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We're Innovation, Money and Power Collie in Silicon Valley, NBN. This is Bloomberg Technology with Caroline Hyde and Ed Ludlow.
I'm Caroline Heidel, Bloomberg's Well's I caught us in New York and Amed Ludlow here in Cupertino, Apple Campus the Steve Jobs Theater behind me.
This carr is a special Bloomberg Technology and everything iPhone at Apple's wonder last event and.
Everything change of cords and everything focus on AirPods on the watch as well. We have got so much to drive forward as well as some of those headwinds when it comes to China, when it comes to supply chain, when it comes to those all important chips that I know you love so much. And we've got the perfect person to be setting us up into all of this. Bloomberg's Tom Charles joins us for really ready what we anticipate Margham and just comes out with really a fully
fledged view of what we're going to be delivered. The point is how much importance this is to an investor based Tom.
Yeah, this is a huge moment for Apple, this company. There's been a lot of anticipation for this event. But this year it's particularly high, and that's for a couple of reasons. One, we expect this to be a major upgrade in a lot of areas, camera chip. This is Apple's most important device, and they are going for the gusto here.
There is a lot of upgrades, there's a lot of changes. This is a major one.
This is not incremental. So in that regard, this is hugely important. And remember the backdrop here is a decline in global smartphone demand and that's something that Apple is really having to fight against.
I think we're having a few technical issues at the moment, Tom, but I just want to drive it home with you a little bit more in terms of what we understand the power of the iPhone. We understand the two hundred billion dollars it brings in terms of revenue per year. I'm interested in, ultimately, with a price point that may well rise, how much can they really ensure a consumer will go there? Tom Ah, I think we've lost Tom
Giles unfortunately. But Ed, I think at the moment in Kubatino, there's going to be a lot of excitement, a lot of people waiting with baited breath for the upgrades, and we've got a perfect guest to be sort of driving that conversation forward.
Yeah, and hey, I'll remind our audience there's a reason Apple pre records this presentation and then plays it out later to get rid of those technical issues. Absolutely delighted to be joined here at Apple campus by a net Zimmerman Gartner analyst. And you know, atte we've gone through all the specs we're expecting, lots of focus on the higher end pro and promacs, updated silicon, updated camera.
For you, what is most important to return Apple to growth?
Yeah, So I mean at the moment, of course, is still a little bit of speculation what we will see. And I think there's going to be some kind of feature that we haven't heard about yet because it's called wonderlust, right, so that the event so wonder or emerging in the word wonder with wanderlust, which means literally translated to be the desire to travel. And I think we all have this desire to travel since the pandemic, and that we
have most of it behind us. So I think there's going to be something around, you know, certain sensors that will make workout and traveling and just moving around even more precise and more accurate and more yeah, engaging basically, So I think there's there's going to be a lot of around new precise sensors and these kind of things.
The event is underway and in the early stages they're sharing video with people using older generation of iPhone, older generation of the watch.
In the real world, the iPhone seems to be everything.
Just explain to or alreadience how important the refresh cycle is for Apple every new generation of iPhone that they release.
Yeah, So Apple targets obviously different user groups. So one user group is the early adopters that usually upgrade their phone maybe every two years and sometimes even every year. So that is usually the group that they target with
their very high end devices. But then you also have a very loyal user group that is more in the mid range and maybe more on the budget side that sometimes you know, they upgrade only after five years, you know, as long as the you know, you can upgrade the operating system and and I think especially it's gonna be or this event is usually around the higher end in the mid range type of devices and the users and for for those users that maybe wait a little bit
longer for for upgrading. Apple also has some some interesting price offers, usually with with those you know that's come or that have been introduced earlier in the year so or last year maybe even so all of this will be important. It's the whole thing about Apple targeting these different user groups, but also really paying attention to these different segments and try to make them happy.
Yes, you are watching Bloomberg Technology special coverage of Apple's wonder last event. We're expecting iPhone fifteen and net zimmermun Gardner analyst with me and in the early stages the presentation started a couple of minutes in. They've been talking about how Apple devices help consumers and users in medical emergency situations. At the beginning of our conversation you mentioned
censor technology. We know that there are some updates to watch coming, but talk about that healthcare segment and indeed the emergency case scenario with Apple.
Yeah.
So at WWDC we saw some really interesting developments with iOS and and the ability to you know, there to to support people with their physical health but also with their mental health. Right and and so we're we're seeing Apple expanding significantly into different areas. So it's yeah, it's it's about our behavior, our health, our mental health or
physical health. That will I think, you know, as part of our everyday life and we need to embrace it and we need to or we can use specifically the Apple devices to support us in our journey for health.
I can confirm that Tim Cook is now speaking on stage and he said that he's going to be talking about Apple Watch and iPhone not really surprising. One thing that's going to impact consumers everywhere is the move to USBC. It's a European Union mandate deadline end of twenty twenty four. What effect will the hat for Apple switching to USBC.
It has a big.
Effect on Apple because they obviously had to make technical and physical changes to the design and to you know, basically to the entire roadmap of devices that will be coming.
And there will be more on top of that will be made or changes will be made because the use also looking for better repair ability of devices, so on Apple has to invest in new designs to make those devices more repair able and also make mix spare parts available, make it affordable available to users so you can do your do your own repair if you want these kind of things. And but that impacts Apple and the entire industry really Tim Cook is.
Using these early stages to talk about WWDC Dune, the M two chip Ultra chip that went into the fifteen inch MacBook Air, Mac Studio Mac Pro, basically saying the feedback in response has been fantastic. We will see if the feedback or response is as good for this next generation of.
iPhone, which is what we will.
Focus on most net Zimmermum Gartner. And it's so good to have you here in real time during this Apple Wonderlust event.
Caroline back to you in New York.
I know, so great to have the on the feeling sense of this moment. And actually we're hearing from Tim Cook as well, saying, look, Apple is still on track to ship its Vision Pro in early twenty twenty four. Now we are still anticipating the announcements regarding the Watch, the AirPods, the new ways in which are going to be charging them through the USB, and indeed what we're
waiting on the iPhone fifteen range. But let's go back to Tom Giles, of course, and Tom, this is about consumer or, but it's also about investor reality, and at this moment they've got plenty of headwinds. We're worried about Chinese consumer, we're worried about supply chain as well. How do you think they managed to tackle or offset that narrative at this moment.
Yeah, and don't forget they've also got Huawei in the mix, Juahwei out with a new phone with a new operating system and gathering a lot of momentum behind. So there's a lot that they have to do here today to prove that this is a really special upgrade. As we were talking about earlier, this isn't your average instance where they're adding a few things. They're iterating around the edges.
There are some substantial changes. If you talk to Mark German, he will tell you that this is a major set of upgrades, and that's what Apple is doing to really take the attention off the competitive threat, the pressure from the Chinese government on using the iPhone in that country, the pressure from.
Huawei, all of it.
This is Tim Cook's moment to take your attention off of that and show once again that we're adding really special features to the iPhone. The faster chip again, this telephoto lens with the camera that's letting you take these up close, these up close photos.
With the iPhone, things you can't do with other devices.
This is his moment to remind people we're doing things that are really special with this camera, and it's.
Really important because it makes up half of the company's revenue.
And to be fair like, analysts still seem convinced by all of that. At the moment, Tom I'm looking at thirty five by ratings. That's two thirds of all the ans out there rate this stock a buy. And in fact, there's still about fifteen percent upside potential if you're looking at a price target consensus of two hundred and four.
But we have had this sort of knock.
To the overall market capitalization of Apple over the last few training days. And ultimately, how important is the fact that they can nudge us up on a price point.
How resilient does the US.
Consumer need to be at this moment?
Yeah, definitely.
I mean Apple has to walk a really fine line right with the way they price this device. And that's why they've got multiple devices that are going to be getting upgrades today. And exactly where are they going to tinker with pricing? How much do they add those high end features.
To the lower end devices? All of those things.
This is the kind of thing that Apple spends a lot of time thinking about very strategically, and they do. They tend to be very smart about it, not loading too much into the lower end devices so that they can still sell them at a little bit of a discount to the higher end devices. How do they keep those margins going in the right direction, and if you look at their gross margins, they're going in the right direction.
So how does Apple do this, particularly at a time when you're seeing overall demand for smartphones globally dropping off. Q two was a really tough quarter, both for the iOS that's Apple and Android that's the Google operating system that's in so many global devices. But something that Apple did in the second quarter was they weathered the storm better than Android. And that's what Tim Cook really wants to see Apple continue to do going forward.
Well, we'll have so much more from Tim Cook, from you, Tom, We thank you so much all regarding this big unveil where we understand that it is official. The S nine of the watch has arrived, and indeed it's got an S nine chips, so we're going to have some they
call major performance improvements overall. We understand that the CEO, Jeff Williams is on the stage at the moment, introducing this next generation of the Apple Watch, and it's scouting an improved performance overall, including the new chip and calling it the most powerful Apple Watch chip to date. Now we're going to be talking so much about the intricacies of this announcement with Ray Wang. He's a CEO and principle analyst of Constellation Research. His take what is being
announced at the Apple event is over in Kubertino. That's where r Ed Ludlow is too. This is Blue meg technology, all right.
The latest headlines coming out of this Apple Wonderlust event center on the next generation Apple Watch, the S nine or nine series, with an updated piece of Silicon S nine chip, thirty percent more powerful GPU CARO. In terms of some of the things that this manifests itself with dictation twenty five percent more accurate, eighteen hours of battery life, two ways of looking at it. That's all day battery life, although Mark German posting in the Bloomberg Top Live blog
that is basically the same as prior generations. Also, the ability to engage with Siri directly to the watch without latency in a more secure method.
That's what they're leaning on with this latest watch.
Yeah, more effective use and point. Also, integration with a home pod is an interesting one as well. But overall new gesture control being integrated, they've got to be pushing really the way in which they're standing out from a crowded space when it comes to connected devices, the way in which we measure our healthhead because well many have been getting into the rings the watches of other variations too.
Yeah, something really cool they've just announced with this latest generation Watch series nine has gesture control, So with a one handed gesture you can engage with the watch called it's called double tap.
So I don't know how needle.
Moving that is, right, the ability to waive at one's wrists and watch, but we will find out because there is somebody who definitely has a stronger perspective on this than Ui, and that is Ray Wang, Consolation CEO and principal analysts.
Good to see you here in Cupatino.
Based on what I've just reported for you on the Apple Watch Series nine, what do you make of that?
As quick reaction, Yeah, welcome to the hometown.
Like corup Patino, I think the really important thing that's going on here is the important piece that they're going from silicon to chip, and they're using their silicon to manage the batter life, using the silicon to handle the AI capabilities, and all those are really important, especially when
you think about what Apple's known for. They have full control of their ecosystem and that starts with the silicon, and so they're showcasing that on the watch, and of course I think we're all waiting to see if there are other things that are going to be monitored, right, other health indicators that I think would drive other people to go to the Ultra and of course to the Series nine watch.
Yeah, the expectation is that we would have two size variants of Series nine, one new variant of the Ultra. These are the early exchanges of this event. Apple Wonderlus is underway behind us in the Steve Jobs Theater, and you're right, we're waiting for four variants of the iPhone fifteen. How important is it that the hardware upgrades on the pro side are substantive to drive an upgrade cycle.
Well, when we look at the entire upgrade cycle, we're talking about a billion iPhones that need to get five G right, and it's been happening over the next three years, and so as we're moving those in that supercycle. The big piece is really is a tolefootal lens potentially enough to get you there. The USBC got to do it because there's a regulatory requirement. Is it also going to be something around? Is it a battery life?
Is this a feature?
Is it a service that's going to take people to that next level of using the iPhone? But the chips make a big difference. The battery life makes a big difference, and potentially a forty eight megapixel camera may make that difference.
I want to go back to the watch for just a second. Some other information. Is the series nine, let's call it the base model has double the brightness two thousand nits. That goes back to the last generation of Ultra. What is the strategy do you see there from Apple? They're basically taking last year's tech and putting it into this year's base models.
Yeah, we're seeing things.
If you want the Pro or the Ultra, you want the top level, you'll pay a little bit more for the new chip, and then you're going to see that gradation come into different markets. Let's take India for example, right the big talk about India. You might have different price points given where the demographics and the socioeconomics are, you'll have a different price point in the UK, of course, and you have a different price point if you're in the Middle East.
Right.
Remember, Apple is at the heart a luxury brand, and because it's a luxury brand, that's what's driving that capability.
Right now, onstage Apple, we're talking about their environmental goals and the progress they've made and sustainability and materials.
Is that an important factor for you?
It's important for.
Me, especially when we think about circular economy and we think about how much energy is required to create a device, how you bring that back into it. Apple's been a leader, especially in sustainability and some of those ESJ goles, and it goes from not not just you know, the battery, but it's also the materials and the recycling process. I've probably turned in and maybe you as well turned in a couple of phones in the fact.
To do that.
So Okay, forget what we've reported and what we think is coming. What do you want to see in these higher end iPhone fifteen Pro and promacs.
Yeah, I think people are looking for better features, They're looking for experiences. For example, the ability to tie these
to more devices. They're looking for the eventual integration between mac os iOS and watch os and then of course you know they're trying to figure out, hey, maybe there's a sneak peek into vision Pro and what's going to take us into Vision Pro as the replacement for the Mac Like that integration has always been an Apple fans dream, right to be able to bring all those things together.
Ray Wang, Constellation Research CEO and principle analyst, joining us in real time Caroline here in Kubatino.
The Apple event is underway and.
Is underway, and there's a focus on the environment, on sustainability, and we understand the latest headline is it's going to be phasing out its lever from its iPhone cases and many had taken that queue from well moves over at ames of Late. Coming up, we're going to have so much more coming for you the analysis from Apple. Thomas and he's vice president in principal analyst over at Forester Research is going to be joining the show live from Cupertino from New York.
We've got it all covered.
This is blue bag technology, and so we have the news coming from the Apple event in Coupatino. Thick and fast. Of course, I Watch Series nine going to be more powerful, swifter, We're going to be having the ability to well hand gesture, to be able to waveh fingers at it. Double tap is what it's called intraoperability with your home pod as well.
Really this is about being faster and more powerful. We're also seeing some more nuanced announcements around perhaps the wind down of any leather at the moment when it comes to being used in iPhone cases, So a push on sustainability. But we all await the iPhone fifteen and the array that we get there Forester Research Vice president of principal anistad analyst Thomas Fusson is with us and Thomas, you
were expecting perhaps an ultra version of the Watch. What more do you anticipate from the phone lineup and is it going to be enough?
Well, I'd expect significant incremental innovation and improvement on the lineup of the especially on the iPhone and the iPhone pros. We've heard right now about some of the sustainability efforts. I think what would be very disruptive is to hear more of a device as a service offering where you have a bundle of rware content and some circularity services recurability. That would be a great step. I'm not sure we're going to hear that tonight and forratunity, so is it
going to be enough? I think Apple will maintain its leadership when it comes to smartphone innovation. The bigger question, I think, given the economy context and we don't know yet, is going to be around.
Pricing precisely, and many anticipating that prices will rise, We're going to boost the average selling price. We're still focusing at the moment in ten on the environmental impact. Lisa Jackson, the EPA chief, saying about how by twenty thirty, Apple devices will be net zero in impact. That was a Tim Cook ad as well. I'm interested in really the Huawei and Chinese perspective here as well, because there's been
a lot of headwinds on Apple stock of late. Do you think that the innovation is enough for Apple to fight off the homegrown innovation of a Huawei.
Well, I think so.
From a pure innovation standpoint. I think the bigger question is about the geopolitical context in China and the fact that the iPhone has been banned to potentially dozens of millions of employees working in public, state employees or for the government in China. What will be the consumer sentiment of Chinese consumers is a very big unknown, given the fact that the Greater China represents about a fifth of Apple's revenue, so that might be another reason for a potential price up tag.
In other use, we keep.
An eye on the price point and indeed, what we're going to hear when it comes to the new phones for us to research Vice president and principle analyst Thomas Housson joining us on what we've so far been digesting, and it is a focus on the environment. Lisa Jackson I misspoke earlier, of course, was a former EPA chief ed Apple's head of environment now really outlining the efforts and Tim cook saying by twenty thirty Apple devices will
be and having a net zero impact. But give us the nitty gritty on what we got from at least connected devices and watches in particular, because many a broceed for more.
Yeah.
Look, I think we've probably got a more substantive upgrade to the Series nine watch, the lower base model than we thought we'd get. New Silicon S nine chip thirty percent breaded performance on the GPU side, but You're right though, that real focus on the environmental side of this story. If you take Series nine is an example, north of
eighty percent of it is made of recycled materials. That includes some of the core metals like tungsten and copper, you know, and the pledge from Tim Kok is that by twenty thirty all devices will have net zero.
So it's a commitment.
But as our guests have made the point this whole show, it's about the supply chain and how they're adjusting to that.
Well, we'll see how that titanium comes into the mix in a moment. That's what for sorts anticipated the lineup of phones that does have this special edition of Bloueberg Technology Live from Coopertino and from New York.
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