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Having Apple use their own microprocessor and not depending on Intel or Samsung is a big deal: Fmr. Apple CEO

John Sculley, Former Apple CEO and Current CMO and Chairman of RxAdvance joins the Yahoo Finance live panel to discuss Apple and the products from their latest Fall event.

Video Transcript

ZACK GUZMAN: Welcome back to Yahoo Finance Live. I want to spotlight shares of Apple right now, up more than 2% after their big roll-out of Macs their new in-house design chips. The company unveiled the anticipated M1 microchips to enable faster performance, better battery life, perhaps even bigger profits after shifting away from Intel chips. Of course, the hardware update follows the new iPhone rollout and updated wearables with a focus on health earlier this year at Apple too. Joining us now to break it all down in terms of Apple's new endeavors is John Sculley, who led Apple as CEO for a decade and current CMO and chairman of RX Advance as well. John, it's good to be chatting with you today. First off, just want to get your take on the momentous shift away from Intel here and what it signals to you as Apple clearly has now a lot on its plate.

JOHN SCULLEY: Well, I think Apple is making very smart moves. As we all know, Apple doesn't usually care about being the first. They care about being the best. So for years, they have lagged about 18 months behind Samsung in terms of technology like the latest cameras inside of the iPhone. But this new microprocessor that is hung around at Apple is a really big deal, because as Apple has focused on security being important, particularly in health care, the fact that they can do so much on board on an iPhone, now they can do it on a Mac-- that's a big deal.

And particularly as we see things like video and online gaming and many of the really big growth areas-- and health care, of course-- having Apple use their own microprocessor, not dependent on Intel, not dependent on Samsung as much as they had been in the past, that's a big deal, and you'll see that playing out throughout the decade, I believe, in many new types of capabilities and services from Apple.

AKIKO FUJITA: And, John, on those microprocessors, that really just the latest step from Apple to try and fortify its ecosystem. You talked about health care-- that's certainly been a big growth area for Apple. We saw the most recent Apple Watches being able to measure blood oxygen levels, very timely with what's happening with the pandemic. As you look at that particular segment for Apple, where are we in the growth story for that? Is this just the beginning? How much growth do you see moving forward from here?

JOHN SCULLEY: Well, Tim Cook has said publicly a number of times that he believes that perhaps the greatest legacy of Apple could well be in health care. And I think it's going to go well beyond what Apple has done so far with their very successful Apple Watch. But let me kind of Zoom out and give you a context. I've spent the last 14 years, largely, working in health tech.

And the thing that I think about is that we have a US health care industry that is approaching $4 trillion. About 85% of that spend, of that almost $4 trillion, is with chronic care patients. And so it's really a sick care industry. And so when big tech, whether it's Apple or Amazon or Google or even entrepreneurial companies, think about it, they are starting to focus on not the sick care, but they're focusing on the fact that about 75% of chronic care diseases are reversible-- type 2 diabetes, reversible, sleep apnea, reversible, certain types of heart ailments are reversible, obesity, reversible.

So what the real opportunity for technology-- and Apple is obviously, you know, a leader at this point in health tech-- is to say, how do we focus on preventative and wellness care as opposed to just sick care? And then you can start to play in the importance of health tech and technologies and what the digital economy can play in health care. So that's what really gets me excited. And particularly about things like-- when you think about government policies with a new administration coming in, we've started to see telehealth has become a serious business.

Now Teladoc having acquired Livongo, it's now a $40 billion market cap company, and it's doing about $2 billion of revenue now. And it's the leader in telehealth, but there's other companies like Amwell and MD Live, which are growing incredibly fast. All of these companies have had an acceleration of growth during the pandemic. People couldn't have face to face appointments with their doctors.

Well, we're just at the early days of telehealth. It's less than 10% usage today. It is estimated by many people by later in this decade, it'll be over 40%. So I wouldn't be surprised to see companies like Amazon and Apple and Google looking at telehealth and looking at remote patient monitoring, which means digital, of course. And there are things that the government can continue to do in terms of putting a priority with rules and regulations to make it easier for telehealth to become as broadly adopted over this decade as fintech has been over the last decade.

ZACK GUZMAN: And, John, I mean, on that opportunity, when you look at it, having led Apple before, do you think that the way the company is structured now under Tim Cook is good enough to have them capitalize on that opportunity you're describing? Or do you think that right now the company might need to acquire some of these people who are already working intensely, specifically focused on health care, rather than developing some of these things internally?

JOHN SCULLEY: Well, Apple has never grown its company through acquisition. You know, it does acquire, you know, lots of little companies-- I think over 200 companies in the past decade have been acquired by Apple. But these are relatively small acquisitions-- several hundred million dollars. The one exception was Beats, where they had to get into streaming music quickly. But I think for the most part, Apple will continue to build its own businesses.

I don't think it's going to change the way it does. It's organized vertically. It has incredible talent. But it takes its time. It's in no hurry to do things, but it wants to do things better than anybody else. And I don't see why Apple would move away from that formula.

AKIKO FUJITA: John, let me ask you another question that is hanging over the tech space as a whole right now, which is, what does this tension between the US and China really mean for the tech sector? We've certainly seen it very elevated under this administration. We've got another deadline coming up on potentially TikTok getting banned. But now you've got the Biden administration coming in which hasn't made very clear how they're going to approach this. How do you see this relationship evolving, and what does it ultimately mean for innovation on either side?

JOHN SCULLEY: Well, I think the reality is that China is going to continue to be very successful. There is a 100-year journey that China has been pretty articulate about-- by 2049, 100-year anniversary after Mao Tse Tung started what is now the current China Communist Party that they intend to largely replace many of the Western institutions that were created after the Second World War-- you know, like the IMF, like the World Bank, like data and things of that sort.

But that's not going to happen in a military sense. It's going to happen-- if it does happen that way, it's going to happen over another couple of decades. So the reality is China is drawing their boundaries of the parts of the world that they want to have more dominance in, like the South China Sea. The US and China are going to get along. I don't think we're going to see any military actions between us. But the reality is that we have to learn how to coexist.

And I think that the Biden administration is much more experienced than the current administration on how to play that particular strategy out. And I suspect that even though there'll be tensions over different issues between China and the United States, I suspect that we'll learn how to get along a lot better. In the tech world, we already are getting along. Look at companies like Adobe that is incredibly successful, but they have very close ties back to China, which should help them move beyond their original business of doing tools for various types of creative tools. And now they are, you know, in many dominant areas and become a major global company. And we'll continue to see cooperations, I think, between Chinese companies and American companies. They just won't always be in the headlines.

ZACK GUZMAN: And Apple one of those-- certainly one of those companies that is benefiting from those mutual relationships as well. But, John Sculley, I'm privileged to have you on to chat all that today. Thanks again for joining us.

JOHN SCULLEY: Thank you very much.