This is a longer-term bet. When will the payoff come? Why have they shifted away from Qualcomm in the long term? Now, this is an interesting one. The project to develop their own cellular modem really started because they were upset with how much Qualcomm was charging them—the royalty fees that Qualcomm had been charging Apple for years. There's something that the company is simply not used to. Apple typically gets the best bang for their buck. They typically are the ones that are the more controlling in the supplier relationships. But that sort of was spun on its head with Qualcomm. And Apple really had no choice but to work with Qualcomm, because if Apple wanted to move to 5G, there really was no other game in town other than the chip maker from San Diego. And so that was really the start back in 2018 when they started working on this modem development, ramped up around 2020. They acquired Intel's modem group for

about $1 billion in 2019 to really jumpstart that development. But it's interesting because, unlike the move to Apple in-house processors in the Mac, unlike the move to Apple in-house processors for earbuds, for smartwatches, for set-top boxes, the modem from Qualcomm is actually best in class at this point. You're not going to bring better performance to the table than Qualcomm. And if you do, this is not something that can be noticed by the consumer. So the bet here is that this is going to save costs and then maybe five years from now, over time, being able to shrink that modem down to an Apple-sized chip, to put it on the same motherboard and the same. So see, the system on a chip is the existing Apple component. Maybe you can shrink down the internals of the phone to add other new features to create a new form factor. So it's a mix of costs now and hopefully new designs later.

But you also went back to the idea of a tabletop robot in this week's Power On. Just explain the basic design. We don't have a visual, right? That I think is in basic terms worth telling the Bloomberg Technology audience what it is they're planning to bring to us. So, Apple's next big thing is robotics. And the first robotics device you're going to see from Apple is going to be a tabletop robot. It's essentially a gigantic iPad screen connected to a robotic arm or a robotic neck. And the display can move to follow your head movements. If I'm on a face-on call with someone and that other person begins speaking, that's in the room with me. The display can know that it's them speaking and tilt towards them. If you are on a baseline call with someone else and let's say the person on the other line is nodding their head or making various head movements, that screen will be able to follow the head movements of that other person.

You'll be able to tell the device to look at you, and it will all turn towards you. And so, this is a robotic exercise. The company's aiming to get down to a price of around $1,000. The big picture here is that Apple is trying a lot of new stuff, right? And I think one day we're going to be having more in-depth discussions about mobile robots, similar to the Amazon Astro. I think the idea of Apple getting to humanoid robots is also a real possibility a decade from now.

Apple Playing the Long Game by Dropping Qualcomm

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