Nota Bene

The high end, the low end and the middle end.

The world’s most popular laptop gets even better with the incredible performance of M5, double the starting storage, and improved wireless connectivity, packed into a thin, light, and durable aluminum design

The world’s best pro laptop raises the bar again with blazing-fast CPU and GPU performance, plus up to 2x faster SSD speeds and 1TB of starting storage.

Apple announced M5 Pro and M5 Max, the world’s most advanced chips for pro laptops, powering the new MacBook Pro. Built using the new Apple-designed Fusion Architecture, M5 Pro and M5 Max feature an advanced CPU, a next‑generation GPU with Neural Accelerators, and higher unified memory bandwidth for a massive increase in AI compute.

Source: Apple Newsroom MacBook Air

NB: This week saw a blast of new products spanning fro…

…m the highest and the lowest in performance and price. Though one can hardly call the performance of the iPhone 17e or Mac Neo low, the new M5 Max processors M5 Pro and M5 Max are over 4x the peak GPU compute compared to the previous generation and graphics are now up to 35 percent faster for apps using ray tracing than M4 Pro and M4 Max. M5 Pro and M5 Max use a new 18-core CPU with 6 super cores and 12 performance cores fabricated as two "fused" third-generation 3-nanometer dies. In addition, M5 Pro pairs the up-to-18-core CPU with a next-generation up-to-20-core GPU featuring a Neural Accelerator in each core.

Note that the cadence of M series and the cost curves of production put Apple at a distinct advantage relative to any competitors in the PC market. The M1 was announced in November 2020, M1 Pro/Max a year later, M2 a year later, M3 a year later, M4 (Pro/Max) a year later, M5 a year later. The pace is what this move to Apple Silicon was all about. That and the ability to stretch in new dimensions and device form factors. Speed and flexibility are superpowers in hardware which are almost never present at the same time.

 

 

There's more mid in the mid-range.

Apple announced the new iPad Air featuring M4 and more memory, giving users a big jump in performance and making it more versatile than ever.

Source: Apple Newsroom

NB: The most significant difference between the two iPad Air…

…generations is their chipsets. The latest iPad Air launches with the M4 chip versus its predecessor’s M3 chip, and it gets a increase in RAM from 8GB to 12GB.

The M4 is up to 30 percent faster than the M3, according to Apple.

 

 

Double the storage, same price, higher margins

Apple today announced the new iPhone 17e, a powerful and affordable addition to the iPhone 17 lineup.

Source: Apple Newsroom

NB: iPhone 17e will start at 256GB of storage for $599…

…— 2x the entry storage from the previous generation at the same starting price, and 4x more than iPhone 12. I should now remind that Apple guided for record high margins in the current quarter. This is despite knowing they would launch a new product with twice the memory of its predecessor.

 

 

Catastrophic drop predicted

Global memory scarcity will cause a 13 percent drop in smartphone sales in 2026, according to IDC. DRAM is in short supply because AI companies are buying huge quantities of high-bandwidth memory (HBM) for servers in data centers, and manufacturers are prioritizing HBM instead of the memory used in consumer devices.

IDC says that the global memory supply has been drained into next year, putting smartphone makers in a tough spot. Prices have spiked because there's not enough memory to meet production needs, which will cause a smartphone market "crisis like no other."

Smartphone makers are expected to ship 1.1 billion devices in 2026, down from 1.26 billion in 2025.

"The tariffs and pandemic crisis seem a joke compared to this," said IDC Senior Research Director Nabila Popal. "The smartphone market will witness a seismic shift by the time this crisis is over -- in size, average selling prices and competitive landscape. We don't expect the situation to ease up until mid-2027, at least."

Cheap Android smartphones will be impacted most heavily by increasing DRAM costs, but Apple is well-positioned to avoid major impact because it focuses on more expensive, premium devices. Apple has more profit margin to work with and is better able to secure available DRAM supply.

IDC says that even when the DRAM shortage is resolved, memory prices are not expected to return to 2025 levels, so there could be a permanent shift toward higher-priced smartphones.

Source: MacRumors

NB: A recurring theme: when things get tough the tough get going.

During the last earnings call, Tim Cook said that memory price increases had a "minimal impact" on Apple's gross margin during the 2025 holiday quarter, guiding margins for the next quarter to record highs, suggesting *less* impact tough stating that it is expecting a "bit more of an impact".

Again, the impact might be so severe on the low end that supply will disappear and vendors might exit the business. The likely outcome could be a steep increase in Apple market share though perhaps not a big boost in volumes. The volume will recover and shoot higher still in following years as the market adjusts to fewer competitors. Thus, a consolidation would favor Apple disproportionately.

 

How big is Brazil for Apple, exactly?

In an interview with Brazilian newspaper Folha de S. Paulo, Cue emphasized Brazil’s growing role in Apple TV’s global business, reaffirmed the company’s commitment to theatrical releases, and commented on Netflix’s attempt to acquire Warner Bros.

Cue says Brazil is Apple TV’s second-largest and fastest-growing market in terms of subscribers. He adds that Apple is closely watching proposed streaming regulations in the country that could require national content quotas:

During the conversation, Cue also said Apple remains committed to doing theatrical releases through partnerships with traditional distributors. And although he recognized that “the bar for leaving home and going to the movie theater” is getting increasingly higher, he said:

Finally, Cue commented on how a potential Netflix–Warner deal could affect Apple, which has partnered with Warner on films including F1: The Movie.

Source: 9to5Mac

NB: To appreciate the Brazilian market for Apple we need to know the number of users, iPhones and devices in use. That information will be published...

... here in the next few weeks based on proprietary analysis. As will the same data for all countries and regions. As a hint, the number of Apple users in Brazil is over 32 million and growing. The popularity of Apple TV in Brazil requires some explanation.

 

 

First and only, defining moment

Today, Apple announced iPhone and iPad are the first and only consumer devices in compliance with the information assurance requirements of NATO nations. This enables iPhone and iPad to be used with classified information up to the NATO restricted level without requiring special software or settings — a level of government certification no other consumer mobile device has met.

iPhone and iPad previously received approval to handle classified German government data on devices using native iOS and iPadOS security measures, following an extensive evaluation by the Federal Office for Information Security (Bundesamt für Sicherheit in der Informationstechnik, or BSI). Now, iPhone and iPad running iOS 26 and iPadOS 26 are certified for such use in all NATO nations.

As part of this effort, BSI conducted exhaustive technical assessments, comprehensive testing, and deep security analysis, ensuring Apple’s built-in platform security capabilities met NATO nations’ exacting operational and assurance requirements.

“Secure digital transformation is only successful if information security is considered from the beginning in the development of mobile products,” said Claudia Plattner, BSI’s president. “Expanding on BSI’s rigorous audit of iOS and iPadOS platform and device security for use in classified German information environments, we are pleased to confirm the compliance under NATO nations’ assurance requirements.”

The approval marks a defining moment for Apple’s mobile platforms, as iOS 26 and iPadOS 26 are now listed on the NATO Information Assurance Product Catalogue in recognition of their built-in security capabilities.

Source: Apple Newsroom

NB: There is a "movement" or inclination to reduce or eliminate dependencies among European countries and companies on US technologies. This is due to the perceived and actual threat posed by the current US Administration...

... The technologies oftentimes cited are AWS, Microsoft and Google. Apple is rarely mentioned. The issue with this approach is that the alternatives are either not available (open source notwithstanding) but also that they might be Chinese, a worse alternative. In the case of Apple the alternative of Samsung is hardly worth considering as it uses Android, another US technology. The problem gets worse when looking at search and AI as they are even more concentrated and more prone to manipulation.

However, this news shows that Apple technology is not only apolitical but that it's secure enough for military applications. That means that not only are users protected from external inspection but that Apple itself is considered a trusted agent for the technology.

 

 

A billion users are waiting

Apple Pay is set to go live in the Indian market by the end of 2026, according to a report by Business Standard. The service still requires regulatory approvals before it can go live in the country, but Apple is reportedly working with banks, regulators, and card networks to bring the payment service to India within the year, claims the publication's sources.

Once launched, Apple Pay is also expected to offer its Tap to Pay on iPhone feature, allowing users in India to make contactless payments at point-of-sale terminals via NFC. But before that can happen, Apple will have to negotiate fees with major card issuers for use of the payment gateway.

Source: MacRumors

NB: Apple is the biggest exporter out of India. That m…

…ight help with regulatory approvals. Apple is said to be in discussions with ICICI Bank, HDFC Bank, and Axis Bank. Apple is talking through the plan with global payment networks Mastercard and Visa. UPI dominates digital payments in India, and Apple Pay is expected to support the state-backed payments interface, which allows customers to instantly transfer money and bills. My estimates: there are over 1.1 billion cell phone numbers in use in India of which 659 million are attached to smartphone users using 988 million smartphones but only 117 million are iPhones used by 97 million Indians. India offers more than a decade of double digit growth potential.

 

 

Just in time for Personal AI

The Mac mini remains a smaller part of Apple’s Mac lineup, accounting for about 5 percent of global Mac sales last year, according to Consumer Intelligence Research Partners. In 2024, Apple gave the desktop its first major redesign since 2010 and introduced M4 and M4 Pro chips. In the U.S., the Mac mini starts at $599, though buyers must provide their own display and accessories.

At the same time, Apple is increasing domestic chip sourcing. The company plans to purchase more than 100 million chips this year from TSMC’s Arizona facility, reinforcing its long-term strategy to expand U.S. manufacturing while managing tariff pressures on imported products.

Source: The Mac Observer

NB: As demand for Mac mini spikes, assembly ...

NB:   ...  in the US is announced. I don't think these are related. Planning for production takes months if not years. It may be fortuitous but the real test is scale and flexibility. US production can and should be considered and if India can be scaled so can the US. Having said that the devil is in many details.

 

 

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Last Week in AVP #107: Apple Could Demo Immersive F1 on Vision Pro at Its March 4 Event, New Chapter of the Elevated Series Coming Next Friday, Top Dogs On Apple Immersive and more!

Source: Last Week in AVP #107

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Sneak peek at how Apple Vision Pro environments are made 

Amazing animation from the Apple UI team in the AVP 

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4 FREE 8K VR180 travel videos on youtube

 

 

Personal AI

"OpenClaw [is] driving Mac lead times to multi-year highs." — Analyst Erik Woodring

As of Thursday, February 19th, lead times across most Mac products have quickly inflected to multi-year highs, around 2-4 weeks in the US (Exhibit 58), with lead times for Mac Studio the longest (27 days) followed by MacBook Pro M4 (23 days) and Mac Mini (19 days).

Source: Morgan Stanley via Apple 3.0

NB: It's not just the Mac Mini that is seeing a spike in sales...

NB: Sign up for Apple 3.0 to read full quote. It's not just the Mac Mini that is seeing a spike in sales. The Studio inventory is even more drawn down. While Nvidia chips are super popular for data centers expect A and M series chips to become the engines for agentic AI and on-device AI to be a consumer demand driver.

Computation tends to get personal. For each generation of computation, there is an initial period of concentration (mainframe, web services, AI) followed by a period of decentralization (PC, device, Personal AI).

Many assume that once created, a centralized solution is a permanent configuration but it never is. Computing abhors centralization.

 

 

Services is much more than App Store

Apple’s App Store revenue growth is strengthening in February, with Morgan Stanley saying the latest data points to a faster pace of expansion heading into the March quarter.

The firm’s analyst, Erik Woodring, said in a note Monday that App Store net revenue is growing 9 percent year-over-year month-to-date, which represents “a 230bps acceleration from January off a 700bps easier Y/Y compare.”

Woodring added that quarter-to-date revenue is now rising 7.5 percent, putting it “50bps behind our +8.0% Y/Y March quarter App Store forecast.”

The bank kept its March-quarter App Store growth and Services growth forecasts unchanged at 8 percent and 13.5 percent, respectively.

Morgan Stanley said the acceleration is broad-based across major markets. China’s App Store is growing 4 percent year-over-year after a decline in January, while the U.S. is rising 3 percent, a 40-basis-point improvement. Japan is down 1 percent, while the rest of the world is seeing 22 percent growth.

The analysts also cited rising Mac lead times, noting they have “quickly inflected to multi-year highs” due to demand for the on-device AI tool OpenClaw.

They said stronger Taiwan component supplier revenue in January is another positive indicator, pointing to “very robust strength in server demand coming from the largest global cloud service providers.”

Source: Yahoo Finance

NB:     With new products due in a few days...

NB:     ... the product revenues should accelerate nicely into the end of quarter. Services are more predictable as they attach to installed base whereas products attach to launch cycles. The note about Mac growth is interesting. OpenClaw has been quite a surprise and it shows once again that, as during the Covid tech boom, when tech is growing, Apple is booming. The smartest product you'll have is a smartphone and the smartest smartphone will be the iPhone.