Apple's China Problem, Its Tenuous Valuation, And The iPhone 15 — With Walter Piecyk

Walter Piecyk is a partner at LightShed Partners and GP at LightShed Ventures. He joins Big Technology Podcast for a special episode looking entirely at Apple as the company lost $200 billion in market cap this week. In this episode, we break down Apple's entanglements in China, its expensive share price, and what to expect with next week's iPhone 15 launch. Stay tuned for the second half where we discuss Charter's dispute with ESPN at the end.  Learn more about your ad choices. Visit megaphone.fm/adchoices

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Alex Kantrowitz?

  A leading Apple analyst joins to talk about the company's $200 billion market cap plunge and what's coming up as it reveals the iPhone 15. All that and more coming up right after this. This episode is brought to you by Genesis. What does it actually take to put Agentic AI to work across an entire enterprise? I recently spoke with Genesis chairman and CEO Tony Bates about why orchestration is emerging as a competitive advantage in customer experience and what companies need to get right in the AI era. Then I sat down with Adam Mitchell, head of enterprise business solutions at Voya Financial to go inside a large scale Agentic CX transformation, including the business decisions, trade offs, and lessons along the way. You can watch both

• 0:44Alex Kantrowitz?

  conversations now on my YouTube channel today. It's never been more challenging to get frontier compute. How do you know where to look, who to trust, or how much to pay? Akash is an open cloud that provides easy access, flexibility, and peace of mind. That's how companies like Razer were able to cut their inference cost by 15 times. Visit akash.network/alex for a free consultation. That's akash.network/alex for a free consultation. Welcome to Big Technology Podcast Friday Edition, where we break down the week's news in our traditional cool-headed and nuanced format. This week, a special episode with a great analyst. We're going to focus entirely on Apple, which was the biggest story in tech

• 1:28Alex Kantrowitz?

  and the market this week. It's dropped tremendously in the market. It's gone down $200 billion. I mean, it was at $3 trillion, so it can afford to lose a little bit, you would think. But the big news is that it has really exceptional weakness in China that's starting to be revealed in a very public way, and some challengers, and plenty more to discuss. Joining us today, we have a special guest with us, Walter Pychek. He's a partner at Lightshed Partners and the GP at Lightshed Ventures, a real bear on Apple. So this is going to be a fun conversation. Welcome to the show. Thanks for having me. So let's start with what's going on with Apple. You know, the stock plunge is, everyone's trying to figure out why. Couple of things bubble up in China. First is that China has

• 2:13Alex Kantrowitz?

  banned government employees from using the iPhone, and then we learned that it might extend beyond that to even state-funded companies. So can you take us into what's happening there? I mean, is that really a reason for the stock to fall so much?

• 2:26Speaker 01

  I mean, I'm not sure that that event in and of itself is creates enough of change in numbers for analyst estimates. I don't think you've seen any analysts yet, or I don't think they will next week come out and cut numbers. It's obviously hard to gauge because, okay, you can't use your iPhone in a government agency. It doesn't mean you can't not use or use it outside that agency, at least yet. But I think that the concern that investors would have is kind of how much does this, what's the slippery slope? What's the next step that China takes? What's the next step that the US takes in terms of restriction? Remember, the root of this is the banning of Huawei. There's obviously been discussion

• 3:06Speaker 01

  on the use of TikTok within government agencies in this country. What's interesting is that the Chinese government has a lot of power. I've covered this industry really basically since the mid 90s. And, you know, there's times even in China within existing operators, if one telco operator gets too many subscribers and the government would like balance, they have a way of influencing market share shifts in between companies within their own country. And then, obviously, you know, the shares within the, within, you know, the device sellers, whether it's a US company versus a Chinese company. So I think the bottom line is that's a long way of saying like, what happened isn't necessarily material in

• 3:50Speaker 01

  terms of, you know, negatively impacting Apple's earnings. It's not going to cut 15% or 10% out of Apple's earnings. It's just highlighting that as things ratchet up between the US and China, you know, there's a lot of potential risk there.

• 4:03Alex Kantrowitz?

  And I was spending most of the week trying to figure out who has the leverage here, right? Because Apple has 20% of its business in China. That's a huge percentage. And it has a tremendous amount of manufacturing there, which it's been trying to diversify, but it's really in the early stages. Then you have China, right? People do like the iPhone there. It's a very popular phone. And Apple's responsible for millions of jobs. So it's not like China's going to say, Apple, get out of the country. But it's showing the company, hey, listen, you know, or really showing the US like, Your big companies and some ways your economy, I mean, Apple's 7% of the S and P 500. I think 11% of NASDAQ, right?

• 4:44Alex Kantrowitz?

  So your country, your company's health depends on our markets and we have the power to do what we want to them when we want to. So this is obviously a leveraged play. It doesn't seem like either, you know, there's going to be a big divorce, but like, who do you think has the power here? And why do you think anybody would even risk that relationship, given how important it is to both?

• 5:07Speaker 01

  I mean, I think one of the key, key points of those multiple points that you mentioned was the number of jobs that Apple creates in China. So there's effectively a codependency between the company and the country. So to your point, like as China ratchets, it ratchets up against the US and using Apple in some ways, there might be some limitations in terms of the impact that they can have on their own economy. On the flip side, you know, I've heard some talking heads, you know, say like, oh, you know, they can just, Apple can just snap their fingers and pull manufacturing out of China. It doesn't work that way. I mean, it takes a while to get plants up, to have them be able to produce iPhones that are high quality, right?

• 5:49Speaker 01

  There's a lot of times when you talk about good margins, it's managed, it's the expertise that Tim Cook, the CEO of Apple has in managing that supply chain in order to have, you know, quality product. You just don't change your manufacturing overnight. So I think there's a very strong codependency between, you know, Apple and, and China. The, the thing that is a blind spot, I think for me and all investors is we're still dealing with governments at a higher level. And there's, you know, this kind of who's going to be the leader in AI and what can be AI, you know, as a technology, how can it be used by the military? And I think, you know, even if there is this codependency, who knows?

• 6:32Speaker 01

  Like, do, am I a political, do I know enough about politics and know how much China is willing to take on pain if they see a larger, longer term goal in terms of making sure that they have the technologies that they need and that they're not restricted by the US government in terms of AI development or, you know, the use of some of their products in, in the US by US consumers.

• 6:53Alex Kantrowitz?

  Kind of a controversial question, but you know, the US has been trying to cut off China from, and has been cutting off China from. Basically, all the chips that you need to build advanced artificial intelligence, the chips that you need to build fast smartphones, and we're going to talk about that next. And there's been this big campaign against TikTok in the US. I mean, obviously, China feels and hears all of this. Do you think the US is overstepping here? I mean, there are consequences in some ways to these statements and actions. And there can be, is this maybe like the punchback, beginning of the punchback?

• 7:25Speaker 01

  I mean, I heard, again, I heard someone say like, oh, this is all a response to what we did. Like, let's not forget the number of US companies that have social media apps that are restricted in China. So, you know, if you want to go for like a tit for tat in terms of who did what first, I mean, I think it goes both ways. But again, US companies are getting restricted. And that's what, you know, not to get off topic, but but let's look at what the FTC is doing when they're looking at, you know, the antitrust issues that they have with with some of the companies that that Lina Khan is going after. And they're not looking at it on the more global basis where, let's say, you restrict, you know, EA or whoever Microsoft is buying versus to the benefit of Sony, which was not

• 8:09Speaker 01

  a US company, not EA.

• 8:13Alex Kantrowitz?

  Activision.

• 8:14Speaker 01

  Sorry. Activision. Sorry. Brain fart there. Yeah. So, I mean, these things, I think, I think all come to play. So I don't, I wouldn't blame necessarily one side versus another. But as an American citizen, I'm surely, and, you know, aware of the restrictions that US companies have had in operating in that country.

• 8:36Alex Kantrowitz?

  No doubt. I mean, I guess it's clear that the US companies are restricted there, but they have a government that's more willing to take swings that ours is not. So, does the US need to pump the brakes a little bit to avoid? Retribution.

• 8:52Speaker 01

  Yeah, these are trade, these are trade issues in large part. You know, they are, I think, wrapped up in a lot of times, you know, public safety or free speech or things like that. But at the end of the day, trade is a big part of that. And we do have an election coming up and there's been a lot of discussion over TikTok and some of these other things. So what we've seen in the election cycles of our country is not finding that necessarily middle ground, but going one way or the other to dial up the rhetoric and maybe take some actions, you know, that will resonate with voters in an upcoming election. So I think that has to be kind of factored in, whether what they

• 9:32Speaker 01

  should do or shouldn't do. I mean, you know, then you're asking me to run the public policy.

• 9:39Alex Kantrowitz?

  It's always fun.

• 9:40Speaker 01

  Yeah, I mean, but at some point, you know, if we're at the same time, getting back to FTC, trying to restrict our own companies, when, you know, foreign countries are restricting our US companies in those, in those markets, I would, I would think that there might be, there should be maybe some alteration in how we approach that.

• 10:02Alex Kantrowitz?

  It doesn't seem to me that it's going to be a case where, you know, China just says, no more iPhones in China. I mean, that would be totally drastic and fairly unprecedented, I think, in our, like, globalized but steadily deglobalizing economy. So I guess can't rule it out completely. It seems unlikely.

• 10:19Speaker 01

  I mean, with the US, just sorry to interrupt you, but the US has banned, you know, infrastructure purchases from, you know, these Chinese companies and has funded the existing infrastructure to be ripped out of existing telco networks. So when you talk about the kind of tit for tat and back and forth, I mean, obviously, it's not the same scale as, as, you know, the number of phones that Apple sells in China. But it's not like technology has not been imports or exports that's not been discussed as, as, you know, something that is at risk of ban in the past, or it certainly is a possibility. Again, I agree with you.

• 10:58Alex Kantrowitz?

  Right.

• 10:58Speaker 01

  Low, low risk of that, but still can't, can't roll it out altogether.

• 11:02Alex Kantrowitz?

  So I think we should definitely talk about like some of these, you know, technology bans. And we'll do that in a second, but the thing I was getting at on this point was that the thing that seems more likely and the thing that surprised me in my research, um, as I was researching, you and I were both on CNBC this week talking about it. Actually think that, you know, I, I appreciated watching your comments more than I think the things that I said, but, um, as I was researching, one of the things that I found so fascinating was that A, well, we could, let's just get into it. There's a faster Huawei phone called the Mate 60 that's just come out, which is just like basically taken a, a dramatic step forward in terms of connectivity in China. And it's not only the faster specs.

• 11:44Alex Kantrowitz?

  I mean, it sold out in like two days right away, but it's not only the faster specs that people are interested in, it's this matter of national pride. And the U S banned Huawei from using the Android operating system. And that effectively, and between that and the restrictions on connectivity, the, the adoption within China, I think, tanked. And the iPhone was the beneficiary of that. Now with this faster phone, the thought is that Huawei can start to make up some of that market share. And with a product that has somewhat close to parity, uh, to the iPhone in China, the thing that, this is a thing that surprised me is that it's now becoming a matter of

• 12:24Alex Kantrowitz?

  national pride in China where people are like, I am a, I believe in the government. I believe in our country. I'm a Huawei user and this, what this government thing signals is that, you know, if you are a true, um, supporter of the Chinese Communist Party, you're not touching that iPhone. You're going to get this Huawei Mate 60 and roll with that. And when it becomes this sort of a move, a movement phone versus a specs phone, that's where you could end up seeing the iPhone really lose some share there.

• 12:54Speaker 01

  I think that's 100% true. It's just there's different elements of it. The A, that you could already have that sense of pride, right? That may already exist. B, the government can impact it through how they communicate with the citizenry there, right? And the third thing is just outright impacting it. Meaning like, again, talking about this, there's a word for it. I forget what it is, but this need for balance. So let's say you had AT&T, T-Mobile, and let's say Sprint still existed. And they were a really weak third competitor. And the government said to the other two guys, "You cannot sign up new customers for the next six months because we want Sprint to be able to sign up new customers." Those are the types of actions that have been taken historically in that country

• 13:36Speaker 01

  in order to restore balance, in this case, to the number of subscribers, you know, for an existing operator. So when I see that historically have happened, then I think that they can take even more formal steps to help, in this case, what you would, you know, we call this, in operator land, we call this the national champion. Let's say Huawei is the national champion. To help the national champion, you know, really just restrict and go to the operators and say, "Which are government-owned and say, just don't sell the iPhone." Or maybe subsidize Huawei and don't subsidize iPhones, where it's not like an outright ban, where they can't, you know, import them or keep them in the country. But obviously influence those numbers. So certainly, again, that's clearly a risk.

• 14:21Alex Kantrowitz?

  So briefly, what's your prediction of where this goes from here?

• 14:26Speaker 01

  I mean, again, this is like trying to put on politics hats. And I just think like this risk always existed, right? This is, let's get back to the root of why we have a sell rating. I mean, if you look at the multiple of it, multiples are, should be a function of growth and risk. And you have no growth, right, already. And now you have, and let's say the expectation for growth overall for the company is low single digits for next year. And then this is a risk of it. So this is the risk, as risk gets dialed up, meaning that this could lead to less phone sales, you know, you should pay a lower multiple, period. So if, so the way you would theoretically approach something like this, you'd say, "Okay, there's a 10% probability that..."

• 15:11Speaker 01

  There's, you know, you know, handsets are down a million, you know, in this quarter and then it gets resolved. There's a 20% chance that something more dramatic happens and then you, you, um, you're effectively weighting the risk of those different scenarios in order to come up with a average earnings number. Um, and then you put a multiple on it. So when I look at this all together, we, we've already done that. And this is why my, my revenue estimate is $17 billion below consensus for next year. Our earnings are below consensus. And ultimately, if whether this, if this is something that impacts revenue, some of the regulatory risks in terms of what they're charging, um, you know, in their, in their app store, um, or some of the

• 15:53Speaker 01

  restrictions that they'll have on search, um, you know, all these things come to play in terms of what numbers the company's going to generate.

• 16:01Alex Kantrowitz?

  Walt Pisick is here. He is a partner at Lightshed Partners and a GP at Lightshed Ventures. We're talking a lot about the policy side in the first half. In the second half, we're going to talk a little bit more about Apple's business. Walt is actually the most bearish, most bearish analyst on Apple in the entire analyst community. So kind of interesting to dig into that a little bit more. And then we'll also preview the iPhone 15 and maybe touch on one or two more topics before we head out. Back right after this. This episode is brought to you by App Point. Everyone's racing to roll out AI right now. Co-pilots, chatbots, agents doing real work. But here's the part nobody loves talking about.

• 16:40Alex Kantrowitz?

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• 17:31Alex Kantrowitz?

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• 18:16Alex Kantrowitz?

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• 18:31Alex Kantrowitz?

  And we're back on Big Technology Podcast with Walt Pisick. Walt, are you proud of the label, the most bearish analyst on Apple and Wall Street?

• 18:40Speaker 01

  I'm really not. And I mean, I've covered this thing for, I don't know, 15, 16 years. And I've had a buy rating on it more than a sell rating. So I'm not like, I know there's some people that kind of dig in their heels on certain companies. I certainly was that way with Sprint before it got bought by T-Mobile. But in this case, like, you know, it's nothing against the company, the management team, the products. It's just, look, we just look at, we do what the, we, we, I'm very model-focused. And what the numbers tell us is the consensus is too high and the valuation is too high. And our input on this, unlike many of my peers, is from the operators, which is the demand side. And they're telling us what's happening. And I'm seeing it in the reported numbers,

• 19:25Speaker 01

  what's happening with the replacement cycle, meaning how long people hold on to their phones. And I had this very similar situation back in, I think it was 2012, where we had downgraded the stock. In that case, it was from just a buy to a neutral. We hadn't gone to sell at that time. And early on, You know, the stock didn't work out and I was on, you know, on CNBC, you have egg on your face, blah, blah, blah. And then, and then the misses started happening and, um, and the stock, the stock was impacted. So, look, I don't know if I'm going to be right or wrong, but I just look at the numbers.

• 19:55Alex Kantrowitz?

  Right.

• 19:56Speaker 01

  Driven, and by the way, our peers are, you know, do a great job and they do something I don't do, which is they go to Asia and they figure out what the supply is. The risk on that though is, you know, I can think of certain analysts, they come out and they say, oh, Asia's telling us that they're going to make this number of phones. And then two weeks later, they get revised down because Apple goes to them and says, yeah, you know, we're not selling as many phones. So we're reducing the production. So that's a supply based, supply side based analysis and ours is more focused on the demand side. Um, let's go ahead. Sorry.

• 20:27Alex Kantrowitz?

  You've had, you brought up two things that I want to touch on and then we can get back to, to this, but the first is valuation, right? And the second is the upgrade cycle. So first valuation. Okay. I look at it pretty simply, which is that I see the numbers, right? Apple's up 40% this year. It was, it, it hit all time highs above $3 trillion and stayed there for a while. Even as its revenue contracted for three straight quarters and it looks like it's going to do that again this quarter. I mean, how does a company end up having such a high valuation, right? So it's not just the number, but it's multiple, right? Which is like the, the forward looking price to earnings ratio was, um, above 30, which is just not, does never had that in its history before.

• 21:10Alex Kantrowitz?

  Um, and again, if, if its revenue is going down, sales are going down. For it to soar in this way just seems completely counterintuitive. So let's touch on that first and then get to this slowing upgrade cycle. What do you think?

• 21:24Speaker 01

  Sure. Um, first of all, I don't believe in the, that the market is efficient every single day.

• 21:30Alex Kantrowitz?

  Right.

• 21:31Speaker 01

  Over time, um, the market is efficient in terms of growth and valuation. So sometimes, you know, you just have more buyers than sellers. People are buying for defensive reasons. There's, you know, shifts into, into certain types of, of companies. Um, maybe there's a hope for, for growth. I mean, earnings estimates have, have come down. So. You know, these things happen from time to time and look, maybe I'm gonna be wrong and they're gonna outperform even consensus and the stock is reflecting better growth in 2024, which, which the upcoming quarters, quarters, excuse me, will determine that. But, you know, it just kinda is what it is until it isn't, right? Everyone's like, oh, it doesn't go down. By the way, there was also a time when there was a lot of discussion of, hey,

• 22:13Speaker 01

  this thing should be valued like a SaaS or like a services company like Netflix, which I also found amusing because Netflix's PE multiple was actually lower than Apple's. And let's just focus on that for one second. Netflix spent two decades building what they have today in terms of investing in content, investing in technology, which is massive, investing in customer acquisition. And they're undoubtedly the biggest in, in this one segment of what Apple does. And they're a $30 billion company, right? Apple's in 80, Apple services business alone is $80 billion. And by the way, it's growing, it grew less than 10% in the last three quarters.

• 22:57Speaker 01

  So it's not like you're getting hyper growth in this segment. So to say like, let's take a, you know, a business that's 20% of your total, growing at 10%, so you're, you know, you're adding what, two percentage points of growth? And you're gonna re-rate the entire company to say this is a service business? A, that's, that's I think faulty logic and B, even if you did that, you're not even getting a higher multiple because the multiple's already as high as, as some of these other recurring revenue businesses like Netflix.

• 23:25Alex Kantrowitz?

  Exactly. I mean, 52% of the revenue is still from iPhones, so, yeah.

• 23:30Speaker 01

  And by the way, like iPhone 100% is a recurring revenue business in the sense that those customers come back to you, right? So I, I get that, like, there's, there's, you know, where Apple is today. In terms of their customer loyalty, you can argue that that's a very predictable business. But the point is, it's not growing. And then you've got two other segments that are effectively in decline. So what is that? Where do you end up with? You end up with no growth.

• 24:01Alex Kantrowitz?

  Is the rest of the economy at risk a little bit? Because we have, sorry, the rest of the market at risk a little bit. Because so much of the, it seems like Apple's just kind of been pulling it up year after year. And it just, I mentioned the first half, but it makes up so much. Like if you're a passive investor, you hold ETFs, like you have like the S and P 500 or NASDAQ funds. Like you're seven, a 10, or even more percent of your portfolio is just going to be Apple. So, I mean, your prediction is that this stock is going to fall dramatically. What does that say for the rest of the market?

• 24:39Speaker 01

  I mean, look, we all own index funds and mutual funds. So it's probably one of my biggest personal holdings, not because I own it personally. I don't, just because it's within an index fund. But it's not a call on the market. And frankly, the last quarter, when the stock sold off after they reported, the market was up. And I think a lot of times, you know, leadership, you know, meaning the top five or 10 stocks in the market are always the primary driver, or frequently the primary driver. And sometimes those things change. So maybe if Apple has a drawdown, which it has had in the past, maybe not when its weighting was as great, then maybe one of the other large cap tech names like Amazon or Facebook is going to do that much better

• 25:23Speaker 01

  in terms of how the overall markets can perform and money will just shift there.

• 25:27Alex Kantrowitz?

  Yeah.

• 25:29Speaker 01

  So I mean, I think just things, things change. Like, you know, leadership has always been, been big. And there's been different leaders 10 or 20 years ago that no one thought would ever fall off. And, and they did.

• 25:40Alex Kantrowitz?

  Okay. And so let's talk.

• 25:41Speaker 01

  And by the way, just to be clear. Our call is not that like this is the end of Apple. Apple is doomed. All I'm saying is.

• 25:49Alex Kantrowitz?

  It's still gonna be a pretty expensive. I mean, it's still a very valuable company, even if it hits your.

• 25:53Speaker 01

  It's a great company, right? It's but there's but where should it be valued? And where should consensus be? So like maybe that when they miss and the stock comes down and our numbers are in line with consensus, maybe our numbers are going to be better than consensus. And then it can return to decent performance. Maybe all of this R and D that they've been investing in over the years. I mean, just look at that R and D number. I think it's like 30 billion a year now continues to grow as a percentage of revenue. Maybe that will, you know, deliver some innovative products. I know there's always been this speculation about cars and TVs. And and now you actually have a product that they're going to launch in the first quarter. Um, with the VR, the AR VR. Yeah. The so maybe one of these things, you know, will, you know, return a great company.

• 26:38Speaker 01

  I just don't think that this is the right price to invest in it.

• 26:41Alex Kantrowitz?

  And so let's pick up on one last thing, which is before we move to iPhone 15, which is the upgrades, right? So you say you speak to the operators, right? So these are the companies that know who's upgrading, how often this happens. I mean, they're like, if you're going to look for someone to know this, um, you know, almost as well as Apple does, it's them. And the sense that I get from hearing you speak about it is that people are just holding on onto their phones for years and years and years and longer than they ever have. Is that sort of what you're seeing? And I mean, this sort of like the segues naturally into what's going to happen with the iPhone 15. But just from the operator's side, is that what you're hearing?

• 27:19Speaker 01

  And it's not, this is not just a private conversation with me. This is they go on earnings calls. They they were just interviewed by, you know, CNBC and spoke at the Goldman Sachs conference. I mean, they have a good idea of what's going on in the US. Let's just look at the US. Every market's different and I cover, you know, operators throughout the world. But in the US, they actually 80% of their sales actually go through their own distribution channels. And then they can put their finger on the scale one way or another in terms of subsidies and, you know, the payment plans and how those things work. And, you know, whether it's American Mobile, which is emerging markets in Latin America or the developed markets, the story is the same, which is people are holding on to their existing phones longer. And we can sit here and debate.

• 28:02Speaker 01

  And like, you know, make negative comments about the evolution of the products. It's not revolutionary, but, but, um, but that the facts are what they are and the outlook from these operators, which again, have a good sense of how things are progressing. Um, or that that replacement cycle is going to continue to lengthen, which is going to make it very hard to grow. So if you look at last quarter, it could have been worse. They did have some growth from, I think, India and a couple of other emerging markets, um, which was surprising. Then the question is like, well, how sustainable? Yes, huge populations, but in terms of GDP, like number of people that can afford an eight hundred or a thousand dollar phone versus maybe some of the older models. And then when they purchase those phones, how much services revenue accretes?

• 28:47Speaker 01

  How many applications is someone going to buy in a market where the GDP is so low? And just one other point on that. What many people don't know is that services line that everyone gets so excited about includes an allocation of revenue from equipment, meaning that you spend a thousand dollars on a, on an iPhone. I don't know what the exact number is, maybe it's a hundred dollars or $200. They actually allocate into the services.

• 29:12Alex Kantrowitz?

  No way. I had no idea that was the case. That's wild.

• 29:15Speaker 01

  Why? Because they say, well, the accountants tell them because you're getting free services like message and maps and these are, these are services. So that needs to be booked in the service line. So to the extent, so there, so there is in one portion of the revenue, some correlation to the actual number of phones that are sold. Aside from if your mix is going to go to emerging markets, like how many people are going to be doing paid subscriptions in those markets?

• 29:38Alex Kantrowitz?

  Okay. Before we end, what's your feeling on the iPhone 15?

• 29:42Speaker 01

  I mean, I have no idea. I think my friends are all upset about the new cord and no one wants to pay.

• 29:49Alex Kantrowitz?

  Really? I'm personally excited about that new cord. It's like finally some standards in my laptop is USB C. Everything I'm plugging in is USB C. The fact that my iPhone is a lightning cable is driving me nuts. I've been, I didn't upgrade to the 14 just so I could get the 15, but maybe that I'm an outlier. You think, you think I'm weird because of that?

• 30:07Speaker 01

  I don't know. No, you're, you're with my kid. He's like, yeah, he's psyched about it. People that upgrade frequently like Rich, Rich Greenfield, my partner is very excited about it because he's got all the newest phones. But for those of us that have two or three year old phones, we're still plugging into bricks that are that have the old USB connection. So I mean, who knows? At the end of the day, like, we'll see if it's evolutionary. I mean, there's people out there that constantly say this is the super cycle, super and like, look, there's one, there's been one super cycle, super cycle. It's when the phone got bigger in the six S, right? I mean, in the six.

• 30:39Alex Kantrowitz?

  So it wasn't COVID, it was just sizing?

• 30:42Speaker 01

  I mean, COVID, you had, you know, you had good growth, but not like the growth you had with it, with the true super cycle. Yeah. And certainly 5G has not delivered that either.

• 30:52Alex Kantrowitz?

  Are you, how are, are you going to stick with whatever you have? Or you think you'll make the move?

• 30:56Speaker 01

  I have an, I have an iPhone 12 and my issue is not only bad, well, it is battery. It's just the thing when it gets heated up at all, the phone just turns, the phone just turns off. So I may actually be due for an upgrade.

• 31:09Alex Kantrowitz?

  I'm on a 10, I plug it into a car. I worry.

• 31:13Speaker 01

  You're on a 10?

• 31:14Alex Kantrowitz?

  Yeah. I mean, I've really held on.

• 31:16Speaker 01

  So you underscore the thesis then. So the question though is, are you going to buy the new one? Or are you going to buy the last year's model at the lower price?

• 31:21Alex Kantrowitz?

  I'm, I'm waiting for the 15. I've been waiting. I would have been for on the 14. This, this phone is, is really is true garbage. There's, I've said it on shows in the past, screen's cracked, bright line through it. I've replaced the battery, but plug it into a car and, you know, both the car and the phone overheat. It's like one of those like mutually destructive things. So yeah, I'm waiting. I'm excited for that 15.

• 31:45Speaker 01

  Well, you, there's, there's a little envelope and I think I was, who did I read? I think, I think it's New York Times or Wall Street Journal, Julia Stern, I think her name is, that she talked about the, the packet you can get to slide your phone in to keep it cool to save the battery. So there's our tip for, tip for listeners to preserve the battery life.

• 32:03Alex Kantrowitz?

  My wife and I, we, we did a big road trip through the Pacific Northwest over the summer and we would drive for about 30 to 45 minutes and then stick the phone in the air conditioner and then be able to turn Google Maps back on. Okay. Before we go, do you, are you able to chime in for like one or two minutes just about the Charter situation? Because we talked a little bit last week about the, the problems that Disney's having in its business. And we said, what's going to happen with ESPN? And now, like, just as that happened, Charter and ESPN entered this big dispute. I know we're about, about the end, towards the end of our time, but if you could just give a quick summary about the state of play there.

• 32:41Speaker 01

  I think what's amazing is, what I've been learning is, the number of people that are actually, you know, consume sports on a regular basis that are super fans is probably like a lot lower than what many of us believe and the costs for these rights continue to go up. I mean, obviously DirecTV has their own battle surrounding sports. I'm sure Dish will have some as well. So it's getting harder to substantiate for everyone to subsidize the sports fanatic like myself. And I think the numbers have gotten to that point and the technology in terms of what YouTube TV offers as an alternative and the broadband penetration in terms of like what you can do. All of these things have now coalesced

• 33:25Speaker 01

  at a time where, you know, I think Disney is facing, is going to be facing some very difficult decisions and how they handle that with Charter. And look, the challenge here is, I think the way it works is whatever they, whatever they agree to with Charter, I think is probably going to then accrue to other large distributors just based on most favored nation clause. Don't know that for a fact, but I mean, you would think that, you know, as rights come up or maybe even sooner, that those, whatever the new deal is that they cut with Charter is going to have a broader impact. But it's a fascinating time. I think things are kind of unraveling quickly in that whole ecosystem.

• 34:08Alex Kantrowitz?

  And the fundamental dispute is ESPN is like, we've acquired all these rights to air league games, pay us this amount to carry the network and Charter is just like, you're done, you're done.

• 34:19Speaker 01

  Yeah, pay us this amount for all of your subs when only whatever it is, let's, you know, some low, much very low amount are actually using it. So if, they just do the math. Like if those customers churn and they lose X billion, but then they drop 2 billion of what they're paying to Disney, like it's just math. I mean, I think the- The one factor that's harder to calculate is like the brand impact, meaning that when I disconnect my, when I rip out all my set top boxes and I'm going to put YouTube TV in, at the same time, do I take my cable modem and throw it out and do I have a fiber alternative or maybe I, maybe I turn to T-Mobile or Verizon or now AT&T that's, that's selling these services? Like, is there a brand impact that hits the core of what Charter's business is, which

• 35:02Speaker 01

  is that, was is that broadband business? And that, that's a very, that's a debatable topic. We're going to have to see how that, that impacts the company over time.

• 35:10Alex Kantrowitz?

  Yeah, well, this is definitely something that we're going to keep following and really should go into a bit more depth here on the show. Walt, thanks so much for joining. Great speaking with you and really appreciate the very insightful and elucidating analysis on the Apple stuff and Charter.

• 35:22Speaker 01

  You bet.

• 35:23Alex Kantrowitz?

  All right. Thanks, everybody for listening. We'll be back on Wednesday. Have a great author with a new book that takes you inside Amazon. So stay tuned for that. And then plenty of great interviews coming up this month. Back in action, we have some great stuff, including a very big CEO who I'm very excited to reveal. Maybe next week I'll let you know. All right. Thanks again for listening and we'll see you next time on Big Technology Podcast.

• 36:10Speaker 02

  Now, more than ever, we need someone on our side. But Rob Whitman? Whitman's votes drove up costs, cut Medicaid and risked 350,000 Virginians healthcare to pay for tax breaks for himself and his donors. He's not on our side. Shannon Taylor will fight corruption, cut taxes and bring down costs. This November, vote for Shannon Taylor. She's for us. Paid for by HMP, the HouseMajorityPac.com. Not authorized by any candidate or candidate's committee.