Key Points:

• iPhone XVI launch underwhelms due to similarity with previous models and delayed iOS 18 release.
• Apple’s competitive edge in China is at risk against innovative local smartphones.
• Concerns arise about Apple’s future sales, especially in the crucial Chinese market.
• Also: Smart money is starting to look ahead to 2025’s biggest winners and has named ‘The Next Nvidia’ to profit

Doug and Lee discuss the launch of the iPhone XVI and the lackluster response it received, largely due to its similarity to previous models and the delayed release of the new iOS 18 with AI features. They express concerns about Apple’s (NASDAQ: AAPL) competitiveness in China, especially with strong local smartphone competition and the absence of significant innovations. They predict that Apple’s stock may have already peaked and express skepticism about whether the new iOS will offer anything groundbreaking. The conversation touches on the broader implications for Apple’s market position and potential future struggles, especially if they fail to introduce more innovative products.

Watch the Video

Edited Video Transcript:

Okay. iPhone XVI launched a couple of days ago.

It did?

Yeah. Not a lot of enthusiasm in the market about it for two reasons.

The first one is it’s a lot like the iPhone, which is now a perpetual problem for Apple.

The other one is what I think is going to be one of the great strategic errors for an unforced error among big American companies in the next year or two is they didn’t release the operating system with all the great AI.

You buy your Sixteen and you have to wait a month or two before what’s called iOS Eighteen, which is the operating system with all the fun stuff, AI stuff in it.

So if you’re a consumer and you walk by the Apple store and you see the new Sixteen in the window, you say, well, I’ll buy it, you know, when the new thing shows up and, you know, they also tell me and, you know, some magazine tells me that they’ve debugged it.

It’s an unforced error on Apple’s part. And I don’t understand it.

Yeah. And the thing, and again, I have a XIV, you know, and again, I am not a Gen Z or a millennial, so it pretty much covers everything that I need, you know, because I remember when the smartphone first came out, I said, well, why do I need a phone in my camera? I have a camera, or a camera in my phone, rather.

But, you know, it seems as every upgrade, it’s like, okay, we have a new brushed cover, or we have new colors, or there’s more pixels in the camera, and it’s never anything dramatic where I read recently that Huawei has like a triple folding phone or something like that. And the demand in China for that was huge, you know, upon the release of the Huawei flip-flop phone.

So, boy, unless they really hit the ball way out of the park in China, I don’t see how this is a big deal unless the iOS-A team is something dramatically different, you know, big that can really make a difference for Apple owners.

Here’s what worries me about Apple right now.

You remember very early in this year, a research report came out that said that Apple’s iPhone sales in China had been down. I think you’re looking at the possibility of China being very soft for Apple.

First, they’re going to launch the XVI. It’s not going to have the iOS in it.

Then you’ve got this slew of really, really good Chinese smartphones. It’s not like they don’t get AI.

So Apple, I think in China, is going to be in a more competitive market selling a phone that doesn’t have the best software that they’re going to have.

And if you think about smartphones, there are nine hundred and fifty million subscribers to smart cellular service that works with smart phones.

That is three times the United States.

So you’ve got you have got nine hundred and fifty million customers in China.

You’ve got a third of that in the United States.

Apple has to do well in China. They have to do well there.

I don’t think they will. I think they’re going to get hammered in China.

You mentioned this triple folding phone.

Yeah.

They just don’t have it anymore.

They don’t have something. They can’t go into China and say, we’re Apple.

We’ve got by far and away the best product. We’ve got the best software.

They don’t have that anymore.

No. And it’s almost like it’s like Hollywood. They can’t think of anything new. So they go back to everything that’s old.

And so we’ll go back to the first.

The flip phone, you know, the Motorola flip phone sort of design, but apparently, you know, people really like it because, you know, you can, you can have it sit on its, you know, sit on its base while you, you know, shoot video and things of that nature.

But apparently the first day sales were like three million units or some, some, you know, home run like that.

And like, yeah, unless it’s something super big, what are they going to do?

Cause they’re not going to make it up with new, you know, ear pods, or they’re not going to make it up with a new Apple watch, or they’re not going to make it up with, you know, a new iPad.

They’re just, it’s just not going to make it up. And, and there’s no way Mac sales can ever, you know, the Mac user is usually they use it for not just your standard computer work thing.

You know, they use it for graphics or, you know, it’s used in media and things of that nature. So they’re never going to make up any ground with that.

I’m going to make a prediction. My prediction is that Apple has already traded at its all timeline.

That’s entirely possible. And it could take a big shot and then go sideways until they really, unless the new operating system really brings some dramatic, interesting ai features to the phone and I’m trying to think of what that could be that’s nothing it’s like a siri it’s a better siri whatever it is so I’m saying this right now.

Yeah.

You can take this to the bank Apple if I want bad hey I can use, you know, Alexa right Alexa

Right. Or you can choose chat. You can download, you know, these features onto your iPhone for either for free or for like nine ninety nine for the year.

So is that Alexa talking to you?

OK, Alexa, thanks. She’s talking to me right now.

So we have a real time version. OK, hang on, Alexa. That’s more than enough.

Yeah, I always yell at Alexa because it’s such bad AI.

But, you know, if I need to know the temperature or how the storm is in the Gulf, it works pretty good.

Well, I’m telling you something right now. Apple, you’ve seen it traded its high. I think you’re right.

Take it to the bank.

We’ll see how… the third quarter rolls for Apple and we’ll see how those iPhone sales and all the new product sales work.

As you know, investment banks are pretty good at figuring out sales the first few weeks and then leaking the numbers.

So when that first set of numbers gets leaked, either in China or, you know, the U S we’re going to come back and look at this right away.

Apple needs to think about a flip phone, I think.

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.