WEBVTT - Apple Product Launch, HSBC Mulls Merging Divisions 0:00:02.400 --> 0:00:09.119 Bloomberg Audio Studios, podcasts, radio news. You're listening to the 0:00:09.119 --> 0:00:13.320 Bloomberg Intelligence Podcast. Catch us live weekdays at ten am 0:00:13.360 --> 0:00:15.800 Eastern on Apple card Playing and Broud Auto with the 0:00:15.800 --> 0:00:19.720 Bloomberg Business App. Listen on demand wherever you get your podcasts, 0:00:19.920 --> 0:00:22.280 or watch us live on YouTube. 0:00:23.200 --> 0:00:25.320 All right, so we know a big, big day out 0:00:25.320 --> 0:00:27.800 in the Bay Area today with Apple and their new 0:00:28.520 --> 0:00:31.320 iPhone and new product launches. Mark German he covers all 0:00:31.320 --> 0:00:34.279 the technology stuff out there for Bloomberg News. Mark, I've 0:00:34.320 --> 0:00:36.720 already informed Tim Cook that I am, in fact going 0:00:36.760 --> 0:00:38.839 to be upgrading my phone here in the not too 0:00:38.880 --> 0:00:43.279 distant future to the iPhone sixteen. I guess I am 0:00:43.320 --> 0:00:47.680 who cares and they're very excited. Are people excited for 0:00:47.720 --> 0:00:48.680 this event here today? 0:00:48.720 --> 0:00:52.320 And if so, why, Yes, it's all about the iPhone 0:00:52.320 --> 0:00:54.280 this year. This is actually going to be more of 0:00:54.320 --> 0:00:56.600 a muted release, right, So this is not a big 0:00:56.720 --> 0:00:59.120 year over year overhaul. Remember last year they added the 0:00:59.160 --> 0:01:03.520 Titanium show. Well, this year is more about refinements, increased 0:01:03.600 --> 0:01:10.280 processing performance to better support artificial intelligence, improve displays on 0:01:10.319 --> 0:01:12.720 the Pro model, so slightly bigger screens is about a 0:01:12.760 --> 0:01:16.720 five percent display increase, but because the bezels around the 0:01:16.760 --> 0:01:19.840 display are smaller, that increase is actually going to be 0:01:19.840 --> 0:01:23.000 more noticeable than a five percent increase would normally suggest 0:01:23.080 --> 0:01:26.319 if you heard that. The other big enhancement is going 0:01:26.360 --> 0:01:28.319 to be a camera button. This is going to be 0:01:28.319 --> 0:01:30.440 on all four new models, both the low end and 0:01:30.480 --> 0:01:33.000 the high end models, and it basically works the same 0:01:33.040 --> 0:01:35.640 as a DSLR button, right, So you soft touch it 0:01:35.680 --> 0:01:39.039 to autofocus on a subject, you press it in in 0:01:39.120 --> 0:01:42.200 order to actually take that photo or a video. You're 0:01:42.240 --> 0:01:43.800 also going to be able to swipe on it up 0:01:43.840 --> 0:01:46.680 and down or left to right in order to zoom 0:01:46.680 --> 0:01:48.960 in and out of the subject. So it's essentially the 0:01:49.000 --> 0:01:51.840 same camera controls that you've had on the display now 0:01:51.880 --> 0:01:54.560 relegated to a harbor button on the side of the phone. 0:01:54.880 --> 0:01:57.120 And the bet there is that will help people take 0:01:57.160 --> 0:02:00.080 more pictures and maybe better pictures, which of course is 0:02:00.080 --> 0:02:02.360 going to translate to people needing to buy iPhone with 0:02:02.480 --> 0:02:06.600 more storage base, which obviously costs more, and bigger iCloud 0:02:06.680 --> 0:02:09.720 storage plans, which obviously will generate more revenue for Apple 0:02:09.760 --> 0:02:12.520 on both of those things, right, So it's I guess 0:02:12.520 --> 0:02:14.880 a win for consumers and a double win for Apple. 0:02:15.000 --> 0:02:17.920 Does that imply then a supercycle definitely taking hold in 0:02:17.960 --> 0:02:19.000 twenty four to twenty five. 0:02:20.520 --> 0:02:21.880 There's no iPhone supercycle. 0:02:21.919 --> 0:02:24.440 There have been some analyst claims over the last several 0:02:24.480 --> 0:02:27.840 weeks about a supercycle coming with these new iPhones. I 0:02:27.880 --> 0:02:29.880 would have to say that they're either making things up, 0:02:29.960 --> 0:02:32.280 or getting bad information, or just trying to pump the 0:02:32.280 --> 0:02:35.519 stock price for their own self interests. 0:02:35.720 --> 0:02:35.919 Right. 0:02:36.560 --> 0:02:39.280 The reality is that the numbers that we're seeing in 0:02:39.320 --> 0:02:42.600 terms of iPhone orders from the supply chain probably indicate 0:02:42.600 --> 0:02:44.120 an annual decline. 0:02:43.680 --> 0:02:44.919 On iPhone unit shipments. 0:02:44.960 --> 0:02:48.440 Now, an annual decline doesn't necessarily mean a revenue decline, right, 0:02:48.760 --> 0:02:51.160 Because they're adding new features through these higher end models, 0:02:51.200 --> 0:02:54.880 particularly making the lower end Pro model even better at 0:02:54.919 --> 0:02:57.280 one thousand dollars price point. You may be seeing people 0:02:57.320 --> 0:02:59.480 who normally would buy the seven ninety nine version go 0:02:59.520 --> 0:03:02.120 to the nine nine version, which could raise overall asps. 0:03:02.639 --> 0:03:05.839 In terms of an iPhone supercycle, that normally means big 0:03:05.880 --> 0:03:08.600 hardware changes, We're not getting that this time around. It 0:03:08.639 --> 0:03:11.200 also would mean that Apple intelligence would be ready to go, 0:03:11.600 --> 0:03:13.040 but I would say it's half baked. 0:03:13.040 --> 0:03:13.560 If even that. 0:03:13.960 --> 0:03:16.080 A lot of the new features aren't coming until December, 0:03:16.160 --> 0:03:18.440 and many more aren't coming until the middle of next year. 0:03:18.720 --> 0:03:19.880 So if you're anticipating an. 0:03:19.760 --> 0:03:22.160 iPhone supercycle, if you believe there will ever be an 0:03:22.200 --> 0:03:26.360 iPhone supercycle again, a I would say, adjust your expectations 0:03:26.360 --> 0:03:29.800 for twenty twenty four, maybe focused on September twenty twenty five, 0:03:29.960 --> 0:03:33.000 when the iPhone seventeen launches with more significant enhancements. 0:03:33.360 --> 0:03:34.680 What is Apple Intelligence? 0:03:36.400 --> 0:03:40.520 Apple Intelligence is artificial intelligence for Apple customers, right, So 0:03:40.600 --> 0:03:43.920 that's the Apple branded version of their AI platform coming 0:03:43.920 --> 0:03:47.279 as part of iOS eighteen point one sometime in October. 0:03:47.400 --> 0:03:52.840 That's including summaries of notifications. That's including phone call recording 0:03:52.920 --> 0:03:58.040 and automated transcriptions. That's including transcriptions and voice memos is 0:03:58.320 --> 0:04:03.240 including voice recording, and the nosapp. It's including gen Mojis, 0:04:03.280 --> 0:04:06.280 which uses artificial intelligence to create your own emoji characters. 0:04:07.320 --> 0:04:11.160 My daughter loves that, by the way, like they're making emojis, 0:04:11.200 --> 0:04:13.080 Like she takes my phone and does the things and 0:04:13.120 --> 0:04:15.480 she makes chiffs and all this stuff. Like the young kids, 0:04:15.560 --> 0:04:16.080 they love it. 0:04:17.320 --> 0:04:19.760 I think the gen moojis are going to be incredibly popular. 0:04:19.839 --> 0:04:21.080 I think it's going to be at the center of 0:04:21.080 --> 0:04:24.120 many of Apple's advertisements for these features, but that's not 0:04:24.160 --> 0:04:25.200 coming until December. 0:04:25.279 --> 0:04:26.560 So I'm not sure. 0:04:26.279 --> 0:04:29.000 How that can sell new iPhones in September if it's 0:04:29.040 --> 0:04:31.120 not going to be available until December. 0:04:31.200 --> 0:04:32.960 So I have some big. 0:04:32.880 --> 0:04:37.080 Questions about where analysts get their information from, why they 0:04:37.120 --> 0:04:39.520 say the things they do, and why some. 0:04:39.480 --> 0:04:40.880 Of them are considered reputable. 0:04:40.960 --> 0:04:43.240 So I think that people need to be able to 0:04:43.480 --> 0:04:46.720 separate the signal from the noise. And that's why I'm 0:04:46.760 --> 0:04:49.880 so happy to come on here and explain and provide 0:04:49.880 --> 0:04:50.760 a dose of reality. 0:04:50.880 --> 0:04:52.760 So but the dumb question, So Paul gets his new 0:04:52.800 --> 0:04:55.800 phone in October, can he just update the stuff when 0:04:55.800 --> 0:04:57.720 the cool things like the emoji stuff comes out? 0:04:59.200 --> 0:05:01.680 Yes, he can'tolutely and it's not a dumb question, right, 0:05:01.720 --> 0:05:04.800 So what we're going to see our Apple Intelligence features 0:05:04.880 --> 0:05:07.120 rolling out probably over the course the next six to 0:05:07.200 --> 0:05:10.360 nine months, with constant software updates. Now this is new 0:05:10.360 --> 0:05:12.640 for Apple. This is not something they've done in the past. 0:05:12.920 --> 0:05:15.359 Usually you get one big software update every September and 0:05:15.400 --> 0:05:16.120 you're pretty. 0:05:15.920 --> 0:05:17.640 Much set safe for buck mixes and. 0:05:17.640 --> 0:05:19.760 Maybe a couple of enhancements here or there until the 0:05:19.760 --> 0:05:21.960 following September. This time around is going to be a 0:05:22.040 --> 0:05:24.760 gradual release. Now, why are they doing that, because Apple 0:05:24.800 --> 0:05:27.520 Intelligence simply is not ready. There's a lot of testing 0:05:27.520 --> 0:05:30.000 that needs to go into this. And the reason Apple 0:05:30.040 --> 0:05:33.360 Intelligence has been behind is because they're responding late to 0:05:33.400 --> 0:05:36.000 this AI praise. They really didn't start getting to work 0:05:36.080 --> 0:05:39.520 on these AI enhancements until the second half of twenty 0:05:39.560 --> 0:05:43.320 twenty two after they saw chat GPT launch. Right, this 0:05:43.440 --> 0:05:45.440 was really something that was developed over the course of 0:05:45.440 --> 0:05:47.880 twenty twenty three and into the first half of twenty 0:05:47.880 --> 0:05:48.360 twenty four. 0:05:48.760 --> 0:05:49.960 And their development. 0:05:49.520 --> 0:05:52.120 Cycles for major new initiatives like this, these normally can 0:05:52.160 --> 0:05:54.279 take three to four years, right, but they did it 0:05:54.320 --> 0:05:55.599 basically in half the time. 0:05:56.560 --> 0:05:59.200 So, yeah, you raised a good point earlier, mark that 0:05:59.400 --> 0:06:02.320 there's a reasonable scenario, just given the size of the market, 0:06:02.400 --> 0:06:05.840 that there really are no supercycles unlikely to be a 0:06:05.880 --> 0:06:08.159 super cycle again for the Apple iPhone. Is that a 0:06:08.200 --> 0:06:09.599 belief that's widely held out there. 0:06:11.320 --> 0:06:13.440 It's widely held by me, and I think it's widely 0:06:13.480 --> 0:06:15.480 held by people who really understand this stuff. 0:06:15.720 --> 0:06:16.960 You know, the last time we. 0:06:16.920 --> 0:06:20.800 Got a true, true iPhone supercycle was back in twenty fourteen, 0:06:20.920 --> 0:06:22.920 ten years ago, with the release of the iPhone six 0:06:22.960 --> 0:06:24.560 and six plus two reasons. 0:06:24.760 --> 0:06:25.880 That was the first time. 0:06:25.720 --> 0:06:29.640 That they made substantial screen size increases to the iPhone. 0:06:29.680 --> 0:06:32.240 That was your first Apple fablet, right, moving to the 0:06:32.240 --> 0:06:34.320 four point seven to five point five in screen sizes. 0:06:34.800 --> 0:06:35.200 Massive. 0:06:35.680 --> 0:06:38.440 Also, that was the same year where they struck the 0:06:38.520 --> 0:06:42.440 carrier agreement with China Mobile in China, the biggest wireless 0:06:42.480 --> 0:06:46.320 carrier in the world, adding an addressable market, an additional 0:06:46.360 --> 0:06:49.520 addressable market of one billion people, right, So that is 0:06:49.560 --> 0:06:51.760 what really elicited that supercycle, and that was a two 0:06:51.839 --> 0:06:53.760 three year thing, So that was great for Apple. We 0:06:53.800 --> 0:06:57.200 saw another big bounce in twenty seventeen with the iPhone ten. 0:06:57.440 --> 0:07:00.000 Obviously that was major in terms of asps or great 0:07:00.279 --> 0:07:03.120 the starting price right by three hundred dollars from seven 0:07:03.200 --> 0:07:05.320 hundred and two one thousand. That was a big upgrade 0:07:05.320 --> 0:07:07.680 with face idea. Then we saw that again with the 0:07:07.720 --> 0:07:10.600 iPhone twelve, five G all four models at the tail 0:07:10.680 --> 0:07:13.000 end of twenty twenty, at the top of COVID when 0:07:13.000 --> 0:07:15.600 people were splurging on money, right, So that was a 0:07:15.640 --> 0:07:16.119 big one. 0:07:16.200 --> 0:07:18.280 But since the iPhone twelve and twenty twenty and the 0:07:18.320 --> 0:07:20.120 advent of five G for Apple. 0:07:20.280 --> 0:07:23.239 We haven't seen major, major, major significant changes. 0:07:23.720 --> 0:07:26.120 Maybe they're coming at the end of next year. Maybe 0:07:26.120 --> 0:07:26.720 that will. 0:07:26.480 --> 0:07:29.480 Create a supercycle, but I want people to know, don't 0:07:29.520 --> 0:07:30.400 expect one this year. 0:07:30.480 --> 0:07:32.480 All Right, We're on't up more Apple in just a moment. Also, Hey, 0:07:32.520 --> 0:07:36.360 Mark Ourman, Thanks lot really appreciated. Bloomer Technology senior reporter 0:07:36.560 --> 0:07:38.440 joining us from California. 0:07:39.360 --> 0:07:43.240 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:07:43.320 --> 0:07:46.360 weekdays at ten am Eastern on Apple Car Play and 0:07:46.360 --> 0:07:49.280 Android Auto with the Bloomberg Business app. You can also 0:07:49.360 --> 0:07:52.880 listen live on Amazon Alexa from our flagship New York station. 0:07:53.240 --> 0:07:55.960 Just say Alexa Play Bloomberg eleven thirty. 0:07:57.560 --> 0:07:59.600 Speaking of sectors, good to look at. Looking at Apple, 0:07:59.720 --> 0:08:02.640 it's about one point three percent today. It is their 0:08:02.720 --> 0:08:05.320 glow time event, as we've been talking about. But Bloomberg 0:08:05.320 --> 0:08:09.720 Big Take had a fantastic piece today and we wanted 0:08:09.720 --> 0:08:13.280 to dive into Austin car technology reporter for Bloomberg News. 0:08:13.280 --> 0:08:16.600 It's titled Apple's Rise from Rebel to three point four 0:08:16.720 --> 0:08:21.160 trillion dollar world power. It's great to get you on this, Austin. 0:08:21.240 --> 0:08:23.320 It was a wonderful piece. Distracted me from my whole 0:08:23.320 --> 0:08:23.960 car ride. 0:08:23.840 --> 0:08:24.880 Into the office. 0:08:25.480 --> 0:08:28.080 Can you just connect all the dots from like the 0:08:28.240 --> 0:08:29.600 eighties until now. 0:08:31.520 --> 0:08:33.440 You want me to summarize forty years and a minute, 0:08:33.480 --> 0:08:37.480 I can you bet you've got okay? Well, well, really, 0:08:37.559 --> 0:08:40.480 what this story does is chart why and how Apple 0:08:40.520 --> 0:08:43.760 found in its position today, facing a big anti trust 0:08:44.080 --> 0:08:48.400 lawsuit in the US, a lot of regulatory pressure in Europe, 0:08:48.840 --> 0:08:52.240 as well as a lot of really just skepticism and 0:08:52.280 --> 0:08:54.640 criticism for a lot of the partners and developers that 0:08:54.640 --> 0:08:57.640 have depended on Apple over the years. And it charts 0:08:57.640 --> 0:09:01.040 how basically Apple has changed from thatnineteen eighty four era 0:09:01.200 --> 0:09:03.720 when it released the Mac it was seen as this 0:09:03.800 --> 0:09:07.200 sort of disruptive force in the technology industry to twenty 0:09:07.240 --> 0:09:09.080 twenty four when a lot of people think that this 0:09:09.160 --> 0:09:12.040 is a sort of domineering force that needs to be disrupted. 0:09:12.200 --> 0:09:14.199 So we go through from the Mac to the iPod 0:09:14.240 --> 0:09:17.200 and iPhone up through present day with the release of 0:09:17.240 --> 0:09:21.000 the iPhone, the new iPhone sixteen later today, and it's 0:09:21.000 --> 0:09:23.319 just really just putting all the pieces together about how 0:09:23.360 --> 0:09:24.640 Apple finds itself. 0:09:24.320 --> 0:09:25.360 In that position now. 0:09:26.160 --> 0:09:29.720 And Austin along with Max Chafkin, you guys reported this story. 0:09:29.840 --> 0:09:30.720 Just fantastic work. 0:09:30.760 --> 0:09:34.480 But for me, Cameron Galley who does all the illustrations 0:09:34.520 --> 0:09:37.600 just made it really cool and really interactive, some awesome 0:09:37.640 --> 0:09:38.560 stuff as always. 0:09:38.840 --> 0:09:41.960 So Austin, where do you think Apple goes from here? 0:09:42.040 --> 0:09:44.840 What's is it just new products? 0:09:45.040 --> 0:09:47.600 Is it maybe getting more ingrained in our daily lives? 0:09:47.640 --> 0:09:48.800 If that's even possible. 0:09:49.200 --> 0:09:51.400 What do you think kind of a longer term vision 0:09:51.440 --> 0:09:52.640 is for the folks in Kupertino? 0:09:54.559 --> 0:09:56.640 Look, I mean, I think a really good question for 0:09:57.040 --> 0:09:59.800 listeners right now or even you guys, is just, you know, 0:10:00.120 --> 0:10:02.240 going to release this new iPhone. If you guys are 0:10:02.280 --> 0:10:05.640 Apple users, have you ever seriously considered switching to a 0:10:05.640 --> 0:10:08.200 different device or is it just the default? Now that 0:10:08.280 --> 0:10:11.160 I'm going to upgrade to the iPhone sixteen? Maybe at default? 0:10:11.240 --> 0:10:13.280 And so I think the question is how long can 0:10:13.320 --> 0:10:15.480 that last where it is just sort of the default? 0:10:15.679 --> 0:10:18.120 I mean, even their new features that are going to 0:10:18.280 --> 0:10:20.600 release today are all about you know, AI and how 0:10:20.640 --> 0:10:23.880 that ties into some of its hardware. But in all honesty, 0:10:23.800 --> 0:10:26.319 they're two years late to AI. A lot of the features. 0:10:26.320 --> 0:10:29.440 Mark German or Apple colleague, is reporting that won't really 0:10:29.440 --> 0:10:31.679 release until twenty twenty five, at which point maybe you 0:10:31.679 --> 0:10:34.000 should just wait for the iPhone seventeen and I just 0:10:34.000 --> 0:10:37.080 think there's a big question about you know, Apple's products 0:10:37.120 --> 0:10:39.480 are still good. They still make you know, the best laptop, 0:10:39.520 --> 0:10:42.920 the best you know, watch and earbuds. I'm talking through 0:10:42.920 --> 0:10:45.120 my AirPods right now. But at the same time, when 0:10:45.120 --> 0:10:47.920 they don't face that type of pressure, does their products 0:10:47.960 --> 0:10:50.440 just become too incremental and too boring? And I think 0:10:50.480 --> 0:10:53.040 that is when you're going to see a lot more 0:10:53.040 --> 0:10:56.200 disruptives trying to change the way computing works and work 0:10:56.240 --> 0:10:58.960 outside of the Apple ecosystem. But the problem for consumers 0:10:58.960 --> 0:11:00.720 like us is we're kind of stuck in it. I'm 0:11:00.720 --> 0:11:02.319 not going to switch anytime soon for sure. 0:11:02.880 --> 0:11:04.720 Well then to that point, but I found also interesting, 0:11:04.840 --> 0:11:06.840 and I didn't know in the piece that you wrote, 0:11:07.000 --> 0:11:10.600 was sort of Tim Cook's role in managing Apple supply chain, 0:11:10.640 --> 0:11:14.360 and you dug deep into Apple would have a supply 0:11:14.480 --> 0:11:17.520 chain partner and then in essence look to manufacture that 0:11:17.760 --> 0:11:20.400 in house, and then booed that company, which is really 0:11:20.400 --> 0:11:22.959 messed up tons of companies around the world. Can you 0:11:23.000 --> 0:11:26.080 give us some detail on that. Sure. 0:11:26.520 --> 0:11:29.400 The most infamous example actually goes back about a decade ago. 0:11:29.559 --> 0:11:33.280 Apple was developing these new sapphire screams that were going 0:11:33.320 --> 0:11:35.439 to be altered durable instead of the glass that they 0:11:35.480 --> 0:11:37.920 currently use, and they sort of outsourced it to a 0:11:37.960 --> 0:11:41.400 partner and then left that partner on the hook with 0:11:41.440 --> 0:11:43.440 all the liability when Apple decided not to go that 0:11:43.520 --> 0:11:46.040 route because the sapphire wasn't quite going as fast as 0:11:46.080 --> 0:11:49.040 they could develop it for the iPhone. And I think 0:11:49.040 --> 0:11:51.000 that we sort of positioned that as symbolic of what 0:11:51.040 --> 0:11:53.600 Apple has seen with a few of the partners they've 0:11:53.600 --> 0:11:55.800 worked with over the years, not just in the supply chain, 0:11:55.840 --> 0:11:59.119 but also on the software ecosystem side. It's really fascinating 0:11:59.160 --> 0:12:01.160 all this sort of trend that we see of a 0:12:01.200 --> 0:12:04.240 partner really excited to work with Apple in the beginning, 0:12:04.280 --> 0:12:08.240 like Goldman Sachs on the Apple Card or even General Motors. 0:12:08.240 --> 0:12:10.360 We side as another example of working them on CarPlay, 0:12:10.520 --> 0:12:12.520 and then years go by and suddenly they're not so 0:12:12.640 --> 0:12:15.160 happy with the relationship with the Apple anymore. And I 0:12:15.160 --> 0:12:17.520 think that really has become our trend in recent years 0:12:17.559 --> 0:12:20.840 as the company has grown to this massive, multi trillion 0:12:20.840 --> 0:12:23.960 dollar force that essentially it's Apple's where or the highway. 0:12:24.160 --> 0:12:26.120 And I'm just curious how long that will last with 0:12:26.160 --> 0:12:30.480 partners before they say you know what enough is enough, and. 0:12:30.480 --> 0:12:32.280 You know, Austin, I think for a lot of investors, 0:12:32.320 --> 0:12:34.839 one of the longer term issues that's still always out 0:12:34.880 --> 0:12:36.920 there and is probably increasing in concern. It's just the 0:12:36.960 --> 0:12:39.840 regulatory risk for not just Apple but kind of big 0:12:39.840 --> 0:12:42.920 tech in general, but certainly for Apple given their marketing position. 0:12:43.800 --> 0:12:45.880 How do you think the companies kind of how do 0:12:45.960 --> 0:12:47.720 they react to that? And just in terms of a 0:12:47.840 --> 0:12:49.760 long term thread or headwind. 0:12:51.480 --> 0:12:53.800 Well, actually, I mean the DOJ case in the US. 0:12:53.920 --> 0:12:57.439 You know, they just released their complaint in March. Apple 0:12:57.520 --> 0:13:00.160 is pushed to dismiss it just earlier in August. That's 0:13:00.160 --> 0:13:01.760 going to play out over the course of years. I 0:13:01.760 --> 0:13:04.480 think that, you know, the preceding cases with the DOJ 0:13:04.600 --> 0:13:06.959 and IBM, or DJ and Microsoft. I mean this last many, 0:13:07.040 --> 0:13:10.520 many years, but we're already seeing sort of a precursor 0:13:10.559 --> 0:13:12.400 to that, and what's happening in Europe with the Digital 0:13:12.400 --> 0:13:15.440 Markets Act, which has already pushed Apple to change a 0:13:15.480 --> 0:13:18.160 ton In fact right now in Europe, because of those 0:13:18.200 --> 0:13:21.800 regulatory changes, you can get an alternative marketplace, meaning you 0:13:21.840 --> 0:13:25.040 don't just have to rely on Apple's app store. You're 0:13:25.280 --> 0:13:27.560 you're actually able to delete a lot of native Apple 0:13:27.559 --> 0:13:30.240 apps that you can't delete the US, you can delete Safari. 0:13:30.720 --> 0:13:33.200 You'll eventually be able to delete your phone app, your 0:13:33.240 --> 0:13:36.160 camera app, the app store and just use alternative products 0:13:36.160 --> 0:13:39.040 from the third party ecosystem. And so what you're seeing 0:13:39.080 --> 0:13:41.240 in Europe is this almost two track system where they 0:13:41.240 --> 0:13:45.640 have a lot more flexible sort of computing platform than 0:13:45.760 --> 0:13:48.079 anywhere else if you're an Apple user. So I think 0:13:48.120 --> 0:13:50.000 what they've sort of done is take this almost whack 0:13:50.040 --> 0:13:52.840 a mole approach to regulation and the EU, and even 0:13:52.880 --> 0:13:54.560 in some of the pressure they've seen in the US, 0:13:54.559 --> 0:13:57.120 they've had to open up that walled garden that, as 0:13:57.120 --> 0:13:59.280 we refer to it, sort of their closed ecosystem a 0:13:59.320 --> 0:14:01.320 little bit more in a way that Apple doesn't like 0:14:01.320 --> 0:14:03.720 because they lose control. But for consumers in a lot 0:14:03.760 --> 0:14:05.400 of ways, it's a little bit interesting to watch this 0:14:06.200 --> 0:14:08.600 company have to change and not just have it the 0:14:08.679 --> 0:14:10.880 Apple approach. They're going to have to, at least in 0:14:10.920 --> 0:14:13.320 Europe so far, open up their walled garden a little bit, 0:14:13.480 --> 0:14:16.560 allows some more players within their ecosystem to run some 0:14:16.600 --> 0:14:17.840 of those fundamental parts. 0:14:18.160 --> 0:14:19.960 Yeah, which is why it's so interesting to read the 0:14:20.000 --> 0:14:23.920 piece because it really reminds us that Apple wasn't the 0:14:24.000 --> 0:14:26.560 leader forty years ago, that it was a very different 0:14:26.600 --> 0:14:29.800 world when it came to PCs. You can definitely read 0:14:29.840 --> 0:14:33.200 this Big Take and more on the Bloomberg and at 0:14:33.240 --> 0:14:36.000 Bloomberg dot com slash Big Take. Definitely check it out, 0:14:36.120 --> 0:14:39.960 really wonderful stuff. Plus, if you're joining us from Boston, Massachusetts, 0:14:40.160 --> 0:14:42.120 like Austin is, if you're listening to us in Boston, 0:14:42.680 --> 0:14:45.320 does now ninety two nine FM in Boston. I could 0:14:45.360 --> 0:14:47.280 have done a little bit better, but I did it 0:14:47.400 --> 0:14:50.040 all right, Austin, Thanks a lot, Austin Car Technology Reporter. 0:14:51.520 --> 0:14:55.400 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:14:55.480 --> 0:14:58.800 weekdays at ten am Eastern on Applecar playing Android OUTO 0:14:58.920 --> 0:15:01.800 with the Bloomberg Business That listener on demand wherever you 0:15:01.920 --> 0:15:04.880 get your podcasts, or watch us live on YouTube. 0:15:06.680 --> 0:15:08.680 Okay, let's get to another chap story here that we're 0:15:08.680 --> 0:15:11.720 looking on. That's HSBC is looking at potentially merging it's 0:15:11.760 --> 0:15:15.320 commercial and investment bank to cut some cost. We wanted 0:15:15.320 --> 0:15:17.640 to get more on that with too much netsl senior 0:15:17.760 --> 0:15:21.040 US Banks analyst. He joins us from Bloomberg Intelligence from London. 0:15:21.240 --> 0:15:23.720 Can you just walk me through why and sort of 0:15:23.800 --> 0:15:24.560 what this would look like. 0:15:25.720 --> 0:15:27.720 Yes, hey, hey guys, thank you very much for having me. 0:15:28.320 --> 0:15:31.000 So cost cutting, yes, so that's definitely something on top 0:15:31.000 --> 0:15:34.280 of our gendle of the new new HSBCCO who has 0:15:34.440 --> 0:15:37.200 just started started his position a couple of days ago. 0:15:37.800 --> 0:15:40.360 So why cost cutting? First of all, we are seeing 0:15:40.600 --> 0:15:44.520 a revenue weekending outdocouse weekending because of interest rates are 0:15:44.560 --> 0:15:47.360 going down the next two years and the hedges. We 0:15:47.640 --> 0:15:50.640 need to do something to keep the profitability and they 0:15:50.640 --> 0:15:53.400 would love to stay at around the meeting's rot and 0:15:53.520 --> 0:15:55.520 in order to achieve that, they need to cost codes 0:15:55.520 --> 0:15:58.000 because there's little options to do with revenues. 0:16:00.120 --> 0:16:04.040 So what is the competitive position for hs SPC. Just 0:16:04.080 --> 0:16:05.320 break it down for it because I think a lot 0:16:05.320 --> 0:16:07.480 of our listeners and viewers some don't have a great 0:16:07.640 --> 0:16:08.160 handle on it. 0:16:09.120 --> 0:16:11.480 Yeah, So first of all, we need to understand that 0:16:11.640 --> 0:16:14.800 HSBC is very much heavily emerging market focused bank. If 0:16:14.840 --> 0:16:17.240 you are emerging market focused bank, of course you have 0:16:17.400 --> 0:16:21.040 much better opportunity to grow your revenues, your growth your lending. 0:16:21.800 --> 0:16:23.680 But if you look into the outlook, it's not had 0:16:23.720 --> 0:16:25.680 to rose the story anymore because now we have much 0:16:25.760 --> 0:16:28.080 higher interest rates, red are going to go down. GDP 0:16:28.240 --> 0:16:30.640 is not so growing south fast as it does in 0:16:30.680 --> 0:16:32.360 the past, so revenue is going to flat in the 0:16:32.440 --> 0:16:34.720 next two three years. But if you look, if you 0:16:34.760 --> 0:16:37.280 are emerging market focused bank as well, you are facing 0:16:37.360 --> 0:16:40.000 higher inflation costs and because of the higher wage inflation 0:16:40.080 --> 0:16:43.280 those markets, etc. Your costs, but it is growing. On 0:16:43.400 --> 0:16:46.160 top of that, you have to invest in digitalization, transformation, 0:16:46.200 --> 0:16:48.920 et cetera. So everybody is doing this globally, so there 0:16:49.000 --> 0:16:52.440 is massive cost pressure. And looking at HSBC, which is 0:16:52.480 --> 0:16:56.280 spread across more than fifty markets, mainly in Asia right 0:16:56.320 --> 0:16:59.840 now after recent recent restructuring, you know there's a massive 0:17:00.480 --> 0:17:02.880 and they have to do something about this to streamline 0:17:02.880 --> 0:17:05.399 the operations. They have started this already a couple of 0:17:05.480 --> 0:17:07.920 years ago under no Queen and they've done quite good 0:17:08.000 --> 0:17:10.639 job cutting costs by more than five billions. However, there 0:17:10.680 --> 0:17:12.719 are still lots of things to be done, and one 0:17:12.760 --> 0:17:16.080 of those aspects we definitely head counts and then maybe 0:17:16.160 --> 0:17:18.600 looking into cost base and look at headcounts and try 0:17:18.680 --> 0:17:22.760 to have some synergies in those two businesses, which will 0:17:22.800 --> 0:17:25.480 combined have around forty billions in revenues, will be the biggest, 0:17:25.520 --> 0:17:28.480 biggest revenue driver for HSBC Marke bigger than wealth and 0:17:28.560 --> 0:17:30.080 every which is the key focus of the bank at 0:17:30.080 --> 0:17:30.440 the moment. 0:17:30.600 --> 0:17:32.680 It's something damn question. But if it's such a it 0:17:32.840 --> 0:17:34.639 makes so much sense. Why haven't they done it already? 0:17:35.680 --> 0:17:36.760 Well, that's a good question for. 0:17:38.400 --> 0:17:41.600 The four CEO who just left no queen and the 0:17:42.000 --> 0:17:44.120 new guy is coming and he has to deliver something 0:17:44.160 --> 0:17:46.400 and he has to why he hadn't done before Because 0:17:46.440 --> 0:17:49.440 we were living in different interest rate environments right here 0:17:49.520 --> 0:17:52.520 linking in the interest rates environment that we're supporting revenues, 0:17:52.560 --> 0:17:55.680 but the condition has changed. Environments has changed now that 0:17:55.800 --> 0:17:58.719 the expectations for US rates, global rates are going up 0:17:58.720 --> 0:18:01.320 and down. The volatility is quite high, but I think 0:18:01.359 --> 0:18:03.000 we now expect, we know more or less that the 0:18:03.160 --> 0:18:05.359 rest is going to come down and the sensit and 0:18:05.560 --> 0:18:08.240 EDGESBC is one of the most sensitive bank to cut 0:18:08.320 --> 0:18:10.399 in indust right, so they have to do something quickly 0:18:10.880 --> 0:18:13.320 and definitely the new CEO needs to deliver something, needs 0:18:13.359 --> 0:18:15.720 to convince market that he can get the handle of 0:18:15.880 --> 0:18:18.879 on cost causes. Definitely the big issue. Have been writing 0:18:18.960 --> 0:18:21.239 about this quite a lot. You want to deliver. If 0:18:21.280 --> 0:18:23.640