Sep.01 -- Apple Inc. has asked suppliers to build at least 75 million 5G iPhones for later this year, roughly in line with last year’s launch, in a sign that demand for the company’s most important product is holding up in the midst of the global pandemic and recession. Mark Gurman got the scoop and reports on "Bloomberg Technology."
- We have learned that Apple is targeting 75 million iPhones for the fall. Tell us more about what we know and what this means.
MARK GURMAN: So we know that they've asked their suppliers to build between 75 and 80 million 5G phones, as you said. And what that indicates is that there's going to be a similar target for sales through this year as they had last year and the year before, which means that despite the pandemic, despite the economic slowdown, despite everything going on in the world, Apple is anticipating that the status quo for their own sales of their most important product. So that's good news for the company and good news for investors, certainly.
- You always have a pretty good lead on other forthcoming products. You've reported they're planning to announce a couple of new Apple Watches this fall, new iPads, and over-the-ear headphones. Tell us more about what you know.
MARK GURMAN: Yeah, so it's going to be another jam-packed holiday season for Apple. In addition to those four phones, there's going to be an over-the-ear headphone, which should be quite popular. These will be basically AirPods on steroids. They'll be over the ear, first time they'll be doing over-ear headphones not with the Beats branding. These will be Apple branded.
There's going to be a new smaller, cheaper HomePod, which could hopefully, for them, help boost their smart home situation, where they've very much lagged behind Google and Amazon and other companies in that space. There'll be a new iPad Air, which is their $500 to $600 mid-tier tablet, which could continue to increase sales of that line, which saw some success in the third fiscal quarter, as you know. And so it's going to be a pretty packed, you know, fall for the company, in addition to those two Apple watches that you mentioned.
- I do want to talk about this new contact-tracing partnership that has been slow to take off the ground between Apple and Google. So new announcements today that iPhones, as of now, have the capability to contact trace but only in tandem, as I understand it, with apps from typically public health officials. What exactly did they tell us today, and how well is this technology actually working so far?
MARK GURMAN: So the news is that now on the iPhone specifically, with an update called 13.7 that came out today, you'll be able to use contact tracing without actually installing or downloading an app from a public health authority. The problem is is that this portion of the service is only available in three states plus Washington DC, so four parts of the US, and this component is US only.
On the Android side, they sort of are not doing as much as Apple is doing, in terms of not requiring an app. The difference is that the iPhone will require no app, whereas Android, they're actually going to start building the apps for public health authorities themselves, which tells you all you need to know. These public health authorities have really not gotten it together.
In total, only six states in the US and 20 countries, not particularly big countries, have adopted this. So there is a lot of room to grow. And you know, hopefully-- you know, just hopefully-- coronavirus is gone by the time people need to start complaining about this service only being in a very limited amount of places.
- So what's it going to take for this to actually take off, for people to realize the need and, you know, take advantage of this?
MARK GURMAN: Yeah, you know, I think Google's approach for actually-- to actually build the apps for the public health authorities, I mean, is really the best option, right? I mean, they're basically saying, hey, you guys aren't going to build it, so we're going to build them. But as of today, only three states plus Washington DC out of, you know, all of the hundreds of countries around the world and obviously the 50 states in the US. It's not a lot of penetration. So you know, we'll see, you know, how many more states get onboard by the fall and for how long this is really going to be necessary.
- Meantime, looking forward to the products you're expecting them to unveil this fall, we're expecting the launch to happen in October rather than September when it typically happens. Normally, Mark, you and I are preparing for this to roll out next week, the second week of September. That, to our understanding, is not happening. How will that impact Apple's sales for the holiday quarter, which is typically the biggest quarter for the company?
MARK GURMAN: Yeah, now to be clear, there might be a few products, some of the more minor products, during this month of September. The iOS 14 update will come out this month. But I think the iPhones-- or yes, the iPhones will be announced at an event of some sort in October.
In terms of sales, I think they already priced in for their, you know, internal guidance-- they haven't really announced external guidance because of coronavirus-- that these phones won't launch until several weeks after. I think the interesting thing to see is how long the staggered launch is going to be. So my anticipation is we'll start to see the cheaper, new iPhone 12s launch around third week October in maybe the Pro models more toward the end of October, early November. So you're going to see a little bit of a drawback from that, of course, for the Q1 holiday quarter. What that might do is set Apple up for a strong Q2 as well in 2021.