The paris terror attacks. Officials say his dna was found in a house used by the terrorists. First alleged shooter was arrested friday in brussels after a fourmonth manhunt. E fda is looking to ban gloves made with powder designed to make them easier to wear, which can cause Health Problems for some. Most have already been phased out; only six manufacturers are still making the gloves in the u. S. Says they are looking at hosting a regularseason game in china as early as 2018. The league says several teams are willing to go. Global news, 24 hours a day, powered by 2400 journalists in 150 news bureaus around the world. Im mark crumpton. Emily i am emily chang, and this is bloomberg west. Apple versus the fbi after tim cooks latest remarks, and twitter turns 10 years old. We look at what the next 10 years may hold. First, to our lead. Apple unveiling their new iphone, the se, in cupertino, starting out at 399, the cheapest iphone ever, appealing to loyal customers and potential upgraders, also highgrowth markets, like china and india. Investors not initially crazy about it. But i do want to point out that investors are sometimes slow to digest apple product announcements. Looking back since steve jobs died, shares on average rose 1. 5 after product launches but retreated by 1. 8 three months after those dates. What about todays news . I want to bring in a Senior Research analyst. And in the studio, we have an analyst and another, and then our bloomberg editor at large, cory johnson. So, cory, i will start with you since you have had a few hours to do just the news. What are your big takeaways . Cory rather than go big or go home, and they won a championship in doing that, and apple is doing the same thing. The 30 Million People, that was a shocking number. 30 Million People bought an iphone 5, and they recognized they have customers who want to use small phones, and they gave them a better smaller phone, and they lowered the price, so a very interesting embrace of these customers, but i look at it as infill rather than creating new markets. Emily what do you think, gene . Gene i think investors are already concerned about this, so that is already priced in. They are being slightly more aggressive, it may be appropriately aggressive, so this is a great price point, because it will be more attractive. At the same time, it will not be at the cost of their margins, so i think investors should feel good about this. The second piece is that the large guidance they gave, many investors believe that included the phone. There quarter ends on march 26, and what that means is that the march quarter does not benefit, so one of the takeaways is they should feel a little bit better about the guidance based about the timing of when this phone is available. Emily this is the lowest priced iphone ever. Will this help invigorate their sales . Lets be clear. There is one billion devices out there. We are looking at a huge audience that is going to expand, perhaps slower than we are used to, but one billion people potentially are using apple devices. Now, how much faster can they grow . How many more users are nonconsumers of iphones . There are billions of people on the planet. Many will have iphones. They are just going to keep improving this product. Emily who is going to buy this phone . Is this people who have not upgraded yet . Or the people who want a smaller screen . Who are they targeting . I think we still see a portion of the base that has not moved yet. This is not always a price driven thing. 20 of the panel, for example, said they are not sure about the size. They will upgrade at some point, but they like it small. The existing base, like the holdouts who are saying i am adamantly set maybe that is 10 or 15 of those owners, so i think the important thing that they are bringing the platform up to current technology, but i think they were very intentional in saying that the First Time Buyer typically buys in at this screen size, but if you look at indonesia and other places, this is the price point, so it is a maturing middle. Consumers, where it is not their first phone. An android phone. Those drawn to apple, they are willing to pay a little bit more, and they are meeting them there in this mid tier price range. Emily gene, swimming against the tide. A slowdown in china, and the smart phone market is quickly saturating in some places. At what point is this outside apples control . Gene some of it is. In china, in the december quarter, it grew 18 yeartoyear, a big deceleration from where it was in september, but it was better than another number that was near 10 . Everyone is up against a headwind. It should be a mid to high single digit business for them for the next years. Even with those headwinds, this should be a growing business. Emily we are seeing a new iphone, and a new watch, and they are lowering the price by 50. What do you think . Horace the question is, what is that price on a per day races, and if you look at how long what is that price on a per day basis, and if you look at how long they have it i have worked on that model and refined it, and now it is coming to about . 70 per day, and we also saw what apple published. 17 for the lowest iphone and up to 31 for the highend model. Think about that. 30 a month versus a dollar a day. This is how i think we should think about these products and ask ourselves how many of those customers there are and how many are, for example, going to add services on top of that, so we are looking at 10 or 20 per year for each device, so that you reduce it to how many users you have and how many how much is spent on each device emily ben, nobody knows how well the watch is selling, and you guys are wearing them, and there are some people who do not wear them at all. Can this be more than a niche product . Ben there are couple of ways to look at the watch product. There was nothing preceding it to give us a reference. The iphone, most of us had something. Most of us were familiar with the ios, and this product, i think it takes time. You see it in the mainstream markets, the everyday buyers who are finding value in the messaging and data. We are optimistic that this product does. The question is, again, how big is this market . We have this with all of the category products that come out, from v. R. And other. The Research Suggests that there is certainly something there. How big that goes is the debate. Making some sense, to unbundle it from the iphone, improve it those will, as the category matures. What we are seeing in the market is just positive it just positive. Emily cory, i went to send it out to you, because you spend a lot of time on your apple i want to send it out to you, because you spent a lot of time on your apple research. Cory you talk about bottom line, and to genes point, the growth in china is kind of the whole story. It shows you really impressive growth into a new market that decelerating growth, so the only way for apple to get that growth, double digit, topline growth, we get to the saturation levels, you are not going to see just replacing the devices is not going to give you double digit growth. You have to have new devices and new so they can do that in emerging markets and beyond. Emily ok, cory johnson from the apple headquarters in cupertino. And horace and ben, you guys are staying with me. And we are following the patent battle with samsung, and a court has agreed to hear the challenge to the award won by apple. A jury had found that they should turn over profits from their phone sales. In a statement, samsung says they welcomed the Court Decision to hear the case. We believe it will support creativity and reward innovation. Apple had no comment on this latest. This has spanned the globe, engulfing every major smartphone maker and billions of dollars spent on patents. There is a ninemonth term that starts in october. And still to come, we ask about apple, what is the next big hit that will really energize sales . Emily turning back to techs top event today, a similar update to the ipad pro, the iphone se. An expert roundtable with gene, ben, horace with me in the studio, who have their dueling ipad pros out. The vertical has been struggling for ipad. Is this ipad pro enough . Horace it is very much off the charts. People consume them greatly, and they use them longer than what an iphone would last, so on the one hand, they are much loved. The idea of a smaller, faster ipad is a continuation of an existing story. This is not something that it is something that makes me jealous even though i have the largest ipad that you can buy. Six months old. Emily you are one of the most fervent ipad fans out there. Horace i use mine a lot, and this makes me jealous, because i think i had the best. Ben one of the categories i study is the pc industry, and as we know, that pc industry has not been doing great. There are 6 million devices that are five years old. I do not know if you have tried to use a fiveyearold pc or even a fouryearold pc, but people are holding onto them. We watch this number grow, and now it is at 600, so you have to reason at some point in time, they are going to do something, so apple started saying the tablet that can replace your pc. We have all said you can replace your pc with your ipad get they had not been saying that, so now you see them targeting that. You have not upgraded your pc, so we want you to consider this. I think that is an interesting part of the story, and that is really the nut they are going after. This idea there are 600 million old pcs out there. Emily a question investors and i think customers have is what is going to be the next big product . Is it the apple tv . Is it a car . Is it owning the living room and doing Something Like the amazon alexa . Gene think about google glass, and the Companies Like google and samsung. Sony. They have all been very vocal about what they are doing in this space. Apple has been making some acquisitions and hiring people, but if you think about the window, it is this mixed reality, different from virtual reality, but this is going to be a paradigm shift in computing. Apple needs to nail this to keep the momentum growing, and i think this is the kind of thing that keeps tim cook up at night. Emily interesting. Horace, quickly, because i want to talk about encryption before we go. Horace i am still optimistic that the watch has a growth story to it. The margins are good. What we are talking about is an important part of the growth story. It is not just a hardware play, but apple is involved in making money in different ways and not just hardware, and that is a message they are putting out there. Emily tim cook on the world stage talking about this battle with the fbi. It was the first thing that he talked about. Horace, we will start with you. Will this impact the business . Horace you mentioned earlier the samsung lawsuit there. This is an ongoing thing. There is always going to be court battles, but what i will say is there are legs to the story. These are not topics you lead with typically. You lead with a huge, new product launch, and this is a side of apple where they lead with these topics, which most people say, oh, yes, it is just being a good boy, but it is far more important to leave a legacy, and that is an interesting story. I do not know what to make of it as an analyst, but it is an interesting story. Emily horace, ben, and gene, i feel we have the best apple experts on our show today, so thank you so much for breaking it down for us. Later on, we focus on apple and their battle with the fbi over encryption. That battle comes to a head tomorrow in riverside, california. Details to come. Emily chinas highest value start up, like apple, it has had to field questions about slowing growth in its home market. We caught up with their Vice President and asked whether the company is planning to raise any more money. We are not raising at this point. In fact, our last was over a billion dollars in 2014. It was a huge amount of power. We have been investing in companies and making some strategic investment. The business itself is operationally selfsufficient, so we really do not need to raise any more money beyond the round that we did, which was focused only on investments. Reporter how long can this last . Hugo the company can keep itself going operationally. We have been a Profitable Company for a long time. When you look at how much money we have raised and how heavy from a Capital Expenditure point of view is the smartphone is this, you know we have been a Profitable Company for a long time. Reporter last year, a little bit below expectation, and some are saying that the 45 billion valuation is not sustainable. What would you say about that . Hugo looking at our china business, we were number one, number one for a second year in a row. It is not growing fast anymore, but we are maintaining our leadership position, and it is also a very competitive market. Emily speaking to our Bloomberg News reporter, he went on to say that the u. S. Is still on the companys radar. Later, all eyes are on apple with the showdown with the fbi. When we return. Rishaad japanese shares gaining. Dropping against u. S. Dollar for a third day while oil remains above 31 per barrel. The recovery includes willingness to support Global Growth in central banks. Carney calling a volatile start the training year. The u. S. Government says it may not need apples help to unlock the terrorists iphone after all. They canceled the Court Hearing tomorrow. A thirdparty suggested a way to hack the phone. Apple says it is an interesting twist which means it is no longer obliged to comply with any order. , a new message app tops the ranking on apple devices after japan released it. Nintendo is promising to bring hit games like super mario brothers to cell phones. 2400 journalists and 150 euros globally. Lets get the latest on the market. Heres david. David thanks, rish. Out with what is happening in nintendo, but lets get started with the other members across the region. Oracle japan, the biggest mover to the upside on the msci. 5 , under ¥37 billion. The other side, if you have sino in hong kong, 48 drop in net income, 21 drop in revenue shares, down 5. 8 . As promised, nintendo will be here, but before i get to that, have a look at htc. Apples back to this whole releasing the new iphone where does it get . Nintendo shares are up almost 8 . Shares are up, its new messaging app hitting one million users. Theyre developing a console game for smart. Broader picture looks like this very much mixed. Thats doing, and enough to lift the overall msci to the highest level since january 1 of this year. Elsewhere, we are seeing some weakness, the same picture we have seen across equity markets. Things should improve as we move into the afternoon. Emily lets get back to our top story. Apple unveiling a smaller, cheaper iphone. Alongside other announcements at the cupertino headquarters. Investors are taking time to digest the news. We look at how apples stock is the doing is doing. We did not see any pop in share prices. Investors were pretty unwowd by it. Shares closed flat, down. 01 . Pretty much no movement whatsoever. Earlier in the day, it had been in positive territory. If you look at the intraday chart, when tim cook started talking, there was a slight blip down when he started talking about the apple and doj investigation. Around 1 30 p. M. Eastern time, you see the definite slide about 1. 6 . That is after he talked about specs with the iphone se coming out. They tried to pare losses but they ended flat. Looking at here today, apple share price has actually come back from its low that it hit in february, february 11 or so after analysts were fretting about what happened with iphone sales and the forecasts. But of course what is happening with the new iphone iteration, we could be seeing a lift up. But we havent seen anything at all. And we may not until the iphone seven comes out this fall. Emily in l. A. To cover the hearing tomorrow in riverside which we will be covering throughout the day. We will be hearing a lot from him. Apples fight with the fbi as they head back to court on tuesday. Both parties will face a judge. The judge has already ruled apple must do what the government is asking. The Vice President and research director, bob odonnell. The judge came out today setting some ground rules. What did she say . What are we expecting to happen tomorrow . The judge is expecting a lot of interest and some of the rules for how many people that can be in the courtroom. There is limited space and there will be an overflow room for people that want to watch. Making sure she gets all of her ducks in a row before the big day. Emily both sides have said they will take this all the way to the supreme court. A ruling could potentially come tomorrow. Tim cook made this issue center stage and talked about it first off at the event today. Take a look and listen to what tim cook had to say. Tim cook we did not expect to be in this position. At odds with our own government. We believe strongly that we have a responsibility to help you protect your data. And protect your privacy. We owe it to our customers, and we oh it to our country. This is an issue that impacts all of us, and we will not shrink from this responsibility. Emily the government has not backed down a single inch. I sat down with loretta lynch. Loretta lynch we are not against strong encryption. Our only concern is with warrant encryption. Technology has changed so much in the last six months, two years, three years. We do not know what its on the horizon. Emily meantime, guys, apple has gotten the entire Tech Industry to public side with them. The judge said it has gotten a lot of publicity. Will this impact the ruling . I dont know that it will. What is fascinating watching this evolved is going from a tiny specific case about one phone and one version to a platform precedentsetting case. That is what you see the Tech Industry get behind apple. They recognize this is way bigger than apple. It is a defining moment for tim cook. He can really put his stamp on the leadership and what he wants to do with apple. Emily every company as a data company. What are the broader implications of this . Chris apple has been putting the privacy stake in the ground the last years. Theyve made a part of their brand. If customers see them backing down, it will have an impact on apples brand. If they see a company with apple, that kind of clout, if they lose, others will follow suit. Emily the New York Times engineers have reported they will quit if this comes to pass. What happens if a judge orders the company to do this . What happens if apple engineers say, we re