We all knew the Air was coming, and it’s thin, 28% thinner than the Pro models. Despite Apple positioning it as a Pro level device, it has noticeable gaps in camera features and battery life. Yes, its aesthetics are impressive, but the functionality still lags the Pro line.

That said, what matters most is that both the Air and Pro introduce eye catching new hardware designs. For many iPhone buyers, the phone is a reflection of their personal brand, and when it is obvious you have the latest and greatest, that becomes a selling point.

Look no further than Apple’s landing pages for the two products to get a sense that they’re pushing hard on design as a feature.

I was most impressed by the meaty new Pro form factor, which sits nicely alongside the Watch Ultra. Apple is clearly playing up that industrial look in its marketing, the oversized “Pro” lettering on Apple.com says it all.

Looking back at iPhone 6 to get a sense of what is to come

When the iPhone 6 and 6 Plus launched in September of 2014, with larger 4.7 inch and 5.5 inch displays compared to the iPhone 5’s 4 inch, it powered a super cycle. iPhone revenue in FY14, the iPhone 5 cycle, grew 12% year over year. The 6 and 6 Plus drove revenue up 52% in FY15.

Features vs. form factor

Battery life, cameras, and new features like recording video from both front and rear cameras simultaneously matter, but they are incremental. Apple needs to deliver them to keep phones fresh, but compared to form factor changes, they are secondary. What matters most is form factor, and Apple successfully landed two winners with today’s updates.

Some investors were disappointed that nothing new was said on the Apple Intelligence and new Siri front. Those investors were at least hoping the company would reiterate that they expect the next generation AI powered Siri next spring.

My take is the project is on track. Most investors now expect the update to come in March, with a hard deadline in June at WWDC.

The simple truth is Apple learned its lesson to keep a tight lid on what they’re doing in AI until it’s ready for prime time. We know it will be next level based on comments from management, and its absence from today’s event does not change the high bar for what we will see in about seven months.

As mentioned above, new form factor should bode well for upgrades. Additionally, the much talked about and often dismissed upgrade pool from FY21 should provide a tailwind over the next year.

1. Form factor. Material design changes boost sales.

2. Upgrade pool. A year ago, I predicted a super cycle that never materialized. My thesis was based on Apple Intelligence (which so far has fell flat, at least for now) driving upgrades in combination with a bumper iPhone year in 2021, when sales were up 39% on the heels of the pandemic, which four years later yield a large upgrade pool.

The upgrade pool, however, has started to show up over the past two quarters, with iPhone growth moving from flattish in recent years to up 2% in March and up 11% in June, adjusting for the tariff driven pull forward in the US. Reported overall iPhone growth in June was 13.5%.

• Putting it together, I believe iPhone should grow around 10% year over year in December, ahead of the Street’s 7% target.

• For FY26, the Street expects 5% iPhone growth. I expect closer to 7% plus, which would mark the best growth since FY22.

Apple raised pricing efficiently through subtle changes:

• The new Air came in at $999, above expectations of $899.

• They eliminated the $999 128GB Pro, making the entry point $1,099 for 256GB. In theory, this is a price hike, but in practice, most Pro buyers already opted for 256GB, so the impact is minimal.

The biggest pricing leverage will come from buyers who would have taken the $799 iPhone 17 but stretch to get the $999 Air. This dynamic is similar to last year, when the iPhone 16 started at $799 and Pro models at $999, the difference now is the intrigue of a fresh form factor.

Putting this together, I expect overall iPhone ASP’s to increase by 1% over the next year.

Apple held pricing steady on AirPods and Watch.

Below the iPhone headlines, Apple Watch adds hypertension and blood pressure monitoring.

This is a feature that I have watched many startups have chased unsuccessfully for years. Hypertension is one of the best indicators of overall health, which is why the prize has been so big. Apple appears to have cracked it, using the same light sensors that measure heart rate and EKG to infer blood pressure from the skin. FDA approval is expected soon.

Most people don’t want to check blood pressure daily, but being able to monitor it over time, rather than once a year, presents a major opportunity to improve health. I will be curious to see how accurate it is, and whether insurance companies view it as a way to improve outcomes by subsidizing the Watch. Today, less than 2% of Watches are sold through insurance subsidies.

Currently, about 15% of iPhone owners have a Watch, a figure I believe should move closer to 75% over time. That sounds aggressive, but the Watch is an incredible wellness device, with heart rate, blood oxygen, EKG, sleep tracking, and now hypertension, and wellness is an undeniable, growing trend.

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