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So you probably know that Apple unveiled its latest iPhone this week.
iPhone sixteen raises the bar for what an iPhone can do.
The new model, the iPhone sixteen, came with you guessed it, a new camera.
iPhone sixteen features so many exciting camera upgrades, camera control, fortyh megapixel fusion camera, the equivalent of four lenses including Macro Space, Shiel Capture, and more.
Kind of sounds a lot like the last iPhone launch. iPhone fifteen Pro has our best camera system yet users will get even better photos and videos. And the one before.
That, iPhone fourteen and iPhone fourteen plus are full of innovations, including a fantastic new camera system.
And the one before that.
IPhone thirteen Pro with our biggest cameras some advancement.
Yeah, you get the idea. So why is it always the camera? Well, my colleague Bloomberg Tech reporter Austin Carr says, there's something else going on here.
Here's a very straightforward example to demonstrate how there's this beautiful interplay that Apple is discovered between hardware sales, which are profitable on their own and digital subscriptions. So each iPhone comes out with, like you mentioned, a bigger camera, a better camera. So every time you take a photo, that photo is bigger and bigger. It's larger in size in terms of the megabytes that each photo or gigabytes
that a video might take up. Now, the amount of storage you have on your iPhone or in iCloud has a limit, so the larger photos get, the more you might have to pay when your phone runs out of memory. So that's just a great example of the people who pay for iCloud. It's often because you keep getting that pop up saying, hey, you're out of space, would you like to pay for I Cloud? And so that's driving people to pay ten twenty eight dollars a month to have storage in the cloud.
Ten twenty however, many bucks a month that stacks up pretty fast. Apple has gotten really good at turning hardware iPhones, watches into ongoing revenue, so good that Austin says the company is now at a turning point.
It's just a really fascinating time to review how Apple has changed in the last forty years, going from what was sort of an underdog upstart to now increasingly being seen as sort of this overlord of the technology landscape.
Today on the show, how Apple went from underdog to overlord, It's strategy to stay that way and what that means for all of us. I'm Janet Paskin, and this is the big take from Bloomberg News. It's hard to remember now, but when Apple was first getting started, its products were way outside the industry mainstream. They were expensive, sometimes slow. There was that goofy orange laptop. Even the iPod came out way after other MP three players were on the market.
And yet today Apple is worth more than three trillion dollars. I asked Bloomberg's Austin Carr. What happened helped me understand just how big Apple is. So for starters, it's the world's most valuable company. But what does that mean?
You know, this is a massive company whose market shared is really as high as it is in devices in mobile computing. It really under sells how much of the world and our day to day lives their products touch and really have massive control on. They sell hundreds of ely I think it's two hundred three hund million or so iPhones per year. On top of that, they sell tons and tons of MacBooks, of AirPods, of Apple watches,
you know, the iPads, MacBook pros imax. I mean, there was just a slate of hardware that drives their profits. It is just absolutely insane the scale and production that they sort of have to churn out every year.
If you count up all the iPhones, iPads, Apple watches, and computers, there are more than two billion active Apple devices in the world. But it's not just selling the hardware that's made Apple rich. The companies figured out how to keep making money even after you make that initial purchase. Like Austin mentioned earlier, you get a new iPhone, and then maybe you add iCloud storage and subscribe to Apple TV. Plus this is all revenue tied to what the company
calls digital services. Here's one astonishing statistic.
Last quarter, Apple sales from digital services alone reached twenty four point two billion dollars, which is more than the combined revenue of Adobe, Airbnb, Netflix, Palenteer, Spotify, Zoom, and Elon Musk's X during that same period. I mean, that's just wild because we think about Apple as a hardware company, but they're making massive revenues in the digital space as well.
So these are ways that Apple is sort of building on their hardware ecosystem in a way that drives tons more revenue and also diversifies so they're not wholly dependent on iPhone sales.
Every two years, as Apple's gotten bigger, it's also gotten more confident about its place in the ecosystem and everyone else's Apple is in charge. Take the app store.
It has become an absolute blockbuster for the company, in part because they charge big fees for accessing and selling things through that Apple ecosystem.
An almost every transaction that takes place through the app store, buying an app, signing up for Netflix, or even buying something in an app, Apple takes thirty percent.
And so that's become a massive, massive generator of revenues for Apple, just because the scale of the app store, there's so many apps within it, all over the world, and they're all every single day having a new update or something to sell a digital good within their apps, and that again is something that Apple always takes a cut on if you're of a certain scale.
That hasn't made the company a ton of friends, and it certainly made them a few enemies, particularly when it comes to developers. The key group that made the App Store a success in the first place.
As they've taken on more of these developers that they've imposed more rules about what can be released into the Apple ecosystem, as they continue to charge fees that Apple developers really are against. I think the question is how long they can keep that developer community interested in delivering the latest and greatest to Apple's products.
Another question whether Apple's tactics are even legal coming up after the break, why regulators are circling the company, and why this year is a turning point for Apple. The flood of money coming from digital services and the app Store has made Apple and its shareholders really rich, but Bloomberg Tech reporter Austin Carr says it's also fundamentally changed what the company does. It doesn't need to wow us with game changing devices in quite the same way. It just has to play defense.
A lot of you know, former executives or even current employees that feel like, you know what, maybe they've gone too far with their rules regulations about the app store, And the question is just are those walls that they put around their garden a little bit too high? Maybe they have too much barbed wire.
The US Justice Department certainly thinks.
So.
In March, the Department, along with sixteen states, sued Apple, accusing it of violating anti trust laws.
It's a very long initial complaint, but it's ultimately about how Apple sort of prioritizes its own ecosystem to the detriment of others.
Austin says. The complaint has a laundry list of ways the Justice Department sees Apple suppressing competition and limiting customers' choices. The complaint alleges Apple blocks rivals from using hardware and software features on iPhones and MacBooks or here's another example, car play.
They talked about how because Apple controls so much of the software hubbed within the car, that that's becoming an anti competitive practice, to the point that some carmakers have canceled certain of software, Like I think there was one sided example of an automaker that was trying to develop a digital key to turn on your car through the iPhone, but because of Apple's rules, they ended up having to cancel it.
The DOJ also alleges Apple uses the app store to thwart innovations that would have made it easier for consumers to switch phones that it has refused to support. Other messaging apps, that it has limited third party digital wallets and non Apple smart watches, and blocked mobile cloud streaming services. Apple says the lawsuit is wrong on the facts and the law. If Apple is right and the DOJ's suit fails,
well Apple doesn't have to do anything differently. But what if the government wins, Austin says, to understand what could change, look at Europe.
It's a really fascinating case study right now because of the different regulations in Europe. They're forcing Apple to allow alternative software marketplaces.
In other words, not just one single app store.
Indeed, there's already app stores that have launched, one called the Alt Store that has a different set of apps. It's a bit complicated to install. But Apple is forced to sort of open up its walled garden, create a few gates and different bridges to experience a different type of ecosystem within Apple products.
And it's not just opening up the app store. Soon in Europe you could delete Safari or even I Message.
So it's actually a really interesting experiment right now. If you go to Europe, people would argue that that's actually a more creative, interesting experience because there's more competition on Europe based on these regulations, whereas you cannot get the same type of experience in the US right now.
On top of regulation, AI is also about to change the playing field for Apple. At the same event this week where it rolled out the new iPhone, Apple also showcased its new artificial intelligence platform.
Apple Intelligence is the personal intelligence system at the heart of the iPhone sexteen lineup. The sort of big reveal is that Apple is trying to show AI as a hardware feature. Apple Intelligence draws on the immense power of our silicon to run multiple generative models on the iPhone in your pocket.
AI as a hardware feature running models on the iPhone in your pocket. What that means is we usually think of AI like chat GPT or Google's Gemini AI like software, an app or a program that needs the Internet to run. Apple wants to change that by including a chip that could process some of this AI locally without an Internet connection.
And so the big question is how well will those features appeal to consumers to make them want to spend another thousand dollars on upgrading a new iPhone or is it just sort of an arbitrary way of Apple saying, you know what in order to access the service, you're going to have to pay us for our hardware, even though we could deliver to you from the cloud.
And the other thing about this new AI feature is it's kind of late. Apple's been late before, but this isn't the iPod.
It's sort of an incremental, safe update. And indeed, for things that this AI cannot answer, they have this Chatchchept partnership, which we'll just say, let's say you ask it a question, it will just say, oh, we don't know how to
answer that. Would you like to ask chat gept? And I think that just speaks volumes that Apple was not only late to this type of innovation, but they're rolling out a much more safe, incremental approach to it that's relying on an outside partner to handle the more complicated stuff.
All of this is why Austin thinks Apple CEO Tim Cook has radically transformed the company.
In twenty twenty five. I think, you know, Apple's in a pretty safe dominant position right now, but there's no doubt that that sort of relationship and brand sort of reputation which is so important to Apple has fundamentally altered in the last year or two. And I think that's what the story is all about.
This is The Big Take from Bloomberg News. I'm Janet Paskin in for Sarah Holder. This episode was produced by David Fox. It was fact checked by Adriana Tapia. It was mixed by Rishi bijacob Our senior producers are Naomi Shaven and Kim Gettleson, who also edited this episode along with Jeff Muscus. Our senior editor is Elizabeth Ponto. Nicole Beemsterboer is our executive producer. Sage Bauman is Bloomberg's head
of podcasts. If you liked this episode, make sure to subscribe and review The Big Take wherever you listen to podcasts. It helps people find the show. Thanks so much for listening. We'll be back tomorrow