Apple iPhone Duo Debuts, Elon Musk’s Data Center Snag, Will AI Cause Humanity’s Demise?

0:12Welcome everyone to the information's TI TV. My name is Akash Pasricha. It is Thursday, September 10th. Today on the show, Apple unveiled its long awaited foldable iPhone. We're going to bring on an analyst who was on site at Apple Park for his review of the device. We're then going to get to our exclusive reporting on how SpaceX is changing the way that its data centers are built and the tradeoffs that come with the new approach. We've also got exclusive reporting on OpenAI, restricting ads in ChatGPT from competitors that offer image and audio generation features. We're going to close out the show with a conversation with the CEO of Asana about the company's latest quarter.

0:54It's going to be a great show, so let's get right on into it. Apple announced its folding iPhone duo yesterday. It was John Ternus' first keynote as CEO. Executives were touting the continuous interface between the folded and unfolded modes. The phone starts at about$2 ,000, goes up to around$3 ,200. Ben Beharin from Creative Strategies, he is CEO of that company, was on site at Apple Park. I want to bring him on for his review. Ben, welcome back to the show. It's great to have you here. Yeah, thanks for having me. So how was John Ternus? Let's start there. This was his first keynote. Yeah. I mean, you know, he wasn't a surprise in terms of his presentation style.

1:34You know, he's been on camera before, obviously been a part of these events before. So I don't think his like how natural he was, right, was a surprise. Everybody knew he had good candor, ability to, you know, speak clearly and kind of have that Apple presenter vibe, if you will. Was the vibe different at all compared to the Tim Cook keynotes? or was it like literally exactly the same? No, I mean, obviously, right. You sit there, we sit there and watch the same video that others do, right? So there's very little like executive presence on stage. But I think in general, there was a good crowd reaction.

2:10People were pretty, you know, receptive to him. You know, he did come briefly on stage and do something right in advance of that, just talk to us. And, you know, and I think what's nice is, you know, to be honest, like this is, you know, I've been following, i've been going to apple events since 2001 so i've seen a lot of them and you know what i appreciated was you know he kind of stepped into the moment and recognized you know what i just would loosely say the inheritance that he has that is apple right which is it is not just a company it's a culture it's a way of being a way of designing products and i know for a lot of people that like breaks their brain but there's something very different about apple because of the approach and the culture internally.

2:52And anytime you get a new leader, you want to know that or have confidence that that culture is going to continue, right? This was the sole concern when, you know, Steve Jobs passed away was that could the culture continue with Tim Cook and beyond? Like that was really everyone's concern, which, because that was what made Apple Apple. And I think knowing that he understands that, he was obviously there in the Steve Jobs era, he gets the culture and that he understands the gravitas of the situation and the inheritance he has, and he's committed to keeping that forward. So I thought that was a great stage setting for him to emphasize that point.

3:30Right. Well, look, he stepped in at quite a moment here. I mean, the foldable phone is probably the biggest change to the iPhone that we've seen, they say, since the iPhone was invented. I think you could probably agree with that. What were your reviews of the device? You held it in your hand. What do you think? Yeah. No, it's a great piece of hardware. Again, I think that there is a lot of good foldable hardware out there, right? So I wouldn't say like in general, Apple's just crushed the competition when it comes to hardware. You've actually noticed a lot of these new Chinese smartphones as well as Samsung is now adopting this more passport-like form factor.

4:11So there They're in line with the trend, but the difference was the software. I mean, really, like I've used a bunch of foldables. Folks on our team have been deep in foldables. And really, the complaint has always been the software, right? Just feels like a candy bar smartphone software that's now on a bigger kind of folding phone. And so I think Apple went to great lengths to make the software highly differentiated and a unique experience for that form factor. And all of the things you did with it, the demos they showed, the stuff we got to do with a hands-on, like really showcased how clean that software is.

4:46And that it really leverages. But when you say software, I mean, are you talking just about the, like the whole, when you open it, it sort of, you know, you peer through the blurriness. Like it's continuous. I get that. I mean, outside of that, which it's nice to have, although I don't know, you know, as long as it's continuous, it doesn't matter to me. Think the whole operating system, right? It's like an operating system that's kind of a blend between iPad and iPhone. You don't have something like this in iPad that can shrink down to a small aspect ratio when you hold it, but then also kind of goes up.

5:21And so it's just the operating system, the software ability to handle those modes, have apps be kind of truly in a dual screen, same aspect ratio type of an environment was very, very good. Because again, there isn't a screen size that exists both when this is closed, front screen, or open. It's close to iPad mini when open, but it's a little bit smaller. And so they had to make those adaptations. And it doesn't feel like it was just iPad shrunk down or iPhone shrunk up, I guess is the point I make. It felt well implemented for the form factor. And it didn't feel too wide in your hand, even when it's closed.

6:03I mean, that was my biggest concern. I haven't held it, but I mean, I don't particularly enjoy the width of my passport, to be honest. So, and, you know, I was sort of trying to figure out if I'm putting a passport to my ear, what's that experience like? What did it feel like in your hand? Yeah, I think it felt okay. I mean, again, I don't have small hands, right? So I would say maybe average to above average. Yeah. I tried everything, like using it, right, one-handed like this, two-handed when it was folded, right? And it felt relevant. It is different, right? I do think people are going to have to see it and judge for themselves.

6:41And again, right, just look at the foldables category. It has largely not been very big. Globally, historically, less than 20 million units, right? And so there's a place for it. I don't think the vast majority of people gravitate to a foldable smartphone. I think they still prefer the phone sizes that they use today, but there is a market for it. And I think that's more - Who is that market? I mean, who is this phone meant for, would you say? I think there's a couple things. There's people who are out and about, probably don't use their computers as much, right? Want a bigger screen when they're out at lunch or out at the park or on the train or on the subway or any of these things, and would find value in that kind of additional form factor that goes to when it's open, right?

7:247.6 inches. So I think there's people who value the entertainment side really more than probably something else. I don't know if there's productivity use cases. They kind of tease that with Apple Pencil. Obviously, there's camera trade-offs, so I don't think these are for kind of your creatives who want to go out and create movies and photos out in the world. So I think there's that kind of blend of maybe more entertainment focus. They showed gaming and people who are on the go and want kind of that bigger screen type of an experience. That's at least my read on it. Again, that's not everybody.

7:59I think, again, there's a market for this. I think Apple immediately comes in and helps double the size of the foldable market. But again, we're still talking a small percentage of the overall iPhone sales will still be foldables for the foreseeable future. Well, and I got to say the creative trade-offs here, the fact that this is not meant for creators or creatives because of the camera trade-offs. I mean, that was one of the most disappointing parts for me, at least, because I was pretty excited about this. and to be honest the most compelling feature of it was which is not unique to apple but it's the idea that you can take a photo and also you can see you know the photo on the other side uh which look i mean i can't even count the number of times that i'm at somebody to take some tape something of me or something and it's just never you know the framing that you want i just wish that the camera was better.

8:55So my question is, was this, and let's get to price, was it because of price that they couldn't fathom even making it more expensive? Or why didn't they go that route of the camera? No, it's similar, right, to iPhone Air. I think it's a space thing, right? When the device is that thin, the camera console or mechanism itself is actually a little bit bigger and thicker, right? And so that's an engineering problem. And so I think, you know, again, just look long-term, right? I think they, over the next two to three years, as they expand this category, they'll bring more of those features. Like I would fully expect there to be less camera trade-offs in the future.

9:32I wouldn't say zero, but less. And same with things like Face ID, right? Which it didn't have. It's gone back to Touch ID. That's a space problem, right? It's the thicker module. So those are things I think engineering, right? Will bring to minimize those trade-offs. But again, but look, again, like I said, you know, there's markets. China's another one that's huge with foldables and growing. So for their presence in China, this is an essential form factor. And I think folks in developed markets will start to get used to it. But you're right. It's going to skew toward those who really would value that on-the-go, pocketable, big-screen experience.

10:09And we'll see. We'll see what the reaction is once people go to stores and get their hands on it for the first time. But it's a great product. Right. What about the price? I mean, this is the big thing. Do you think that... I mean, look, I hear what you're saying. It's a small market. People who want the foldable phone, maybe they will get around the price. How do you think that changes in the years to come? And also, I mean, if you look at the overall strategy here, how big a part of Apple's iPhone strategy is this device. Yeah. I mean, I think it's an important part of the portfolio, right? I think that's how you have to look at it.

10:50Again, there's other markets where foldables are much more mature. Like I said, like China, and there's other markets where Apple's really growing in India, which I also know is a price-sensitive market. I'm not saying everybody in India can afford this, but these are people who don't really use computers with big screens very often. So for them, there's a lot of value in big screens. In fact, if you just look back at the entire reason that Apple went to a large screen, so what was the iPhone Pro in back of the day, it was because China. China had, they were called phablets at the time, if anybody remembers, and Apple did that to keep relevance in China, and then it ended up being great for the rest of the world.

11:36So I think think this becomes the dominant part of that portfolio, if ever, right, anytime soon. But to your price point, you know, there's a couple things. Most markets now, including China, are doing payment plans, right? So you can, for either zero interest or just pay this off over time with your carriers via financing, that's standard in every market, right? And so while that does bump it up, right, from 1 ,200, it's not that big of a jump, right, initially. But I do think right i think this is the most important point our research has constantly shown in consumer markets like anytime the price goes up to a specific area the lens in which the person evaluates that product goes up a lot so you this is going to be one of those things that's not you know splurge and buy a two thousand dollar phone right you either know you really like it or if you're not sold right you'll go you go in different direction so i again i'm very curious how the market responds to this.

12:32It's new ground for Apple. Like we always think, right, there's a built-in early adopter install base who will just buy anything and that it will do well with them. But I want to see the broader market reaction, right? What about the supply chain angle to this, Ben? Is there anything unique here about this phone that we know of that, or any considerations Apple might make in terms of how many they produce, what the demand is for a product like this? I mean, is that a consideration that you think about at all? Oh, 100%. I mean, I think there's two parts to this, right? It is obviously very hard to manufacture.

13:10That's continually been one of the things that's kind of been in the foldable supply chain. But again, I think there's the market demand for this, right? That doesn't mean that they can't flex up the supply chain if there's more demand, but the hinge, the dual-layered glass, like all of the things that they've brought to this is very, like it's a new manufacturing process to scale. We have heard kind of first year, so full cycle estimates from now to kind of end of 26 is somewhere in that maybe 15 to 20 million range that they could make in that ballpark, Again, they could scale down if need be.

13:47I don't know how much they can scale up to that, to be honest with you. But you're seeing them basically build up to be, you know, kind of what the size of the foldable market is. But there's a really good chance that they remain supply constrained, right, by this for the foreseeable future and struggle to meet kind of that initial demand. I think that's a fair – you know, we've seen this before in early iPhone launches. And I think the reception, again, from their early adopter base will be strong. And so they'll be up against those supply chain constraints. How big that scales up, like I said, over the course of the next year will be a question that we'll track, right, and work that we do in the supply chain.

14:23But yeah, it's not the kind of thing. Doubling, if they're making$20 million, you said the market itself is$20 million, right? I mean, that's the scale of Apple for you right there. Even if they sneeze at something, it makes a dent. So Ben, I want to thank you for coming on. It was a great conversation. That is Ben Beharan, CEO and Principal Analyst at Creative Strategies here on TI TV. SpaceX is changing the way that its data centers will be built. That is according to new exclusive reporting from The Information's Elon Musk reporter. Grace Kay has the details. She joins me now to share with us what she learned.

15:01Grace, welcome back to the show. It's great to have you here. Thanks. Great to be here. So what's changing with SpaceX's data center strategy here? Yeah, so they are changing some strategies to make it more reliable. So they're building in more redundancies early on. So that would be backup cooling and power systems. They're also looking to, when they launch data centers, use less temporary systems like turbines, you know, temporary cooling systems. So basically, they're changing a lot of things that made the company be able to move really quickly. And why are they doing that? It sounds like they're coming in to address some reliability concerns and, you know, push it towards being, you know, easier.

15:43You're smiling. These are like, this is like the open secret, right? The data centers, they just keep getting hit with these problems, right? Yeah, I think it's like a mix of like, you know, they're saying they're coming in for reliability concerns. And then I think part of it is also SpaceX is just getting involved in every facet of XAI. So, you know, that's, you know, part of it. But it's also just, you know, they're kind of putting the SpaceX brand on XAI now. Okay. And then who's calling the shots? I mean, you know, slow doesn't really seem to be the way that Elon Musk likes to work. So, I mean, Is he the one calling the shots here?

16:19Is he on board with this? Yeah, it's definitely a switch up. The people calling the shots are definitely put in place by Elon Musk. So this VP of production from SpaceX who led production for the Falcon and the Dragon, Wesley Salandro, is in charge of the effort. He's brought on a lot of people from SpaceX. They actually had people sign up to, you know, they circulated a petition around SpaceX to see if people wanted to join to help with data centers. And more than 1 ,300 people offered, and now they've brought in several hundred of those people to help. So I kind of want to get to the meat of the matter here, which is that speed was very much the advantage that XAI, when it was just XAI, touted with its data center build out.

17:07I mean, you pointed out in your story, I mean, what, They got Colossus 1, maybe 2. I forget which Colossus is built. They're both built, right? Yeah, they're both built. Colossus 1 went up in 122 days, yeah, which is really fast in the industry where it usually takes a few years. Right. That scale. So, yeah, that's one of their main advantages, and this could definitely change that. I think that they're going to still have really ambitious timelines, and they're still going to move faster than other hyperscalers, but I think maybe not as fast as before as a natural result of adding in these different measures.

17:46But net net, I mean, do you think this ends up being a positive for the company? I mean, reliability seems to be a pretty important part of the data center actually working. It doesn't matter if you can get it up 123 days, it doesn't work. You know, it doesn't do anything. But, you know, I wonder if sources you've talked to or, you know, maybe investors in SpaceX, you know, do you think that they really value the trade-off here, or is this really a productive move for them? Yeah, it really depends on who you ask. I think reliability is a good thing, especially when you have customers like Google and Anthropic, but they also, you know, the longer it takes them to bring up a data center, the more money they lose, so that's a big thing.

18:27I also think that it's not a good sign that a few weeks after SpaceX leadership took over and started making these changes, going back and looking at old data centers and seeing what they could redesign, that there was a major outage at one of the data centers. I think that's not a great sign for them coming in. Meaning that the changes haven't been working so far? So I think the changes have caused a little bit of instability in the company. And when new people come in, maybe they don't know how it works in the same way that people who've been working on the system for several years do. And I think sometimes that can cause issues.

19:03And I think the recent outage is an example of that. And so, Grace, the folks that you talk to, do they think that these new leaders that Elon has put in place and this new approach, however slow it might be, do they think it is slow enough? Do they think that these are the right people to solve the issues? Or is there still a bit of concern maybe in the data center community that, hey, this is still a bit of a rogue operation. We still have concerns about if they'll be able to meet the demands of these customers and stuff like that. Yeah, I think it depends on who you ask. I mean, I think adding reliability is a good thing and adding these backup systems earlier on will definitely do that.

19:48But I think there are some concerns within XAI because the people coming in don't necessarily have data center experience. So So, you know, like Wesley, who's leading the project, he, you know, led production for rocket ships, which is very different than data centers. And a lot of these leaders coming in don't necessarily have that background. Right. Grace, well, I want to thank you for coming on. That is Grace Kay, our Elon Musk reporter here at The Information. OpenAI's ad business is growing fast, but now the company is changing. Who can actually advertise on the platform according to exclusive new reporting from The Information?

20:23I want to bring on Alix Koutour, who reported that story with our co-executive editor, Amir Afradi. Alix, welcome back to the show. It's great to have you here. Hi, Akash. How is OpenAI changing its advertising strategy, Alix? Well, we don't really know whether or not this is a big shift for OpenAI. What we know is that yesterday, business partners received an email informing them that they will no longer be able to advertise its products on Shack GPT for image and audio generated products specifically, not video. So we don't really know if it's a big shift or not because it's really in specific categories, and that is audio and image, not video.

21:16And it's really directly competing with ChatGPT's product. We also don't know how widespread the change is. we know that Adobe's team started noticing that for certain QueerEyes, such as how do I edit that photo or how do I generate that image, outside citations and links have no longer been linked to those QueerEyes. So Adobe has been noticing that for the past week and it was confirmed yesterday. We don't know whether it's widespread or not, whether it's a big shift or not. We just know that for competing products it's happening right now i mean we have uh heard about open ai's ad business from the company they have said publicly that they uh i think last month they were on track to hit a billion dollars in annualized revenue for that business so it's growing quickly this obviously could be a trade-off right i i mean adobe alone i don't know how much they advertise But, you know, if you sort of broaden the basket to other such companies that produce image or audio generation, I mean, why do you think they would want to sort of hamstring their own revenue growth right at the start here?

22:38Well, it does raise questions and industry people have been wondering why do that when it just hit$1 billion in revenue last month, which fell short of its target by the end of the year. It targets$2.4 billion in revenue by the end of the year. So the$1 billion suggests that it will be challenging to get there. So some people wonder why do this. I think for Adobe, it makes sense because the products that are prohibited from being advertised are competing really directly with its own features. So OpenAI just released its ChatGPT Images 2.5 product, and that is really, really good at editing. So that will compete directly with Adobe.

23:43Also, ChatGPT is really good at text to image, and that, again, competes directly with Adobe's Firefly product. So that's the reason. and it really competes directly. Whether or not it's widespread will tell us whether it's a shift or not. And if it's only Adobe's product, and if it really is only for video and image, for audio and image in certain categories and for certain players, then the impact for OpenAI's revenue will probably be very significant. Narrow. Not very significant. Yeah. Alex, do you have a sense for how common this is in the advertising industry? I mean, I think, look, we were talking here in the newsroom this morning, and we see TikTok ads on YouTube sometimes.

24:41So sometimes these advertisers get too big to ignore in terms of their spend. But outside of that, is this common for platforms to restrict who can advertise on their platforms? Well, it happens often. It does happen often for big or small players. We know that Disney, Netflix, Paramount have been doing this. Meta or Amazon have been doing this. The question is not really how big a partner is to ignore, but it's more about how big the company banning competitors is and how much market power it has, because it will easily look like a bully if it starts prohibiting partners from advertising on its platform.

25:32If it's really, really big and it has a lot of market power, then it can face really easily antitrust problems and issues. So there's a lot of antitrust questions when you're very big. OpenAI can still afford to do that because it's not big enough. So then for the big companies, it is common. But then it's up to them to decide whether or not they want to have reputational effects down the road. How big a hit do you think this is to Adobe in terms of getting their product in front of customers? OpenAI is just one distribution channel, but I mean, what's your assessment of that? It's very small.

26:19It's very, very small. Adobe started advertising its products in ChatGPT in February, so very recently. and it's extremely narrow compared to the revenue it makes on meta or google. It was really just, it was not one of the early adopters of chat GPT's advertising features, but it will really not be a big hit for them. So it is extremely symbolic. Right. Great. Well, Alix, I want to thank you for coming on. That is Alice Couture, our reporter here at The Information. Asana reported its second quarter results last week. Revenue grew 10%, about the same as last quarter. The company is guiding to 9 % growth for the full year.

27:11I want to bring on CEO Dan Rogers for our conversation about the current state of play. Dan, welcome back to the show. It's great to have you here. Yeah, great to be back, Akash. Nice to see you again. So, Dan, I was re-watching our conversation from March. you had come on to talk about the launch of AI Teammates back then. It's been about six months. I had asked you a question at that point about why, in your view, investors were trading shares of Asana at about half the median multiple for software companies. One of the things you had said was, well, until that point, you launched AI Teammates, we hadn't had the right product mix to really fit with what the market was hoping for.

27:53It's been six months now since the launch of AI Teammates and AI Studio came much before that. The multiple hasn't really moved. And so what is your assessment here of the current situation? Well, let's talk about the things that we can control. So the controllables are all of our KPIs. You saw in this earnings, really across the board and all of our metrics, they were stellar. But the thing that I was most excited about was the AI attach. And you saw that in our largest customers, AI products are attaching at 25 % now. And in fact, they've represented 25 % of our net new ARR. So that's AI teammates and AI studio.

28:35So I guess the prediction has really come to pass and maybe even a little bit faster than we were expecting. So that's really phase one was really around AI teammates in AI studio. Phase two is actually coming in the next couple of weeks, which is where you'll see all of our new products against our new buying centers. So Asana service management for IT teams, Asana command, which is for R &D teams, Asana client management for client-facing teams. So the innovation under the hood is progressing very nicely. So help me understand here then, so the growth rate for this year, I mean, you're guiding to 9%, which is the same 9 % as last year.