Daybreak Holiday: Apple's New CEO, Oracle Earnings, Paramount Deal

Nathan Hager (0:02)

Hello everybody, thank you so much for joining us for this special edition of Bloomberg Daybreak. US markets are closed for the Labor Day holiday. I'm Nathan Hager. Coming up this hour, we'll update you on where a mega media merger stands on the legal front. Bloomberg Intelligence Senior Litigation Analyst Jennifer Rie will join us on Paramount Skydance's $110 billion takeover of Warner Brothers Discovery. Plus, big tech in focus this week. Bloomberg's Brody Ford will join us from San Francisco to get us set for Oracle's earnings on Wednesday. Also Wednesday, Apple holds its biggest product launch of the year, helping to kick off the tenure of Apple's first new CEO in 15 years, John Ternus. For more on this, we are pleased to welcome Bloomberg's top reporter on the Apple and Consumer Tech beat, Mark Gurman is with us from Los Angeles. Thanks so much for being here, Mark. I hear so much about a foldable phone coming, a foldable phone coming in Cupertino this week. Is that all we're expecting? Hello.

Mark Gurman (1:02)

It's not all we're expecting, but that is going to be the centerpiece of Apple's launch on Wednesday.

Samsung, some of the Chinese companies have been offering foldable phones for many years at this point, but now Apple's getting in the game, which is going to make it a lot more mainstream. Their differentiator there is that their version is a bit shorter and wider, which means it has an aspect ratio that is more interesting and is a better viewing experience for video and for book reading and for gaming. And so this should be a little bit of an interesting concept. When closed, it's about the size of a passport, and when opened, it's about the size of a small iPad. So that's going to be pretty interesting, but it's also going to be fairly expensive coming in at over $2,000.

Nathan Hager (1:47)

Wow. So how much are we expecting this to resonate with consumers at a price point like that?

Mark Gurman (1:55)

I don't think the first generation of this product is going to be a mainstream device by any means. I think this is going to be a product bought by early adopters. It's going to be a product bought by people coming over from the Android ecosystem, and it's going to be a product bought by the people at the very high end of the Apple ecosystem, right? People who are going to always buy the top end version of the Apple products, the most expensive Apple products. Now, don't get me wrong. Apple has tried this early adopter product strategy before. Remember the Apple Vision Pro launch two years ago. That was $3,500.

That was very expensive, but also very heavy and very cumbersome. That product really didn't resonate, but I think this foldable will do much better than that.

Nathan Hager (2:38)

How so? Why could this one do better than, as you say, the Vision Pro that kind of went by the wayside, I think?

Mark Gurman (2:45)

Well, believe it or not, foldable phones are more mainstream than headsets, right? Like price aside, a headset is something you got to put on your head.

A headset is something that you got to boot up. Limited content offerings, limited applications, limited use cases, two hours of battery life and, of course, also very heavy. But a phone is a phone, and there's going to be some interesting capabilities there. And also, that's a big price difference to $1,500 in between.

Nathan Hager (3:13)

This is also coming after Apple raised prices on some of its existing lineup, including Macs and iPads. To come out with a new product at an even higher price point like that, what does that do for consumer sentiment potentially?

Mark Gurman (3:27)

Apple rolled out a recent program called Apple Upgrade, where now you could lease your phone, lease your iPad, lease your Mac, lease your watch. And so you're paying a monthly fee that's less than an installment, sort of like leasing a car. And at the end of your lease term, you could sign up for a new phone or you can pay off the balance and keep the current phone.

But the reality is, is that most people don't pay full prices for their phones, right? A lot of people are using training programs, financing, installments. And so, yes, there'll be the sticker shock of $2,000 plus. But when reality comes down to it, you're not paying that. You're paying something month to month on your phone bill, most likely.

Nathan Hager (4:06)

Is that expected to be a significant revenue driver for Apple going forward, the upgrade strategy?

Mark Gurman (4:13)