The New iPhones and Apple’s Future: A Preview

two thousand seven. An Apple CEO, Steve Jobs is on stage at the Mosconi Center in San Francisco. Every once in a while, a revolutionary product comes along that changes everything. Apple at this time is worth about seventy billion dollars. It's making computers, and it's making iPods, if you remember what those are. It's a well known company, but certainly not one of the most powerful in the world. So three things, A widescreen iPod with touch controls, a revolutionary

mobile phone, and a breakthrough internet communications device. Jobs is here to announce the next big thing, a widely anticipated product that he's taking Apple's future on. These are not three separate devices. This is one device, and we are calling it iPhone. Twelve and a half years later, Apple is in a very different place today. At that moment in two thousand seven was the beginning of a historic surge. Let's turn Apple into an almost one true the in

dollar giant. Apple is now contending with a stall out in need of its next blockbuster product. Today on the Show, ahead of Apple's announcement of the next generation of devices, we'll be hearing from our consumer Products reporter Mark German, who has the exclusive details on what to expect from these new phones, including cameras that can take wider photos. Will these upgrades be enough to reinvigorate growth at Apple? Am Ito, you're listening to Decrypted Stay with us. It's official.

The next Apple event is upon us and we're getting a fresh batch of Apple devices in a matter of days. The invitation is out Scott and it says, by innovation only, please join us for an Apple special event at the Steve Jobs Theater in Cooper Tino, September ten at ten am. Of course, got this would be so Mark. We're just days away from Apple's annual event, where executives will be announcing the company's new slate of products. As a reporter

covering Apple, what are these final weeks like for you? Yeah, I mean the final two weeks is sort of the marathon to the end, and this is the time where there's lots of information floating around from lots of different people. So are you stressed at right now? No? I don't don't really get stressed about it. I mean, believe it or not. It's been almost ten years, about nine a little bit more than nine and a half years since I started covering Apple, so it's it's just the usual

stuff year over year from me here. So we started the show today with Steve jobs unveiling the very first iPhone. I was in college at the time, and I vaguely remember hearing about it in the news. Do you remember that day when Steve Jobson once iPhone? Where was I? So at the time, I remember that I knew that the Macworld conference was that day, but I remember just going to Apple dot com and I was like, Wow,

that seems like the coolest, you know thing ever. It was like something that the tech industry hadn't seen before. I mean, if you see the reactions of people in the crowd is just unbelievable to people. That's not something that we've seen not only from Apple, but really many of the other technology players since then. Last year, Apple came out with three different versions of the iPhone. You can think of them as the two high end models and the one low end model. The most expensive one,

of course, was the Tennis Max. That's the one with the high resolution screen, the best camera, so the biggest size. Then there's the ten S, which is based sickally the same phone, just smaller, and then we got this low end model called the ten Are. Not as nice of a display, not as nice of a camera, but it's also a few hundred dollars cheaper. Mark tell us about

the biggest changes coming to this year's models. So there's going to be the same three screen sizes, and the cameras will both be upgraded on both sets of phones. So right now, the ten R, as you know, has one camera on the back, and the ten S and Tennis Max have two cameras on the back. The story this year will be two cameras on the successor to the ten ARE and three cameras on the back of both sizes of the high end pro phone. And what

does it mean when you have more cameras. When you add a second camera, it allows you to have optical zoom right now if you're on a single camera, so the ten aren't today. When you go to zoom in and you go past the standard range of one point zero x zoom, it will get a little blurred because it's digital zoom versus physical zoom. But the more lenses you have, the farther you can go without decreating the quality.

But you'll also get is improved portrait mode because you're actually getting multiple lenses working together to do that blur effect, and you'll get some additional stage lighting effects as well. And these new cameras on the high end phones, what will they be able to do? The third camera on the pro I phones, that's where things get really interesting. That opens up a whole wider range of possibilities. So one you'll likely get even deeper zoom without decreating quality

because you have three lenses optically working together. You'll probably get a zero point five x zoom now, which means that you're be able to take pictures that are farther back, so you can capture more information, more detail on the edges, so you basically get a much wider photograph. There's also going to be significantly improved low light photos, which is something people have complained about. And what about the pricing on these phones because they seem to get more expensive

by the year. Yeah, I mean that's a good question. I'd really expect the pricing to be very consistent to the current prices, right, so around seven d fifty eight hundred dollars for the low end model which would be replacing the ten Are, and then the same you know, one thousand dollars to fourteen fifty or fifteen hundred pricing for the high end models, depending on screen size and storage capacity. It's crazy that the Leeuwin model is like in the seven hundred dollar range. That's not low end

at all. No, it's not low end. And that's the thing about the ten Are, It's like it's always been positioned as this cheaper iPhone. Apple sort of positioned it as the iPhone for everyone. But the fact of the matter is is that it's the same exact price as the iPhones before they rose the prices two d fifty three hundred dollars to a thousand dollars at the base

with the iPhone ten a few years ago. So aside from the camera upgrades that we just talked about, there are still quite a few more additional tweaks coming to the iPhone that Mark you've reported over the last few days. We're gonna keep that story pinned on Bloomberg dot com slash tech for our listeners who want to know more about the smaller details that we're just not going to have time to get into in this episode. But overall, it does sound like all of these changes to the

iPhone are pretty incremental. I don't get the sense that these will feel like entirely new products for the average consumer. Yeah, I don't think so. But I think the thing that that shouldn't be lost is that Apple has really slowed down. I would say it's innovation cycle in terms of design on the iPhones in recent years. And if you look at the history of the iPhone, so obviously the original iPhone in two thousand seven was like nothing we had

seen before. Then the next year they changed the design with the plastic curved black and white backs of the iPhone three G. They kept that for the three GS, and then they came out with the four in and nothing looked completely different. I remember being really, you know, blown away by that design. It just felt super new. They used to be a new design s here with

the same design. Now it's basically three years in a row of the same look, which I think is one of the reasons that people are not upgrading at the same speed that they used to. Coming up, how Apple will be changing its other products, including the iPad, the watch, the MacBook, and the air pods, and also what this will all mean for the future of Apple. We'll be

right back. Okay, So before the break, we went through a couple of changes coming to the three existing iPhone models, the tennis, the Tennis Max, and the ten are Mark. Tell us about some of the other products Apple is going to be announcing this month. Let's start with the Watch. Yeah, so the Apple Watch got a really really big upgrade last year with the Series four. So this year, I think it's going to be a really minor update focusing on the casings, so I think more visual and material

based changes rather than real functionality changes. And what about the iPad. Yeah, the iPad is interesting because they are working on a bigger iPad upgrade for next year. This would be an iPad with three D cameras on the back, which is what they're also going to add to the iPhone as well, So you'll be able to use these laser based cameras to really get a better picture of where you are in a room, for much better augmented reality,

computer vision, and AI applications. And so that's gonna be a really big deal for both consumers and the enterprise use cases as well and businesses. And for this year, you know, we're expecting a software iPad upgrade, focusing on the processor, focusing on the cameras rather than anything really significant. And what about the air pads, Yeah, the air pods. Those are interesting. Everyone loves to talk about air pods.

So we got the original ones in. Then there was the air pods update in March with the new processor, the support for the series command. I don't want to say the weakeward right now and have all my devices go off. But they're also working on a new model.

This is a higher end I guess you can call it a pro model, would be a little bit more expensive, would have the wireless charging as well, but what you would also get is a sense of noise cancelation and some water resistance and I think those are going to launch around the end of this year or next year, and any updates coming to the MacBooks, what we are going to get is a new sort of even Pro

or MacBook Pro. So it's a bigger MacBook Pro. It's part of this approach to lock in professional users and retain them. This is going to have an over sixteen inch screen, about sixteen and a half inches, and I think that's going to be something that a lot of pro users are going to run to buy. And I hope it's not to explain to myself. Let's take a moment to zoom out and talk about the greater context

for Apple right now. This is a really interesting time for the company, maybe one of the most challenging times in recent history. Walk us through the different headwinds that Apple is facing right now. Tariffs is a big one. I feel like that's something that's in the news every day. I don't think it's really going to impact consumers a whole lot. I think Apple has sort of incorporated the price already of a tariff impact on the devices. I mean,

you see how expensive the iPhones are already. I don't see any possibility even getting more expensive. Apple is going to have to take a slight margin hitt or they're gonna have a real problem selling phones that are it's just not gonna happen. You saw the prices of the iPad pro and the Apple pencil and a bunch of other impacted accessories by tariffs happening over the past year or so. You see, the math pro is six thousand dollars. That display is another six thousand dollars if you get

the stand. So I think these prices are too high as it is, and I think they're a little high because you know, it's incorporating the cost of the tariff's already in there. The other thing is coming out with a breakthrough new thing, right, Uh, it's been a while. The next one will be an a R headset. There's a few other things that they're working on that will be writing about soon as well. So you know, it's interesting and it's to be seen if they get these

things out the door. Remember the car, the Apple car. When they went to work on that five six years ago, it was supposed to launch by now, right, is that still in the works. It's not. They've completely rebooted the project. They're focusing on the underlying self driving technology. They could eventually go back to building a car, but in terms of the ambition they had five six years ago, you know,

that's really out the door for now. I mean, listening to you talk about all the new products that Apple is planning to launch this fall or maybe next year, it sounds like there's just a ton of them. Me. You know, they're different price iterations of the various products, and then they're just only more products than back during Steve jobs age. Yeah, I agree, they're doing a lot, but it's also it's a different time period, right, the competition is so much stronger. And so here's the problem.

Amazon comes out with a really really cool device, and let's say it's the Eco speaker, right, the Alexa speaker a few years ago, and then down the road, people really get attached to the Echo speaker, and Apple doesn't have one, So people start buying the Amazon speaker, right, and people start moving away from the Apple ecosystem to the Amazon ecosystem because Amazon offers hardware products and categories

that Apple doesn't have. And that's how you lose customers out of your ecosystem by not completely locking them in, by not covering all the bases, and that's why you're seeing this pushing services, That's why you're seeing Apple music,

That's why you're seeing the Apple credit card. So if you're an iPhone user, you have your banking in your phone, you have your Apple card on your phone, How in the world are you going to switch to Android when Samsung comes out with some breakthrough new phone that you know everyone wants in two years or now right, you just can't do it. They're not going to have the Apple card in the same Sung phone and people will be like, Wow, I can't switch. I'm completely locked in.

So that's what it's about. That's why Apple is doing this type of stuff. In terms of Apple's revenue, is the strategy of selling more products, helping them offset declining sales of the iPhone itself. So yeah, maybe offset is a good word. They're not growing very strongly. I mean, I anticipate that they'll have some growth in Q one for this year, given that last year's first quarter was

such a disaster sales wise. I mean when I say disaster, you know, eighty billion dollars is no disaster, but for them, it was a drop in growth. It was big missed expectations. So something interesting was that the iPhone at revenues last quarter, which is one of the lowest percentages in years, which is a good thing. It means some of the diversification is working. But you know the reality is that all these products and services really are around the iPhone as

a hub. You know, the air pods, it's an iPhone thing. Seri is an eye phone thing. I give list every Apple product, every Apple service, every Apple application and make a really solid argument as to why it's basically completely reliant on the iPhone. So even though iPhone sales are declining, it's still the core of the company. You might as well call it iPhone, Inc. And so as a result, Apple still needs to find its next blockbuster hit. It does.

It needs to find whatever the hub will be afterwards, right, I mean, you've seen it change over the years. It was the Mac, than it was the iPod, now it's the iPhone. Some people thought it would be the iPad, but the iPad really quickly turned out to be a companion product. So, I mean, the question is, are you eventually going to build your world around glasses? You're eventually

gonna build your world around a watch. Well, we'll see, but Apple seems to be trying all the different possibilities, and you know, at the end of the day, I I personally feel like as I don't know if this is how Apple feels, but my personal feeling is that, you know, people are always going to want to carry a device that they can do everything from in their pocket or in their per or in their backpack. So I don't really see the iPhone going away anytime soon.

Based on what you know right now, from what you've been able to tell us today, do you think this news slate of products that are coming this fall are the game changer that Apple is looking for. I don't think anything they're coming out with this fall is a game changer. I don't think this is going to boost you know, their sales, boost their their profile, etcetera, etcetera. But I also don't think they're a game changer in the negative way. None of these products will do anything

to hurt them. It'll keep everything moving smoothly for them, and that's important. What are you going to be watching for from Apple over I don't know. Let's say like the next two, three, four years. The big theme for me is, for sure, you're going to be this augmented reality slash virtual reality heads that they've been working on.

I think that's the big focus area moving away from Intel in terms of their processors for laptops, that's going to be another big one, as well as I phone with five G. I think those are the three big things on my plate. If our listeners want to watch this fall event live where they'll be unveiling the new iPhones and all these other products, where can they follow along and they'll be live streaming at all Apple dot com as they normally do I would expect, but also

of course by Twitter account Twitter dot com. Slash Mark German for the best live commentary. I'm sure you're going to be on Twitter all day, Yeah, all day every day, and of course we'll be posting stories all day long on September tent on our website at Bloomberg dot com slash tech Mark German, thanks for being on the show today. Thank you for having me. Decrypted is produced by me Aki Ito and Ethan Brooks. Emily Buso and Ann vander May are our story editors. Francesscality is the head of

Bloomberg Podcasts. We'll see you next week. M