Loup Ventures

About the Author Loup Ventures

At Loup Ventures, research is in our blood. The spirit of our team has always lived on the curiosity to discover new insights that yield investment opportunities. For years we did this on Wall Street, focused on public tech companies. Now we invest in private frontier tech companies, but public companies like Tesla, Nvidia, and others are also meaningful innovators in frontier tech. These public companies are shaping the emergence of AI, robotics, autonomous vehicles, and AR/VR just as much as early stage startups. As a result, we’ve always kept a watchful eye on public market participants to inform our private investment strategy. Gene Munster is a managing partner and co-founder at Loup Ventures. Prior to Loup Ventures, Gene was a managing director and senior research analyst at Piper Jaffray where he covered technology companies including Apple, Amazon, Google and Facebook. During his 21-year tenure, Gene received many acknowledgements including: Top Stock Picker from Forbes, Best on the Street from The Wall Street Journal, and was widely recognized for his work on Apple. Gene holds a bachelor’s degree in finance and entrepreneurship from University of St. Thomas.

A Glimpse Into Apple’s (AAPL) Gather Round Event on September 12th

By Gene Munster

Apple (NASDAQ:AAPL) sent out invitations to its annual fall gathering to announce new iPhones. Historically, they have also used this event to set the iPad, iPod, and other product lineups for the holiday shopping season. Here’s what we expect:

  • Three new iPhones: An upgraded iPhone X with a 5.8″ OLED display (iPhone Xs?), a larger screen, upgraded iPhone X with a new 6.5″ OLED display (iPhone Xs Plus?), and a lower-cost, full-screen iPhone with 6.1″ LCD display (iPhone 9?). See more below on the bigger picture of the iPhone business.
  • Apple Watch Series 4: Apple Watch Series 4, including a new, larger display. While we were not expecting a change in form factor, Apple’s “Gather round” tagline for the event has us wondering (hoping?) that the company introduces its first round-faced Apple Watch. However, the software and hardware implications of such a change are so massive, we think it’s unlikely that Apple will depart from the current Apple watch form factor. It’s more likely that they’ll deliver a larger display in a similar watch casing, reducing the size of the bezel.
  • New iPad Pros: The 10.5″ and 12.9″ iPad Pros were last updated in June 2017. The question is not whether they will be updated this year (they will), but whether Apple will host a separate fall event, as the company has done in the past, to launch the new iPads. The number of new products on this list likely warrants a second event.
  • New AirPods: Even though Apple still can’t make the first generation AirPods fast enough, we think they’re preparing an updated version with support for “Hey Siri” — voice-based Siri activation.
  • AirPower: Assuming the company is still on track for the “2018” release of the AirPower wireless charging mat, we expect to see the product launched at the Sept. event.

Now, Let’s Decode This Invitation

Warning: We’re about to read way too far into this invite. Aside from the obvious reference to the event location, the Steve Jobs Theater at Apple Park (both round), and the shape’s resemblance to the top of the main building at Apple Park, let’s see what more we can pull out of the invite.

Screenshot: Apple event invitation

The color seems to reinforce rumors of a new iPhone color. The iPhone X does not come in gold, which may be added to the lineup. The gold also has a brushed look, which may reference the finish of the lower-cost iPhone with a 6.1″ LCD display vs. the polished finish of iPhone X today.

Source: Curbed

The concentric black circles within the larger gold circle are elements drawn from Apple Park. But we wouldn’t be surprised if Apple integrated that same design language into a new, round product. Does it hint at the look of a coil, like the ones used for wireless charging? Or is it a hint at a round-faced Apple Watch? We think not, but this invitation is more than a creative look at the event’s location.

iPhone: The Bigger Picture

iPhone is entering a period of stability (0% to 5% unit growth for the next several years) driven by 805m+ active iPhones with a high (90%) retention rate. Assuming a 3.5-year upgrade cycle and a 90% retention rate implies 207m iPhones sold each year, slightly below the Streets 219m expected in FY18 and FY19.

Three new iPhones this year will be a meaningful shot in the arm for our Apple as a Service thesis. In short, Stable iPhone businessServices growth, a significant capital return, and new products are driving a new investment paradigm for the company. Apple’s Sept. iPhone events set the stage for a stable iPhone business over the next year and beyond.


Disclaimer: We actively write about the themes in which we invest or may invest: virtual reality, augmented reality, artificial intelligence, and robotics. From time to time, we may write about companies that are in our portfolio. As managers of the portfolio, we may earn carried interest, management fees or other compensation from such portfolio.

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