emily: i am emily chang and welcome to a special edition of "bloomberg technology." live from outside of the steve jobs theater in california. in the next hour, apple unveiled a faster iphone x next, a bigger cheapter --a cheaper xr. will this kickstart more growth for the $1 trillion tech giant? some investors are not

convinced. apple scores fda approval for its watch with new health tracking features and competitors flat lined. another day, high-ranking executive departure in tesla. details ahead. first, it has been a big day at the steve jobs theater in california with apple's latest product announcement. there were few surprises. they are tripling down on its upgrade to the iphone x. the new models are named the xs, xr and x max. mark gurman was inside of the theater and revealed many of the features before apple did. you were spot on and what were your biggest takeaways? >> and expansion of the iphone x with the three new phones. they start with a new model and

expanded to other phones. they are very android like this year. it is a little confusing but they will catch on eventually. emily: not a huge design change. what are the upgrades? >> if we step back and look at the history of the iphone, every year they have upgraded it. this must be the most minimal upgrade from one model to another. the differences between iphone x and iphone x s are the slimmest i have seen. the case is the same, they added a faster processor and slight tweaks to the camera. emily: you got your hands on to look and i did as well. one of the things that struck me is that the cheapest model is not that much different to the middle model. why would consumers by the thousand dollar phone when they can get it for 750? mark: that will be the key for

apple. it is more strategy than features. they are bringing the best of the iphone x to the cheaper iphone 8 design this year. there is not a lot of differences. at $750, $250 less than the iphone x, this will be a good seller. emily: i like a big screen. the big one felt light and is at $1100. will people pay it? mark: i think so. people had been paying for the smaller iphone x last year at $100 more. the early adopters are looking toward the iphone x max. emily: did anything surprise you today? mark: a few surprises was also the lack of surprise. i thought they would be more

hardware tweaks and real differentiators last year like anemojis were a year ago and portrait mode two years ago. there was not much apple had up its sleeve. emily: people are really excited about the watch upgrade and the fda is tracking approval. the first model of the watch did not deliver on what people thought this was supposed to be. mark: this is apple bragging now. they are so far ahead of the competition that it is laughable how behind the rest of the industry is. even investors know how far behind others are. emily: what was missing from today? mark: one, air pods. those things are so popular going with the watch and phone. they should have brought out the new ones they are working on. the wireless charger which can charge the air pods would have been a perfect complement for today. they have not discussed it since one year today. the biggest ipad, the biggest

upgrade since the ipad pro came out this year. those are coming to. there is a lot apple still has to reveal. emily: any mention of a trade war looming over this? mark: no mention from apple today. they got rid of that last week with their comments. emily: $200 billion in products potentially getting new tariffs that will impact the watch and air pods, but we are really waiting for if the president levies another round of tariffs on the additional $267 billion worth of goods. could that impact the iphone? mark: i think the prices of the phone are so high, over $1000, i sought on the store today, it is almost $1500 at the highest capacity. maybe this hurt them a little bit, but it does not sound like there will be phone tariffs anytime. emily: we will continue to watch the tweets.

you went inside and got a hands-on look. i want to take a look at mark gurman's review of the newest iphones now. mark: we are here the steve jobs theater and this is the iphone x s. it looks just like an iphone x. there is an upgrade on the hardware and software side. it has a faster processor. it starts at the same price as some of the new wallpapers. you can press down on it. overall, it is just like an iphone x. same general design, features, stainless steel casing. the big difference is that there is a bigger version now with the xs max. the reason they call it the max is that it is bigger than the plus screen size as well. this is the xs max, the bigger

xs.than the iphone x and at 6.5 inches, the overall 8+, is the same as the 7 or but you have an inch more diagonally. this is $1050. you have this white, silver color as well as the new gold finish and a silver one. that is the iphone xs. it will go on sale september 21st.

this is the lower-cost iphone xr. it is $750 so it is sandwiched in between on this pricing scale. 6.1 inch screen. this is an ltd screen. it is a little bit thicker than those devices having the metal edges instead of the stainless steel. this is a way for apple to bring in this because of the price. it sort of looks like an iphone 8 from the back with the glass back and the camera. and the led flash below. on the front, it looks like an iphone x because of the edge to edge screen. this is mark gurman for bloomberg news. emily: i want to bring in a chief analyst. you were also inside today. we saw apple trickling down on the family of iphones and mark

gurman played down the newness of these devices. bob: fundamentally, it was the things they expected. people expected them and the market once larger screen sizes and smaller screen sizes. it is about segmentation at this point. the market is saturated and people are now looking for the special niches that they will want to fulfill. apple did that in a couple of interesting ways. the screen sizes one, but don't forget or the china and asia markets, dual sim support is a big deal. emily: let's talk about that. this is an addition of an electronic sin card meaning you do not have to go through hassle to change carriers. why could this be so transformative? bob: it is going to be much more transformative in other parts of the world rather than the u.s.. it is easier to change carriers but you still have to make the call and do the changes.

there is hassle involved. in asia and other markets, people have a work line, and a personal line. that is really important as well. emily: talk about the apple watch. a lot of excitement about the watch. the fda approval, health tracking features, heart monitoring features on your wrist. how significant are these upgrades? bob: i think they are really significant. you mentioned earlier and i agree that we are finally seeing the vision of the apple watch. people originally expected this. it is a health device and a wearable computer. it is much more than a smart watch. the original vision is what people had and they are just now getting to that vision. will it dramatically increase the sales of the device? we will see. it can be thought about differently because it is a health tracking device and not just a fitness device or smart watch. it does things automatically.

to me, even though mark revealed all of the specs, the one thing he was not necessarily able to do was reveal the intelligence of these devices. on the watch, you have the automatic fall recognition and making a phone call. as well as on the phone, the automatic vision of high-resolution images and the ability to do it dynamically with the neural net engine. it gave a little bit of a twist and a look forward to what we can expect to see from these companies. emily: my kids would be making a lot of phone calls. when face id came out, it did not work well. people had to get used to it. will that be the same case with the watch in these new features? will they work as well as advertised? bob: the devil is in the details so we will see. the idea is interesting. the mainstream people who have not gone to an iphone x, getting used to this white and black

-- swipe and the lack of the home button will take people getting used to. emily: the strategy is so different than it was eight or 10 years ago where it was all about one device, one phone. now, you have all of these niches. are there too many? i asked mark, are people going to buy the middle phone? bob: it is a great question. if you look at how people use your phone, i can look at my family and friends, people have different preferences. there are a lot of regional preferences. apple recognizes we cannot do the one-size-fits-all phenomenon. we have to segment the market, create different products, for the different segments. that is the only way they can maintain the position they are in. the overall market is not growing. now it is about maintaining share. emily: you have the iphone 7

still available in the $400 range, but competition is only getting more fierce. you have a raft of competitors in china and they are a lot cheaper. how well poised is apple to tackle some of these growing and developing markets? will it be about customers upgrading or lowering new users? bob: i think we will see a little bit of both. china has a cute of very strong apple followers. they love big phones. the iphone x s max will be a huge hit. places like india, even 449 is great. people sell phones there for under $100 or maybe $150. they are well-equipped and that will be a challenge. i think that is the world we live in and apple knows that and will have to continue that segmentation. remember, not everything is geared for everybody and they

will target certain products to certain markets and use other products in other markets. emily: we have a huge family of devices now. bob, always great to have you on the show. thank you for breaking it down. next, tesla is in the headlines. another high-ranking executive said to be leaving the company. if you like bloomberg news, you can check us out on the radio, listen to us on the bloomberg app on bloomberg.com, and, in the u.s., sirius xm. this is bloomberg. ♪ emily: welcome back to a

special edition of "bloomberg technology" live drum apple headquarters in california. we turn to another big story. yet another high-ranking high executive from tesla is leaving.

the vice president of worldwide finance and operations is parting ways with tesla. we are also getting news of longer delivery response times for cars. this was posted on twitter. do a large increase in vehicle we have ivan with us and max chafkin in new york. max, translate the longer response time situation and how serious it is. max: it is hard to know exactly what he is talking about. he is talking about people requesting service on their cars. what is happening with tesla as we have been talking about four -- for months, is in the middle of a sprint to get as many cars delivered to customers as possible. it feels like they are having some sort of normal customer service snafu.

until we learn more, i would not read into it. i definitely want to look at what customers are saying. emily: perhaps, ivan, more serious is this executive turnover now specifically in the finest apartment. we had the chief accounting officer leave as well as other finance executives now yet another. how concerning is it that tesla cannot keep people in the very important positions as they work toward profitability? ivan: it is never good to have turnover, especially with executives. there is a long line of people that want to work for tesla. they will not have a hard time replacing these people. the opportunity to get in on what is the ground floor of a company making huge changes to

the automobile industry, and that is very appealing to people in silicon valley. a lot of companies have high turnover. people in silicon valley tend to look for the next big opportunity. the turnover is never good, but there is opportunity to fill the positions easily. emily: this is extremely high turnover. we are focused on it of course. max, we have an entire bloomberg team trying to talk to former and current tesla employees. what are employees saying? max: what is happening now and happening for the past few weeks i think would be extremely demotivating to many tesla employees. you have people basically working around the clock including elon musk. while that is going on, you have this whole drama that feels like something close to self sabotage. while i think ivan's right, sure, they will hire people, and this is a company with a lot of growth potential ahead of it. there is a problem that when you have a lot of turnover, it saps

productivity. when you have these distractions, that also saps productivity. this is a company that cannot afford that now. they are trying to work as fast as they can to get the cars out of the door. emily: in the meantime, we heard gwen shotwell comment on what she believes elon to be as capable and lucid as he has ever been. as someone who is analyzing this company, of all the news that has made headlines, what matters in your evaluation of the capability of elon musk and the potential of tesla? ivan: the recent events surrounding elon have been pretty shocking, however, the focus is still on the car. i do not believe anybody in the

tesla showroom, considering purchasing a tesla is thinking about what elon is doing. they are thinking about if they like the car and it has a lot of appeal. the interest in the car is high. they have a long pipeline of people that have the interest in model threes. i do not think it affects the sale of the vehicles. emily: max, is that the case or are there customers out there questioning is my car safe or am i going to be able to buy another one of these in three years? max: i think the legacy tesla customer who bought the model s, those people are not turned off by elon musk going on a podcast and using some trucks. as the company tries to make a "mass-market car" and electric toyota corolla or whatever,

toyota corolla buyers don't care about cool. they want something safe and reliable. there is long-term risk if the company is not able to get its image under control. the other thing is, this is a situation where you have a lot of little cuts. if they get things turned around and have a good quarter, if elon keeps things buttoned up on twitter. i think this kind of dies down. if there is another problem, say an accident at the factory, that could create a narrative that would be bad for tesla. emily: in the meantime, ivan, tesla is extending the life of some car batteries as hurricane florence encroaches on the east coast. is it good pr? is it significant? if it is, why can they not to do it for everyone?

ivan: the way they keep upgrading the versatility is upgrading and downloading software from the satellite. once they have the capability of doing this, they will. the software can control how much electricity is being drawn up by the motor. it is a way of extending that part of it. they can extend the battery life. this process may be a recent breakthrough that they are starting to put out as an upgrade cycle. they keep upgrading the cars through upgrading the software. emily: max, walk us through the milestones that we are going to be charging through the rest of the year. max: we will have another quarter coming up and we will see whether this company is on pace in terms of production and

profit and losses. they have been doing all of these aggressive maneuvers to cut costs. we want to look at that. the other thing coming up is the launch of the model y. when tesla introduced the model three, there was huge interest and orders were through the roof. e line will get out there early next year and unveil the new electric suv, a sort of compact suv and we will see. our customers going to reserve them in the same numbers as the model three? if they do, that is a good time. -- good sign. emily: max and ivan, thank you both. more of the special edition of "bloomberg technology" from apple headquarters is up next. this is bloomberg. ♪ emily: the european parliament

has dealt a blow to google and facebook. lawmakers voted to back copyright laws that would help copyright holders to seek payment for their work online. more of the special edition of "bloomberg technology", coming up. ♪

emily: this is "bloomberg technology." i'm emily chang. back to our apple coverage today, revealing new phones and changes to the apple watch. the company delivered what was expected, it's upgrade to the iphone x with the xs, xs max, xr. audiences were surprised by the new apple watch, here to tell us more about the watch and all creative strategy, caroline. we were talking about the watch. you think it is a big deal and could bring in new customers and skeptics.

>> absolutely. the redesign and the face is different because of the complication, it can be a richer experience. it is more powerful. it is simple. it might get some people excited. it is a smart idea to keep the third generation in the portfolio for the people that tried it. or that people who have been waiting, kind of a dipped her toe when the water move. and the health side is important. how long before we can actually get insurance to pay for it? emily: i know a lot of people who got the first generation and tossed it aside. they felt they did not need it. can those people be convinced to have a different experience?

>> i've only said you need to put some time in the watch to understand what it can do for you. emily: it does take an investment of time and energy. which not everyone has. >> we are at a time where people are trying to disconnect from the phone. the watch helps you because if you are a control freak, like i am, i want to know what is going on. i do not want to get sucked into my phone. 40 minutes later you're still looking at your screen. watch helps you with that. emily: how to evaluate the phones apple has now? the apple 7, up to the xs max. >> i think it is a strong lineup for apple. of course different countries, different price points, $450 is not cheap in india.

i think it is the first time you have that breadth for the basic models and a little bit of everything from a form factor as well. last year when the 10 came out, people appreciated more screen. if you were on the plus model, it did feel strange. you miss to the larger form factor which is what the max will adjust. then you have the r, a new attempt apple is taking to the more affordable price point. i think it is smart. emily: will this cannibalize sales? >> apple does not really mine. i think it is differentiated from the standpoint of feature set and the colors.

so that consumers will go to one or the other. what is important is it does not matter which one of the x you buy, apple is selling you the next generation experience. emily: what are the risks for apple? what are roadblocks? we did not see shares react well. they don't usually on product announcement days. the company is that a trillion dollars. is up the only way to go? could there be another direction? >> there's a lot of attention on the service side. this is what else they have done with the different models, the larger screen, the tv service, maybe the other part is china and the economic and political situation with china. you saw today how much china means to apple. the fact they came out with the

model that has two sims. emily: if the tariffs do materialize, there could be an additional tariff. how much is that going to hurt apple? >> more than it would samsung, which is the other big name for smartphones because they don't have to get caught into this u.s. versus china battle. there are other ways. not always apple will have to pass on to the final consumer. it is not as simple as build it in america. the cost will be higher. emily: carolina, great to have you back. thank you for your perspective. investors unconvinced about the new suite. shares finished 1.24% and were

mostly down throughout the day. shannon, why do you think shares reacted this way? >> the stock has been strong through earnings. i think a lot of what they announced was in line with expectations. i think there will be a digesting of what it means from what they announced. based on estimates, there's probably a 10% potential year over year which is significant. whereas there was questions about their ability to do it last year, at this point, they have experience to know what the market will absorb. i feel more confident with the pricing today. emily: the average selling price

of the iphone, $724. it could go up to $793. we spoke to pierre, his view is that the iphone x has done so well so far that there's not a lot of room for upgrades. it means next year will be a disappointment. what do you think about that? >> one of the things that is interesting is they have grown double digits on an annual basis. they have a large installed base to target. i think $749 will be attractive. based on our research with people, china likes the new big.west and greatest and

there is a group of people who are on the every year cycle that will buy the latest one. i'm not thinking they have exhausted the potential pool. clearly it surprised them and the street in terms of how the iphone x did not fall off. that gives them support that they can go to almost $1100 for the high-end phone. i think they will get it. will it be a huge percentage? not necessarily. the combination of the oled devices will sell well. emily: talk about what you see happening in other international markets. china sells a lot of iphones. it is complicated. apple has been struggling in india where the price is still very high.

you have these other developing markets. >> one of the things apple did last year and they continue to do is they are keeping a wide product set. they will have the 6s under $400, which is attractive. maybe not india. in china, other areas. it is a good price point. obviously all the way up to the high-end. europe is price sensitive. japan tends to like the smaller form factor. that would be the iphone xs or smaller phone. it has become somewhat bifurcated for apple. again, the important thing, they have all of these products to target the various price points they need to. when you look at the competition, where apple is, and

the recurring nature of the hardware purchases they have, you tend to stay. i think it bodes well for iphone sales in 2019, which would start right now. emily: all right, shannon cross with us on the phone. thank you for calling in. apple's new virtual sim card. that is next. later in the show, we will wrap up apple's big day. that is coming up. this is bloomberg. ♪ emily: welcome back to a

special edition of "bloomberg technology" from cupertino. we are looking at apple day

product launch. one feature for the iphone x, dual sim cards. that means you don't have to physically insert a chip into the phone. you have to change the setting to change carriers. this feature has one fan already, john legere tweeted i love apple is offering dual esims. everyone wants to switch to t-mobile. joining me now is alastair barr. perhaps a little bit of sarcasm. what will this mean for carriers like t-mobile? >> i think john hit it on the head. it is going to be bad news for u.s. carriers. it is going to make it easier to switch between carriers. verizon and at&t have been

fighting this for a couple of years. about a year ago, apple wrote some letters complaining about verizon and at&t digging their heels in. they really hate this. it is bad news for them. emily: which is why there was a suspicion this has coming. apple says it has partnerships with carriers around the world. what does this mean if you're not in the united states? >> in the u.s., there looks to be some specific limitations. if you are in china, the esim technology is not there at all. apple had to change the iphone xs for china and is going to

have a slot for two physical cards. that is important because there's going to be fewer benefits from that. apple has not said why that is the case. last year the apple watch came out in china with esim technology and the national carrier switched it off after about three days in china. emily: does this mean if you are a t-mobile user or verizon user, you might not say so? i am a samsung or iphone user? >> certainly, some of the strategy that big u.s. technology companies have had is taking away everyone else's brand and overlaying their brand on top. certain carriers like t-mobile

like it because they are used to competing on price. i think there is going to be more of that in the u.s. emily: alastair barr, thanks for that. coming up one last look at apple's new line of products and the apple of the future. that is next. this is bloomberg. ♪ emily: the longtime executive

producer of "60 minutes" is out. they say he violated company policy.

it is not directly related to allegations of sexual misconduct, which surfaced in the press and are being investigated independently. we are wrapping up our look at apple's product launch in cupertino. while there were a few surprises, apple tripling down on the iphone, including its first 6.5 inch screen smartphone. apple is raising prices rather than focusing on luring in new users. one place where apple might get new users is the apple watch as it looks to turn it into a health care device. it got new health sensors and an app to monitor your heart. what can we make of apple's big day? i'm so glad you're here with us. you have been to so many of these events. how do you think about how these events have evolved from the days of steve jobs, when he was large and in charge?

>> interesting times for the company. you see more influencers, video, videographers. emily: actors and actresses. >> the company is a much more mainstream brand. definitely signs of a trillion dollar company. i think what has changed is the ruthless editing up the product is gone. the collective marketing is gone. we see a lot of gloss. we do not see the simplicity of marketing and honest message. emily: is that not a good thing? or is it? you are reaching a more diverse set of customers? >> i don't know. i think the iphone xs max, steve

would not have allowed that. they have to come up with marketing their product in a way that appeals to everybody. not just to a few people. signs of a trillion dollar company. emily: tim cook talked about the scale of ios and of apple today. take a listen to this video. >> ios is not just the most advanced mobile operating system. it is the most personal. we are about to hit a major milestone. we are about to show our two billionth ios device. emily: two billion, he says. how much room is there for growth? >> they have to come up with new

products. as we have seen with the watch, they come up with a product that takes a little bit longer to become billion-dollar businesses. they have challenges to find new niches to grow. i think they can. you have seen that with the watch as well. they will keep trying these ideas. the core of the company is very strong. it is focused on hardware and innovation. that has not changed, and probably gotten better since steve's day. they have invested other technologies. that is the ultimate gift of steve jobs. that is the last thing he did for this company, to put them on the safe track. emily: we saw them showcase new apps, new ar features.

that could be perhaps the next big platform for apple. does that make for a different experience? or is it just an improvement? >> this is a great next step. my main takeaway from the event, this company is struggling to market itself properly. you look at the watch, they are pushing the esg, they are not for young people. the ads are all about young people running and biking. wait, who is in charge here? that is an old people's feature. i have a heart disease. i am older. that makes sense for me. how does it make sense for a 25-year-old? that is where the marketing challenges are showing up. if we focus on the problem for apple, how do you tell your story going forward?

we have seen they can build great products. how will they tell the story now that you can't tell the difference between x and xs? what do i care? why should my mom care? they need to make people care more. it is a marketing challenge for a company which has been great about marketing. emily: and spend so much time thinking about how they tell the story. it is tim cook's seventh year at the helm of apple. what is the next seven years look like? >> if tim cook did what he has been doing, that is pretty good. i don't think we should ask for more from a ceo. he is a decent human being. he looks after his people and

the legacy of the company. he has done right by its customers, which is you and i, by not selling our data. he understands it at a humanistic level. this company has a moral obligation. he is a great ceo. emily: what about the company? >> if i was that smart about forecasting the future, i would be running one. emily: do you think the next big innovation, is it health features, ar? >> this is the problem. the big innovation, the a12 bionic chip, that is the best chip right now. they built a beautiful internal device. how do you tell that story? they are pushing the envelope.

look what they have done with the hardware, the watch, inside, it is beautiful. how do you tell this to people? how do you make people care for it? emily: just watch instagram. a new family of iphones, apple watches. always good to have your thoughtful views on our show. thank you. that does it for this special edition of "bloomberg technology" from cupertino. tomorrow, we have a big one. kevin johnson will be speaking in san francisco. i will be sitting down with him. do not miss that conversation. this is bloomberg. ♪

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