Apple to launch first new product in years
The business news that matters
Hello everyone and welcome to the latest edition of Off to Lunch…
Apple will unveil its first new product in years next week and details of the product seem to be leaking out ahead of the launch.
The product will reportedly be called the Reality Pro and is a virtual reality headset that will cost around $3,000. It will offer things like VR FaceTime calls and an external display for computers according to the best preview I have read by Platformer, which you can find here.
It is unlikely that this product will be anywhere near as big as the iPhone, iPad or Apple Watch. But Apple has been underestimated before and it is the master at taking a technology that was previously niche and making it mainstream.
Apple is expected to announce the product at its annual WWDC event for developers. The event starts on Monday and you will be able to watch it online here. The headline on Apple’s promotion of the event is “Code new worlds”, a hint of what is to come. Bloomberg’s Mark Gurman has been tweeting about what to expect from Apple…
Dan Ives, tech analyst at Wedbush, said he is expecting Apple and its chief executive Tim Cook, pictured above, to also talk about AI. So far Apple has let Open AI, Microsoft and Google take the attention on AI…
The last time Apple announced a significant new hardware product was 2015, when it launched the Apple Watch. The Watch was the first product to be launched since Steve Jobs died in 2011. The iPod was launched in 2001, the iPhone in 2007 and the iPad in 2010. Apple Airpods, the company’s wireless headphones, were announced in 2016, although they obviously need to be used in conjunction with other technology.
The launch of the new product is therefore a notable moment for Cook, who has overseen Apple’s extraordinary growth since Jobs died, with Apple now worth $2.7 trillion and the most valuable in the world. But given the purported high price of the device, the relative lack of interest in virtual reality in recent months and the fact that, according to the Platformer preview, Apple thinks that the Reality Pro does not yet have a killer app that will attract a wave of new users, this feels a relatively low-key launch by Apple standards. The cost of the Reality Pro failing would be a fraction of the $95 billion of revenues that Apple reported for the first three months of 2023. But the upsides of launching the product outweigh the downsides. As Richard Waters writes in an excellent column for the Financial Times, the Reality Pro is a “hedge against threats to the iPhone empire”. You can read that column here.
Interestingly, Meta, one of the companies which already has a VR headset, has just announced that it is launching the Quest 3, an updated version of its product, which will cost $499.99, much cheaper than Apple’s. It is also cutting the price of the Quest 2 to $299.99. The Quest has been popular with video gamers…
Other stories that matter…
1. “Build it once and build it right”. That is the message to the government from a collection of local leaders in Manchester and London, who are concerned about the progress of HS2. The signatories of the letter are Andy Burnham, the mayor of Greater Manchester, Sadiq Khan, the mayor of London, Bev Craig, the leader of Manchester city council, and Georgia Gould, the leader of Camden council. The letter was sent to Mark Harper, the transport secretary. It raises concerns about the design of the station at Manchester Piccadilly and how it could severely limit regeneration opportunities, a subject that Off to Lunch has touched on before here. The letter also warns against connecting HS2 with a station outside central London rather than Euston. The letter says: “Across the business community, both in London and the North, there is a consensus that current plans for both stations could permanently damage Britain’s economic ambitions. If we are committed to growing our economy, and connecting our cities, then we need to make sure we get this right now, not hamstring the opportunities of future generations.” You can read the letter in full here.
2. James Henderson, the fund manager, has provided the opportunity to get into the mind of a City investor with a column in the Financial Times. His piece focuses on how to be a contrarian investor and the importance of being aware of cognitive biases that can lead to poor decisions, such as following the herd, bemoaning your losses more than you enjoy your successes and confirmation bias, which is paying more attention to information that supports your beliefs. The piece also touches on why Henderson, a fund manager at Janus Henderson Investors, is backing UK-focused companies like Next Fifteen, Marks & Spencer, Halfords and Serica Energy. “Buying smaller UK companies hurts now. In truth, it has hurt for some time. But experience and rational thinking tell me the brave will be rewarded. One day that bounce will come,” he writes. The full column is here. The piece is a reminder of the work, expertise and risk-assessment that goes into investing. This is why it is foolhardy to complain about UK investors being risk-averse and dangerous for the government to look at forcing pension funds to put more money into promising British companies. Do we really want fund managers to just chuck all their processes in the bin? James Kirkup, the director of the Social Market Foundation, has made a similar point about meddling with pensions in a column for The Times today, which you can read here.
3. Two popular children’s brands are making a comeback in the UK. Raleigh is bringing back its Chopper bicycle, which has odd-sized wheels and abnormally-high handlebars. Raleigh is based in Eastwood, Nottinghamshire, and stopped making the bike in the 1980s. The new version isn’t cheap - it is priced at £950. More details in BBC story here. Meanwhile, Toys R Us shops are also returning to the UK, albeit in a different format. Toys R Us collapsed in 2018 but WH Smith is now going to open small Toys R Us shops within its own stores. These shops will initially be in Canterbury, Chelmsford, Cheltenham, Cwmbran, Oxford, Poole, Reading, Solihull and York. The statement confirming the plans is here.
4. The Wall Street Journal has written a fascinating piece about how Albemarle went from a paper mill in the US to the world’s most valuable lithium producer. The company moved into chemicals and then bought a lithium producer almost a decade ago. It is now valued at $23 billion. Lithium is a key material in the batteries for electric cars and smartphones. But there are concerns about a shortage of the material as demand surges. “The Street [Wall Street] didn’t believe our forecasts,” says former boss Luke Kissam. “We far exceeded them in terms of revenue and profitability.” Full piece here
5. The Athletic has taken a deep and insightful look at how Aaron Rodgers came to leave the Green Bay Packers and how relationships within the organisation broke down. This isn’t really a sports story - it’s a people story, one that has lessons for all organisations about how to manage prized assets, when is the right time to move on from them, succession planning and how you plan for the long-term without destroying your short-term prospects. The piece includes quotes from all the major players in this story. To give you an example of how complex the relationship got, this is a quote from Rodgers about why he didn’t sit down for talks with Brian Gutekunst, the Packers’ general manager and the man responsible for player recruitment: “I have zero or one bar at the house, so you call me. Sometimes it goes through, most of the time it drops and doesn’t go through.” Rodgers adds: “Did Brian text me more than I texted him? Yeah, but did I ghost him? No.” Full piece here
Podcast…
Our Business Studies podcast is taking a short-break as we prepare for a new collection of episodes. But you can find all our previous episodes on Substack here, Apple here and Spotify here
And finally…
Congratulations to Oliver Hughes and his superbly named team The Juan that Matas for winning the Off to Lunch mini-league in Fantasy Premier League. The Juan that Matas’ scored 2,573 points, which meant the team ranked 30,453 in the world overall out of 11.4 million players, which is a superb effort. Matthew Taylor’s AbraDubravka pushed The Juan that Matas all the way and finished second with 2,552 points, also a superb effort (and another superb team name). Tom Cahn and Point Extraction were third with 2,456 points. Congratulations to all. The Off to Lunch league will be back in August!
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Best
Graham