Speaker 1: From Mahard where Innovation, Money and power Collie in Silicon
Speaker 1: Vallet NBN. This is Bloomberg Technology with Caroline Hyde and
Speaker 1: Ed Ludlow.
Speaker 2: I'm Caroline Heider Bloomberg's World headquarters in New York.
Speaker 3: And I'm Ed Ludlow live in cu Patino here at
Speaker 3: the Apple campus. Behind me the Steve Jobs Theater. This
Speaker 3: is a special Bloomberg Technology for coverage of Apple's iPhone event.
Speaker 2: So much to digest coming up on this program. We'll have,
Speaker 2: of course, that extended coverage on apple It's product launch
Speaker 2: as the company of course spaces internal chip delays, restrictions
Speaker 2: in China and a shifting supply chain. Will break down
Speaker 2: everything you need to know and will cover Google's biggest
Speaker 2: antitrust challenge yet that is the Department of Justice and
Speaker 2: thirty five US states through the Search Chime, accusing it
Speaker 2: of maintaining a monopoly over the search market. Or details ahead,
Speaker 2: and we'll hear from Endeavor president as Mark Shapiro. As
Speaker 2: the company completes it's takeover a WWE and combines it
Speaker 2: with UFC to create a newly publicly traded fighting giant
Speaker 2: will talk for streaming implications all that and so much
Speaker 2: more ahead. But first and foremost, we've got to be
Speaker 2: discussing what's happening in the world of Apple. And this
Speaker 2: really is an exciting time in terms of the fifteen launch.
Speaker 2: I almost feel we know exactly what to anticipate. We
Speaker 2: always know. Our reporting is so strong here at Bloomberg,
Speaker 2: but there is a lot of headwinds facing Apple. Do
Speaker 2: you think that we can see the tailwinds today?
Speaker 3: Yeah, And it's why the iPhone is everything. That's kind
Speaker 3: of the key of what we're expecting. Four variants of
Speaker 3: the next generation iPhone fifteen, a base model, an iPhone
Speaker 3: fifteen plus, and then a Pro and Pro Max. And
Speaker 3: as you know, Caro, Apple kind of reserves its biggest
Speaker 3: technological updates for those Pro lines. Higher price point it
Speaker 3: raises the average selling price. Is it enough to convince
Speaker 3: the consumer to upgrade? We know there are tens, if
Speaker 3: not hundreds of millions of older generation iPhone handsets out there.
Speaker 3: Are they going to be able to boost volumes or
Speaker 3: are they going to rely on higher prices?
Speaker 4: That's going to be a key question.
Speaker 2: And now are we going to see revenues start to
Speaker 2: increase again? This is of course the key to two
Speaker 2: hundred billion dollar juggernaut of Apple's revenue, that is the phone.
Speaker 2: Let's dig into it always, So please to welcome Mark
Speaker 2: Gammon to the show, of course, who has already kind
Speaker 2: of braced us for what to expect throughout the announcements.
Speaker 2: But is it all about getting them to pay a
Speaker 2: higher price point? Mark?
Speaker 5: Certainly, Apple is pushing, like Ed said, it's latest features
Speaker 5: and advancements to the higher end models. Right, They're going
Speaker 5: to be differentiating the Pro models from the non Pro
Speaker 5: models more than ever. Right, And on top of that,
Speaker 5: the highest and the most expensive Pro model, the iPhone
Speaker 5: fifteen Pro Max, is going to have additional features like
Speaker 5: a periscope camera, which essentially means it can have a
Speaker 5: much wider range of zoom using hardware, so being able
Speaker 5: to zoom in double the amount you could on the
Speaker 5: regular fifteen Pro without degrading the quality of the image.
Speaker 5: So certainly they're pushing people to the top with the
Speaker 5: better cameras, titanium and faster performance.
Speaker 3: You know, Mark, there's a big emphasis on the higher
Speaker 3: end processor for the Pro and Promax. Right a seventeen
Speaker 3: You've reported about Apple's latest generation processor additional memory, So
Speaker 3: there's a compute factor there, but there's also a battery
Speaker 3: life factor. And then, of course, not of Apple's own volition,
Speaker 3: a European Union mandate for USBC taughts us about what
Speaker 3: you've reported on those two items.
Speaker 5: Yeah, the three and nanimeter chip, this is going to
Speaker 5: be Apple's first three nanimeter component. This is a chip
Speaker 5: manufactured by TSMC, and what three nanimeter allows is better
Speaker 5: battery life and better efficiency. So you'll see some battery
Speaker 5: life upgrades on the fifteen Pro and fifteen Promacs.
Speaker 4: Because of that. And of course back.
Speaker 5: To that differentiation point, the higher end phones will get
Speaker 5: that A seventeen, whereas the lower end, the fifteen and
Speaker 5: fifteen plus the two entry level phones, those will both
Speaker 5: get the A sixteen from the fourteen Pro and fourteen
Speaker 5: Promacs from last year. And in terms of USBC, all
Speaker 5: four models will get USBC instead of Lightning. But there
Speaker 5: is a little bit of a trick here because the
Speaker 5: Pro models they're going to get USBC with faster data
Speaker 5: transfer speeds, which would be good if you take very
Speaker 5: high resolution video on the Pro models to connect them
Speaker 5: to your computer and transfer them over a cable, you'll
Speaker 5: be able to do that at a much faster rate
Speaker 5: with some specialized thunderbalk cables than you would on the
Speaker 5: regular models. So certainly the talk of today will be
Speaker 5: how the pro models are going to have extra bells
Speaker 5: and whistles to really bring people up to the higher
Speaker 5: end models.
Speaker 3: Great, so all those lightning cables I've been accruing since
Speaker 3: twenty twelve are now completely redundant, thank you to Bloomberg's
Speaker 3: Mark Gum. And We're just getting started here in Koopertino,
Speaker 3: and I'm delighted to bring in creative strategies principle analysts.
Speaker 3: Carolina Milianacy. We will get to the USBC debate. I
Speaker 3: think the big discussion we've had on Bloomberg technology has
Speaker 3: been there is an unknown number of older generation iPhone
Speaker 3: out there, if it's the tens of millions or hundreds
Speaker 3: of millions we've reported, and what we think is coming
Speaker 3: is the technology upgrade enough to spur this genuine upgrade cycle.
Speaker 6: I think it is if you know all the rumors
Speaker 6: play out. You know Mark was talking about moving people
Speaker 6: to the higher price point. I think there's two markets, right,
Speaker 6: you have the early adopters and the pro users that
Speaker 6: can do that, but then you have a huge base
Speaker 6: of people that have devices that are four or five
Speaker 6: years old that need to continue to go on that path.
Speaker 6: So creating more separation between the pro model and the
Speaker 6: non pro model is critical to get those people to
Speaker 6: move up.
Speaker 3: As you know, I focus a lot on the technology
Speaker 3: from a sort of processor compute standpoint that actually switching
Speaker 3: to titanium sides or edges is interesting. Why would that
Speaker 3: make a difference in the smartphone market?
Speaker 6: I can tell you that from just from a consumer perspective,
Speaker 6: getting into a store and holding one of those new
Speaker 6: phones is the most tangible expression of the phone being different. Right,
Speaker 6: weight on something that you use so much during the
Speaker 6: day makes a difference. It might also invite some people
Speaker 6: to go to the larger PHM factor because the weight
Speaker 6: is no longer the factor that is deciding whether or
Speaker 6: not you want to carry something that heavy. There's obviously
Speaker 6: sustainability story as well linked to titanium, and it'd be
Speaker 6: interesting to see how far Apple is going to push
Speaker 6: by a sustainability story today.
Speaker 4: Us b C did Apple wait too long?
Speaker 3: European Union mandate is the end of twenty twenty four deadline.
Speaker 4: They're going now what impact will that have.
Speaker 6: It makes it easier for people that are within the ecosystem.
Speaker 6: You know, it's one less cable. But as Mark was
Speaker 6: talking about, for the pro version, if it does do
Speaker 6: the higher data is nicer for creators rights, actually useful.
Speaker 6: It's not just about doing the mandate for for the requirement.
Speaker 6: It'd be interesting to see how they spin the story
Speaker 6: because we all been waiting, you know, and from a
Speaker 6: portfolio perspective, you know, the iPad has it, but the
Speaker 6: phone does it, and so you start to see, you know,
Speaker 6: discrepancies within the portfolio. Now we have one cable across
Speaker 6: the board. I'm sure that the AirPods will also get
Speaker 6: a new KSE with the USBC.
Speaker 2: I am all in on one cable. Carolina, tell me
Speaker 2: a little bit about how they're going to spin the
Speaker 2: green element. You just took us there a little bit,
Speaker 2: the sustainability narrative. Feel as though that's going to creep
Speaker 2: into the watches as well.
Speaker 6: It seems so with material and there's been a lot
Speaker 6: of speculation about abandoning lever, both with their own bends
Speaker 6: and with the relationship with Hermes, and I think that
Speaker 6: if you look at Apple's DNA around sustainability. They always
Speaker 6: had a very strong story. They have a goal to
Speaker 6: be carbon neutral by twenty thirty across their supply chain
Speaker 6: and products. They already carbon neutral for their own operations
Speaker 6: already today, and so it'd be interesting to see whether
Speaker 6: the material is one aspect of it. We saw the
Speaker 6: badges today are all recycled. There's no plastic in today's
Speaker 6: events badges. So it seems like sustainability is definitely going
Speaker 6: to be a story.
Speaker 2: What about the watch in general? How much are they
Speaker 2: continuing to want to innovate on that particular product. How
Speaker 2: important is it to them.
Speaker 6: It's a very important product to them, just because health
Speaker 6: and fitness is an important story to tell, and they
Speaker 6: have made a huge impact. It's been interesting to see
Speaker 6: how much the ultra version of the watch as taking
Speaker 6: consumers by storm. It's not just for the fitness when
Speaker 6: you know, we were talking about this actually on the
Speaker 6: program program and said, there's a lot of wanna bees
Speaker 6: health and fitness people that will buy this watch. So
Speaker 6: for Apple is another way too lot customers in and
Speaker 6: I know that they hate that term, but it's true.
Speaker 6: You know, if you have your phone and your watch
Speaker 6: is harder for you to move away and move to
Speaker 6: a different brand and ecosystem.
Speaker 3: Karlina, the company story for Apple has really been China.
Speaker 3: In the June quarter, it was recording greater China eight
Speaker 3: percent growth when there was overall decline. How important is
Speaker 3: this iPhone fifteen for that market? Does it get traction
Speaker 3: with the consumer in China?
Speaker 2: It's very important.
Speaker 6: And I think the story about the processor for the
Speaker 6: Maxis and the pro is important for China. China has
Speaker 6: always been a market that is more about real technology
Speaker 6: and so processors or something, but they look at very
Speaker 6: closely versus design and material. So I think that separating
Speaker 6: that pro line with a different processor, with a dedicated
Speaker 6: processor that can give you more is going to be
Speaker 6: really critical for China.
Speaker 3: Caroline and middle Lesi create a strategies principle analysts, This
Speaker 3: is a strong start, Carriac to US coverage for Bloomberg
Speaker 3: Technology to Apple's iPhone events.
Speaker 2: Let's talk about Google facing its biggest antitrust challenging yet
Speaker 2: over accusations it's maintained a monopoly over the search market
Speaker 2: via of course, those agreements with tech rivals. The company
Speaker 2: facing a pair of lawsuits by the US Justice Department
Speaker 2: and state attorneys general that could result in perhaps even
Speaker 2: the breakup of the twenty five year old search chant
Speaker 2: for more. That's bringing Jennifer and Wee Bloomberg Intelligence senior
Speaker 2: litigation analyst who's been listening in already some opening statements.
Speaker 2: Does this feel reminiscent to the nineties?
Speaker 4: You know?
Speaker 7: It does?
Speaker 8: It really does.
Speaker 9: And there's so many parallels being brought to the big,
Speaker 9: huge case against Microsoft that I think we all know about.
Speaker 9: And the thing is it is similar. You know, there
Speaker 9: are allegations, you know, Microsoft was entering into agreements to
Speaker 9: try to block out Netscape and Java, and the allegation
Speaker 9: here is that Google's entering agreements to try to block
Speaker 9: out Bright like being in duc, dot Go other companies
Speaker 9: that people would use to search the Internet. Right, So
Speaker 9: there are a lot of similarities there, but there are
Speaker 9: also some very big differences because of what these tech
Speaker 9: companies have learned from the Microsoft case.
Speaker 2: And to that end, the argument's going to be coming
Speaker 2: from Alphabet, the parent company of Google. Are they in
Speaker 2: any way going to diverge from basically what we learned
Speaker 2: to the nineteenth Yeah? I think so.
Speaker 9: Look, they're going to say we've done nothing to prevent
Speaker 9: anybody from using being or duc dot Go to search
Speaker 9: the internet. You know, in Microsoft's case, it made it
Speaker 9: very difficult for anybody using a Microsoft PC to download
Speaker 9: and use Netscape right as a browser. They technically made
Speaker 9: it difficult, you could not do it. But in this case,
Speaker 9: actually it's quite easy to change your default search engine.
Speaker 9: Google may have that agreement to start as the default
Speaker 9: when you buy your device, but you can go in
Speaker 9: and change your device. So it's questionable as to whether
Speaker 9: is this really foreclosing Google competitors or isn't it And
Speaker 9: so we're going to have to see how that testimony
Speaker 9: comes out about how sticky it is to be the default,
Speaker 9: how much users actually do switch back and.
Speaker 2: Forth, And isn't it interesting that's coming all at this
Speaker 2: moment where we're suddenly thinking the monopoli is under attack
Speaker 2: from chat GPT four, the idea that AI is really
Speaker 2: it's the competitor of choice now.
Speaker 7: You know.
Speaker 9: The interesting thing about technology is that the markets can
Speaker 9: change so quickly and so drastically, you know, And this
Speaker 9: is one of the things that all the tech companies
Speaker 9: will claim. Look, I may have a monopoly now, but
Speaker 9: this could change any day. And we're always trying to
Speaker 9: hold onto our position and technology changes and you really
Speaker 9: can't judge it sort of the way the antitrust laws
Speaker 9: are judging it right now.
Speaker 2: You know, you have to think about chat GBT.
Speaker 9: I tend to think chat gbt is a bigger threat
Speaker 9: to Google, actually Google Search than this particular trial.
Speaker 2: Interesting, Jenniferry, We're so pleased to have her hair from
Speaker 2: Blue Meg Intelligence, and we want to dig into the
Speaker 2: legal ramifications a little bit more, the arguments being set
Speaker 2: forth for Rebecca Allen'sworth, professor of Law. I've write, Vanderbilt,
Speaker 2: it is wonderful to have your perspective hair, Rebecca. And
Speaker 2: the track record thus far of the government in the
Speaker 2: antitrust case is it ain't been good? I mean, are
Speaker 2: embracing yourself that perhaps they could land this one.
Speaker 7: Well, all antitrust trials are really hard to win, and
Speaker 7: this is no different. The government's arguments are good, and
Speaker 7: I think that if they have a chance of winning
Speaker 7: in any case, they have a chance of winning in
Speaker 7: this one. I do take issue with the idea that
Speaker 7: their track record has been bad. It's true that they've
Speaker 7: lost a lot of cases in terms of the final outcome.
Speaker 7: But along the way there have been some important holdings
Speaker 7: that I think actually vindicate the current enforcement attitude that
Speaker 7: the FTC and the dj is taking.
Speaker 2: Let's dwell on that a little bit, because this isn't
Speaker 2: just about winning individual fights, but it's about sort of
Speaker 2: changing the narrative the leaning of how future FTCs as
Speaker 2: well and future administrations might just tackle big tech. Do
Speaker 2: you think that has changed?
Speaker 4: I think it has.
Speaker 7: I mean, there's a case from about fifteen years ago
Speaker 7: actually involving Google, in which the court said that there
Speaker 7: cannot be any antitrust harm in a market for which
Speaker 7: consumers don't pay for the product, and that is not
Speaker 7: likely to be the holding in this case because we've
Speaker 7: realized that free products aren't really so free. So that's
Speaker 7: just one example of how yes, it's it's it's changed
Speaker 7: over time in.
Speaker 2: Terms of the technicalities of this particular case. How do
Speaker 2: you think the arguments will land thus far? When you're
Speaker 2: hearing of the ten million being paid by Google to
Speaker 2: maintain basically key relationships with phonemakers, how do you think
Speaker 2: the alternatives are going to land coming from Google?
Speaker 7: Well, I think that they have some strong arguments too, honestly.
Speaker 2: So they're going to argue two things.
Speaker 7: They're going to say, first of all, we are big
Speaker 7: not because we have these exclusive dealing contracts, but we're
Speaker 7: big because we were better. Consumers have voted. That's what
Speaker 7: competition is supposed to do, and we won. We're the
Speaker 7: best search engine. They're also going to say that these
Speaker 7: are not actually exclusive dealing contracts. Competition is just a
Speaker 7: click away. This, I think is a less strong argument,
Speaker 7: and I do think this is a lot like the
Speaker 7: argument made in the Microsoft case, but kind of put together,
Speaker 7: there is an intuition that, you know, consumers really like Google.
Speaker 7: They're not downloading bing and Duck Duck go to their phones,
Speaker 7: and that's competition, so that will be hard to overcome
Speaker 7: for the government.
Speaker 2: We're looking at year to date chart of Alphabet shares
Speaker 2: right now about fifty four percent. It doesn't feel as
Speaker 2: though the investor and analyst community are particularly fretting over
Speaker 2: some sort of big breakup or impact to the overall
Speaker 2: revenue streams of this business. That's largely about where artificial
Speaker 2: intelligence takes us. But for the here and the NARRABECKA,
Speaker 2: do you think that some sort of risk does need
Speaker 2: to be factored in how do you think that people
Speaker 2: are bracing themselves.
Speaker 7: So I think as far as the market risk, I
Speaker 7: don't know that this trial poses a huge risk to
Speaker 7: Google's bottom line. And that's for a few different reasons.
Speaker 7: First of all, I think that they're more likely than
Speaker 7: not to win. I think that maybe speaks to the
Speaker 7: weakness of our antitrust laws.
Speaker 2: But the other thing is Google.
Speaker 7: Is big, and Google is dominant for reasons other than
Speaker 7: these exclusive of dealing contracts. I think a breakup is unlikely.
Speaker 7: I think even if the government wins, what they're going
Speaker 7: to get is an injunction against these contracts, and it's
Speaker 7: a small piece of why Google is so dominant. I
Speaker 7: think this trial matters more for precedent and for anti
Speaker 7: trust law and for what it means for the rest
Speaker 7: of tech.
Speaker 2: Rebecca, really great to get your expertise. We thank you
Speaker 2: so much. Rebecca Alla's were founderment law school professor. This
Speaker 2: one's going to roll on, so I have a feeling
Speaker 2: we'll be inviting her back. Meanwhile, coming up, Cage Matches,
Speaker 2: they've become part of a technology show much more than
Speaker 2: I ever envisioned. But let's have a look at WW
Speaker 2: and the UFC today combining as a public entity training
Speaker 2: on the New York Stock Exchange. I'm going to be
Speaker 2: discussing law within deva COO Mark Shapiro. That's next. This
Speaker 2: is blouly bout technology time now for talking tech. First up,
Speaker 2: arm preparing for the biggest IPO of the year, and
Speaker 2: its CEO is pitching investors a little bit of a pivot.
Speaker 2: Instead of focusing on chips for smartphones and other electronics
Speaker 2: that sell for pennies, Army is doing complex design work,
Speaker 2: it says, folks on specific products tailored for what sees
Speaker 2: as a key area of growth, of course, largely being AI. Currently,
Speaker 2: its listing is oversubscribed by ten times plus. Ali Baba
Speaker 2: will put artificial intelligence and user experience at the top
Speaker 2: of its priorities as its new leadership seeks to reclaim
Speaker 2: customers and indeed market share. CEO Eddi Wu laid out
Speaker 2: his vision in a memo to staff, stressing its approach
Speaker 2: to go AI first, while not forgetting the one hundreds
Speaker 2: of millions of users that helped create one of China's
Speaker 2: largest corporations. And senators here in America will question the
Speaker 2: nation's top technology leaders as Congress confronts thus posed by
Speaker 2: what they see as a rapid rise of artificial intelligence. Tomorrow,
Speaker 2: it's going to be a closed door inaugural AI forum.
Speaker 2: You're going to see these two gentlemen, Elon Musk, Mark Zuckerberg,
Speaker 2: also so of Pitchee and others who are going to
Speaker 2: be attending to ask questions and concerns of the burgeoning technology. Meanwhile,
Speaker 2: talking of those two individuals and Musk, remember we were
Speaker 2: all talking about cage matches. Well, we're talking also fighting
Speaker 2: more broadly, the billions of money it brings in Endeavor
Speaker 2: today completing its takeover ww and combining it with UFC
Speaker 2: to create a publicly traded fighting machine called TKO. That's
Speaker 2: technical knockout being the boxing term. Now, earlier I discussed
Speaker 2: the news with Endeavor and now TKO's COO and president,
Speaker 2: that's Mark Shapiro, and this is what he talked about
Speaker 2: in terms of competition taking.
Speaker 10: Listen, the market completely overreacted last week because ultimately piff
Speaker 10: came out said they were going to make one hundred
Speaker 10: million dollar investment.
Speaker 8: In the PFL. And you know what, We're fans of
Speaker 8: the BFL.
Speaker 10: We're fans of any entity that supports MMA for the UFC.
Speaker 10: Rising tide lifts all boats on this front, and the
Speaker 10: UFC is where everybody wants to get to. I mean,
Speaker 10: the UFC is really the NFL of combat sports. So
Speaker 10: when we welcome it, I think the overreaction was really.
Speaker 8: About fighter pay.
Speaker 10: If there's more and more competition and there's more and
Speaker 10: more brands coming to the table, is fighter pagan to
Speaker 10: get out of control and hurt UFC's margins.
Speaker 8: And it couldn't be farther from the truth.
Speaker 10: Because the real growth of UFC, the revenue growth, has
Speaker 10: been driven by high margin revenue streams such as our
Speaker 10: media deals and sponsorships, and at the end of the day,
Speaker 10: any fighter pay increase can be absorbed by the increases
Speaker 10: we're seeing in those revenue streams and results still in
Speaker 10: margin accretion.
Speaker 2: Let's talk about the board that of course, he said
Speaker 2: that you're going to be controlling, but there's a bit
Speaker 2: of a key man risk with being McMahon himself ofwe
Speaker 2: how do you see that and his real dedication as
Speaker 2: executive chair to the overall TKO.
Speaker 8: He's very similar to Dana White. I mean, Vince McMahon
Speaker 8: is very similar. He's a founder.
Speaker 10: He's a pioneer, he's an innovator, he's a hard charger,
Speaker 10: he's got unbelievable relationships, and he's grown this sport from
Speaker 10: nothing to be the global behemoth that it is. So
Speaker 10: I welcome him being executive chairman. Ari and I are
Speaker 10: very excited a partner with him. And just in the
Speaker 10: early days we haven't been able to kind of get
Speaker 10: in there and really integrate. We've already seen a willingness
Speaker 10: to do that. Terrific communication, terrific collaboration, and I think
Speaker 10: Vince really recognizes the areas of business he has undermonetized
Speaker 10: or his team is undermonetized. And that's why the merger,
Speaker 10: the partnership here, because we can teach them something, meaning
Speaker 10: UFC an endeavor and WW can surely teach us something.
Speaker 8: And at the end of the day, one plus one
Speaker 8: equals five.
Speaker 2: He's been subpoena though, is a legal risk.
Speaker 10: What I would say on that is, you know, federal
Speaker 10: law enforcement and regulatory agencies, they are doing their investigations
Speaker 10: and there will be due process and we're not going
Speaker 10: to get involved in that. Will stand by, well, listen,
Speaker 10: We'll take our cues. He'll be executive chairman. He'll do
Speaker 10: his day job and if somebody else tells us something we.
Speaker 8: Need to do differently or pivot course correct, we will.
Speaker 2: And let's talk about coursing and charting a course in
Speaker 2: this economic environment where you are seemingly very excited by
Speaker 2: the opportunities. Is two MONETI to get more brands in,
Speaker 2: but the grands are scared to spend money right now.
Speaker 2: The economy is volatile, to say the least. How do
Speaker 2: you see that?
Speaker 8: What I see in that is the thirty second spot.
Speaker 10: Traditional ad budgets are certainly being compromised, but from an
Speaker 10: activation standpoint, an experiential standpoint, which is where we sit right.
Speaker 10: We have three hundred and fifty events annually. We have
Speaker 10: a billion fans, we have a billion social followers. Advertisers
Speaker 10: wann't access to those fans.
Speaker 2: Meanwhile, we've got to talk Apple once again. We're going
Speaker 2: to join by Miravell Lopez, founder and principe analyst of
Speaker 2: Lopez Research. Her take and want to expect from the
Speaker 2: key event. This is bloom Meg Technology. Welcome back to
Speaker 2: blue Meag Technology. I'm karenin Hoied in New York. We
Speaker 2: are going to check in on these markets on the
Speaker 2: oral important day ahead of CPI print for macro, day
Speaker 2: of micro news when it comes to Apple. Look in
Speaker 2: the NAT one hundred, just off about two thirds and
Speaker 2: percentage point. There is a nervousness out there regarding some
Speaker 2: of the big macro headwinds and indeed, well some of
Speaker 2: the read across from earnings that I'll dig into in
Speaker 2: a moment. Bitcoin no actually getting a bit of a
Speaker 2: push hiret for almost five percent on the upside twenty
Speaker 2: six three hundred. And remember there's a lot of volatility
Speaker 2: in overall crypto as we anticipate whether there'll be FTX sales.
Speaker 2: But we also think that Franklin Templeton seems to be
Speaker 2: adding its weight into the rush to get a spot
Speaker 2: bitcoin ETF adding a little bit of well move music
Speaker 2: to the upside on Bitcoin. I'm looking at Bloomberg Commodity
Speaker 2: Index up a ten percent despite a stronger dollar today.
Speaker 2: That's more about the strength of oil and OPEC saying
Speaker 2: they're seeing these type markets. Let's move on from the
Speaker 2: macro to the micro pictures. I want to shine a
Speaker 2: light on what's happening with Oracle, as I said, having
Speaker 2: its worst day since two thousand and two are off
Speaker 2: by twelve percent. We see revenue growth not living up
Speaker 2: to expectations. They actually put in thirty percent increase in
Speaker 2: terms of cloud revenue when the market wanted higher. We're
Speaker 2: seeing also Intel on the upside actually divesting some stakes
Speaker 2: in a nanofabricator in particular IMS, and we're seeing it
Speaker 2: well ten percent state being offloaded. That makes the shares
Speaker 2: just rise about two percent of selling it to TSMC.
Speaker 2: And I'm looking lastly at Apple, maybe there's the question
Speaker 2: of how much mister worried about the headwinds of China.
Speaker 2: We're worried about the chip implications are still having to
Speaker 2: turn to quol commed. We're off by one and a
Speaker 2: half percent as we anticipate those big unveils over there
Speaker 2: where you are in California.
Speaker 3: Yeah, these Apple events are always a bar is high
Speaker 3: for the market moment. Right There's been twelve iPhone launch
Speaker 3: events going back to twenty eleven. On the day the
Speaker 3: stocks ended up down nine out of twelve, so that's
Speaker 3: kind of the precedent that's set. There's so much more
Speaker 3: to recap with thirty minutes from the start of Apple's
Speaker 3: wonder last event, where we're expecting four variants of the
Speaker 3: next gen iPhone fifteen.
Speaker 4: Let's keep the conversation going.
Speaker 3: Marabell Lopez Lopez research principle analyst joining us on Bloomberg
Speaker 3: Technology right now. One thing we haven't quite talked about
Speaker 3: is the camera upgrade on the Pro and Pro Max.
Speaker 3: Historically camera upgrades are important. How important are they this
Speaker 3: time around?
Speaker 4: For Apple?
Speaker 11: They're a very popular feature with consumers. They're looking for
Speaker 11: better cameras, and this time we have the opportunity to
Speaker 11: get a hardware based center option combined with AI software,
Speaker 11: So we expect it's going to be a big leap
Speaker 11: in performance and perhaps what all the wonderlust is all about.
Speaker 3: Yeah, Caroline and I have been very busy for the
Speaker 3: last seven days talking about what's happening in China. Bloomberg
Speaker 3: reported that China Central government is expanding a clamp down
Speaker 3: on the use of foreign handsets, in particular iPhone for
Speaker 3: government agencies and state backs enterprises. Is that a concern
Speaker 3: ahead of a big launch of an ext gen iPhone
Speaker 3: for Apple?
Speaker 11: You know, we see it's still posturing right now. We
Speaker 11: think it's a long way from a wholesale ban on
Speaker 11: Apple tech In China. But it is concerning because it
Speaker 11: starts with the government and then it could roll into
Speaker 11: government owned companies or government shall we say, government controlled companies.
Speaker 11: So there's a lot of opportunity and risk associated with
Speaker 11: this right now, but I think it's still too early
Speaker 11: to call it as an issue for iPhone sales in
Speaker 11: the near term.
Speaker 2: In the near term, then, is the US economy an
Speaker 2: issue or do you think that everyone is willing to
Speaker 2: continue to pay up for a more high functioning and
Speaker 2: indeed lighter device even though the price point just keeps
Speaker 2: on getting higher.
Speaker 11: I think where we are in the market right now
Speaker 11: is that Apple is really targeting a premium consumer and
Speaker 11: aspirational consumer, and they are still willing to pay for
Speaker 11: these device upgrades. We're expecting that there's going to be
Speaker 11: a price increase on the promax, but we also expect
Speaker 11: that that premium aspirational buyer will be willing to pay that.
Speaker 11: The real risk for Apple is if they do not
Speaker 11: have a set of smaller, cheaper product category, do they
Speaker 11: see share to someone else in the market. And I
Speaker 11: think their perspective is, we don't really care. We want
Speaker 11: the premium buyer, we want the higher margin.
Speaker 2: Okay, what about you know, the competitive space that is
Speaker 2: wearables as well. How much focus do we give the
Speaker 2: watch and the announcements.
Speaker 11: I think the watch is something that we have continued
Speaker 11: to wait for that big bang on and it's only
Speaker 11: broken through a certain set at the consumer base. What
Speaker 11: I do think will happen is that watch buyers are
Speaker 11: very attracted to this product and will continue to buy
Speaker 11: upgrades to this product because it is part of their
Speaker 11: overarching health and fitness goal. The big question is can
Speaker 11: we get new markets into it. They've made a play
Speaker 11: for the elder population and a lot of people have
Speaker 11: bought these devices for their family members. We still see
Speaker 11: opportunity there. There is still actually an opportunity for the
Speaker 11: wearable in the workplace, particularly as we look at first
Speaker 11: line workers where it can actually provide quite a bit
Speaker 11: of health and safety. We've really not seen any penetration
Speaker 11: in that market, so it could be the twenty twenty
Speaker 11: four is the year that we start to see the
Speaker 11: watch get better enterprise play as well.
Speaker 3: Kind of other bucket of things. We expect a move
Speaker 3: to USBC, USBC going into the pro AirPods, and then
Speaker 3: some kind of you know, the watch changes that we
Speaker 3: just outlined. How much importance do you place on the
Speaker 3: other bucket that we just talked about.
Speaker 11: I think the other bucket is nice to have. They'd
Speaker 11: still sell the products without the USBC, but having said that,
Speaker 11: there are regulations that have been proposed that they need
Speaker 11: to address, and if you're going to do it in
Speaker 11: one region, you have to do the all regions. We
Speaker 11: think it's going to be really good for consumers. It's
Speaker 11: really going to open up the ecosystem to a wide
Speaker 11: range of companies that already have USBC product. So that
Speaker 11: is going to be good for Apple and good for
Speaker 11: the people that build around the smartphone smart watch ecosystem.
Speaker 3: Marabob, there's a piece of data. It's been stuck in
Speaker 3: my head for a few days now. Tim Cook talked
Speaker 3: about several quarters of slow down in the US smartphone market,
Speaker 3: three straight quarters of sales declines for Apple. But if
Speaker 3: you look at IDC in that period, particularly the second quarter,
Speaker 3: they grew market share even in a market that's pulling
Speaker 3: back against Samsung. What does that tell you Apple's ability
Speaker 3: to gain market share.
Speaker 11: They've had tremendous resilience and what's been looking like a
Speaker 11: major smartphone slowdown splash smartphone winner. Similar to what we've
Speaker 11: seen in the PC market, there could be double digital
Speaker 11: clients that continue on. But what we're seeing happening with
Speaker 11: Apple is the strength of the Apple ecosystem in terms
Speaker 11: of the applications and in terms of the cool factor
Speaker 11: has really kept them in this more Brazilian position. We
Speaker 11: expect that since they're the only provider of iOS software
Speaker 11: right now, that they're going to have strength through the
Speaker 11: next several quarters, despite it being a difficult market. Perhaps
Speaker 11: not as strong as we would all like to see
Speaker 11: them perform, but I still think they'll do well compared
Speaker 11: to the market at large.
Speaker 2: Well do they need to remind us of the vision
Speaker 2: pro and the cool factor of that.
Speaker 11: They do, But the reality is it still seems like
Speaker 11: that being a market that's going to really add top
Speaker 11: line and bottom line dollars to Apple is still quite
Speaker 11: a few quarters away. I think they'll talk about it
Speaker 11: so that they can keep the momentum alive to get
Speaker 11: people thinking about it for twenty four buys, but I'm
Speaker 11: not sure it's going to be a big year for
Speaker 11: that this coming year.
Speaker 2: And lastly, I mean, what everyone has waited for a
Speaker 2: void to be filled by Apple is what they're going
Speaker 2: to be doing about artificial intelligence, how.
Speaker 12: They're going to be intweaving that within its services. You
Speaker 12: already talk about the power of the Apple ecosystem. Within that,
Speaker 12: I think fintech, but I also think Siri, and I
Speaker 12: think about the ways that ultimately general to AI might
Speaker 12: up the antea.
Speaker 2: Are you waiting for that moment?
Speaker 11: I think we're already starting to see that moment. We're
Speaker 11: seeing it in software that's being built, we're seeing in
Speaker 11: the chipsets that Apple provides. And you back on the
Speaker 11: earlier discussion about the chipset, this has been a big
Speaker 11: push and concern for Apple, and being able to control
Speaker 11: at least some of the hardware behind that allows them
Speaker 11: to be better positioned to actually embraces Jenny I with
Speaker 11: that is really rushing over us at this point in time.
Speaker 11: So I think that they'll have a strong showing and
Speaker 11: AI related products as a result of the power of
Speaker 11: the processor. And it's one of the things that keeps
Speaker 11: the phone expensive, but it's also one of the things
Speaker 11: that keeps the phone.
Speaker 2: Interesting and about Lopez founder and principle analysts of Lopez Research.
Speaker 2: Great to have your take there and Ed, isn't it
Speaker 2: interesting that Marabella ends her point on it keeps on
Speaker 2: allowing them to up the price point, But it makes
Speaker 2: you more interesting.
Speaker 9: Ed.
Speaker 3: Yeah, if your dan ives a webburst, you point to
Speaker 3: two hundred and fifty million old generation iPhones around the
Speaker 3: world that are due for upgrade, and that drives volumes.
Speaker 3: If you're Anna rag Rana at Bloomberg Intelligence our analysts,
Speaker 3: he would say, look at prices. iPhone fourteen Pro is
Speaker 3: nine hundred and ninety nine US dollars. What if what
Speaker 3: if Apple price is the iPhone fifteen pro and promax
Speaker 3: incrementally higher or substantively higher than that? Are those kind
Speaker 3: of first adopters that Carolina mean Lacey was talking about.
Speaker 3: Are they willing to spend at that price point?
Speaker 2: And to that point, what does it do for the
Speaker 2: overarching average selling point? Does it mean that we still
Speaker 2: see people gravitating to those pros? Do they then decide, actually,
Speaker 2: you know, I can forsake a bit of an upgrade
Speaker 2: in my camera here, and indeed perhaps some speed to
Speaker 2: the chip. I'd rather hold on out and maybe just
Speaker 2: wait until I can get an iPhone fifteen on this
Speaker 2: particular generation. I don't know and the people you're speaking
Speaker 2: to in California, I feel that they're early adopters. They're
Speaker 2: going to be in no matter what, right, Yeah, yeah.
Speaker 3: They focus on the technology, so the processor has faster speeds,
Speaker 3: more memory added. But the other benefit is better battery
Speaker 3: life or battery performance, which for everyone watching this program,
Speaker 3: let's all agree battery life on iPhone is key.
Speaker 2: Yeah, mister two phones ed, I'm sure you can agree. Meanwhile,
Speaker 2: coming up, look, we're going to have a bit of
Speaker 2: a book club moment, going to take a pass from
Speaker 2: Apple just for a split second and discuss two new
Speaker 2: books detailing the thoughts and actions made by well some
Speaker 2: pretty polarizing figures, Sam Badman Freed in a musk Stay tuned.
Speaker 2: There's a been technology. It feels an age ago. But boy,
Speaker 2: the collapse of Sam Badman Freed's FTX it sent shock
Speaker 2: waves throughout the crypto market, and it rather lined up
Speaker 2: in time for a new book called Number Go Up.
Speaker 2: Since side crypto's wild rise and staggering for makes investigative reporters,
Speaker 2: Fox goes down basically an entire rabbit hole to learn
Speaker 2: more about digital tokens, lesser known mechanics of the industry,
Speaker 2: and well, zee, am I fair in saying that you
Speaker 2: came back kind of underwhelmed by the whole situation. Was
Speaker 2: that it felt as though it was just funny, raucous, absurd,
Speaker 2: but at times pretty shocking. Remind us how it all began.
Speaker 13: So I started out like a lot of people just
Speaker 13: fall like I saw my friends getting big scores on dogecoin,
Speaker 13: Salana like whatever. I thought the whole thing was kind
Speaker 13: of annoying. It seemed dumb, but I wanted to I
Speaker 13: got sucked in. I decided to investigate, and I found
Speaker 13: myself on like this crazy adventure. And but two years
Speaker 13: later I was in Cambodia investigating crypto fueled human trafficking.
Speaker 13: And then I was at Sam Bankman Freed's penthouse in
Speaker 13: the Bahamas, just before the cops showed up. So even
Speaker 13: though I resisted, I was glad I went down the
Speaker 13: crypto rabbit hole.
Speaker 2: I can imagine when you start to describe writings around
Speaker 2: human trafficking, that those are the moments as a journalist
Speaker 2: you need but don't always want. I mean, what was
Speaker 2: the really dark underbelly or what was happening in the crypto world?
Speaker 13: So you always hear things about like, oh, crypto might
Speaker 13: be used for money laundering or other illicit purposes. What
Speaker 13: I found is that there are whole like office parks
Speaker 13: in Cambodia and southwestern cam where there's like Flora after Flora,
Speaker 13: people who are working around the clock under thread of
Speaker 13: beatings and torture, sending spam text messages to people in
Speaker 13: richer countries trying to trick them into investing in crypto
Speaker 13: and other like crypto and gambling scams.
Speaker 2: Was there any repercussion from that? Are you starting to see?
Speaker 2: I mean, ultimately we had to see a blow up
Speaker 2: of gargantuan proportions for regulators for people to start to
Speaker 2: become involved and dig more deeply or what ultimately was
Speaker 2: the FTX showdown. But what about human trafficking and Cambodia?
Speaker 2: Who is looking at that?
Speaker 13: Yeah, So it's starting to get more attention from like Interpool,
Speaker 13: the UN. It's like an international issue, but within the
Speaker 13: crypto world, like when I was at it's been sort
Speaker 13: of ignored. Like when I went to go talk to
Speaker 13: Sam Bankman feed for the last time as apartment when
Speaker 13: things were blowing up, I was like, have you read
Speaker 13: about any of this like, do you realize that some
Speaker 13: of these criminals are sending money like to your exchange
Speaker 13: And he's like hmm, like that sounds bad.
Speaker 2: So go into his psyche, like obviously you saw him
Speaker 2: at probably the most extraordinary moment, But what do you
Speaker 2: think his overwhelming drive was. Because we've got to remember,
Speaker 2: the trial is happening relatively soon, and he's still deeming himself,
Speaker 2: you know, not guilty.
Speaker 13: So when I met him, I was fascinated by this
Speaker 13: idea that like when he was a teenager, he was like,
Speaker 13: I want to do something good for the world. Somebody
Speaker 13: convinced him the best thing to do would be to
Speaker 13: get rich, and then like ten years later, at least
Speaker 13: on paper, he's one of the richest guys in the world.
Speaker 13: And I actually some people think that like it was
Speaker 13: all a lie, he was a monster the whole time.
Speaker 13: I actually think that this drive, this belief in his
Speaker 13: own self righteousness, led him to do take insane risks
Speaker 13: and led him to where he is today.
Speaker 2: He ris I mean, ultimately the reason crypto is sort
Speaker 2: of like a media gift that keeps on giving and
Speaker 2: in an extraordinary rabbit hole field to have gone down
Speaker 2: is sort of celebrity meets vast quantities of cash meets
Speaker 2: overnight success meets ridiculous acronyms, all sort of bombarded into one.
Speaker 2: There's a lot of Seanan Freuder. There's a lot of like,
Speaker 2: how these you know, celebrities and lost vast amounts on NFTs.
Speaker 2: But I mean you bought a board ape at one point,
Speaker 2: I mean, how do you think this ends up playing out? Ultimately?
Speaker 2: Everyone loses money.
Speaker 13: I mean, if you anyone who's seen like the last
Speaker 13: couple of years, if you've paid any attention, it's hard
Speaker 13: to say, like, oh, let's run it all back, like
Speaker 13: let's wait for the next cycle. I think that's that's
Speaker 13: pretty unlikely. But it was pretty fun to be a
Speaker 13: part of it this last time. And yeah, buying a
Speaker 13: board ape. I got to go to Apefest, which was
Speaker 13: like a week long party for people who own these
Speaker 13: one hundred thousand dollars ugly cartoon JPEGs.
Speaker 2: But that's loyalty, right, that's creating a club. You think
Speaker 2: that's dead entirely.
Speaker 4: The party costs.
Speaker 13: I mean for twenty grand, you got to go mill
Speaker 13: around with a bunch of drunk dudes. I did get
Speaker 13: to confront Jimmy Fallon about the investment advice that he
Speaker 13: given these people. So for me, I think I was
Speaker 13: happy I went, But I think most people are going
Speaker 13: to be more mad about all the money they're losing
Speaker 13: than happy about you know, they got to see Amy
Speaker 13: Schumer tell some jokes about NFTs.
Speaker 2: Maybe Jimmy Fallon wasn't so pleased you were there either,
Speaker 2: But Zeke, I'm glad you were and to tell the story.
Speaker 2: What an amazing read. Just go read it. He's always
Speaker 2: got some incredible anecdotes and really deep, thoughtful, important reporting.
Speaker 2: Zeke Fox, We thank him. Number go up. It's now
Speaker 2: available for purchase. Meanwhile, let's talk about another key book
Speaker 2: you might be wanting to look at. The biography about
Speaker 2: Elon Musk's shedding liked about well has often dismissive behavior
Speaker 2: when given advice by powerful advisors. Walter Isaacson's Elon Musk
Speaker 2: comes out this week. Too Remote New social media reporter
Speaker 2: Asha Counts. You had a deep dive on it, and
Speaker 2: I think particularly a shocking in there. As someone who
Speaker 2: covers the ins and outs of Elon must day in.
Speaker 8: Day out.
Speaker 14: You know, when you start to cover Elan Musk, you
Speaker 14: realize you shouldn't be shocked by anything, right, expect everything.
Speaker 14: But there were a few anecdotes and details that I
Speaker 14: thought were interesting. So he had more advisors than I
Speaker 14: had initially realized. So people like David Zaslov from warn
Speaker 14: about his discovery advised him and was saying, hey, you're
Speaker 14: kind of engaging in some self destructive behaviors that are
Speaker 14: not helping advertisers want to spend money on your platform.
Speaker 14: And they had about an hour on conversation about that,
Speaker 14: and he was like, you should focus on video, you
Speaker 14: should make your ads better. I think must kind of
Speaker 14: ignored that, cause he continued to send out tweets and
Speaker 14: things that kind of irked advertisers. But it was interesting
Speaker 14: that I didn't know that Zaslov advised him at that point.
Speaker 2: I mean, ninety five chapters and six hundred pages, how
Speaker 2: much of this is about leadership style? How much of
Speaker 2: this is going to sort of inform us about what
Speaker 2: apparently and could well be happening within the businesses he
Speaker 2: runs at the moment?
Speaker 14: I mean, I think it gives you some sense of
Speaker 14: how he is as a leader. Right, there's a lot
Speaker 14: of stories and details of musk kind of going out
Speaker 14: and taking charge or making erratic decisions, which we all
Speaker 14: kind of thought he was doing that and sort of
Speaker 14: knew from what he was doing with like Twitter which
Speaker 14: is now X or other companies, but you really start
Speaker 14: to see kind of behind this scenes how many people
Speaker 14: were saying, hey, maybe you shouldn't do that, right, even
Speaker 14: down to his own brother was like, I don't know
Speaker 14: if you should tweet that, and was not able to
Speaker 14: sleep at night because he was worried about what Elon
Speaker 14: might tweet. So you start to see details like that
Speaker 14: that there were more people in his inner circle that
Speaker 14: were sort of advising him and must kind of just
Speaker 14: made his own decisions.
Speaker 2: And to that point, nation does it therefore drive an
Speaker 2: investor base looking for dedication someone who is completely hands
Speaker 2: at the wheel to pardon a partner of tesla En
Speaker 2: showing that he is doing what he needs to be
Speaker 2: doing when it comes to an incredibly valuable private company
Speaker 2: that is SpaceX.
Speaker 14: I mean it's a good question, right. I think investors
Speaker 14: are probably mixed. I think it sounds like some right,
Speaker 14: especially some venture capitalists that he's close to, like David
Speaker 14: sachs Or and Andriyson liked that must sort of was
Speaker 14: willing to break the rules and go out and do
Speaker 14: things that people said couldn't be done. And then other
Speaker 14: people were like, I don't want to deal with this.
Speaker 14: He's too erratic and I can't trust what decision he's
Speaker 14: going to make. Like the chair of Tesla at one
Speaker 14: point was like, Hey, we're concerned about how your work
Speaker 14: on on Twitter and x is distracting from what you
Speaker 14: should be doing at Tesla. And I'm sure SpaceX investor
Speaker 14: has felt the same.
Speaker 2: So to mix to mix, and of course he's got
Speaker 2: XAI as well to be taken under his wing. Aisha
Speaker 2: counts really fascinating deep dive on the book that many
Speaker 2: are going to be eyeing up. We thank you. The
Speaker 2: Apple Wanderlust event starts in watch a few minutes time
Speaker 2: one pm Eastern Times, six minutes from now ed you're
Speaker 2: live there in Kupertino.
Speaker 3: Getting exciting, Yeah, I'm getting excited. You know, this is
Speaker 3: a big event. It actually feels like a much bigger
Speaker 3: event than WWDC when we got the Vision Pro. And
Speaker 3: it kind of makes sense, right, Remember ww DC's on
Speaker 3: the developer side. This is about iPhone two hundred billion
Speaker 3: dollars of sales last year. Fifty percent of revenue. It
Speaker 3: touches people all over the world. We know what's coming
Speaker 3: four variants of the iPhone fifteen. What we don't know
Speaker 3: is about pricing, like what if they raise prices in
Speaker 3: a big.
Speaker 2: And whether people want to be going to that average
Speaker 2: selling price because it's interesting, isn't it. Dovetails at a
Speaker 2: moment where they've been looking for new types of buyers,
Speaker 2: a middle class growing in India, but also that speaks
Speaker 2: to the supply chain change that we see at hand
Speaker 2: as well.
Speaker 3: This was really important Bloomberg reporting overnight. According to our sources,
Speaker 3: this will be the first launch where an India assembled
Speaker 3: iPhone will hit the market in India and other markets
Speaker 3: around the world straight away. Traditionally it's made in China
Speaker 3: and then six to nine months later, the lower spec
Speaker 3: base models of iPhone start production in fox Com facilities
Speaker 3: in India. What we're hearing from sources is they're accelerating
Speaker 3: that starting straight away in India, which speaks to the
Speaker 3: supply chain story.
Speaker 2: And maybe just shows the focus on diversifying and consumer
Speaker 2: base that at the moment we potentially see headwinds coming,
Speaker 2: particularly in their Chinese buyer. At the moment as well.
Speaker 2: Ed you're going to be telling this global story, but
Speaker 2: it's an investor based story, it's a revenue driven story,
Speaker 2: and we're going to be all across it because coming up,
Speaker 2: we've got our coverage continuing. It's a Bluemberg Technology Extended
Speaker 2: Special Edition. We're going to be focused on guess what
Speaker 2: Apple as we count you down to the annual product
Speaker 2: launch just a few minutes away. We're going to be
Speaker 2: live right here from New York, right over there in Coopatino,
Speaker 2: and this really is a focus on a raft of products,
Speaker 2: the high end, the pros, the max Is, the overall
Speaker 2: fifteen's what they're going to have on offer, the cameras,
Speaker 2: the chips, what goes into them, and indeed a fair
Speaker 2: focus on the smart watch too. From New York. This
Speaker 2: is gonna make technology