Nota Bene

As prices rose, demand among 2.5 billion consumers rose

iPhone 18 Pro is estimated to have had a 12% y/y sales increase in its first week on sale in China, placing first in weekly smartphone rankings, according to Counterpoint Research.

Though the iPhone 18 Pro was only available for only three days, Apple took about 33% of share that week.

Overall China’s weekly smartphone sales fell at a double-digit year-over-year pace since July. Overall sell-out in Week 38 was still about 17% below the same week a year earlier.

Meanwhile in India, demand for the iPhone 18 Pro has risen by nearly 20% compared with the iPhone 17 Pro at the same point last year.

The iPhone 18 lineup went on sale on September 18 and drew long lines in major cities. Some customers traveled for hours to reach Apple Stores in places such as Mumbai, with waits stretching as long as 10 hours.

Counterpoint Research director Tarun Pathak expects Apple’s volume market share in India to reach 10% in 2026 — the company’s first full calendar year in double digits. That would represent a sharp rise from just 4% in 2022.

The base iPhone 18 Pro costs the equivalent of about $1,700 in India.

As iPhone sales grew, makers of lower-priced smartphones reportedly saw a sharper decline this year.

Anyone see a pattern?

Let's look at the data.

The iPhone 18 Pro Density of pixels reduced for a portion …

for IR sensors in order to support a 25% reduction in the size of the Dynamic island. It has much better thermal performance due to a new vapor chamber architecture. It has a 48MP variable aperture camera with a minimum of f 1.48. The battery life is greatly improved.

The Pro allows truly professional photography.

So why did the Phone do so well in India?

Are we to believe Indians have been clamoring for better vapor chambers and f-stop?

If we just look at what Apple itself promotes about the product or the cynics who know the price (but not the value) of the product, there are no clues. If we listen to the market analysts they say things like:

'but that dip was attributed to supply constraints rather than fading demand. Sales had otherwise grown for four years.

India is also becoming a more important manufacturing base for iPhones, and recent tax breaks could further strengthen Apple’s position. The current surge in iPhone 18 Pro demand suggests Apple’s high-end strategy is connecting with aspirational buyers, though the company will need to keep balancing premium pricing with accessible payment options if the momentum is to last.'

Neither the feature set analysis nor the market mechanicals explain why the iPhone is growing while the market is shrinking in a market defined by lower incomes and higher share from low-end competitors.

The missing data is that there are millions of middle and upper income individuals in a population of 2.5 billion (nearly one third of humanity), even if they are in India and China (or even in Africa.) The iPhone is an aspirational product with an enormous amount of utility. Luxury goods do well in emerging markets, as long as there is a sense of prosperity that is growing. But they will pull back in times of anxiety. Apple's products are not luxuries. They embody necessity and are used continuously throughout the day, and every day as long as they are owned.

Apple has a remarkable position and one wonders how well this is known inside the company while remaining unknown outside.

Disrupting the disruptor. The Curse of Cassandra strikes again.

Netflix stock has "a growing YouTube problem," a Wall Street analyst says. Alphabet's YouTube is taking increasing viewer share.

Netflix (NASDAQ:NFLX) shares slipped Tuesday after HSBC downgraded the streaming giant to Hold from Buy and slashed its price target 21%, warning that weakening engagement and intensifying competition from YouTube could make a near-term recovery harder to deliver. Analyst Mohammed Khallouf cut his target to $76 from $96, leaving only about 3% upside from current levels and putting renewed focus on whether Netflix can defend viewing time without materially increasing content costs.

Netflix stock fell more than 1% at Tuesday's open following the downgrade.

HSBC's central concern is engagement. Khallouf said near-term recovery in engagement looks unlikely, citing a declining reception for Netflix original content and the growing share of television viewing captured by YouTube.

That competitive pressure is increasingly visible in the numbers. YouTube reached a record 14.2% share of U.S. television viewing in July, while Netflix accounted for 7.8%, according to data cited by HSBC. Netflix's own engagement metrics also weakened: viewing hours for English-language programs appearing on its weekly Top 10 lists declined roughly 17% year over year across July and August.

"YouTube has been benefiting, in our view, from a declining reception to Netflix's original content," Khallouf said in a client note. "Near-term recovery in engagement looks unlikely."

Netflix has shifted more into YouTube's space with video podcasts, sports and other content.

"YouTube has been rapidly expanding its living room footprint, having captured a record 14.2% share of U.S. TV time this July," Khallouf said. "This momentum is increasingly coming at the direct expense of Netflix as its share fell to a multiyear low of 7.8%."

Netflix Stock Cut To Sell Rating

Meanwhile, rival Apple's (AAPL) Apple TV+ subscription service is riding high after dominating the Primetime Emmy Awards last week with 29 wins for critically acclaimed shows such as "Widow's Bay," "Pluribus" and "Slow Horses." Netflix scored 16 Emmy Awards.

On Friday, Wells Fargo analyst Steven Cahall lowered his rating on Netflix stock to underweight, or sell, from equal weight, or neutral. He also slashed his price target to 57 from 80.

"Engagement trends look worrying to us," Cahall said in a report. He also noted competition with YouTube.

Source: Investor's Business Daily

NB: You wait years and years for the obvious to happen. So long that you give up. Then it happens.

YouTube was the writing on the wall for all forms of TV. That much was clear more than a decade ago. So long ago that I forgot all that I wrote and thought about it. You just move on to other things, like transportation. This was in 2014.

In the meantime the trajectory takes its parabolic course. You just don't know where the peak is. We may have reached that peak, finally.

The power of YouTube was always there, the numbers have been compounding for years.

Personally, I never subscribed to Netflix, leaping directly to YouTube long ago. It may not appear comparable, but the jobs are the same: fill downtime with content that's easy to digest. Initially not good enough but good enough soon enough and more than good enough eventually.

The Curse of Cassandra strikes again.

But what about Apple?

The article notes that Apple keeps piling on the awards. What seems to be happening is that Apple saw the disruption and decided to fly well above it. The premise of Apple TV+ is that it's a provider of content of the highest, award-winning level only.

This may be eventually matched by YouTube but perhaps not. The production quality has no monetization equivalence in YouTube. The marginal dollar spent on quality has no return beyond a certain point. At least that's the calculus.

The best shows will just be on Apple TV. For everything else you can use YouTube.

This assumes that there are people who will seek out quality. That they are not ever going to just settle for filler and junk and ads and short-twitch triggers. The market bifurcation into "super premium" and "slop" follows the 80:20 rule.

Sounds familiar.

 

 

Apple sold 1.2 million Macs in China for 10% market share in the second quarter of 2026. That compares to sales of 700,000 Macs and 7% market share in the second quarter of 2025. That’s annual growth of 63%.

For full-year 2026, Omdia expects mainland China’s PC market to decline 6% YoY, with consumer shipments falling 10%. Meanwhile, the tablet market is forecast to contract 10% in 2026, reflecting weak demand and continued supply constraints.

Source: Apple World Today [my emphasis]

NB: This is a few months ago and baked into the results already posted (29% revenue growth for the Mac segment).

The refrain of growth while the market contracts repeats across all products and all regions and predates the product launch cycle that began in September. It's quite extraordinary.

I estimate China made up about 16% of all Mac sales and there is plenty of room to grow.

 

It's an anomaly. Pay attention to anomalies.

In a new interview, Clique TV’s Mouloud Achour asked Ternus: “The Vision Pro: for you is it a test, a flop, or the first step to the future of what’s going to be…a computer?”

Here’s what Ternus said:

"Vision Pro to me is an amazing device. It’s an absolutely amazing device. But I think of it as like the early days of computers. It is the early days of a long journey. That’s how I feel about Vision Pro. What you see, if you think about the early days, people found different reasons where the computer allowed them, the Mac allowed them to do something never before possible. Like desktop publishing, and it became a big thing in that industry.

What you’re seeing with Vision Pro now is, certainly there’s early adopters who love it and they’re using it and they’re enjoying it, but you also—surgeons are starting to use it in surgery because it’s just a fundamentally better tool for them than a monitor that’s kind of sitting over here. And so it’s growing in that area. In film production people are using it for set development and things like that. So we’re going to continue to grow and find more and more compelling use cases. And I think there’s a very bright future."

Source: 9to5Mac

NB: Tim Cook launched and supported the Vision Pro while…

… many said it should cancelled due to poor sales. I argued recently that it's an anomaly. A phenomenon that has no explanation using the theories we currently have. When an anomaly emerges it should be studied carefully because either it refutes our theories or it enhances them by refining them.

Apple's interest in this category of visual computing (or spatial computing, as Apple calls it) is deeply seated. Apple exists at the intersection of humans and computers and the visual representation of information is the most compelling and highest bandwidth way of interacting with machines. We are fundamentally vision-based lifeforms and interfaces that maximize stimulation of the visual cortex are most likely to be adopted. For a simple demonstration of this one can simply ask about the physiology of reading and why we have binocular vision and how cave paintings came so early in our history.

The interest in this product is not for its revenue potential but for its guidance into how we will connect with and through machines. The learning required perhaps cannot be obtained entirely in a laboratory.

 

 

An Office Hours question asked by Fred S., September 11, 2026.

Q: Will Apple follow what carmakers have done with certified pre-owned, taking the phones returned through Apple Upgrade, putting them in a nice package and selling them?

They do, on the Apple Store, but at small scale, and refurbishment is a scale game. Today the refurbs come from the refund policy: someone returns a phone a month later that they barely used, and Apple resells it, almost new, at a slight discount. What you're referring to is lease returns, one- to two-year-old phones. They will probably take those in huge numbers, refurbish them in a very high-volume facility, and pump them back out at minimal profit. I don't think it's about profit. I think it's about knowledge of the market. Once a phone goes into the secondary market, Apple doesn't know much about it or what pricing people are getting; they have to sample it. Leased products that return to Apple are under their control and visibility. That information is super important. The lowest-priced new iPhone is now in the 800s. It used to be 400. That slot is now taken by the used market.

The auto market is the key question, because there are four used cars sold for every new car. The used market is now becoming the primary market, because cars are so expensive. Only twelve percent of Americans today can afford a new car. It used to be sixty or seventy percent. Prices have exploded, so one in six Americans are buying new cars, and that determines why the cars we find available are all enormous SUVs: that 12% is the wealthiest 12%, and they're saying no to economy cars.

This is a very important observation, because a lot of classical disruption theory depends on the low end and the mass market being interested in good enough. The problem is that the auto industry has completely dehydrated itself of visibility into that market. The challenge for Apple is not to fall into the trap of making things for the rich few, and yet not compromise on quality. If there's one thing I would advise Apple on, it's not to fall into the innovator's dilemma. It's a trap to think that more profitability is always the right answer. Apple being a premium brand, people already assume it's an exclusive, frivolous type of product, but they're not thinking fully about what's going on there.

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One of the questions asked in Asymco Office Hours. The full recording and transcript are available to Asymco One subscribers.

See the proceedings at asymco.com/live.

An Office Hours question asked by Bob V., September 11, 2026.

Q: When wrong answers came from ChatGPT under the original integration, Apple could say it was ChatGPT's problem. Now AI is integrated into the OS itself. Does that change the risk for Apple?

I suppose. But then again, people have gotten used to AIs being wrong. There have been improvements in performance and quality, but there's an acceptance that the nature of AI is that it's not deterministic, and usually you get a disclaimer saying answers may be wrong. I don't think there's that much brand risk, as long as the experience is as expected. Of course, Siri also had its problems, but it wasn't usually being wrong. It was not understanding, or not getting the question right.

Where it gets dangerous is if you're using these technologies to make decisions that are life-threatening, or if it gives you bad advice, as we see with chat AIs, where people become psychotic as a result of using them. I got a briefing on this from the product manager of Apple Intelligence, and she said: we're building Siri not to be a companion. It was a very big deal. It's an advisor, but not a companion. Siri is there as a concierge, a professional persona. It is not an amiable person, because they want to maintain an emotional distance. That was by design.

It's interesting they made that decision, because it would have been very attractive to create a companion Siri. Years ago, when Siri first came out, Big Bang Theory put Siri as a character in one of the shows: the nerdy characters became emotionally involved with Siri, and it was a cause for comedy. That was more than ten years ago, and I think since then Apple has become very aware of the pitfalls. They're probably conscious of the hallucinations and being careful with that. But the main focus is not on error prevention. It's on preventing violations of privacy or security. It's far more scandalous if they're accused of some sort of leak of information. They'd get sued right away. There was a recent lawsuit claiming a privacy fault, where the exposure came from their own claim. This gets very tricky: regulatory concern, legal liabilities, class actions of all kinds. Managing all that risk is part of the cost of doing business.

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One of the questions asked in Asymco Office Hours. The full recording and transcript are available to Asymco One subscribers.

See the proceedings at asymco.com/live.

An Office Hours question asked by Fred S., September 11, 2026.

Q: One theme about the iPhone Duo seems underreported: pleasure, prestige, the pride of ownership. It's always been there with Apple products, but being the first to get a foldable, after everyone's been talking about it for so long, might be a bigger driver than the practical aspects. Do you agree?

Absolutely. The skeptics are the ones who haven't been able to be there, and seeing is believing. I called it having a sense of theater about it. It took what was a two-dimensional experience into three dimensions. As the demos show, it's always in motion. It's not just opening it as a book, though even the book nature of it matters. It can be held at a slightly open angle to resemble a book. It will be an alarm clock, a television, a keyboard and screen, and with the Apple Pencil it will be a notebook. The configurations they've demonstrated suggest that it has a presence, a satisfaction you get from using it in a tactile way. It is not a simple sheet of glass. That has its own attraction; we've always been sold on the thing as a piece of glass. But now it's suddenly an origami, a moving object.

I'll give my own story. When I was at Nokia we believed in the so-called monoblock, a single phone that didn't have any moving parts, for many practical reasons. It was more durable. It had a longer battery, because you could put a big battery in it. It was cheaper to manufacture. And yet, at the same time, in the US and in Japan the flip phone was catching on big. Everyone in Finland was scratching their heads and asking why anybody would do this, as a user or as a builder of phones. One of the things people argued with us about was that there's a sense of action when you open and answer, and a sense of closure when you end the call by closing the phone. In Japan they had antennas that pulled out, so you opened it and had all these activities you would do to initiate a call. It's not just for the person doing it, but for the person watching. There are all kinds of secondary and tertiary effects to this form and the way it feels.

On top of that, I think there's an element of attraction that, without saying it's only women, I think women are going to feel more: that this is more stylish. My wife has a case that opens this way, because she likes to put cards in it, and she likes the physical cover because the phone sits in a purse. There are all these reasons why you want a folding form factor. We don't think logically about this. We think this is a waste of energy, a waste of time, but it's extremely important to understand. I haven't seen the research or the data. Perhaps no one has; perhaps it's all secret. But I think Apple has seen what people do with things that move.

Remember, even Jony Ive said people like to fidget. If you have a pen, you're always clicking it. If you have a pen where you can select different colors of ink, you're always messing with it. Physically moving objects have a natural attraction. The folding competitors may have known this already, but Apple just didn't think the technology or the quality was there until now. Apple doesn't do it just because you can. It only does it when it can meet their criteria to be sufficiently good.

So the product is going to be a big hit, even though it's a niche, and many people, maybe most, would argue they don't need it. It'll be a bigger hit than we anticipate. Initially the market reaction was very muted. The stock closed flat. But since then it's risen quite a bit, and on the second and third day we've seen the realization, also by the media who were out there, that this has resonance with audiences. It's not about specs. It never is, with Apple, but in this case in particular there's a mystery to it, a mystery as to why it's going to be successful, and a charm. I always said Apple really sells hormones. Here we have people who are going to have the flushed cheeks and the dilated pupils, an emotional, hormonal response. And if you see another person with it, it's going to be contagious. This is why stores exist. The Apple Store exists precisely for this product. Steve even said the Apple Store exists for the Watch, because once you see it and touch it, you'll be persuaded. Once people see it in the stores, it'll be a huge driver.

Q (follow-up): In jobs-to-be-done theory there are three hotspots: emotional, social and functional. You've covered the first two. On the functional side, anyone who uses an iPad regularly and has an iPhone is going to want one of these. It replaces the iPad mini and gives the iPad a pocket.

A lot of people are going to discuss the utility. I've been reading many comments since the event, and people are discussing exactly this: pencil use, could I replace my iPad, what size is it, all the possible measurements. The whole point I'm making is to work at another level, away from utility, which gets less coverage because it is so much harder to talk about. The decisions to buy it are much more emotional than rational, because frankly that's how it came across to me. It's a product of dazzling dimensions of attraction, not just utility. I bring up metaphors: high heels, fashion, jewelry. Why do people buy jewelry at all? It's extremely non-functional, but it signals between people. Especially as a gift, it signals love, it signals desire, and people like to receive those symbols. Why do we not think this should apply to devices that happen to do other things as well, especially highly utilitarian things?

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One of the questions asked in Asymco Office Hours. The full recording and transcript are available to Asymco One subscribers.

See the proceedings at asymco.com/live.

Thoughts just before the Duo launched

The smartphone industry has spent much of its history persuading consumers that the device in their pocket could be substantially better. Cameras improved, screens sharpened, and mobile networks advanced. Each generation offered another reason to replace the last. Today’s phones present manufacturers with a more complicated proposition. Consumers now keep smartphones for roughly four years, according to global technology market research firm Counterpoint Research, while resale and refurbishment keep devices in circulation longer. Counterpoint found that the global installed base of active smartphones grew 2 percent in 2025 even as replacement cycles approached four years.

Source: The Beiruter

NB: I had the pleasure of an interview with Katharine …

…Sorensen of The Beiruter while riding the shuttle bus to the Apple iPhone event last week. Her questions could not consider the Duo as it had not yet launched but we discussed the more profound question of good enough phones.

 

 

Global smartwatch shipments fell 4% year over year in the second quarter. However, Apple’s shipments climbed 14%, the fastest growth among the five largest brands. Its global market share increased to 20.1% from 17%

Source: Benzinga

NB: It's not only phones and Macs and tablets. The watch apparently is growing in a shrinking market. This might be more than the memory shortage.

The flaw is to think that there is a market only for those who already own "smartwatches" and the options are either to encourage upgrades or switchers from other watches. I doubt an Android watch user will switch to Apple Watch because they like the watch only.

Apple says frequently that "half of buyers of Watch are new to the product" or something to this effect. This implies either switching but more likely buying their first smartwatch.

There is so much non-consumption to conquer. The fact that fewer Android watches are sold may be indicative of fatigue with the platform or adoption of screenless wearable health monitors.

 

 

Tough act to follow for iPhone 18?

“The iPhone 17 series stands out as Apple’s strongest lineup in years, with the base model inheriting features once reserved for Pro variants and the 17 Pro series delivering powerful Apple silicon, a standout camera system, impressive design and greater choice in color, material and finish,” said Counterpoint Research Director Tarun Pathak. “The iPhone 17 series has resonated with a remarkably broad user base, from first-time upgraders drawn to Pro-level features at the base tier to loyal Pro users pushing for the latest Apple silicon and camera performance. The iPhone 17 base model’s revenue grew 1.3x over its predecessor during the first year. It was also the No. 1 best-selling smartphone model globally in H1 2026 in terms of units, followed by the iPhone 17 Pro and iPhone 17 Pro Max. The iPhone 17e, the most affordable model of the line-up, also saw a powerful performance.”

In terms of regional markets, China was the biggest driver of revenue growth for the iPhone 17 series, with wholesale revenue up 35% compared with the iPhone 16 series and accounting for nearly 24% of global iPhone 17 series revenue, largely due to base-variant upgrades. Japan, the Middle East and Africa (MEA) and the Asia-Pacific markets posted healthy gains. Strong demand in these markets helped offset moderate growth in mature markets like North America and Europe and contributed to the overall revenue increase.

Source: Counterpoint Research

NB: This is an 11% increase over the iPhone 16 series’…

…wholesale revenue in its first year. Strong demand across the lineup, especially for the base and Pro Max variants, supported by a stronger replacement cycle, contributed to this record revenue.

Counterpoint says that adding foldable could raise Apple’s overall iPhone ASP, while the later launch of lower-priced models could broaden the portfolio and sustain sales momentum into the following cycle.

The extension of the 17's presence as the prime model into Spring will be seen as a genius move.

 

 

32% growth as market shrinks

Apple moved into third place ahead of Lenovo, with US PC shipments growing 32.1% YoY, supported by a full quarter of MacBook Neo availability. This lifted Apple’s share of the US consumer PC segment to 29.4%. Apple also continued to expand in the business segment, where shipment grew 50.6%.

Dell recorded the largest decline among the major PC vendors, with shipments falling 8.8% as component allocation shifted away from entry-level systems; its US Chromebook shipments fell 47.0%, against a 10.0% decline for the overall US Chromebooks market. HP shipments fell 3.7%, although both HP and Dell recorded revenue growth as higher ASPs offset lower shipment volumes. Lenovo shipments increased 2.0%, slightly outperforming the overall market, supported by consumer demand.

Source: Omdia

NB: Consumer PC shipments expected to decline 13.6% in…

…2026. Commercial PCs forecast to decline 9.3% for the full year. It seems to me that Apple has a shot at beating Dell. That will be a noteworthy footnote. The parallel to how the phone market is reshaping is uncanny.