Speaker 1: Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is alive
Speaker 1: from coast to coast with Caroline Hyde in New York
Speaker 1: and ever Low in Sent Francisco.
Speaker 2: Welcome to a special edition of Bloomberg Tech. Tim Cook
Speaker 2: is stepping down as CEO of Apple on September first,
Speaker 2: after fifteen years leading the company. He will become executive chairman.
Speaker 3: Taking over as CEO John Turnus.
Speaker 4: He's been Apple's head of hardware engineering since twenty twenty one,
Speaker 4: is for twenty five years at the company focused on
Speaker 4: product development.
Speaker 2: Over the next hour, a breakdown Cook's legacy, Apple's performance,
Speaker 2: and what will change under new leadership, all things that
Speaker 2: investors are trying to price in. We'll also look at
Speaker 2: Cook's next role working with policymakers and get reaction from
Speaker 2: markets and lists and our team of reporters.
Speaker 4: And joining us first as Bloomberg Senior tech headder Daniel
Speaker 4: Olman in New York, who helps lead out consumer tech coverage,
Speaker 4: which of course reported earlier this year that Turnus was
Speaker 4: the heir apparent.
Speaker 3: Mark German has an.
Speaker 4: Extraordinary way of for seeing Apple's future as always, but
Speaker 4: who is John turnas so.
Speaker 5: He really has spent most of his professional career at Apple.
Speaker 5: He joined just four years after graduating college, so he
Speaker 5: really has grown up there professionally. He came there as
Speaker 5: a recent mechanical engineering grad and as you said, really
Speaker 5: has that background on the product side. So he really
Speaker 5: is a hardware guy, and as we've reported here at
Speaker 5: Bloomberg more recently, has been consolidating power and responsibility on
Speaker 5: the hardware side, presumably in preparation for this CEO transition.
Speaker 2: Overnight, Bloomberg published the full memos that Tim Cook and
Speaker 2: John Turner shared with Apple's staff. And I'm just pointing
Speaker 2: that out to our audience because right now there's basically
Speaker 2: a company wide all hands going on, so we're on
Speaker 2: the watch for any news that comes out of that.
Speaker 2: What else are we learning. The read on this from
Speaker 2: our reporting and the comments from Tim Kirk is that
Speaker 2: he has a new role, but he's not really going anywhere.
Speaker 2: What are we expecting him to do?
Speaker 5: So he's going to be transitioning to an executive chairman
Speaker 5: role and really focusing on diplomacy, both at a corporate
Speaker 5: level at almost geopolitical level, just given where Apple sits
Speaker 5: at the intersection of US policy and US relations with
Speaker 5: countries like China. So, according to our reporting, at least
Speaker 5: as much as John Turnis was ready to assume the
Speaker 5: role of CEO, wasn't quite ready to take on this
Speaker 5: more geopolitical role of negotiating on behalf of the company
Speaker 5: in a really high stakes way.
Speaker 2: That is the core of the story and what you
Speaker 2: need to know about Apple Bloomberg's day in a woman
Speaker 2: who leads consumer tech. Thank you. Let's get more on
Speaker 2: Wall Streets take on the industry's take with Ben veteran
Speaker 2: creative strategy CEO and principal analysts. He his coverage includes
Speaker 2: consumer technology, personal computing devices, semiconductors, and with respect, Ben,
Speaker 2: you've been at this for a very long time, pretty
Speaker 2: much the same amount of time that John Turnus has
Speaker 2: been at Apple. He is a hardware guy, He's an
Speaker 2: engineering guy. How do you see this changing Apple going forward?
Speaker 6: Yeah, I think there's a lot of excitement just coming
Speaker 6: from a now hardware maybe more engineering centric CEO. It's
Speaker 6: obviously been a while right since that has happened for
Speaker 6: someone who I think both the company and then the
Speaker 6: outsiders believe would have a more distinct point of view
Speaker 6: on the hardware side.
Speaker 7: Of things.
Speaker 6: I think there's also just a cultural dynamic, right working
Speaker 6: for an engineer, having a CEO who can speak your language,
Speaker 6: who can be in that room on product development, maybe
Speaker 6: work through some of the real hard engineering challenges for
Speaker 6: Apple's roadmap. And then more importantly, I think, you know,
Speaker 6: the next phase of Apple's growth is still going to
Speaker 6: be very hardware centric, with existing categories getting more aggressive
Speaker 6: as they launched more products for family as well as
Speaker 6: a whole slew of new hardware category. So I think
Speaker 6: there's a lot of optimism there. You know, we've heard
Speaker 6: he's well liked. I know, you know, Mark German and
Speaker 6: you guys have said the same thing. So I think
Speaker 6: there's there's a lot of positivity and I think the
Speaker 6: street will respond well. I think the market will like him.
Speaker 6: And then obviously, with Tim Cook not going away, there's
Speaker 6: the you know, the calming presence there that maybe Tim
Speaker 6: Cook can still do some of the geopolitical stuff that
Speaker 6: needs to happen and let John you know, just continue
Speaker 6: to focus on execution at Apple.
Speaker 2: Then how surprised were you either by the timing or
Speaker 2: that it happened as tool.
Speaker 6: No, not surprised by Mark German and I've been talking
Speaker 6: about this for probably two years.
Speaker 7: You know.
Speaker 6: I think the reality is that we had felt that
Speaker 6: Tim Cook would want to get past the fiftieth anniversary,
Speaker 6: which is what he did lead You know, you now
Speaker 6: have a couple more quarters where Tim could will still
Speaker 6: be on earnings calls to help ease that transition, and
Speaker 6: I would expect John Turnas to be involved as well.
Speaker 7: You know, we had.
Speaker 6: Felt that it would be this year, but really because
Speaker 6: I feel like the market just wanted to know, like
Speaker 6: the industry to as well, just wanted to know who's
Speaker 6: going to lead Apple for the next ten to fifteen years.
Speaker 6: And I think that there was angst around that, and
Speaker 6: it's good that they did this post fiftieth and now
Speaker 6: we now know who will be at the helm and
Speaker 6: I think, you know, again, it's a good decision.
Speaker 3: All of this.
Speaker 4: Does it signal confidence that the AI strategy is coming,
Speaker 4: that the right building blocks are in place for WWDC
Speaker 4: for September the first to be often to the races
Speaker 4: for John Turners.
Speaker 7: I think so.
Speaker 6: And I think that's a great point just in terms
Speaker 6: of right, if it wasn't right, if there was any hiccups,
Speaker 6: or could we be worried about a delay. Is there
Speaker 6: lack of confidence in what they're doing? Right, this would
Speaker 6: not be the right time. So I do think that
Speaker 6: there's a lot of things are in place. Timko is
Speaker 6: happy with the direction that the company is in. I
Speaker 6: think he's happy again with the stewardship of the culture
Speaker 6: of Apple that he was then tasked with after Steve
Speaker 6: Jobs died, and now John Turners will be responsible for
Speaker 6: carrying that culture forward as well. So I think right
Speaker 6: there was a lot of intention.
Speaker 8: Right.
Speaker 7: I don't expect Tim Cook would have done.
Speaker 6: Any of this in haste or by any sort of pressure.
Speaker 7: I think he just felt it was the right time.
Speaker 6: Apple's in good hands and in a good position in
Speaker 6: terms of all of their strategies, and now it's again
Speaker 6: it's a time for you know, John to drive the
Speaker 6: next leg of growth for Apple.
Speaker 4: An engineering brain is how Tim Cook described John Turners,
Speaker 4: but with an innovator's heart. So talk about the innovation
Speaker 4: you started to see and we understand how much adoption
Speaker 4: of AI that John has brought to his own team internally.
Speaker 4: But he's also working on the hardware as well to
Speaker 4: bring us the future of AI within Apple.
Speaker 6: Yeah, I think the innovation side, even the invention side,
Speaker 6: where you know you've got somebody who can be in
Speaker 6: again that room, who can be a fast adopter, who
Speaker 6: can push the limits of technology, and who can have
Speaker 6: high expectations and high demands of the engineers, which is
Speaker 6: really one of the things that you know, when Steve
Speaker 6: Jobs was there, he's constantly challenging people making them be better,
Speaker 6: and he came at it from like.
Speaker 7: A what was possible, right, what was possible with product
Speaker 7: and with technology. So I think you know, John Turnis
Speaker 7: is going to have that.
Speaker 6: He's obviously, as you pointed out right, been at Apple
Speaker 6: a really long time and you know, more importantly been
Speaker 6: involved in some of the biggest product launches that Apple
Speaker 6: has had, So I think he's well suited for this.
Speaker 6: There's obviously a lot of very key decisions that he'll
Speaker 6: have to make, and I think people will want to
Speaker 6: see how he handles that, you know, things relative to
Speaker 6: their AI software strategy. As good as there are strategy
Speaker 6: is just knowing where they're going to land in software
Speaker 6: partners that they'll make there, so it'll be you know,
Speaker 6: interesting to see and evaluate that. But like I said,
Speaker 6: I think coming from the engineering side. When Apple's going
Speaker 6: to need to be in a hardware growth cycle for
Speaker 6: the foreseeable future is a good spot and I think
Speaker 6: he'll bring a lot of expertise to that, to those conversations.
Speaker 4: And Maharon have creative strategies, great analysis analysis that maybe
Speaker 4: the market still wants to wrap its head around. Let's
Speaker 4: look at the market reaction because Apple is lower today.
Speaker 4: In fact, it's the biggest points drag on the NASDAT
Speaker 4: one hundred. We're of by two and a half percent.
Speaker 4: Now we're seeing what therefore ninety eight billion dollars wiped
Speaker 4: off the market capitalization of this company. Still it's worth
Speaker 4: three point nine trullion ed, but there is some questioning.
Speaker 2: Yeah, it took time to get to this decline for
Speaker 2: the market to make itself up when the major indices
Speaker 2: are flat, basically a lot amidst many headlines coming up.
Speaker 4: Tim Cook maybe stepping down a CEO, but his skills
Speaker 4: in corporate diplomacy will still be a hand for Apple.
Speaker 4: More on that next. This is Bloomberg Tech. Welcome back
Speaker 4: to a special edition of Bloomberg Tech. We check in
Speaker 4: on Apple because it is the biggest points drag today.
Speaker 4: We're seeing its worst performance well in a couple of
Speaker 4: months February, the twenty seventh new leadership a CEO transition
Speaker 4: Tim Cook to John Turnas.
Speaker 3: Tim Cook added.
Speaker 4: Two thousand percent or thereabouts to the stock market valuation
Speaker 4: of this company over his fifteen year tenure ed.
Speaker 2: One of Tim Cook's challenges has been managing Apple's relationship
Speaker 2: with the White House. The outgoing Apple CEO has navigated
Speaker 2: global tariffs and supplying chain disruptions, while on the whole
Speaker 2: staying in President Trump's good graces over the course of
Speaker 2: two administrations. That was evident in today's post from the
Speaker 2: President describing Cook's quote amazing career and calling him, quote
Speaker 2: an incredible guy. Let's get more on the Cook Trump
Speaker 2: dynamic with Bloomberg senior tech editor out of Washington, Mike Shephard,
Speaker 2: This was a focus for Cook and it will continue
Speaker 2: to be, shep What do we need to know?
Speaker 9: So it certainly will be. And you know when we
Speaker 9: talk about the Apple statement pointing to his new job
Speaker 9: engaging with global policy makers. Naturally, that means continuing work
Speaker 9: with officials in China to ensure that their presence there
Speaker 9: is unfettered and that they can continue to produce there,
Speaker 9: and that their expansion into India to bolster the supply
Speaker 9: chain there for the company is proceeding a pace as well.
Speaker 9: But there is no other relationship more important right now
Speaker 9: than the one with President Donald Trump. And Cook was
Speaker 9: really a pioneer among the tech industry when it came
Speaker 9: to engaging with the President. He really built that tie
Speaker 9: all the way back in twenty seventeen, shortly after Trump
Speaker 9: took office in his first term, and the two began
Speaker 9: exchanging phone calls and really having this kind of dialogue
Speaker 9: that the President alluded to in his truth Social post,
Speaker 9: and he even talked about how Cook would go to
Speaker 9: the White House and to him specifically as president, seeking
Speaker 9: certain things, seeking relief from impositions by the government. And
Speaker 9: we know that he was able to persuade the first
Speaker 9: Trump administration to layoff on some terifts that would have
Speaker 9: hit iPhones and AirPods and other Apple devices. And more
Speaker 9: recently since the President returned to office, we have seen
Speaker 9: that same level of engagement and really the same payoff
Speaker 9: for Apple in terms of relief from some of the
Speaker 9: President's tariffs. In this role will take on continued importance,
Speaker 9: of course, with lingering tensions between the US and China
Speaker 9: over trade, and of course now with the geopolitical friction
Speaker 9: rising touched off by the war in Iran, and so
Speaker 9: we're going to have to see how Tim Cook places
Speaker 9: this out. How much he is continuing to be a
Speaker 9: frequent interlocutor with Trump and a frequent visitor here to
Speaker 9: Washington too.
Speaker 4: Mags, Mike Shepherd is always wrapping things up in Washington.
Speaker 3: Thank you.
Speaker 4: Let's get more on the political global dynamics. Tim Cook
Speaker 4: has navigated and will continue to Jason Oxman's with our
Speaker 4: CEO of the Information Technology Industry Council. It's a tech
Speaker 4: trade association, a global one, which Apple is of course
Speaker 4: a member. So Jason, how important will Tim Cook's senior
Speaker 4: role executive chair remain for the company?
Speaker 7: Well.
Speaker 10: Tim's role and his leadership in the tech industry has
Speaker 10: been incredible, but as Mike noted, his work on the
Speaker 10: geopolitical government diplomacy front has been even more impactful.
Speaker 7: I think Tim.
Speaker 10: Cook really set the stage for the tech industry's engagement
Speaker 10: with the Trump administration. He developed, as we've been talking about,
Speaker 10: a personal relationship with the President, but he also helped
Speaker 10: inform the president's decision making in a variety of ways,
Speaker 10: and I think the US China relationship is really of
Speaker 10: the center of that. So I'm pleased and the tech
Speaker 10: industry has certainly pleased that Tim Cook will continue to
Speaker 10: play this role going forward. I think it's important for
Speaker 10: the administration to understand the business impact of the political
Speaker 10: and governmental decisions that are made, and that US China
Speaker 10: relationship is at the core of that.
Speaker 7: I also think Apple has.
Speaker 10: Been a leader in investing in the United States in manufacturing,
Speaker 10: hundreds of billions of dollars of investment made there. But
Speaker 10: also reminding the administration that supply chains are global. So
Speaker 10: as Apple and the rest of the tech industry continue
Speaker 10: to invest in manufacturing in the United States, they need
Speaker 10: access to critical components and need access, of course to
Speaker 10: the ninety five percent of the world's population that doesn't
Speaker 10: live in the United States as customers for American technology.
Speaker 10: So I think that role has been important will continue
Speaker 10: to be important going forward.
Speaker 4: It's worth remembering Tim Cook's supply chain prowess. We have
Speaker 4: seen supply chain changes from China into India non for Apple,
Speaker 4: what's number one? Therefore, for Tim Cook to address September
Speaker 4: the first and continue to do so.
Speaker 3: As the role of CEO. Is it more Iran or
Speaker 3: is it more China.
Speaker 10: Well, I think China is at the center for the
Speaker 10: technology industry of the discussion, because although the relationship between
Speaker 10: US and China is complicated, to say the least, they
Speaker 10: are the two largest players in the global supply chain.
Speaker 10: But we're of course very much looking forward to President
Speaker 10: Trump's visit to China. I think the discussions there will
Speaker 10: be productive. And Apple has definitely demonstrated, as other technology
Speaker 10: companies have, that manufacturing is global. So as manufacturing happens
Speaker 10: in the US, it happens in China, it happens in India.
Speaker 10: The rest of Southeast Asia of course is a manufacturing
Speaker 10: hub as well.
Speaker 7: So I think that.
Speaker 10: Geopolitical relationship is enormously important, and early milestones and signs
Speaker 10: of the warming relationship between the US and China are
Speaker 10: obviously very positive. Continuing that relationship going forward will be
Speaker 10: crucial for the tech industry. Look when you look at
Speaker 10: supply chains and critical minerals, a lot of things that
Speaker 10: just aren't available in the United States are available in China,
Speaker 10: and we need those supply chains globally to remain active.
Speaker 2: Let's end the discussion by remembering what happens. The President
Speaker 2: put pressure on Apple last summer. He wanted them to
Speaker 2: build the iPhone in the United States, and he talked
Speaker 2: about tariffs. In August, Apple announced over four years a
Speaker 2: six hundred billion dollar commitment to manufacture more things in
Speaker 2: the United States. Was that fully resolved that request from
Speaker 2: the White House and how Apple responded to it.
Speaker 10: I think Apple's response was enormously positive. We saw the
Speaker 10: President and senior members of the administration visiting Apple manufacturing facilities.
Speaker 10: We saw a very positive reaction of the White House
Speaker 10: about the moving to the United States of a lot
Speaker 10: of manufacturing capability. Look, can all manufacturing happen in the
Speaker 10: United States, No, of course not. We need to continue
Speaker 10: to advance manufacturing in the United States in parallel with
Speaker 10: manufacturing happening around the world, in the same way that
Speaker 10: no American company can succeed only investing in the United
Speaker 10: States market for customers. Because only five percent of the
Speaker 10: global population lives in the United States. You need access
Speaker 10: to the rest of the world.
Speaker 7: So I think it is a balance.
Speaker 10: I think Apple has done a phenomenal job of investing
Speaker 10: significantly in the United States in order to be responsive
Speaker 10: to the administration's goals, and I think the rest of
Speaker 10: the tech ecosystem is doing the same. The second day
Speaker 10: of the Trump administration, the very first announcement was about
Speaker 10: data center investments in the United States, and that's happening apace.
Speaker 10: But at the same time, I think we need to
Speaker 10: recognize that the rest of the world economy and the
Speaker 10: rest of the world's supply chains are global, and we
Speaker 10: need to focus on that as well.
Speaker 2: Jason Oxman, CEO of the Information Tech Industry Council Thank
Speaker 2: You Apple navigates a leadership transition. Amazon is doubling down
Speaker 2: on AI. Amazon, already one of Anthropic's biggest backers, is
Speaker 2: investing in additional five billion dollars in the company, securing
Speaker 2: a one hundred billion dollar cloud commitment in return. The
Speaker 2: news broke within minutes of the Tim Cook announcement. Bloombos
Speaker 2: Matt Day has more. Last night was chaos. This was
Speaker 2: a big deal in move markets. What do we need to.
Speaker 11: Know, so we need to know is that there really
Speaker 11: aren't any questions anymore about how much scale Amazon is
Speaker 11: going to have in the AI business. You roll the
Speaker 11: clock back a couple of years and they were a
Speaker 11: little bit at c in this new market.
Speaker 8: You know.
Speaker 11: Now they've got one hundred billion dollar plus commitments from
Speaker 11: Anthropic as well as Open Ai, so it seems they've
Speaker 11: really kind of found a seat at the table here
Speaker 11: empowering these AI models.
Speaker 4: How much are we still seeing this circularity? Is the
Speaker 4: market likes to call it the equity being given to Amazon,
Speaker 4: but the promise towards AWS is that just inevitable the
Speaker 4: way these deals go.
Speaker 11: It sure seems to be so last night's commitment. The
Speaker 11: details are five billion from Amazon to Entthropic now up
Speaker 11: to twenty billion dollars sometime in the future depending on
Speaker 11: certain commercial arrangements. Then on the other side of that,
Speaker 11: Anthropic is going to spend somewhere north of one hundred
Speaker 11: billion on Amazon services over over ten years. So a
Speaker 11: lot of money gone back and forth, and that.
Speaker 4: Deale struck at that valuation of three hundred and fifty
Speaker 4: billion dollars.
Speaker 3: We appreciate you.
Speaker 4: Bloomberg's Matt Day on all things Anthropic and Amazon. Welcome
Speaker 4: back to a special edition of Bloomberg Tech. We check
Speaker 4: in on the markets and then as that one hundred
Speaker 4: doing very little of anything today, we're currently trading flat
Speaker 4: by about tenth of a percent lower. Of course, geopolitical
Speaker 4: headwind still buttress the entire market. We have the wash hearing,
Speaker 4: and we of course have still questions over negotiations between
Speaker 4: us in Iran. But the key story in technology is
Speaker 4: one we can continue to be fixated upon.
Speaker 3: Apple is your biggest points.
Speaker 4: Drag on the Nasdaq one hundred to day, having the
Speaker 4: worst day in a couple of months, and end of
Speaker 4: February of by two point six percent. This as we
Speaker 4: hear of a changing of the guard after fifteen years,
Speaker 4: Tim Cook is handing over the rains come September.
Speaker 2: The first ed yeah to John turnus a hardware guy,
Speaker 2: an engineering guy. Apple may be going for continuity in
Speaker 2: its choice of new CEO, but Tim Cook's left a
Speaker 2: lasting legacy and impression on the company that he ran
Speaker 2: for fifteen years. Bloomberg's senior executive editor for Tech, Tom Giles,
Speaker 2: is with us, and that's what we've been reflecting on. Tom.
Speaker 2: You know, you can measure it in a number of ways. One,
Speaker 2: when Tim Cook became CEO, Apple had a market cap
Speaker 2: for three hundred and fifty billion dollars. It's breached the
Speaker 2: four trillion dollar market cap mark, how else would we
Speaker 2: measure the era that was Tim Cook's CEO of Apple.
Speaker 12: So many ways he oversaw such a massive expansion in
Speaker 12: terms of their footprint, in terms of where they operate
Speaker 12: and how deeply they penetrate markets like China, for example,
Speaker 12: based on a foundation that he really laid in terms
Speaker 12: of bringing Apple into China and expanding it there in
Speaker 12: terms of the number of stores, the number of products,
Speaker 12: and it's just its reach at a time when other
Speaker 12: US companies, most other US big tech companies saved Tesla,
Speaker 12: could not make any headway in that country. Massive legacy
Speaker 12: other numbers. To think about eight x increase in profits
Speaker 12: over his ten uere a massive increase in the number
Speaker 12: of stores to five hundred and forty three point sixty
Speaker 12: six trillion dollars in market cap, as you alluded to earlier.
Speaker 12: And that's just a testament to the ways that he
Speaker 12: really made Apple so much more interwoven into our everyday lives.
Speaker 12: Jam packing the iPhone with more features and then adding
Speaker 12: peripheral devices like the watch and like the AirPods, not
Speaker 12: to mention expansions and things like the Mac and the iPad.
Speaker 12: It was just a matter of really expanding Apple's reach
Speaker 12: geographically and deeper and deeper into the lives of concer
Speaker 12: uomers around the world.
Speaker 4: Tom like more than two and a half billion active devices,
Speaker 4: but not many of them are the VR headsets, and
Speaker 4: certainly none of them ended up being a car.
Speaker 3: There have been a couple of missteps along the way.
Speaker 12: Absolutely there were things that Apple spent a lot of
Speaker 12: time and money on. The car you mentioned ten billion
Speaker 12: dollars over ten years. They gave it a college try
Speaker 12: and never quite came together. The vision pro, as you
Speaker 12: pointed out, has not taken off, and that's one that
Speaker 12: it will not go down in the annals of his
Speaker 12: great success stories. But so many other things did take off,
Speaker 12: like the watch, like the AirPods. My own personal view
Speaker 12: on the AirPods. I remember the early versions. They look
Speaker 12: like earrings. They weren't my cup of tea, but now
Speaker 12: I am completely hooked on them. Left the cords completely behind.
Speaker 12: That's just one small personal example of the ways that
Speaker 12: you know, the expansion and the ways that Tim Cook
Speaker 12: entered use products that one over even the skeptics like.
Speaker 4: Me, But have your kids the gen z has left
Speaker 4: the cords behind. That's the question, Tom jarles, we so
Speaker 4: appreciate it. We're glad you took one of the AirPods
Speaker 4: out to join us today. Now, in choosing Turners as
Speaker 4: cook successor, the I film maker is stressing that its
Speaker 4: future remains in that hardware, like the AirPods. But according
Speaker 4: to Bloomberg opinion columnist Daily, that meansing incoming ZEO is
Speaker 4: inheriting a big gamble. Dave please to say, sits next
Speaker 4: to us here? Why is it the gamble in this
Speaker 4: age of AI?
Speaker 13: Well, look, when you put Apple alongside the other big
Speaker 13: tech rivals, Google, Amazon, Meta, they're spending on the AI
Speaker 13: revolution in Apple's case is very very small, magnitude smaller.
Speaker 13: And you know, depending on how you look at it,
Speaker 13: either Tim Cook's been pretty restrained, They're quite shrewd and
Speaker 13: saying you know what, maybe we don't have to invest
Speaker 13: so much in that giest yet, or Affle's hopelessly behind.
Speaker 13: And when all these data centers start coming online, Apple's
Speaker 13: going to be more vulnerable for it, particularly if some
Speaker 13: of these AI applications get put in the phones that
Speaker 13: aren't the iPhone and other devices that aren't Apple. I
Speaker 13: see it personally, you know, the hiring the promotion of
Speaker 13: John Turners. It's Apple saying, look, the thing we do
Speaker 13: best is hardware. And you know, I think if you
Speaker 13: deviced analysts two years ago, whether or not Apple hadn't
Speaker 13: much AI by now, they had said that had been
Speaker 13: a disaster. But look, the iPhones never been stronger. When
Speaker 13: people use the latest AI tools like Vibe coding, they
Speaker 13: use a MacBook to do it. Mac Mini's were running
Speaker 13: on shortages because people were using that for identic AI.
Speaker 13: Apple is still the device of choice, and I think
Speaker 13: that's what Apple is saying here. They're saying we need
Speaker 13: to carry on being that company whilst working in some
Speaker 13: of these new technologies as well.
Speaker 7: Well.
Speaker 2: The other kind of peripheral piece of your column that's
Speaker 2: so interesting is you capture the kind of role that
Speaker 2: that he's played in development, and so you talk about
Speaker 2: ambient computing, I'm talking to John that is, you know,
Speaker 2: he's kind of like gone through the development cycle of
Speaker 2: products that the new way people interact with software, not
Speaker 2: necessarily the iPhone. But then you talk about chronology. June,
Speaker 2: we have WWDC. Tim Cook will still be there September
Speaker 2: and into the fall. That's iPhone season, and you are
Speaker 2: basically billing this as his on stage moment all around
Speaker 2: the iPhone explain the thesis I suppose.
Speaker 13: I mean, look, one of the questions about Tim Cook
Speaker 13: moving on was going to be the timing, right, if
Speaker 13: you see Apple as vulnerable in some ways, the timing
Speaker 13: could have been difficult. By announcing this now and saying
Speaker 13: that John Turners will take over in September, his first
Speaker 13: real public introduction to the wider world. I mean, he's
Speaker 13: well known in technologies because but to the wider world,
Speaker 13: it's going to be standing on stage saying, here's the
Speaker 13: new cycle of iPhones, and around that time we're expecting,
Speaker 13: if you know Bloomberg, as Bloomberg's already reported that there'll
Speaker 13: be a folding iPhone as well. So John Turns is
Speaker 13: going to have this great moment where you can say
Speaker 13: the new era of iPhone is here, and I'm the
Speaker 13: guy in charge that's going to be ushering it in.
Speaker 13: I think that's very very important for Apple and to
Speaker 13: associate John Turner's with this new era. One of the
Speaker 13: things that Tim Cook is going to continue to do,
Speaker 13: which I also think is very important, is that he
Speaker 13: seems to be retaining this role as the kind of
Speaker 13: chief diplomat Johnald Trump talking about some of that in
Speaker 13: his social media posts. It will be quite smart for
Speaker 13: Apple to separate those two functions. John Turners is the man.
Speaker 13: He's running a company. He's fully focused on doing that.
Speaker 13: Tim Cook can deflect some of that attention and be
Speaker 13: the man who turns up with Tim Cook in the
Speaker 13: Oval office doing all those things that Apple, I think
Speaker 13: would prefer not to be doing at all.
Speaker 3: Frank, Oh, Tim.
Speaker 4: Apple, we have said that line yet, and you call
Speaker 4: it John Apple in your piece, And how is it in.
Speaker 3: This uncharted territory of supply chain?
Speaker 4: And when you think about some of the new innovations
Speaker 4: that Mark German so well spells out for us that
Speaker 4: are likely on their line.
Speaker 3: We've got, you.
Speaker 4: Know, maybe a robotic future, maybe at least a video
Speaker 4: TV that moves around with you that you're able to
Speaker 4: do the calls on. This is going to be AI integration.
Speaker 4: How much is John going to be at the heart
Speaker 4: of that supply chain chain?
Speaker 13: Well, that's his entire resume, right, it's in building some
Speaker 13: of the these new products. We know that He's been
Speaker 13: across every major product line, I think air pods, as
Speaker 13: Tom was mentioning just a moment ago. You know, if
Speaker 13: ambient computing is the new interface, if screens play less
Speaker 13: of a role in our life, the product that's already
Speaker 13: in millions of ears around the world is the air pods,
Speaker 13: And so you know, I do think there is this
Speaker 13: perhaps overstatement of how vulnerable Apple is to AI because
Speaker 13: it's hardware. It's just got such an incredible reputation. And
Speaker 13: whereas Steve Jobs's innovation was perhaps an individual products, particularly
Speaker 13: the iPhone, Tim Cook's innovation was in building those products
Speaker 13: and getting as many of them built as quickly and
Speaker 13: to the incredibly high standard. When you have a company
Speaker 13: like open Ai saying we're going to make an AI
Speaker 13: device is going to be designed by Johnny. I've doing
Speaker 13: that in small numbers. Sure, that's a doable task. I
Speaker 13: think making hundreds of millions of them and competing with Apple,
Speaker 13: I think it's much more difficult to do that than
Speaker 13: it is for Apple to learn how to add AI
Speaker 13: to its devices.
Speaker 2: Davely Bloomberg Opinion columnists, thank you very much. As Apple
Speaker 2: enter as a new chapter under CEO John Turners. From
Speaker 2: September first, all eyes of focus on what that means
Speaker 2: for Apple's future hardware cycle. Nabila po Paw is senior
Speaker 2: research director at IDC and joins us now and you
Speaker 2: come on this program and we talk about the outlook
Speaker 2: for handset sales, and we're zeroed in on the iPhone.
Speaker 2: The only question for you is whether a change in
Speaker 2: CEO from Tim Cook to John Turnus changed your outlook
Speaker 2: for how the iPhone and future generations the iPhone will
Speaker 2: do this year and beyond.
Speaker 14: Thank you for having me. No, that's a great question.
Speaker 14: And you know.
Speaker 8: I would say, and I think as many others right
Speaker 8: that John Turners is the perfect choice to take Apple
Speaker 8: into the next era. I mean, like you said yourself,
Speaker 8: he's a products guy, he's our hardware guy, and you know,
Speaker 8: I think it's just taking Apple full circle.
Speaker 10: Right.
Speaker 14: When Tim Cook took the rains from Steve.
Speaker 8: Jobs, it was he was taking the rains from a
Speaker 8: product's innovation like legend, right, And everyone questioned that choice,
Speaker 8: right that, Okay, how will Apple's reviving you know, the
Speaker 8: Tim Cook being a supply chain operation guy, and we
Speaker 8: know what Tim Cook is accomplished that you you know,
Speaker 8: we've all discussed in terms of how much he added
Speaker 8: you know, tent growing market capitalization tenfold, growing Apple iPhone
Speaker 8: is by like thirty percent from seven hundred dollars to
Speaker 8: a thousand plus and tons of other you know, accomplishments,
Speaker 8: expanding especially apples and ecosystem. But he couldn't have done
Speaker 8: all of that, you know, much more of course without
Speaker 8: really having those rains. You can't become a global company
Speaker 8: without controlling supply chain operations. So now that that all
Speaker 8: has been accomplished, and you know, kind of in smooth clay,
Speaker 8: it's just coming with John Turners's appointment is bringing Apple
Speaker 8: back full circle back to the product's guye right, who
Speaker 8: will leverage his engineering and hardware expertise. And he's already
Speaker 8: had his hands on, you know, being the chief architecture
Speaker 8: or being involved in.
Speaker 14: Many of the products.
Speaker 8: But taking Apple to the next level, you know, the
Speaker 8: next big iPhone like innovative product into the next era.
Speaker 14: So I'm really excited.
Speaker 2: We're looking at the image that Apple published of on
Speaker 2: turn us with with Tim Cook taking a walk on
Speaker 2: Apple Park campus Cooopatino. What's the environment that this transition
Speaker 2: takes place in. You give an annual forecast, you talk
Speaker 2: about the macro factors that are impacting the smartphone market
Speaker 2: right now, what is it that John Turnis is taking on.
Speaker 8: It's definitely he's got big shoes to Phil Phil right,
Speaker 8: given everything that Tim Cook is accomplished in his tenure,
Speaker 8: you know, but but he's young, that fifty, He's got
Speaker 8: a long you know, runway ahead of him. And I
Speaker 8: think the most prominent challenge right now, aside from coming
Speaker 8: up with that big innovated product, is to navigate Apple
Speaker 8: through this memory shortage. Its like, you know, crisis, which
Speaker 8: is again, you know, a very kind of app the
Speaker 8: alley of Tim Cook, right, So that might be the question, Okay,
Speaker 8: how is John Turner's going to navigate that? And Apple's
Speaker 8: already proved to investors, to consumers or anyone in the
Speaker 8: industry that despite what's already happening, because this is you know,
Speaker 8: this is not memory crisis is something we're in today
Speaker 8: and we'refore Apple had was one of the few companies
Speaker 8: in the top five to show positive year and your
Speaker 8: growth in Q one, and we expect Apple to be
Speaker 8: you know, probably best position this year to gain share.
Speaker 8: But right you know, you wonder if this change's leadership
Speaker 8: will impact that stronghold.
Speaker 14: But you know, having.
Speaker 8: And the other concern I had earlier when we were
Speaker 8: talking about you know, John Turner's as the heir apparent
Speaker 8: is how.
Speaker 14: Will he navigate geopolitics right?
Speaker 8: How will he balance do play that balancing act that
Speaker 8: Tim Cook has done so perfectly over the years, taking
Speaker 8: Apple through the pandemic or the terrorist crisis, getting so
Speaker 8: many exceptions for Apple, if not the entire smartphone and
Speaker 8: consumer devices category right, So how will how will he
Speaker 8: any other CEO manage that?
Speaker 1: So?
Speaker 8: I think they solve that puzzle perfectly with keeping Tim
Speaker 8: Cook on as executive chairman to still balance that.
Speaker 14: I mean and handle that.
Speaker 4: Can I jump in on give us how much John
Speaker 4: Turners has already own that sophistication when it comes to
Speaker 4: supply chain. It was through his navigation that well apples
Speaker 4: so in control of their own chips. He had to
Speaker 4: make that move right and help we even navigate from
Speaker 4: Intel to.
Speaker 8: Homegrown absolutely, and that not only helped in terms of
Speaker 8: bringing you know, excellent products with better performance and efficiency,
Speaker 8: but also really helped you know Margins right, and you
Speaker 8: were as a company having access to your own supply
Speaker 8: chip set. It's just it's it's he has already proven himself,
Speaker 8: which is why he's won the the the confidence of
Speaker 8: the board, which which gave him you know, unanimous vote
Speaker 8: to put him in in this new leadership position and
Speaker 8: also investors. Right, and we've we've already seen Apple put
Speaker 8: him in the leadership seat with leading the launch of
Speaker 8: the MacBook Neo, which again I think he had you know,
Speaker 8: he had a chief rolland right, bringing using leveraging smartphone
Speaker 8: chip into that and bringing that the price point that
Speaker 8: no one ever thought that a premium you know, mac
Speaker 8: premium like MacBook would be available at They're going to
Speaker 8: break another few records in that category as.
Speaker 14: Well this year.
Speaker 4: And it is integral and design of iPad for example,
Speaker 4: NI push us forward fifteen years, that's too hard problems
Speaker 4: five years? Yeah, Does market share remain the same for
Speaker 4: Apple if guided? Well?
Speaker 8: Absolutely, If not, I think Apple has already well positioned
Speaker 8: to grow. They will see a few points share growth
Speaker 8: both in the PC category thanks to the MacBook Neo
Speaker 8: as well as in the smartphone category because of its
Speaker 8: you know, continued pushing premiumization and really perfect timing. I
Speaker 8: think the memory crisis is probably you know, it's bad
Speaker 8: news for everyone, but it just you know, miraculously again
Speaker 8: works out for an Apple's favor. So I think five
Speaker 8: years down the line, especially with the new products that
Speaker 8: are on the table, right, we've talked about what the
Speaker 8: rumors around Apple. The glasses whatever they're going to be
Speaker 8: called with an iPhone fold that is coming out as
Speaker 8: soon as the rains are handed over, and that's going
Speaker 8: to fall in John Don's tenure, right, and other products
Speaker 8: and robotics and tabletop robotics whatever those products entail. So
Speaker 8: definitely in the old consumer devices space, Apple tens is
Speaker 8: very likely to continue to gain share and be a
Speaker 8: market leader.
Speaker 4: Jambella Povol, it's great to have you from IDC. Thankanks
Speaker 4: for your time today.
Speaker 2: Welcome back to a special edition of Bloomberg Tech. We
Speaker 2: are near session lows on Apple. Last night when news
Speaker 2: broke that Tim Cook would be stepping down as CEO
Speaker 2: on September first, becoming executive chair, and that John Turnus,
Speaker 2: the hardware chief, would be taking on the CEO role,
Speaker 2: there was this muted reaction. Apple hardly moved, Its suppliers
Speaker 2: hardly moved. We are three hours or more into the
Speaker 2: session and with time, investors are digesting this. The stock underperforming.
Speaker 2: It is down almost three percent, while major indices are flat.
Speaker 2: But people have had time to read Bloomberg's reporting, read
Speaker 2: the analysis and make up their mind on what this means.
Speaker 3: Karra, Yeah, while we delve more into what it means.
Speaker 4: Because Apple's post Tim Cook, here are signals a strategic
Speaker 4: continuity over disruption. Bloomberg Intelligence analysts say they expect Apple
Speaker 4: to focus on its core ecosystem for a look at
Speaker 4: the road ahead and the massive shoes turnus now has
Speaker 4: to fill, especially in China.
Speaker 3: Bis Anna rag Rana joins.
Speaker 4: Us now, who is one of the first out the
Speaker 4: gate with this take and a consistency. What does that
Speaker 4: mean in terms of turnus being able to drive the
Speaker 4: supply chain that in many ways Tim Cook has still
Speaker 4: navigated and will do his exec chair Yeah.
Speaker 15: I think this has been his legacy, the supply chain.
Speaker 15: It is really remarkable for a company to maintain March.
Speaker 15: It's this high despite everything that's going on from tariffs
Speaker 15: to memory prices, et cetera. I mean, is done a
Speaker 15: phenomenal job. I was last night. I started to look
Speaker 15: at ratturns and you know, look at them over the
Speaker 15: last from the day he took on till yesterday compounded
Speaker 15: annual growth rate of over twenty four percent, and S
Speaker 15: and P at that time period is at fifteen percent,
Speaker 15: So massive outperformance on that end. You know, it's done
Speaker 15: a phenomenal job of creating an ecosystem. You know, some
Speaker 15: will say that services is the future of Apple, but
Speaker 15: in our view, the services is nowhere unless you have
Speaker 15: the devices that rives the ecosystem. So from our side,
Speaker 15: I think this basically says Apple at the heart is
Speaker 15: a hardware company and will remain one of those.
Speaker 2: So let's be more specific about that. You write in
Speaker 2: your research that Apple could even sharpen its hardware strategy.
Speaker 2: What do you mean by that? What would that look
Speaker 2: like to you?
Speaker 15: See? One of the biggest complaints that we have heard
Speaker 15: almost for almost a decade now is that there is
Speaker 15: no real innovation in the iPhone, for example, it is
Speaker 15: still the same. We haven't even seen a foldable device
Speaker 15: come out at this point compared to Samsung, who's launched
Speaker 15: it several years ago. So you can anticipate that if
Speaker 15: your heart is really in hardware, you're going to have
Speaker 15: a lot more focus in that area. We saw that
Speaker 15: with Microsoft and Satya when Satya came on Cloud was
Speaker 15: at the center of his older job and that really
Speaker 15: made the big difference, and in fact that has been
Speaker 15: the primary growth friber for Microsoft. So we anticipate a
Speaker 15: lot more work to be done on the hardware side
Speaker 15: and see what he does with it.
Speaker 3: Talk about a foldable phone.
Speaker 4: We talk about how AI is going to be adopted
Speaker 4: in many ways as a black eye that they're having
Speaker 4: to turn to a key rival to Google for the
Speaker 4: underpinnings of Siri. But how do you think John Turnus
Speaker 4: really thinks about that integration and becoming more self sufficient
Speaker 4: in the future.
Speaker 15: Yeah, I return to Google for search. I mean, why
Speaker 15: not go to the provider that has the best technology.
Speaker 15: So right now they think Google CM and I has
Speaker 15: the best model, they're going to use it in their
Speaker 15: own models. On top of that, it's they're going to
Speaker 15: allow CD to tap into any AI network that's out there.
Speaker 15: I think at this point, with models changing so dramatically,
Speaker 15: you don't want to be basically bound by one ecosystem,
Speaker 15: whether that's Anthropic, Gemini or any or open AI. You
Speaker 15: do want to have their flexibility for your users to
Speaker 15: tap into any LM what they want. And I think
Speaker 15: that's what Apple's done. Look at their capex, I mean
Speaker 15: three percent of revenues compared to Microsoft which is now
Speaker 15: over forty percent.
Speaker 2: Bloomberg Intelligence is Anna ag Rhana with the key React
Speaker 2: research on the Bloomberg tumminel.
Speaker 11: You should read it.
Speaker 2: Annah, Rag's beIN at this a long time. Thank you
Speaker 2: for joining us on the special show, What a Day,
Speaker 2: What a Story? Apple shares after a few hours of
Speaker 2: the world digesting the news that Tim Cook is stepping
Speaker 2: down as CEO and John Turner steps in as CEO
Speaker 2: effective September. First, the stock is down more significantly, but
Speaker 2: it took a while.
Speaker 4: It took a while for the digestion to go on,
Speaker 4: and really the optimism is still among the analyst community.
Speaker 4: We've got forty buyers on this stock just two cells,
Speaker 4: and many still thinking that this is a continuity play.
Speaker 4: But there is an element of risk here as we
Speaker 4: see Tim Cook go up to more of a political
Speaker 4: role or that diplomatic role two and a half.
Speaker 3: For the big.
Speaker 2: Headline is that after fifteen years he steps back as CEO.
Speaker 2: But the other big story is that he has a
Speaker 2: new role executive chairman, where he is focused on policymakers
Speaker 2: and the President of the United States posting on True
Speaker 2: Social in response to this news is pretty telling, right,
Speaker 2: there's a.
Speaker 3: Lot of love for this guy.
Speaker 4: An amazing career, he says, an incredible guy.
Speaker 3: I mean, there is a lot more to this post.
Speaker 4: Some of it's well, it makes light at the fact
Speaker 4: that he wants called him Tim Apple. Of course many
Speaker 4: will forever remember. But here is someone who's managed over
Speaker 4: two administrations of Trump to really navigate what are some
Speaker 4: really difficult headwinds. He's managed to expand out supply chain India, Vietnam,
Speaker 4: but still very dependent on China and still something he
Speaker 4: has to.
Speaker 3: Work up as execution.
Speaker 2: And the net result was Apple committing six hundred billion
Speaker 2: dollars to the United States over four years. Let's bring
Speaker 2: up the image of outgoing CEO Tim Cook and incoming
Speaker 2: CEO John Turnis. The timing was a surprise.
Speaker 3: Same same difference.
Speaker 2: This is what Apple published, by the way, this photo.
Speaker 2: But it's a surprise because Apple just celebrated fifty years
Speaker 2: and in a number of interviews, Tim Cook kind of
Speaker 2: indicated he wasn't going anywhere, but the fact that John
Speaker 2: Turnis was their apparent not to surprise, as it was
Speaker 2: detailed in detail by Bloomberg News.
Speaker 4: Yeah a month ago, March twenty second, Mark Gooman puts
Speaker 4: out the thought leadership piece about how John Turners is
Speaker 4: now having his time in the spotlight, introducing new categories
Speaker 4: of product and a man who's going to be developing
Speaker 4: and giving us all to the world.
Speaker 3: A lot more of than to come.
Speaker 2: He's a hardware guy, he's an engineering guy, and he's
Speaker 2: the continuity candidate. And we're still trying to work out
Speaker 2: what happens in the next era of Apple.
Speaker 3: That does it.
Speaker 4: For this special edition of Bloomberg Tech, check out the podcast.
Speaker 2: You know where to find it online on the terminal
Speaker 2: for New York City. This is Bloomberg Tech.