discountopinion

I would bet on tandem OLED for the flagship iPhones since Apple has proven the tech for the iPad Pro and it would put the Pro line in sync with premium visuals.

I highly doubt they will go for under screen anything as what is the pull factor? Yes TouchID is useful but likely they need all the space they can get to bring enhanced camera optics and telescope lens and potentially the double OLED display in addition to AI enhanced SoC.

Clearly a challenging quarter on the hardware side and the story seems to be repeating over the last few quarters.
The services story is becoming increasingly pronounced and thus a source of exposure given the anti-trust activities looking to unlock the walled garden and threaten the partnership with Google.

All things being equal then Services may get into relative gross margin contribution parity with hardware in Q3 2025. 
Below is my calcs on the recent quarterly results for services. Errors may be in there

Metric	Current Year (March 30, 2024)	Previous Year (April 1, 2023)	Year-on-Year Increase (%)
Services Revenue (million USD)	23,867	20,907	14.16
Cost of Services (million USD)	6,058	6,065	-0.12
Absolute Gross Profit (million USD)	17,809	14,842	19.99
Gross Margin (%)	74.62	70.99	5.11
Relative Gross Margin Contribution (%)	42.13	35.36	19.15

Apple has finally publicly pivoted towards GenAI instead of keeping it hidden and discreet.

I have no doubt that Apple explores all sorts of concepts and files patents. Some of it may be PsyOps against the competition to occlude their real intent.

Apple Ring - feels meh if already having a watch.  A better product would be a scaled down Apple Watch that can tell time, health features, cellular, gps and satellite comms with personal attack alarm. Many schools are banning smart phones and smart watches regardless of the software modes for use in school.. a visibly scaled down version would be great for kids.

A ring would be a pain in the neck to scale to mass volumes since there will be a wide range of finger sizes. Customer variance in size is low cost to manage when having the variance in a rubber loop on the iPhone. I do not see it for a ring unless reaching massive scale.

Apple smart glasses? Not yet. Need massive uplift of Apples AI chops first.

AirPods with cameras? Feels like a massive distraction instead of doubling down on the market segment of assisted hearing. 

I have to say that most Equities analysts talk their own book.

I.e. if their most profitable clients are looking to load up on AAPL then they will put out cautionary notes to the public about AAPL to allow their clients to buy into depressed demand and thus secure lower average per share prices. Reverse behaviour if looking to offload shares in bulk then talk up the stock to sell into strong demand to get as much for the shares as possible.

Looking objectively at AAPL and unit sales for a minute. Yes handset sales are somewhat threatened as people stretch their upgrade cycles longer and longer. This is somewhat offset with building momentum in new markets like India and Indonesia with huge populations, rapidly growing affluence and low current base for Apple.

Overall selling devices may be less of the story for AAPL in the next few years depending on how some pivotal rulings may or may not change the landscape. This is where one should keep one's eye as services have about 2x gross margin compared to devices and if continuing uninterrupted will soon be 50% of overall gross margin contribution.

Cutting AAPL targets due to handset concerns is quite dumb. Being somewhat concerned with seismic shifts in the services revenue is a better thing to be focused on and caution is needed here.

AAPL needs to better articulate their story of how they will prosper in a world with multiple app stores, competition of in-app payments, search engine placement competition or bans. I.e. what is the growth model with minimal control of the eco-system vs. strong control as it is now.

Personally I think Apple has a bright future ahead of itself as most customers will remain loyal to the brand and the service ecosystem. It is an aspirational product and ecosystem in most countries and as a comparison LMVH, Hermes and others are doing exceedingly well despite there being a mee-too universe of copycats. On the other hand Hermes does not stop the wearer from having Zara trousers together with a silk scarf. Apple currently limits the customer from mixing and matching devices and services with others for the most part.