Apple's competition isn't other AI companies, its smart phone makers, says Fmr. Apple executive

I'm a bevy of Apple headlines out in recent days ahead of next week's fourth quarter earnings. Today, the stock getting a downgrade from KeyBank based on iPhone super cycle concerns. Meantime, new data from the International Data Corporation shows Apple sales in China slipping half a percent year over year, but regaining the number two slot in market share. Joining us now is Tony Fadell, a former executive at Apple, inventor, co-inventor of the iPod and iPhone. He's now principal at Build Collective, an investment and advisory firm. Tony, great to have you back. This, this data, these numbers are funny, right? They swing one way or the other. We find out over time, but I want to, I want to get some perspective with you, right? Six years ago, Apple crossed a trillion dollar market cap. And a popular thing to say was, well, if they're going to get another trillion, they'll have to come out with another hit like the iPhone. Instead, loyalty ecosystem have profiled it three and a half X from there. So how does Apple remain different from your perspective, having been inside the culture years ago and observed it since? I think Apple, Apple is continuing to be different because it's providing the customer exactly what they want. They don't really know. They hear about all these buzzwords, they hear about AI and everything else. But if you look at their real competition, their competition is an open AI and other, other AI companies, their competition, Samsung and these, these types of companies. If you look at the AI applications that are coming out from Apple, they're, they meet or beat what's from Samsung or any of the other providers. So look, they're continuing to drive, drive interest by their, their, their, their loyal consumers. They continue to hold onto that market with services. You see all the services growing and the profitability of those services over time. So they're just doing what they've always done. Obviously, everybody wants to see some huge spike, but I don't see anything coming anytime soon. That's going to change that. But those customers not running anywhere else because Apple provides them what they want in a, for a, for a great value. So about the nationalist sort of concerns, particularly in China market, Huawei, we were worried about Xiaomi, I suppose, a few years back, foldable phones now more popular. Is that you, your sense, just more of a fashionable flash in the pan, or is this an area like larger screens, larger phones where Apple eventually is going to have to assess and decide to respond? Look at the foldables are, they are, they're not a, they are a segment for sure, but they're actually higher price than anything that Apple sells today. So if you want to go higher, you can go higher with those foldables. Apple may or may not do that over time, but we're talking about a real different segment of the market than where the volume is today. And if we look at China, remember China actually has restrictions for government workers to not use iPhones at all inside of government work. So Apple is doing pretty well when you consider all the government workers and China today can't use them. It's doing well. It's holding on to market share. It's slightly down from the growth, but it's holding onto its market share. So you go ahead. Yeah. Yeah. Just to, to take it broader and into the future for a moment here, I want your assessment of the power of Apple's vertical integration and chip design. Now that we're in the AI era, because we're talking about companies like Nvidia, et cetera, having their chips and the power to extend the strength of those through software. Apple seems to me uniquely positioned in the consumer market with a similar combination of strengths. Absolutely. When you have AI actually moved down onto the device, if you look at all the other products out there, the other smartphones, they don't really have that same AI offering on the device that Apple does to take advantage of. And yes, this week they released the software and the APIs to allow third parties to get access to those, that AI on the device itself. And so what's great about this is when you talk about Nvidia, Nvidia is about all in the cloud. It's not on device. And so Apple doesn't have to go and buy huge server farms or work with huge server farms to get AI to work. They have it on every single device. So that's a strategic advantage, just not this year, but years to come. And so you're just seeing the initial benefits of that with the latest release, but you're going to see a lot more, not just from Apple, but from third parties to take advantage of it. Typically, when you look at Samsung and these other ones, they have different AI processors. They can't use apps on top of them.