Speaker 1: From the heart of where innovation, money and power Collie
Speaker 1: in Silicon Valley and beyond. This is Bloomberg Technology with
Speaker 1: Emily Jay. I'm Emily changing Coopertino and this is Bloomberg Technology.
Speaker 1: We are alive from Apple's campus where the company just
Speaker 1: unveiled its next generation of devices and upgrades to new iPhones, watches,
Speaker 1: and AirPods, focusing on health, safety and satellite connectivity. And
Speaker 1: there was one big surprise the price of the bottom
Speaker 1: of the line iPhone unchanged despite the worst inflation in decades.
Speaker 1: We are going to give you the full download, but
Speaker 1: first I want to get a look with Apple bringing
Speaker 1: Carolina Milan as of creative Strategies. Who's here with me
Speaker 1: at Apple headquarters inside the Steve jobs the for the
Speaker 1: first time in a few years. Actually, um, how significant
Speaker 1: do you think these upgrades are? And key are people
Speaker 1: going to buy these new devices with increasing inflation higher
Speaker 1: than you know it's been in forty years. I think
Speaker 1: it's been interesting to see that the focus today has
Speaker 1: been on real pain points that consumer have and also
Speaker 1: hit on the key drivers that you see consumer talk
Speaker 1: more and more about. Which is better life, is a
Speaker 1: better display, is a better camera with low light conditions.
Speaker 1: You saw that, and you saw out Tim Cook opened
Speaker 1: devent today talking about the value of each product and
Speaker 1: then the magic that the three products that we were
Speaker 1: here for today bring together. And I think that's what
Speaker 1: you have when you're thinking about upgrading. You might have
Speaker 1: one of these products that are older than another and
Speaker 1: you want to get into the cycle so that you
Speaker 1: can take better advantage of the new features, but also
Speaker 1: feel that magic that Cook was talking about. Well, I
Speaker 1: wonder if the most significant announcement was the price of
Speaker 1: that you know, lowest tier iPhone fourteen and it being
Speaker 1: the same as the iPhone thirteen was last year. Yeah,
Speaker 1: the price are the same is a good and depending
Speaker 1: where you're looking at it right that we have seen
Speaker 1: some of the consumer electronic companies bringing their prices up
Speaker 1: earlier in the year because of the inflation. Others we
Speaker 1: kept on the same. I think what was interesting to
Speaker 1: maybe sweeten a little bit that price point is the
Speaker 1: deals for the trade ins that you've seen Apple mentioned
Speaker 1: through the careers in the US and directly from Apple
Speaker 1: eight hundred two thou dollars depending on what model you've
Speaker 1: traded in. So let's talk about the the other things.
Speaker 1: Satellite connectivity. I know that was a really big deal
Speaker 1: and how significant is that going to be in terms
Speaker 1: of driving more people to buy these phones. I don't
Speaker 1: know that the satellite is necessarily a purchased driver per se,
Speaker 1: but I think is that extra peace of mind the
Speaker 1: same way as you think about insurance, Right, you have it,
Speaker 1: you have to purchase it. You hope you'll never use it,
Speaker 1: but you know that is bear in case you need it.
Speaker 1: And it's the same with the feature of car crash
Speaker 1: detection as an example piece of mind for you know,
Speaker 1: parents with new drivers coming on feature that is both
Speaker 1: on the watch end, on the phone all the way
Speaker 1: to the you know, throughout the portfolio. So the safety
Speaker 1: was an extra, if you like, pillar on what Apple
Speaker 1: built today across the portfolio. All right, let's talk about
Speaker 1: the Apple Watch. Ultra significant pricing news there as well,
Speaker 1: very much undercutting garment at the high end on the market.
Speaker 1: They called this watch your dive computer. It can go
Speaker 1: forty below the surface of the ocean. I mean, it
Speaker 1: seems pretty cool, but how big a market is there
Speaker 1: for a niche rugged smart watch. The reality is that
Speaker 1: you have the core people that would have a garment,
Speaker 1: and then you have the wanna be and the market
Speaker 1: for the wanna be, you know, the ones that wish
Speaker 1: but it could do an iron then, but they can't.
Speaker 1: It's considerable, right, And I think what was smart about
Speaker 1: the design is that despite the size that is so large,
Speaker 1: is very lightweight and so you know, I have a
Speaker 1: small risk like you do, and and it looks humongous
Speaker 1: on the risk, but it's not heavy. So I think
Speaker 1: they've done a good job in trying from a style
Speaker 1: perspective to appeal to a broader market. And they could
Speaker 1: have price if they wanted to, but they did not.
Speaker 1: So what are you looking for in terms of the numbers.
Speaker 1: I spoke with Tim Cook at the end of earnings
Speaker 1: last quarter and he said they do expect revenue to
Speaker 1: accelerate in the September quarter. Of course, we know that
Speaker 1: new iPhones are going to go on sale a week
Speaker 1: before the quarter end, so they can get some additional
Speaker 1: uh boost there. You know, how much of a difference
Speaker 1: is that going to make? And could it give the
Speaker 1: the global economy kind of a little morale boost? If
Speaker 1: Apple is able to you know, beat or even meet expectations,
Speaker 1: I think you have three lines that will contribute to
Speaker 1: that boost. Right, you have the iPhone, and it's interesting
Speaker 1: that they picked at different times of the release for
Speaker 1: the iPhone getting into October as well, so you have
Speaker 1: that caring through to the next quarter. But you also
Speaker 1: have something like Airport Airports Pro that at two fifty
Speaker 1: World drive a lot of upgrades, so there's a lot
Speaker 1: of different price point there that will help the bottom line.
Speaker 1: Um and as I said, is the magic of the
Speaker 1: three coming together. The air pads were kind of a
Speaker 1: sleeper hit when they came out, and it's been a
Speaker 1: long time. A lot of people have been waiting for
Speaker 1: an upgrade, you know. Was also said today that a
Speaker 1: lot of people lose the air parts as they're gonna
Speaker 1: spend two hundred fifty dollars on something that is, yes, beloved,
Speaker 1: but also easy to misplace. Well, uh speak for an experience.
Speaker 1: I've a teenager that always loses them, so I feel
Speaker 1: I feel that pain. It made it easier about to
Speaker 1: find them today, fair enough, right, so you can find
Speaker 1: the case and you can find each individual AirPod in
Speaker 1: an easier way. And I think the silly thing of
Speaker 1: the emoji engraving speaks also to that popularity where you
Speaker 1: have households, where you have multiple airports that lived together,
Speaker 1: and that will make it easier for the consumers to
Speaker 1: spot which one is mine. And again with all of
Speaker 1: these products, we talked about new chips faster, clearly you know,
Speaker 1: big tech upgrades, even though we might not necessarily see
Speaker 1: them as as consumers at Carolina Milan as of creative strategies.
Speaker 1: Thank you so much, thanks for joining us. Good to
Speaker 1: see all right coming up? Apple seems to have supply
Speaker 1: chain issues under control. Will that keep up through the
Speaker 1: holiday rash? M it's rising global tensions? We will discuss
Speaker 1: this is Bloomberg. Apple seems to have managed supply bottleneckt
Speaker 1: spirt by the pandemic, but now it has to navigate
Speaker 1: the Chips Act and a new policy designed to boost
Speaker 1: US production of tech product that includes approval for certain
Speaker 1: semiconductor exports to countries of concern, including China. I want
Speaker 1: to bring in CFRE, a equity analyst, Angelo Zeno. Now
Speaker 1: for more so, Angela. First of all, let's talk about
Speaker 1: the supply chain management for this new slate of products.
Speaker 1: Is Apple going to be able to get all of
Speaker 1: these new iPhones and watches and air pods to people
Speaker 1: who want them in time for the holidays. I mean,
Speaker 1: as far as getting it in time for the holidays, yes,
Speaker 1: we think so. Um. Yeah, I think it's interesting that
Speaker 1: clearly the timing of this event clearly being on September seven,
Speaker 1: and the actual UM launch of the phones, right, I
Speaker 1: mean you were talking September six, case, I believe is
Speaker 1: when shipman start um pretty much a week earlier than
Speaker 1: we had previously anticipated. To be honest with you, UM,
Speaker 1: I think that in itself should tell you that they're
Speaker 1: absolutely managing the supply constraints that you know, maybe they
Speaker 1: had to content with more severely earlier that year, in
Speaker 1: a much better situation, so they should be better positioned
Speaker 1: here over the next couple of months, um than others
Speaker 1: out there. Now, I will say this, um, as far
Speaker 1: as UM these phones are concerned, I mean, it is
Speaker 1: more supplied driven than demand driven. In terms of expectations
Speaker 1: for the September quarter. We do expect them to be
Speaker 1: supplied constraints to some extent here over the next couple
Speaker 1: of weeks. And I think it's really interesting with how
Speaker 1: they kind of land, uh kind of uh put the
Speaker 1: launch of these phones right. So, we have the phone
Speaker 1: four phones four devices will be available UM at the
Speaker 1: end of next week, where the other one will be
Speaker 1: UM in October. So that will help them also better
Speaker 1: navigate the constraints and put more emphasis on those pro devices,
Speaker 1: which of course our higher price and better margins. So interestingly,
Speaker 1: when you look at the Apple website and the shipping times,
Speaker 1: a lot of those times have come down, which is
Speaker 1: sort of our gauge of you know, how much trouble
Speaker 1: are they having, you know, making all of these products
Speaker 1: and getting them to customers. The iPhone, mac iPad, you know,
Speaker 1: all pretty much coming you know, when you want them
Speaker 1: to come. One of the biggest pain points going to
Speaker 1: be though over the next few months. I mean, we've
Speaker 1: seen various chip companies continuing to struggle as we look
Speaker 1: at their earnings, and you know, what is it about
Speaker 1: Apple if they're not having these issues? Yeah, well so
Speaker 1: i'd say as far as you know issue, I'd say
Speaker 1: they they're much better position than others out there. And
Speaker 1: the biggest reason is, you know, they are the largest
Speaker 1: kind of UM you know, purchaser of semiconductor UM goods
Speaker 1: out there on kind of a pure play basis, right,
Speaker 1: I Mean, if you take out samsull and which kind
Speaker 1: of UM you know, utilize this kind of their own
Speaker 1: semi can you know, their own smartphones demands to kind
Speaker 1: of feed their own business. That's not necessarily the taste
Speaker 1: here UM with Apple. Apple kind of outsources all their
Speaker 1: semi conductor needs out there, so they have significant needs
Speaker 1: out there and because of that, UM, they definitely get
Speaker 1: kind of their first in line in order to kind
Speaker 1: of get those good UM. At the end of the day, though,
Speaker 1: we kind of look ahead here in terms of where
Speaker 1: the supply constraints continue to be most er. It's definitely
Speaker 1: at this more trailing edge technology node. It's more yer
Speaker 1: kind of UM you know, your microprocessors, that are your
Speaker 1: micro controllers and what have you of the world. Then UM,
Speaker 1: Apple does need to purchase those type of UM components.
Speaker 1: But UM again they are in better position than others
Speaker 1: out there to UM get those orders fulfilled. Obviously, we
Speaker 1: know how interconnected Apple supply chain is with China. They've
Speaker 1: they've been trying to diversify that and it likely won't
Speaker 1: be so intertwined in years to come, but that's still
Speaker 1: the case for now. How will rising global tension impact Apple?
Speaker 1: How will the Chips Act come into play. So, you know,
Speaker 1: I think longer term, you know, clearly Apple does want
Speaker 1: to further diversified its supply chain, and they clearly are
Speaker 1: looking to do so. We think kind of, um, their
Speaker 1: emphasis is absolutely going to be more so in India
Speaker 1: than other regions of the world. Rightfully so, because when
Speaker 1: you actually think about where the demand upside could potentially
Speaker 1: come from from Apple here over the next decade, I
Speaker 1: think India is a big reason. Um, if you are
Speaker 1: a bowl on apple from the natural natural wealth effect
Speaker 1: that will take place in India over the next ten
Speaker 1: twenty years. So it makes takes a lot of sense
Speaker 1: for Apple to start kind of um expanding into that
Speaker 1: geographic region. But that being said, Apple remains very well
Speaker 1: positioned within China. We don't necessarily actually expect them to um,
Speaker 1: you know, shut down any type of production out there,
Speaker 1: to be honest with you, as more and more chips
Speaker 1: companies out there kind of evolved within China, exactly a
Speaker 1: possibility um where Apple could potentially use their local semiconduct
Speaker 1: their manufacturing industry as well. But that's being said, I mean,
Speaker 1: we do expect them to continue to um look for
Speaker 1: ways to expand and further diversify outside of China, but
Speaker 1: India will be the key there. I don't know how
Speaker 1: much of an impact kind of the chip sacks will
Speaker 1: have um within the US, but I think only time
Speaker 1: will help. The big question remains how many people are
Speaker 1: going to upgrade these upgrade their devices in the middle
Speaker 1: of a downturn, when they're already paying more for everything else.
Speaker 1: How significant do you think the pricing that we heard
Speaker 1: today the Apple Watch Ultra seven nine, the new iPhone
Speaker 1: fourteen at seven the same price it was last year
Speaker 1: as the iPhone thirteen, that that seems to be pretty significant. Yes,
Speaker 1: I mean it looks that. I actually I thought there
Speaker 1: was a possibility they could have raised the prices on
Speaker 1: some of those pro devices, but I'm kind of happy
Speaker 1: that they didn't, to be honest with you, when you
Speaker 1: kind of look um an Apple here. First off, our
Speaker 1: forecast for the upcoming cycle here in terms of the
Speaker 1: iPhone fourteen cycle is actually no growth in terms on
Speaker 1: the unit side of things. However, we do expect average
Speaker 1: selling prices to increase about three at least recent and
Speaker 1: that's going to just be the actual improving mix. I mean,
Speaker 1: clearly they're ditching the the mini out there UM adding
Speaker 1: the six point seven inch um plub device, and then
Speaker 1: you know just just what they've been now on the
Speaker 1: pro side of things relative to what they've done with
Speaker 1: the two standard devices. I think that's a big enough
Speaker 1: gaps where you could potentially seem more consumers kind of
Speaker 1: gravitate out there UM towards the pro devices. At least
Speaker 1: for the September quarter and December quarter. UM, we remain
Speaker 1: very optimistic in terms of UM units. We were about
Speaker 1: two to three percent above the street. We do get
Speaker 1: a little bit more concerned on the macro side of
Speaker 1: things as we go with some marching tune quarters and
Speaker 1: the Psycolosten. All right, Angelo's you know, c fr, I
Speaker 1: thank you for giving us the big picture of you
Speaker 1: appreciate it. Shairs on Twitter jumping in Wednesday session after
Speaker 1: a Delaware judge told Elon Musk, no, we can't delay
Speaker 1: this trial with Twitter. Of course, Ellen trying to walk
Speaker 1: away from that forty four billion dollar deal. Bloomberg's at
Speaker 1: Ludlow here with all the deep tales and kind of
Speaker 1: a big loss for Musk here, meaning he won't have
Speaker 1: as much time to pull together some additional discovery. What
Speaker 1: is this signal from the judge? Yeah, best day for
Speaker 1: Twitter shares since mid July. The idea being that a
Speaker 1: Brisker schedule timeline for trial favors Twitter. Most analysts, including
Speaker 1: our Bloomberg Intelligence litigation team, would say that that Brisker said,
Speaker 1: you'll boost the odds that Twitter will be able to
Speaker 1: enforce the original deal terms, which is, you know, m
Speaker 1: a fifty four twenty centers share valuing Twitter at fort
Speaker 1: four billion. And Judge Kathleen st Jude McCormick basically said
Speaker 1: that she couldn't delay the trial by even four weeks.
Speaker 1: Remember must team, we're asking for December because if she did,
Speaker 1: then it could bring harm to Twitter's business that she
Speaker 1: couldn't justify. So one win for Elon Musk is that
Speaker 1: he can use the complaints of this whistleblower, which recently
Speaker 1: emerge to an extent explain. Yeah. So this is Peter Zako,
Speaker 1: who filed a whistleblower complaint on auguste basically saying that
Speaker 1: Twitter had security deficiencies making its platform vulnerable to hackers,
Speaker 1: and in this complaint that he'd been told by a
Speaker 1: senior Twitter executive that there was a spots issue that Now,
Speaker 1: what the judge is saying is that incrementally the must
Speaker 1: team can go out as part of discovery ahead of
Speaker 1: trial to include some of that information that was in
Speaker 1: the August whistle blur filing in their legal armory, so
Speaker 1: to speak. But again it all comes down to Musk
Speaker 1: having to prove the same impact, the same legal point
Speaker 1: that he has had to all along, which is material
Speaker 1: adverse effect. And again Street analysts, Bloomberg Intelligence, this Gation
Speaker 1: analysts see this being a Twitter's favorite at this point.
Speaker 1: All right, lad blow, thank you Meantime, on Tuesday night,
Speaker 1: Alphabet's CEO Sundar Pachai defended the company in response to
Speaker 1: claims that it is anti competitive. At the CODE conference.
Speaker 1: He also commented on Google's decision to remove former President
Speaker 1: Trump's truth social app from the app store. Bloom looks
Speaker 1: Alex Barnka was in the room for Purchi's remarks. She
Speaker 1: joins us, Now, so Alex, let's start on the anti
Speaker 1: competitive accusations. You know, not a surprise that he defended
Speaker 1: Alphabet and Google's position there, But what do you make
Speaker 1: of how he did it? Yeah, Emily, he brought it
Speaker 1: up at basically every turn sendor was on stage for
Speaker 1: about forty five minutes, and whether he was talking about
Speaker 1: the ad market, about commerce, about competition with TikTok, he
Speaker 1: brought it back to this argument that their company, that
Speaker 1: Alphabet is not anti competitive, that in fact, there is
Speaker 1: a lot of competition on the market now. It is
Speaker 1: a timely argument for him to be making. Just last month,
Speaker 1: our colleagues reported, based on their sourcing that the d
Speaker 1: o J maybe bringing another anti competition suit against Google
Speaker 1: on their ad business. You'll remember that there's already a
Speaker 1: suit out there from the d J alleging the company
Speaker 1: dominates the search market. So it seems like anti trust
Speaker 1: is definitely on the mind of Alphabet CEO, and he
Speaker 1: really wanted to remind us that, you know, they have
Speaker 1: rivals out there in the market as well. Meantime, he
Speaker 1: gave some detail, more detail and I think we would
Speaker 1: expect about their decision to remove Trump's Truth social app
Speaker 1: from the Google Play Store. Tell us what I had
Speaker 1: to say, Yeah, that's right, he pointing to kind of
Speaker 1: what it's coming down to for removing it right now,
Speaker 1: which is content moderation. He kind of talked at length
Speaker 1: that the Google play Store has standards for what they
Speaker 1: expect the apps on UM on that platform to kind
Speaker 1: of participate in when it comes to content moderation, and
Speaker 1: said that it seems like they are looking at that
Speaker 1: more closely. He also pointed out that the Google play
Speaker 1: Store did bring on Parlor recently, so UM, there has
Speaker 1: been movement there for some of these platforms that seem
Speaker 1: to be friendlier to Trump or allow Trump on the
Speaker 1: platform in terms of getting them into the play Store,
Speaker 1: but for truth social that content moderation peace and making
Speaker 1: sure that they can kind of abide by the standards
Speaker 1: that Google expects seems to be the breaking point at
Speaker 1: the moment. Meantime, he talked about his goal to make
Speaker 1: Google more productive, which is really significant given how massive
Speaker 1: that company is. Does that mean layoffs? Uh potentially um,
Speaker 1: it seemed like yesterday he talked about UM finding kind
Speaker 1: of product productivity games. He gave some examples UM past
Speaker 1: examples like having multiple music applications on different sides of
Speaker 1: alphabets platforms and combining those into one. He also talked
Speaker 1: about things like teams that have perhaps three managers as
Speaker 1: the decision maker UH when there should only be one,
Speaker 1: and that slows things down, so perhaps you don't need
Speaker 1: that many people. But for Google, look, they are struggling
Speaker 1: like the rest of the ad driven businesses out there
Speaker 1: in big tech, so he's absolutely looking to efficiencies and
Speaker 1: it sounds like right now, um, they're going through kind
Speaker 1: of a holistic process of figuring out where they have
Speaker 1: duplications in the business that they can narrow down and
Speaker 1: where perhaps the business should be moving faster with fewer
Speaker 1: voices to make sure that it is hitting those productivity goals.
Speaker 1: All right, Alex Barnka for us, I know you'll be
Speaker 1: back at code later tonight, only looking for your dispatches.
Speaker 1: Welcome back to Little More Technology. I'm emily changing Coppuccino
Speaker 1: where Apple just unveiled a new line of products. Let's
Speaker 1: talk about it all with Marabel Lopez, founder and principal
Speaker 1: analyst of Lopez Research. Good to see you back here
Speaker 1: in person. You know, I thought it was interesting. They
Speaker 1: obviously unveiled you know, a ton of new things today,
Speaker 1: some features geared for everyone and some geared towards more
Speaker 1: niche users, whether it's you know, an outdoor enthusiast or
Speaker 1: there was also a focus on um women's health. What
Speaker 1: stood outmost to you. What I thought was interesting is
Speaker 1: we're at a real mature state of the market right now.
Speaker 1: We have to do some things that are definitely for
Speaker 1: a niche market, like the outdoor enthusiasts, But you still
Speaker 1: wanted every release to make sure that there's something for everybody.
Speaker 1: So we had crash detection in the watch, We had
Speaker 1: temperature sensors for women's health. We had satellite which is
Speaker 1: in all of the iPhone fourteen so that anybody can
Speaker 1: have emergency calling. So it was really that balance of
Speaker 1: things that were very specific, like you can have a
Speaker 1: dive computer on your watch. That word multiple times dive
Speaker 1: computer cycle. I mean, what arrange? How let's talk about
Speaker 1: the every day that and you know women are half
Speaker 1: the population. How compelling are some of these women's health
Speaker 1: features in terms of convincing a new audience to upgrade.
Speaker 1: We want this watch to be for everything, right, if
Speaker 1: you're going to wear this every day, then you wanted
Speaker 1: to really do things of matter in your life. And
Speaker 1: nothing is more important to women at certain points in
Speaker 1: their life than being able to understand what's happening with
Speaker 1: their menstrual cycles. So I think that they really hit
Speaker 1: a curve that that makes sense for a broad percentage
Speaker 1: of the populace. They also double down on the privacy
Speaker 1: features there, because obviously we're talking about really personal information.
Speaker 1: Privacy has been Apple and Tim Cook's big thing. You know,
Speaker 1: they've continually said, you know, we are doing this better
Speaker 1: than anyone else. We are protecting you and your data.
Speaker 1: How important is that in terms of the marketing. I
Speaker 1: think one of the things that we're seeing is really
Speaker 1: a bifurcation of those that care about privacy and those
Speaker 1: that don't. Does have monetize you with your data? And
Speaker 1: those that are saying, O, hey, this is really about
Speaker 1: you buying the product and it's your information. And I
Speaker 1: think no one is excelling at that message better than
Speaker 1: Apple right now. But Apple is also building out its
Speaker 1: own advertising business, right is there some will I? Um,
Speaker 1: we don't know yet, is the short answer, because we
Speaker 1: don't know exactly what type of data they're going to
Speaker 1: collect with, what they're gonna do with it, or what
Speaker 1: the privacy constraints are around it. But it's clear that
Speaker 1: everybody wants advertising dollars. So let's talk about the outdoor
Speaker 1: enthusiasts and and and I mean, first of all the
Speaker 1: video was just absolutely amazing and all the different deserts
Speaker 1: and uh, you know, snow covered mountaintops. They went to
Speaker 1: um But how how how big a driver do you
Speaker 1: think this this will be? I mean, they obviously did
Speaker 1: undercut the garment watched, the high end garment watch significantly. Absolutely.
Speaker 1: I look at this very similar to how the Mac
Speaker 1: was theoretically designed for creatives. The watch is now also
Speaker 1: an outdoor enthusiast specialty. You don't need a dive computer,
Speaker 1: you don't need a garment watch if you are a
Speaker 1: triathlete or anybody frankly that just really wanted all day
Speaker 1: battery life and to be out there and to know
Speaker 1: it was going to work. I think they struck a chord.
Speaker 1: These were complaints that had been in the marketplace, and
Speaker 1: now they've addressed them. So, you know, let's talk about
Speaker 1: what this means over the longer term, because you know,
Speaker 1: Apple's revenue now comes from the iPhone. But you're not
Speaker 1: going to buy an Apple watch or AirPods if you
Speaker 1: don't have an iPhone. So are you seeing Apple becoming
Speaker 1: even more reliant on the iPhone or still less reliant
Speaker 1: on the iPhone? I think the world is reliant on smartphones,
Speaker 1: so that iPhone absolutely has to have features that sell
Speaker 1: it because it drags the entire ecosystem with it and
Speaker 1: that's not going to change. So what are you look
Speaker 1: at when you when you look out over the holidays
Speaker 1: and you know, potentially a very busy quarter, but customers
Speaker 1: under pressure. You know, they're paying more for gas and
Speaker 1: groceries and literally everything, though you know, iPhone staying at
Speaker 1: the same price. Thank you Apple, um are what do
Speaker 1: you think this upgrade cycle is really going to look
Speaker 1: like in a downturn? I think the grade cycle is
Speaker 1: going to be contentious and people have to make choices
Speaker 1: between what they're going to buy. You know, in some
Speaker 1: cases this is going to be are you gonna have eater?
Speaker 1: Are you're gonna have an iPhone? But having said that,
Speaker 1: that's morphone is so critical to what people do in
Speaker 1: their lives that they'll choose a smartphone oversight a PC something.
Speaker 1: So I think that there's still great opportunity for the
Speaker 1: fourth quarter to be a great quarter for Apple. Alright,
Speaker 1: Maria Lopez Lopez Research, good to have you back here
Speaker 1: on the show. Than thank you for stopping by. Let
Speaker 1: you cool off, all right, coming up, we're gonna talk
Speaker 1: a little bit more about those satellites and just how
Speaker 1: game changing that new technology can potentially be. The ability
Speaker 1: to send s O S messages without cell service details next,
Speaker 1: this is Bloomberg. Unlike stationary cell towers, communications satellites are
Speaker 1: hundreds of miles above the Earth and flying it over
Speaker 1: fifteen thousand miles per hour. To connect to these satellites
Speaker 1: need to be outside with a clear view of the
Speaker 1: sky and the band with all limited that even sending
Speaker 1: a text message is a technical challenge. Typically, the only
Speaker 1: way to tap into such a network is with an
Speaker 1: expensive device that uses a bulky external antenna. We knew
Speaker 1: that approach just wouldn't work for iPhone, so we invented
Speaker 1: another way. We designed and build custom components and specific
Speaker 1: software so that iPhone fourteen antennas can connect with satellite's
Speaker 1: unique frequencies. There's one stock that went wild during the
Speaker 1: iPhone fourteen unveiling, and it was an Apple Blue works
Speaker 1: at Ludlow back now with a look at global Star,
Speaker 1: very important partner at global Star Global staff. Fifty minutes
Speaker 1: into the Apple presentation, global Star is down six and
Speaker 1: the stock is halted pending News on stage in Cubatino,
Speaker 1: where you r M they discussing the satellite text capabilities
Speaker 1: of the latest generation of iPhone. A few minutes later,
Speaker 1: the stop begins training again. You see that on the
Speaker 1: right hand side of your screen it jumps from a
Speaker 1: decline of six to a gain of forty one before
Speaker 1: ultimately closing down one point to Now. There have been
Speaker 1: rumors for almost a year the Global Star war partner
Speaker 1: with Apple to be the satellite operator, which is confirmed
Speaker 1: now in that regulatory filing. Apple is going to pay
Speaker 1: Global Star fees to provide this service. But a Global
Speaker 1: Star this is a big win. This is a tiny
Speaker 1: company three point seven billion dollar market cap, sales in
Speaker 1: the hundreds and millions of dollars each year. But for them,
Speaker 1: this is a really big win. Big win Indean and
Speaker 1: putting a lot of speculation to resk. Thank you, and
Speaker 1: I want to talk more about Apple's new satellite connectivity
Speaker 1: um and bring in Chris Quality, the founder of Quilty Analytics,
Speaker 1: which works exclusively in the satellite and space industry. This
Speaker 1: is something because I know that you've been following for
Speaker 1: a very long time, and on stage today Apple talked
Speaker 1: about how this took years to put to practice hardware, software,
Speaker 1: infrastructure innovation. Just how significant is it that Apple um
Speaker 1: says they can now pull this off. Well, I think
Speaker 1: it's a good innovation form. I think it's also a
Speaker 1: first step. The services was announced today is a fairly limited,
Speaker 1: uh you know, worst case scenario. Good to have as
Speaker 1: a background technology. But if you've been watching the broader
Speaker 1: industry landscape, there's lots of things happening with satellite phone connectivity,
Speaker 1: and other companies including SpaceX and T Mobile just last
Speaker 1: week or two weeks ago that announced the service. That's
Speaker 1: a substantially more viable service. Companies like a Ridium that
Speaker 1: are working with handset manufacturers A S T Space Mobile
Speaker 1: Link and supposedly Android and Google are coming out with
Speaker 1: satellite phone connectivity also. So let's talk about the T
Speaker 1: Mobile and SpaceX example. What do they offer that Apple
Speaker 1: does not. Well, the fundamental difference here that really matters
Speaker 1: is the spectrum. In the case of the Apple announcement,
Speaker 1: they are using dedicated satellite only spectrum, which means Apple
Speaker 1: has to put, as they said, specific hardware, antennas and
Speaker 1: chips to work with that satellite only hardware. Uh spectrum
Speaker 1: in the case of Global what SpaceX is doing the
Speaker 1: T mobile or a s T working with Vota Phone
Speaker 1: and a T and T. They're actually using the carrier spectrum,
Speaker 1: so there's no change that needs to be made made
Speaker 1: to the device itself. All the work will be done
Speaker 1: by the satellite. In the case of a company like
Speaker 1: a s T, they're building one of the largest satellites,
Speaker 1: certainly one of the most powerful satellites out there, in
Speaker 1: order to do the work that the handset can't because
Speaker 1: the handset has no modifications made to it. So if
Speaker 1: this is a good first step, as you say, what
Speaker 1: do you imagine the second and third step might be. Yeah.
Speaker 1: So clearly this is an opening salvo by Apple. It
Speaker 1: provides a basic level of service, can probably draw some
Speaker 1: extra interest in the iPhone fourteen. But I think given
Speaker 1: what's happening in the broader landscape, if Apple is serious
Speaker 1: about this, they would have to look at potentially building
Speaker 1: a satellite constellation of their own. Perhaps not a surprise
Speaker 1: that Global Star does have a filing for over three
Speaker 1: thousand satellites to potentially launch, and they'd have to build
Speaker 1: satellites unlike the current second gen or recently ordered third
Speaker 1: gen satellites that have a much bigger antenna, much more power,
Speaker 1: and are optimized for working with that consumer handset. So
Speaker 1: let's play this out a little bit. Do you imagine
Speaker 1: that someday Apple might be interested in building a competitor
Speaker 1: to starlink for example, UM, I would say not exactly Starlink.
Speaker 1: Starlink's main purpose is broadband, and uh, you know that's
Speaker 1: non Apple's game, at least potentially here in the neryor term.
Speaker 1: I think the reason that they partnered with Global Star,
Speaker 1: they're probably one of the weaker players in terms of
Speaker 1: their current revenue and their their customer profile within the
Speaker 1: satellite mobile satellite spectrum industry. What they do have is
Speaker 1: a very good spectrum position, and uh if they eventually
Speaker 1: use the full aspect of that spectrum. But there is
Speaker 1: a potential to offer a higher data rate service. Certainly
Speaker 1: nothing that would compare with the Starlink service, but you know,
Speaker 1: think of it as a three G, four G, maybe
Speaker 1: even up to a low level five G type service
Speaker 1: in the longer term. All Right, I'm fascinating to look
Speaker 1: that far out, if you will. To play on Apples onwards,
Speaker 1: Chris Quality Quilty Analytics Co. Founder. Thank you. These incredible
Speaker 1: products each offers so many great capabilities and work seamlessly
Speaker 1: together in a way that only Apple can deliver. Making
Speaker 1: that are so from Apple CEO Tim Cook. There before
Speaker 1: we go, I want to recap the day's event. I
Speaker 1: am joined now by Bloomberg's Mark German, our resident Apple expert,
Speaker 1: and Juliasca forrest Or Research, Vice president of Principal Analysts.
Speaker 1: The're going to see you, Julie Marcot. Want to start
Speaker 1: with you because obviously you previewed so many of the
Speaker 1: things that we saw today, but there must have been
Speaker 1: some surprises what stood out most to you? You know,
Speaker 1: leading up to the to the event, there were a
Speaker 1: lot of analysts who were expecting iPhone price likes, particularly
Speaker 1: on the iPhone Fortune, Prome Pro Max line. I had
Speaker 1: never heard that was happening, so I didn't believe it
Speaker 1: was happening. In little do we know be announced today
Speaker 1: with no price likes. Very interesting in light of inflation
Speaker 1: price increases you're seeing from Meta, from Samsung and from
Speaker 1: other companies. However, there are so inflationary related price increases
Speaker 1: you're seeing in Europe, in India. But if you want
Speaker 1: an iPhone fourteen pro it's going to be that same now,
Speaker 1: I will not. If you look at the fine print
Speaker 1: at some of the carrier deals this year, they're not
Speaker 1: as aggressive as last year. Right, So last year you
Speaker 1: were able to upgrade from a twelve prom Max to
Speaker 1: a thirteen Promax and get like fifty bucks cash back
Speaker 1: on top of getting that new phone. This year, that
Speaker 1: same upgrade from a thirteen Promax to a fourteen Promax,
Speaker 1: it's going to cost most people between three hundred and
Speaker 1: six d dollars. So the carrier deals not as aggressive,
Speaker 1: you know, Julie, it's almost a given every year the
Speaker 1: price of the iPhone goes out, we get a new
Speaker 1: one and the price goes out. What do you make
Speaker 1: of Apple's play here? Is this genius or not? Well?
Speaker 1: I think it's a nod to the economic headwinds that
Speaker 1: we feel like a lot of consumers are facing. So
Speaker 1: I think it was very smart not only keeping the
Speaker 1: prices relatively flat, but you also heard Tin Coxie the
Speaker 1: word essential a lot. It's essential, it's essential, and it's
Speaker 1: only essential, but now it's essential to our health and
Speaker 1: a set to our safety. So I think it's it's
Speaker 1: smart marketing mark when it comes to the technology. You know,
Speaker 1: as you reported, we're seeing more significant upgrades than we
Speaker 1: saw last year. But to some people, they might still
Speaker 1: look at this phone and saying looks like basically the
Speaker 1: same phone. But you know, those technological upgrades that go
Speaker 1: into you know, a new chip, thinner, faster, longer, bat
Speaker 1: battery life are so hard to do. Can you talk
Speaker 1: to us about the significance of of the inside changes
Speaker 1: that we can't see? Sure? I mean, if you're looking
Speaker 1: at the jump from the thirteen to the four team,
Speaker 1: I'm not talking about the Pro models. I think I
Speaker 1: can sit here today and safely tell you that there
Speaker 1: is absolutely no reason for you to upgrade. There's no
Speaker 1: faster processor, the battery life is about the same. In
Speaker 1: the camera enhancements going from the thirteen to the fourteen
Speaker 1: are not that significant. But when you get to the
Speaker 1: Pro models, you are seeing major changes. Right that new
Speaker 1: notch cut out. They really turned something that's an ugly
Speaker 1: portion of the iPhone into something that quite frankly looks awesome. Right,
Speaker 1: changing the notch into a software area where you can
Speaker 1: see when your ubers arriving, you could see your music playback,
Speaker 1: And that technology is something They've spent years developing the
Speaker 1: Apple Watch Pro. We first wrote about that about two
Speaker 1: years ago. This thing has been in development, probably in
Speaker 1: some way or another since the original Apple Watch launched
Speaker 1: seven years ago. Talk let's talk about the car crash feature. Right,
Speaker 1: that required them to actually do car crash testing. They
Speaker 1: showed a video of that. That takes years, Right, they
Speaker 1: need to get this right. That's years of data collection
Speaker 1: and the links they go to for testing and development
Speaker 1: in terms of features like that probably go beyond what
Speaker 1: any other company in the space goes through. Right, you know,
Speaker 1: I've dropped my phone so many times. How are they
Speaker 1: going to know that's not a car crash, Julie While
Speaker 1: you weren't going sixty miles per hour. So there's that.
Speaker 1: You're probably just standing But you know, what do you
Speaker 1: agree with there? And and what would you pick a
Speaker 1: bone with of what Mark had to say. Yes, so
Speaker 1: I think the tech theological advancements are pretty substantial, But
Speaker 1: I think the thing is for a lot of consumers,
Speaker 1: it's just it's subtle, you know, And it's one of
Speaker 1: those things if you're just going from a thirteen to
Speaker 1: a fourteen, you're like, Okay, it's a little bit better.
Speaker 1: But if you're going from like an eleven or twelve
Speaker 1: to a fourteen, you can't really articulate it as a consumer.
Speaker 1: But at some point you're like, oh, my goodness, that's
Speaker 1: so much better. It's so much brighter. The pictures are
Speaker 1: so much better. I had no idea. So there's a
Speaker 1: lot of things I think that are to subtle. I
Speaker 1: think a lot of the other things they did they
Speaker 1: added sensors, right, So when you add sensors, you get
Speaker 1: more data, you get more precise data. They can model
Speaker 1: more activities. Uh. Like my favorite, as I told you,
Speaker 1: is being able to track my kicksets in the pool. Right.
Speaker 1: They can do that with these kinds of sensors. Uh.
Speaker 1: There's other really subtle things about managing the battery, like
Speaker 1: dimming the phone. Uh, you know, the transparency, the spatial audio.
Speaker 1: There's a lot of things that are just really subtle.
Speaker 1: I think that are hard to communicate to consumers, but
Speaker 1: when consumers experience, they just have a wow effect. What's
Speaker 1: your sense of how a cult supply chain issues are
Speaker 1: going to be to manage over the next six months.
Speaker 1: I don't you know. I would say, not being an
Speaker 1: expert in the supply chain, and you know, it seems
Speaker 1: to be impacting the world economy. But somehow Apple seems
Speaker 1: to be doing okay, and Mark you would agree with that, right,
Speaker 1: I mean, when you look at the lead times on
Speaker 1: these various products, they're not that bad, YEA. So far
Speaker 1: on the Apple which Ultra, what we're seeing is only
Speaker 1: one of the three variations is already shipping at the
Speaker 1: end of October, whereas you still get first day September
Speaker 1: twenty three availability for two of the bands. Now, the
Speaker 1: the impact seems to be on the bands themselves, not
Speaker 1: the Watch Ultra. So if you're trying to get a
Speaker 1: watch Watch Ultra on launch day, my recommendation for you
Speaker 1: would buy any band combination just to get that watch
Speaker 1: and then worry about buying the band you want later.
Speaker 1: So clearly in terms of the production process for those bands,
Speaker 1: trying to figure out which bands are going to be
Speaker 1: more popular, uh, that's going to be you know, tougher
Speaker 1: for Apple. Also, the Watch Ultra is one skew right
Speaker 1: on color, one finish, one screen size right, much less
Speaker 1: complex to produce when you have fear excuse, So I
Speaker 1: think they're gonna be okay on that I also think
Speaker 1: they're going to be just fine on iPhone production. Uh.
Speaker 1: The issues they had with iPad and mac supply, Uh,
Speaker 1: those seem, based on my research, probably resolved. We'll see
Speaker 1: what happens in October November when they launch new variations
Speaker 1: for the Mac UH and the iPad Pro. Now, one
Speaker 1: thing we didn't hear much about is the mixed reality
Speaker 1: headset that you've of course been reporting on. I know
Speaker 1: you're expecting it to come next year. Unless there were
Speaker 1: some Easter eggs today that I didn't see. Did you
Speaker 1: hear anything Mark that can any more clues as to
Speaker 1: what this headset will look like. No, no easter eggs today.
Speaker 1: I know in power On we wrote the other day
Speaker 1: there would be no uh you know, reveal of this
Speaker 1: mixed reality had set. I'm not expecting them to announce
Speaker 1: that until next year, and I think will be the
Speaker 1: year of they are and VR for Apple. Uh. No
Speaker 1: new augmented reality features on the iPhone. Nothing are related
Speaker 1: to the watch. There are some new transparency modes and
Speaker 1: some cool new audio features for the AirPods pro too
Speaker 1: announced today. It's plausible that some of that functionality will
Speaker 1: make their way into the speaker system. On the reality Probe,
Speaker 1: which is I believe will be the name of the
Speaker 1: headset next year. But I think we're still a few
Speaker 1: months away before seeing that headset come to fruition. And
Speaker 1: what about the M word, Julie, the metaverse, what's apples
Speaker 1: play going to be today? Need one? Well, there's there
Speaker 1: is no metaverse, so Apple is not late yet, No,
Speaker 1: I think you know. More seriously, I think Apple is
Speaker 1: really good at timing the market, and what we're seeing
Speaker 1: now are some metaverse precursors, which means we've got some
Speaker 1: luxury brands selling you a Groucci purse for your avatar
Speaker 1: and roadblocks, which is probably something more that your children play. Right,
Speaker 1: So there's some things that I prefer a real Gucci
Speaker 1: at this point, but not a real Gucci at this point. No,
Speaker 1: But I think you also, I think the you know,
Speaker 1: the notion these augmented reality glasses like we did, We're
Speaker 1: just not there with the technology yet where we can
Speaker 1: get a comfortable headset on consumers that's going to allow
Speaker 1: them with the great use case at the right pripes point.
Speaker 1: So I think, you know, I agree with Mark. We
Speaker 1: may see some kind of a pro version announced in
Speaker 1: the next couple of years. But I believe Apple will
Speaker 1: come into the market when they feel the markets ready
Speaker 1: and they feel consumers ready. There's a good use case,
Speaker 1: and I think Apples just generally very good at timing
Speaker 1: the market. And I think it's still too early. And Mark,
Speaker 1: you've reported that they're still working through you know, hardware
Speaker 1: software issues with that forthcoming headset. I want to end
Speaker 1: with you on comments that Tim Cook made to me
Speaker 1: around the last earnings call, uh, you know, which which
Speaker 1: aligned with your reporting that Apple is going to be
Speaker 1: spending through the downturn. That's something that they've always done.
Speaker 1: He feels like it's made them stronger on the other side,
Speaker 1: but also that they're going to be deliberate about that spending.
Speaker 1: Do you have any sense of wear Apple we'll pull back, uh,
Speaker 1: and not quickly. Yeah. I mean, I think that you're
Speaker 1: seeing budget cuts across the company. I don't think you're
Speaker 1: seeing that happen to core areas. I think that they
Speaker 1: have enough people to launch the products they want to launch.
Speaker 1: I think you're going to see a slow down and hiring.
Speaker 1: In fact, they are doing slow down and hiring. It's
Speaker 1: very difficult right now to get hiring approval of Apple. Uh,
Speaker 1: you're going to see them spend probably about the same
Speaker 1: on research and development for the next year or so.
Speaker 1: So just no growth there, Okay, but I'm not alarmed
Speaker 1: about the company's prospects because of this. All right, Bloomberg
Speaker 1: spark German juliosc a Forester Research. Thank you both. Couldn't
Speaker 1: think of a better way to end the show. Um,
Speaker 1: and thank you all for watching this special edition of
Speaker 1: Bloomberg Technology from Apple headquarters in Cupertino. Thursday. We've got
Speaker 1: a fun show coming up. Golden State Warriors. Andre Iguadala
Speaker 1: will be with us. If you're an Iggy fan, you
Speaker 1: don't want to miss it. This is Bloomberg