At apple is going to come from. We sat down at the annual Development Conference as he stakes out New Territory for the companys future, from tv, new rs and apples category product in years, a Smart Speaker called home pod, a direct challenge to amazon and google. On this edition of bloomberg studio 1. 0, apple ceo tim cook. Tim, thank you so much for joining us. It is a pleasure to be here. Tim it is great to see you again, and unbelievable to be here, obviously. Emily lets start with the new Smart Speaker, why should people buy homepods over the competitors . Tim what we tried to do is we tried to develop a breakthrough speaker first. Music is deep in our dna, dating back from itunes and ipod. And so, we wanted something that, number one, sounded unbelievable. And of course, it does a lot of other things, right . And all of those are important, as well, but we wanted a high quality audio experience as well. Emily you are focused on how this can reinvent music in the home. What about these other things . Will i be able to make a phone call, call a car, order groceries . Tim there are a lot of things you can do with it. You know, one of the advantages we have with it is there are a lot of things that siri knows how to do from the phone. And so, we will start with a patch of those, and then you can bet that there is a nice followon activity there as well. Emily lets talk about ecommerce. Ecommerce is very important to these devices. I can order paper towels on my amazon echo, does this tell us about apples aspirations in etail . Tim no, i wouldnt read into it in that regard. What i would read into it is apple is a company that deeply cares about music, and wants to deliver a great audio experience from the home. We feel like we reinvented it in the portable player area, and we think we can reinvent it in the home as well. And we know that people want a speaker to do more than that, and obviously, we want a speaker to do more than that, and so we are sort of combining what has been thought of to be two distinctly Different Things until now. Emily how long have you been working on this . Tim multiple years. So, the Underlying Technology in here is something to behold and to get the experience that we wanted at the quality we wanted you know, like apple products in general take multiple years to do. Starting from the Core Technology and then building up to the product. Emily you have people out there saying, finally, what ook so long . Tim for us, it has never been about being first to anything. If you think back, we didnt have the first mp3 player. We didnt have the first smart phone. We didnt have the first tablet. There was a tablet shipping a decade before, very few people used it. Arguably, we shipped the first modern mp3 player, the first modern smartphone, the first modern tablet, but we werent first in any of those. And so, for us, its not about being first, its about being the best. Emily it is the 10th anniversary of the iphone. You have unveiled the new ios. Ios 11. What does that tell us about what is next . Tim i can tell you ios 11 is unbelievable. And both for iphone and ipad, there are incredible things in it from peertopeer payments. It is the biggest ipad release ever. And an area that i have great personal excitement i am excited about all of it, but i am really excited about ar. And as we get this developer release out in the hands of developers, we will have the largest augmented reality platform in the world. Emily you talked about ar and vr with regards to developers, but what about consumers . When will consumers see an apple ar product . Tim with a Core Technology, and as a platform owner, the first thing, and arguably in some ways the most important, is to build a foundation. And then from the foundation, you can do many things off of it but first, you have to have a solid foundation. Emily peter thiel said that he believes that innovation in smartphones is over. Are the days of Quantum Leaps in smartphone innovation over, or are there more Quantum Leaps to come . Tim you know, i dont agree with that view at all. The thing that drives Quantum Leaps is the Core Technology. And when i think about all of the things that are going to change from a Core Technology point of view in the future, i think we are just getting started, and so i am incredibly excited. And clearly, there is nothing that i think virtually anybody would say will replace smartphones anytime soon. And you know, as time has gone on, the smartphone has become more important to peoples lives. When it started, the phone call was still a dominant reason for having it. Now, if you look at what people are doing on smartphones, it is a minor piece of what a phone s now. And so when i look at that and the health kit and what that has done in terms of getting eoples health data, car play, e use of it in the car i am controlling all of my house with siri using my iphone. And so i think about all of these things, the usage of it, it is something that you just dont leave home without your iphone. No, i think it is in the early stages, still. I dont see it in that light at all. Emily controlling your home with your device is still a fairly niche behavior. When do you see that becoming more mainstream . Tim i think it is going to become more mainstream this year, honestly, because built t into ios 10, after that, you saw more and more accessories coming to the market that are home kit enabled, and it is super easy to set up. We just made it easier for accessory vendors to be compatible with home kit, because you now can use software encryption. You dont have to actually have hardware encryption to go. So, i think that also unleashes even more accessory guys to join. And i think people are increasingly going to want to automate different parts of their home. I wouldnt live without it at this point, right . Its one of those things at you go wow, how could i have ever done that in a different manner . Emily in the past you said, the ipad is the clearest expression for our vision of the future of home computing. Mac sales are holding steady, ipad sales continue to fall. Why is that . Tim you know, we make both, and i am happy with whatever People Choose to buy. Some people will only buy mac, some people only buy ipad. Many of us want both, honestly. So, what we have tried to do with the ipad is bring more codec productivity features to it. I think people buying pcs look at this and think they want to have an ipad pro, and that is great. I think people that have an ipad will want an upgrade. But the mac remains very important to us, so i see it as both of them are computing evices and we are going to keep investing in both, because we think both have a great future. One of the reasons that ipad on the surface just look at the numbers, the units are going down . Keep in mind the ipad mini came out at a point in time that smartphones were fairly small. People had 3. 5 inch or maybe fourinch screens on their smartphone, and so one of the things you are being is a natural move to a smartphone not taking all of that market, but taking a piece of it, and obviously we are ok with that, too. The 7 plus has been phenomenal. We are seeing growth rates that have shocked us. Emily you called President Trump and urged him not to pull out of paris. Tim i did, yes. Emily he didnt listen. What does that mean for your relationship with the president . Emily you have been engaged with this white house. You called President Trump and urged him not to pull out of the paris accord. Tim i did. Emily he didnt listen. What does that mean for your relationship with the president . Tim actually, i would say it a little different. He did listen to me. He didnt decide what i wanted him to decide. Think he decided wrong. I think it is not in the best interest of the United States what he decided. But in terms of you know, the way i look at this thing do you interact with politicians or do you not . My view is that first and foremost, things are about can you help your country . And if you can help your country and you do that by interacting, then you do it. That country eclipses politics. And so, you know, if there is something that we can Work Together that helps people in the United States, then of course we would do it. Emily you have other people that are leaving the table though, like bob iger, like elon musk. Is the president jeopardizing his relationship with one of his key constituencies . The Business Community . Tim i would differentiate leaving a council and advising in a way that you can help the country. I think the first one is a judgment call that people make. I didnt join a council, and so it is not a decision i had to make, but i understand both sides of that. But advising on something that you believe will help america, i think is a requirement as a ceo. You definitely do that. And you know, honestly, if i get the chance to go pitch the Paris Agreement again, im going to do it again. Because i think its very important that we engage to fight Climate Change on a lobal basis. This isnt something where you can solve it country by country. It requires a global action. In missions created in one emissions created in one country affect another. It is something we feel strongly about, and i wanted to do every single thing that we could do to tell how important it was to stay in the agreement. Unfortunately, he decided something different. Emily why didnt you join a council . Tim why didnt i . Because two reasons. One, my primary job is being ceo of the company. I spend the bulk of my waking hours doing that. I do so willingly, because i love the company and the people in it. And so traveling back east isnt something that i look forward to doing except when i eed to do. Secondly, i dont find these councils in general and committees to be terribly productive. But it wasnt about not wanting to advise on something where i thought that we could help or we had a point of view that should be heard. So i am doing the latter. I cannot imagine a situation where i would not do the latter because i think it is in the best interest of america to do it. And i am first and foremost an american. Emily on repatriation, this would be an issue that his important to apple, how would you like a repatriation bill to be structured . Tim in our of view, it should be a deemed repatriation. This means it should be a required pact. So you are not asking the people who have had earnings from International Subsidiaries if they would like to bring back money. You are saying that you must pay the government x percent now or over some period of time. And i think my own advice would be that the u. S. Use that money for a significant infrastructure spend in the u. S. , because it creates obs. I think theres few people that would argue that we dont need investment in america, so that is what i think should be done, i think it should have been done years ago, but it asnt. So, tomorrow is good. Emily you have made it clear that the privacy of apple users is of utmost importance to you. Even as terror attacks continue to happen around the world. Does the new ios strengthen User Security and privacy . Tim these terrorist attacks first of all, our heart goes out to everyone affected by them. They are horrendous, and the u. K. , for us, we have been in the u. K. Pretty much the whole length of time for our company. And it feels like they are our neighbor. We have thousands of employees there, and so our heart goes out, and so, what do we do with helping with this . We have done one thing since the beginning of the app store is we curate the app store. And so, we dont want hate speech on there. We do not want these recruiting kind of things on there. We have tried to be careful from the beginning about not having that stuff on there. I am not saying we will never make a mistake, but actually i do not know of a case where anything has gotten through. We have also been cooperating with the u. K. Government, not only in Law Enforcement kind of matters, but on some of the attacks. And i cannot speak in detail bout that. But in cases where we have information and they have gone through the lawful process, we not just give it, but we do it very, very promptly. I think i would hope, that they would say that we have been cooperating well. And i think, you know, that there is some valuable information. I think there is a misunderstanding about encryption doesnt mean there is no information, right . Because likely metadata xists. And metadata, if you are putting together a profile, is very important. Emily can we assume that apple is always working to make encryption Even Stronger . Tim the reality is that the cyberattacks on people and government i mean, it is happening left and right everywhere these affect your safety, your security. So it is not just privacy. It is not privacy versus security. It is privacy and security versus security. And so, we are always working to try to stay one step ahead of these hackers who, frankly speaking, have gone from the guy in the basement that is a kind of hobbyist, to a sophisticated enterprise. And it takes all that we can do to do it, and we do not think our users should have to think through all of this stuff. It is not practical for people, and so we try to stand up for users and stay one step ahead of these guys. Emily you said cars are an area ripe for disruption. How important is it that apple not miss out on cars . Emily lets talk about the worlds secondbiggest economy, china. How does apple navigate what seems to be uncertain economic and political waters there . Tim china, for us, we make all decisions for the longterm. And so, we are not investing for next quarter or next year, we are thinking about many years out. And as i stand back and look at china, i see megatrends that make china an incredible market, and i dont mean just a market to sell in. I also mean a market for Application Developers. We have 1. 5 million Application Developers in china now. Probably closer to 2 million. Its an incredible marketplace for talent, and in terms of the size of the marketplace. So this the shortterm kinds of economic moves up and down, i dont get too excited about. Emily how realistic is it to expect that doubledigit growth for apple to continue in china . Tim it didnt continue last year. Emily are the days of doubledigit growth over . Tim i think we will do better this quarter than we have the last several. That doesnt mean that we are growing doubledigit or will grow, but it means it will be better yearoveryear comp over than the previous ones. I feel pretty good about that. Iphone 7 is the most popular hone in china. Iphone 7 plus is the third most popular smartphone in china. Last year, the size of our business was almost 50 billion in greater china. So, we are going to stick at it, because i think china is a huge opportunity over time. Emily how would you characterize tim cooks apple versus steve jobs apple . Tim well, i dont think about it very much. What would i say . I guess i would point out that steves dna will always be the dna of apple, or it will be as long as i am ceo. And i think as long as anyone is, honestly. I think it is deeply embedded in the company, and we celebrate it. And it should be like that and should stay like that. Obviously, things evolve over time in some other areas, as they would have if he were sitting here interviewing with you today. There is clearly, im sure, some things that is probably a better question to ask somebody who worked for both of s. Emily you said cars are an area ripe for disruption. How important is it that apple not miss out on cars . Tim i think there is a major disruption looming there, not only for self driving cars, but also the electrification case. Piece. If you have driven an allelectric car, it is actually a marvelous experience. It is a marvelous experience not to stop at the filling station or gas station or whatever you want to call t. Plus, you have ridesharing on top of this. Youve got kind of three vectors of the change happening generally in the same timeframe. And so, as we look at it, and what we are focusing on what we have talked about focusing on publicly, is we are focusing on Autonomous System. Clearly one purpose of Autonomous System is self driving cars, there are others. And we sort of see it as the mother of all ai projects. It is probably one of the most difficult ai projects to work on, and so, autonomy is something that is incredibly exciting for us, but we will see where it takes us. We are not really saying from a Product Point of view what we will do, but we are being straightforward that it is a Core Technology that we view as very important. Emily you are working across so many different platforms, whether its tv, the watch, the ipad, mac, the phone. What do you see now as your vision for the future of personal computing across all of these platforms . Tim the great thing is they are all built on the same Core Technology, right . But we have thought through how they are used and the experience that is needed to get the best experience for the user in each of the cases. And so, out of that came watch os, tv os, and mac ios. We think that when you begin to merge, that the risk is the lowest common denominator kind of approach, and we are staying away from that. I know others have a different view on that, but that is our view, and we are straightforward with it. And so, with tv, we wanted to give an update that amazon was joining the tv app and all apple tvs later in the year, and we are going have more to say about what we are doing in that area later. So i will keep you in suspense a while there. Emily i think everyone will be speculating after that very comment. We will have to leave it there. Apple ceo tim cook, thank you so much. Tim great to see you and spend time with you. Yousef it is 7 00 a. M. In st. Petersburg. Oil sees the biggest drop in two weeks and it is make or break as opec and nonopec meets here to try and