Bloomberg Talks
00:06:44 · Carol Massar, Mark Gurman
[00:06:44] S0: What about Siri, the Siri AI chatbot? Have you played with it? Do you like it? [00:06:49] S1: Yeah. Yeah. Siri AI is fantastic for 90% of use cases. You ask it questions, it uses that Gemini model to get you the answers. You need to get something done on your phone, it can get something done on your phone. But in terms of replicating a real-world assistant, it's not that. It's basically what the original vision of Siri was 15 years ago, but finally executed correctly. That's an amazing thing. It means that the core AI product that Apple has finally works. That means they have an excellent foundation. Now they have to actually build something on top of it. [00:07:20] S0: Services. This has always been an important revenue generator, and it looks like it's slowing. How problematic is that, or what's the question to ask of John Ternus and the C-suite about that? [00:07:34] S1: Well, the question is why, and one of the answers is because Google searches are down because of AI, and a big chunk of the revenue Apple gets from services is a revenue share from Google search done in Safari. And as people move to the Gemini app, as people move towards the ChatGPT app or the Claude app or the Muse app, or even Siri AI to get things done that they normally would do in a search engine, that services revenue is going to come down. What Apple needs to do is figure out a way to make up for that revenue loss by monetizing search on its platforms, or shall I say AI search on its platforms, because they're not doing that.
00:07:34 · Mark Gurman, Caroline Hepker, Carol Massar
[00:07:34] S1: Well, the question is why, and one of the answers is because Google searches are down because of AI, and a big chunk of the revenue Apple gets from services is a revenue share from Google search done in Safari. And as people move to the Gemini app, as people move towards the ChatGPT app or the Claude app or the Muse app, or even Siri AI to get things done that they normally would do in a search engine, that services revenue is going to come down. What Apple needs to do is figure out a way to make up for that revenue loss by monetizing search on its platforms, or shall I say AI search on its platforms, because they're not doing that. [00:08:07] S3: We're speaking with Mark Gurman. He's Bloomberg News Managing Editor for Global Consumer Tech. We're in the midst of Apple's numbers. That call does start in just about 14 minutes. Mark's going to go to that in a few minutes. We do have a few more minutes with Mark. But to catch everybody up, if you are just joining us, the company reported revenue gains of 12% to $ 114. 5 billion. That was a beat on the top line. China sales, though, fell short of analysts' estimates. iPhone revenue climbed 17% to $ 57. 6 billion. The shares in the after hours, they're flat right now. They fell, they moved higher, and now they're flat. [00:08:41] S0: Yeah, stock is really flat. So, Mark, you know, we've always had high expectations for like what's next from Apple. Where do they go next from here?
00:08:41 · Carol Massar, Mark Gurman, Tim Stenovec
[00:08:41] S0: Yeah, stock is really flat. So, Mark, you know, we've always had high expectations for like what's next from Apple. Where do they go next from here? [00:08:51] S1: Well, next year is going to be an extremely strong year in terms of AI wearables. So where they're excelling is AI hardware. Smart glasses are going to be there. The AirPods with cameras, those have often have been off delayed. We're going to see those. The touchscreen MacBook Pro goes on sale Friday. I'm excited for that as lack of revolutionary as it is. The home view goes on sale in a couple of weeks. I'm excited for that. So there's a chock full product pipeline here. The big question is 2028, 2029, 2030 and beyond. Things like robotics, things like augmented reality glasses. Are they going to take another swing at autonomy? Those are the big questions for the company's future and certainly things that you will not hear from John Ternus today. [00:09:30] S0: All right, so we're all in on the elections, as you can imagine. How does that, you know, Tim Cook has been a master, right, in terms of really overseeing things with Washington and just kind of. [00:09:41] S2: With Beijing, too. [00:09:42] S0: Navigating all of it pretty well, to say the least. But how does the midterm outcome, you know, kind of impact this company, if at all?
00:09:42 · Carol Massar, Mark Gurman, Tim Stenovec
[00:09:42] S0: Navigating all of it pretty well, to say the least. But how does the midterm outcome, you know, kind of impact this company, if at all? [00:09:53] S1: Yeah, it's a fascinating question. I've been asked this the last several weeks. I think there's going to be no impact. You know, the big... political thing when it came to Apple, you know, with the Republicans in charge has been tariffs. No matter who wins, I don't see that changing. I don't think there's going to be anything dramatic or even less than dramatic when it comes to whether it's the Democrats or the Republicans in the lead after these midterms. [00:10:16] S0: What's your favorite Apple product right now? [00:10:19] S1: Me? Oh, I'm using the iPhone Duo. [00:10:21] S2: I think it's incredible. [00:10:22] S0: And are you loving it? [00:10:23] S1: And I feel bad for people who want yes, and I feel bad for people who want it and aren't able to get their hands on it because it's a game-changing experience. And I think you really should give it a shot. I mean, I've seen some people buy it and return it. But give it the two weeks, and I think you'll get used to it. The inner screen is simply incredible. It's changed my workflow completely. You can use a lot of what you would use a laptop or an iPad for on this thing. So I encourage anyone who has the means or the desire to give it a shot. [00:10:49] S2: Or the patience.
00:10:49 · Tim Stenovec, Mark Gurman, Caroline Hepker, Carol Massar
[00:10:49] S2: Or the patience. [00:10:51] S1: Or the patience to wait in line for it. People are trying to buy them through the Apple Store app, and the AI bots are taking these things very quickly, 30 seconds, 60 seconds, 15 seconds, and it's hard for consumers to get their hands on it. [00:11:06] S3: We have to wrap with you in 10 seconds, Mark, but when do you think it won't be an issue where somebody can just go and get one if they want one? [00:11:14] S1: February, March. Okay. [00:11:17] S2: Mark your calendar, Carol. Well, just have a little patience. Got to update this iPhone 13 Pro that I have. [00:11:22] S0: Yeah, you do kind of. I would. Mark Gurman, thank you. We know it's busy time for you. We really appreciate it. Mark Gurman, he's Bloomberg News Managing Editor for Global Consumer Tech, joining us out there from the LA Bureau. As we continue to watch Apple, little changed here in the aftermarket. We're just... Not quite. A little bit more than 10 minutes away from the start of the call with analysts and investors. So as we know, guidance for the December quarter. This is going to be important, what we hear. And also what they say about China and also about the services business slowing down. [00:11:53] S3: Yeah, and look for those headlines at about 5.30 Wall Street time. That's when you typically find them from Apple.