>> i am selina wang in for emily chang. this is "bloomberg technology." in the next hour, apple misses. the company underwhelms with his forecast for holiday sales. has their pricier iphones failed to spark excitement? plus, google walk out. employies of the giant have protests against sexual misconduct.

we will discuss google's reaction to its reports of coverups of multiple claims of executives. and spotify reveals plans to boost spending to drive growth. wall street is dancing to a different beat. shares slump surrounding the company's revenue forecast. first, to the top story. apple shares are falling after reporting an underwhelming forecast for the holiday period. earnings suggest a weaker than xpected demand for their price year new iphones. in terms of the fourth quarter, sales rose to $62.9 billion in came at $2.91 per share. joining us now in boston is our nalyst and in -- and our correspondent in san francisco. it seems to be a mixed bag. we had the current quarter beat on the top and bottom, but the forecast was underwhelming. what is your take?

>> i think we had a great hird-quarter in terms of the fourth fiscal, but we are a little built disappointed on the guidance here. it looks to be perhaps indicating the emerging market or china slowdowns. frankly, it is flat considering the product mix they have, it is a flat forecast with zero growth in the iphone. elina: a big change of focus on the number of iphones but the average selling price -- iphone sold, but the average selling price was positive. how much further can they juice the price on the same consumers? >> there have not seem to be that many limits. ? we look at apple's opportunities, in terms of revenue growth, they find more customers, and most of the growth in the

smartphone market is coming out of markets like indonesia, nigeria, and india. the percentage of the population that can afford one of the devices isn't high. you could increase revenue or you can sell more products. while the wearables and other devices are doing well, there is no other it product like a smartphone the consumers have to have. selina: horace, these numbers only show about two weeks of the nearest iphone sales. what do we know about how those have performed so far? horace: the signals are good it is -- good as far as what we are seeing, but the problem is we do not know if we will see some kind of structural issue n china. as far as the pricing is concerned, yes, it has gone up, but there is quite a bit of mix out there. the iphone -- the newest 10r has not really shown us a lot of data.

that will be the driver and it is a little puzzle. why we are is not seeing nthusiasm from guidance. selina: the hope was apple might lift the tech sector. the hope was that it might lift the tech sector. what do you think now? we see stocks down and investors seem underwhelmed. will this change later in the day? horace: it is hard to say on the whole market. through looking at apple alone, we are seeing a little less enthusiasm. we just had new products two days ago, meat and potatoes products, the middle of the market. ew air is a little pricier and it is getting a nice boost in functionality, and not to see that reflected in guidance is a

little disappointing. selina: tim cook gave an interview earlier with reuters citing weakness in emerging markets. in china, the trade tensions could be leading to a dampening consumer sentiment. are we seeing that at all in the numbers? is there a concern about this? julie: i think when you look at apple and their target audience which tends to be more fluid, even in markets like china and india, i think even over the past 10-15 years, luxury goods have done well. i wouldn't expect to see as much of an impact there because when you are targeting an audience as fluid as they are, you don't expect as much. selina: cook just now on the call citing how strong the quarter was. overall the quarter had the biggest quarterly growth spurt since 2018. 10th anniversary of the app score. i want to talk about the 10r.

there seems to be a lot of investor sentiment around this. why all of the excitement when it could be potentially cannibalizing its products? horace: it is still a $750 minimum price. it is a significant rise over the $600 $700 price in the past for the leading products. we are seeing an uplift in the overall asp. the product has also not ecessarily cannibalized. it is very interestingly positioned as a middle product in terms of screen size, which is what most people respond to when they look at initial impression. it is a solid product. i'm saying there is a little disappointment, but let's not forget we are talking about projecting 78 million units sold at an average of $800. this will still be a great quarter, it is just not the growth that we saw in the top line.

of 20% plus. we see a flat top line going forward. i'm actually penciling in a little bit of growth on the ipad and the mac as well, low single digits. the big growth services and other in the 30-20% range doing well and are continuing to do well, but those are based off an installed base which is based off of 1.3 billion devices out there. that is where the services growth is coming from. the question is whether the 10r would be a home run or not. sean: what is your take on that? ok?he 10r ll people upgrade for this cheaper-ish phone? julie: a lot of consumers still may have a six or seven or eight and have been waiting to upgrade to something more

affordable to them. i think that is some of the target market they see chasing. selina: tim cook talking about the new iphones being the most advanced ever. they have seven nanometer chips and are ahead of technology. they are quoting reviews on just how good some folks think they are. you were talking about services earlier and they came in under expectations. what is your take on that? is service not growing as much as expected? horace: it is doing pretty well, actually. my expectations were in line with what we saw and we saw about 10 billion quarter. they are ahead of schedule in terms of hitting their long-term targets at $50 billion per year run rate. that is going to be reached probably next year ahead of schedule. that is not a bad story at all. there were some one-off revenues that were not present this year. but overall, i don't think there is anything i can see negative about services right now. i think forecast now i am

looking at about 18% growth. a little bit less than we saw in. past. sean: all right, thank you for joining us. he will be sticking with us throughout the hour and we talk about apple earnings. coming up, google has come under fire for multiple executive misconduct claims. now employees are protest thing. their list of demands up next. if you look bloomberg news, checking us out on the radio, the bloomberg app and bloomberg.com. this is bloomberg. ♪

selina: google employees around the world left their offices in

global protest against the company's handling of sexual misconduct. this follows a scathing report detailing the company's cover up of multiple sexual misconduct claims against xecutives. the report claimed that it gave $90 million package. over 47 offices worldwide participated in the walkout demanding several key changes including transparency and an end to forced arbitration. well, the ceo just respond at the "new york times" deal book event. >> it has obviously been a difficult time with the frustration within the company. we all feel it. i feel it too. google set a very high bar and we clearly did not live up to our expectations which is why

we thought it was important to express our support for the employees today. selina: here to discuss is josh idols and -- idolson. and pipeline equity c.e.o. sundar seems supportive of the walkout and he is expressing sincere remorse. how would you judge the overall response of google as a corporation to this? >> i think it's great he is supportive of the walkout today and what will be important is the accountability and transparency going forward. so the response to the five requests that the organizers actually requested as part of their demonstration today. selina: josh, one of the top demand of the protesters is to forced arbitration allowing companies to hide the wrongdoing and silence the central -- sexual harassment. the tech giants have been called to end this so do you think anything could change this time?

>> well, certainly we are seeing a wave of attention on forced ash stration. this is an issue that the national labor relations board tried to address and got beaten down by the supreme court. the issue, according to critics, is that when people as a condition of employment are forced to give up the chance to bring their claims in open court, it hurts their ability to get a fair hearing and also hurts their ability to bring public scrutiny on these shoes. it is something we have seen the attorney generals of all states speaks up about together, something that rarely happens, something the media pays attention to. yes, the companies now, though they have the discretion to include these aagreements are facing more public push-back when they choose to, particularly as it relates to harassment and discrimination issues. >> it is really amaze to go see the images and video come out of the crowds around the world. they do have a very distinct outline of what they are asking for. what do you make of their actual demands and the

realisticness of the companies actually agreeing to this? >> it is realistic. the decision is not whether or not you can implement this, it is whether or not you choose to. as josh stated, earlier this first time in first time in 10 years that all 50 states attorneys general came together and asked congress to remove sexual harassment from binding arbitration agreements. he r- we tpwheft that that does ban people from effectively having a pace. we know that equitable pay and opportunity is possible. that is is what pipelines does. they can actually meet those edmonds. >> and tech companies like to promote themselves and ethical and socially progressive. do you think other companies

will follow suit? >> i think we have seen already when one company moves, there is pressure on others to. we say this dynamic with facebook and google on the question of protecting employees from retaliation in terms of may 1st protests. they are dealing with a wave of vocal and activist employees, while they have virilityly all non-union engineers. we have seen workers banding together for the kind of activisms the labor lawyers are supposed to protect. they have got attention from other employees and from the broader public to what they are doing and how the companies respond. >> we did see google decide not to renew a contract with the pentagon based on the employee protests. i want to get to what your company does, which is use a.i. to prove he could wilt in the

work place. have you spoken with google about using your technology? if not, what should they be doing? >> not yet, we haven't spoken to them. what pipeline does is provide a clear path and understanding of how it actually gets to equity. if you think about it, every time you make a pay decision, a hiring decision, a promotion decision, you actually have the opportunity to either move toward equity or not. in the second request that the google organizers demanded of the company was not only pay equity, it was actually opportunity equity. we know that pay is actually the sim ton. the disease is truly opportunity and how we ensure that every time you are making a promotion decision or a performance decision, you are actually making sure that it is equitable. >> josh and katica, thank you for joining. >> thaupping. >> sticking with the work place and techs, amazon officially

raised the minimum wage for u.s. employees to $15 og turris. while the company is touting the pay raise across all employees and hourly positions, it turns out not everyone is everyone. according to bloomberg, it does not apply to amazon flex workers who deliver packages using their own cars because they are contractors. the company advertises an hourly rate of $18 to $20 for hese, it is close to $5 to $111. amazon had agreed to raise the minimum wage across the board. how are they justifying the discrepancy with the flex workers? >> let me describe to you what the flex work force does and who they are. it is an independent contractor program within amazon, and it works a loe like uber and

others. people use their own cars to drive, and they are promised about $18 to $20 an hour. what we found, using a report from the research fireman, bernstein, is that people are taking home closer to $5 an hour to $11 and hour. an hour after driving their own cars after paying tolls and parking. >> that is a huge difference. how did amazon respond to in? >> they were pretty unhappy with our reporting. but in all seriousness, i think they felt that the report we used was unfair. the report that we used said that drivers actually ended up going about an hour and a half longer than what amazon promised them in these blocks. so most blocks are about four hours. this report from bernstein said drivers were actually working about 5 1/2 hours because they were returning undeliverable

packages to amazon warehouses and not getting paid for that work. so they did dispute the report, and we made that clear in our article. what we found in talking to a lot of drivers, the report is backed up from the fact that most drivers after they did their expenses found they were mowing closer to $5.50 or $6 an hour. >> it seems like amazon's move raising the wage to $15 was caving to playing pressure, but also dealing with a tighter labor market. they don't want to hurt the reputation. what do you think is the likelihood they will actually raise the wages for flex worker's well? >> they could end up raising them because it is competitive to get good workers. i could see them doing that, or chipping in on some of the tolzien or expenses that come up when you are delivering packages, especially across state lines or to areas that don't have parking. so i think they may consider or

reconsider their model. the bernstein report we used said this is not a sustainable moderate goal amazon because people will eventually catch on. the drivers will catch on and realize they are only making $5 an hour. >> right. your reporting put in great detail all the burdens they have to take on as a result of this. do you think fewer workers will join the xander flex platform? >> it is unclear. we did speak with some psychologists and an economist. what i found so fascinating in doing this reporting is that people don't think about expenses when they take on a gig economy job. it is hard wired in our brains that we think about the reward, what is going into our bank account, and we don't want to assess the actual expense that is we have to account for come tax time. it is possible they could continue to survive on this model hoping that people don't

realize how much they actually have to spend to make these delivers. >> great reporting as always. that is olivia. thank you for joining. the apple analyst call is still under way. they just began working us through the numbers. tim cook just ra wrapped up, and he heilman the the strong growth in apple pay and transactions, and the apple watch as well. he said he couldn't be more bull bullish about apple's future. a new story coming to thailand. half of a apple stores are utes the yuss us. here is cook speaking about the quarter. >> this year we shipped our two billionth i.o.s. device, celebrated the 10th anniversary of the app score and achieved the strongest earnings in apple history. in fiscal year 2018 our revenue grew by $34.6 billion. that is the equivalent of a fortune 100 company in a single

year. and we are capping all that off with our best september quarter ever. ♪

>> apple's earnings call is still under way. the c.f.o. says apple now has more than 330 million paid subscriptions as part of its services business. some headlines coming in from paypal co-founder peter teal. he is speaking at the "new york times" deal book conference in new york. he said he would still support president trump if given the chance again and that the president's tax reform was a major achievement. facebook board members spoke at the 2016 national convention in support of trump and as a member of trump's transition team. a group of tesla share holders wants the company's board to go beyond an overhaul board ordered by the s.e.c. they want tesla to replace elom

musk for three years. they say they should permanently separate the chairman and c. e.o. positions and set time lines for board members to leave. >> and they will stop e-mailing stores to others to separate them from the hard hitting coverage of president trump. since entering the white house, the president has sought to plur the lines between the amazon and the post. daily e-mail will be discontinued from november 5th. still' head, europe wants in on the clouded cloud face. how s.a.p. is taking on u.s. excess tors like sales course and oracle. up next, this is bloomberg.

♪

selina: this is "bloomberg technology." i'm selina wang in san francisco in for emily chang. now back at the our top story. apple shares are on the decline. the investor shares are doing nothing to soothe investor sentiment. the stock is now down almost 5% in post mark trading. investors are concerned about apple's numbers, suggesting weaker than expected demand for the company's pricier new options. the c.f.o. is currently speaking on the call and saying apple will stop providing unit numbers for the iphone, ipad, and mac. investors will not like this. let's bring in our panel with tom giles and julie ask from forrester.

tom, does this come as a surprise? we knew the average selling price would be more valuable to investors than the actual units sold. tom: we know investors pay close attention to the average sale price. they want to know, are they buying the higher end models? asp's came in as much higher han analysts were expecting. that is a good sign. you cannot completely dismiss unit sales for the past quarter, which were like the revenue number for the coming quarters. the forecast also meets -- also missed expectations. that has really been weighing on the stock in after-hours trading. selina: i want to touch on the after-hours trading, which includes the apple watch and air pods. do you think moving to the future this could be a more valuable component of the overall revenue mix? >> i think there are two things

in filet here. one with i phone being such a dominant element of their revenue, nothing is going to replace the smart phone. there is no other "it" device. the better they do it, the watch and so forth, the better their services business will do, because it will become stickier. if i can play apple music on the four, five, six, 10 apple devices i own, it is a much more compelling bundled than in one device. selina: cook has said, unit sales do not represent a clear indication of performance of the company and are less relevant. factoring in to the forecast. is he talking about china? tom: didn't specify. tim cook talked to reuters. there. was discussion about emerging-market weakness also talked about foreign exchange, timing of the device, and concerns about whether or not they will be able to actually meet demand. there is always that perennial question about production. now the backdrop of all of this is the brewing trade war between the u.s. and china.

apple have talked about some of their devices, some of their smaller products being affected and there is this general question over the economy about whether or not rising interest rates, trade war with china, are going to dampen consumer sentiment? heading into the holiday quarter. amazon had a forecast for the holiday quarter that came in lighter than expected. this is a big question about whether global economic issues are weighing on consumer sentiment. selina: the bank stocks minus apple have been punished a lot. they have been pretty resilient what is interesting they have such vulnerability to what is going on in china. how are investors factoring in this china headwind? how long can they stay out of this trade tussle? tom: that is a great question. it is one of many factors that are affecting the overall technology industry. as we've talked about on the show many times, october was a ery difficult month for this

industry overall, and some of the tech stocks have been following even before october got under way. a really difficult week. a lot of questions about this big data center buildout. companies have been investing in data centers, snapping up servers, snapping up the chips. that is something that is weighing on one part of the technology industry but, the consumer side of things, apple is a huge bellwether, given its ole in selling iphones and other devices -- they are really emphasizing sales and services over selling prices. selina: cook answered saying that turkey, india and brazil and russia, he said apple's business in india was flat. how are they doing in emerging markets, when you look at apple versus competitors? >> i think, overall they do well. apple is not in this to be the largest volume player. they are in this to be the most profitable player. those markets are always a bit

challenging. some of these economies like india and so forth, are -- the middle and upper class are compared with the market in the u.s. there's still going to be a little bit softer. they are big markets. selina: tom giles, thanks for joining us. julie ask will stick with us throughout the hour. apple down 7%, by the way. and tech giants like amazon and microsoft are jostling for market share in the cloud. europe's largest tech company is now looking for a piece of the action. sap is known for his enterprise software for managing business and customer relations and now it is putting its strategic for the cloud. it saw new bookings rise 37%. it says it now generates more revenue from that business. than from on-premise products. it hopes to take on salesforce and oracle, raising its substantial revenue forecast for the current quarter to $6 billion. i sat down with bill mcdermott o discuss.

>> you have a major move to the cloud. if legacy companies have not fully vested themselves in the cloud, or they've converted their revenue streams more to cloud then on premise, i think you will see them make bold moves to get cloud ready. selina: now, oracle recently launched its autonomous database. do you see a lot of competition? are you developing something similar? >> we have taken over the database enterprise with hahhah. so, hana has many of the characteristics that you mention but moreover it can take data from any source. so, everything that is either structured or unstructured and data from any source in the enterprise it's running the biggest enterprises with more than 25,000 customers at mass scale. so we like other database very much. selina: sticking with the competition, i want to talk about salesforce. what is the plan to catch up ith them in the customer

relationship management cloud market? >> we see a fourth-generation where we'll go beyond the current market participants. basically, they focused on sales marketing campaigns, things that essentially take money out of the customer's pocket. what we want to do is focus on an omni channel, e-commerce world where we connect the demand chain, because that customer is real mobile, and they shop in every channel -- direct to consumer, wholesale and retail -- and we want to connect that. see how to complete in an end-to-end business. why is this so important? we are not just talking about crm. we are talking about customers. the way ceo's think about their brand, their products, the human capital, their customers. all the people inside a company have to be completely committed to the customers outside the company. this is what we call fourth generation crm, all about the customer experience.

selina: you have mixed with president trump. wall street was quick to cite the tax reform as a way of the future profit growth. now the future is tariffs. what is your assessment of his performance and what you hearing from clients? >> the most important thing is is we get paid to run businesses and work in an environment where we let government do what government does. and all government leaders have to do what is best for their country and best for their constituents. and these tariffs are a serious situation. you have the two largest economies in the world, $30 trillion in combined economic firepower, right now a little bit at odds with each other. it is good. you saw today's tweet when it was stated at the g-20 president xi and president trump will talk. that is very encouraging to the markets. markets like certainty. we'd like to see the u.s. and china cooperate.

it is good for the supply chain and good for business. selina: china is a very important market to sap. how are the tensions affecting the company? it is a german company. is it good for bills in a way? >> well in, a certain sense you could say that. german engineering is highly regarded in china, as it is in the united states and around the world, but we do particularly well in china. china is our fastest-growing market. we think that china is easily regarded as sap's second home in terms of the market receptivity, the ecosystem growth in china, and our long-term prospects. we think china will end up being the biggest market in the world soon. selina: what is your approach to servicing customers there, given the data privacy concerns? >> well, we have, as you know, the most sophisticated data privacy technology in the world. we acquired a company called giggia, where we have billions and billions of customer records. we protect your privacy. we do not let customers

actually engage you unless you gree you want to opt in on various offerings from our customers and how they serve their customers. so we follow the same reference architecture, high security standards and cloud standards in china that we do in europe as well as the united states and every other theater in the world. we are very confident in china in the way enterprises can serve their customers in china with high security standards. we recently announced a very important partnership with alibaba. that is a cloud partnership that will not only impact our growth in china but also -- the region, one of the fastest-growing regions in the world. selina: succession is a big issue. who have you lined up as future leaders, and are they diverse? >> that is a great question. we just appointed within the last 12 months two women onto our executive board, not just because they are women but because they are great leaders.

that would be adair fox martin and jennifer morgan. if you look at our company, we have a third of our workforce that is female and a third of our leaders that are female. we are very diverse, highly inclusive. one of the things we really enjoy is what we have done with autism at work. now we've dedicated 1% of our hiring to autistic folks, at least on the spectrum somewhere, to basically help our workforce be highly productive and diverse. so, that extends also to the solutions that we have. if you look at success factors, the number one human capital management solution in the world, we have a business without bias mentality. computers don't have bias. the way we built all the algorithms and the software, they eliminate bias from hiring. -- there the hiring process.

so, the computer does not have a bias. it looks for the best candidates and fills an algorithm or model the company is trying to get at. if you want 40% of your workforce to be diverse and inclusive, the model is built to do that for you. you don't leave it up to humans. you let the software do the work, and the human judgment comes in at the final phase of hiring. it is changing companies everywhere. selina: that was bill mcdermott. nd coming up, spotify out with a lackluster third quarter due to unimpressive user growth. what this means for the future numbers of subscribers up next. and the apple's earnings call is underway. tim cook is speaking about apple's global growth. cook says apple's business in india was flat, and he would honestly say that he would like to see huge growth there. yet, cook did say that business n china was very strong, though gig approval is far blow historic pace. another big headline from the call -- apple will no longer report unit sales for apple iphone, ipad, and mac. mere they are explaining.

>> starting the december quarter, we will no longer be providing unit sales data for iphone, ipad, and mac. as we have stated many times, our objective is to make great products and services that enrich people's lives and provide an unparalleled customer experience so that our users are very satisfied, loyal and engaged. ♪

selina: more headlines from the apple call underway. when asked about health care and growth in subscriptions, tim cook said apple has a huge opportunity. cook says apple has an intense interest in the space and has added non-monetized price. -- non-monetized products. shares of spotify declined after the company's lackluster forecast.

third quarter subscriber growth was as expected, but the revenue outlook is troubling to investors who are betting on paid streaming services. spotify expects fewer subscribers in the fourth quarter. let's bring in our guests to discuss the future of music streaming services along with bloomberg intelligence sean hanrahan. i want to start it with you. third quarter subscriber growth was as expected but revenue outlook was not so great. because they were betting on years of growth in paid streaming. are investors lost on that hope right now? >> yeah, so, it's actually a very competitive space. investors are looking at where are the revenue growth going to come from? they had raise their guidance for the fourth quarter in terms of additions of subscribers and they actually cut it back again in third quarter. so, investors are kind of like, what is going on here? there is a change in the outlook for spotify. selina: spotify had some recent tensions with the record labels. they are facing competition from larger giants. how much room for error is

there for spotify? >> the margin for error is very small. what i've been told from a close source at a record label, their working relationship with spotify is doing quite well but what does that mean for the entire record industry? we don't know. we will have to see going forward. what is really important right now was looking at the monthly active users. it's good to be able to bring in total subscribers at a decent amount, 87 million for the third quarter. if you look at the monthly active users, it is lower than expected, and if you cannot get your subscribers engaged, that's a problem investors have to look at moving forward. selina: there was a continued decline in average revenue for users? >> they have shifted to doing family plants from the original $10.00 a month. those come in at lower price points per user. the investor concern there, they sort of, they knew this was coming, but spotify is also planning to raise his expenses next year and increased its r&d

spending. with subscriber outlook in question, revenue per user coming down and growing expenses you're questioning if this company can grow profit longer-term, is -- if its market share is not growing as fast as expected? selina: what about expanding to other types of audio like podcasts? are investors seeing a pay-off from that yet? >> this is something that management has not, also, has not looked forward to yet. that is a sector they are considering. they launched a new podcast. but this is something that could be a growth driver for them. selina: and spotify also had a recent partnership with google. offering the free home mini product. how i this supposed drive subscriber growth. >> they give very limited information about what they expect from that. if you are a family subscriber, you get a free home mini. that may bring people in. it is nice that google is sort of neutral. they can tap the android

marketplace with this. that will show up over the next 12 months. selina: sean, how would you rate spotify's performance against the competitors? sean: still holds the market share lead. it's still close to double the size of apple in terms of paid subscribers, doing well. they need to keep proving in 2019 they that can hold fast subscriber growth and that will be the key for investors. if they said to lose market share, it will be a big question mark for the company. selina: thank you both for joining us. coming up, we get back to apple earnings. the market is not like and comments coming from management on the call. shares near the post trading lows down over 7%.

selina: we have been following apple's earnings call as it happens throughout the program. the stocks have slumped more than 7% in aftermarket trade, possibly putting its $1 trillion valuation under threat. tim cook has been asked about the company's aims in health care, the expansive product lines, and trade tensions. he's asked also what to say about the game approvals in china. still with us -- >> there is a new set up in china. there's -- things are not moving the way they were moving reviously. we did see a few games improve -- approved recently, but it is very far below the historic pace. as you have probably seen, some of the larger companies there that are public have talked about this as they announced heir earnings as well.

e don't know exactly when this will, approvals will sort of return to a normal pace. so, i would not want to predict that. i do not view, just for an avoidance of doubt here, i don't view that that issue has nything to do with the trade related discussions between the countries. i think that is strictly a domestic, a domestic issue in china. selina: with us is julie forester. underwhelmed with the results so far. they are slowing growth. do we need to reconcile that with this new reality of slower growth? and why is that? julie: because devices and hardware have been apple's history for so long, there is a set of expectations around

those kinds of products, but i think growth in the future is going to be slower in some ways. when you look at the services market, we are not getting 700-800, $1000 a game. -- at a time. every 99 cent game that is sold returns 30 cents to apple. also, the other part of it is when you look at the upgrade cycles, those are slowing. these devices are amazing. you have to be a user of the more demanding applications on the phone to really need that upgrade. i do not need a x to do email. i do need it to play the latest video games. so it is related. selina: there is a lot of excitement around services because is it creating a revenue stream that is not dipping seasonally. if you look over the span of seven years, it has been climbing up. is there something apple should be doing to create faster growth there? the service revenue is composed of many different products. julie: it is hard to accelerate that growth. on the one hand they do -- when

they do get a customer or user subscription service, that is steady and long-term. but this is also, services are a lot more dependent on ecosystem partners, apple pay or music, or media or the media library. apple cannot flip a switch and ake that happen. it is kind of like grinding it out day by day, negotiate more partners, get more services, getting more people in the ecosystem, the more valuable he services are. something that grows much more slowly and more organically, it is not about a big bang, wow, i have to have that new product once a year. it's slower. selina: given the importance of the services business and how difficult it is, how concerning is the fact that the app store sales in china have slowed and there it are regulatory issues round gaming licenses? >> that is a component they are going to have to work through and that is certainly an important element of that market.

if they can accelerate that, those are certainly the kinds of applications that drive demand for new hardware. selina: julie ask of forrester thanks for joining us. that does it for this edition of "bloomberg technology." tune in tomorrow for full coverage of alibaba and our nterview with the ceo. nick will be jack: us for earnings. this is bloomberg. ♪ >> the following is a paid

program. the opinions and views expressed do not reflect those of bloomberg lp its affiliates or employees. announcer: next, a paid presentation from perricone md featuring a lively discussion on aging with some of television's favorite faces. gilpin, tracy redmond, and your host, courtney thorne smith. brought to you by trusted guthy renker.