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Speaker 1: Hey. If you're a longtime listener of Decrypted, you might

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Speaker 1: recognize my voice. My name's Aki Ito. I'm an editor

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Speaker 1: with Bloomberg and I was one of the original co

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Speaker 1: hosts of this show, and I am so happy to

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Speaker 1: say I am back to be your host again. We've

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Speaker 1: been working on some amazing stories that I can't wait

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Speaker 1: to share with you over the next few months, and

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Speaker 1: with that, I hope you enjoy our first episode of

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Speaker 1: the season. This is a day I've been looking forward

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Speaker 1: to for two and a half years. It's January nine,

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Speaker 1: two thousand seven. An Apple CEO, Steve Jobs is on

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Speaker 1: stage at the Mosconi Center in San Francisco. Every once

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Speaker 1: in a while, a revolutionary product comes along that changes everything.

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Speaker 1: Apple at this time is worth about seventy billion dollars.

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Speaker 1: It's making computers, and it's making iPods, if you remember

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Speaker 1: what those are. It's a well known company, but certainly

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Speaker 1: not one of the most powerful in the world. So

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Speaker 1: three things, A widescreen iPod with touch controls, a revolutionary

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Speaker 1: mobile phone, and a breakthrough internet communications device. Jobs is

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Speaker 1: here to announce the next big thing, a widely anticipated

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Speaker 1: product that he's taking Apple's future on. These are not

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Speaker 1: three separate devices. This is one device, and we are

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Speaker 1: calling it iPhone. Twelve and a half years later, Apple

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Speaker 1: is in a very different place today. At that moment

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Speaker 1: in two thousand seven was the beginning of a historic surge.

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Speaker 1: Let's turn Apple into an almost one true the in

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Speaker 1: dollar giant. Apple is now contending with a stall out

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Speaker 1: in need of its next blockbuster product. Today on the Show,

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Speaker 1: ahead of Apple's announcement of the next generation of devices,

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Speaker 1: we'll be hearing from our consumer Products reporter Mark German,

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Speaker 1: who has the exclusive details on what to expect from

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Speaker 1: these new phones, including cameras that can take wider photos.

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Speaker 1: Will these upgrades be enough to reinvigorate growth at Apple?

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Speaker 1: Am Ito, you're listening to Decrypted Stay with us. It's official.

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Speaker 1: The next Apple event is upon us and we're getting

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Speaker 1: a fresh batch of Apple devices in a matter of days.

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Speaker 1: The invitation is out Scott and it says, by innovation only,

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Speaker 1: please join us for an Apple special event at the

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Speaker 1: Steve Jobs Theater in Cooper Tino, September ten at ten am.

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Speaker 1: Of course, got this would be so Mark. We're just

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Speaker 1: days away from Apple's annual event, where executives will be

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Speaker 1: announcing the company's new slate of products. As a reporter

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Speaker 1: covering Apple, what are these final weeks like for you? Yeah,

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Speaker 1: I mean the final two weeks is sort of the

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Speaker 1: marathon to the end, and this is the time where

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Speaker 1: there's lots of information floating around from lots of different people.

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Speaker 1: So are you stressed at right now? No? I don't

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Speaker 1: don't really get stressed about it. I mean, believe it

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Speaker 1: or not. It's been almost ten years, about nine a

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Speaker 1: little bit more than nine and a half years since

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Speaker 1: I started covering Apple, so it's it's just the usual

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Speaker 1: stuff year over year from me here. So we started

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Speaker 1: the show today with Steve jobs unveiling the very first iPhone.

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Speaker 1: I was in college at the time, and I vaguely

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Speaker 1: remember hearing about it in the news. Do you remember

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Speaker 1: that day when Steve Jobson once iPhone? Where was I?

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Speaker 1: So at the time, I remember that I knew that

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Speaker 1: the Macworld conference was that day, but I remember just

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Speaker 1: going to Apple dot com and I was like, Wow,

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Speaker 1: that seems like the coolest, you know thing ever. It

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Speaker 1: was like something that the tech industry hadn't seen before.

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Speaker 1: I mean, if you see the reactions of people in

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Speaker 1: the crowd is just unbelievable to people. That's not something

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Speaker 1: that we've seen not only from Apple, but really many

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Speaker 1: of the other technology players since then. Last year, Apple

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Speaker 1: came out with three different versions of the iPhone. You

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Speaker 1: can think of them as the two high end models

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Speaker 1: and the one low end model. The most expensive one,

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Speaker 1: of course, was the Tennis Max. That's the one with

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Speaker 1: the high resolution screen, the best camera, so the biggest size.

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Speaker 1: Then there's the ten S, which is based sickally the

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Speaker 1: same phone, just smaller, and then we got this low

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Speaker 1: end model called the ten Are. Not as nice of

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Speaker 1: a display, not as nice of a camera, but it's

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Speaker 1: also a few hundred dollars cheaper. Mark tell us about

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Speaker 1: the biggest changes coming to this year's models. So there's

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Speaker 1: going to be the same three screen sizes, and the

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Speaker 1: cameras will both be upgraded on both sets of phones.

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Speaker 1: So right now, the ten R, as you know, has

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Speaker 1: one camera on the back, and the ten S and

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Speaker 1: Tennis Max have two cameras on the back. The story

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Speaker 1: this year will be two cameras on the successor to

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Speaker 1: the ten ARE and three cameras on the back of

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Speaker 1: both sizes of the high end pro phone. And what

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Speaker 1: does it mean when you have more cameras. When you

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Speaker 1: add a second camera, it allows you to have optical

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Speaker 1: zoom right now if you're on a single camera, so

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Speaker 1: the ten aren't today. When you go to zoom in

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Speaker 1: and you go past the standard range of one point

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Speaker 1: zero x zoom, it will get a little blurred because

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Speaker 1: it's digital zoom versus physical zoom. But the more lenses

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Speaker 1: you have, the farther you can go without decreating the quality.

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Speaker 1: But you'll also get is improved portrait mode because you're

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Speaker 1: actually getting multiple lenses working together to do that blur effect,

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Speaker 1: and you'll get some additional stage lighting effects as well.

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Speaker 1: And these new cameras on the high end phones, what

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Speaker 1: will they be able to do? The third camera on

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Speaker 1: the pro I phones, that's where things get really interesting.

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Speaker 1: That opens up a whole wider range of possibilities. So

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Speaker 1: one you'll likely get even deeper zoom without decreating quality

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Speaker 1: because you have three lenses optically working together. You'll probably

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Speaker 1: get a zero point five x zoom now, which means

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Speaker 1: that you're be able to take pictures that are farther back,

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Speaker 1: so you can capture more information, more detail on the edges,

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Speaker 1: so you basically get a much wider photograph. There's also

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Speaker 1: going to be significantly improved low light photos, which is

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Speaker 1: something people have complained about. And what about the pricing

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Speaker 1: on these phones because they seem to get more expensive

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Speaker 1: by the year. Yeah, I mean that's a good question.

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Speaker 1: I'd really expect the pricing to be very consistent to

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Speaker 1: the current prices, right, so around seven d fifty eight

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Speaker 1: hundred dollars for the low end model which would be

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Speaker 1: replacing the ten Are, and then the same you know,

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Speaker 1: one thousand dollars to fourteen fifty or fifteen hundred pricing

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Speaker 1: for the high end models, depending on screen size and

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Speaker 1: storage capacity. It's crazy that the Leeuwin model is like

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Speaker 1: in the seven hundred dollar range. That's not low end

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Speaker 1: at all. No, it's not low end. And that's the

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Speaker 1: thing about the ten Are, It's like it's always been

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Speaker 1: positioned as this cheaper iPhone. Apple sort of positioned it

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Speaker 1: as the iPhone for everyone. But the fact of the

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Speaker 1: matter is is that it's the same exact price as

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Speaker 1: the iPhones before they rose the prices two d fifty

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Speaker 1: three hundred dollars to a thousand dollars at the base

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Speaker 1: with the iPhone ten a few years ago. So aside

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Speaker 1: from the camera upgrades that we just talked about, there

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Speaker 1: are still quite a few more additional tweaks coming to

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Speaker 1: the iPhone that Mark you've reported over the last few days.

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Speaker 1: We're gonna keep that story pinned on Bloomberg dot com

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Speaker 1: slash tech for our listeners who want to know more

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Speaker 1: about the smaller details that we're just not going to

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Speaker 1: have time to get into in this episode. But overall,

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Speaker 1: it does sound like all of these changes to the

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Speaker 1: iPhone are pretty incremental. I don't get the sense that

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Speaker 1: these will feel like entirely new products for the average consumer. Yeah,

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Speaker 1: I don't think so. But I think the thing that

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Speaker 1: that shouldn't be lost is that Apple has really slowed down.

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Speaker 1: I would say it's innovation cycle in terms of design

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Speaker 1: on the iPhones in recent years. And if you look

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Speaker 1: at the history of the iPhone, so obviously the original

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Speaker 1: iPhone in two thousand seven was like nothing we had

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Speaker 1: seen before. Then the next year they changed the design

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Speaker 1: with the plastic curved black and white backs of the

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Speaker 1: iPhone three G. They kept that for the three GS,

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Speaker 1: and then they came out with the four in and

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Speaker 1: nothing looked completely different. I remember being really, you know,

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Speaker 1: blown away by that design. It just felt super new.

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Speaker 1: They used to be a new design s here with

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Speaker 1: the same design. Now it's basically three years in a

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Speaker 1: row of the same look, which I think is one

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Speaker 1: of the reasons that people are not upgrading at the

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Speaker 1: same speed that they used to. Coming up, how Apple

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Speaker 1: will be changing its other products, including the iPad, the watch,

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Speaker 1: the MacBook, and the air pods, and also what this

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Speaker 1: will all mean for the future of Apple. We'll be

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Speaker 1: right back. Okay, So before the break, we went through

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Speaker 1: a couple of changes coming to the three existing iPhone models,

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Speaker 1: the tennis, the Tennis Max, and the ten are Mark.

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Speaker 1: Tell us about some of the other products Apple is

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Speaker 1: going to be announcing this month. Let's start with the Watch. Yeah,

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Speaker 1: so the Apple Watch got a really really big upgrade

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Speaker 1: last year with the Series four. So this year, I

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Speaker 1: think it's going to be a really minor update focusing

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Speaker 1: on the casings, so I think more visual and material

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Speaker 1: based changes rather than real functionality changes. And what about

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Speaker 1: the iPad. Yeah, the iPad is interesting because they are

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Speaker 1: working on a bigger iPad upgrade for next year. This

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Speaker 1: would be an iPad with three D cameras on the back,

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Speaker 1: which is what they're also going to add to the

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Speaker 1: iPhone as well, So you'll be able to use these

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Speaker 1: laser based cameras to really get a better picture of

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Speaker 1: where you are in a room, for much better augmented reality,

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Speaker 1: computer vision, and AI applications. And so that's gonna be

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Speaker 1: a really big deal for both consumers and the enterprise

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Speaker 1: use cases as well and businesses. And for this year,

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Speaker 1: you know, we're expecting a software iPad upgrade, focusing on

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Speaker 1: the processor, focusing on the cameras rather than anything really significant.

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Speaker 1: And what about the air pads, Yeah, the air pods.

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Speaker 1: Those are interesting. Everyone loves to talk about air pods.

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Speaker 1: So we got the original ones in. Then there was

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Speaker 1: the air pods update in March with the new processor,

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Speaker 1: the support for the series command. I don't want to

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Speaker 1: say the weakeward right now and have all my devices

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Speaker 1: go off. But they're also working on a new model.

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Speaker 1: This is a higher end I guess you can call

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Speaker 1: it a pro model, would be a little bit more expensive,

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Speaker 1: would have the wireless charging as well, but what you

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Speaker 1: would also get is a sense of noise cancelation and

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Speaker 1: some water resistance and I think those are going to

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Speaker 1: launch around the end of this year or next year,

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Speaker 1: and any updates coming to the MacBooks, what we are

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Speaker 1: going to get is a new sort of even Pro

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Speaker 1: or MacBook Pro. So it's a bigger MacBook Pro. It's

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Speaker 1: part of this approach to lock in professional users and

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Speaker 1: retain them. This is going to have an over sixteen

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Speaker 1: inch screen, about sixteen and a half inches, and I

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Speaker 1: think that's going to be something that a lot of

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Speaker 1: pro users are going to run to buy. And I

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Speaker 1: hope it's not to explain to myself. Let's take a

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Speaker 1: moment to zoom out and talk about the greater context

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Speaker 1: for Apple right now. This is a really interesting time

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Speaker 1: for the company, maybe one of the most challenging times

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Speaker 1: in recent history. Walk us through the different headwinds that

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Speaker 1: Apple is facing right now. Tariffs is a big one.

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Speaker 1: I feel like that's something that's in the news every day.

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Speaker 1: I don't think it's really going to impact consumers a

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Speaker 1: whole lot. I think Apple has sort of incorporated the

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Speaker 1: price already of a tariff impact on the devices. I mean,

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Speaker 1: you see how expensive the iPhones are already. I don't

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Speaker 1: see any possibility even getting more expensive. Apple is going

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Speaker 1: to have to take a slight margin hitt or they're

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Speaker 1: gonna have a real problem selling phones that are it's

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Speaker 1: just not gonna happen. You saw the prices of the

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Speaker 1: iPad pro and the Apple pencil and a bunch of

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Speaker 1: other impacted accessories by tariffs happening over the past year

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Speaker 1: or so. You see, the math pro is six thousand dollars.

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Speaker 1: That display is another six thousand dollars if you get

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Speaker 1: the stand. So I think these prices are too high

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Speaker 1: as it is, and I think they're a little high

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Speaker 1: because you know, it's incorporating the cost of the tariff's

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Speaker 1: already in there. The other thing is coming out with

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Speaker 1: a breakthrough new thing, right, Uh, it's been a while.

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Speaker 1: The next one will be an a R headset. There's

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Speaker 1: a few other things that they're working on that will

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Speaker 1: be writing about soon as well. So you know, it's

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Speaker 1: interesting and it's to be seen if they get these

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Speaker 1: things out the door. Remember the car, the Apple car.

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Speaker 1: When they went to work on that five six years ago,

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Speaker 1: it was supposed to launch by now, right, is that

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Speaker 1: still in the works. It's not. They've completely rebooted the project.

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Speaker 1: They're focusing on the underlying self driving technology. They could

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Speaker 1: eventually go back to building a car, but in terms

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Speaker 1: of the ambition they had five six years ago, you know,

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Speaker 1: that's really out the door for now. I mean, listening

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Speaker 1: to you talk about all the new products that Apple

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Speaker 1: is planning to launch this fall or maybe next year,

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Speaker 1: it sounds like there's just a ton of them. Me.

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Speaker 1: You know, they're different price iterations of the various products,

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Speaker 1: and then they're just only more products than back during

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Speaker 1: Steve jobs age. Yeah, I agree, they're doing a lot,

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Speaker 1: but it's also it's a different time period, right, the

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Speaker 1: competition is so much stronger. And so here's the problem.

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Speaker 1: Amazon comes out with a really really cool device, and

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Speaker 1: let's say it's the Eco speaker, right, the Alexa speaker

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Speaker 1: a few years ago, and then down the road, people

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Speaker 1: really get attached to the Echo speaker, and Apple doesn't

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Speaker 1: have one, So people start buying the Amazon speaker, right,

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Speaker 1: and people start moving away from the Apple ecosystem to

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Speaker 1: the Amazon ecosystem because Amazon offers hardware products and categories

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Speaker 1: that Apple doesn't have. And that's how you lose customers

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Speaker 1: out of your ecosystem by not completely locking them in,

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Speaker 1: by not covering all the bases, and that's why you're

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Speaker 1: seeing this pushing services, That's why you're seeing Apple music,

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Speaker 1: That's why you're seeing the Apple credit card. So if

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Speaker 1: you're an iPhone user, you have your banking in your phone,

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Speaker 1: you have your Apple card on your phone, How in

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Speaker 1: the world are you going to switch to Android when

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Speaker 1: Samsung comes out with some breakthrough new phone that you

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Speaker 1: know everyone wants in two years or now right, you

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Speaker 1: just can't do it. They're not going to have the

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Speaker 1: Apple card in the same Sung phone and people will

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Speaker 1: be like, Wow, I can't switch. I'm completely locked in.

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Speaker 1: So that's what it's about. That's why Apple is doing

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Speaker 1: this type of stuff. In terms of Apple's revenue, is

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Speaker 1: the strategy of selling more products, helping them offset declining

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Speaker 1: sales of the iPhone itself. So yeah, maybe offset is

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Speaker 1: a good word. They're not growing very strongly. I mean,

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Speaker 1: I anticipate that they'll have some growth in Q one

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Speaker 1: for this year, given that last year's first quarter was

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Speaker 1: such a disaster sales wise. I mean when I say disaster,

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Speaker 1: you know, eighty billion dollars is no disaster, but for them,

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Speaker 1: it was a drop in growth. It was big missed expectations.

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Speaker 1: So something interesting was that the iPhone at revenues last quarter,

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Speaker 1: which is one of the lowest percentages in years, which

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Speaker 1: is a good thing. It means some of the diversification

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Speaker 1: is working. But you know the reality is that all

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Speaker 1: these products and services really are around the iPhone as

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Speaker 1: a hub. You know, the air pods, it's an iPhone thing.

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Speaker 1: Seri is an eye phone thing. I give list every

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Speaker 1: Apple product, every Apple service, every Apple application and make

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Speaker 1: a really solid argument as to why it's basically completely

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Speaker 1: reliant on the iPhone. So even though iPhone sales are declining,

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Speaker 1: it's still the core of the company. You might as

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Speaker 1: well call it iPhone, Inc. And so as a result,

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Speaker 1: Apple still needs to find its next blockbuster hit. It does.

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Speaker 1: It needs to find whatever the hub will be afterwards, right,

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Speaker 1: I mean, you've seen it change over the years. It

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Speaker 1: was the Mac, than it was the iPod, now it's

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Speaker 1: the iPhone. Some people thought it would be the iPad,

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Speaker 1: but the iPad really quickly turned out to be a

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Speaker 1: companion product. So, I mean, the question is, are you

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Speaker 1: eventually going to build your world around glasses? You're eventually

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Speaker 1: gonna build your world around a watch. Well, we'll see,

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Speaker 1: but Apple seems to be trying all the different possibilities,

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Speaker 1: and you know, at the end of the day, I

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Speaker 1: I personally feel like as I don't know if this

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Speaker 1: is how Apple feels, but my personal feeling is that,

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Speaker 1: you know, people are always going to want to carry

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Speaker 1: a device that they can do everything from in their

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Speaker 1: pocket or in their per or in their backpack. So

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Speaker 1: I don't really see the iPhone going away anytime soon.

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Speaker 1: Based on what you know right now, from what you've

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Speaker 1: been able to tell us today, do you think this

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Speaker 1: news slate of products that are coming this fall are

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Speaker 1: the game changer that Apple is looking for. I don't

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Speaker 1: think anything they're coming out with this fall is a

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Speaker 1: game changer. I don't think this is going to boost

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Speaker 1: you know, their sales, boost their their profile, etcetera, etcetera.

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Speaker 1: But I also don't think they're a game changer in

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Speaker 1: the negative way. None of these products will do anything

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Speaker 1: to hurt them. It'll keep everything moving smoothly for them,

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Speaker 1: and that's important. What are you going to be watching

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Speaker 1: for from Apple over I don't know. Let's say like

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Speaker 1: the next two, three, four years. The big theme for

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Speaker 1: me is, for sure, you're going to be this augmented

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Speaker 1: reality slash virtual reality heads that they've been working on.

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Speaker 1: I think that's the big focus area moving away from

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Speaker 1: Intel in terms of their processors for laptops, that's going

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Speaker 1: to be another big one, as well as I phone

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Speaker 1: with five G. I think those are the three big

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Speaker 1: things on my plate. If our listeners want to watch

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Speaker 1: this fall event live where they'll be unveiling the new

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Speaker 1: iPhones and all these other products, where can they follow

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Speaker 1: along and they'll be live streaming at all Apple dot

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Speaker 1: com as they normally do I would expect, but also

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Speaker 1: of course by Twitter account Twitter dot com. Slash Mark

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Speaker 1: German for the best live commentary. I'm sure you're going

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Speaker 1: to be on Twitter all day, Yeah, all day every day,

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Speaker 1: and of course we'll be posting stories all day long

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Speaker 1: on September tent on our website at Bloomberg dot com

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Speaker 1: slash tech Mark German, thanks for being on the show today.

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Speaker 1: Thank you for having me. Decrypted is produced by me

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Speaker 1: Aki Ito and Ethan Brooks. Emily Buso and Ann vander

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Speaker 1: May are our story editors. Francesscality is the head of

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Speaker 1: Bloomberg Podcasts. We'll see you next week. M