max are available right away. And then some of the more mid-tier models will be released in the spring. And so I think some of the softness or some of the reporting that we're seeing about guidance for their manufacturers and their partners kind of like lowering some of the production volumes for this quarter is really also relative to this this dual launch timing.

Nicole (3:52)

We still think of Apple as an iPhone company, but there's so much that comes into Apple and what contributes to the bottom line, right? I mean, they have all kinds of services and other growth drivers. You tell me, what should we look at Apple? When we look at Apple, what kind of company is it? What are the growth drivers?

Olivier Blanchard (4:11)

Well, it's you know, it's a platform company. It's a fully integrated vertical stack. But I think that the thing to really focus on, and I know I'm going to sound like a broken record and like everybody else, but it's really still about AI. And so Apple Intelligence, the new Siri, all of those integrations with agentic capabilities, with more autonomous kind of like AI driven applications and experiences. That's definitely what you need to look at. Because ultimately, the hardware is solid. It does really cool things. It looks great. But it's still a vehicle for all of these AI driven services. So look for Apple to still continue to monetize this and to grow into more of an AI first company.