1
00:00:02,520 --> 00:00:10,440
Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is a breaking

2
00:00:10,520 --> 00:00:15,440
Speaker 1: news update from Bloomberg. Instant reaction and analysis from our

3
00:00:15,480 --> 00:00:18,439
Speaker 1: three thousand journalists and analysts around the world.

4
00:00:19,440 --> 00:00:21,040
Speaker 2: Just want to get to Apple. Let's get to it.

5
00:00:21,160 --> 00:00:23,880
Speaker 2: First quarter revenue one hundred and forty three point seventy

6
00:00:23,920 --> 00:00:26,439
Speaker 2: six billion, Yes, a big beat. One hundred and thirty

7
00:00:26,440 --> 00:00:28,560
Speaker 2: eight point four billion was what the street was expecting.

8
00:00:28,600 --> 00:00:32,000
Speaker 2: First quarter EPs also a big beat. Two dollars eighty

9
00:00:32,040 --> 00:00:34,279
Speaker 2: four cents a share. The street estimate was for two

10
00:00:34,320 --> 00:00:37,479
Speaker 2: dollars sixty eight cents a share Greater China. They've been

11
00:00:37,520 --> 00:00:42,440
Speaker 2: struggling there. Revenue in Greater China twenty five point fifty

12
00:00:42,440 --> 00:00:45,440
Speaker 2: three billion dollars, folks, That is a beat. Twenty one

13
00:00:45,440 --> 00:00:48,800
Speaker 2: point eighty two billion dollars was what the street was expecting.

14
00:00:49,680 --> 00:00:52,760
Speaker 2: That's a new all time EPs record though overall, and

15
00:00:52,840 --> 00:00:54,600
Speaker 2: the install base now has more than two and a

16
00:00:54,640 --> 00:00:57,880
Speaker 2: half billion active devices. Well, got to say investors like

17
00:00:57,880 --> 00:01:00,960
Speaker 2: in this report. In the Aftermarkett still up about two

18
00:01:00,960 --> 00:01:05,000
Speaker 2: percent here in the postmarket trade. Hey, let's see what

19
00:01:05,280 --> 00:01:09,560
Speaker 2: Bloomberg News Managing editor for Global Tech Consumer Tech thinks

20
00:01:09,600 --> 00:01:12,679
Speaker 2: about this. He is Mark German, knows everything about this company,

21
00:01:12,840 --> 00:01:15,119
Speaker 2: lots of exclusives. This feels pretty good.

22
00:01:16,440 --> 00:01:19,280
Speaker 3: Tim Cook has to keep his job, at least for now.

23
00:01:20,480 --> 00:01:23,880
Speaker 3: This is a massive, massive, massive quarter. This is a

24
00:01:24,000 --> 00:01:28,760
Speaker 3: home run. Their greatest quarter ever by orders of magnitude.

25
00:01:28,840 --> 00:01:33,119
Speaker 3: It's a gigantic beat on overall revenue. China is back.

26
00:01:33,920 --> 00:01:38,200
Speaker 3: You have a big beat on the iPhone in particular.

27
00:01:38,280 --> 00:01:42,240
Speaker 3: Eighty five billion dollar quarter is just insane. The installed

28
00:01:42,240 --> 00:01:44,920
Speaker 3: based two and a half billion. The numbers are just

29
00:01:45,000 --> 00:01:48,080
Speaker 3: beyond excellent. We could ignore the fact that they missed

30
00:01:48,080 --> 00:01:50,400
Speaker 3: on wearables, home and accessories. We can ignore the fact

31
00:01:50,440 --> 00:01:52,680
Speaker 3: they missed on Mac. We could ignore the fact that

32
00:01:52,720 --> 00:01:57,559
Speaker 3: they barely you know, crossed expectations on services. I guess

33
00:01:57,560 --> 00:01:59,640
Speaker 3: none of that matters when the iPhone is selling so well.

34
00:02:00,480 --> 00:02:04,440
Speaker 3: But still there's the big existential question of what's next.

35
00:02:05,320 --> 00:02:08,760
Speaker 3: It's an important question because of AI and Apple absolutely

36
00:02:08,800 --> 00:02:10,880
Speaker 3: needs to figure out what's AI strategy. There needs to

37
00:02:10,880 --> 00:02:14,200
Speaker 3: be an AI reckoning of some sort there. But they

38
00:02:14,320 --> 00:02:18,840
Speaker 3: just bought themselves a very long time with this just

39
00:02:19,120 --> 00:02:20,200
Speaker 3: insanely great quarter.

40
00:02:20,360 --> 00:02:22,720
Speaker 1: So let's talk about a couple of the areas that

41
00:02:23,200 --> 00:02:26,200
Speaker 1: you highlighted there. One is China and Another one is

42
00:02:26,240 --> 00:02:30,720
Speaker 1: the sort of the concerns that people had about memory

43
00:02:30,760 --> 00:02:34,320
Speaker 1: chips in this quarter and the rising prices of memory chips.

44
00:02:34,320 --> 00:02:37,240
Speaker 1: How was Apple able to navigate this so it didn't

45
00:02:37,280 --> 00:02:39,080
Speaker 1: hit its margins like people thought it would.

46
00:02:40,760 --> 00:02:45,639
Speaker 3: They buy components and memory components quarters and months in advance,

47
00:02:45,800 --> 00:02:49,120
Speaker 3: sometimes years in advance. They have these deals struck, so

48
00:02:49,160 --> 00:02:53,360
Speaker 3: they're working off of numbers and pricing and materials here

49
00:02:54,440 --> 00:02:58,720
Speaker 3: that really give them extensive pricing power over competitors. So

50
00:02:59,040 --> 00:03:00,800
Speaker 3: we'll hear more about that on a call today, But

51
00:03:01,120 --> 00:03:02,160
Speaker 3: it seems like they're fine.

52
00:03:02,600 --> 00:03:04,480
Speaker 2: Mark, I love this. I mean, I'm looking at our

53
00:03:04,560 --> 00:03:06,639
Speaker 2: live blog, so you must have like kicked this out

54
00:03:06,680 --> 00:03:08,560
Speaker 2: before you jumped on air with us. But you did

55
00:03:08,639 --> 00:03:12,440
Speaker 2: mention that the significant things on the call. You you've

56
00:03:12,440 --> 00:03:15,400
Speaker 2: already talked about the AI strategy succession. You've kind of

57
00:03:15,400 --> 00:03:17,079
Speaker 2: said maybe that's off the table for now because this

58
00:03:17,200 --> 00:03:19,440
Speaker 2: was such a blowout quarter. You talk about the long

59
00:03:19,520 --> 00:03:21,880
Speaker 2: term viability of the business if it doesn't get its

60
00:03:21,919 --> 00:03:25,440
Speaker 2: AI act together. It's hard to even think about that

61
00:03:25,720 --> 00:03:28,680
Speaker 2: when you see the numbers here and just what a

62
00:03:28,680 --> 00:03:31,400
Speaker 2: big company this is and how significant is I feel

63
00:03:31,440 --> 00:03:33,440
Speaker 2: like in so many different people's lives, like I have

64
00:03:33,480 --> 00:03:35,840
Speaker 2: an Apple household. I think Tim has an Apple household.

65
00:03:37,000 --> 00:03:39,520
Speaker 2: Is that is that really the long term viability if

66
00:03:39,560 --> 00:03:40,960
Speaker 2: they don't get AI together.

67
00:03:40,720 --> 00:03:41,480
Speaker 1: Call me Tim Apple.

68
00:03:41,520 --> 00:03:44,240
Speaker 2: In fact they do, that's.

69
00:03:43,720 --> 00:03:47,360
Speaker 3: Yes, I said long term right and the talking really

70
00:03:47,400 --> 00:03:52,800
Speaker 3: and walking really long? Okay, uh, the little, the little,

71
00:03:53,080 --> 00:03:55,320
Speaker 3: the really long term here right, Like, at some point

72
00:03:55,600 --> 00:03:58,200
Speaker 3: there is going to be a need to fulfill these

73
00:03:58,240 --> 00:04:00,760
Speaker 3: AI desires and you know they're going to have to

74
00:04:00,800 --> 00:04:01,760
Speaker 3: figure that out well.

75
00:04:01,760 --> 00:04:03,960
Speaker 2: Onor ag Ranov our BI team. He talked with Tim

76
00:04:03,960 --> 00:04:05,920
Speaker 2: and I just moments ago, and he talked about, you

77
00:04:05,960 --> 00:04:08,560
Speaker 2: know how they're working with Google when it comes to AI,

78
00:04:08,960 --> 00:04:11,880
Speaker 2: relying on them right now for their models, and so

79
00:04:11,920 --> 00:04:13,920
Speaker 2: they're not doing the big AI spend. That makes sense

80
00:04:13,960 --> 00:04:16,160
Speaker 2: for now too. So do you agree that that's kind

81
00:04:16,160 --> 00:04:18,680
Speaker 2: of a smart strategy now and kind of waiting it

82
00:04:18,680 --> 00:04:20,600
Speaker 2: out a little bit, But at some point they've got

83
00:04:20,640 --> 00:04:21,560
Speaker 2: to kind of do their own thing.

84
00:04:21,880 --> 00:04:25,400
Speaker 3: It's not that they're waiting it out. It's that they

85
00:04:25,400 --> 00:04:28,039
Speaker 3: have no choice, They have nothing internal. So it's not

86
00:04:28,080 --> 00:04:29,919
Speaker 3: that they're waiting it out, it's that they need to

87
00:04:30,000 --> 00:04:32,479
Speaker 3: do it. And so they're partnering with the best partner

88
00:04:32,520 --> 00:04:34,720
Speaker 3: they can that's going to offer them the best pricing power,

89
00:04:35,000 --> 00:04:37,479
Speaker 3: which for now is Google. They initially wanted to work

90
00:04:37,520 --> 00:04:40,360
Speaker 3: with Anthropic, but from a pricing standpoint, that didn't work out.

91
00:04:40,800 --> 00:04:43,080
Speaker 3: They couldn't work with open Ai because they're, you know,

92
00:04:43,400 --> 00:04:46,920
Speaker 3: hardcore competitors at this point. So Google is all who

93
00:04:47,000 --> 00:04:49,520
Speaker 3: was left. And obviously the judge didn't break up the

94
00:04:49,560 --> 00:04:52,480
Speaker 3: search deal there, so it made sense and it'll aligned

95
00:04:52,480 --> 00:04:53,400
Speaker 3: pretty nicely for them.

96
00:04:53,600 --> 00:04:56,240
Speaker 1: Okay, do we know yet how Apple was able to

97
00:04:56,240 --> 00:04:59,640
Speaker 1: beat expectations in China once again for the first quarter

98
00:04:59,720 --> 00:05:01,840
Speaker 1: the most recent quarter, Greater China revenue came in at

99
00:05:01,839 --> 00:05:04,240
Speaker 1: twenty five point five to three billion dollars. Twenty one

100
00:05:04,279 --> 00:05:07,040
Speaker 1: point eight two was the estimate. You said it minutes ago.

101
00:05:07,640 --> 00:05:09,680
Speaker 1: It is back in China. You're holding up an iPhone

102
00:05:09,720 --> 00:05:10,719
Speaker 1: right now. That's what they did.

103
00:05:11,440 --> 00:05:14,000
Speaker 3: I'm answering your question. I'm answering your question.

104
00:05:14,160 --> 00:05:16,440
Speaker 1: It was the iPhone seven color orange. Oh, it's the

105
00:05:16,440 --> 00:05:17,960
Speaker 1: color orange. It's that easy.

106
00:05:18,000 --> 00:05:23,160
Speaker 3: It is the Promax. No, it's design. People buy the

107
00:05:23,160 --> 00:05:25,440
Speaker 3: new designs. This is the first new design in half

108
00:05:25,440 --> 00:05:28,359
Speaker 3: a decade. It got it done. That's why you do

109
00:05:28,440 --> 00:05:31,240
Speaker 3: new designs because you're trying to bring in new customers,

110
00:05:31,360 --> 00:05:33,120
Speaker 3: why does for upgrades? And but that's the way to

111
00:05:33,120 --> 00:05:33,400
Speaker 3: do it.

112
00:05:33,680 --> 00:05:34,480
Speaker 1: Didn't They know that?

113
00:05:35,440 --> 00:05:37,080
Speaker 3: Of course they know that, But it takes time to

114
00:05:37,080 --> 00:05:39,080
Speaker 3: do these new designs and you kind of want to

115
00:05:39,080 --> 00:05:41,240
Speaker 3: get it right. And then you can't do it too

116
00:05:41,240 --> 00:05:44,200
Speaker 3: often because if you do it too often, it doesn't

117
00:05:44,200 --> 00:05:46,640
Speaker 3: have the power that it has if you do it

118
00:05:46,680 --> 00:05:47,680
Speaker 3: only every so often.

119
00:05:47,920 --> 00:05:49,840
Speaker 2: Hey, I want to roll into this a story you've

120
00:05:49,839 --> 00:05:52,640
Speaker 2: got on the Bloomberg that you put out today, and

121
00:05:52,680 --> 00:05:55,279
Speaker 2: this has to do with Apple buying the Israeli AI

122
00:05:55,480 --> 00:06:04,120
Speaker 2: startup that interprets facial movement QAI. Is this important?

123
00:06:04,440 --> 00:06:06,880
Speaker 3: I think it's going to enable some features for future

124
00:06:06,920 --> 00:06:09,640
Speaker 3: air pods and smart glasses and mixed reality headsets and

125
00:06:09,640 --> 00:06:13,760
Speaker 3: all that, but it's not fundamental to the overall AI strategy,

126
00:06:14,040 --> 00:06:16,719
Speaker 3: which I think they're still trying to figure out. Also,

127
00:06:17,000 --> 00:06:18,560
Speaker 3: just one piece of the puzzle, Okay.

128
00:06:18,640 --> 00:06:21,679
Speaker 1: Mark. Another story that you reported on this week, Apple's

129
00:06:21,720 --> 00:06:25,680
Speaker 1: Tim Cook calls for a de escalation after Alex Pretti's

130
00:06:25,720 --> 00:06:30,560
Speaker 1: shooting in Minneapolis. There's this thread that Tim Cook is

131
00:06:30,600 --> 00:06:33,640
Speaker 1: trying to a needle that Tim Cook is trying to thread.

132
00:06:34,240 --> 00:06:36,000
Speaker 1: He was at the White House on Saturday, and to

133
00:06:36,000 --> 00:06:36,280
Speaker 1: do a.

134
00:06:36,279 --> 00:06:39,360
Speaker 3: Very good job. Why not the needle. Well, I think

135
00:06:39,400 --> 00:06:44,840
Speaker 3: his statement was kind of worthless in some respects. I

136
00:06:44,920 --> 00:06:47,279
Speaker 3: think that he's spent. I don't know if it's at

137
00:06:47,279 --> 00:06:50,559
Speaker 3: this statement talking about how the president, the one who's

138
00:06:50,600 --> 00:06:54,040
Speaker 3: overseeing the policies that led to the situation of Minneapolis,

139
00:06:54,839 --> 00:06:57,560
Speaker 3: has his ears wide open to listen to feedback. I mean,

140
00:06:57,600 --> 00:07:00,960
Speaker 3: I'm not sure that's what his employees, who are sort

141
00:07:00,960 --> 00:07:04,240
Speaker 3: of revolting internally about this, we're looking for. I think

142
00:07:04,279 --> 00:07:06,240
Speaker 3: they were looking for Tim Cook to take some sort

143
00:07:06,279 --> 00:07:10,040
Speaker 3: of stand here, and he really didn't. You know. From

144
00:07:10,040 --> 00:07:14,120
Speaker 3: his perspective is he's scared to upset Trump and get

145
00:07:14,280 --> 00:07:17,960
Speaker 3: tariffs and other policies slapped onto Apple's business. So you'll

146
00:07:17,960 --> 00:07:20,760
Speaker 3: see him continue to do what he's doing, because this

147
00:07:20,920 --> 00:07:23,400
Speaker 3: is not about taking a stand at this point for him,

148
00:07:23,480 --> 00:07:27,320
Speaker 3: this is about protecting the underlying business, and the results

149
00:07:27,360 --> 00:07:30,080
Speaker 3: speak from themselves. Underlying business seems pretty well protected.

150
00:07:30,200 --> 00:07:32,640
Speaker 2: Great stuff as always, and we'll be looking for your reporting.

151
00:07:33,280 --> 00:07:36,680
Speaker 2: He is Mark URMs, Thank you, Mark, Managing editor for

152
00:07:36,720 --> 00:07:40,000
Speaker 2: Global Consumer Tech for Bloomberg News. Out there out there

153
00:07:40,040 --> 00:07:41,440
Speaker 2: on the West Coast, well, let's.

154
00:07:41,280 --> 00:07:43,840
Speaker 1: Bringing Ed Ludlow. He's the coast of Bloomberg Tech on

155
00:07:43,840 --> 00:07:46,840
Speaker 1: Bloomberg TV. He joins us from our San Francisco bureau.

156
00:07:47,120 --> 00:07:50,600
Speaker 1: Ed the story from Mark German is out sales trouncing

157
00:07:50,680 --> 00:07:54,640
Speaker 1: estimates after iPhone fuels record quarter. Tim Cook called the

158
00:07:54,640 --> 00:07:59,280
Speaker 1: demand quote unprecedented. Is this all about the iPhone doing

159
00:07:59,320 --> 00:07:59,960
Speaker 1: well around the world?

160
00:08:00,080 --> 00:08:03,400
Speaker 4: Old? Yeah, all about the iPhone And in some ways

161
00:08:03,440 --> 00:08:06,000
Speaker 4: it's like an issue of chronology and timing, right. Think

162
00:08:06,000 --> 00:08:09,920
Speaker 4: about when Apple announces the iPhone seventeen generation and we're

163
00:08:09,960 --> 00:08:12,880
Speaker 4: all there and Cooper Tino for it, and then it

164
00:08:12,920 --> 00:08:15,520
Speaker 4: goes on sale and you have the holiday quarter, so

165
00:08:15,800 --> 00:08:18,040
Speaker 4: you know, actually it goes a little bit beyond that. Yeah,

166
00:08:18,080 --> 00:08:20,800
Speaker 4: you know, this is where the Bloomberg terminal comes in useful.

167
00:08:21,160 --> 00:08:23,080
Speaker 4: So that is a big beat. You can just see

168
00:08:23,080 --> 00:08:25,760
Speaker 4: it looking at the headline on a dollar basis. But

169
00:08:25,840 --> 00:08:29,840
Speaker 4: not only is it nine percent above consensus even the

170
00:08:29,880 --> 00:08:32,079
Speaker 4: top end of the most bullish ranges on how this

171
00:08:32,160 --> 00:08:35,800
Speaker 4: iPhone would do, we're only about eighty one billion dollars.

172
00:08:36,240 --> 00:08:38,680
Speaker 4: I think it came in above eighty five billion dollars.

173
00:08:39,000 --> 00:08:41,960
Speaker 4: So they've done something. Either the phone has got traction

174
00:08:42,880 --> 00:08:45,080
Speaker 4: or they've done something smart with the timing of it

175
00:08:45,280 --> 00:08:48,280
Speaker 4: and it's sold well. The bit that's missing, of course,

176
00:08:48,360 --> 00:08:51,280
Speaker 4: is that that commentary does not have anything specific to

177
00:08:51,280 --> 00:08:54,120
Speaker 4: do with Greater China. We know the numbers in Greater

178
00:08:54,240 --> 00:08:57,040
Speaker 4: China are really good, but how did this iPhone do there?

179
00:08:58,480 --> 00:09:01,480
Speaker 2: Yeah, like, is it just whoa just a good quarter

180
00:09:01,600 --> 00:09:04,160
Speaker 2: or do was it luck or was it really strategy?

181
00:09:04,280 --> 00:09:05,440
Speaker 2: Right of understanding.

182
00:09:06,200 --> 00:09:09,640
Speaker 4: I'm super cautious because sometimes we've relied on third party

183
00:09:09,720 --> 00:09:12,640
Speaker 4: data like you. I won't name it, it would be

184
00:09:12,679 --> 00:09:14,880
Speaker 4: a bit unfair, but there are various third party data

185
00:09:14,920 --> 00:09:18,280
Speaker 4: sets that say, oh, no, Apple's doing really bad.

186
00:09:19,760 --> 00:09:24,200
Speaker 1: You're talking about it's okay, okay, I'll.

187
00:09:24,120 --> 00:09:26,640
Speaker 4: Stick to my guns and you know, and then Apple

188
00:09:26,679 --> 00:09:29,640
Speaker 4: comes around with earnings and the opposite has been true

189
00:09:29,679 --> 00:09:33,120
Speaker 4: on more than one occasion. But this occasion, like the

190
00:09:33,120 --> 00:09:36,640
Speaker 4: third party data that this sort of incremental and anecdote

191
00:09:36,720 --> 00:09:39,960
Speaker 4: of people queuing up for the iPhone seventeen in all markets,

192
00:09:39,960 --> 00:09:43,120
Speaker 4: but like Greater China, it was kind of there. So

193
00:09:43,120 --> 00:09:45,640
Speaker 4: so that's interesting. Where else do you want to go?

194
00:09:45,679 --> 00:09:46,960
Speaker 1: I mean this, you know, this is Apple.

195
00:09:47,040 --> 00:09:49,760
Speaker 4: There's anything we want to go to AI? Because yes,

196
00:09:49,880 --> 00:09:51,280
Speaker 4: you want to ask me about the thing that they

197
00:09:51,280 --> 00:09:52,280
Speaker 4: have nothing to say about.

198
00:09:52,520 --> 00:09:55,840
Speaker 1: WHOA sure every analyst is really pointed to that. I mean,

199
00:09:55,880 --> 00:09:58,480
Speaker 1: we can we can talk about the relationship that Apple

200
00:09:58,520 --> 00:10:00,480
Speaker 1: has with with Google and for gem and we could

201
00:10:00,480 --> 00:10:03,240
Speaker 1: talk about all the money going to Open AI potentially

202
00:10:03,280 --> 00:10:06,880
Speaker 1: from Amazon and other companies, about a potential one hundred

203
00:10:06,920 --> 00:10:10,360
Speaker 1: billion dollar fundraising around We could talk about Apple relying

204
00:10:10,400 --> 00:10:13,680
Speaker 1: on third parties rather than building its own Is there

205
00:10:14,040 --> 00:10:15,200
Speaker 1: a risk in doing that?

206
00:10:16,640 --> 00:10:18,440
Speaker 4: I go back to basics, and you know, I kind

207
00:10:18,480 --> 00:10:21,599
Speaker 4: of rely on Bloomberg's Mark Guman, who is one of

208
00:10:21,640 --> 00:10:24,559
Speaker 4: the world's leading journalists when it comes to covering not

209
00:10:24,600 --> 00:10:28,320
Speaker 4: just Apple but consumer electronics. And in the context of

210
00:10:28,320 --> 00:10:31,560
Speaker 4: this earnings print, what he's written is probably true that

211
00:10:31,679 --> 00:10:36,280
Speaker 4: Apple has done enough to mask over or allay the

212
00:10:36,360 --> 00:10:39,520
Speaker 4: concerns that investors have about a lack of progress in

213
00:10:39,600 --> 00:10:43,040
Speaker 4: AI as a product. You know, the reporting's quite clear,

214
00:10:43,480 --> 00:10:45,880
Speaker 4: and it's been announced now officially, right that at least

215
00:10:45,880 --> 00:10:50,520
Speaker 4: on the interim, Apple's AI generation of Siri will be

216
00:10:50,600 --> 00:10:53,920
Speaker 4: underpin underpinned by Gemini. And Mark's reported a lot about

217
00:10:53,920 --> 00:10:57,520
Speaker 4: the financials around that. Right, it's a one billion perannum agreement.

218
00:10:58,400 --> 00:11:00,920
Speaker 4: We don't. We don't and you won't get this sort

219
00:11:00,960 --> 00:11:03,480
Speaker 4: of announcement like here it is, here's the date it's coming,

220
00:11:03,600 --> 00:11:06,680
Speaker 4: and this is what it can do until it's here.

221
00:11:06,880 --> 00:11:08,559
Speaker 4: You know, that's not how Apple operates.

222
00:11:10,920 --> 00:11:15,680
Speaker 2: Yeah, it's just you know, I mean it's pretty like

223
00:11:16,080 --> 00:11:17,520
Speaker 2: like where do you go? Where do you go?

224
00:11:18,840 --> 00:11:19,080
Speaker 3: You know?

225
00:11:19,240 --> 00:11:21,640
Speaker 2: Here we are looking. I mean the stock isn't up

226
00:11:21,720 --> 00:11:23,920
Speaker 2: as much as it was earlier. We were talking about,

227
00:11:23,960 --> 00:11:26,000
Speaker 2: you know, more than a two percent gain. I think

228
00:11:26,000 --> 00:11:28,679
Speaker 2: at its highs here in the aftermarket, it's just up

229
00:11:28,679 --> 00:11:31,520
Speaker 2: about three quarters of one percentage point. What is it

230
00:11:31,559 --> 00:11:34,880
Speaker 2: that they need to do? Maybe on the call? Is

231
00:11:34,880 --> 00:11:37,800
Speaker 2: it ai? Is it that this is sustainable, this is

232
00:11:37,840 --> 00:11:41,040
Speaker 2: a strategy, this is you know, we figured out China.

233
00:11:40,920 --> 00:11:45,360
Speaker 4: Like, what is it? Well? You know that I don't

234
00:11:45,360 --> 00:11:47,400
Speaker 4: forgive me because I was blogging, I didn't hear what

235
00:11:47,400 --> 00:11:50,520
Speaker 4: you guys were talking about just before. But in this

236
00:11:50,760 --> 00:11:54,160
Speaker 4: very limited earnings release and statement, you guys maybe you

237
00:11:54,200 --> 00:11:55,800
Speaker 4: went over the risk factors and forward looking.

238
00:11:55,920 --> 00:11:58,040
Speaker 1: Yeah, we talked about that. We talked about that, you know,

239
00:11:58,080 --> 00:12:00,360
Speaker 1: I talked about how you started pointing that out back

240
00:12:00,400 --> 00:12:01,680
Speaker 1: in May of last year.

241
00:12:02,520 --> 00:12:04,319
Speaker 4: In May of last year, I was sat next to

242
00:12:04,360 --> 00:12:06,560
Speaker 4: the you two at New York studio, do you remember,

243
00:12:06,600 --> 00:12:08,360
Speaker 4: and we were like, oh, that's interesting, and they've never

244
00:12:08,400 --> 00:12:09,000
Speaker 4: said that before.

245
00:12:09,280 --> 00:12:12,720
Speaker 1: But that was only your first report post Liberation Day, right.

246
00:12:13,080 --> 00:12:15,600
Speaker 4: The only observation I'll make in line with that is

247
00:12:15,640 --> 00:12:19,200
Speaker 4: that this release also says nothing about the environment for

248
00:12:19,280 --> 00:12:23,679
Speaker 4: memory chips. And you know, like memory chip prices are

249
00:12:23,760 --> 00:12:24,960
Speaker 4: very high.

250
00:12:24,640 --> 00:12:26,600
Speaker 2: But their margin was so good, right.

251
00:12:26,800 --> 00:12:29,559
Speaker 4: And their margins were pretty good, and there's a scarcity,

252
00:12:29,640 --> 00:12:32,440
Speaker 4: and that the principal difference is like this. This is

253
00:12:32,440 --> 00:12:34,720
Speaker 4: why it's so fun to cover hardware companies. And it's

254
00:12:34,760 --> 00:12:37,240
Speaker 4: a privilege to be a technology journalist when you get

255
00:12:37,280 --> 00:12:40,199
Speaker 4: access to all these companies and speak to the CEOs.

256
00:12:40,679 --> 00:12:43,480
Speaker 4: If you're a very big company, you have leverage with

257
00:12:43,559 --> 00:12:46,439
Speaker 4: your supply base. If a supplier has to choose, I've

258
00:12:46,480 --> 00:12:48,720
Speaker 4: got this number of things and I can only send

259
00:12:48,760 --> 00:12:50,400
Speaker 4: them here, or I can send them there, or I

260
00:12:50,400 --> 00:12:53,560
Speaker 4: can split. It helps to be Apple, is what I'm saying.

261
00:12:53,800 --> 00:12:56,720
Speaker 4: And there are companies that I've covered whose CEOs you know,

262
00:12:56,760 --> 00:12:59,640
Speaker 4: will privately just agonize over how difficult it is to

263
00:12:59,640 --> 00:13:02,200
Speaker 4: convince supplies to give them the things they need. So

264
00:13:02,400 --> 00:13:04,160
Speaker 4: on the call that will come up. You know, the

265
00:13:04,280 --> 00:13:06,000
Speaker 4: cell sider likely to ask about it.

266
00:13:06,360 --> 00:13:09,280
Speaker 1: But you know, there are high prices, and then there's

267
00:13:09,320 --> 00:13:11,800
Speaker 1: Apple dealing with high prices. And when I asked Mark

268
00:13:11,880 --> 00:13:14,840
Speaker 1: this question about how they were able to successfully navigate

269
00:13:14,840 --> 00:13:18,160
Speaker 1: these higher memory prices, he said, well, one they're Apple,

270
00:13:18,200 --> 00:13:20,800
Speaker 1: and two they buy so far in advance, and they

271
00:13:20,840 --> 00:13:23,480
Speaker 1: buy the components too that go in, so at a

272
00:13:23,480 --> 00:13:26,000
Speaker 1: certain point ed it'll hit them.

273
00:13:26,080 --> 00:13:26,360
Speaker 2: Right.

274
00:13:27,600 --> 00:13:33,960
Speaker 4: Well, it's not just that the memory prices are high.

275
00:13:34,600 --> 00:13:37,839
Speaker 4: The reason that memory prices are high is that historically

276
00:13:37,880 --> 00:13:42,920
Speaker 4: memory dram and and flash memory is a very cyclical

277
00:13:43,080 --> 00:13:45,760
Speaker 4: up and down business. Boom and bust. You know, that's

278
00:13:45,760 --> 00:13:47,679
Speaker 4: what I and King would say, boom and bust in

279
00:13:47,840 --> 00:13:52,160
Speaker 4: King leads are semiconductive coverages right at Apploomberg. And it

280
00:13:52,280 --> 00:13:55,600
Speaker 4: is correct that Apple supply chain teams are its secret source.

281
00:13:55,640 --> 00:13:57,319
Speaker 4: You know, that was Tim Cook's whole thing. He was

282
00:13:57,400 --> 00:14:00,760
Speaker 4: coo like, that's what he was good at. But the

283
00:14:00,840 --> 00:14:04,199
Speaker 4: reason prices are high is because of scarcity of availability,

284
00:14:04,840 --> 00:14:08,000
Speaker 4: you know, because there is such demand for equivalent chips

285
00:14:08,040 --> 00:14:11,040
Speaker 4: that are going into data centers and so like Mark's

286
00:14:11,080 --> 00:14:13,960
Speaker 4: answer is appropriate. Apple has leverage and the ability of

287
00:14:14,040 --> 00:14:17,480
Speaker 4: scale to say like, Okay, we have got ahead of this,

288
00:14:17,960 --> 00:14:20,280
Speaker 4: and one would imagine that their supply chain team is

289
00:14:20,360 --> 00:14:23,920
Speaker 4: sophisticated enough to have foreseen some of the things that

290
00:14:23,920 --> 00:14:26,120
Speaker 4: we're now experiencing in that market.

291
00:14:26,440 --> 00:14:30,480
Speaker 1: So the first thing Mark said to us, I no, no,

292
00:14:30,560 --> 00:14:33,440
Speaker 1: you were blogging ed and you were looking at the results.

293
00:14:34,440 --> 00:14:37,200
Speaker 1: Was Tim Cook just bought himself time? Tim Cook gets

294
00:14:37,240 --> 00:14:40,360
Speaker 1: to keep his job. I mean, there's been a lot

295
00:14:40,360 --> 00:14:42,760
Speaker 1: of questions about succession. Mark says, That's one of two

296
00:14:42,840 --> 00:14:44,560
Speaker 1: questions he would ask on the call. The other would

297
00:14:44,560 --> 00:14:49,200
Speaker 1: be about AI in your view, was his job not

298
00:14:49,640 --> 00:14:53,000
Speaker 1: at risk? But you know there are questions about who

299
00:14:53,080 --> 00:14:54,680
Speaker 1: leads this company after Tim Cook.

300
00:14:56,760 --> 00:15:03,840
Speaker 4: I am not Bloomberg's Mark g What right is that?

301
00:15:04,680 --> 00:15:08,400
Speaker 4: When Mark did that recent reporting and it's been it's

302
00:15:08,440 --> 00:15:12,280
Speaker 4: been over a period of time about which executives are

303
00:15:12,320 --> 00:15:15,840
Speaker 4: now more at the forefront of Apple's future, he was

304
00:15:15,920 --> 00:15:19,680
Speaker 4: crystal clear in that reporting that there is no suggestion

305
00:15:20,840 --> 00:15:24,920
Speaker 4: that Tim Cook being replaced or stepping down or retiring

306
00:15:25,040 --> 00:15:28,360
Speaker 4: is imminent. You know that that that this was a

307
00:15:28,400 --> 00:15:32,320
Speaker 4: longer term thing. What I would reflect on is the

308
00:15:32,320 --> 00:15:35,160
Speaker 4: conversations that I have with people in industry and those

309
00:15:35,200 --> 00:15:37,640
Speaker 4: that come on the show and talk about it is

310
00:15:38,120 --> 00:15:42,000
Speaker 4: you know, Tim cook is is the operator that many

311
00:15:42,040 --> 00:15:45,640
Speaker 4: people would want. In an environment like this where we

312
00:15:45,720 --> 00:15:50,200
Speaker 4: still have trade and tariff considerations, the movement of goods

313
00:15:50,240 --> 00:15:53,000
Speaker 4: between borders from point A to point B is quite difficult.

314
00:15:53,960 --> 00:15:57,200
Speaker 4: And as we just talked about, you know, like specifically

315
00:15:57,240 --> 00:16:00,640
Speaker 4: memory pricing, that's within his you know, his his range.

316
00:16:00,680 --> 00:16:02,680
Speaker 4: This is not me speaking, This is how people would

317
00:16:02,680 --> 00:16:05,920
Speaker 4: relay it to me. Mark when he goes on air

318
00:16:05,960 --> 00:16:07,520
Speaker 4: and when he writes, and again I'm not speaking on

319
00:16:07,560 --> 00:16:09,680
Speaker 4: his behalf. He would talk a lot more about the

320
00:16:09,720 --> 00:16:13,920
Speaker 4: product you know, fresh products, reiterated and renewed products, in

321
00:16:13,960 --> 00:16:17,520
Speaker 4: the product pipeline for the future. And right now, I

322
00:16:17,560 --> 00:16:20,160
Speaker 4: don't know that people are necessarily so worried about that,

323
00:16:20,480 --> 00:16:22,680
Speaker 4: at least in my world. They are worried about when

324
00:16:22,720 --> 00:16:24,640
Speaker 4: they're going to get the software bit right with AI.

325
00:16:25,160 --> 00:16:27,280
Speaker 2: You know, it's interesting, you say, AI. It's something we

326
00:16:27,520 --> 00:16:30,720
Speaker 2: talked about just briefly with Mark German. It's a story

327
00:16:30,760 --> 00:16:33,480
Speaker 2: that he put out Apple bys Israeli AI startup that

328
00:16:33,560 --> 00:16:38,120
Speaker 2: interprets facial movements. He's like, you know, interesting will help

329
00:16:38,160 --> 00:16:40,960
Speaker 2: in terms of I guess product development, but not necessarily

330
00:16:42,280 --> 00:16:43,360
Speaker 2: a big big deal.

331
00:16:43,880 --> 00:16:45,520
Speaker 1: So Ed, we have one time for one more question,

332
00:16:45,560 --> 00:16:47,760
Speaker 1: and we'd be really remiss if we didn't ask you

333
00:16:47,760 --> 00:16:50,280
Speaker 1: your view on AMAZ. This news come in just late

334
00:16:50,320 --> 00:16:52,880
Speaker 1: in the day, switching gears a little bit still on Ai,

335
00:16:52,920 --> 00:16:56,280
Speaker 1: Amazon talk and talks to invest fifty billion dollars and

336
00:16:56,440 --> 00:16:59,480
Speaker 1: open Ai expand tizzed this could be part of a

337
00:16:59,560 --> 00:17:05,080
Speaker 1: one high hundred billion dollar funding round, which would value

338
00:17:05,560 --> 00:17:08,800
Speaker 1: open Ai at more than eight hundred billion dollars. When

339
00:17:08,840 --> 00:17:11,479
Speaker 1: we're talking about a funding round of one hundred billion dollars,

340
00:17:11,520 --> 00:17:15,639
Speaker 1: I mean we're talking about just the massive, massive scale.

341
00:17:16,280 --> 00:17:19,320
Speaker 1: What does it mean that that Amazon could invest this

342
00:17:19,440 --> 00:17:19,960
Speaker 1: much money.

343
00:17:21,000 --> 00:17:24,520
Speaker 4: Well, Amazon probably can invest that much money. You know.

344
00:17:24,680 --> 00:17:27,520
Speaker 4: What we've seen is most of the hyperscalers that were

345
00:17:27,520 --> 00:17:31,600
Speaker 4: wedded to one player have diversified, and Thropic and Microsoft

346
00:17:31,880 --> 00:17:35,520
Speaker 4: deepened their interaction. And Thropic was very heavily aligned with Amazon.

347
00:17:36,119 --> 00:17:39,440
Speaker 4: Google and Anthropic have very heavily aligned and propic relies

348
00:17:39,480 --> 00:17:43,440
Speaker 4: on TPUs. Amazon from a software perspective, has tried to

349
00:17:43,480 --> 00:17:46,000
Speaker 4: accommodate all the players on its Bedrock platform, which is

350
00:17:46,000 --> 00:17:49,560
Speaker 4: basically a workplace where you can either train or build

351
00:17:49,600 --> 00:17:52,880
Speaker 4: on top of existing models. So the financials are there,

352
00:17:52,920 --> 00:17:55,000
Speaker 4: like if you have a if people are watching that

353
00:17:55,080 --> 00:17:57,960
Speaker 4: are investors in those companies, phone me explain the dilution,

354
00:17:58,080 --> 00:18:03,240
Speaker 4: to me, explain the post and pre evaluation. But open

355
00:18:03,280 --> 00:18:06,840
Speaker 4: ai needs capital. It is coming from multiple places apparently,

356
00:18:07,760 --> 00:18:10,639
Speaker 4: and one would imagine based on the reporting that's been

357
00:18:10,680 --> 00:18:14,159
Speaker 4: done by Bloomberg and others, this is a big, large

358
00:18:14,200 --> 00:18:17,119
Speaker 4: anchor round before a future I PO as well of

359
00:18:17,160 --> 00:18:18,879
Speaker 4: some part of the open ai entity.

360
00:18:19,040 --> 00:18:21,879
Speaker 1: The scale is just otherworldly, the amounts of money that

361
00:18:21,880 --> 00:18:22,880
Speaker 1: we're talking about right now,