Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. Bloomberg Tech is live
Speaker 1: from coast to coast with Caroline Hide in New York
Speaker 1: and ev love Low into sent Francisco.
Speaker 2: This is Bloomberg Tech and Caroline.
Speaker 3: Heid in New York.
Speaker 4: And am Ed Ludlow live in Coopertino from Apple. Is
Speaker 4: the company's biggest product launch event of the year, and
Speaker 4: we're waiting for the next generation of iPhone, smart watches
Speaker 4: and much more character.
Speaker 2: And let's just talk about what Apple is already pricing
Speaker 2: in from a market valuation perspective, ED, I'm looking at
Speaker 2: Apple off by six tens percent, as perhaps we brought.
Speaker 3: The news into this unveil.
Speaker 2: Usually stock does sinc after a product launch, and this
Speaker 2: one is the iPhone seventeen ED. But let's look at
Speaker 2: it on a longer term basis. This company has added
Speaker 2: four hundred and thirty billion dollars in market capitalization since
Speaker 2: the end.
Speaker 3: Of July alone.
Speaker 2: We have really not enough to bring it green in
Speaker 2: a year to date perspective, though, ED. But that's because
Speaker 2: we continue to worry about trade in so many other overhangs.
Speaker 4: The way I think about it was third most valuable
Speaker 4: company half of revenue as iPhone. Apple's biggest product launch
Speaker 4: of the year is today in the company, which has
Speaker 4: fallen behind in the generative AI race, will focus on hardware,
Speaker 4: show off the new iPhone seventeen range. Let's bring in
Speaker 4: Bloomberg's Global Consumer Tech Managing editor Mark German the basics
Speaker 4: seventeen base model, through Pro and Pro maxin in the middle,
Speaker 4: a seventeen air per you're reporting, Explain the features that
Speaker 4: come with the seventeen air mark, but also why does
Speaker 4: that matter?
Speaker 5: The seventeen ear that's going to be the big deal today.
Speaker 5: This is a slim down phone. On paper, it's a
Speaker 5: third thinner than the other new iPhones that you're going
Speaker 5: to see today, and this is an entirely new industrial design.
Speaker 5: It's something brand new for the company. They have not
Speaker 5: done an air phone to this point. Obviously there's the
Speaker 5: Magwook Gear, there's the iPad Air, and now there's going
Speaker 5: to be the iPhone Air.
Speaker 6: This is going to be a pricey.
Speaker 5: Phone, not as pricey as the pro models, but it's
Speaker 5: going to be quite expensive, right somewhere between nine hundred
Speaker 5: and around one thousand dollars, give or take.
Speaker 6: It's going to only have one camera. It's going to.
Speaker 5: Have drastically less battery life than the pro models.
Speaker 6: But this is going to be exciting.
Speaker 5: It's going to get people really interested in the phones
Speaker 5: this year.
Speaker 6: It's going to help draw people to Apple stores.
Speaker 5: It's going to give Apple a way to have a
Speaker 5: big marketing push going to the holiday season. But in
Speaker 5: my view, as I've written, the most popular phones will
Speaker 5: still remain the profones, and those prophones will also still
Speaker 5: be the most practical new iPhones because of the better
Speaker 5: battery life performance and cameras.
Speaker 2: A lot of this, as you told us yesterday, is
Speaker 2: sort of a warm up act to a foldable phone.
Speaker 2: Having to make it as slim as possible and redesigning
Speaker 2: that camera. Tell us about some of the health perks
Speaker 2: that we're going to be getting. You've got a whole
Speaker 2: new lineup of smart watches. We've also got AirPods really
Speaker 2: lifting their game.
Speaker 5: Pods Pro three that is going to be a health
Speaker 5: centric upgrade. Last year they added hearing health features. This
Speaker 5: year they're adding heart health features, so you're going to
Speaker 5: have a heart rate monitor in the air pods for
Speaker 5: the first time. This is interesting for people who want
Speaker 5: to work out with their earbuds, which obviously is an
Speaker 5: extraordinarily common use case, but people who don't have Apple
Speaker 5: watches right the Apple Watch right, if you're like you
Speaker 5: have an Apple Watch, it has a heart rate monitor
Speaker 5: on there, but the total addressable market because of the
Speaker 5: price and the more ubiquitous nature of the earbuds category,
Speaker 5: will bring heart rate to more Apple customers, and if
Speaker 5: you're an Android user, right, you might find that to
Speaker 5: be an easier way to get into the Apple ecosystem
Speaker 5: as well through the air pods.
Speaker 6: So definitely a big upgrade there.
Speaker 5: The smart watches, you're going to see the biggest overhaul
Speaker 5: to the Apple Watch lineup in three years. So you're
Speaker 5: going to see updates to the se which is their
Speaker 5: low cost of three hundred dollars watch. You're going to
Speaker 5: see a Series eleven minor after the big Series ten
Speaker 5: overhaul last year, and then a pretty big update, the
Speaker 5: biggest update ever the Apple Watch Ultra. Slightly bigger screen,
Speaker 5: five G red cap so, faster internet connectivity, big thing
Speaker 5: satellite capabilities. So if you are on the go in
Speaker 5: a mountain range without cellular connectivity and you don't have
Speaker 5: your phone with satellite, now.
Speaker 6: Your watch the Ultra Watch will have it.
Speaker 5: Apple is going squarely today after Fipit and Garmin Mark.
Speaker 7: Pricing is going to be a story.
Speaker 4: I've away right, Either Apple raises prices, passes it onto
Speaker 4: the consumer, or they don't. They eat that cost largely
Speaker 4: relating to tariffs, and then the carriers come in with
Speaker 4: trade in deals.
Speaker 7: What do we know about those three factors.
Speaker 5: Yeah, so the pricing is interesting, You're right. Either way,
Speaker 5: it's going to be noteworthy. It's interesting because Samsung and
Speaker 5: Google both recently rolled out new phones and they did
Speaker 5: not increase their prices. So the precedent is not set
Speaker 5: there for Apple to raise the prices, even though they
Speaker 5: do have the air cover of tariffs. If they do
Speaker 5: raise prices, they're not really going to get into it.
Speaker 5: But if they did, my bet would be they explain
Speaker 5: it away as this is the first redesign, major camera upgrades,
Speaker 5: new processors, whatever, whatever, whatever. They're not going to blame
Speaker 5: Trump and tariffs because we as we all know, that
Speaker 5: is a no no with this administration. In terms of
Speaker 5: carrier deals, I am expecting an extraordinary amount of trade
Speaker 5: in specials in deals from all the.
Speaker 6: Major carriers in the US.
Speaker 5: Apple has been working in the last several months with
Speaker 5: these carriers to ensure that there are major deals in place.
Speaker 5: To me, that implies there will be some tweaks to
Speaker 5: the pricing strategy, and this could be positioned as a
Speaker 5: way to offset any of those changes.
Speaker 4: Bloomos Mark Gunman, who will be with us on the
Speaker 4: network for coverage out throughout the day.
Speaker 7: Thank you very much.
Speaker 4: Let's get more Carly in a Millionacy president and principle
Speaker 4: analyst of creative Strategies. You have a Galaxy S twenty
Speaker 4: five edge handset. It is the Samsung Slim thin phone. Yeah,
Speaker 4: it is a segment. So you've got Mark's reporting there
Speaker 4: on a seventeen air Again, why does it matter for Samsung?
Speaker 8: It was clearly a stepping stone to a much thinner
Speaker 8: fold seven. They didn't put a lot of marketing behind
Speaker 8: the product. To your point, is a segment, it's not
Speaker 8: consumers are screaming for finner phones. But we also haven't
Speaker 8: seen much difference in design for a long time. You know,
Speaker 8: all the phones kind of look the same. The thing
Speaker 8: that changes the most is the back where the camera is.
Speaker 8: So it'd be interesting to see if a rumors are right.
Speaker 8: But Apples is changing that part of the phone because
Speaker 8: it's going to be very obvious that you have a
Speaker 8: new model of your iPhone. But yes, the thinner phone
Speaker 8: is something that vendors seem to be doing to lead
Speaker 8: their way to a foldable which would make me wrong
Speaker 8: about Apple doing affordable iPad before an iphable phone affordable iPhone,
Speaker 8: which was always my theory.
Speaker 2: Your theory unfoldable, though, is one that we listen to
Speaker 2: because eventually we do anticipate a foldable phone from Apple,
Speaker 2: but they lag there behind competition, and of course everyone
Speaker 2: says they lag behind on gender to AI.
Speaker 3: Does that matter to a consumer?
Speaker 8: I don't think that consumers are going into a store
Speaker 8: as in four AI, and I think what plays in
Speaker 8: Apple's favor or what they don't have a tunnel of time,
Speaker 8: is the fact that there's the assurance that when they
Speaker 8: are ready, the software will come with all the phones
Speaker 8: that you already have. So if consumers are drawn to
Speaker 8: this year's models because of a change in hardware design,
Speaker 8: they know they have peace on minding going in and
Speaker 8: buy now knowing that when Apple Intelligence redesign will happen,
Speaker 8: they will have access to it.
Speaker 4: Karly, Now, what do we know from third party data
Speaker 4: from consumer trends about what happened after iPhone sixteen launch,
Speaker 4: particularly on Pro. You heard Mark explain that whatever happens
Speaker 4: with pricing, the carriers will come out and say trade
Speaker 4: in your handset. Lots of people get really frustrated, particularly
Speaker 4: in the USA, where they say, I only just got
Speaker 4: a sixteen Pro. Is there going to be enough in
Speaker 4: the capability to drive me even with a trade in
Speaker 4: to upgrade?
Speaker 8: Yes, last year's upgrade from the carriers were very aggressive.
Speaker 8: The tradeing pricing was really good for consumers. I think,
Speaker 8: as always, you have a segment of the market that
Speaker 8: is going to hold on to their phone no matter what.
Speaker 8: The Where it really makes a difference is the early
Speaker 8: adopters that will get that bump. Usually the hardware redesign
Speaker 8: really drives a lot of upgrades, and I think that
Speaker 8: between what we've see as room or colors and then
Speaker 8: the finn design, people will get into the store. Whether
Speaker 8: or not they'll decide to buy, we'll see depending on pricing.
Speaker 8: As you just discussed with Mark.
Speaker 4: May I ask in a quick fire around how many
Speaker 4: iPhone events have you been to?
Speaker 8: Oh my god since two thousand and seven, so too
Speaker 8: many odd time.
Speaker 4: We always say this is the biggest event for Apple
Speaker 4: in the year. I put it back to basics. iPhone
Speaker 4: is more than half of revenue. But this idea of
Speaker 4: a seventeen generation with a thin and air thrown in
Speaker 4: the middle, where do you think that ranks in the
Speaker 4: history of the sort of storied Apple launches.
Speaker 8: I think is to me, if it's true that this
Speaker 8: is a step in stone to fold, is a moment
Speaker 8: that is going to really fine the next generation. It'll
Speaker 8: be interesting to see how much they get into the
Speaker 8: architecture of the actual device, whatever they change, how they
Speaker 8: are redesigned. Making something thin is really hard when it
Speaker 8: comes to the phone, from battery size to not compromise
Speaker 8: your battery life, which was the biggest drawback for some song,
Speaker 8: and then the camera and the camera capability. You cannot
Speaker 8: have the same camera set as you do on a Promax,
Speaker 8: so how do you reinvent your camera to make sure
Speaker 8: that there's no compromise for people that care?
Speaker 2: Carolina talk to us about caring on wearables. How important
Speaker 2: are the new iterations of their pods of the watch is.
Speaker 3: Going to be for you?
Speaker 8: I think they're really important, and there is the reason
Speaker 8: why Apple always does these three products together because it
Speaker 8: is the trifecta of what being mobile is. I do
Speaker 8: think that the RT rate monitoring on the AirPods, if true,
Speaker 8: is going to be a really interesting for Apple. There
Speaker 8: are people who don't want to wear a watch, or
Speaker 8: people that cannot afford to add that to their list
Speaker 8: of products that they own, and so having AirPods allowing
Speaker 8: you to work out and do what you need, you
Speaker 8: will see, my guess, is a strong upgrade from regular
Speaker 8: AirPods to Airport Pro and so nice revenue uptake for Apple.
Speaker 2: What about to the bottom line, What about pushing up
Speaker 2: the price points for.
Speaker 8: These It'll be interesting to see if they're pushing up
Speaker 8: the price point. I agree totally with market that they
Speaker 8: cannot blame me on tariff if they do. There is
Speaker 8: the president of both Google and Samsung not raising prices,
Speaker 8: so it'll be really hard for them to do that.
Speaker 8: I also do think that they're a moment where they
Speaker 8: want to make sure that they're install based upgrades to
Speaker 8: the latest devices so that they have the latest chipset.
Speaker 8: That at the end of the day is what is
Speaker 8: going to matter for Apple intelligence ANYI in general, you.
Speaker 4: Know when you're setting the Steve jobs theater, what is
Speaker 4: the one thing the absolute focus for you in that
Speaker 4: moment that you're tracking.
Speaker 8: I'm still looking at how Apple brings everything together so
Speaker 8: that consumers stay tied to the ecosystem. That is going
Speaker 8: to be their biggest ticket to winning when it comes
Speaker 8: to AI.
Speaker 2: Currently in a Milanasy, President principal Analystic Creative Strategies, She's
Speaker 2: going to be back on Bloomberg again after Apple's keynote
Speaker 2: this afternoon, so stay tuned. Meanwhile, coming up, Europe's AI
Speaker 2: infrastructure company Nevious soaring after it said it will provide
Speaker 2: Microsoft access to GPU infrastructure capacity.
Speaker 3: This is putting their tech in video.
Speaker 2: It plans to offer a new product design to make
Speaker 2: certain types of AI work more efficient, such as video
Speaker 2: generation and software creation. That The product, called REUBENCPX, will
Speaker 2: debut at the end of twenty twenty six and will
Speaker 2: be offered in the form of cards that can be
Speaker 2: incorporated into existing server computer designs or used in discrete
Speaker 2: computers that can operate separately.
Speaker 3: Alongside other hardware in data centers.
Speaker 4: Elshore A AI a massive infrastructure deal between Microsoft and
Speaker 4: Europe's Nebius worth as much as nineteen point four billion dollars.
Speaker 4: Neocloud nebbiis recently spun off from Russia's tech giant Yandex
Speaker 4: will provide compute to Microsoft from a data center in
Speaker 4: New Jersey. Let's get out to Bloomberg's Matt Day, who
Speaker 4: covers Microsoft for US. And Matt, let's start with what
Speaker 4: Microsoft gets out of this cloud arrangement.
Speaker 9: So they get access to a whole bunch of video
Speaker 9: GPUs that Nebus is said to receive and fire up
Speaker 9: in New Jersey. They also get some optionality, right, They've
Speaker 9: been spending a ton of money on their own data
Speaker 9: center construction. They've also been throwing some to partners. This
Speaker 9: is maybe a way for them to grow that portfolio
Speaker 9: without so much of their risk if they had have
Speaker 9: been buying all the stuff themselves.
Speaker 2: We will Mebbius really making its name in neoc offering
Speaker 2: extraordinary storied business where it spun out of yan Nex.
Speaker 3: Of course, posts.
Speaker 2: Russia's invasion of Ukraine, the CEO backs away and now
Speaker 2: has this new European based juggernaut that's all things AI.
Speaker 9: Yeah, out of nowhere, right, and it's a huge vote
Speaker 9: of confidence in the yandexprass and some of the staffers
Speaker 9: who who left Russia to set up this rebranded holding company.
Speaker 9: They are quite quite a bet on a name that
Speaker 9: just didn't have a whole lot going for it. Here
Speaker 9: a couple of years ago.
Speaker 4: Matt, You've got to get back to your desk because
Speaker 4: in the time you've been in the seat, some news
Speaker 4: from Microsoft a change in rto policy.
Speaker 7: Do you have the details?
Speaker 9: Yeah, it looks like three days a week starting in
Speaker 9: Puget Sound, rolling out later to the rest of the
Speaker 9: US and then abroad. Microsoft have been a pretty a
Speaker 9: pretty lax hand on this sort of recommending two days
Speaker 9: a week, but it really varied by team. Some teams
Speaker 9: had an arty oot at all. So looks like they're
Speaker 9: kind of following some of the some of the folks
Speaker 9: like Amazon, the who have taken a harder line on
Speaker 9: getting folks back into the office.
Speaker 2: I mean, it doesn't seem to set them back in
Speaker 2: terms of market valuation, in terms of performance as far,
Speaker 2: But how much is there the fierce talent wars upon
Speaker 2: Microsoft weighing as well as some of the other names
Speaker 2: that we think about.
Speaker 9: Well, for sure, and I think for some who would
Speaker 9: argue that Microsoft's pres arrangements working well. It's been a
Speaker 9: recruiting advantage for them right particularly here in Seattle, where
Speaker 9: both Microsoft and Amazon are based. You know, you could say, hey, listen,
Speaker 9: if you don't want to have to commute the office
Speaker 9: five days a week, Microsoft's your bet. A little bit
Speaker 9: less advantage there, but they still are relatively flexible by
Speaker 9: big tech standards.
Speaker 2: Bloomberg's Matt Day all things Microsoft and Nevis, we appreciate it.
Speaker 3: Look, let's talk about the.
Speaker 2: Dutch chip making equipment company ASML. Now it's investing one
Speaker 2: and a half billion dollars in France's Mistral AI.
Speaker 3: This is pretty unusual move.
Speaker 2: It's going to allow ASML to incorporate Mistral's generative AI
Speaker 2: services in its own machinery and operations.
Speaker 3: Makes ASML the larger shareholder in Mistral within a Levember
Speaker 3: cent steak.
Speaker 2: Bloomberg's Benoir Buffalo is here for more from Paris. It
Speaker 2: is the pin up generative AI business Mistral for France.
Speaker 2: ASML coming in taking such a stake, what does it
Speaker 2: mean for the French government.
Speaker 10: It's obviously super important to French and I would say
Speaker 10: to European tech because now Mistral is probably the only
Speaker 10: European tech startup that's doing language models AI language models
Speaker 10: and that has a full suite of products also doing
Speaker 10: computing here, So it's definitely key.
Speaker 6: And key is also the fact.
Speaker 10: That it's a European tech giant, ASML investing in Mistral.
Speaker 10: Mistral previously got back in from US venture funds people
Speaker 10: who are doubting that they could continue to grow and
Speaker 10: raise capital with the European backers, and this is the
Speaker 10: case now, and it's important for Mistral because obviously we've
Speaker 10: got these giants like open Ai and the x et
Speaker 10: cetera doing the leading language models now, but there are
Speaker 10: European companies choosing to cut deals with Mistral because they're
Speaker 10: European and they see it as a sovereignty or strategic
Speaker 10: independence issue to make this contract and it's important for
Speaker 10: them for this reason. So it's extremely key for that reason.
Speaker 4: Yeah, Ben, While SML participated in that broader funding round,
Speaker 4: valuing Mistrau at almost twelve billion euros, that's the finance part.
Speaker 4: But there's a technology story here too, right, What is
Speaker 4: it that each company is partnering on in the technology sense.
Speaker 11: So.
Speaker 10: In a way they are on both ends of the
Speaker 10: AI value chain right, ALSML, it is really at the
Speaker 10: top of the value chain, really doing these very powerful
Speaker 10: and sophisticated machines, the only one in the world to
Speaker 10: do these machines, allowing chip makers to do very advanced chips.
Speaker 10: They have Nvidia, they are powering Nvida for example. Stroll
Speaker 10: is really at the end selling AI AI products. So
Speaker 10: Mistral for example, is a customer of Nvidia because they've
Speaker 10: got data centers that they're building in Europe to train
Speaker 10: their models. So what they say of this deal, it's
Speaker 10: a bit of a surprising deal in a way. What
Speaker 10: they say on ICML sides is that it's going to
Speaker 10: be for them a way to incorporate AI into the
Speaker 10: whole company, and ASML is going to use Mistral AI
Speaker 10: to improve the scanning of data to improve really it's
Speaker 10: core products, to improve efficiency. So that's what they're telling
Speaker 10: for now, but it's going to be interesting to follow
Speaker 10: what they're going to do, and they might use other
Speaker 10: AI companies, but they choose Mistral, and they choose to
Speaker 10: back this company.
Speaker 3: Well and immediately made every one thing.
Speaker 2: Maybe SML eventually wants to buy it, but there was
Speaker 2: pushback from the CEO.
Speaker 7: On that.
Speaker 6: Yeah, he said.
Speaker 10: They don't want to win corporate every technology they use,
Speaker 10: they don't want to integrate that into their company. So
Speaker 10: it looks like a put back, a pushback for sure.
Speaker 10: The founders of Mistrall and employees Mistral says they still
Speaker 10: have the majority of the company, so for surely it
Speaker 10: doesn't seem to be undergouts.
Speaker 6: It's already a very sizable.
Speaker 10: Investment for SML because they haven't done that kind of
Speaker 10: venture deals before, so it's already something unusual for them
Speaker 10: in a way to do.
Speaker 4: Bloomberg spend war Butelo in Paris, thank you very much.
Speaker 2: Attack association funded by the likes of Battle, Google and
Speaker 2: other major tech companies, when it's launching a new initiative
Speaker 2: to strengthen the freight relationship between Democrats and Silicon Valley,
Speaker 2: all ahead of the twenty twenty six midterm elections, and
Speaker 2: Bloomberg's Emily Burnbaun, who covers corporate lobbying for US, has
Speaker 2: that story. It looks support for the Trump administration is
Speaker 2: spiked among tech executives. So what does the Chamber of
Speaker 2: Progress hope to achieve here?
Speaker 12: Yes, they say that that movement, that right word shift
Speaker 12: in Silicon Valley is in part due to a reaction
Speaker 12: to the Biden administration's policies, which were much more skeptical
Speaker 12: and critical of big tech and AI companies. So they
Speaker 12: say we're here to do some relationship counseling. You know,
Speaker 12: Silicon Valley was once associated with Democrats. They want to
Speaker 12: bring us back to that more you know, Obama tech
Speaker 12: friendly era.
Speaker 4: Emily, I'm live here at Apple Park and Cupertino, And
Speaker 4: in the story we note that Apple is one of
Speaker 4: a number of technology companies helping to fund this association.
Speaker 4: In the last week, we've seen Tim Cook at the
Speaker 4: table with the President discussing the almost quid pro coo
Speaker 4: of investing in America in return for sort.
Speaker 7: Of policy relief. I gave you that backdrop, Souse.
Speaker 4: I just want to understand who's involved here on the
Speaker 4: company side and the democratic side, away from the association itself.
Speaker 12: Yeah, the association has hired a Democrat who has relationships
Speaker 12: with tech companies. So that's Dave Borland from the Department
Speaker 12: of Defense.
Speaker 3: And when I.
Speaker 12: Asked which company specifically signed off on this, you know,
Speaker 12: democratic project held under the Chamber of Progress, they said
Speaker 12: they couldn't say specifically, but They pointed to their members.
Speaker 3: They said, their members have.
Speaker 12: You know, they are also interested in looking ahead to
Speaker 12: a potentially more democratically controlled Washington and they want to
Speaker 12: start thinking about what it's going to look like when
Speaker 12: Trump is no longer in power.
Speaker 2: I mean, it's going to be quite a major reset
Speaker 2: because you just go back to the previous administration and
Speaker 2: how CEO off the CEO really felt that they were
Speaker 2: either being investigated or being fined. What's the next steps
Speaker 2: to rectify it?
Speaker 12: Well, you know, different people have different opinions on this contest.
Speaker 12: You know, it's contested within the Democratic Party if this
Speaker 12: is something to fix, but you know, if your chamber
Speaker 12: of progress, if you're a tech friendly Democrat, then I
Speaker 12: think first steps would be at least hearing out industry more.
Speaker 12: There was kind of a blanket policy in the Biden
Speaker 12: administration not to even speak to tech on issues that
Speaker 12: might impact them for fear of corporate capture.
Speaker 6: I think it would also be.
Speaker 12: You know, not having as strong M and A policies
Speaker 12: and things like that.
Speaker 4: Bloomberg's Emily Burnbound, thank you very much, welcome back.
Speaker 3: To Bloomberg Tech. And Caroline heid in New York.
Speaker 4: And Amed Lovelow live in Cooper Tino from Apple. It
Speaker 4: is iPhone day. I think it's worth thinking about the
Speaker 4: stock carra right, It's normal not just to see the
Speaker 4: stock treading water in advance of the presentation, but for
Speaker 4: it to be a seldom used kind of event. Overall
Speaker 4: yere to date, the stock's down almost six percent, but
Speaker 4: since the end of July, Apple's had a big rally.
Speaker 4: Some of the political issues behind it, some of the
Speaker 4: tariff questions partly put to bed but not completely. And
Speaker 4: now the overhang is what happens with AI. We don't
Speaker 4: expect anything from that today. I'm also thinking about what
Speaker 4: historically happens on iPhone day. Yes, sell the news, but
Speaker 4: in the thirty day or sixty day period afterwards, we
Speaker 4: do sometimes see that stock rally where the handset of
Speaker 4: that generation has had a warm reception with the consumer.
Speaker 4: We're in the fiscal fourth quarter, we're entering the holiday
Speaker 4: period of fiscal first quarter. That's why we're here tracking
Speaker 4: the third most valuable company in the world and the
Speaker 4: latest handsets.
Speaker 2: What you're looking at, I'm looking at another stock that's
Speaker 2: rallied hard going into today, Oracle. It's earnings about after
Speaker 2: the Bell Bloomberg Intelligence senior software analysts and rag Rana
Speaker 2: writing that solid recent results from Microsoft and call we've
Speaker 2: they're mode well for Oracle's own cloud infrastructure business. When
Speaker 2: are report's earnings, anra joins us now for more?
Speaker 3: The key question is.
Speaker 2: Whether the news is going to be strong enough to
Speaker 2: vindicate the run up in the stock. What strength do
Speaker 2: you want on fundamental.
Speaker 13: Zanerag Yeah, I think that is absolutely right. We really
Speaker 13: have a lot of their solidy baked into expectations going in.
Speaker 13: But the big question is going to be how much
Speaker 13: capital expenditures have to go up in order to take
Speaker 13: care of these you know backlock that is going to
Speaker 13: be extremely strong. When outicle reports tonight, you know what
Speaker 13: kind of funding they need? Well, you know when will
Speaker 13: it go live? So there's a lot of supply chain
Speaker 13: as well as financing questions, not so much demand issues
Speaker 13: at this point.
Speaker 4: And our Oracle to me has been a bit of
Speaker 4: a surprise story, the relationship with open Ai and Stargate.
Speaker 4: It's also just sort of getting a lot of wins.
Speaker 4: How much has it surprised you when you put it
Speaker 4: in the context of that broader field of let's call
Speaker 4: them Hyperscalers.
Speaker 13: Yeah, yeah, I know that's absolutely true. So when you
Speaker 13: go back to twenty eighteen when we started looking at
Speaker 13: the OCI infrastructure build up, you know, we were surprised
Speaker 13: that why Larry is spending so much money? Why not
Speaker 13: just you know, work with the hyperscalers to expand its
Speaker 13: database business, which is the cash cow and the high
Speaker 13: margin business. But frankly speaking, his bet was right because
Speaker 13: right now the question is where can I get compute
Speaker 13: And frankly speaking, they are now the fourth largest cloud
Speaker 13: providers in terms of size. The next few years they're
Speaker 13: going to generate twenty thirty billion dollars from it, so
Speaker 13: it's fairly lucrative business. Right now, the margins are low,
Speaker 13: but over time we anticipate that to improve as well.
Speaker 2: I mean, going back to their last learnings, we learned
Speaker 2: to the thirty billion dollars per year run. Right, we're
Speaker 2: going to get from one client alone we want anticipate,
Speaker 2: of course, that was open AI. Are we going to
Speaker 2: hear any major victories once again in terms of new
Speaker 2: clients or is it going to be more just showing
Speaker 2: the proof in AYI infrastructure revenue growth?
Speaker 13: Yeah, Oracle is very good at detailing the number of
Speaker 13: customers it has gained every quarter, so we do anticipate
Speaker 13: a long relist of that. But frankly speaking, the biggest
Speaker 13: question is when can you get these data centers up
Speaker 13: in live and running, and when do you start recognizing
Speaker 13: this backlog into revenue and improve on the growth rate
Speaker 13: which has already gone from you know, there was a
Speaker 13: time they were growing at subpart five five percent and
Speaker 13: now it's going to be low double digit's moving towards
Speaker 13: middle double digit growth rate, So very good for uticle shareholders.
Speaker 13: And you know management team and.
Speaker 4: Rona a Bloomberg Intelligence setting us up for Oracle after
Speaker 4: the bell, Thank you very much. It is iPhone day
Speaker 4: here in Coopertino at Apple, Samantha Kelly recently joining Bloomberg's
Speaker 4: consumer tech team. We have this squad now, but you
Speaker 4: know how this works. Let's start with the basics. What
Speaker 4: is it that you are looking out for and that
Speaker 4: you think is going to be the big story here?
Speaker 3: Yeah, thank you for having me.
Speaker 14: So Apple is a master of you know, stagery basically,
Speaker 14: you know, I just walked in a little while ago.
Speaker 14: Everyone's had enjoyed the show, and I think it's a
Speaker 14: reminder that this day is as almost about theatrics as
Speaker 14: it is about the tech aspect. So we're here to
Speaker 14: you know, listen to what they have to veil go,
Speaker 14: we test it out and we kind of decipher. You know,
Speaker 14: there's a lot of hype around it. Sometimes they might say,
Speaker 14: you know, a certain feature might represent you know, the
Speaker 14: whole new wave of what's to expect.
Speaker 3: But is that the case?
Speaker 14: How does that translate to why is it impactful to people?
Speaker 14: Will it really impact the industry and does it really
Speaker 14: actually matter?
Speaker 2: When it comes to questioning if it really matters, many
Speaker 2: feel it's the air that really matters to show the
Speaker 2: next leap forward in a foldable phone?
Speaker 3: Is that right for you? Sammy? Excited to get your
Speaker 3: hand on the air.
Speaker 14: I'm definitely excited to see it, that's for sure. I
Speaker 14: do think whether or not it translates to whether people
Speaker 14: actually need something like that. Again, it's going to be
Speaker 14: a lot slimmer, But what does that mean for battery life?
Speaker 14: What does it mean for the camera system? Kind of
Speaker 14: will sit in this like murky spot in between the
Speaker 14: entry level iPhone and higher end iPhone, But of course,
Speaker 14: you know, why does it exist anyway? Could perhaps lead
Speaker 14: the way to thinner perhaps foldable devices down the line.
Speaker 14: So definitely interested to see how the form factor impacts
Speaker 14: the functionality as well.
Speaker 4: We perhaps assume or take for granted that everyone knows
Speaker 4: what's going to happen. But the basics are local time
Speaker 4: one pm New York time, a keynote, a presentation, take
Speaker 4: it from there. How does Apple usually do it? Did
Speaker 4: they just sort of come up front and say, Okay,
Speaker 4: here's all the stuff. Do they tease things out?
Speaker 7: Yeah?
Speaker 14: What's interesting is it's changed in recent years. Before COVID,
Speaker 14: we used to come out here and it was a
Speaker 14: live presentation, a lot of excitement around that. You know what,
Speaker 14: will they announce? Will the demo even work? More authentic?
Speaker 14: During COVID they did. They switched to live streams. A
Speaker 14: lot of other companies did that. A lot of companies
Speaker 14: have since switched back, but Apple is still doing the
Speaker 14: pre recorded streaming. So it depends. You know, wherever you
Speaker 14: are in the world watching, you're going to see what
Speaker 14: we're sitting in the lawn chairs watching. So what's different
Speaker 14: here is Tim Cook usually addresses the audience, has a
Speaker 14: few words, We watch the live stream and then we
Speaker 14: get funneled into another room, we're able to try out
Speaker 14: have some minutes with the devices for the first time,
Speaker 14: and that allows us to see sort of what they're
Speaker 14: conveying and how it translates to touch.
Speaker 2: Some people love the people behind these stories, and we
Speaker 2: know that actually a lot of key talent has been
Speaker 2: being lost from Apple but largely in the AI sphere.
Speaker 2: Who are we going to see getting off on a
Speaker 2: pre recorded stage today.
Speaker 3: Who's going to be making an impact? Yes, that's a
Speaker 3: great question.
Speaker 14: So of course it'll be introductions by Tim Cook, who
Speaker 14: will be throughout the entire presentation, and then the leads
Speaker 14: around the different products. So again we're expecting new iPhones,
Speaker 14: we're expecting Apple Watches, we might see some air new AirPods,
Speaker 14: home pods, so the respective leads will join.
Speaker 3: But what's interesting too is.
Speaker 14: Sort of before the event, you can kind of see
Speaker 14: some key players in the audience. Last year, I remember
Speaker 14: there was some buzz about whether or not there's going
Speaker 14: to be an open AI partnership. In just moments before
Speaker 14: the live stream, we saw Sam Altman walking around the grounds.
Speaker 14: So it's always really kind of exciting to see sort
Speaker 14: of who might play a part in what that means
Speaker 14: for the announcements later in the day.
Speaker 3: I'm bog Samantha Kelly.
Speaker 2: We so appreciate you being live for us from Coombertino today.
Speaker 2: Re ready to get your hands on some of the
Speaker 2: new devices. Meanwhile, coming up, we're going to be joined
Speaker 2: by the Cisco Chief Product Officer discussing the company's latest
Speaker 2: agentic AI announcements.
Speaker 3: This is Bloomberg Tech.
Speaker 2: Now, amid the frenzy of demand for AI infrastructure, companies
Speaker 2: are focused on monitoring its impact, crucially the security and
Speaker 2: the cost.
Speaker 3: Of their AI application stack.
Speaker 2: That's including infrastructure but also LMS and agents. Now, Cisco
Speaker 2: is today unveiling new Splunk enterprise solutions to do just this,
Speaker 2: eighteen months after Cisco's.
Speaker 3: Acquisition are Plunk.
Speaker 2: The teams are revealing further product innovation focused on actionable AI,
Speaker 2: and here to discuss it all, Cisco's Chief Product Officer
Speaker 2: Gue two Patel a Splunks user conference. G two, what
Speaker 2: is it that you really think Cisco can offer a
Speaker 2: world in which AIA agree running left, right and center.
Speaker 15: Caroline, It's good to see you again. Thank you for
Speaker 15: having me on the show. Look, if you take a
Speaker 15: step back, we are probably witnessing one of the most
Speaker 15: seismic shifts that we've seen in humanity with AI, and
Speaker 15: we're now squarely in the second phase of AI, where
Speaker 15: you're moving from these chat pots that intelligently answered questions
Speaker 15: to agents that are going to conduct tasks and jobs
Speaker 15: almost fully autonomously, to automated workflows. Now, as that happens,
Speaker 15: you know, we start to think about, like, what are
Speaker 15: the constraints and impediments that might actually really limit the
Speaker 15: growth of AI, And we think there are three big constraints.
Speaker 15: First one is infrastructure where you just don't have enough
Speaker 15: power compute networking bandwidth to go out and you know,
Speaker 15: satiate the demand for AI. The second is a trust
Speaker 15: deficit where if you don't trust these systems, you're not
Speaker 15: going to use them, and so you have to make
Speaker 15: sure that the safety and security is really well thought through.
Speaker 15: And the third one is a data gap. And in
Speaker 15: all these three areas, Splunk out he plays a pretty
Speaker 15: big role. We happen to be at the user conferences
Speaker 15: Plunk in Boston and we've just made some pretty amazing
Speaker 15: announcements around what we're going to be able to do,
Speaker 15: specifically around machine data in AI. Like, so far AI
Speaker 15: has been really good with human data and training models
Speaker 15: and human kind of human generated data that's publicly available
Speaker 15: on the internet. What they've not been as good at
Speaker 15: as good at is machine data. And so what we
Speaker 15: want to do is make sure that we can actually
Speaker 15: have the time series machine data also be used to
Speaker 15: train these models. And we're excited about all the all
Speaker 15: the innovations that we've ad So I mean.
Speaker 2: You to as the product innovator here. How is it
Speaker 2: that you what is the technological feats that you have
Speaker 2: to do working alongside Splung? What is it that you
Speaker 2: have to drive it's different from others Now.
Speaker 15: I feel like that formula is pretty simple, Caroline. It's
Speaker 15: like you know, in tech, you just have to be
Speaker 15: relentlessly obsessed about continuing to innovate and making sure that
Speaker 15: you keep listening to customers and creating solutions that are
Speaker 15: at least an order of magnitude better than what's available
Speaker 15: in the market. No one switches to you for ten
Speaker 15: percent better. You have to be at least an order
Speaker 15: of magnitude better. And so we have this rule internally
Speaker 15: called B tenex better. And you're going to actually make
Speaker 15: sure that customers will get excited, and we saw that
Speaker 15: level of palpable energy today and at the event where
Speaker 15: all of our customers were just completely excited about the
Speaker 15: machine data Lake announcement we made. We made an announcement
Speaker 15: around an open source model for time series data. These
Speaker 15: are all really hard problems that actually require a level
Speaker 15: of assistance so their organizations can harness the full potential
Speaker 15: of AI because of the way that they can use data.
Speaker 4: G Two, is there evidence that Splunk's historic customers are
Speaker 4: using Cisco's other products and signing on for deals on
Speaker 4: that side and vice versa.
Speaker 7: Since you guys have closed.
Speaker 15: We've actually seen a lot of great evidence around it.
Speaker 15: In fact, just last quarter we closed one of the
Speaker 15: large financial service or organizations that happen to be a
Speaker 15: great Cisco customer is also a Splunk customer and now
Speaker 15: and they had actually we replaced another competitor in that
Speaker 15: account with Splunk. And let me tell you the reason why.
Speaker 15: If you really think about where Splunk shines is correlating
Speaker 15: data across multiple different sources, and if you start thinking
Speaker 15: about the kind of data that we have, if you
Speaker 15: assume that the attacker is already in your network, and
Speaker 15: what you're trying to do is prevent lateral movement. Who
Speaker 15: has the most amount of data about the network. Cisco
Speaker 15: does the telemetry from that network. Hydrating Splunk actually gives
Speaker 15: Plunk meaningful insights. The telemetry from users and devices, and
Speaker 15: the security firewalls that we might have. All of these
Speaker 15: pieces add value to Splunk. So what ends up happening
Speaker 15: is customers when they're starting to use Cisco technology with
Speaker 15: Splunk actually fine. Then not only be able to drive
Speaker 15: insights that we're not able to be derived, but we
Speaker 15: also get to be very economical in the way that
Speaker 15: you use it. And we made this one big announcement
Speaker 15: around Cisco firewall telemetry getting ingested in Splunk for free,
Speaker 15: and so that actually provides incentives from a financial perspective
Speaker 15: to our customers as well. G.
Speaker 7: Two.
Speaker 4: When I speak to industry, they say it's you personally
Speaker 4: that's responsible for bringing Cisco into this AI era. So
Speaker 4: very quickly to end, I wanted to ask where you
Speaker 4: feel Cisco is today versus where you want it to
Speaker 4: be in three to five years time now that Splunk's
Speaker 4: being integrated.
Speaker 15: Well, let me just start by saying that it is
Speaker 15: not just me. There's a wonderful team of people behind
Speaker 15: me that do all the work, and so I'm just
Speaker 15: lucky to be a small part of it. Where we
Speaker 15: see AI moving forward is we are now a squarely
Speaker 15: in the second phase and we're helping companies out with
Speaker 15: massive data center buildouts, whether it be hyperscalers or neo clouds,
Speaker 15: or serve providers or the enterprise. And the fact that
Speaker 15: we serve all those four constituencies helps each one of
Speaker 15: the constituencies from the learnings that we get from each
Speaker 15: one of them. So that's the first area that we're
Speaker 15: really helping in a big way, and low latency, high performance,
Speaker 15: energy efficient networking is one of our core value propositions there. Second,
Speaker 15: we're really helping with making sure that AI is safe
Speaker 15: and secure, and by the way, what I mean by
Speaker 15: that is not just using AI for security, but securing
Speaker 15: AI itself. That's a really, really important area that we've
Speaker 15: got a tremendous amount of offerings that are helping customers out.
Speaker 15: And the third one is this notion of fifty five
Speaker 15: percent of the growth of data is coming from machine data,
Speaker 15: and the market has not really gone out and figured
Speaker 15: out how to use machine data effectively. With AI. That's
Speaker 15: the problem that we want to solve and that's where
Speaker 15: we've actually made these announcements with Splunk and so the
Speaker 15: combination of those three technologies coming together in a unified
Speaker 15: platform is where we can really shine. And very few
Speaker 15: companies in the world have the level of breath and
Speaker 15: depth of technology that we do, so we feel pretty
Speaker 15: fortunate about that.
Speaker 4: Cisco's Chief Product Officer G two Patel, thank you. I'm
Speaker 4: joined now buying Nabila Popeau, senior research director at IDC
Speaker 4: where she focuses on smartphones and consumer electronics. Smartphone is
Speaker 4: key and Nabila, it's good to see you again. I
Speaker 4: want to get something we haven't yet discussed in the show,
Speaker 4: which is upgrade cycle and what it will take the
Speaker 4: capability of an iPhone seventeen generation the features to drive
Speaker 4: an upgrade cycle. Have you modeled for that?
Speaker 11: Absolutely, that's what we've been talking about for I guess
Speaker 11: as long as I can you know the past few years,
Speaker 11: when is the next upgrade cycle going to come? And
Speaker 11: you know we are right now looking at about a
Speaker 11: forty plus or almost four year upgrade cycle for iPhones,
Speaker 11: and this is what primes the iPhone seventeen regardless of
Speaker 11: obviously there's big upgrades to the phone and device itself
Speaker 11: in terms of hardware, and of course very anticipated and
Speaker 11: exciting excitement around iPhone seventeen Air. But regardless of all that,
Speaker 11: or on top of all that, the Apple devices themselves
Speaker 11: are looking at a major upwoid cycle coming up, because
Speaker 11: we're approaching that four year mark. So that's what we're
Speaker 11: you know, looking baking that.
Speaker 4: In Bluebosmark Gunman reports that an iPhone seventeen Air, a
Speaker 4: thin five point five millimeters thickness phone, will be eSIM,
Speaker 4: and he talks about how eSIM in the Chinese market
Speaker 4: very interesting.
Speaker 7: Why is that an important factor?
Speaker 11: That's important because that makes it a barrier, right because
Speaker 11: the Chinese market right now, on top of all the
Speaker 11: other challenges that Apple is facing in terms of competition
Speaker 11: being very driven with all the AI features that they
Speaker 11: have been marketing to the hill, right, that's that's a big,
Speaker 11: big challenge for Apple, on top of the accelerated growth
Speaker 11: of Huawei and the support that they have from the
Speaker 11: government as well as the consumer loyalty the ATH feature.
Speaker 11: Despite the excitement that the consumers have with the Ultrasim
Speaker 11: Ultraslim device. The fact that it doesn't is not going
Speaker 11: to support that is going to be another challenge. So yes,
Speaker 11: the Chinese market we're still expecting again regardless of you know,
Speaker 11: on top of despite the great upgrades that the seventeen
Speaker 11: will bring, there is the excitement in the Chinese market,
Speaker 11: but we're still expecting a decline. So it's still going
Speaker 11: to be a tough, uphill battle for Apple.
Speaker 3: And China Narina.
Speaker 2: How price sensitive are well China if you even called
Speaker 2: it an emerging market now, but India they'd be making
Speaker 2: scale there. How much is price and ability to move
Speaker 2: higher on some of these newer and the ones you're
Speaker 2: excited about, the slimmer versions.
Speaker 11: So I'm glad you you know, you've brought India and
Speaker 11: some of these emerging markets up.
Speaker 7: I think.
Speaker 11: What's interesting is that despite these markets being extremely price
Speaker 11: sensitive traditionally, right we've seen the opposite trend. We've seen,
Speaker 11: especially in India, the large ASB growth or in history
Speaker 11: for the Indian market in twenty in Q two right
Speaker 11: now we saw ten percent growth and the largest ASP
Speaker 11: for smartphones ever. And Apple has been seeing double digit growth.
Speaker 11: So regardless of where the price, despite the price increases,
Speaker 11: and even with the new devices that will see Apple
Speaker 11: is seeing tremendous growth and that is because of the
Speaker 11: support from financing programs that we're seeing in all.
Speaker 3: Of these markets. What will steal the show?
Speaker 2: Is it all about the slimmer versions or will the
Speaker 2: pro still be the standout? Will ultimately people go for
Speaker 2: more power, more battery life versus trying out something that's
Speaker 2: incredibly slim but might be better for a next generation.
Speaker 11: So again, great question, and you know, for me, I
Speaker 11: think it depends. It's going to be a combination. I
Speaker 11: think that's what Apple is doing really well, and it's
Speaker 11: ingenious move because with the Slim, they've gotten the buzz,
Speaker 11: the marketing and a great you know lead up to
Speaker 11: the event. Because the Slim will hit the mark with
Speaker 11: a lot of consumers, or with a few consumers actually,
Speaker 11: then the majority of consumers who are looking for camera
Speaker 11: a better performance, so the Pro will hit the majority
Speaker 11: of consumers. We will generate more volume and certainly more
Speaker 11: revenue for Apple, but the slim device will also hit
Speaker 11: the mark. So I think combined is what will lead
Speaker 11: to a bigger upraight cycle for Apple this year. And
Speaker 11: that's why, as a result, for total. So if you
Speaker 11: look at the seventeen series, we're expecting them to do
Speaker 11: bigger volume.
Speaker 4: Listening very quickly, trade in how big a fact will
Speaker 4: that be? Particular in America? Very quick huge, Okay, enormous
Speaker 4: that sixtinct carry you had it there.
Speaker 2: Nada Profile. It's so good to have you back on
Speaker 2: the show. Senior research director at IDC. We love their
Speaker 2: number crunching. Meanwhile, and that does it for this edition
Speaker 2: a Bloomberg Tech.
Speaker 3: We got more.
Speaker 4: Yeah, stay with us throughout the news day for more
Speaker 4: on Apple. Special coverage later today. It's very focused on
Speaker 4: price seeing, bring in the tariffs and the political story.
Speaker 4: And Zambila just talked about. Huge factor is trade.
Speaker 3: Ins from New York, from Kupertino.
Speaker 2: People all eyes on Apple, one of the most valuable
Speaker 2: companies in the world.
Speaker 3: This is Bloomberg Tech.