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Apple didn't show 'anything big' to consumers at its launch event: Analyst

Santosh Rao, Manhattan Venture Partners Head of Research, joins Yahoo Finance to discuss Apple's new product lineup, from new iPhones and Watches to AirPods Pro, and whether it could be a catalyst for the stock.

Video Transcript

SEANA SMITH: Apple shares moving to the upside here. You can see it up just around 1%, the move coming after the company unveiled its latest iPhone earlier today. Here with the breakdown of the new phone, also some of the other products that Apple announced, like new watches and a second generation AirPod Pro, we want to bring in Santosh Rao. He's the head of research at Manhattan Venture Partner. Santosh, great to see you. So new lineup of iPhones, new watches, a second generation AirPod Pro, stock moving slightly up just around 1%. What did you think of today's announcements?

SANTOSH RAO: Yeah, stock moving up 1% is not a surprise. It's always moved up every time they've launched the new products after these events. So that's fine. That's in line with the historical trends. Overall, I don't think anything was kind of blew me away. Good enhancements all over. I find iPhone Apple Watch enhancements very interesting, especially the battery life is longer, and all that.

So I think that looked very interesting. The satellite connectivity is good. The Pro, I think it just looked like there was a move to move people to Pro models, which is more high margin, better product in terms of profitability. So I think that was-- because the other models were essentially the same except for minor tweaks overall.

So net, net, not much change. It'll hold the line. It'll get that incremental guy who's looking for an iPhone. It's not going to-- they're not going to lose anyone because of this. They're going to keep them. So it's good. It's good to have all these features. But it's not enough to just kind of drop everything and go out and buy a new phone yet. So let's wait and see how that goes out.

DAVE BRIGGS: Not the wow factor that we've come to count on from Tim Cook. A lot of people expected the prices to increase. Perhaps that was the big lead today that they stayed the same. How significant is that?

SANTOSH RAO: That's significant because I think that's what-- price increase in the face of the inflationary backdrop, I think that was important to hold the line there. That will be good. And the fact that iPhone Pro seems more and more affordable, especially if they come out and release their subscription plans, pay now, buy now, pay later plans, and all that, which will be coming pretty soon, I think that's all good. I think it's going to make it affordable. I think that's good.

I think overall, iPhone Pro, that's where you want to be. It's very interesting. The camera features are excellent. And they've always been good. And every time, they just keep on improving that camera. So for iPhone aficionados-- aficionados, if I can say that, I think it's good. I mean, they'll go out and get it because there's always that incremental change. But nothing big. I mean, I have iPhone 13. I'm not going to go out yet. I'll wait. But let's wait and see. It's definitely in the right direction, but not mind blowing that I must have that. That's based on my observation.

RACHELLE AKUFFO: So Santosh, we know that Tim Cook does prefer the services side of things as opposed to some of the wow factor then. But in terms of market shelves, the Apple overtaking Android in the US for the first time, what's next for Apple? How are they going to get perhaps the next batch of consumers to really get on board with the Apple ecosystem?

SANTOSH RAO: Yeah, it's going to be the same thing. I think there was talk about AR VR down the road. That was-- I don't think they mentioned anything. And there are some features out there, then the cars down the road. We'll see where that goes. So there are a lot of levers they can pull. They are well positioned. They have the money. They have the R&D to go on. So I think you really can't bet against Apple as yet. It just continues to reinvent.

Overall, the experience is better, the product is better, enhancements, the look, the features, the utility value of the iPhone is much better, always enhanced. So it's become an essential part of your life. You just can't change it. There's no reason to jump ship at this point because they have a good sticky ecosystem. And there's enough there to hold you back-- accessories and the whole ecosystem, how they are enhancing it. So I think this did the job. It's good. It'll keep it there. And I think it'll hold the line. It's good. It had the modest bump in sales, but nothing mind blowing.

DAVE BRIGGS: You're definitely not blown away, Santosh. In terms of that ecosphere and getting some new people in, how significant it could be, and we saw a little bit on this today, Apple Fitness Plus, a new service coming free for new iPhone users? And also just the fact that new Apple Watch Ultra targets specifically those real fitness buffs.

SANTOSH RAO: Yeah, I think Apple Watch needed some enhancements. I think the health features are very good. They're getting there. More and more people are buying into this thing, buying into Apple Watch and the health aspect of it. So I think all that combined with the iPhone, I think those things are good. They're becoming essential part of your lifestyle. So it's definitely-- like I said, I like the Apple Watch much more than iPhone today. They look good. And they look much more valuable at this point. They can do much more, especially those-- the satellite features, satellite connectivity, and all the other things.

And I think there's the SOS part of it. So a lot of it. I think and overall, even the look was so much better. The options are much better. So in that sense, Apple Watch did get a good enhancement. It's good. It keeps there. And it'll add to the revenue stream definitely. People will buy into. But it's been a disappointment. It hasn't taken off as much. Hopefully, this will kind of push, move the bar, move the needle slightly in terms of Apple Watch sales.

RACHELLE AKUFFO: All right. Always great to get your insights. Santosh Rao, thank you for joining us this afternoon.