It will cost a consumer about five dollars a month. How the price and content stacks up against other streaming content companies. And the hits keep coming. Mutual fund giant fidelity reduced its wework valuation by 34 in march, adding to the Office Rental companys preipo woes. But first to our top story, it was a big day for apple as the tech giant launched its newest hardware at its annual Product Launch in cupertino, california. Among the new items, a new apple watch and a lowcost ipad, not to mention announcements tied to its new services, apple tv plus and apple arcade. But as always, all eyes were focused on the freshest versions of the iphone. This is the iphone 11 pro, and these are the most powerful and most advanced iphones we have ever built in a stunning new design. Taylor apple unveiled the iphone 11, the iphone 11 pro, and the iphone 11 promax. The iphone 11 is about 50 cheaper than the iphone xr, coming in at around 700. The iphone 11 pro will still hit the same 1100 mark. To discuss, in boston, i joined am by ryan reith and mark gurman. Mark, let me start with you. You have been covering these for years. How did today feel relative to years past . Mark this was, you know another , apple event, but nothing earth shattering. It has been a while since apple came out with an entirely new hardware product that changed the game. The most surprising thing was around pricing, tv plus, apple arcade, the price reduction on the iphone 11 as you mentioned. But in terms of hardware functionality, nothing to write home about. Ryan, let me bring you in here. Talk to me about the iphone, because it still makes up a decent amount of top line for the company. What is your take away when it comes to the iphone . Ryan i think i agree with mark. Not to beat this drum, but i think the story line today is all about pricing. On the hardware side, as mark mentioned, you mentioned the 50 price cut from where we were with the xr. Apple, be honest in my opinion, them leading with services, partnerships that came out with arcade, and then getting to lowercost iphone and even watch pricing shows that they see we have pushed the threshold of the average consumer pretty high on price point, and they have to be cautious of that because the important thing is making sure the base grows, which i think they are still doing a good job at that. Taylor are they maxed out at a 1000 iphone . I dont think we would ever max things out because starting points are never what the highest point actually gets to. We are probably talking upwards of 1500, 1600 for the highest configuration. I think there are going to continue to push things, but they are realizing the audience who will actually pay that price to use those features is smaller than you know it was when their highest iphone price was 800. It is sort of a changing of the times. It is not apple only being affected by that. Their main competitors, samsung and huawei, are affected the same way. It is sort of a just a changing times. I think we will continue to see price points that will sit over 1000 with iphones. Taylor mark, i want to come into my terminal, gtv. What we are taking a look at in white is the average sales price, starting to rise a little bit. But along with that on the righthand column is the number of iphones sold, which is slowly dipping down. What does that tell you about where we are in the cycle . Mark it tells us that there really has been a combination of rising prices and a decrease in it is ironic given the thing today innovation. , the changes here are all about the camera. If you go to apples website about the iphone 11 pro, 75 is about the new camera functionality. That is what the past few years have been about. The last time we saw a real breakthrough change was the iphone x two years ago. We are expecting bigger changes again next year as prices are coming down, so i think things will start to rebound in about 12 months. Taylor ryan, what do you make of this device no longer being an iphone but really a camera that has some audio capabilities . Ryan it has probably been more than a phone for quite some time. Right . It is a good question. I think the features they have introduced, some of which have met some people say, things like night mode have met up with what google has done and others, and thats great. I think whats important to recognize is what the average consumer actually does with their camera. And i think to be honest, not just for apple but for some of these others, some of the features they are integrating, a lot of that is done through software and not just modules and number of megapixels. I dont think personally everyone is actually utilizing that to the full benefit. Having said that, everybody wants the latest and greatest, so it is important they continue to innovate. Clearly they have been a Market Leader in photography and they continue to be so. Ryan the lowest price , point comes in at 700. Last year it was 750. Does that concern you as it relates to apple or the industry . Ryan no, it doesnt concern me on either. To be honest, like i said, if i am apple and i am looking at a longterm strategy, there is many things going on. There is products we dont know about, continuing the product lines we have. I think the main thing for them though is making sure they dont lose their install base and, more importantly, they grow it. I think by recognizing there is a large number of users that are frustrated with the price points of smartphones in general, how high they have gone i think it , is perfect for them to play into the fact, to say, listen, we are going to continue to innovate. You can still get a new iphone thats topoftheline quality that is not going to be priced at the 1000 price point or above and is actually going to be less than the same product line last year with the xr. I think the strategy is right. Everybody has to test the waters in terms of pricing for the average consumer because nobody really knows where that stops. But if you look at the last five years, the average phone prices have grown so much compared to the 10 years leading up to that, it is a night and day comparison. It has to stop at some point. Taylor we wont get 5g until a year from now, so why do i care . Mark 5g in the United States is just rolling out now. Not a big deal. The real impact is going to be in china. Taylor wonderful. Idcs ryan reith and mark gurman, thank you for joining me. Coming up, watching your health. While apple is betting on a wearable that will help it transform the health industry. That is next. And if you like bloomberg news, check us out on the radio on the bloomberg app, bloomberg. Com, and in the u. S. On sirius xm. This is bloomberg. Taylor apple has debuted an always on retina display that never sleeps as part of its series five watch unveiling. Beyond the screen, apple says it continues to pursue ways to boost health, as ceo tim cook pointed out. We are really excited about the impact a research app can have. Us, alllf, it gives of us an amazing opportunity to purchase a paid in Health Research that could lead to innovations to improve our health and the health of future generations. Taylor to discuss let me bring , in and go over to apples headquarters in cupertino, california where carolina milanesi is standing by. Talk to me how much of a , surprise was the watch five today . Carolina i think from a watch perspective, what was interesting is i think nobody has really thought about the always on screen. A lot of people had complained from the get go that that was a feature that consumers wanted, especially consumers that were trying to switch from a traditional watch to a smartwatch. But today was really about moving the envelope on the health side and really hearing apple clearly that this is an area where they want to continue to develop, they want to stay for the long run, and creating a Health Research app speaks to that. Taylor is pricing it 399 competitive or expensive . Carolina 399 is competitive and even more competitive is the 199 price point of the thirdgeneration apple watch. We always get carried away and excited about the latest models, but when you look at the lineup, i think thats where it is becoming more and more obvious that apple wants to get consumers that are part of their instore base to venture into new devices. You might be an iphone user and have yet to find out what the value add of an apple watch might be. 199 price point is maybe an easier to get you to try than the 399. Taylor the 199 for the three that they lowered today, you think that is a good thing the company is doing . Carolina absolutely. It is getting the entrylevel more interesting for consumers. We had a bit of an impasse on the android side as far as android wear and new devices coming to the android ecosystem, outside of fitbit, which i am sure today is going to look worried about the 199 price point. We have not seen a lot of uptake on the watch formfactor. There is lots of bands out there fitness bands, but not so many watches. Taylor right. You mentioned fitbit. I was looking at that earlier as well. How concerned should other wearables be today . Carolina i think they should be quite concerned. I think apple watch has become the smartwatch that the rest of the industry is looking up to, and that 199 price point is super competitive with a device that doesnt feel like you are really compromising your experience. Thats the core part, you are not getting a device that you feel doesnt give you the key features that you want. And so why not try and see what it can do for you . Taylor talk to me finally about integrating services and doing Health Research. What about the future of health and apple excites you . Carolina i think to me, thats the next level. It is not just something apple wants to do for the goodness of the human race, so to speak, as far as making us all more healthy. It is really a good way to get people to see value from the ecosystem at a level where it impacts their lives. It is not just about entertainment. It is not about having a gadget, but it is really having a device that can make a difference in your life. They played a video during the keynote that spoke to that, having people that have had heart arrhythmia highlighted to them by the watch and being able to get to the hospital on time and prevent something that would have changed their life forever. That is very, very powerful. Taylor that was Creative Strategies principal analyst carolina milanesi. Thank you for joining me. And from a hotly anticipated ipo to will that even happen, that is the concern around weworks public debut. The Office Rental companys biggest backer softbank is pushing the company to postpone its offering amid concern about a drop in valuation. Earlier this year, Goldman Sachs pitched wework as a 65 billion business. Now there is word that mutual Fund Fidelity cut its stake in wework in march. To discuss i want to bring in bloomberg techs ellen huet. The ipo is in flux. Is this because of wework or softbank . Ellen i think it is a log of a lot of different factors. We are seeing confusion at reporting suggesting some divisiveness within the wework and softbank relationship about how to proceed in the highly anticipated ipo. So like you mentioned, this is something wework was planning since they first filed confidential documents to go public late last year, but as things have progressed, it sounds like the evaluation has started to drop below what the company had expected and what its most recent valuation was at 70 million. Taylor how much of it is concerns about wework versus the market volatility and the tough ipo market frankly that it has been this year . Ellen it is probably both. There were timing issues. Earlier in the summer when we were reporting on timing the wework ipo, there was discussion around wanting to get the ipo done while the market was still in a good place. At the same time, some of the revelations that came from the public ipo prospectus in august have stirred up more discussion about conflicts of interest within wework, in particular related to their ceo adam , newman. This is a company that had very complicated Corporate Structure as well as a lot more related transactions than your average company. Taylor i want to come into my terminal at gtv. With ipos, we talk about equity markets. I want to fold this into a high Level Analysis of the bond market. We are now for the first time dipping below par, the first time as you mentioned really going back a few months. We are now under par, . 98 on the dollar. Without analyzing bond fundamentals, what does this tell you about the level of nervousness in the market . Ellen i think it indicates bondholders are having concerns about what the future of the bond can look like. This is a bond that wework first started selling early last year. And as you mentioned, it has been above par since about august. That is when the f1 went public. There was optimism an ipo could come and the cash infusion could then help support the bond. And now i think as we are seeing that the ipo plan is in flux, bondholders are reacting with concern. Taylor after softbank, other big investors, namely fidelity, cut their valuation of wework going back to march. What did they see that the market were wall street did not see until now . Ellen i am not sure we will know. When fidelity reviews their internal evaluations around some of their holdings they dont , usually make it clear why. I think we can have some guesses as to maybe they were anticipating an ipo and trying to react to the news knowing that the equity could soon be public. It is hard to understand. Has just been a company that has been under a lot of scrutiny and as each development has come forward, we have seen some changes. Every time they announce, it seems like they are going to go public, then it seems like not. I think we are going to have to wait and see. Taylor dont even get me started on how to discount the cash flows of future lease payments. Thank you. That was bloombergs ellen hewitt. Coming up, five dollars. Thats how much customers will pay monthly to stream apple tv, that is compared to 13 for netflix and 15 for cbs all access. We break down the competition in the streaming space, next. And Bloomberg Technology is livestreaming on twitter. And bes out technology sure to follow our global breaking news network tictoc on twitter. This is bloomberg. Tter. This is bloomberg. Taylor as we continue to report, apple launches products at its event in cupertino, but the tech giant still pushes to become a Services Company. This holds true when it comes to the apple tv. All of these incredible shows for the price of a single movie rental. This is crazy. [laughter] we are so excited about apple tv plus that we wanted to do something really special. And so starting today when you buy an iphone, ipad, mac, or apple tv, you will get one year of apple tv plus included for free. [applause] taylor so does this new incentive show that apple is really pushing into services or still relying on hardware . To discuss i am joined by Forrester Research analyst julie ask. So julie, Services Company or Hardware Company . Julie it is ever increasingly becoming a Services Company. I think the announcement around apple tv plus is significant for several reasons. I think it is the first time we have seen apple create content. Together apple tv plus arcade fills two gaps in the Subscription Services. You know, it already has news. It has music. If you add that up, it is easy to see apple is getting 400 or 500 per year in Services Revenue from any customer. It fundamentally changes their Business Model in how they sell. They go from a Device Company that is trying to keep customers excited and get a purchase every 2, 4 years, to a company that is collecting revenue on a monthly basis. The Services Revenue is already 15 to 20 of their revenue and you imagine that these Additional Services make that even stickier. This is a different game apple has been playing and it makes it different for how you think about the company. Taylor how competitive is 4. 99 a month . Julie i think when you look at the 4. 99 a month, you have to take into context that apple doesnt have the same kind of library that netflix or some competitors do. I believe it is a Solid Foundation and a good starting point, especially with giving it away with new hardware purchases, it gives its consumers a chance to try it and experience it before they make an even bigger play. Taylor julie, i want to come into my terminal at gtv. Basically all you need to know is we are looking at a massive debt pile of apple. Cash, i should say. Massive cash pile, more than 200 billion. Is that cash they have been storing to now start spending to keep up with netflix . Julie i think thats one of the areas they can spend the money. They could also spend the money supporting Game Development as part of arcade. But i think absolutely, what today indicates, they will spend more money and push forward with the services business. Taylor it was notable that the shares reacted not on the pricing of 4. 99, but on the fact that when you buy a new device, you now get one year free. The shares of their competitors like disney, roku, all started to fall. Does that show apple is still reliant so much on that hardware . Just, ifthink if you you look at their financials, yes, they are reliant on the hardware. It is still 70 , 80 of their revenue. You are looking at something more about the future of what apple will be. If you look at how quickly their Services Revenue is growing, it is already 50 , the more they can get consumers into subscriptions, the stickier those services can be and the faster the revenue will grow. And the turnover the switching , costs on that and devices will be higher. The other thing you have to keep in mind is the more services, the more consumers they get committed to subscriptions, the more valuable the devices become. And then those two things play off one another. It also shows the strength they are building with a vertical integration of hardware, software, the Services Including cont