Apple Kicks Off Terns Era with First Foldable Phone

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1:00Bloomberg Tech is live from the heart of Silicon Valley with Ed Luglo in San Francisco. This is Bloomberg Tech, we're live from Apple Park in Cupertino. For what could be the iPhone make his most consequential product launch in years? All eyes. On John Turner's making his first major public appearance, there's Apple's CEO. Since taking the hell on September 1st and Bloomberg reports, Apple will unveil its first foldable iPhone. The device nearly a decade in the making. The biggest change to iPhone's form factor in almost 20 years will bring you the details and analysis throughout the hour. So Apple's kind of treading water down a percentage point on the stock. But really the story has been about a comeback on the shares. Since late June, remember in June, Apple raised prices on everything apart from the iPhone reflecting higher memory costs. A rally of 15% since then adding $580 billion or so of market cap. These in part reflective of enthusiasm around this latest generation of products with the

2:03folding iPhone at the centre of it. Let's get out to Bloomberg's Mark Gurman who leads up, up range of Apple and consumer technology. Let's just start with the basics, Mark. You've done a lot of reporting on what Bloomberg says will be called the iPhone Duo. What are the specs? What do we need to know? Yes, so I'm hearing the phone will be called the iPhone Duo. This is the foldable phone. It'll start at $2,000, $5.5 inch screen on the outside, $7.8 inch screen on the inside, dual 48 megapixel cameras on the back, software based telephoto. So there's no dedicated telephoto lens similar to the iPhone Air that came out last year. Come in dark blue, come in white. There will be storage capacities up to two terabytes and that model will cost roughly $3,000. And so at the $2,000 price point, they're eating a lot of the memory costs here and they're going to be passing it on to international shoppers where the price tags are less influential

3:05and less read into by Wall Street. They really want to keep the US price at that $19.99 threshold for effect and you'll see that be announced today and go on sale in October. So slightly later than the iPhone 18 Pro and Pro Max that are launching this month. Speaking of 18 Pro and Pro Max, lots of talk about pricing increases over the last several months. Here's the deal, $100 more on each of those models. So not that $300, $500 price increase that some are expecting $100. Why are they doing this? Samsung and Google, they recently raised prices. They did $100. Apple doesn't want to go past that. They want to eat these costs. They're chasing market share here at a time where they really could raise prices substantially. Right. Blue and Miss Mark Gurman stay with us. We have some breaking news on the Bloomberg terminal out of the US Treasury. Bloomberg's international economics and policy correspondent Mike McKee has those details.

4:08Hi Mike. Hi Ed. Well all of our bond market friends are getting the information they were looking for. The Treasury is going to buy back $6 billion worth of 10 and 20 year notes. The question had been would they go above the $4 billion that they suggested which was double the normal $2 billion amount. And they have gone over that maybe to send a message that they are serious about all of this. Starting on September 10th rather, they will raise the size to $6 billion. Tomorrow we get the first buybacks of the day. And you can see the distribution right now of what we have out there that people can pick and choose to try to sell back. These will be off the run treasuries that the Treasury Department has been buying back because they say it's an liquidity need. But the market thinks that perhaps the ramping up of the number to $6 billion is really

5:09more a question of trying to bring down rates. And as you can see there, that didn't work immediately. The rates have gone up quite a bit on the 10 year note. Now this is just early moments but we'll see how this plays out the rates right now higher than they were when they first said they were going to do this. Treasury's falling UK bonds also extend their drop. Mike McKee, thank you very much. I'm live at Apple Park and Cupertino. Let's get back to Los Angeles and Blue Mo's Mark Gurman. We were talking about the foldable iPhone that you've reported will be called the iPhone Duo. I want to go into some of the backstory mark if we can. The idea initially, and this work's been going on since before 2019 when Samsung came to the market with a foldable, maybe Apple looked at an iPad form factor. Your reporting details that Tim Cook made a pretty clear intervention on this needing to be an iPhone. And then John Turner's more recently got it over the line. Bring us that reporting. Yeah, it's exactly what you said, right?

6:10Initially Apple looked at foldable displays, its core technology teams. This was over a decade ago. 2019, Samsung launches their phone, Huawei launches their phones, Tim Cook goes to Asia, Korea, China, sees that these are popular, gets enthusiastic about the category, which was rare for him. He really was never close to product development. Really pushed the hardware engineering team to develop this into a phone. And around 2023, Apple had its aha moment where the core technologies making the crease slimmer, making battery life to a better place, durability to a better place, that intersected with this idea of a passport sized iPhone, a shorter display, a wider internal display. That all came together. Now, three years later, this is coming to market in just about a month and a half from now. We're going to be speaking to Bloomberg's Mark Gurman, our managing editor for Consumer Tech all day long. Big thank you to Mark. Joining us here at Apple headquarters is Carolien Amelie Nasey, president and principal

7:10analyst at Creative Strategies. And what was so interesting is some of the kind of history that Mark detailed is, Apple isn't always the first to enter a category. But when it does, they're often ready. Your expectations of how that would play out in the foldable category. I think foldable is really about taking friction away so that consumers are ready to take advantage of a new form factor. We are so used to, as labglass, that we've been using for so long. So taking the software together with the hardware and then the ecosystem of apps that will come alive from a larger form factor. And it reminds me of the iPad days, right? The beginning, it was like basically it's an iPhone but bigger. And that was enough for people to understand what they could do with it. So then it was the attention to the software and the application that came optimised for the screen size, that really brought the device to life. You've taken an interest in the software story in two ways.

8:12There's what Mark reported about how Apple has got ready for the foldable on the software side. But it also links to Siri AI. Absolutely. Why do you think that? Because I think there's a way for AI to have all devices, all categories, devices really come together. So I'll be curious to see if there are going to be applications that Siri will have specifically on the Duo or maybe that it plays out slightly differently. I'm also curious to see if Apple have paid attention to other devices, aiding or coming together with the Duo in particular. I don't know if it's something with the earbuds or with AirPods or if we watch a bit might bring the ecosystem even tighter together. Pricing is going to be one of the biggest watches. The Bloomberg reporting is that the Duo will have a floor of about 2000 but for higher storage

9:15spec, $3,000. But even the next generation of iPhones being $100 higher than the prior generation, Apple has to do that really, don't they? They don't have much of a choice. Supply chain is what it is. Cost is going up. Obviously, one choice they could have had is eating into their margins. I'm sure Wall Street wouldn't have appreciated that very much. But that balance is how much they can give back from a cost perspective to consumer but also make sure that they do have an upgrade cycle that matters to them. So is that balance? Apple has in a way an advantage over other OEMs which is that they have a lot of content. They are generating revenue from services. So that's the other part. Balancing, maybe I'm not raising my prices as much because I know that I have some money coming in from subscriptions which is something that others don't have.

10:16How is Carolina, Millinesi and Creative Strategies modeling in John Ternos? How do you do that? On the future, what might be different for Apple? I've been saying at the end of the day, you're still talking about Apple, right? So you're not having a wild car that is going to now take the company into a totally different direction. But it will make its mark. And so from somebody that is coming from engineering and product, I think as we turn more into AI, that to me is really important. I've been saying for a while that you still need to sell hardware before you sell AI. And that is where the integration of silicon, hardware and software is going to bring AI to life. The global smartphone market will probably be a billion units this year. Something like that. Foldable is going to be a very small part. Very small. But if I can take you back to what Apple said at earnings, it really surprised me. Put memories one side. It basically said, we miss red demand. And so we didn't place orders for the processes.

11:19Demand seems really robust around the world. What are you seeing? As much as we want to talk about what comes after the phone, the phone, the smartphone is still our most precious device. And I think that consumer, especially at times of economic pressure, rely on this device so much more. Because it's everything to you. Is your internet device, is your calculator, is your wallet? So we've become highly dependent. And over time, consumers have proven that that's where they're going to put their money. Just to go over the basics, John Ternas has been on stage before. It's just that this time he's the CEO. Does it matter what he says? How he says it? Oh, absolutely. You know, not that blessed, not that before. It didn't matter. But the way that you carry, when you speak as a CEO versus a leading engineer is very different. So yes, we'll be watching. And I'm curious to see what he will anchor himself on as far as who he wants to be as a CEO.

12:22Very quickly, you've been on campus for 24 hours or so. Is it different this time? There's a lot of excitement. I think people are not just around the foldable iPhone, but really about the change of the garden and what comes next. Karolina Milin and AC, creative strategies. Thank you very much for being with us here at Apple Park, Lupitino. Coming up, we're going to talk through consumers preference changes. And what it means for Apple with the coal paint from Omdea will be backed from Apple Park in just a moment. This is Bloomberg Tech. OK, let's get back to that breaking news at the top of the hour. The US Treasury said it will buy up to $6 billion of longer data government debt. This is the first operation under an expanded buy back program. Bloomberg International Economics and Policy Correspondent Mike McKee is back with us. I see market moves on this news mic. We're seeing the kind of moves that the Treasury Department did not want to see as the 10-year note yield rises on this news.

13:24Originally in August when Treasury Secretary of Besson said they would increase the size of the Treasury's buybacks, it was thought that it would bring down the yields some and it did in the short run. But then yield started climbing again as people in the bond market started worrying about things like the US debt about inflation, about what's going on with the war in the Middle East. And it looks like that is continuing through. Besson's buybacks, as you mentioned, $6 billion, up to $6 billion. They don't have to go that high, but they likely will. Maturities between 10 and 20 years and this operation will take place tomorrow. There should be decent enough response to the auction because there is a lot of paper out there that is lightly traded and could get turned back into the Treasury. What we didn't get today is any kind of indication about how this is going to be paid for or whether this is going to go on beyond this one operation. They have been buying back regularly in this debt maturity range, $2 billion worth.

14:28And do they intend to keep this at $6 billion? Do they raise it? Do they go back to $2 billion? Those are unanswered questions right now. And then the other unanswered question is, do they fund this by selling more T-bills? Or do they fund this out of a Treasury general account? May depend on how often they're going to continue to do this. So still questions for the markets to have answers to, but at least we know what the initial amount is. That's quite a popping yields with saying, well, what is the Treasury trying to achieve here? Mike, what are they trying to affect with this action? This is coming under the rubric of the program that they say is for liquidity help. They want to make these bonds more liquid, more available to sell. So they will be the buyer of last resort, which would then give people in the Treasury market more money to buy newer bonds. But really, the market thinks that that wasn't really a problem and they're just trying to bring down yields because the higher the 10 year goes, the higher the whole yield

15:33curve goes, the more they have to pay an interest and it's getting very, very expensive to do that. Plus the fact that we're seeing a reaction because the debt keeps going up and these added interest payments only add to that. So it's a kind of a vicious circle that the market suspects the Treasury is trying to sort of stop. The question is, can they maybe not, if this is any indication of what's happening today, and can they afford to keep doing this? Also, there's an impact on the Fed because they want to take cues from the Treasury market on what the economy is doing and what the Fed should do and instead they're getting a market that is manipulated by the Treasury and that will throw off whatever they're calculating. The most mic-me-key, thank you very much. Genquities also at session lows for Apple on a point space is one of the biggest drags. Apple's foldable iPhone is expected to be the crown jewel of product announcements

16:33later today. But how will it fit into the wider picture of what's a growing, but nascent segment, the Colpeng Research VP covering consumer hardware application, Alamedia is with me to discuss. The pricing is the focus, right? Today are going to, according to Bloomberg's reporting, price iPhone duo, $2,000, up to 3,000 for higher-spec storage. Where does that sit in the market today? Actually, it's not a surprise for us for this pricing because since all the foldable in the market is sitting at around $1,900 on the US dollar, on a retail price and for Apple, we don't expect anything less than that. But it's still three times than the average selling price of normal smartphone in the market. It is a premium market anyway, isn't it? I mean, if you think about consumers in different geographies, a foldable iPhone would almost be like design-aware. I will say that if you look at the market data these days, in fact, China is more than

17:4050% of the foldable version. The existing foldable market. And US is about 15%. Then 12% is coming from development. For example, Korea, Japan. Indeed, in those markets, they look at such a device as very much premium and also early adopters. And what is interesting is in China, the early adopters usually are very high and consumer as well. So this fits in very well with what they need and what they want at the same time. How important is it that the iPhone duo, which Bloomberg is reporting, is the name of this foldable to come later today, is AI ready, that they've taken into account the AI age. It's an interesting question. I will offer different perspectives here. We did consumer survey and across the world. Some of the places are really keen to get everything AI, for example, India, China.

18:46And US is somewhere in the middle. And we look at Europe is much more reserved when it comes to AI feature. We will ask them what are the top facts, the inference, how they buy a smartphone brand, whether how they choose a smartphone brand. More than 50% of the users, they want it from a trusted company with reliable quality product. Second factor, best user experience. Third factors, best specs, top specs. Four factors, security perusing. So when it comes to AI feature, cool AI feature, guess what, it comes down to that age of the 12 factors that we asked them. So these days, what we can't do with our AI, all the company coming with cool AI feature, really helpful. I think it's really fitting into the number two factor where we're saying the best user experience. So the AI ready, what I think, what I think is not just AI feature that you're talking

19:52about or a GPT or a chatbot, it's more about how you enhance the user experience. That is the number two factors that are helping people to choose their favorite things. But those other factors seem important as well. Boomboaks reporting detail that Apple spent a lot of time on the hinge, on the margin or the fold and by necessity, in a foldable, you have to make some compromise, lower battery life, lower quality camera to achieve the aesthetic. How important do you think that it will be that Apple nails that? That's why it takes a lot. VoodooBerry is not new and then it's been like 10 years already. But what we see quite a lot of breakthrough actually only happening in this two years. For example, battery take a break for us. There is a new battery technology that really enhances and making it very thin and light at the same time very durable. Hedge, of course, and then screen technology has only just come out these two years and

20:53making it much better reliable devices that you can use longer. So I believe what we are looking at here is not just the cost of purchasing a device, it's the cost of owning it, which is actually preventing a lot of people not buying it at the moment. How expensive it might be taking to repair. Nicole, Apple has spent 20 years trying to get us to live our lives through a rectangle. This foldable iPhone is going to be short and wide, like a passport we keep saying. Is that what the form factor that the market wants? I think it is another very interesting question. How we evolve from a bar form factor that actually come from a feature point. Do you remember it blabbering? Just about. So you have a screen on top and a keyboard on the bottom. But when you come in to tablet, how people consume a lot of video content, multitasking,

21:56it's a completely different form factor. So we are moving from actually a phone from a tablet light devices. Another also very interesting when you're looking at immersive experience, everything is about wide and a wider TV that you got at home, a wider cinema screen and now is a wider phone. So what we look at is here is we found it from our other devices that you look at. It's quite hard for people to go back to the previous experience and when they started to experience a much more immersive experience here. So it is especially important as well in this AI as well because all the interaction has become much more voice-centric and we are consuming much more information on the phone. So it could be a more AI-ready form factor compared to, previously, it was a phone, it's supposed to do what a phone needs to be doing.

22:59The Cool Peng Omdia, Ombloomboek Tech here live at Apple Park and Cupertino. Thank you very much. Another big story, Amazon, is tapping yet another corner of the global debt market to fund its AI ambitions. Tech Giant is expected to raise more than 5.8 billion in its first ever sterling bond sale drawing nearly $16 billion in investor demand, according to a Bloomberg source joining us now is Bloomberg's Rowan and Martin. The hyperscalers keep going and this is an interesting sterling move by Amazon. What do we know? Hi, it's another market that the hyperscalers are tapping. Amazon are following quite a well-traumat at this point of coming over to Europe to raise more debt. So Amazon obviously did a Euro deal earlier in the year and I think it's their fourth global bond so far this year. They're following Alphabet into the sterling market. It's slightly different deals with Alphabet. Alphabet kind of tapped the market earlier on in the year in February when the moment was still going crazy for these deals.

24:00They even sold that century, 100 year century bond that really kind of blew out of the water. It's a little bit more reserved. We're seeing investors pulling a bit more demand and kind of placing a few bit fewer bids for the deals. We also see Uber in the market, a debut Euro bond sale. It's interesting. I don't know that I saw this with Uber happening. What's our reporting there? It's an interesting one. I think some of the first assumptions were it was going to be around the delivery hero deal but we're hearing that financing for that isn't going to be until next year when that all gets approved. This is just another diversifying their funding sources. We're seeing the US market has been so well tapped so far this year. Hype scalers have done so much debt there. Even there's the whole conversations around whether the hyperscalers are affecting the treasury market with how much is going on there. For these global companies diversifying some of their debt into a different market,

25:03with European investors who typically massively underserved in terms of tech companies. There just isn't that kind of same level of tech issuance over here. So for some investors this is a great opportunity to get a new name, a well-known company. I think those are brilliant Martin. We're what's going in corporate debt. Thank you very much. Coming up from Apple Park, Cupertino, IDC's, Nabila Popoale, with the impact that a foldable iPhone could have in what is a nascent foldable's market would be right back. This is Bloomberg Tech. Growth requires more than capital. It requires the right connections. HSBC corporate and institutional banking combines global reach with local execution. So banking stays simple as your footprint grows. Find your next financial partner. Search grp.hspc forward slash uscib.

26:05Hi, I'm Carol Masser with a helpful tip to keep you plugged in throughout the market day. Subscribe to the Stock Movers report from Bloomberg. These are short audio episodes, five minutes or less delivered right to your podcast feed. Stock Movers fills you in on the day's winners and losers on Wall Street and tells you about the news and data that's driving those gains and losses. I spend all day watching ticker scroll across your screen. Subscribe to Stock Movers today, an Apple, Spotify or anywhere else you listen. Welcome back to Bloomberg Tech. Let's get back to New York with Bloomberg's chief economic correspondent Mike McKee for an update from the Treasury and the buybacks and the impact on the market. Hi, Mike. Hi, Ed. Well, we're having a significant impact on the markets, at least for the long dated notes, the 10 year and 30 year at this point yields are much higher after the Treasury announced

27:06it would do $6 billion in buybacks in the 10 to 20 year space. The administration apparently looking to bring down or at least control yields and that goal is not being met at the moment. The latest development is that they have updated their buyback schedule going forward to show that future buybacks in the 10 to 20 year space will be $4 billion or greater. That's what they originally said on August 18th when they announced this first buyback operation that it would be doubled to at least $4 billion and they come in at 6th so they could easily raise those in the future. They're going to have to see how this all plays out and whether this sell off in bonds continues whether it sticks because of the market's concerns about the overall US debt. It is a concern for the administration because the more yields rise, more expensive it gets to pay for this and the budget deficit gets bigger.

28:06Also because it's the 10 year no yield, that's tied to mortgages. Rates go up and that's not very good for a White House that is trying to convince people to vote Republican in midterm elections. We're keeping eye on this all day and see if we fade this, it's faded just a little bit but it's still a big jump up and that what Treasury may have been expected. Dumbass Mike McKee, thank you very much. There's a lot going on in the world of technology in the world of AI particularly when it comes to the equity market. Blumas Com Rhinoke joins us now. Comment what you got. Thanks, Ed. Yep, tech stocks are the biggest movers of the day today. Shares of meta are particularly having a great run. The stock is having its best day in more than a month as Wall Street analysts are cheering its Muse AI agent. So this is something that people have been waiting for looking really great here. Mizzouho analysts are writing that the agent marks the start of a substantial product cycle

29:08that's not priced into shares. On the flip side we're seeing some big AI stocks also weighing on the NASDAQ. It's down today and some of the biggest decliners are Amazon alphabet and actually Apple at this point. So it should be noted Amazon and alphabet also have AI agents. There could be some competition there. There's also the bond sale as well as Alphabet's Google spending more than $15 billion in AI structure and Finland. And of course we're all watching Shares of Apple. Stock is actually seeing some selling pressure today heading into their event. Obviously later in the afternoon we're going to be watching here for the new foldable iPhone back to you, Ed. Okay, Bloomberg has come right into you. Thank you very much. Apple's new foldable device is expected to come with a price tag of around $2,000. But despite that cost, a head start by rival phone makers, IDC predicts Apple's entrance will breathe new life into the foldable space. Nebula Pope House Senior Research Director is with me and I really want to dig into the

30:11data here. What's interesting actually is we saw the market for foldables which is quite small, contract in the first half of this year. But if you zoom out for some clarity, you know, a billion smartphone units this year, it's foldables where we could see growth and Apple's responsible for it to your mind. Absolutely. I mean, we haven't been this excited for an Apple event in a long time. And you know, with the foldable as everyone's expecting to launch from Apple, it's going to re-ignite growth, right? And not just re-ignite growth in a overall smartphone market that's declining, but to a very high value segment, which currently is only under 2% of the market. So we're expecting Apple already within the first four months of launch to capture 30% share. Oh, yes, this is very small, but still very relevant foldable market. So Bloomberg's reporting is that the iPhone duo is what it will be called. Okay. Goes on sale in October. Wall Street estimates vary actually. Six million units, 10 million units in the December quarter. What does IDC think is possible?

31:13We are forecasting about 10 million units in the first 12 months of launch. So, I mean, we're really, you know, I think just given those numbers and then by the end of next year. So, Apple will capture about 40% share and just over 30% this year. So there is, you know, given the fact that the total foldable market is about 23 million this year, that's going to, you know, make up a huge portion. But more importantly, we're excited about to see how Apple brings more relevance to the category, right? What are the new elements that it brings to play? Because it's a very crowded market. Foldables have been around for eight years now and there's a ton of competitions. How's Apple really going to stand out and differentiate the product aside from its obviously, you know, brand value that it has? And as IDC feel is most important then for the product itself. What is it that Apple has to have got absolutely right when they show us this foldable later today? Well, considering it's going to be at a banging price of 2000 or 2500, right? We don't know where it's going to land. We're expecting on the higher end of that range.

32:14And we are, the most important thing is going to be really the look and feel. It has to feel premium. They have to get the crease, right? It's rumored to be, you know, invisible. So let's see how they get. But I think more importantly, to make the product relevant or really impressive is how are they going to define and polish the user experience until now consumers are really like, you know, why do I really need a foldable and what can I do differently? So the seamless, you know, the Apple's all really great about, you know, integrating new things in a very user friendly way. So I'm excited to see how Apple brings what is brings to the OS, right? In terms of the extra screen size and what can you really do with it? So I'm excited to see how Apple, I'm curious what Apple does about that. The luxury or premium segment is really interesting in the context of China. You were cited by Bimbabwe as Mark German in his latest piece, likening this, the potential of the foldable phone to what we see in the luxury bag space.

33:15Explain that bit to me. Right, the Birken comment. The Birken. Well, you know, last year the orange of the 17 was so popular and Chinese consumers were liking it to the Hermes orange, right? So I was saying, yes, despite this high price, I won't be surprised if the new iPhone foldable could, you know, or do or whatever ends up being cold, ends up being like the new Birken of smartphones, right? So high price, very luxurious, very limited. And so, you know, that's why I do think that it's going to be a blockbuster product. We have the IDC numbers and expectations, both for China, for the foldable segment, but also just in general globally, to the end of this decade, what's the pathway for foldables over the next few years and how big a driver is Apple with that growth? So you know, the two largest markets for foldables are US and China. We China with over 60% share and Apple US with over 20% share. Now Apple is almost 50% of the US market.

34:15So right there it tells you that Apple being the largest number one player in the US, for example, and now number two in China. It's going to, you know, launching a foldable device. It's going to really take momentum to the category and increase the share of the foldable space. But more importantly, it's going to add a ton of value to, you know, Apple's proposition and revenue. Really quick. Is there anything else you're watching out for beyond the foldable? Oh, yeah. I'm actually super excited to see what they do with the rumored red or burgundy or whatever color it's going to be launched. I'm a big colorist person last year. Yes, the orange was a big hit, but it wasn't my thing. So I am really excited to see where in that range they fall. So, and then of course, the camera improvements with the pros and pro max. The 18 generation, the Villa Popeye Senior Research Director, ID Secret, to have you back on the show. Thank you. Thank you very much. The events tech startup Covenant emerges from stealth with a long range missile built to close the West Deep Precision Strike Gap Covenant President Abbey Demberg joins us next.

35:17This is Bloomberg Tech. Hi, I'm Barry Rittultz inviting you to join me for the Masters in Business podcast. Every week we bring you conversations with the people who shake markets, investing, and business. And speak with CEOs, Nobel laureates, market innovators, and legendary investors. Whether you own stock spawns, real estate commodities, even crypto, these are discussions you absolutely need to hear. Subscribe to the Masters in Business podcast on Apple Spotify or anywhere you listen. The AI researcher has resigned from anthropic and called on other staffers to rethink their work. In a post on X, Jacob Cox and cited his concern that the company and its top competitor OpenAI are acting irresponsibly in their all-out pursuit of a technology that possesses

36:19increasing safety concerns. Saying, quote, they are racing straight to self-improving superintelligence and gambling with our lives. Bloomberg's Senior Tech Editor, Mike Shepherd, joins us with the details. This is kind of a two-partner as well because after that initial post from the employee that resigned, one of his colleagues in current anthropic research weighed in as well. Yes, and this also stands out really because we have heard, for I don't know how long and you and I have talked about it from time to time, all this doomer talk surrounding artificial intelligence and the speed at which it is being developed by all these companies. And these calls have been dismissed somewhat by the industry to a point, but now we're hearing the call coming from inside the house in a way. And it really is not only a warning to the public, it is also a warning to AI employees themselves. The poster who just resigned from anthropic Jacob Cox and really did tell his fellow researchers to think twice about what they're doing and whether they want to be associated with something

37:21that could potentially have such grave consequences. And we have heard this message from other employees within Silicon Valley who work in artificial intelligence in July. There was that letter that was signed by 1,100 open AI, anthropic and other AI industry employees urging the industry to pace development of artificial intelligence so that they can reckon with some of the risks. But now we're in kind of a new phase of the game, the introduction last week of Austria, which some have hailed, including Jensen Wang as what we would term AGI, the point at which the intelligence can outpace and outwork humans, that really puts us in a different territory. And that highlights what Jacob Cox and posted today. The specific line that everyone's talking about online on social media is the likelihood in the next decade that AI wipes out humanity. He's just explaining that bit very quickly, Chef.

38:23Well one of the concerns is that AI really does have this ability now on a cybersecurity front, on a health development front, on all of these areas to potentially up-end security as we know it. Waging cyber attacks that could disrupt the financial system on mass, being used to develop biowipons that really pose as you put it and as the poster put it an existential threat. Now, that is prompting some reflection here in Washington and a number of calls from politicians, including Senator Bernie Sanders, for steps to halt this. And really to ban what he called superintelligence really is a protective measure. We're hearing a lot of that reaction today in response on Capitol Hill, but it is important to note that the Trump administration so far has really looked away from the safety question the president himself last week saying in response to safety concerns that the priority really is continuing with AI development. Because he sees it as essential to propelling the US economy and also keeping pace against

39:25China in the race to dominate AI. It's been a nice mic, Chef, with a reporting. Thank you very much. Let's stay with private markets and startups. In recent horror, it's fact startup, Covenant is emerging from stealth after raising more than $250 million from three different funding rounds. The defense tech firm has already signed military contracts across the US and Europe and says it can make cheaper, heavy payload, long range cruise missiles. Covenant president and chief growth officer, Abbey Demberg, is with us. Really interesting that reading about government, let's start with the technology that you're working on. What is this most akin to in terms of what's already out there in the American defense industrial base? I'm trying to get your production facility in Dallas, Texas and behind me you can see the anthem, which is a low-cost, long-range cruise missile designed to fill the new precision strike gap. And we talk about heavy payload and long range. There's not a lot of capability out there that can achieve that, and there's no capability

40:28that can achieve that today at the price and scale that for all of us. Abbey, that looks to me all the way over here from Cupertino, but also from the description and sounds to me very similar to a Tomahawk missile. Is that fair? What I can say is that anthem is offering exquisite capability, but at an affordable price point. The, as a nation, have relied heavily on exquisite capabilities that at the moment are not at an affordable price point and not being produced at scale and we're eager to be able to bring affordable mass to strategic range. Abbey's $250 million out of gate. That's a lot of money to come out of stealth. I go back to the note that it's three separate rounds that happened over time, but talk about the experience of raising those funds and coming out of stealth right now, why this moment. I'll start with the rounds because what I can say is we have an incredible cap table

41:30with investors who truly understand the deep precision strike gap today. We went to market for our seed round two years ago and that was before a deep precision strike was really talked about in the way that it is today, but we found investors that really understand the criticality of bringing affordable munitions into the marketplace and we have been able to leverage that of the last two years to be able to build and develop a capability that you're seeing behind me today. So when we think about that capital, it enables us to build a resilient redundant supply chain and multiple production facilities in order to enable capability fielded as early as 2027. Abbey, tell me about the team. What are the core competencies of those of you that are building covenant right now? Where have you all come from? We have, I'm sure many CEOs and presidents would say this, but we have the best engineering team in the world.

42:31We have been very intentional about bringing in only those that are really mission driven and focused and the employee base is made up of reservists like myself veterans and petrients who are so driven by this mission that we have worked tirelessly in order to deliver this capability. We went from ideation to a full scale operational prototype in 11 months at one day and that stems from having missile engineers who have been doing this for 20 plus years. Our chief technology officer was the chiefs to engineer a buyer and dome and we have engineers from across the globe that are working with us in order to bring forward a capability that executes. Let's go to what happens next. You've raised the money. You're joining us from the facility in Dallas, your headquarter in Washington, DC. What do you guys need to do to get going? We already talked about the contracts you have with both US but also Western Allies, where you may focus right now with these funds. Well, this is to deliver.

43:32A lot of startups can deliver prototypes and we've seen that but the question is not can new companies bring forward interesting technology. The question is can they produce that scale and that's what covenant is about to do next. You're going to be delivering thousands of missiles. This production facility will be delivering a thousand missiles next year and is designed to deliver 5,000 a year. The same is true of our production facility in Germany. What's next is delivery because ultimately this is a deterrent capability and the way that deterrents actually is effective is having munitions at the hands of our enemies. Covenant President and chief growth officer Abbey Demberg, this startup coming out of stealth with $250 million. It's great to have you on the show. Thank you very much indeed. Now coming up a new iPhone and a new era for Apple, counting down to Apple's biggest probably most consequential event in years and it is all about a foldable iPhone. More to come, this is Bloomberg Tech.

44:33The curtains about to go off on Apple's big event. So what's coming and what's going to steal the show? Bloomberg Consumer Tech reporter Chris Welch with me here at Apple Park, Cupertino, let's just be honest, foldable. And it has a name according to Bloomberg's reporting. It's called the iPhone Duo. We're just going to take some getting used to. Not the iPhone Fold, not the iPhone Ultra, but the iPhone Duo. I guess that you have a foldable right. You are a user of a foldable. Yeah. Duo represents that it has two modes. Our reporting is that when folded it has one screen size. When unfolded it has a different one, explain. So it's got a very wide form factor when it's open. So that's great for watching movies or showing photos to your friends. For stuff like eBooks.

45:34So it's got a lot of great use cases. But when it's closed, it's kind of like a squat short form factor, which people aren't really used to. So I think it's going to be like a learning curve once people get their hands on this phone. It's going to feel very different. We're starting to hear the cheers behind us of everyone that's gathering at the Steve Jobs Theatre. This market is really interesting. So IDC says there will be a billion smartphone unit ship this year. Actually, foldable is a very small. Yes. They're a very niche market. And there seems to be some hope, at least in our reporting that Apple is going to give this segment a bit of a push. Yeah, for sure. I mean, Samsung kind of pioneered this category. They've been in it for years. They've also got Google, friends like Motorola, Huawei. They've been at this for a long, long time. But now Apple's here. You know, this is the first John Turner's keynote. No pressure. Here's our first ever folding iPhone. And so they're going to come into this market. And we're going to see how it looks, how they made it, the hymns, the crease. Will there be a crease? Have they solved the crease factor? It's been around forever. So there are so many challenges. But I think it's Apple. You know, it's going to have some kind of unique spin that's going to make it pretty special.

46:36Now, you and the team have detailed pretty clearly that this work's been going on behind the scenes Apple for quite a long time. I guess they must be ready. You would think so. It's going to ship next month apparently. So it's going to be somewhat of a wait. But they're ready. And it has been like a several years long effort. So we're going to see what it looks like here. And it's got this, this feels like a big event. It's got that air of like a special day. This is not your typical iPhone event. So it's pretty exciting. You've done a few of these. You should be able to get your hands on what we think will be called iPhone Geo. What is it the check for in the first instance with the foldable? How it feels, how it opens is like reassuring. Does it feel like high quality? Because people take these things to the beach to take them all over the world. So it's got to be durable. It's got to work well. But this is Apple. So that's not going to be a huge concern for most people. I feel like. And the team are going to be very busy today. We're about an hour from the keynote where we expect John Turner, who became CEO in September 1st to kick things off.

47:36And the main event to be a foldable iPhone that Bloomberg reports will be called to you. Oh, Bloomberg's Chris Welch. Thank you very much. So much indeed. That does it for this edition of Bloomberg Tech. Don't forget, check out the podcast. We had a lot of interesting conversations that looked at the foldable market more holistically. The forecasts for this year. What Apple's impact might be. And also what the impact of a 2000 maybe more than $2,000 handset will be in the foldable space. You can find the podcast on all the Bloomberg platforms and on Spotify, I, Hart and on Apple. From Cupertino, from Apple Park. This is Bloomberg Tech. Game insight on the innovators, disruptors and tech driven trends shaping today's complex economy. I'm Carol Masser. And I'm Tim Stenevek. Wrap up your work day with the Bloomberg Business Week Daily Podcast. We bring you deeper dives into the story shaping your world from the evolution of AI to

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