- At 8:00 AM ET today, Apple began taking pre-orders for iPhone 12 and iPhone 12 Pro.
- Over the past three years, we have observed pre-order lead times shorten. For example, two years ago in September of 2018, by 10:00 AM ET, the iPhone XS and XS Max lead times were 2-3 weeks, and compressed further in the fall of 2019.
- While connecting lead times to demand is more art than science, over the years we’ve noted extending delivery times have historically been a favorable indicator of demand.
- A cautionary factor in interpreting lead times: we don’t have visibility into iPhone supply.
Early pre-order data points
- As of Noon ET, iPhone 12 Pro lead times ranged from 7-10 days to 2-3 weeks depending on color, capacity, and carrier. iPhone 12 (all colors and capacities) has consistently shown the original Oct. 23rd delivery date.
- While difficult to measure, throughout the morning we observed slow website speeds on iPhone pre-order pages. This is in contrast to other pages on Apple.com that we observed were running at regular speeds.
- We remain comfortable with our FY21 iPhone revenue growth estimate of 15% (essentially in line with the Street), compared to about 1% growth in FY20.
- Early indications suggest the iPhone 12 Pro will be more popular than the iPhone 12. Once again, early buyers like the latest and greatest.
- The most popular iPhone 12 Pro model appears to be the 128GB Pacific Blue priced at $999. As a point of reference, this quarter we’re modeling for an overall iPhone ASP of $818, and continue to feel comfortable with that estimate.
- The consistently slow speeds on the pre-order pages are likely a sign that consumer traffic on these pages continues to be high.
We checked iPhone 12 Pro and iPhone 12 lead times 8 times between 8:00 AM and Noon ET. Reflecting on lead times is not a science, given we don’t know how many phones Apple is able to produce. That said, longer lead times have historically been an indicator of healthy demand and shorter lead times an indicator of softer demand.
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It’s been a long road for Augmented Reality (AR). In the summer of 2017, Tim Cook predicted that AR “is one of those huge things that we’ll look back at and marvel.” For the casual observer, AR has fallen short of that target. We disagree. While mainstream consumer AR is taking time, there have been measurable advancements in AR recently, including Apple adding a LiDAR scanner to its iPhone 12 Pro models. In the end, we continue to agree with Cook, and believe the world will look back and marvel on how it’s changed our life.
AR overlays information onto the real world. Examples include Pokemon Go, shopping apps that overlay virtual furniture into a space, remote troubleshooting for service providers, and remote imaging for healthcare providers. More transformative AR will likely involve a pair of smart glasses that will make it easier to access AR, and open new use cases including better navigation, real-time language translation of written documents or speech, and facts about products, people, and landmarks as you pass by them. Ultimately, we have faith in developers’ ability to dream up new use cases. Most encouraging, Apple, Facebook, Google, Microsoft, and Snapchat are committed to building this technology because they view AR as foundational to the future of the user interface.
Recent advancements in AR
While AR had a slow first half of 2020 (along with the rest of the world), the platform has had several advancements over the past two months:
- Snapchat released a new feature called City Paint (currently available in one street in London), which allows users to virtually paint graffiti on buildings. Other Snapchat users can then walk by the buildings, viewing the previous artist’s graffiti and having the ability to make their own edits.
- Amazon launched a new QR code on some of its packages that produces AR effects when scanned by a phone. For example, kids could draw a train next to the QR code, triggering an animation of the drawing. Another potential experience is linking AR content with what’s inside the box. We envision an Amazon box containing a holiday gift which is enriched by animated elves when opened.
- Facebook partnered with the New York Times to provide AR effects for certain news stories on Instagram to make the content more engaging. For example, a story on a new automobile could allow the user to interact with a virtual clone of the vehicle.
- Google expanded its ‘Live View’ function within Google Maps to deliver better walking directions for people as they exit public transit. For example, when a commuter exits a subway station, Live View will help them better understand where they’re standing.
- Microsoft’s HoloLens 2 mixed reality headset is being used by businesses such as Lockheed Martin to build rockets more efficiently for NASA.
- The U.S. Army is now working with Command Sight to make a pair of AR goggles for special force canines (yes, we’re talking about dogs) that would allow military personnel to give commands remotely.
iPhone 12 Pro: a measurable step forward
Perhaps the biggest recent development in AR came from Apple with the inclusion of a LiDAR scanner in the iPhone 12 Pro models. LiDAR, which stands for Light Detection and Ranging, maps spaces in 3D (see featured image on this post). This is a material improvement from the previous technology, VCSEL arrays, for two reasons: 1) LiDAR is more powerful, and will therefore enable a more realistic overlay of information for AR applications, and 2) the scanner is located in the rear or world-facing camera, not the front or individual-facing camera. This should spur better use cases as LiDAR can now capture the world, not merely a user’s face.
We estimate about 50m iPhones units with LiDAR will be sold over the next year (out of 217m total iPhone unit sales). An important next step for Apple will be to make it a standard feature across the entire iPhone lineup. Even though it’s available for only a segment of iPhone buyers today, we believe the addition of LiDAR is a material step forward, as it gives developers increased capability and incentive to build more compelling AR consumer and business applications. A case in point is Snapchat’s new feature in its ‘Lens Studio’, announced just one day after the iPhone 12 launch, that allows creators to make LiDAR-powered AR animations and effects.
When will we see AR glasses?
While Facebook has publicly announced they are building AR glasses, they have not given a timetable on the product’s release. Our best guess is 2025. Microsoft and Google currently sell enterprise AR glasses, with no clear roadmap for if or when they might attempt to build consumer AR glasses.
Separately, Apple has a team working on consumer AR glasses. As far as timing, we learned our lesson from our failed Apple Television prediction: just because Apple is working on something, doesn’t mean it will see the light of day. That said, we believe there’s a greater chance that the company releases AR glasses.