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Everything in Apple’s event was more ‘evolutionary than revolutionary’: Manhattan Venture Partners Head of Research

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Santosh Rao, Head of Research at Manhattan Venture Partners, joins Yahoo Finance to break down Apple’s live event bringing the latest news on Apple’s devices.

Video Transcript

- Well, we want to continue the discussion here of all things Apple with Santosh Rao. He's the Head of Research at Manhattan Venture Partners. Thanks for joining us here. You were just listening to--

SANTOSH RAO: Thank you.

- --Dan Howley. Yeah. And lots of focus on the camera features of the new iPhone here, especially cinematic mode-- just some stunning images that we've been looking at. But what stood out to you in today's presentation?

SANTOSH RAO: Yeah, I think, overall, like it was just mentioned, a lot of features. But as expected, I think everything was more evolutionary than revolutionary. And that has been said in the past. And that's expected in the second year of a design change. This phone is more evolutionary.

Next year, we'll get more design change and more different [? phone ?] factors and all that. But this year was more feature updates and enhancements, which is what we got-- yes, more space, more storage, more display. I like the iWatch features especially, because the battery drains very fast. It has a lot more features and wasn't upgraded since, I think, 2019, if I'm not mistaken. So that's a nice upgrade.

So I think for picture aficionados, picture-- people who [INAUDIBLE] cameras, it's great. But for the incremental buyer, I don't know if he's going to come in just because of this, just because of 5G. Yes, 5G is there. But I don't know if this is enough to pull them in.

So people who are looking to upgrade, they might do it because it's almost the same price as the iPhone 12. But for the new ones, the people who want to upgrade, I think they might wait for the next one, because it's really not that much, unless you're really into cameras and pictures.

- Well, yeah, I was chatting with one of our producers during one of the breaks here. He's a sucker, as he says, for all those new cinematic features or phone features that come out, with respect to the camera. I want to get to some of the other products we haven't necessarily discussed, some new improvements. I think you mentioned the iPad, maybe the iPad Mini. Anything else that catches your attention here today?

SANTOSH RAO: Yeah, I think that's good. iPad is very popular. It became more popular during the pandemic stay-at-home and all that. So I think that was good enhancement. It will improve sales there as well. So and things will grow. And it's a net positive.

But it's not anything that's really out of the expectations. It was in line. People expected all these things.

I thought the presentation was kind of low-key. Yes, I mean, their low-key is always very grand anyway. But [INAUDIBLE] relatively speaking, it wasn't that spectacular as I expected. And so we'll see [? everything, ?] including the iPod.

Well, they didn't introduce anything yet. But they'll have something there as well-- so a few things, few misses, few pluses, few minuses. [? Net-net, ?] I think, it's going to stay the same as expected, more evolutionary than revolutionary. And it's not going to move the needle as much in terms of the stock.

- Well, I want to shift gears a little bit and talk about the Apple supply chain. We know that a lot of chip manufacturers around the world have had to deal with shortages not only in terms of the incoming materials but also in shipping their products. I know that's not what this presentation is about.

But separately, what's the state with Apple and its products? I noticed that the Pro 13 goes on sale not this Friday but a week from next Friday. Are they going to be able to fulfill their orders?

SANTOSH RAO: Yeah, I think that's the big issue. We'll see. We'll wait and see. But so far, it looks like they can. I thought they might raise the prices for iPhone 13 because of the supply chain constraints and all the bottlenecks and all that. But they kept the prices at the same level. So that's good.

I think as far as I'm concerned, as far as I see, talking to a few people in the industry as well, looks like that should be on time. So we'll see. We'll wait and see how that goes. The bottlenecks are a big issue.

- Well, then, just on the price points, I'm looking at our banner here. It says Pro Max starting at $1,099. That's just the base model. I think 128 gigabytes goes up to a terabyte. Does Apple, do you think, do they still have the pricing power to pump out these new models, admittedly, in this interim cycle, and still charge as much as they are?

SANTOSH RAO: It looks like they have the pricing power. They've had it for a while. And that's one thing that's good with Apple. They do it very well. They have the pricing power, the features, and all that. So I think they believe they can pretty much hold those prices, raise the prices, if needed, more, raise it more.

But Apple can command good pricing. They always had the advantage there. So I don't see any issue in terms of people rejecting that because of the price, because it's just become so intrinsic part of our lives that you just need it. You just have-- you just need it. It is a have-to, not maybe [? if ?] needed. But it's really, it's a [? nice ?] part of our lives.

- I know exactly what you're talking about, because when I need a new phone, I need it yesterday. It's gotten so slow I can't stand it. Or I need the new camera feature.

I just want to broaden the discussion out to some of the other cell phone manufacturers. Apple is perennially the leader in this group. But I'm just wondering, any contenders now that you see catching up to it? Google Pixel has their own phone. The Samsung Galaxy is ever present. Anything on the competition front?

SANTOSH RAO: Yeah, all those companies have been nipping at their heels for a long time [INAUDIBLE] hold its own. But the Android features are pretty strong. It's a strong competition.

But that's the beauty of Apple. Once again, come into their ecosystem. It's so tough to get out of it. And that's been their strong point all along.

So I don't see anything that'll really change that scenario. But Google and Samsung, they've always been nipping at their heels. And Apple has maintained [INAUDIBLE] price, their market share all along. So maybe they'll lose a point here and there. But I think, overall, it's essentially a market leader in what they do.

- All right, we want to thank you for stopping by here, Santosh Rao, Head of Research at Manhattan Venture Partners.

SANTOSH RAO: Thank you.