Ben Bajarin: All they did was update the Air with Retina and some modern specs and priced it around $899, they would take share like it's no one's business. It would really, really disrupt PC sales in a significant way.
Rene Ritchie: Ben Bajarin, industry analyst. Rumor has it Apple will hold a March event again this year and at the Steve Jobs Theater. Let's get into it.
Rene: The biggest rumor is iPad. There's been a number of sources that've talked about new iPads. I was wondering about that specifically because Apple updated both the iPad Pro 12.9 inch and introduced a new iPad Pro 10.5 inch last year.
They're not on the A11 architecture. They don't have features like Face ID. But it's uncommon for Apple to rev an iPad nine months into the cycle as opposed to 12 or 18 months they've been doing lately.
Ben: I think the question is just when's the right timing. They're going to refresh them. They did just refresh them. But the buying cycles for this has shifted to the latter half of the year. I'm just not sure what you gain in a mid or earlier type of an event around iPads when the buying cycles I think are relatively clear for those products.
Rene: Last year around this time, they did introduce a new 9.7 inch iPad that was, in terms of casing, somewhere in between an iPad Air 1 and 2. It didn't have the laminated screen. But they were trying to keep the pricing down.
If they rev that model, do you think it would behoove them to bring the price even lower, maybe into low end video player tablet territory? Or, do you think that they can keep the price the same and increase the specs this year?
Ben: Apple's motto's never really been to try to scrape the bottom of the barrel in pricing. I think they believe that there's premiums they can get for their products. I think that applies to verticals like education and enterprise, as well. But you could argue that the iPad of today that's on market could see a price decrease. Last year's model goes down.
They slot newer products up in that and basically cover as aggressive as price points as you can from really low, early level 9.7s from last year, and then some new specs and features around those products this year.
I do think that they're trying to bring Apple Pencil across the line to all iPads. I wouldn't be surprised if there's a version of iPad that's not iPad Pro if you will but does support some Pencil at a lower cost for some of those use cases.
Rene: One of the big hopes and dreams of a lot of people is still, I don't know about a lot of people but some very vocal people, is the iPad Mini. We know from history that Steve Jobs was never keen on this device. Eddy Cue had to convince him to make it.
Now since they've got bigger and bigger iPhones, that's really cannibalized. It's really cut into the sales of the iPad Mini. Do you think that's a product that Apple could still refresh or do you think that'll be handled by even bigger iPhones in the future?
Ben: People are going to listen to this and I'm sure are going to be like, "I love my Mini!" I can already see the tweets coming my way. But the reality is...
Rene: Where's my Mini Pro? [laughs]
Ben: That's just not a big market. You're right. I think it fit that little gap when we had four inch phones or 3.5 inch phones and we didn't quite have a bigger pocket computer that we could just really take with us all the time. We would see executives here in the Valley. They'd have it slipped in their coat pocket, the iPad Mini.
I think you're right. It was a point in time product. I don't think that it really bears tons of relevance in the market today. The sales would validate that. But absolutely, I think the phone becoming bigger is the biggest thing encroaching on that. I think that's what we all assumed when we first saw the 6 Plus was that this will start to eat into Mini. I think that's really what it's done.
If you were looking at the data like Apple was, you'd say, "Look, this is great. We'll probably still support it. But it's just not anywhere near the volume of our sellers. The market has moved on. They're moving in this direction, and that's where we should focus our resources."
Rene: You mentioned earlier, we thought about this for a while, Apple moving the Pencil across the line. You think Apple would ever bring Pencil to iPhone? Obviously, they have it in the labs. But if Apple does go with an iPhone 10 Plus, could you see a Pencil functionality coming along with that?
Ben: I don't think it's coming to phone before it comes across all iPads. I think this year, you're either going to see it on all iPads or vast majority. I think phone is the second step should it ever come to that form factor which I'm still super skeptical about regardless of how many people are interested in it.
Not to say that you compare Apple to Samsung, but the reality is the Note's great and all but the pen is still a fairly limited use case. There's certainly your hardcore who use it. But it's very, very small percentage of the market that gravitates towards those products and, even when they do, that uses the pen on a regular basis.
Rene: I just want an iPhone 10 Plus with an Apple Pencil Sketch as my ultimate portable Wacom tablet. You're breaking my heart.
Ben: I'm sorry. Look, I sympathize with those people. You're just in the minority.
Rene: I know.
Ben: This is the reality of it.
Rene: Two years ago at the March event, we saw the advent of the iPhone SE. It was essentially an iPhone 5S with iPhone 6S guts. Since then, Apple hasn't really updated it. They have increased the memory capacity of it. But it's still running silicon that's several years old and still has a camera module that's several years old.
There's a rumor now that you might see an iPhone SE 2 which would bring more modern specs again to the small phone.
But we're also hearing rumors that when Apple revs the iPhone 8 and the iPhone X, I don't know what they'll call them, the iPhone 11 and the iPhone 11 Plus, whatever, that they'll have a less expensive version, one that has LCD for example instead of OLED and otherwise lets them meet a lower price range.
Do you think there's room for both of those phones or do you think Apple has to choose between them?
Ben: No, I think there's room in this lineup holistically because again one of the more important observations I think from a product pricing standpoint that you can look at today is Apple sells an iPhone that costs anywhere from 399, upfront full cost, non-subsidized, to 1,199.
That's an incredibly powerful price range especially when you look at what's happening in markets that aren't their biggest markets, like China and the United States and UK for example.
If you look at what's going on in parts of India, if you look at what's going on in many parts of Europe, these are places that just don't spend $800 on phones. That's just the reality of it. They don't do it in any large number.
I think Apple looks at that and says, "You know there's portions of the market we want to make sure we address. We recognize that price point is an important part of the decision-making process for those in those other areas. But also that they need to be spec competitive."
I think the goal here is however it shakes out, whether that's a new version of an SE or whether it's something completely different, I think they want to span those price points with modern specs. Their strategy is clear. Now, it's just how do they balance what those specs are, what those price ranges are, and what the lineup looks like.
Rene: The other thing that's interesting to me is that last year, there wasn't a March event and there wasn't an update to the iPhone SE. But there was a very small change to the iPhone 7. It got Product Red treatment.
It's amazing to me that in market, people respond to new colors often the way they respond to new designs. There's an incredible amount of excitement. They're facetious about it in the beginning. Conan O'Brien makes his jokes. But when you get gold, you get rose gold or you get Product Red, there is genuine excitement.
Samsung, famously a lot of companies put out their competing phones around this time of year, around Mobile World Congress and around the spring. It seems like Apple could get a lot of attention back if they did do a Product Red iPhone X or release the gold one which they didn't do last September or maybe experiment with a blue or purple or something else. Do you think that might be in the cards?
Ben: I think that's possible. I think if we look back on last year, it was actually a pretty smart strategy for the reasons that you mentioned but also that the people who buy the flagship phone, in this case which is the X and maybe to some degree 8 and 8 Plus, typically buy in the first two quarters. Then, it really drops off after that, after the March quarter.
The question then is...I think this is what Product Red did. It actually invested some incitement back into the modern phone lineup with something that was fresh and new and really gave it a little bit of a needed jolt for the June quarter. That works. I could definitely see them do that. It would make sense. It's again, like I said, a strategy that's paid off before.
Rene: Last September, we also saw when Apple introduced the iPhone 8 and the iPhone X and they had inductive charging for the first time on Apple's platform, they announced AirPower along with it, a device that would charge one or two iPhones, an Apple Watch, and AirPods if you got the new inductive charging case for AirPods. But it hadn't come out yet, and it hadn't come out yet.
Now, there's rumors that we'll see it announced again at this event. Have you any sense of how well inductive charging is being used as a feature by iPhone owners and if there would be excitement for AirPower, especially because there's rumors that it'll be at a higher price point.
Ben: I think it's certain that it's going to expensive. It's the one product that I'm really, really excited for. But I do think it's going to be a premium for sure. It wasn't as high as an attach on things like the 8. It was a little bit higher on the 8 Plus. But it was very, very high on iPhone X.
But there's no question when you look at something like even HomePad as an example of this...But when you look at something like AirPower, it's designed for that cream of the crop of Apple's customers that really clamor at those things. Then we see how it diffuses over time.
Rene: The rumor for AirPods is that they'll get inductive charging built in. They'll be water resistant for things like rain and sweat. They'll have voice-activated Siri built in the way a HomePod does. But we have the rumors now. I don't know what to call them, StudioPods, AirCans. I'm running out of names for these things. These are probably for later in the year.
But the rumor is the team that made the AirPods and HomePod are now working on over the ear headphones using a synthesis of the wireless technology of the AirPods and the sort of high end acoustics audiophile technology of HomePod.
Ben: I think obviously if AirPods is coming out, let's just say it's this half, not necessarily end of the year, you could see them lower the price of existing AirPods, as well, which just again diffuses the price now and makes it possible so that a greater proportion of their users can buy such a product. But they've got Beats. There's obviously tons of stuff that you could do. But I don't know.
One of my experiences with HomePod was like, "Man, it's fantastic, and I'd love a version of this for my ears." Bose has some good stuff obviously. Beats is OK. That's a controversial opinion, but so be it. But the reality is it makes sense. My point is that those types of things are the new products or new categories that I think Apple has planned for the foreseeable future.
Rene: It's really interesting to me because the Apple Watch obviously was introduced in the spring. But it's been revved every September. But we're still getting new watch bands for example almost twice a year. There's a spring collection and a fall collection.
With the new functionality in Apple Watch Series 3, you can go out for periods of time without your phone, especially with something like AirPods. They just announced skiing and snowboarding workouts.
It wouldn't surprise me if we saw something, more fashion relationships or yet another style of band, something that ties together again the value of AirPods and the value of Apple Watch for Apple, even if the watch itself is not being revved yet.
Ben: I think that's a good way to look at what they can do in the spring that still furthers the ecosystem, keeps buzz and excitement around their products, gives their customers some new things that can tide us over until the fall. It's a playbook that works.
I think we know what their main category cadences are towards the end of the half of the year. We're learning about how they're starting to navigate these waters of market maturity with some of these companion products, which again, makes sense for the spring.
Rene: One place where it still is competitive is the Mac. Windows vendors are increasingly pushing out hybrids or tablets or laptops. Microsoft's own Surface keeps getting updated. We had the new 12 inch MacBook debuted in the spring. I think it was 2015. They revved it the next year in 2016.
We had to wait till WWDC for the 2017, for the Kaby-like version. Then Apple revved the MacBook, the MacBook Pro, the iMac. Everything went Kaby-like.
Do you think we're ready for a Coffee Lake update? Do you think maybe Apple will revisit the controversial nature, the divisive nature, of some of their recent Mac decisions?
Ben: If there was to be a new set of these products out that we could argue is coming and you could argue that it's the Mac, I'm still just not terribly convinced that Intel's schedule lines up with that from a CPU standpoint. I still think they're leaning toward the fall.
I've heard all sorts of stuff with other vendors in terms of trying to get certain stuff out in back to school. I'm just not sure that their timing lines up the same way. That doesn't mean that Apple can't do something and then update the processor later on in the year. It might just be a cadence they have to deal with if that's their schedule.
Rene: What about TrueDepth? Because we've heard previously that TrueDepth camera modules were constrained. But I think an argument could be made that if they do closer to edge to edge displays on iPads and include things like Face ID, whether the technology is OLED or LCD or the chip set from Intel is Coffee Lakes or sticks with Kaby Lake, maybe if they just revved the keyboard on the MacBook Pro, a lot of people would be happy anyway.
Ben: You're right. Honestly, there's a slot that I think if Apple chose to could seriously rain on the PC OEMs' parade if they brought updates to the MacBook Air with Retina for example. If all they did was update the Air with Retina and some modern specs and priced it around 899, they would take share like it's no one's business. It would really, really disrupt PC sales in a significant way.
I know they know where those gaps are. I think they see what's happening in the PC market also. I just don't know if that's something that they would do this year.
But if they wanted to just completely rain on their parade and boost Mac from five, seven million and go way higher than six million units a quarter, that's what they'd do. They'd come in at 899 with an updated MacBook Air at Retina and modern specs. It would be a force.
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Thank you so much, Ben. If there is an event in March, I hope to see you there.
Ben: My pleasure. We'll see you there, Rene.
Rene: Any rumor to the fact that you began doing this show on a connection from a satellite where may or may not have used the actual horns from a bull on a farm to get you the connection?
Ben: Completely true...