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TL;DR
Top News of the Week: The iPhone Duo is TIME’s invention of the year, and we will probably never learn how many Apple sells.
From Last Week’s News: The biggest grocery merger in US history died two years ago. As of Monday, the two companies are fighting over who killed it.
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TOP NEWS OF THE WEEK
The iPhone Duo Costs About Twice as Much as a Base iPhone
TIME named the iPhone Duo its invention of the year and put it on the cover. The honor is deserved for a beautiful object. It tells you very little about whether the Duo will move Apple’s numbers, and Apple’s reporting makes a clean answer unlikely.
The Duo starts at $1,999, roughly double the entry iPhone. That’s the price band where Apple’s last big hardware swing struggled, and TIME describes Vision Pro sales last year as very low.
Apple iPhone Duo (supplied by Apple)
The engineering is impressive. John Ternus, CEO since September 1, was one of six engineers on a 2011 patent application for foldable devices. Apple then sat out for years while Samsung and others shipped foldables. Ternus told TIME the early rivals felt “kind of cheap and cr—py.” The finished Duo puts a custom polymer screen over a hinge with more than 100 precision parts, and Apple moved the main iOS controls to the right edge so your thumb can reach them. First users say the crease is close to invisible, though Apple picked who got early units and I’d rather see teardowns and a few months of real pocket wear first.
Unit volume is the first problem. Apple stopped reporting iPhone units years ago, so the Duo will disappear into the iPhone revenue line. From the outside we’ll see average selling price and whatever management says on the next call, and I don’t expect a unit count in either.
Margin is harder to read. Ternus told TIME the memory shortage is a crisis. The Financial Times reported in July that Apple was testing memory chips from a Chinese supplier, which drew a bipartisan letter from senators. A premium phone with a lot of memory and a complex hinge gets squeezed hardest when component costs climb. If memory prices keep rising, Apple either raises the price or absorbs the cost in gross margin, and it won’t show either by product.
TIME reports demand for Samsung’s Galaxy Z Fold8 has been strong, especially in Asia, so foldables do have buyers. Apple has 2.5B active devices and customers who mostly upgrade within the Apple lineup. Services growth has cooled this year. If even a small share of the iPhone base trades up to a $2,000 phone, that would lift revenue per customer more than most launches Apple could plan.
Ternus demoed the Duo with IShowSpeed, who was livestreaming to 61M YouTube subscribers. That audience skews young. Most young buyers don’t pay $1,999 up front, so a lot of Duo demand will probably run through installment plans and carrier trade-ins, and Apple doesn’t disclose that split.
THE BIG IDEA
Apple reports the holiday quarter early next year. I’ll be looking at iPhone revenue and gross margin and trying to work out how much of either came from a phone that folds.
THE TRUTH ABOUT LAST WEEK: The $24.6B Grocery Merger is Back, in a Delaware Courtroom
Albertsons wants Kroger to pay for the merger that collapsed two years ago, and the bill runs from $7.5 billion to $9.3 billion. The trial opened Monday in Delaware’s Court of Chancery and is scheduled to run two weeks before Vice Chancellor Lori Will. Albertsons says Kroger was obligated to take “any and all actions” to win antitrust approval, up to selling 650 stores. Kroger says Albertsons is misreading the agreement and that regulators sank the deal.
Albertsons says Kroger cost its shareholders $5.43 billion to $6.88 billion in lost merger premium, including interest. It also wants the $600M termination fee and $1.4 billion to $1.7 billion for taxes, because the payment would go to the company instead of directly to stockholders. To win damages, it has to show Kroger knew it was breaking the agreement.
Kroger says it spent more than $1 billion and tens of thousands of hours of employee and adviser time trying to close the deal. It uses that number to argue it never willfully breached the agreement.
Kroger says Albertsons CEO Susan Morris had repeated unauthorized contact with C&S, the company lined up to buy the divested stores. Kroger argues Albertsons undercut its position with regulators and so isn’t entitled to the termination fee.
WHY IT MATTERS
Rulings often take months after the trial ends, and the outcome can be appealed to the Delaware Supreme Court. If Albertsons wins even half the damages it's claiming, it resets how merger agreements are written — specifically the 'any and all actions' language every deal lawyer is now reading twice.
FRIENDS OF WATSON
Miami Dinner
Date & Time: Tuesday, October 20th from 6-9p ET
Location: Miami
Host: ClearEngine
Eligibility: Manager+, full-time at multichannel eCommerce brands
Description: An evening over king crab at Klaw, trading notes on what actually moved the needle this year, and what didn't, with retail and ecommerce leaders who've been in the trenches.
Confirmed RSVPs: Function of Beauty, 5 SENS & More!
