The battle of Apple and Epic Games is like ‘Game of Thrones’, argues analyst

The battle of Apple and Epic Games is like ‘Game of Thrones’, argues analyst

ZACK GUZMAN: So there you go. I mean, Dan, what would be your reaction to that, considering the fact that, you know, the growth that we’ve seen from Apple under Tim Cook, you know, is going to hinge on the way that, as you said, the way this legal battle goes, though many people expect it to be a win. What’s your reaction? Story continues DAN IVES: Yeah, I mean, look, Cook’s had the golden touch. And obviously, filling the shoes for Jobs, many were skeptical. But what he’s done, him and the team in Cupertino, navigating the US-China cold tech war, really reinventing themselves, going through a supercycle, I think, really, Cook really puts himself in the Hall of Fame in terms of CEOs that we’ve seen in the last, call it 30 years. And when you look at the shoes that he filled, just that much more of an impressive move, especially given the challenges they’ve seen. And I agree with exactly what Warren is saying, who’s been one of the biggest supporters of Apple out there. And it’s been a linchpin of their success. Challenge and challenge, we continue to navigate.

ZACK GUZMAN: And Dan, obviously, it would be a major gut punch. And I mean, we talk so much about security or the services side of this here being a big chunk and a big chunk of the growth for Apple. Of course, though, when it comes to management at Apple, it was interesting to hear over the weekend Warren Buffett weighing in on the management style of Tim Cook, who’s going to be testifying in this lawsuit here, and the way that it was kind of a mistake in his mind that even Charlie Munger pressed Warren Buffett on in the way that they sold a bit of their Apple stake. I just want to play what we heard from them over the weekend, get your take on the other side. Take a listen. DAN IVES: Look, this is a Game of Thrones battle between Apple and Epic. And this is the crown jewel in terms of the App Store, worth $1.3 trillion, $65 billion in annual revenue stream. But Cook and Cupertino have defended this again and again. And this is just the way it is. Obviously, a high profile court case, especially with the regulatory swirls, we ultimately believe Apple comes out victorious. But many focused on this to make sure that there’s no ripple effects. Because if Epic ultimately does get some win or ultimately forces a lowering of the fee, it would be a major gut punch to the services bull story.

WARREN BUFFETT: It’s an extraordinary business. But I do want to emphasize that in his own way, it’s a different way, but Tim Cook is– we see a lot of managers of businesses, and you’re looking at two great ones on both ends here. He’s handled that business so well. He couldn’t do what Steve Jobs, obviously, could do in terms of creation. But I don’t– but Steve Jobs couldn’t really, I don’t think, do what Tim Cook has done in many respects. AKIKO FUJITA: Let’s bring in our first guest for the hour. We’ve got Dan Ives, Wedbush Securities Managing Director. Dan, you’ve been hearing Alexis sort of lay out the legal arguments in the case here. But you cover Apple. How significantly do you think this would be a hit, at least for Apple services, if, in fact, the court rules against Apple?

And we know cloud storage has been big for Amazon and other companies, but File Coin basically lets you store across people’s unused computer space. And you can– the coin facilitates that. And you put out a note saying that this was going to be a very interesting real life use case of a crypto project. And you put that note out earlier this year. It’s up 7x cents then. So talk to me about maybe how these worlds are coming together, how they’re blending now, as we’re seeing real use cases of crypto take off, and what it means. DAN IVES: Yeah, it’s a great point because, ultimately, crypto is much broader than just the currency. It’s about the applicability. I think there’s no better example than blockchain and cloud storage, which is what File Coin has been a leader in. And we’re talking about what’s ultimately a $2 trillion market in terms of cloud storage. ZACK GUZMAN: Dan, I mean, when we look at some of the other opportunities out there in tech and the rise of crypto, obviously, maybe not surprising to hear Charlie Munger and Warren Buffett come out and attack Bitcoin again. But when you look past Bitcoin into some of these projects, it’s interesting because you put out a note on File Coin, which is a project that I point to a lot when it comes to projects that people can understand, right? It’s all about decentralized storage.

DAN IVES: I couldn’t agree with them more. And it’s a linchpin of our bull thesis. It’s about the monetization and, really, the linchpin that, ultimately, iPhones have become in society. 950 million iPhones worldwide, and that monetization has led to the services business. We believe ultimately this business, if you sum up the parts, it’s a $3 trillion business. And despite last week, unreal numbers, stock basically trades flat. As I view, call it, six, nine months from now, we’re looking at a stock that’s a $3 trillion mark cap. Couldn’t agree more. AKIKO FUJITA: Dan, Warren Buffett also seemed to suggest that Apple’s devices– and I think he was speaking specifically about the iPhone– is a little undervalued, where he said, look, it’s a huge bargain because it’s a product that’s indispensable to people, sort of saying if a car costs $35,000, you know, which one can you live without? And I wonder, as somebody who covers the company, whether you agree with that, number one, that the device itself is undervalued, and if so, what that suggests in terms of how much more upside there is for Apple if they can continue to keep the cycle going.

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