1 00:00:02,600 --> 00:00:07,320 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. 2 00:00:08,840 --> 00:00:09,520 Speaker 2: From Marhart. 3 00:00:09,680 --> 00:00:14,120 Speaker 3: We're Innovation, Money and Power Collie in Silicon Valley, NBN. 4 00:00:14,440 --> 00:00:18,480 Speaker 1: This is Bloomberg Technology with Caroline Hide and Ed Louvelove. 5 00:00:33,120 --> 00:00:35,960 Speaker 4: I Meed Lovelo in San Francisco. Caroline Hides off today. 6 00:00:35,960 --> 00:00:39,400 Speaker 4: This is Bloomberg Technology coming up. Apple saws amid an 7 00:00:39,440 --> 00:00:43,200 Speaker 4: upbeat forecast and record buyback, full coverage throughout the hour, 8 00:00:43,280 --> 00:00:46,520 Speaker 4: plus tech jumps and market traders re up their rate 9 00:00:46,560 --> 00:00:50,440 Speaker 4: cup bets as US jobs data disappoints to the downside, 10 00:00:50,600 --> 00:00:52,880 Speaker 4: and we sit down with the CFO of Coinbase to 11 00:00:52,920 --> 00:00:56,280 Speaker 4: break down the company's first quarter results. 12 00:00:56,720 --> 00:00:57,560 Speaker 5: Let's get right to our. 13 00:00:57,480 --> 00:01:00,760 Speaker 4: Top story, and that top story is Apple shares are 14 00:01:00,760 --> 00:01:03,000 Speaker 4: actually on track in the moment for their biggest jumps 15 00:01:03,000 --> 00:01:06,480 Speaker 4: since November of twenty twenty two, the biggest announced five 16 00:01:06,520 --> 00:01:09,600 Speaker 4: back in US company history. Probably has some part to 17 00:01:09,680 --> 00:01:12,640 Speaker 4: play in that. But then there's the story, which is simple, 18 00:01:12,880 --> 00:01:15,160 Speaker 4: Things weren't as bad for the iPhone in the first 19 00:01:15,200 --> 00:01:18,600 Speaker 4: quarter calendar quarters perhaps we thought they might be. And 20 00:01:18,600 --> 00:01:21,319 Speaker 4: then there's the question, what on earth is Apple doing 21 00:01:21,400 --> 00:01:23,600 Speaker 4: in the realm of generative AI. Let's get right to 22 00:01:23,640 --> 00:01:26,760 Speaker 4: Bloomberg's chef correspondent Mark German and Mark long Day for 23 00:01:26,800 --> 00:01:29,120 Speaker 4: you yesterday, long night. But I think that sums it 24 00:01:29,200 --> 00:01:32,200 Speaker 4: up right, not so bad as we had feared, but 25 00:01:32,240 --> 00:01:34,440 Speaker 4: we still have questions about the path forward. What did 26 00:01:34,480 --> 00:01:35,840 Speaker 4: executives tell us last night? 27 00:01:36,040 --> 00:01:37,600 Speaker 6: Yeah, and I think you're exactly right. 28 00:01:37,680 --> 00:01:40,600 Speaker 7: As always, things were not as bad as we anticipated, 29 00:01:40,680 --> 00:01:44,840 Speaker 7: or not we anticipated. Wall Street anticipated with their estimates, 30 00:01:45,000 --> 00:01:48,280 Speaker 7: but things also weren't great, right. They still had about 31 00:01:48,280 --> 00:01:51,280 Speaker 7: a five billion dollars decline on overall revenue. They still 32 00:01:51,320 --> 00:01:54,200 Speaker 7: had a pretty big decline on the iPhone. The Mac 33 00:01:54,240 --> 00:01:57,080 Speaker 7: and services were two bright spots. The iPad came in 34 00:01:57,120 --> 00:02:01,160 Speaker 7: lower than anticipated, even though people knew that new models 35 00:02:01,160 --> 00:02:04,800 Speaker 7: are coming out next week. And Wearable's home and accessories 36 00:02:04,960 --> 00:02:07,840 Speaker 7: that was quite disappointing, coming in at about seven point 37 00:02:07,960 --> 00:02:11,120 Speaker 7: nine billion, right, the lowest metric for that category in 38 00:02:11,320 --> 00:02:14,200 Speaker 7: several quarters, despite the fact that the vision pro in. 39 00:02:14,160 --> 00:02:16,680 Speaker 6: That segment launched on February second. 40 00:02:17,120 --> 00:02:21,080 Speaker 7: Now looking ahead, the big thing, artificial intelligence. It felt 41 00:02:21,080 --> 00:02:23,320 Speaker 7: like every other question on the call was about AI. 42 00:02:23,480 --> 00:02:26,720 Speaker 7: In Apple's plans for jen Ai, Tim Cook Luku, my history. 43 00:02:26,880 --> 00:02:28,720 Speaker 7: They didn't move an inch on that front. You'll hear 44 00:02:28,760 --> 00:02:31,520 Speaker 7: more about that on June tenth, though the Worldwide Developer Conference. 45 00:02:32,160 --> 00:02:34,079 Speaker 4: You've kind of already set out the chronology of what's 46 00:02:34,120 --> 00:02:35,640 Speaker 4: going to happen on the afront. We'll get to that 47 00:02:35,680 --> 00:02:38,920 Speaker 4: in a second. China is a story in and of itself. 48 00:02:39,040 --> 00:02:42,720 Speaker 4: There are some idiosyncratic things about product lines that do 49 00:02:42,840 --> 00:02:45,320 Speaker 4: well and those that don't. So I think iPhone was 50 00:02:45,360 --> 00:02:48,400 Speaker 4: probably brighter in China than expected. But I think what 51 00:02:48,520 --> 00:02:51,079 Speaker 4: stuck out to me is is a concession maybe from 52 00:02:51,120 --> 00:02:55,160 Speaker 4: Tim Cook, that China is becoming a more competitive marketplace 53 00:02:55,160 --> 00:02:57,519 Speaker 4: for them. 54 00:02:58,000 --> 00:03:01,480 Speaker 7: He certainly mentioned several times that China's the most competitive 55 00:03:01,480 --> 00:03:04,440 Speaker 7: market in the world. Now, the most interesting thing that 56 00:03:04,480 --> 00:03:07,480 Speaker 7: happened with the China numbers yesterday is that China came 57 00:03:07,520 --> 00:03:09,600 Speaker 7: in about a billion better than expected. It was still 58 00:03:09,639 --> 00:03:12,320 Speaker 7: about a billion dollar decline, But what Tim Cook said 59 00:03:12,360 --> 00:03:13,800 Speaker 7: is the iPhone actually. 60 00:03:13,440 --> 00:03:15,200 Speaker 6: Grew in mainland China. 61 00:03:15,360 --> 00:03:19,160 Speaker 7: Right now, this is super interesting because Counterpoint Intelligence, id 62 00:03:19,360 --> 00:03:21,600 Speaker 7: C some other analyst firms came out and said that 63 00:03:21,639 --> 00:03:25,040 Speaker 7: the iPhone was really cratering during the quarter in China. 64 00:03:25,160 --> 00:03:26,639 Speaker 6: Now, the discrepancy there. 65 00:03:26,639 --> 00:03:29,000 Speaker 7: Is that some may be talking about unit sales that 66 00:03:29,120 --> 00:03:31,440 Speaker 7: might be the analysts, and Tim Cook is probably talking 67 00:03:31,480 --> 00:03:34,840 Speaker 7: about revenue. Now, if the asps went up, there is 68 00:03:34,880 --> 00:03:38,760 Speaker 7: a chance that unit sales were still down, but revenue 69 00:03:38,920 --> 00:03:41,080 Speaker 7: actually was up and they probably grew a little bit 70 00:03:41,120 --> 00:03:45,280 Speaker 7: in mainland China. Either way, we still are facing concerns 71 00:03:45,280 --> 00:03:49,240 Speaker 7: in China for Apple. Right there is newfound competition from 72 00:03:49,280 --> 00:03:53,240 Speaker 7: Huawei Shaomi, there are those government bands. But certainly Tim 73 00:03:53,240 --> 00:03:56,080 Speaker 7: Cook and Lukeu Mystry, they actually seemed pretty optimistic about 74 00:03:56,160 --> 00:03:59,160 Speaker 7: China when it came to the iPhone. Where Cook seemed 75 00:03:59,240 --> 00:04:01,840 Speaker 7: less optimistic was about the company's other products. 76 00:04:01,880 --> 00:04:03,640 Speaker 6: Now, he didn't explain what's. 77 00:04:03,440 --> 00:04:06,240 Speaker 7: Doing so poorly for Apple and China why revenue is 78 00:04:06,280 --> 00:04:09,840 Speaker 7: down in China. Clearly it is down, but he didn't 79 00:04:09,880 --> 00:04:11,840 Speaker 7: get into it. But he said Apple does have work 80 00:04:11,880 --> 00:04:12,200 Speaker 7: to do. 81 00:04:12,480 --> 00:04:12,800 Speaker 6: Now. 82 00:04:13,120 --> 00:04:16,279 Speaker 7: One other thing, Apple could have grown quarter over quarter. 83 00:04:16,360 --> 00:04:19,560 Speaker 7: He didn't specify when that growth occurred. They may be 84 00:04:19,680 --> 00:04:21,760 Speaker 7: down on an annual basis for the iPhone in China. 85 00:04:22,040 --> 00:04:24,880 Speaker 7: Maybe they grew over the last quarter, Maybe they grew 86 00:04:25,040 --> 00:04:26,400 Speaker 7: at some period during the quarter. 87 00:04:26,680 --> 00:04:27,560 Speaker 6: So there's a. 88 00:04:27,480 --> 00:04:30,640 Speaker 7: Little more explanation to do from Cook, but obviously they're 89 00:04:30,640 --> 00:04:31,760 Speaker 7: not going to give those details. 90 00:04:32,360 --> 00:04:35,120 Speaker 4: Well, in the big area where explanation is needed is 91 00:04:35,120 --> 00:04:37,840 Speaker 4: the roadmap for generative AI. You know just what I 92 00:04:37,880 --> 00:04:40,520 Speaker 4: would say to our audience. Check out Mark's latest reporting 93 00:04:40,920 --> 00:04:44,120 Speaker 4: next week with the let loose the focus is iPad WWDC. 94 00:04:44,240 --> 00:04:46,840 Speaker 4: In June, we should find out some more about generative AI. 95 00:04:46,920 --> 00:04:49,400 Speaker 4: Bloomberg's Mark German, thank you very much. Let's stick with 96 00:04:49,440 --> 00:04:52,640 Speaker 4: Apple joining us as gene monster of deep water asset 97 00:04:52,720 --> 00:04:55,200 Speaker 4: management and gene You know, you were pretty clear in 98 00:04:55,240 --> 00:04:58,000 Speaker 4: your posts on social media last night how you read 99 00:04:58,120 --> 00:05:02,800 Speaker 4: the the earnings. What's the standout story for you? Just 100 00:05:02,880 --> 00:05:05,160 Speaker 4: one thing that you learned from Apple last night. 101 00:05:07,120 --> 00:05:09,680 Speaker 8: The one piece I learned is that the core business, 102 00:05:09,760 --> 00:05:12,760 Speaker 8: as Mark said, it's not doing great, but it's holding together. 103 00:05:13,360 --> 00:05:15,920 Speaker 8: And there was again this fear that the estimates would 104 00:05:15,920 --> 00:05:19,400 Speaker 8: be revised downward for the June quarter. They basically maintain them, 105 00:05:19,880 --> 00:05:22,240 Speaker 8: and I think that that is testimony to just the 106 00:05:22,320 --> 00:05:25,240 Speaker 8: strength of their brand across the product lines, whether it's 107 00:05:25,320 --> 00:05:29,080 Speaker 8: be the software and the services or to even iPhone 108 00:05:29,080 --> 00:05:32,039 Speaker 8: being down. It's held together. And what I take away 109 00:05:32,080 --> 00:05:34,800 Speaker 8: from that is that in the June quarter we're going 110 00:05:34,880 --> 00:05:37,320 Speaker 8: to see revenue growth really for the first time in 111 00:05:37,400 --> 00:05:41,119 Speaker 8: two years. Over the last two years, Apple's revenue growth 112 00:05:41,120 --> 00:05:44,800 Speaker 8: has averaged down zero point three percent. It's going to 113 00:05:44,839 --> 00:05:47,960 Speaker 8: be up a couple percent in June, probably four percent 114 00:05:48,040 --> 00:05:51,920 Speaker 8: in September, and six percent in December. So that that turnaround, 115 00:05:51,920 --> 00:05:56,160 Speaker 8: that reacceleration is the one thing that stepped out to me, Gene. 116 00:05:56,200 --> 00:05:59,320 Speaker 4: I'm showing our audience and you a table, and the 117 00:05:59,400 --> 00:06:04,640 Speaker 4: table shows the list of largest announced company share buybacks 118 00:06:04,640 --> 00:06:08,600 Speaker 4: in history. And unless you've been living under a rock, 119 00:06:08,680 --> 00:06:11,040 Speaker 4: you'll see there's only one name on that list, Gene, 120 00:06:11,440 --> 00:06:15,560 Speaker 4: It's Apple. What's the point in a one hundred and 121 00:06:15,600 --> 00:06:16,840 Speaker 4: ten billion dollar buyback? 122 00:06:18,480 --> 00:06:21,200 Speaker 8: Now, there's two points. Number one is they're sending a 123 00:06:21,320 --> 00:06:24,720 Speaker 8: message to investors that they're going to continue to return 124 00:06:24,839 --> 00:06:29,320 Speaker 8: capital despite going into an investment phase related to AI. 125 00:06:29,360 --> 00:06:31,520 Speaker 8: They've made that very clear that they think AI is 126 00:06:31,520 --> 00:06:33,839 Speaker 8: going to be significant. Cooke said, it's going to impact 127 00:06:33,920 --> 00:06:36,880 Speaker 8: most of their products, not just software but hardware. And 128 00:06:36,960 --> 00:06:40,520 Speaker 8: so the fact that they're reiterating and increasing this buyback 129 00:06:40,600 --> 00:06:43,520 Speaker 8: during that period, that's one piece to it. A second 130 00:06:43,680 --> 00:06:47,320 Speaker 8: is there cadence to getting to net cash neutral and 131 00:06:47,400 --> 00:06:49,120 Speaker 8: so this of course has been a goal for them 132 00:06:49,160 --> 00:06:49,440 Speaker 8: for the. 133 00:06:49,360 --> 00:06:50,520 Speaker 5: Past five years. 134 00:06:50,960 --> 00:06:53,960 Speaker 8: Right now, it's at fifty seven billion dollars, so they 135 00:06:54,000 --> 00:06:56,240 Speaker 8: want to bring that down to zero. That means they 136 00:06:56,240 --> 00:06:58,799 Speaker 8: have the same amount of cash as they have in debt. 137 00:06:59,360 --> 00:07:01,680 Speaker 8: And what I I see that step up from ninety 138 00:07:01,720 --> 00:07:04,000 Speaker 8: to one hundred and ten billion in the buyback is 139 00:07:04,040 --> 00:07:07,600 Speaker 8: an indication that they want to quicken that pace. The 140 00:07:07,600 --> 00:07:10,400 Speaker 8: CFO Luca did mention on the call that they think 141 00:07:10,400 --> 00:07:13,440 Speaker 8: that they won't get to net cash neutral anytime soon. 142 00:07:14,040 --> 00:07:16,400 Speaker 8: So that shows that just the strength of the overall 143 00:07:16,480 --> 00:07:19,440 Speaker 8: business is really powering this buyback. I think investors should 144 00:07:19,440 --> 00:07:24,120 Speaker 8: remain confident that ultimately that this business is producing just 145 00:07:24,120 --> 00:07:26,480 Speaker 8: an incredible amount of cash, almost ninety billion dollars a 146 00:07:26,520 --> 00:07:30,760 Speaker 8: year in free cashual. It's remarkable despite the revenue being 147 00:07:30,800 --> 00:07:32,760 Speaker 8: down basically five percent year rear. 148 00:07:33,480 --> 00:07:36,880 Speaker 4: Well, we're speaking with Gene Monster of deep Water Asset Management. 149 00:07:37,360 --> 00:07:40,080 Speaker 4: In Gene you do a deep body of research into Apple, 150 00:07:40,160 --> 00:07:42,880 Speaker 4: You yourself hold Apple shares. I believe the firm does 151 00:07:42,920 --> 00:07:47,000 Speaker 4: not argue with me on this one. There is a 152 00:07:47,040 --> 00:07:50,320 Speaker 4: frustration from people around the world. They might not be investors, 153 00:07:50,360 --> 00:07:53,080 Speaker 4: they might just be consumers that have an iPhone and 154 00:07:53,120 --> 00:07:57,239 Speaker 4: they say, come on, man, this is Apple Coopertino, stop 155 00:07:57,280 --> 00:08:00,440 Speaker 4: messing around with buybacks and actually do some on the 156 00:08:00,440 --> 00:08:04,640 Speaker 4: innovation side. Give us the generative AI platform on iOS, 157 00:08:04,640 --> 00:08:08,280 Speaker 4: so give us a serious hard grade hardware upgrade. 158 00:08:08,440 --> 00:08:09,760 Speaker 5: Do you have any sympathy with that? 159 00:08:11,960 --> 00:08:16,120 Speaker 8: Absolutely? I mean Apple has been painfully silent on the 160 00:08:16,160 --> 00:08:19,520 Speaker 8: topic in twenty twenty three. Of course, as Mark mentioned, 161 00:08:19,560 --> 00:08:22,400 Speaker 8: about every other question on the call was related to AI. 162 00:08:22,520 --> 00:08:25,800 Speaker 8: That is, now they've had a coming out, but they 163 00:08:25,840 --> 00:08:28,600 Speaker 8: are late, There's no question about it. And another piece 164 00:08:28,640 --> 00:08:32,240 Speaker 8: to just some sympathizing with that view. Another piece to 165 00:08:32,320 --> 00:08:35,679 Speaker 8: this is that they got to ask a question about Capex, 166 00:08:36,559 --> 00:08:39,319 Speaker 8: basically going back to what happened with Meta and Google 167 00:08:39,400 --> 00:08:42,880 Speaker 8: and Microsoft and all their step ups, increasing Capex by 168 00:08:43,000 --> 00:08:46,560 Speaker 8: fifty to ninety percent in calendar twenty four. And the 169 00:08:46,600 --> 00:08:49,720 Speaker 8: expectation is that if Apple is serious about AI, they're 170 00:08:49,760 --> 00:08:52,280 Speaker 8: going to be pushing their Capex at a similar rate. 171 00:08:52,840 --> 00:08:55,520 Speaker 8: And Luca kind of sidestepped the question. He just kind 172 00:08:55,520 --> 00:08:59,200 Speaker 8: of outlined how they approach Capex in part firsthand by 173 00:08:59,240 --> 00:09:01,800 Speaker 8: their own out and they also work with third parties, 174 00:09:01,800 --> 00:09:04,120 Speaker 8: but he didn't give any indication that that would be 175 00:09:04,160 --> 00:09:07,960 Speaker 8: stepping up meaningfully. And they actually maintain their margin guidance, 176 00:09:08,000 --> 00:09:13,000 Speaker 8: and so I think that investors can show some I 177 00:09:13,000 --> 00:09:18,400 Speaker 8: think some frustration related to kind of again the pace 178 00:09:18,480 --> 00:09:20,760 Speaker 8: we're going to know more in June. I would have 179 00:09:20,840 --> 00:09:23,720 Speaker 8: welcomed them to have said they're spending a boatload on Capex, 180 00:09:23,720 --> 00:09:26,120 Speaker 8: for example. I don't think they're going to build a 181 00:09:26,160 --> 00:09:30,240 Speaker 8: foundation model to the same level that Microsoft, Google and 182 00:09:31,360 --> 00:09:33,520 Speaker 8: Meta are doing. And so I think part of that 183 00:09:33,720 --> 00:09:36,800 Speaker 8: is some of that frustrations to be understood. One last 184 00:09:36,800 --> 00:09:39,880 Speaker 8: piece is that there are on board on this, and 185 00:09:39,920 --> 00:09:41,880 Speaker 8: I think that they're going to show some exciting things 186 00:09:42,120 --> 00:09:43,880 Speaker 8: in June and beyond related to AI. 187 00:09:44,640 --> 00:09:46,839 Speaker 5: Well, let's scratch a little bit deep. 188 00:09:46,920 --> 00:09:49,640 Speaker 4: I mean, as often is the case with Luke and 189 00:09:49,679 --> 00:09:52,240 Speaker 4: Mistrea in particular, it's reading between between the lines. I 190 00:09:52,280 --> 00:09:54,439 Speaker 4: think that's probably a little bit kind. This is what 191 00:09:54,520 --> 00:09:57,600 Speaker 4: Luca Miifu told Bloomberg's Emily Chang last night. We have 192 00:09:57,840 --> 00:10:00,760 Speaker 4: very exciting things to talk about soon. But obviously we 193 00:10:00,800 --> 00:10:04,040 Speaker 4: think it's a great opportunity, it's a great new technology. 194 00:10:04,280 --> 00:10:08,679 Speaker 4: We think it's got a lot of potential. What does 195 00:10:09,240 --> 00:10:13,720 Speaker 4: an Apple generative AI tool or platform look like in 196 00:10:13,760 --> 00:10:19,000 Speaker 4: your mind? If indeed reading between those lines, Apple is 197 00:10:19,040 --> 00:10:20,360 Speaker 4: working on something to that effect. 198 00:10:21,880 --> 00:10:23,319 Speaker 8: So it's going to think of it as in kind 199 00:10:23,360 --> 00:10:25,920 Speaker 8: of two or three phases. The first phase, what we'll 200 00:10:25,960 --> 00:10:28,480 Speaker 8: see in the back half of this year is new 201 00:10:28,480 --> 00:10:31,720 Speaker 8: operating systems iOS and mac os. It's just going to 202 00:10:31,880 --> 00:10:35,800 Speaker 8: simply integrate generative AI into it. Siri may be able 203 00:10:35,800 --> 00:10:37,800 Speaker 8: to have a conversation with Siria instead of just a 204 00:10:37,840 --> 00:10:41,320 Speaker 8: point answer. You be able to I suspect this year, 205 00:10:41,400 --> 00:10:42,880 Speaker 8: be able to ask your phone to book you an 206 00:10:42,920 --> 00:10:44,600 Speaker 8: uber to the airport, and then it will just take 207 00:10:44,640 --> 00:10:47,320 Speaker 8: care of it. I think they'll allow developers to start 208 00:10:47,320 --> 00:10:51,360 Speaker 8: building AI into their apps with some foundation, a small 209 00:10:51,400 --> 00:10:54,360 Speaker 8: foundation model that they'll come out with, So I would 210 00:10:54,400 --> 00:10:56,840 Speaker 8: say early stage. I think the iPhone this fall they 211 00:10:56,880 --> 00:11:00,199 Speaker 8: will talk a lot about having iPhone AI still ken 212 00:11:00,240 --> 00:11:02,360 Speaker 8: in it, and so that's kind of the first stage. 213 00:11:02,440 --> 00:11:05,000 Speaker 8: Not very exciting, but at least the first step. The 214 00:11:05,080 --> 00:11:09,280 Speaker 8: second piece is really exciting, which is related to agent 215 00:11:09,440 --> 00:11:11,800 Speaker 8: or personalized or agentic AI. You can use any one 216 00:11:11,840 --> 00:11:14,000 Speaker 8: of those phrases, but this is the idea of that 217 00:11:14,080 --> 00:11:17,520 Speaker 8: you ask the device to do something for you, and 218 00:11:17,000 --> 00:11:19,520 Speaker 8: it has multiple steps to it, and it goes out 219 00:11:19,559 --> 00:11:23,559 Speaker 8: and does it itself and this is something that Apple 220 00:11:23,559 --> 00:11:26,720 Speaker 8: has a unique opportunity, and especially around privacy, and Cook 221 00:11:26,800 --> 00:11:30,000 Speaker 8: mentioned that in his prepared remarks. He talked about privacy 222 00:11:30,040 --> 00:11:32,400 Speaker 8: as being a competitive advantage for Apple when it comes 223 00:11:32,400 --> 00:11:34,720 Speaker 8: to AI, and I think what he's hinting to is 224 00:11:34,720 --> 00:11:38,679 Speaker 8: their belief in agent AI and so how that presents 225 00:11:38,720 --> 00:11:41,520 Speaker 8: itself as probably in twenty five twenty twenty five, we'll 226 00:11:41,520 --> 00:11:44,520 Speaker 8: start to see this built more into the hardware and 227 00:11:44,600 --> 00:11:48,640 Speaker 8: potentially even subscription services that allow you to do more 228 00:11:48,720 --> 00:11:51,840 Speaker 8: things based on AI. And it's I think that, to 229 00:11:51,880 --> 00:11:53,400 Speaker 8: me is a really exciting product. 230 00:11:54,200 --> 00:11:56,320 Speaker 4: Jane, it's been a while since you've been on the show, 231 00:11:56,360 --> 00:11:58,480 Speaker 4: so let me milk out some value for the audience 232 00:11:58,520 --> 00:12:01,720 Speaker 4: while we got you. Do you understand what's happening in 233 00:12:01,760 --> 00:12:06,080 Speaker 4: the smartphone market in China? Do you understand the trajectory 234 00:12:06,120 --> 00:12:10,120 Speaker 4: of where the iPhone's going in relation to the domestic 235 00:12:10,160 --> 00:12:16,360 Speaker 4: OEM's largely Android base that appear to be doing quite well. 236 00:12:16,480 --> 00:12:18,400 Speaker 8: It's definitely something we pay a lot of attention to. 237 00:12:18,600 --> 00:12:21,719 Speaker 8: And I think that the biggest force there is that 238 00:12:22,120 --> 00:12:25,200 Speaker 8: there is a geopolitical element to it, even though this 239 00:12:25,320 --> 00:12:28,600 Speaker 8: is not explicitly spoken about with Chinese leadership. I think 240 00:12:28,600 --> 00:12:33,240 Speaker 8: that there is a recommendation that any government employee starts 241 00:12:33,240 --> 00:12:37,559 Speaker 8: to move to homemade phones, which makes sense from their perspective, 242 00:12:37,559 --> 00:12:38,000 Speaker 8: and that's. 243 00:12:37,840 --> 00:12:38,480 Speaker 6: A big pool. 244 00:12:38,520 --> 00:12:44,040 Speaker 8: There's a large population. We're talking about fifty million high 245 00:12:44,160 --> 00:12:46,720 Speaker 8: end phone users that work with the government, and that 246 00:12:46,760 --> 00:12:48,720 Speaker 8: can have a big impact on Apples on two hundred 247 00:12:48,720 --> 00:12:50,040 Speaker 8: and fifty million phones a year. If you get a 248 00:12:50,040 --> 00:12:52,520 Speaker 8: little bit of those two push to a competitor, I 249 00:12:52,520 --> 00:12:53,760 Speaker 8: think that that has an impact. 250 00:12:54,200 --> 00:12:54,880 Speaker 6: I think that the. 251 00:12:54,800 --> 00:12:59,679 Speaker 8: Good news that's negative just there's no way to look 252 00:12:59,720 --> 00:13:02,280 Speaker 8: at it any different. The good news is that the 253 00:13:02,320 --> 00:13:04,800 Speaker 8: comps do get easier. And second is the company is 254 00:13:04,840 --> 00:13:08,120 Speaker 8: talking about diversifying away from China. They spend a little 255 00:13:08,120 --> 00:13:09,480 Speaker 8: bit of time on the call talking about that. But 256 00:13:09,520 --> 00:13:12,800 Speaker 8: to answer your question, I think China is still going 257 00:13:12,840 --> 00:13:15,440 Speaker 8: to remain really important. As a percentage of revenue. It's 258 00:13:15,440 --> 00:13:17,560 Speaker 8: about nineteen percent right now. I suspect that's going to 259 00:13:17,600 --> 00:13:20,400 Speaker 8: drift down to thirteen to fifteen percent over the next 260 00:13:20,440 --> 00:13:21,400 Speaker 8: few years. 261 00:13:21,720 --> 00:13:24,439 Speaker 4: Gene Monster Dewar's asset Management. Great to catch up. 262 00:13:24,600 --> 00:13:25,840 Speaker 5: It's been to thank you Edgie. 263 00:13:26,280 --> 00:13:26,600 Speaker 9: All right. 264 00:13:26,640 --> 00:13:28,000 Speaker 4: Coming up on the show, we're going to be joined 265 00:13:28,000 --> 00:13:31,400 Speaker 4: by Jamaira Herrera from Reach Capital to break down the 266 00:13:31,480 --> 00:13:34,080 Speaker 4: latest jobs report and what that means to the technology sector. 267 00:13:34,160 --> 00:13:36,120 Speaker 4: It's coming out next be right back. This has been 268 00:13:36,160 --> 00:13:53,840 Speaker 4: berg technology. So let's crunch the numbers out of the 269 00:13:53,840 --> 00:13:56,880 Speaker 4: April report. They came in softer than expected, with non 270 00:13:56,920 --> 00:14:00,520 Speaker 4: farm payrolls advancing one hundred and seventy five thousand last month, 271 00:14:00,760 --> 00:14:04,239 Speaker 4: which is the smallest gain in six months. The unemployment 272 00:14:04,320 --> 00:14:07,960 Speaker 4: rate also ticked up to three point nine percent and 273 00:14:08,040 --> 00:14:11,000 Speaker 4: wage gain slow. That's the kind of data that the 274 00:14:11,040 --> 00:14:14,160 Speaker 4: Fed's looking at. Let's break it all down, which Amaira Herrera, 275 00:14:14,480 --> 00:14:17,280 Speaker 4: who's a partner at Each Capital, really zeroed in on. 276 00:14:17,240 --> 00:14:19,920 Speaker 5: The future of work, the future of labor. 277 00:14:21,440 --> 00:14:23,800 Speaker 4: When you track the data, what are you looking for 278 00:14:24,080 --> 00:14:25,120 Speaker 4: in these job numbers? 279 00:14:26,760 --> 00:14:29,320 Speaker 10: Yeah, thank you so much for having me ed one. 280 00:14:29,480 --> 00:14:33,240 Speaker 10: I'm generally looking at the data. I'm looking at one. 281 00:14:33,480 --> 00:14:35,920 Speaker 10: What are the sectors that are driving the growth that 282 00:14:35,960 --> 00:14:40,240 Speaker 10: we're seeing And we've seen pretty consistently healthcare has been 283 00:14:40,440 --> 00:14:43,760 Speaker 10: a big driver of job growth across the US economy. 284 00:14:44,320 --> 00:14:45,840 Speaker 2: In this past month. 285 00:14:45,600 --> 00:14:50,520 Speaker 10: We also saw retail, warehouse and transportation as well continue 286 00:14:50,520 --> 00:14:53,080 Speaker 10: to be a big driver in job growth. Some of 287 00:14:53,120 --> 00:14:55,880 Speaker 10: the other things we think about and consider as well 288 00:14:55,960 --> 00:14:59,920 Speaker 10: are wage increases. So wage increased five point two po 289 00:15:00,120 --> 00:15:02,880 Speaker 10: sent in the last month, a little lower than we anticipated. 290 00:15:04,160 --> 00:15:07,640 Speaker 10: And we also look at other numbers like what are 291 00:15:07,680 --> 00:15:10,880 Speaker 10: the openings that we see the job openings and so 292 00:15:11,000 --> 00:15:15,480 Speaker 10: the Jolts report came out on Wednesday and those continue 293 00:15:15,520 --> 00:15:18,760 Speaker 10: to be relatively healthy and stable. And so those are 294 00:15:18,760 --> 00:15:22,040 Speaker 10: some of the numbers were that we're generally looking at 295 00:15:22,920 --> 00:15:25,760 Speaker 10: when we're looking deeply into these labor market reports. 296 00:15:25,840 --> 00:15:29,240 Speaker 4: Right, did you learn anything about the technology sector this morning? 297 00:15:30,720 --> 00:15:33,560 Speaker 10: Yeah, I mean when it came to the technology sector, 298 00:15:34,920 --> 00:15:36,640 Speaker 10: it's a little bit of a tale of two cities. 299 00:15:36,640 --> 00:15:39,080 Speaker 10: There's a bit of a cognitive dissonance. When you look 300 00:15:39,120 --> 00:15:41,400 Speaker 10: at the labor market reports at a high level, you 301 00:15:41,480 --> 00:15:45,160 Speaker 10: see unemployment continues to be under four percent, and that's 302 00:15:45,160 --> 00:15:48,720 Speaker 10: for the twenty seventh consecutive month. You continue to see 303 00:15:48,720 --> 00:15:51,600 Speaker 10: a high demand across some of these key industries. Like 304 00:15:51,680 --> 00:15:56,280 Speaker 10: I mentioned, now you look at the technology sector more deeply. 305 00:15:56,320 --> 00:15:57,760 Speaker 2: At the technology sector. 306 00:15:57,880 --> 00:16:02,120 Speaker 10: Job postings for most tech jobs are below twenty five 307 00:16:02,160 --> 00:16:03,640 Speaker 10: percent from pre pandemic. 308 00:16:03,760 --> 00:16:05,440 Speaker 2: They're still quite. 309 00:16:05,160 --> 00:16:07,560 Speaker 10: A bit of a lag in the tech sector in 310 00:16:07,680 --> 00:16:10,800 Speaker 10: terms of seeing that increased demand, and you see folks 311 00:16:10,880 --> 00:16:13,760 Speaker 10: that have been laid off of the past year continue 312 00:16:13,800 --> 00:16:18,280 Speaker 10: to struggle to find access to two jobs, particularly if 313 00:16:18,320 --> 00:16:22,600 Speaker 10: they're a non technical role. So think operations, finance, human 314 00:16:22,640 --> 00:16:26,600 Speaker 10: resources in these large tech companies. And it's a hard 315 00:16:26,600 --> 00:16:28,800 Speaker 10: feel to swallow because when we looked at the earning 316 00:16:28,840 --> 00:16:33,600 Speaker 10: reports for the past quarter, seen over the last whether 317 00:16:33,640 --> 00:16:38,400 Speaker 10: it's Meta, Microsoft, Alphabet, they're actually quite strong, but they're 318 00:16:38,440 --> 00:16:42,960 Speaker 10: also showing discipline around maintaining operational efficiencies. And so we 319 00:16:43,040 --> 00:16:46,640 Speaker 10: set we haven't yet seen that resurgence in the same 320 00:16:46,680 --> 00:16:49,240 Speaker 10: way that we see the strength of labor market across 321 00:16:49,280 --> 00:16:50,200 Speaker 10: these other industries. 322 00:16:50,920 --> 00:16:54,200 Speaker 4: As see Jamaara hold that thought earlier today we spoke 323 00:16:54,280 --> 00:16:58,080 Speaker 4: to or yesterday rather Savita Supermanian at Bank of America. 324 00:16:58,240 --> 00:16:59,880 Speaker 4: Just just listen to her thesis real quick. 325 00:17:01,080 --> 00:17:04,119 Speaker 11: Look, who's going to benefit from all these chips and 326 00:17:04,160 --> 00:17:07,880 Speaker 11: this AI and you know automation. It's old economy companies 327 00:17:08,200 --> 00:17:10,600 Speaker 11: that get more labor light. And I think that's the 328 00:17:10,640 --> 00:17:13,560 Speaker 11: benefit that we could see over the next twelve to. 329 00:17:13,520 --> 00:17:15,240 Speaker 2: Twenty four to a few years. 330 00:17:16,040 --> 00:17:18,879 Speaker 11: I think the areas are you know, industries like ours, 331 00:17:18,920 --> 00:17:22,240 Speaker 11: the banks, right, I mean banks are very labor intensive. 332 00:17:22,640 --> 00:17:25,040 Speaker 11: Now there is this tool that we can use to 333 00:17:25,119 --> 00:17:28,359 Speaker 11: replace people with bots and processes, et cetera. 334 00:17:30,240 --> 00:17:33,040 Speaker 4: So, taking your read of the technology sector and what's 335 00:17:33,040 --> 00:17:36,000 Speaker 4: the Vita just said, I think you agree with each 336 00:17:36,000 --> 00:17:38,960 Speaker 4: other about the direction of travel right now, about what's 337 00:17:39,000 --> 00:17:42,280 Speaker 4: happening in jobs in the technology sector, and then how 338 00:17:42,359 --> 00:17:45,720 Speaker 4: technology is impacting basically old school. 339 00:17:45,440 --> 00:17:49,440 Speaker 2: Economy completely and totally. 340 00:17:49,480 --> 00:17:52,840 Speaker 10: I think what's really interesting whenever you have a large 341 00:17:52,880 --> 00:17:57,600 Speaker 10: technology shift, oftentimes we're very very good at predicting what 342 00:17:57,760 --> 00:18:00,399 Speaker 10: jobs we're going to lose. We're very very bad at 343 00:18:00,440 --> 00:18:02,760 Speaker 10: predicting them. More jobs are going to be created, and 344 00:18:02,840 --> 00:18:06,040 Speaker 10: so in this short term period, what we're seeing and 345 00:18:06,119 --> 00:18:09,919 Speaker 10: what we're going to feel is increase automation around tasks 346 00:18:09,960 --> 00:18:13,800 Speaker 10: that right now people are doing, and that will be 347 00:18:14,000 --> 00:18:16,800 Speaker 10: a net productivity gain for the economy. But there is 348 00:18:16,880 --> 00:18:19,280 Speaker 10: going to be some real labor market team that is 349 00:18:19,320 --> 00:18:22,639 Speaker 10: felt bye employees in the short term. But over time, 350 00:18:22,720 --> 00:18:25,240 Speaker 10: what we'll see is employees will be able to lean 351 00:18:25,280 --> 00:18:29,040 Speaker 10: into really human tasks and there will be new jobs 352 00:18:29,080 --> 00:18:32,800 Speaker 10: created in ways that we really can't anticipate right now. 353 00:18:33,080 --> 00:18:36,080 Speaker 4: Right Jamira Herrera, partner at Reached Capital, great to have 354 00:18:36,119 --> 00:18:48,240 Speaker 4: you on the program. US prosecutors making their closing remarks 355 00:18:48,280 --> 00:18:52,080 Speaker 4: in the Google search trial, where they reiterated their argument 356 00:18:52,440 --> 00:18:56,480 Speaker 4: that Google has broken antitrust laws through exclusive, multi billion 357 00:18:56,520 --> 00:18:59,879 Speaker 4: dollar deals to maintain a dominant position in the market 358 00:19:00,160 --> 00:19:04,000 Speaker 4: online search and related advertising. Let's bring in Bloombergs Mike Shephard. 359 00:19:04,480 --> 00:19:07,280 Speaker 4: Mike's the editor that leads the kind of intersection between 360 00:19:07,359 --> 00:19:10,159 Speaker 4: technology and politics, which means he's very busy at the 361 00:19:10,160 --> 00:19:15,000 Speaker 4: moment that the search trial, the antitrust pursuit by the 362 00:19:15,080 --> 00:19:18,600 Speaker 4: DOJ against Google, has played out over a long period 363 00:19:18,640 --> 00:19:21,360 Speaker 4: of time. Just explain the basics of the closing statement 364 00:19:21,400 --> 00:19:22,760 Speaker 4: and where we are in the process. 365 00:19:24,240 --> 00:19:26,800 Speaker 3: Well, in this closing statement, as you said, the government 366 00:19:26,840 --> 00:19:30,560 Speaker 3: repeated its argument that Google has violated anti trust laws 367 00:19:30,720 --> 00:19:34,880 Speaker 3: through billions of dollars in payments to companies like Apple 368 00:19:35,280 --> 00:19:39,760 Speaker 3: and Samsung and others, that we guarantee a prime position, 369 00:19:39,920 --> 00:19:44,920 Speaker 3: prime location on smartphones and other devices for its for 370 00:19:45,640 --> 00:19:49,520 Speaker 3: its search platform and tool, and this allowed it to 371 00:19:49,680 --> 00:19:52,879 Speaker 3: turn its search business into the most dominant and the 372 00:19:52,920 --> 00:19:56,919 Speaker 3: most widely used in the world and helps secure a 373 00:19:57,040 --> 00:20:00,920 Speaker 3: nearly three hundred billion dollar annual stream of revenue for 374 00:20:00,960 --> 00:20:04,400 Speaker 3: the company and the result of this is that there's 375 00:20:04,440 --> 00:20:09,000 Speaker 3: been a stifling of innovation across the tech industry. We 376 00:20:09,040 --> 00:20:13,480 Speaker 3: would have seen certain developments like AI hit the market 377 00:20:13,520 --> 00:20:17,000 Speaker 3: much sooner if we're not for this to have taken place. 378 00:20:17,280 --> 00:20:19,159 Speaker 5: Hey, Mike, bear with me for one second. 379 00:20:19,160 --> 00:20:21,719 Speaker 4: On a day where tech Stock's a pretty markedly higher 380 00:20:21,800 --> 00:20:25,120 Speaker 4: alphabet parent of Google's the one stock that's pretty low 381 00:20:25,160 --> 00:20:28,200 Speaker 4: and is a points drag at the index level, very quick. 382 00:20:28,359 --> 00:20:30,360 Speaker 4: I don't draw a cause or link between the move 383 00:20:30,400 --> 00:20:33,480 Speaker 4: and the news headline. Just explain what happens next in 384 00:20:33,520 --> 00:20:34,160 Speaker 4: this process. 385 00:20:35,520 --> 00:20:38,119 Speaker 3: Well, in this case, it now goes to the judge 386 00:20:38,160 --> 00:20:43,159 Speaker 3: once both sides have finished their closing arguments, And to 387 00:20:43,200 --> 00:20:45,880 Speaker 3: be fair to the company, they are arguing that this 388 00:20:45,960 --> 00:20:49,480 Speaker 3: is not a question of anti competitive behavior. Google is saying, hey, 389 00:20:49,640 --> 00:20:52,320 Speaker 3: we just make a better product and you shouldn't penalize 390 00:20:52,440 --> 00:20:55,520 Speaker 3: us for that. But it will take the judge several 391 00:20:55,600 --> 00:20:58,040 Speaker 3: months to deliberate over this, to think about this. 392 00:20:58,119 --> 00:20:58,720 Speaker 6: But we are. 393 00:20:58,600 --> 00:21:01,520 Speaker 3: Expecting a ruling before the end of the year, and 394 00:21:01,960 --> 00:21:04,400 Speaker 3: this is a significant case, he said. This is the 395 00:21:04,400 --> 00:21:07,040 Speaker 3: first in a series of anti trust actions that the 396 00:21:07,080 --> 00:21:10,520 Speaker 3: government is bringing against tech companies. Now we know that 397 00:21:10,520 --> 00:21:13,600 Speaker 3: the Biden administration has made the whole question of competition 398 00:21:14,600 --> 00:21:17,920 Speaker 3: in a focus across a number of industries, but tech 399 00:21:18,200 --> 00:21:20,440 Speaker 3: is really drawing the line share of that attention. 400 00:21:21,320 --> 00:21:33,520 Speaker 4: Bloomberg's Mike Shepherd out of DC, thank you, Welcome back 401 00:21:33,520 --> 00:21:36,960 Speaker 4: to Bloomberg Technology. Ed Ludlow here in San Francisco. Let's 402 00:21:36,960 --> 00:21:38,240 Speaker 4: also talk about Coinbase. 403 00:21:38,320 --> 00:21:38,480 Speaker 5: Now. 404 00:21:38,480 --> 00:21:41,600 Speaker 4: This is interesting because actually in the quarter, Coinbase did 405 00:21:41,600 --> 00:21:45,480 Speaker 4: pretty well beat top and bottom line. Stocks down four 406 00:21:45,480 --> 00:21:49,280 Speaker 4: point seven percent, high bar often going into these earnings quarters, 407 00:21:49,600 --> 00:21:53,200 Speaker 4: and also some questions about the future about cryptocurrency trading, 408 00:21:53,640 --> 00:21:57,960 Speaker 4: the retail trader and app based transactions. Delighted to say 409 00:21:57,960 --> 00:22:01,320 Speaker 4: that Alicia hass coinbased CF he joins me along with 410 00:22:01,320 --> 00:22:04,000 Speaker 4: my good friend Shlai Basseca Bloomberg who's in New York. 411 00:22:04,000 --> 00:22:05,520 Speaker 5: Shnale take it away. 412 00:22:05,640 --> 00:22:07,600 Speaker 12: Thank you Ed, and thank you Alisia for joining and 413 00:22:07,640 --> 00:22:09,760 Speaker 12: to speak to what Ed was talking about about this 414 00:22:09,920 --> 00:22:13,200 Speaker 12: high bar. Even though you brought in more than a 415 00:22:13,280 --> 00:22:16,480 Speaker 12: billion dollars of transaction revenue in the first quarter, a 416 00:22:16,480 --> 00:22:18,320 Speaker 12: lot of investors, I think, have a lot of questions 417 00:22:18,359 --> 00:22:21,600 Speaker 12: about that fall off in bitcut coin prices in April 418 00:22:21,960 --> 00:22:24,600 Speaker 12: after the quarter ended. How do you think about the 419 00:22:24,640 --> 00:22:26,919 Speaker 12: more recent drawdown and what it means for you. 420 00:22:28,119 --> 00:22:30,320 Speaker 1: Yeah, so let me just start with I think it's 421 00:22:30,320 --> 00:22:32,879 Speaker 1: important to zoom out whenever you're talking about crypto. We 422 00:22:32,920 --> 00:22:35,080 Speaker 1: see volatility day to day, we see it week to week, 423 00:22:35,160 --> 00:22:37,280 Speaker 1: month to month, but when you look over the last decade, 424 00:22:37,560 --> 00:22:41,520 Speaker 1: bitcoin has been the top performing asset against all asset classes, 425 00:22:41,920 --> 00:22:43,160 Speaker 1: so we really. 426 00:22:43,040 --> 00:22:44,560 Speaker 2: Focus on long term trends. 427 00:22:45,080 --> 00:22:46,560 Speaker 1: I think it's also important to note when you look 428 00:22:46,560 --> 00:22:48,640 Speaker 1: at all past prior bull runs where you see price 429 00:22:48,680 --> 00:22:51,719 Speaker 1: appreciation over a period of time, there's been intro ad 430 00:22:51,760 --> 00:22:56,080 Speaker 1: week in day, intro month corrections to the price, and 431 00:22:56,160 --> 00:22:58,560 Speaker 1: so coinbase always prepares for all environments. 432 00:22:58,640 --> 00:23:00,400 Speaker 2: We're prepared for the vallatility. 433 00:23:00,440 --> 00:23:04,919 Speaker 1: We've navigated this incredibly well over the last ten years 434 00:23:05,000 --> 00:23:08,359 Speaker 1: of our history. And it's just another day in crypto. 435 00:23:08,800 --> 00:23:10,879 Speaker 1: It doesn't mean that the long term doesn't continue to 436 00:23:10,880 --> 00:23:11,720 Speaker 1: be as rosy as. 437 00:23:11,600 --> 00:23:12,480 Speaker 2: It was last week. 438 00:23:13,720 --> 00:23:16,679 Speaker 4: Alicia, good morning, it said in San Francisco. Just another day, 439 00:23:16,720 --> 00:23:19,919 Speaker 4: and crypto doesn't carry with Schnali and I because we 440 00:23:19,960 --> 00:23:24,479 Speaker 4: have sleepless nights and never ending days of crypto. I 441 00:23:24,520 --> 00:23:27,800 Speaker 4: get that the volatility is a driver, right. We understand 442 00:23:27,840 --> 00:23:31,000 Speaker 4: that particularly when you consider your customer base, but there 443 00:23:31,080 --> 00:23:35,560 Speaker 4: must be a psychological sentimental element of that as well. 444 00:23:35,640 --> 00:23:39,400 Speaker 4: So if you take the newsflow of late spot, BITCOINYTF 445 00:23:39,480 --> 00:23:43,119 Speaker 4: and the Harving as examples of dominated headlines, do you 446 00:23:43,200 --> 00:23:46,399 Speaker 4: see evidence that those headlines drive activity for you guys 447 00:23:46,400 --> 00:23:48,159 Speaker 4: on the platform? 448 00:23:48,480 --> 00:23:52,959 Speaker 13: We absolutely see that cryptos volatility and rising crypto prices 449 00:23:53,080 --> 00:23:56,240 Speaker 13: drive activity on our platform, and so with the demand 450 00:23:56,400 --> 00:23:59,760 Speaker 13: of bitcoin ETFs, it's natural to see then price go up, 451 00:24:00,080 --> 00:24:03,320 Speaker 13: natural c elevated activity as scrypto has been very headline 452 00:24:03,359 --> 00:24:05,080 Speaker 13: driven over the last decade. 453 00:24:05,200 --> 00:24:07,720 Speaker 1: But what is so exciting to us is that we 454 00:24:07,840 --> 00:24:10,560 Speaker 1: now have a material part of our revenue coming from 455 00:24:10,800 --> 00:24:14,639 Speaker 1: non trading activity. So we've been seeing growth in our 456 00:24:14,680 --> 00:24:18,480 Speaker 1: subscription and services through the downturn of twenty twenty three 457 00:24:19,119 --> 00:24:21,560 Speaker 1: through Q one, where it was about thirty six percent. 458 00:24:21,600 --> 00:24:23,800 Speaker 1: We generate over five hundred and eleven million dollars of 459 00:24:23,880 --> 00:24:26,879 Speaker 1: subscription and services and we're really excited now for this 460 00:24:27,040 --> 00:24:28,520 Speaker 1: next wave of crypto. 461 00:24:28,200 --> 00:24:31,600 Speaker 2: Adoption on chain. So we're seeing the. 462 00:24:31,600 --> 00:24:33,800 Speaker 1: Idea that we can now have base as a layer 463 00:24:33,840 --> 00:24:38,119 Speaker 1: two do faster and cheaper transactions. Gives the foundation that 464 00:24:38,160 --> 00:24:40,879 Speaker 1: we might be able to drive into payments and so yes, 465 00:24:41,560 --> 00:24:44,520 Speaker 1: Historically speculative trading very headline driven, but there's so much 466 00:24:44,520 --> 00:24:46,840 Speaker 1: more to crypto than speculative trading, and we're excited about 467 00:24:46,880 --> 00:24:49,360 Speaker 1: what we can deliver with the diversified revenue on our platform. 468 00:24:49,440 --> 00:24:51,320 Speaker 12: At least, I think a lot of people struggle to 469 00:24:51,840 --> 00:24:56,120 Speaker 12: understand and conceptualize how much Base can really translate into 470 00:24:56,119 --> 00:24:59,840 Speaker 12: future revenue for coinbase, how big can it really get 471 00:25:00,280 --> 00:25:04,600 Speaker 12: and what does it mean for the future economics of Coinbase. 472 00:25:06,119 --> 00:25:08,080 Speaker 2: Thanks for the opportunity to talk about Base. 473 00:25:08,520 --> 00:25:10,880 Speaker 1: So first I want to explain what Base is. Base 474 00:25:11,000 --> 00:25:13,800 Speaker 1: is a layer two solution, which means that it's built 475 00:25:14,000 --> 00:25:17,800 Speaker 1: as infrastructure on top of ethereum and it enables transactions to. 476 00:25:17,800 --> 00:25:20,080 Speaker 2: Move more quickly faster. 477 00:25:20,840 --> 00:25:24,040 Speaker 1: What we saw is we now have eight times the 478 00:25:24,080 --> 00:25:27,480 Speaker 1: developers building on Base quarter over quarter. This is what 479 00:25:27,520 --> 00:25:31,280 Speaker 1: we're driving. We're driving a platform for developers to build applications. 480 00:25:31,760 --> 00:25:35,439 Speaker 1: When they build applications, they're looking for less friction, lower cost, 481 00:25:35,680 --> 00:25:38,560 Speaker 1: faster speeds, and that is the environment that we're trying 482 00:25:38,600 --> 00:25:41,240 Speaker 1: to create. We had a really exciting upgrade in the 483 00:25:41,320 --> 00:25:44,159 Speaker 1: quarter where we were able to reduce transaction costs by 484 00:25:44,240 --> 00:25:44,919 Speaker 1: eighty percent. 485 00:25:45,359 --> 00:25:46,840 Speaker 2: Often getting them lower than a penny. 486 00:25:47,400 --> 00:25:49,800 Speaker 1: What that led to now in the last thirty days 487 00:25:49,920 --> 00:25:52,639 Speaker 1: is that we're seeing two x the number of transactions 488 00:25:52,880 --> 00:25:57,040 Speaker 1: on Base than we do on Ethereum. Driving developer activity 489 00:25:57,200 --> 00:25:58,879 Speaker 1: leads to driving transaction volume. 490 00:25:58,920 --> 00:26:00,600 Speaker 2: Transaction volume leads to revenue. 491 00:26:00,680 --> 00:26:03,320 Speaker 1: So the whole pipeline here of activity is trying to 492 00:26:03,359 --> 00:26:04,840 Speaker 1: create that environment for developers. 493 00:26:05,400 --> 00:26:07,480 Speaker 2: Get the transactions leads revenue. 494 00:26:07,600 --> 00:26:09,440 Speaker 1: We broke out a new revenue stream in Q one 495 00:26:09,480 --> 00:26:13,120 Speaker 1: called other transaction revenue. Other transaction revenue is the base 496 00:26:13,160 --> 00:26:16,239 Speaker 1: sequencer fees and other payment related fees, and so this 497 00:26:16,280 --> 00:26:19,480 Speaker 1: really speaks to our ambition to grow these products and platforms, 498 00:26:19,600 --> 00:26:21,840 Speaker 1: and the investors will have that transparency now to look 499 00:26:21,840 --> 00:26:22,840 Speaker 1: at it as we go forward. 500 00:26:23,840 --> 00:26:27,119 Speaker 4: Sanali, just let me have this one, okay. Alisha is 501 00:26:27,160 --> 00:26:29,280 Speaker 4: the CFO of the company, So i'd like to ask 502 00:26:29,280 --> 00:26:33,760 Speaker 4: about expenses. Alicia, I'd like to ask you about expenses. 503 00:26:33,800 --> 00:26:36,639 Speaker 4: They're creeping up a little bit and you're going to 504 00:26:36,640 --> 00:26:39,199 Speaker 4: tell me, well, demand's going up, so but how you 505 00:26:39,280 --> 00:26:42,760 Speaker 4: managing expenses. You can see the eye roll from Schnale 506 00:26:42,800 --> 00:26:45,720 Speaker 4: that she's less than impressed, but I think it's important 507 00:26:45,720 --> 00:26:46,400 Speaker 4: for investors. 508 00:26:47,680 --> 00:26:49,639 Speaker 2: So in Q one, expenses. We're aout five percent. 509 00:26:50,040 --> 00:26:52,560 Speaker 1: That was largely stock based comp that we shared earlier 510 00:26:52,560 --> 00:26:54,200 Speaker 1: in the year, But I'm going to focus on the future. 511 00:26:54,760 --> 00:26:57,480 Speaker 1: So we are seeing expense growth in Q two. The 512 00:26:57,640 --> 00:27:00,600 Speaker 1: vast majority of this is variable spend, as I shared 513 00:27:00,600 --> 00:27:03,280 Speaker 1: in our shareholder letter. When we see high volumes, which 514 00:27:03,280 --> 00:27:06,640 Speaker 1: we saw sharp tickup and volumes in March, we tend 515 00:27:06,640 --> 00:27:09,440 Speaker 1: to then have a lagging effect to our customer support 516 00:27:09,480 --> 00:27:12,040 Speaker 1: cost as we staff up those teams to address the 517 00:27:12,119 --> 00:27:14,520 Speaker 1: cues that have resulted. So a little bit of that 518 00:27:14,640 --> 00:27:17,440 Speaker 1: is spilling into Q two. We also will see higher 519 00:27:17,440 --> 00:27:21,200 Speaker 1: infrastructure costs in Q two. The third expense that's going 520 00:27:21,280 --> 00:27:25,280 Speaker 1: up is USDC rewards. USDC rewards are tied to activity 521 00:27:25,280 --> 00:27:28,520 Speaker 1: on our platform. We doubled the USDC balances on our 522 00:27:28,520 --> 00:27:31,359 Speaker 1: platform during the quarter and that is what's driving this 523 00:27:31,440 --> 00:27:34,720 Speaker 1: increased spence. All of these can be also ratcheted down 524 00:27:34,800 --> 00:27:37,760 Speaker 1: quickly if we see a change in environment. But we're 525 00:27:37,800 --> 00:27:40,680 Speaker 1: excited about the growth and extenses. It's not hard sticky expenses. 526 00:27:40,720 --> 00:27:42,680 Speaker 1: We learned our lessons hard in twenty twenty one and 527 00:27:42,720 --> 00:27:44,399 Speaker 1: twenty two y two when we grew too quickly. 528 00:27:44,760 --> 00:27:46,119 Speaker 2: We will be prudently growing. 529 00:27:46,160 --> 00:27:48,679 Speaker 1: We're looking for good ROI investments, and we really have 530 00:27:48,760 --> 00:27:52,120 Speaker 1: a focus on the cost management and financial discipline alsia. 531 00:27:52,160 --> 00:27:54,240 Speaker 12: It's interesting because if you think about the currency market, 532 00:27:54,320 --> 00:27:56,399 Speaker 12: it's like King dollar, but when it comes to the 533 00:27:56,440 --> 00:28:00,840 Speaker 12: crypto market, it's King Bitcoin and it is still the 534 00:28:01,040 --> 00:28:04,600 Speaker 12: vast majority of what you see in trading. But when 535 00:28:04,600 --> 00:28:07,359 Speaker 12: it comes to Base and the activity that's being brought 536 00:28:07,400 --> 00:28:09,960 Speaker 12: in the world of mean coins, how do you think 537 00:28:10,000 --> 00:28:14,080 Speaker 12: about that movement, if it's sustainable, and whether that's going 538 00:28:14,119 --> 00:28:16,440 Speaker 12: to be where the bulk of activity lies for a while. 539 00:28:18,080 --> 00:28:20,320 Speaker 1: So there is some mean point activity on Base, but 540 00:28:20,359 --> 00:28:22,800 Speaker 1: I would focus you on this is the creative content. 541 00:28:22,840 --> 00:28:26,200 Speaker 2: This is part of the process. We are seeing really exciting. 542 00:28:25,800 --> 00:28:29,000 Speaker 1: New applications being built on Base, like in the areas 543 00:28:29,000 --> 00:28:31,680 Speaker 1: of social gaming, and I think this is just part 544 00:28:31,720 --> 00:28:34,080 Speaker 1: of the journey to get there. I think again, the 545 00:28:34,160 --> 00:28:37,960 Speaker 1: key that I want to focus on is a platform 546 00:28:38,320 --> 00:28:42,240 Speaker 1: that enables quick, fast transactions, just like we move from 547 00:28:42,360 --> 00:28:45,880 Speaker 1: email to text, text to what app WhatsApp, lower frictions 548 00:28:46,000 --> 00:28:48,360 Speaker 1: will be the path of developer growth. 549 00:28:49,080 --> 00:28:50,680 Speaker 2: And when we think about. 550 00:28:50,400 --> 00:28:53,440 Speaker 1: Just the opportunity now to have USDC on Base, it's 551 00:28:53,520 --> 00:28:57,200 Speaker 1: enabled global payments nearly instant, nearly. 552 00:28:57,080 --> 00:28:59,760 Speaker 2: Free, or very few cents per transaction. 553 00:29:00,520 --> 00:29:03,440 Speaker 1: That is a new innovation that we're really excited to 554 00:29:03,440 --> 00:29:05,360 Speaker 1: see how it is built in growth through our own 555 00:29:05,360 --> 00:29:09,520 Speaker 1: product platform, through our wallet platform, through USDC, growth through 556 00:29:09,560 --> 00:29:13,560 Speaker 1: sequence reviees, but also then for just other developers and 557 00:29:13,600 --> 00:29:17,080 Speaker 1: companies that are looking to then adopt these lower cost rails. 558 00:29:18,680 --> 00:29:21,120 Speaker 4: Oh thanks to Alicia has coinbased CFO and of course 559 00:29:21,120 --> 00:29:23,760 Speaker 4: balloon VOTIONALI beast strong way to end the week in. 560 00:29:23,640 --> 00:29:24,800 Speaker 5: The world of crypto. 561 00:29:25,240 --> 00:29:27,160 Speaker 4: Should we look at some other news headlines, It's time 562 00:29:27,160 --> 00:29:30,480 Speaker 4: for talking tech and first start. Microsoft is adding security 563 00:29:30,560 --> 00:29:33,760 Speaker 4: chiefs to its products group to boost resilience to hacking 564 00:29:34,200 --> 00:29:38,240 Speaker 4: after several serious cyber attacks. The software giant said adapt 565 00:29:38,520 --> 00:29:42,520 Speaker 4: adding deputy chief information security officers within its product groups, 566 00:29:42,560 --> 00:29:46,560 Speaker 4: while declining to identify who those new officials are. Plus 567 00:29:46,760 --> 00:29:49,840 Speaker 4: Live Golf CEO and commissioner Greg Norman spoke to Bloomberg 568 00:29:50,040 --> 00:29:53,320 Speaker 4: about its possible merger with the PGA and the future 569 00:29:53,360 --> 00:29:55,959 Speaker 4: of the sport as streaming competition heats up. 570 00:29:55,960 --> 00:29:56,560 Speaker 5: Listen to this. 571 00:29:57,520 --> 00:30:00,800 Speaker 14: What's the definition of tuning in turning on the TV 572 00:30:00,880 --> 00:30:02,720 Speaker 14: and turning on the channel forty four and say, okay, 573 00:30:02,760 --> 00:30:04,520 Speaker 14: I'm going to watch the next four and a half hours. 574 00:30:05,400 --> 00:30:08,480 Speaker 14: That's tuning in, right, But to an eighteen year old 575 00:30:08,520 --> 00:30:11,240 Speaker 14: or twenty five year old tuning in maybe twelve seconds 576 00:30:11,280 --> 00:30:12,840 Speaker 14: on the phone. Okay, let me see this. Then I'm 577 00:30:12,840 --> 00:30:14,360 Speaker 14: gonna go back and do that, and then I'll come 578 00:30:14,360 --> 00:30:17,120 Speaker 14: back over here to another fourteen seconds on this boy, 579 00:30:18,000 --> 00:30:20,120 Speaker 14: That to me is tuning in. That's, to me is 580 00:30:20,160 --> 00:30:26,560 Speaker 14: a market that's enormously wealthy, right, an enormously influential in 581 00:30:26,600 --> 00:30:29,320 Speaker 14: the direction where were you going? So look, we are 582 00:30:29,400 --> 00:30:31,360 Speaker 14: talking to corporations. I'm not going to give you the 583 00:30:31,400 --> 00:30:34,760 Speaker 14: names of those corporations, of course, but we just did 584 00:30:34,800 --> 00:30:36,200 Speaker 14: a great partnership with Google. 585 00:30:38,240 --> 00:30:41,520 Speaker 4: And here's a story I broke yesterday afternoon. Rivian's receiving 586 00:30:41,560 --> 00:30:45,080 Speaker 4: incentives eight hundred and twenty seven million dollars to expand 587 00:30:45,120 --> 00:30:48,720 Speaker 4: in Illinois. Meanwhile, the company's also tapped the former COO 588 00:30:48,800 --> 00:30:53,040 Speaker 4: and deputy CEO Evolvo Cars to be it COO. Is 589 00:30:53,080 --> 00:30:55,720 Speaker 4: it prepares to roll out that lower cost model, which 590 00:30:55,760 --> 00:30:58,680 Speaker 4: is geared for the mass market. BRT all right, coming 591 00:30:58,720 --> 00:31:00,520 Speaker 4: up on the show, we're going to be joined by boys. 592 00:31:00,800 --> 00:31:04,040 Speaker 4: Jason Chapman's talk about the global outlook for the video 593 00:31:04,120 --> 00:31:04,960 Speaker 4: games landscape. 594 00:31:04,960 --> 00:31:07,680 Speaker 5: Stay tuned. That's coming up next. This is Bloomberg Technology. 595 00:31:22,280 --> 00:31:25,680 Speaker 4: After a year of speculation, it's finally here. JP Morgan's 596 00:31:25,720 --> 00:31:29,719 Speaker 4: index GPT tool In a nutshell, Index GPT is a 597 00:31:29,720 --> 00:31:33,280 Speaker 4: new range of thematic investment baskets created with the help 598 00:31:33,520 --> 00:31:36,720 Speaker 4: of open AI's GPT form model. The tool generates a 599 00:31:36,760 --> 00:31:39,640 Speaker 4: list of keywords associated with the theme, which are then 600 00:31:39,680 --> 00:31:43,480 Speaker 4: fed into a separate natural language processing model that scans 601 00:31:43,600 --> 00:31:49,040 Speaker 4: news articles to identify companies involved in specific spaces. All right, 602 00:31:49,680 --> 00:31:52,000 Speaker 4: it's been a hard week for the video games industry. 603 00:31:52,040 --> 00:31:55,200 Speaker 4: AMD told us on Tuesday demand for chips powering games, 604 00:31:55,200 --> 00:31:58,760 Speaker 4: consoles and computers is down a lot, And on Wednesday, 605 00:31:59,080 --> 00:32:02,840 Speaker 4: Bloomberg reported video game publisher Take two plans to shut 606 00:32:02,880 --> 00:32:07,400 Speaker 4: down subsidiaries in London and Seattle amid mass layoffs, joining Sony, 607 00:32:07,480 --> 00:32:11,840 Speaker 4: EA and Microsoft in cutting back. In more positive news, Twitch, 608 00:32:12,160 --> 00:32:15,480 Speaker 4: Amazon's live streaming platform four Gamers is going to launch 609 00:32:15,480 --> 00:32:17,400 Speaker 4: a competitor to TikTok. 610 00:32:17,880 --> 00:32:19,240 Speaker 5: Here to discuss all of that. 611 00:32:19,160 --> 00:32:23,400 Speaker 4: In today's VC Spotlight is Convoy managing partner Jason Chapman. 612 00:32:23,680 --> 00:32:25,200 Speaker 5: It's hard to know where to start. 613 00:32:25,240 --> 00:32:28,040 Speaker 4: But I guess the broad theme is that for those 614 00:32:28,160 --> 00:32:31,640 Speaker 4: big principally publicly traded names, it's tough out there in 615 00:32:31,640 --> 00:32:33,160 Speaker 4: the video games industry right now. 616 00:32:33,200 --> 00:32:34,640 Speaker 5: Your reaction to the week. 617 00:32:36,000 --> 00:32:38,080 Speaker 15: Yeah, thanks for having me ed. It's definitely been a 618 00:32:38,120 --> 00:32:40,479 Speaker 15: big week obviously. Also this is on the back of 619 00:32:40,920 --> 00:32:43,480 Speaker 15: the ban of TikTok, which eighty percent of the House 620 00:32:44,120 --> 00:32:47,040 Speaker 15: just voted in favor of the force to vestiture and 621 00:32:47,120 --> 00:32:49,920 Speaker 15: something just a macro theme to note that is a 622 00:32:49,960 --> 00:32:54,479 Speaker 15: big theme that we're paying attention to today. Is clearly 623 00:32:54,520 --> 00:32:58,720 Speaker 15: byte dances being forced today as TikTok. TikTok is you 624 00:32:58,760 --> 00:33:01,200 Speaker 15: know in day dances at based in China. China is 625 00:33:01,200 --> 00:33:04,400 Speaker 15: one of six foreign adversaries listed by the United States, 626 00:33:05,000 --> 00:33:07,640 Speaker 15: and a lot of people are now questioning, including a 627 00:33:07,640 --> 00:33:10,560 Speaker 15: lot of the companies you just listed, will this force 628 00:33:10,680 --> 00:33:14,720 Speaker 15: divestiture continue to occur? And I'll tell you here at Convoy. 629 00:33:14,840 --> 00:33:16,760 Speaker 15: You know, we've taken a long principle that we do 630 00:33:16,840 --> 00:33:21,440 Speaker 15: not partner with capital based in foreign adversarial nations, and 631 00:33:22,120 --> 00:33:25,040 Speaker 15: we expect that many others will continue to ponder if 632 00:33:25,040 --> 00:33:26,560 Speaker 15: this is the right move for the industry. 633 00:33:27,720 --> 00:33:30,080 Speaker 4: Jason, There's going to be a large portion of the 634 00:33:30,080 --> 00:33:32,720 Speaker 4: bloembog technology audience that say, hold on a minute, why 635 00:33:32,800 --> 00:33:35,880 Speaker 4: is a bench capital firm that invests in and focus 636 00:33:35,960 --> 00:33:38,360 Speaker 4: on video games worried about TikTok. 637 00:33:40,160 --> 00:33:41,160 Speaker 5: It's a great question. 638 00:33:41,560 --> 00:33:45,480 Speaker 15: So TikTok as an entity is one of the most 639 00:33:45,600 --> 00:33:50,280 Speaker 15: used social platforms in the world. After social platforms, you 640 00:33:50,320 --> 00:33:52,840 Speaker 15: start to look at where else do people spend their 641 00:33:52,880 --> 00:33:56,240 Speaker 15: time in digital formats and digital worlds, and naturally go 642 00:33:56,320 --> 00:34:01,080 Speaker 15: to games and so about the basically, it's a battle 643 00:34:01,080 --> 00:34:03,640 Speaker 15: for eyeballs. And we'll also view this as the precursor 644 00:34:03,720 --> 00:34:06,360 Speaker 15: of what is to potentially come to the games industry. 645 00:34:06,560 --> 00:34:09,920 Speaker 15: So this force divestiture of TikTok could then lead to 646 00:34:09,960 --> 00:34:11,920 Speaker 15: force divestitures in the games industry. 647 00:34:13,320 --> 00:34:15,480 Speaker 5: So you extrapolate that out. I get the thesis. 648 00:34:15,480 --> 00:34:17,719 Speaker 4: Now, So let's look at the case study of what 649 00:34:17,760 --> 00:34:20,840 Speaker 4: Twitch is doing. I thought that was really interesting. You know, 650 00:34:21,040 --> 00:34:24,480 Speaker 4: if it's the battle for eyeballs, otherwise they are principally 651 00:34:24,480 --> 00:34:28,040 Speaker 4: a live streaming platform where you can view and participate 652 00:34:28,080 --> 00:34:28,759 Speaker 4: in others. 653 00:34:28,520 --> 00:34:29,800 Speaker 5: Playing video games. 654 00:34:30,280 --> 00:34:33,400 Speaker 4: So now they're thinking of doing a TikTok competitor, what 655 00:34:33,760 --> 00:34:36,640 Speaker 4: advantage might they have in pursuing that business model? 656 00:34:38,280 --> 00:34:41,279 Speaker 15: Yeah, it's definitely interesting to see Amazon try to move 657 00:34:41,320 --> 00:34:44,040 Speaker 15: heavily into consumer Twitch is obviously i'd say the beacon 658 00:34:44,120 --> 00:34:47,719 Speaker 15: in the North Star for them successfully entering into a 659 00:34:47,760 --> 00:34:51,840 Speaker 15: consumer first product, which is Twitch. And obviously Amazon is 660 00:34:51,880 --> 00:34:54,520 Speaker 15: one of the rumored groups that could potentially buy TikTok 661 00:34:54,560 --> 00:34:57,400 Speaker 15: outright itself. There's really kind of three groups that have 662 00:34:57,400 --> 00:35:01,160 Speaker 15: been considered there. It's private equity shorteach and sort of 663 00:35:01,239 --> 00:35:03,239 Speaker 15: i'd say dark horse picks here for me would be 664 00:35:03,280 --> 00:35:06,719 Speaker 15: e commerce platforms, but you know, them announcing that they 665 00:35:06,760 --> 00:35:09,320 Speaker 15: would like to actually go launch their own competitor directly. 666 00:35:10,400 --> 00:35:13,040 Speaker 15: I think it's either a precursor to test the waters 667 00:35:13,120 --> 00:35:15,120 Speaker 15: in the next year. Do we want to actually consider 668 00:35:15,160 --> 00:35:18,120 Speaker 15: bringing this in house ourselves, or is this something that 669 00:35:18,120 --> 00:35:20,680 Speaker 15: we want to just actually launch directly competitively and can 670 00:35:20,719 --> 00:35:21,360 Speaker 15: grow in house. 671 00:35:22,560 --> 00:35:25,480 Speaker 4: As you said, Jason, a rumor that Amazon's waiting in 672 00:35:25,480 --> 00:35:28,040 Speaker 4: the wings to buy TikTok. I don't think that Bloomberg's 673 00:35:28,040 --> 00:35:31,319 Speaker 4: reported them as a candidate, But I'll look into it 674 00:35:31,560 --> 00:35:33,560 Speaker 4: and I'll let you know. I want to go back 675 00:35:33,600 --> 00:35:36,640 Speaker 4: to get keeping your toes ed. I know, I know, 676 00:35:37,080 --> 00:35:42,920 Speaker 4: I'm just being me. More layoffs, more studio shutdowns. What 677 00:35:43,080 --> 00:35:49,279 Speaker 4: comes next, you know, maybe consolidation. You know, as I 678 00:35:49,400 --> 00:35:52,480 Speaker 4: said before, I believe we're right sizing in an industry. 679 00:35:53,080 --> 00:35:55,520 Speaker 4: You know, we got very bloated as an industry when 680 00:35:55,560 --> 00:35:58,000 Speaker 4: money was free in twenty twenty one. In the early 681 00:35:58,040 --> 00:36:00,920 Speaker 4: part of twenty twenty two, we hired tons of individuals, 682 00:36:00,960 --> 00:36:01,960 Speaker 4: which was fantastic. 683 00:36:02,080 --> 00:36:04,680 Speaker 15: We grew a lot. Gaming continues to grow. It grows 684 00:36:04,719 --> 00:36:06,520 Speaker 15: about one hundred and one hundred and fifty million people 685 00:36:06,560 --> 00:36:10,160 Speaker 15: a year. We're expecting actually a strong twenty twenty four 686 00:36:10,640 --> 00:36:14,200 Speaker 15: and very strong twenty twenty five. And I believe what 687 00:36:14,200 --> 00:36:17,240 Speaker 15: you're seeing is right sizing, which is across not just gaming, 688 00:36:17,280 --> 00:36:19,120 Speaker 15: but also entertainment and tech more largely. 689 00:36:20,280 --> 00:36:23,160 Speaker 4: I've been playing a lot of Ghost of Tushima recently 690 00:36:23,160 --> 00:36:28,000 Speaker 4: on PlayStation. Awesome storytelling. Not clear where the next big 691 00:36:28,040 --> 00:36:30,560 Speaker 4: innovation is in gaming, just really quickly, Jason, you know 692 00:36:30,640 --> 00:36:31,960 Speaker 4: what is the next big innovation? 693 00:36:33,280 --> 00:36:34,960 Speaker 15: I think a lot of the next big innovations you're 694 00:36:34,960 --> 00:36:37,640 Speaker 15: going to see is around the creation process of games 695 00:36:37,719 --> 00:36:41,080 Speaker 15: as well as the distribution of games, and so creation 696 00:36:41,280 --> 00:36:44,000 Speaker 15: is getting faster. We're able to produce a ton more 697 00:36:44,040 --> 00:36:47,000 Speaker 15: content a lot more quickly, thankfully, largely and due to 698 00:36:47,120 --> 00:36:50,920 Speaker 15: new new development tools that are often fueled empowered by 699 00:36:51,000 --> 00:36:54,040 Speaker 15: artificial intelligence. So we're very excited about this trend. And 700 00:36:54,080 --> 00:36:56,880 Speaker 15: then secondly, the way games are distributed is a mess. 701 00:36:57,280 --> 00:37:00,720 Speaker 15: How do you find games today? The vast audio gamers 702 00:37:00,760 --> 00:37:03,000 Speaker 15: find that either in Facebook ads or they find it 703 00:37:03,040 --> 00:37:06,120 Speaker 15: with word of mouth, and with the sheer amount of 704 00:37:06,120 --> 00:37:08,080 Speaker 15: content that's coming our way. We think this needs to 705 00:37:08,080 --> 00:37:11,880 Speaker 15: be rethought and we're really excited to back entrepreneurs pursuing 706 00:37:11,880 --> 00:37:12,520 Speaker 15: these problems. 707 00:37:12,960 --> 00:37:15,439 Speaker 4: We almost went in an entire seven minutes without talking 708 00:37:15,480 --> 00:37:20,440 Speaker 4: about artificial intelligence until your answer. Thanks Convoy Managing Jason Chapman. 709 00:37:20,560 --> 00:37:22,600 Speaker 4: I know, I know you can't no, I mean, you've 710 00:37:22,600 --> 00:37:25,120 Speaker 4: done the research there, but we got to go. Thank 711 00:37:25,160 --> 00:37:36,400 Speaker 4: you so much, Jason Chapman. Let's go back to Apple again. 712 00:37:36,600 --> 00:37:39,319 Speaker 4: Shares up six point seven percent, on track for their 713 00:37:39,320 --> 00:37:45,040 Speaker 4: biggest jump since November of twenty twenty two. A mixed picture, honestly, 714 00:37:45,120 --> 00:37:47,120 Speaker 4: like a really tough quarter in the quarter gone, but 715 00:37:47,320 --> 00:37:50,720 Speaker 4: things improving and in China, iPhone surprised everyone. 716 00:37:50,800 --> 00:37:51,440 Speaker 5: Let's get to man. 717 00:37:51,480 --> 00:37:55,040 Speaker 4: Deep sing of Bloomberg intelligency leads our in house research. 718 00:37:55,320 --> 00:37:58,160 Speaker 4: The thesis you guys had or your response and react. 719 00:37:58,719 --> 00:38:03,320 Speaker 4: Was that the broads ecosystem of Apple products offset specific 720 00:38:03,360 --> 00:38:04,440 Speaker 4: product line weakness. 721 00:38:04,600 --> 00:38:06,080 Speaker 5: Just go into the specifics. 722 00:38:06,920 --> 00:38:10,000 Speaker 9: Yeah, I mean, look at the resilience of the services line, right. 723 00:38:10,400 --> 00:38:15,400 Speaker 9: The fact that it grew almost made peints shows that 724 00:38:15,719 --> 00:38:18,080 Speaker 9: you know, they can pull the levers when it comes 725 00:38:18,120 --> 00:38:22,520 Speaker 9: to pricing and just you know how they bundle things out. 726 00:38:22,560 --> 00:38:25,719 Speaker 9: And that's why even though the iPhone revenue was down 727 00:38:25,760 --> 00:38:30,720 Speaker 9: ten percent, they were able to show fourteen percent services growth. 728 00:38:30,760 --> 00:38:34,560 Speaker 9: So I think everyone gets it that Apple controls a 729 00:38:34,640 --> 00:38:38,399 Speaker 9: distribution and if you have to roll out AI, they 730 00:38:38,440 --> 00:38:41,960 Speaker 9: will have a piece of the transactions that take place 731 00:38:42,000 --> 00:38:45,160 Speaker 9: in the ecosystem. And that's why businesses are resilient. 732 00:38:46,160 --> 00:38:48,959 Speaker 4: So Tim Cooks got us all excited. Big event next week, 733 00:38:48,960 --> 00:38:51,880 Speaker 4: another one in June. We think more products will be revealed. 734 00:38:52,440 --> 00:38:55,640 Speaker 4: What's it going to take to keep the stock going 735 00:38:55,719 --> 00:38:59,000 Speaker 4: higher and engage and people believing that something big really 736 00:38:59,080 --> 00:38:59,520 Speaker 4: is coming. 737 00:38:59,560 --> 00:39:04,160 Speaker 9: Mandy, I mean with Apple, you need a large addressable 738 00:39:04,239 --> 00:39:07,239 Speaker 9: market to move the needle. Look, they saw that with 739 00:39:07,400 --> 00:39:10,719 Speaker 9: Vision Pro and obviously they're not pursuing the car anymore. 740 00:39:10,920 --> 00:39:14,520 Speaker 9: So you need a large addressable market to move a 741 00:39:14,560 --> 00:39:17,560 Speaker 9: company of Apple size and in this case, I think 742 00:39:17,640 --> 00:39:21,480 Speaker 9: AI inferencing is that large market. It's just they need 743 00:39:21,520 --> 00:39:24,960 Speaker 9: to show how are they kind of catering to AI 744 00:39:25,040 --> 00:39:28,040 Speaker 9: infrincing they don't have their own LLLM. I think they 745 00:39:28,040 --> 00:39:30,560 Speaker 9: will have to partner with someone. Most likely it has 746 00:39:30,600 --> 00:39:33,600 Speaker 9: to be Google given the arrangement, but it just needs 747 00:39:33,640 --> 00:39:36,120 Speaker 9: to be articulated a lot more clear for the market 748 00:39:36,200 --> 00:39:36,880 Speaker 9: to understand. 749 00:39:37,680 --> 00:39:41,480 Speaker 4: Mandy supercif quick, which piece of hardware will be the 750 00:39:41,480 --> 00:39:43,000 Speaker 4: home of the AI inferencing. 751 00:39:44,600 --> 00:39:48,120 Speaker 9: So Apple controls the chip, and look, I think you 752 00:39:48,160 --> 00:39:51,160 Speaker 9: can't have inferencing done through the cloud. I mean you 753 00:39:51,200 --> 00:39:54,680 Speaker 9: can't have Nvidia GPUs everywhere because your data centers are 754 00:39:54,680 --> 00:39:59,440 Speaker 9: physically located somewhere. So having inferencing in Apple's chip, albeit 755 00:39:59,480 --> 00:40:02,680 Speaker 9: it's a small is what it needs to do in princing, 756 00:40:02,760 --> 00:40:04,360 Speaker 9: and I think they can do that. 757 00:40:05,520 --> 00:40:07,560 Speaker 4: Man deep Seeing, who leads our tech coverage over at 758 00:40:07,560 --> 00:40:10,600 Speaker 4: Bloomberg Intelligence. Great to catch up with you, Happy Friday. 759 00:40:10,600 --> 00:40:13,319 Speaker 4: That does it for this edition of Bloomberg Technology. What 760 00:40:13,400 --> 00:40:16,480 Speaker 4: a week it's been dominated by earning this big news 761 00:40:16,480 --> 00:40:20,160 Speaker 4: flow Recap Friday the story of Apple on the podcast. 762 00:40:20,200 --> 00:40:23,800 Speaker 4: So many of you checking out the podcast on Apple Spotify, iHeart, 763 00:40:23,920 --> 00:40:26,040 Speaker 4: and of course we post it to all the Bloomberg platforms, 764 00:40:26,040 --> 00:40:27,719 Speaker 4: whether you're on your way to work, if you're on 765 00:40:27,719 --> 00:40:29,680 Speaker 4: your way home, you're just taking a break in the 766 00:40:29,680 --> 00:40:31,480 Speaker 4: middle of the day for all things technology. 767 00:40:32,400 --> 00:40:32,960 Speaker 5: Buckle up. 768 00:40:33,000 --> 00:40:34,640 Speaker 4: There's a lot more to come next week as well. 769 00:40:34,640 --> 00:40:36,920 Speaker 4: From San Francisco, This is Bloomberg Technology.