WEBVTT - Apple Sales Crush Estimates in Record Quarter for the iPhone 0:00:02.520 --> 0:00:07.000 Bloomberg Audio Studios, Podcasts, radio news. 0:00:08.640 --> 0:00:13.000 This is Bloomberg Business Week Daily reporting from the magazine 0:00:13.000 --> 0:00:17.599 that helps global leaders stay ahead with insight on the people, companies, 0:00:17.640 --> 0:00:22.520 and trends shaping today's complex economy. Plus global business, finance 0:00:22.560 --> 0:00:26.280 and tech news as it happens. The Bloomberg Business Weekdaily 0:00:26.400 --> 0:00:31.320 Podcast with Carol Masser and Tim Stenebek on Bloomberg Radio. 0:00:31.760 --> 0:00:34.199 Well, got to say investors like in this report in 0:00:34.240 --> 0:00:38.199 the aftermarket stock still up about two percent here in 0:00:38.280 --> 0:00:41.480 the postmarket trade. Hey, let's see what Bloomberg News Managing 0:00:41.560 --> 0:00:45.479 editor for Global Tech Consumer Tech thinks about this. He 0:00:45.600 --> 0:00:49.239 is Mark German, knows everything about this company, lots of exclusives. 0:00:49.280 --> 0:00:50.360 This feels pretty good. 0:00:51.680 --> 0:00:54.440 Jim Cook has to keep his job, at least for now. 0:00:55.720 --> 0:00:59.080 This is a massive, massive, massive quarter. This is a 0:00:59.240 --> 0:01:03.960 home run. Their greatest quarter ever by orders of magnitude. 0:01:04.040 --> 0:01:08.319 It's a gigantic beat on overall revenue. China is back. 0:01:09.160 --> 0:01:13.480 You have a big beat on the iPhone in particular. 0:01:13.520 --> 0:01:17.479 Eighty five billion dollar quarter is just insane. The installed 0:01:17.480 --> 0:01:20.160 base two and a half billion, The numbers are just 0:01:20.240 --> 0:01:23.280 beyond excellent. We could ignore the fact that they missed 0:01:23.319 --> 0:01:25.640 on wearables, home and accessories. We can ignore the fact 0:01:25.680 --> 0:01:27.920 they missed on Mac. We could ignore the fact that 0:01:27.959 --> 0:01:32.760 they barely you know, crossed expectations on services. I guess 0:01:32.800 --> 0:01:34.880 none of that matters when the iPhone is selling so well. 0:01:35.680 --> 0:01:39.639 But still there's the big existential question of what's next. 0:01:40.520 --> 0:01:43.920 It's an important question because of AI and Apple absolutely 0:01:44.000 --> 0:01:46.080 needs to figure out it's AI strategy. There needs to 0:01:46.120 --> 0:01:49.400 be an AI reckoning of some sort there. But they 0:01:49.560 --> 0:01:54.080 just bought themselves a very long time with this just 0:01:54.360 --> 0:01:55.440 insanely great quarter. 0:01:55.560 --> 0:01:58.280 So let's talk about a couple of the areas that 0:01:58.080 --> 0:02:02.320 you highlighted there, China, and another one is the sort 0:02:02.320 --> 0:02:06.960 of the concerns that people had about memory chips in 0:02:07.000 --> 0:02:09.840 this quarter and the rising prices of memory chips. How 0:02:10.000 --> 0:02:12.680 was Apple able to navigate this so it didn't hit 0:02:12.720 --> 0:02:14.240 its margins like people thought it would. 0:02:15.960 --> 0:02:20.880 They buy components and memory components quarters and months in advance, 0:02:21.040 --> 0:02:24.359 sometimes years in advance. They have these deals struck, so 0:02:24.400 --> 0:02:28.680 they're working off of numbers and pricing and materials here 0:02:29.680 --> 0:02:33.960 that really give them extensive pricing power over competitors. So 0:02:34.280 --> 0:02:36.040 we'll hear more about that on the call today. But 0:02:36.360 --> 0:02:37.400 it seems like they're fine. 0:02:37.840 --> 0:02:39.720 Mark, I love this. I mean, I'm looking at our 0:02:39.760 --> 0:02:42.160 live blog, so you must have kicked this out before 0:02:42.160 --> 0:02:44.120 you jumped on air with us. But you did mention 0:02:44.520 --> 0:02:48.120 that the significant things on the call, You've already talked 0:02:48.160 --> 0:02:51.080 about the AI strategy succession. You've kind of said maybe 0:02:51.080 --> 0:02:52.680 that's off the table for now because this was such 0:02:52.680 --> 0:02:55.600 a blowout quarter. You talk about the long term viability 0:02:55.639 --> 0:02:58.120 of the business if it doesn't get its AI act together. 0:02:58.919 --> 0:03:01.760 It's hard to even think about that when you see 0:03:01.880 --> 0:03:04.640 the numbers here and just what a big company this 0:03:04.760 --> 0:03:07.000 is and how significant is I feel like in so 0:03:07.080 --> 0:03:09.560 many different people's lives, like I have an Apple household. 0:03:09.560 --> 0:03:12.880 I think Tim has an Apple household. Is that is 0:03:12.880 --> 0:03:15.200 that really the long term viability if they don't get 0:03:15.240 --> 0:03:17.799 AI together, call me Tim Apple In fact they do, 0:03:18.280 --> 0:03:19.160 that's yes. 0:03:19.880 --> 0:03:22.680 I said long term, right and the fucking really and 0:03:22.880 --> 0:03:28.720 talking really long okay, the little, the little, the really 0:03:28.760 --> 0:03:31.160 long term here, right, Like, at some point there is 0:03:31.240 --> 0:03:34.440 going to be a need to fulfill these AI desires 0:03:34.480 --> 0:03:36.640 and you know they're going to have to figure that out. 0:03:36.840 --> 0:03:37.000 Well. 0:03:37.000 --> 0:03:39.160 On o agranav Our BI team, he talked with Tim 0:03:39.160 --> 0:03:41.240 and I just moments ago, and he talked about, you know, 0:03:41.280 --> 0:03:43.800 how they're working with Google when it comes to AI, 0:03:44.200 --> 0:03:47.120 relying on them right now for their models, and so 0:03:47.120 --> 0:03:49.160 they're not doing the big AI spend. That makes sense 0:03:49.200 --> 0:03:51.400 for now too. So do you agree that that's kind 0:03:51.400 --> 0:03:53.880 of a smart strategy now and kind of waiting it 0:03:53.920 --> 0:03:55.840 out a little bit, But at some point they've got 0:03:55.880 --> 0:03:56.800 to kind of do their own thing. 0:03:57.120 --> 0:04:00.440 It's not that they're waiting it out. Oh, it's that 0:04:00.480 --> 0:04:03.280 they have no choice, they have nothing internal. It's not 0:04:03.320 --> 0:04:05.160 that they're waiting it out. It's that they need to 0:04:05.240 --> 0:04:07.680 do it, and so they're partnering with the best partner 0:04:07.720 --> 0:04:09.920 they can. It's going to offer them the best pricing power, 0:04:10.240 --> 0:04:12.720 which for now is Google. They initially wanted to work 0:04:12.760 --> 0:04:15.520 with Anthropic, but from a pricing standpoint, that didn't work out. 0:04:16.000 --> 0:04:18.320 They couldn't work with open Ai because they're you know, 0:04:18.600 --> 0:04:22.080 hardcore competitors at this point. So Google was all who 0:04:22.200 --> 0:04:24.760 was left. And obviously the judge didn't break up the 0:04:24.800 --> 0:04:27.680 search deal there, so it made sense and it'll aligned 0:04:27.720 --> 0:04:28.600 pretty nicely for them. 0:04:28.800 --> 0:04:31.440 Okay, do we know yet how Apple was able to 0:04:31.480 --> 0:04:34.960 beat expectations in China once again for the first quarter, 0:04:35.000 --> 0:04:37.039 the most recent quarter, Greater China revenue came in at 0:04:37.080 --> 0:04:39.520 twenty five point five to three billion dollars. Twenty one 0:04:39.520 --> 0:04:42.200 point eighty two was the estimate you said it minutes ago. 0:04:42.880 --> 0:04:44.919 It is back in China. You're holding up an iPhone 0:04:44.960 --> 0:04:45.960 right now. That's what they did. 0:04:46.640 --> 0:04:49.240 I'm answering your question. I'm answering your question. 0:04:49.400 --> 0:04:51.680 It was the iPhone seven color orange. Oh, it's the 0:04:51.680 --> 0:04:53.279 color orange. It's that easy. 0:04:53.120 --> 0:04:59.120 Because the promax. No, it's designed. People buy the new designs. 0:04:59.160 --> 0:05:01.600 This is the first new in half a decade. You 0:05:01.720 --> 0:05:04.479 got it done. That's why you do new designs, because 0:05:04.520 --> 0:05:07.520 you're trying to bring in new customers. Why is for upgrades? 0:05:07.560 --> 0:05:08.640 And but that's the way to do it. 0:05:08.880 --> 0:05:09.599 Didn't they know that? 0:05:12.360 --> 0:05:14.000 Of course they know that. But it takes time to 0:05:14.040 --> 0:05:16.000 do these new designs, and you kind of want to 0:05:16.000 --> 0:05:18.159 get it right. And then you can't do it too 0:05:18.160 --> 0:05:21.120 often because if you do it too often, it doesn't 0:05:21.120 --> 0:05:23.560 have the power that it has if you do it 0:05:23.600 --> 0:05:24.560 only every so often. 0:05:24.839 --> 0:05:26.760 Hey, I want to roll into this a story you've 0:05:26.760 --> 0:05:29.600 got on the Bloomberg that you put out today, and 0:05:29.640 --> 0:05:32.200 this has to do with Apple buying the Israeli AI 0:05:32.400 --> 0:05:41.040 startup that interprets facial movement. QAI is this important. 0:05:41.360 --> 0:05:43.840 I think it's going to enable some features for future 0:05:43.839 --> 0:05:46.560 air pods and smart glasses and mixed reality headsets and 0:05:46.600 --> 0:05:50.680 all that, but it's not fundamental to the overall AI strategy, 0:05:50.960 --> 0:05:53.640 which I think they're still trying to figure out. Also, 0:05:53.920 --> 0:05:55.360 just one piece of the puzzle. 0:05:55.160 --> 0:05:57.520 Okay, Mark. Another story that you reported on this week, 0:05:58.240 --> 0:06:02.599 Apple's Tim Cook calls for a DS after Alex Pretti's 0:06:02.640 --> 0:06:07.520 shooting in Minneapolis. There's this thread that Tim Cook is 0:06:07.520 --> 0:06:10.560 trying to a needle that Tim Cook is trying to thread. 0:06:11.160 --> 0:06:12.839 He was at the White House on Saturday, and. 0:06:12.800 --> 0:06:15.960 They do a very good job. Why not the needle? Well, 0:06:16.000 --> 0:06:20.440 I think his statement was kind of worthless in some respects. 0:06:21.600 --> 0:06:24.080 I think that he spent I don't know if it's 0:06:24.120 --> 0:06:27.160 at a statement talking about how the president, the one 0:06:27.200 --> 0:06:30.760 who's overseeing the policies that led to the situation of Minneapolis, 0:06:31.760 --> 0:06:34.480 has his ears wide open to listen to feedback. I mean, 0:06:34.520 --> 0:06:37.839 I'm not sure that's what his employees, who are sort 0:06:37.880 --> 0:06:41.160 of revolting internally about this, we're looking for. I think 0:06:41.200 --> 0:06:43.159 they were looking for Tim Cook to take some sort 0:06:43.200 --> 0:06:46.960 of stand here, and he really didn't. You know. From 0:06:46.960 --> 0:06:51.080 his perspective is he's scared to upset Trump and get 0:06:51.200 --> 0:06:54.880 tariffs and other policies slapped onto Apple's business. So you'll 0:06:54.880 --> 0:06:57.680 see him continue to do what he's doing because this 0:06:57.839 --> 0:07:00.360 is not about taking a stand at this point for him, 0:07:00.400 --> 0:07:04.240 This is about protecting the underlying business. And the results 0:07:04.279 --> 0:07:07.680 speak for themselves. Underlying business seems pretty well protected, all right, like. 0:07:07.760 --> 0:07:09.160 We like to do, and you know we're going to 0:07:09.240 --> 0:07:10.760 go there. What do you think are the top two 0:07:10.800 --> 0:07:13.280 questions that's got to be asked on this call? 0:07:14.000 --> 0:07:15.480 They got to ask about AI and they got to 0:07:15.480 --> 0:07:20.080 ask about succession. I'm sure they're not going to though, 0:07:20.240 --> 0:07:22.600 I mean maybe AI, but like they're not going to 0:07:22.760 --> 0:07:25.560 ask about succession and risk not being invited back next 0:07:25.640 --> 0:07:26.800 quarter to ask more questions. 0:07:26.880 --> 0:07:28.640 Are they going to ask about him being at the 0:07:28.640 --> 0:07:30.320 White House to see the Millennia movie? 0:07:31.600 --> 0:07:34.040 Like I said, they don't want to risk being banned 0:07:34.080 --> 0:07:36.600 from asking questions next quarter, So no one's going to 0:07:36.600 --> 0:07:38.600 ask anything that rocks the boat. All right, we'll see 0:07:38.680 --> 0:07:39.400 I hope I'm wrong. 0:07:39.800 --> 0:07:42.200 Okay, great stuff as always, and we'll be looking for 0:07:42.240 --> 0:07:45.280 your reporting after that call as well. He is Mark, 0:07:45.320 --> 0:07:48.880 or he's thank you, Mark, Managing Editor for Global Consumer 0:07:48.920 --> 0:07:51.760 Tech for Bloomberg News. Out there out there on the 0:07:51.800 --> 0:07:52.480 West Coast. 0:07:53.920 --> 0:07:56.680 Stay with us. More from Bloomberg Business Week Daily coming 0:07:56.760 --> 0:07:57.680 up after this. 0:08:01.280 --> 0:08:05.200 If you're listening to the Bloomberg Business Weekdaily podcast, catch 0:08:05.280 --> 0:08:08.520 us live weekday afternoons from two to five pm Eastern. 0:08:08.640 --> 0:08:11.680 Listen on Apple CarPlay and Android Auto with the Bloomberg 0:08:11.760 --> 0:08:15.200 Business app, or watch us live on YouTube. 0:08:15.520 --> 0:08:17.360 Well, let's bring in Ed Ludlow. He's the cost of 0:08:17.560 --> 0:08:20.080 Bloomberg Tech on Bloomberg TV. He joins us from our 0:08:20.120 --> 0:08:21.480 San Francisco bureau. 0:08:21.720 --> 0:08:21.800 Ed. 0:08:21.840 --> 0:08:25.720 The story from Mark German is out sales trouncing estimates 0:08:25.720 --> 0:08:29.600 after iPhone fuels record quarter. Tim Cook called the demand 0:08:29.680 --> 0:08:34.120 quote unprecedented. Is this all about the iPhone doing well 0:08:34.160 --> 0:08:34.840 around the world? 0:08:35.520 --> 0:08:38.199 Yeah, all about the iPhone, And in some ways it's 0:08:38.200 --> 0:08:40.120 like an issue of chronology and timing. 0:08:40.200 --> 0:08:40.360 Right. 0:08:40.440 --> 0:08:44.280 Think about when Apple announces the iPhone seventeen generation and 0:08:44.320 --> 0:08:47.360 we're all there in Cooper Tino for it, and then 0:08:47.400 --> 0:08:49.480 it goes on sale when you have the holiday quarter, 0:08:50.000 --> 0:08:52.640 so you know, actually it goes a little bit beyond that. Yeah, 0:08:52.679 --> 0:08:55.440 you know, this is where the Bloomberg terminal comes in useful. 0:08:55.760 --> 0:08:57.680 So that is a big beat. You can just see 0:08:57.679 --> 0:09:00.360 it looking at the headline on a dollar basis. But 0:09:00.440 --> 0:09:04.440 not only is it nine percent above consensus even the 0:09:04.480 --> 0:09:06.679 top end of the most bullish ranges on how this 0:09:06.760 --> 0:09:10.400 iPhone would do, we're only about eighty one billion dollars. 0:09:10.840 --> 0:09:13.280 I think it came in above eighty five billion dollars. 0:09:13.600 --> 0:09:16.560 So they've done something. Either the phone has got traction 0:09:17.480 --> 0:09:19.640 or they've done something smart with the timing of it 0:09:19.880 --> 0:09:22.880 and it's sold well. The bit that's missing, of course, 0:09:22.960 --> 0:09:25.880 is that that commentary does not have anything specific to 0:09:25.880 --> 0:09:28.720 do with Greater China. We know the numbers in Greater 0:09:28.840 --> 0:09:31.640 China are really good, but how did this iPhone do there? 0:09:33.040 --> 0:09:36.040 Yeah, like, is it just WHOA just a good quarter 0:09:36.160 --> 0:09:38.760 or do was it luck or was it really strategy? 0:09:38.880 --> 0:09:39.160 Right? 0:09:39.360 --> 0:09:43.320 I've understod I'm super cautious because sometimes we've relied on 0:09:43.440 --> 0:09:46.920 third party data, like you know, I won't name it, 0:09:46.920 --> 0:09:48.520 it would be a bit unfair, but there are various 0:09:48.559 --> 0:09:52.400 third party data sets that say, oh no, Apple's doing 0:09:52.440 --> 0:09:53.079 really bad. 0:09:52.920 --> 0:09:55.040 And knows what you're talking about. 0:09:55.040 --> 0:10:00.480 It's okay, okay, I'll stick to my guns, you know. 0:10:00.520 --> 0:10:03.560 And then Apple comes around with earnings and the opposite 0:10:03.640 --> 0:10:07.440 has been true on more than one occasion. But this occasion, 0:10:07.520 --> 0:10:10.720 like the third party data, this sort of incremental and 0:10:10.720 --> 0:10:13.520 anecdote or of people queuing up for the iPhone seventeen 0:10:13.760 --> 0:10:16.440 in all markets, but like Greater China, it was kind 0:10:16.440 --> 0:10:20.079 of there. So that's interesting. Where else do you want 0:10:20.080 --> 0:10:21.560 to go? I mean this, you know, this is Apple. 0:10:21.640 --> 0:10:23.480 There's anything we want to go to AI? 0:10:23.960 --> 0:10:24.800 Because you want to. 0:10:24.800 --> 0:10:26.400 Ask me about the thing that they have nothing to 0:10:26.440 --> 0:10:26.920 say about that? 0:10:27.200 --> 0:10:28.680 Yeah, sure, thanks jam. 0:10:28.720 --> 0:10:30.480 Every analyst has really pointed to that. I mean, we 0:10:30.559 --> 0:10:33.320 can we can talk about the relationship that Apple has 0:10:33.360 --> 0:10:35.640 with Google and Progemini. We could talk about all the 0:10:35.640 --> 0:10:40.200 money going to Open AI potentially from Amazon and other companies, 0:10:40.240 --> 0:10:43.400 about a potential one hundred billion dollar fundraising around. We 0:10:43.400 --> 0:10:46.280 could talk about Apple relying on third parties rather than 0:10:46.480 --> 0:10:49.800 building its own Is there a risk in doing that? 0:10:51.280 --> 0:10:53.079 I go back to basics, and you know, I kind 0:10:53.080 --> 0:10:56.199 of rely on Bloomberg's Mark Gumman, who is one of 0:10:56.240 --> 0:10:59.160 the world's leading journalists when it comes to covering not 0:10:59.200 --> 0:11:02.840 just Apple, but can Humor, electronics, and in the context 0:11:02.840 --> 0:11:05.680 of this earnings print. What he's written is probably true 0:11:06.080 --> 0:11:10.679 that Apple has done enough to mask over or allay 0:11:10.800 --> 0:11:14.000 the concerns that investors have about a lack of progress 0:11:14.000 --> 0:11:17.640 in AI as a product. You know, the reporting's quite clear, 0:11:18.080 --> 0:11:20.480 and it's been announced now officially, right that at least 0:11:20.480 --> 0:11:25.120 on the interim, Apple's AI generation of Siri will be 0:11:25.200 --> 0:11:28.480 underpin underpinned by Gemini. And Mark's reported a lot about 0:11:28.520 --> 0:11:32.119 the financials around that, right, it's a one billion perannum agreement. 0:11:33.000 --> 0:11:35.520 We don't we don't and we won't get this sort 0:11:35.559 --> 0:11:38.080 of announcement like here it is, here's the date it's coming, 0:11:38.200 --> 0:11:41.280 and this is what it can do until it's here. 0:11:41.480 --> 0:11:43.160 You know, that's not how Apple operates. 0:11:45.520 --> 0:11:50.280 Yeah, it's just you know, I mean it's pretty like 0:11:50.800 --> 0:11:52.080 where do you go? Where do you go? 0:11:53.440 --> 0:11:53.640 You know? 0:11:53.840 --> 0:11:56.280 Here we are looking. I mean, the stock isn't up 0:11:56.320 --> 0:11:58.520 as much as it was earlier. We were talking about, 0:11:58.559 --> 0:12:00.600 you know, more than a two percent gain I think 0:12:00.600 --> 0:12:03.240 at its highs here in the aftermarket, it's just up 0:12:03.280 --> 0:12:06.120 about three quarters of one percentage point. What is it 0:12:06.160 --> 0:12:09.439 that they need to do? Maybe on the call? Is 0:12:09.480 --> 0:12:12.400 it AI? Is it that this is sustainable. This is 0:12:12.440 --> 0:12:15.280 a strategy. This is you know, we figured out China, 0:12:15.520 --> 0:12:16.320 Like what is it? 0:12:17.160 --> 0:12:20.599 Well, you know that I didn't forgive me because I 0:12:21.000 --> 0:12:22.560 was blogging. I didn't hear what you guys were talking 0:12:22.559 --> 0:12:27.000 about just before. But in this very limited earnings release 0:12:27.080 --> 0:12:29.400 and statement, you guys maybe you went over the risk 0:12:29.440 --> 0:12:30.320 factors and forward looking. 0:12:30.520 --> 0:12:32.640 Yeah, we talked about that. We talked about that, you know, 0:12:32.679 --> 0:12:34.920 I talked about how you started pointing that out back 0:12:34.960 --> 0:12:36.280 in May of last year. 0:12:36.640 --> 0:12:38.880 Middle in May of last year, I was sat next 0:12:38.880 --> 0:12:41.160 to the you two in New York studio, do you remember, 0:12:41.200 --> 0:12:42.840 and we were like, oh, well, that's interesting, and they've 0:12:42.840 --> 0:12:43.600 never said that before. 0:12:43.880 --> 0:12:46.439 But that was only your first report post Liberation Day. 0:12:47.120 --> 0:12:49.800 Right that. The only observation I'll make in line with 0:12:49.840 --> 0:12:53.000 that is that this release also says nothing about the 0:12:53.120 --> 0:12:57.760 environment for memory chips. And you know, like memory chip 0:12:57.800 --> 0:12:58.680 prices are very. 0:12:58.600 --> 0:13:01.239 High, but their market was so sad, right. 0:13:01.360 --> 0:13:04.160 And their margins were pretty good, and there's a scarcity, 0:13:04.240 --> 0:13:07.040 and that the principal difference is like this, This is 0:13:07.040 --> 0:13:09.360 why it's so fun to cover hardware companies, and it's 0:13:09.360 --> 0:13:11.839 a privilege to be a technology journalist when you get 0:13:11.880 --> 0:13:14.800 access to all these companies and speak to the CEOs. 0:13:15.240 --> 0:13:18.080 If you're a very big company, you have leverage with 0:13:18.160 --> 0:13:21.040 your supply base. If a supplier has to choose, I've 0:13:21.040 --> 0:13:23.320 got this number of things, and I can only send 0:13:23.360 --> 0:13:25.000 them here, or I can send them there, or I 0:13:25.000 --> 0:13:28.160 can split. It helps to be Apple, is what I'm saying. 0:13:28.400 --> 0:13:31.320 And there are companies that I've covered whose CEOs you know, 0:13:31.360 --> 0:13:34.240 will privately just agonize over how difficult it is to 0:13:34.320 --> 0:13:36.800 convince supplies to give them the things they need. So 0:13:37.000 --> 0:13:38.719 on the call that will come up, you know, the 0:13:38.880 --> 0:13:40.600 cell sider likely to ask about it. 0:13:40.960 --> 0:13:43.880 But you know there are high prices, and then there's 0:13:43.920 --> 0:13:46.440 Apple dealing with high prices. And when I asked Mark 0:13:46.480 --> 0:13:49.440 this question about how they were able to successfully navigate 0:13:49.440 --> 0:13:52.760 these higher memory prices, he said, well, one they're Apple, 0:13:52.800 --> 0:13:55.400 and two they buy so far in advance, and they 0:13:55.400 --> 0:13:58.080 buy the components too that go in. So at a 0:13:58.080 --> 0:14:00.959 certain point ed it hit them right. 0:14:02.200 --> 0:14:08.559 Well, it's not just that the memory prices are high. 0:14:09.200 --> 0:14:12.439 The reason that memory prices are high is that historically 0:14:12.480 --> 0:14:17.520 memory dram and and flash memory is a very cyclical 0:14:17.679 --> 0:14:20.360 up and down business boom and bust. You know, That's 0:14:20.360 --> 0:14:22.560 what Iaan King would say, boom and bust In King 0:14:22.640 --> 0:14:26.760 leads our semiconductor coverages right at at Bloomberg. And it 0:14:26.880 --> 0:14:30.200 is correct that Apple's supply chain teams are its secret source. 0:14:30.240 --> 0:14:30.400 You know. 0:14:30.440 --> 0:14:32.600 That was Tim Cooks whole thing. He was coo like, 0:14:32.600 --> 0:14:36.160 that's what he was good at. But the reason prices 0:14:36.160 --> 0:14:39.680 are high is because of scarcity of availability, you know, 0:14:40.000 --> 0:14:42.680 because there is such demand for the equivalent chips that 0:14:42.720 --> 0:14:46.040 are going to data centers. And so, like Mark's answer 0:14:46.080 --> 0:14:49.000 is appropriate. Apple has leverage and the ability of scale 0:14:49.320 --> 0:14:52.080 to say like, okay, we have got ahead of this, 0:14:52.560 --> 0:14:54.880 and one would imagine that their supply chain team is 0:14:54.960 --> 0:14:58.520 sophisticated enough to have foreseen some of the things that 0:14:58.520 --> 0:15:00.040 we're now experiencing in that man. 0:15:01.040 --> 0:15:04.000 So one one the first thing Mark said to us, 0:15:04.720 --> 0:15:06.480 I no, no, you were blogging ed and you were 0:15:06.520 --> 0:15:10.040 you were looking at the results. Was Tim Cook just 0:15:10.080 --> 0:15:12.600 bought himself time? Tim Cook gets to keep his job. 0:15:13.200 --> 0:15:16.120 I mean, there's been a lot of questions about succession. 0:15:16.240 --> 0:15:18.280 Mark says, That's one of two questions he would ask 0:15:18.280 --> 0:15:21.200 on the call. The other would be about AI. In 0:15:21.240 --> 0:15:24.760 your view, was was his job not not at risk? 0:15:24.880 --> 0:15:28.040 But you know there are questions about who leads this 0:15:28.120 --> 0:15:29.280 company after Tim Cook. 0:15:31.360 --> 0:15:38.000 I am not Bloomberg's Mark Gum nor am I right? 0:15:38.200 --> 0:15:42.440 Is that when Mark did that recent reporting and it's 0:15:42.480 --> 0:15:45.640 been it's been over a period of time about which 0:15:45.720 --> 0:15:49.640 executives are now more at the forefront of Apple's future, 0:15:50.160 --> 0:15:53.280 he was crystal clear in that reporting that there is 0:15:53.400 --> 0:15:58.760 no suggestion that Tim Cook being replaced or stepping down 0:15:58.840 --> 0:16:02.880 or retiring is imm and you know that this was 0:16:02.880 --> 0:16:06.840 a longer term thing. What I would reflect on is 0:16:06.880 --> 0:16:09.480 the conversations that I have with people in industry and 0:16:09.520 --> 0:16:12.080 those that come on the show and talk about it, 0:16:12.120 --> 0:16:16.600 is you know, Tim Cook is the operator that many 0:16:16.640 --> 0:16:20.240 people would want. In an environment like this where we 0:16:20.320 --> 0:16:24.800 still have trade and tariff considerations, the movement of goods 0:16:24.840 --> 0:16:27.600 between borders from point A to point B is quite difficult. 0:16:28.560 --> 0:16:31.800 And as we just talked about, you know, like specifically 0:16:31.840 --> 0:16:35.360 memory pricing, that's within his you know, his range. This 0:16:35.440 --> 0:16:37.480 is not me speaking, This is how people would relay 0:16:37.520 --> 0:16:40.640 it to me. Mark when he goes on air and 0:16:40.680 --> 0:16:42.760 when he writes, and again I'm not speaking on his behalf, 0:16:43.000 --> 0:16:45.360 he would talk a lot more about the product, you know, 0:16:45.520 --> 0:16:49.360 fresh products reiterated and renewed products and the product pipeline 0:16:49.400 --> 0:16:52.640 for the future, and right now, I don't know that 0:16:52.680 --> 0:16:55.600 people are necessarily so worried about that, at least in 0:16:55.640 --> 0:16:57.760 my world, they are worried about when they're going to 0:16:57.760 --> 0:16:59.240 get the software bit right with AI. 0:16:59.720 --> 0:16:59.920 You know. 0:17:00.000 --> 0:17:02.360 So it's interesting, you say AI. It's something we talked 0:17:02.360 --> 0:17:05.439 about just briefly with Mark German. It's a story that 0:17:05.480 --> 0:17:08.080 he put out Apple Buys is really AI startup that 0:17:08.160 --> 0:17:12.720 interprets facial movements. He's like, you know, interesting will help 0:17:12.760 --> 0:17:15.560 in terms of I guess product development, but not necessarily 0:17:16.880 --> 0:17:19.480 a big, big deal. But you know, what is the 0:17:19.560 --> 0:17:21.800 number one question from that they should be getting on 0:17:21.840 --> 0:17:23.040 the call when it comes to AI. 0:17:23.920 --> 0:17:27.040 Yeah, you know, if I had the opportunity to interview 0:17:27.160 --> 0:17:28.960 Tim Kirk, and let me be honest about it, I 0:17:29.000 --> 0:17:32.639 haven't had that opportunity or in any other of Apple executive. 0:17:33.400 --> 0:17:36.280 You know, the big question is in the future, what 0:17:36.480 --> 0:17:38.679 is the form factor by which we interact with our 0:17:38.760 --> 0:17:44.959 official intelligence, in particular voice based AI assistance? Right For 0:17:45.000 --> 0:17:47.080 the most part, I use and I don't know about 0:17:47.080 --> 0:17:51.040 you guys, but I use chat GPT's voice mode quite 0:17:51.040 --> 0:17:53.880 a lot on my phone, and I use other generative 0:17:53.920 --> 0:17:57.399 AI tools through my laptops. And because I'm a nerd, 0:17:57.440 --> 0:18:00.439 and because Bloomberg issues me different things, I have my 0:18:00.480 --> 0:18:03.320 own MacBook and I have a Windows based PC. Right, 0:18:04.040 --> 0:18:06.199 there are other people that envisage a world where the 0:18:06.240 --> 0:18:09.520 form factor device, the thing that we interact with is 0:18:09.560 --> 0:18:12.679 not a phone. It's the glasses per Meta, And look 0:18:12.760 --> 0:18:17.400 at the surprise upside from Meta's earnings about aiglasses tripling. 0:18:17.760 --> 0:18:20.119 You know, That's what i'd ask Apple, what do you 0:18:20.160 --> 0:18:22.760 see in the future about how people use your AI? 0:18:23.680 --> 0:18:25.320 So and we have one time for one more question, 0:18:25.400 --> 0:18:27.560 and we'd be really remiss if we didn't ask you 0:18:27.560 --> 0:18:30.199 your view on Amazon. This news coming just late in 0:18:30.200 --> 0:18:32.720 the day, switching gears a little bit still on AI. 0:18:32.760 --> 0:18:36.080 Amazon talk and talks to invest fifty billion dollars and 0:18:36.240 --> 0:18:39.640 open ai expandize. This could be part of a one 0:18:39.720 --> 0:18:45.920 hundred billion dollar funding round, which would value open ai 0:18:46.119 --> 0:18:49.000 at more than eight hundred billion dollars. When we're talking 0:18:49.040 --> 0:18:51.399 about a funding round of one hundred billion dollars, I 0:18:51.400 --> 0:18:56.159 mean we're talking about just the massive, massive scale. What 0:18:56.200 --> 0:18:59.800 does it mean that that Amazon could invest this much money. 0:19:00.800 --> 0:19:04.320 Well, Amazon probably can invest that much money. You know, 0:19:04.480 --> 0:19:07.320 what we've seen is most of the hyperscalers that were 0:19:07.320 --> 0:19:11.399 wedded to one player have diversified, and Thropic and Microsoft 0:19:11.400 --> 0:19:14.760 have deepened their interaction. And Thropic was very heavily aligned 0:19:14.760 --> 0:19:18.880 with Amazon. Google and Anthropic have very heavily aligned. Afropic 0:19:18.960 --> 0:19:23.200 relies on TPUs. Amazon, from a software perspective, has tried 0:19:23.200 --> 0:19:25.680 to accommodate all the players on its Bedrock platform, which 0:19:25.720 --> 0:19:28.760 is basically a workplace where you can either train or 0:19:29.040 --> 0:19:32.680 build on top of existing models. So the financials are there, 0:19:32.720 --> 0:19:35.480 like if you if people are watching that are investors 0:19:35.520 --> 0:19:38.080 in those companies, phone me explain the dilution to me, 0:19:38.480 --> 0:19:43.280 explain the post and pre money valuation. But open ai 0:19:43.359 --> 0:19:47.760 needs capital. It is coming from multiple places apparently, and 0:19:48.119 --> 0:19:50.720 one would imagine based on the reporting that's been done 0:19:50.720 --> 0:19:54.359 by Bloomberg and others, this is a big, large anchor 0:19:54.440 --> 0:19:57.480 round before a future IPO as well of some part 0:19:57.560 --> 0:19:58.679 of the open ai entity. 0:19:58.840 --> 0:20:01.600 The scale is just other words, the amounts of money 0:20:01.600 --> 0:20:02.800 that we're talking about right now. 0:20:03.119 --> 0:20:05.800 Yeah, just kind of close our mind. Yeah, all right, 0:20:05.920 --> 0:20:08.800 we get a run. We know you're gonna be we 0:20:08.880 --> 0:20:11.840 know the Apple call, what the Analyson investors is coming 0:20:11.920 --> 0:20:13.480