0:00:00I feel like you've been on the show many times but it's like a long stretch now
0:00:03remember not the sort of with the with the new gig and still was getting
0:00:08getting and giving the schedule in order but I feel pretty good about it now but
0:00:13unfortunately I have to do sort of last minute things like a of an opening today
0:00:17so we can do it it's it's settled then I mean it's weird you work now we're
0:00:21officially work for Google Ventures right yeah there was a holy shit
0:00:27announcement yes in a way I guess but it's not that weird where were you know
0:00:36pretty well sequestered away from from Google itself but I can go over there
0:00:40whenever I want to hang out which is sort of interesting but yeah i mean you
0:00:47know day today my job is pretty much the same as it has been for the past two
0:00:51years which is just sort of being around San Francisco and meeting up with her
0:00:55trainers here right in trying to scope out good ideas and CNN you know I need
0:01:01to go but still has that word Google and it it does which is both beneficial and
0:01:10you know it's it's it's detrimental but it's it can be a little bit of a
0:01:17discussion sometimes when you're talking with specially early-stage entrepreneurs
0:01:20who are worried that if they take you know if they take money from Google
0:01:24Ventures at me you know stop them from doing a day to deal with Facebook or
0:01:29something like that right that that's not the case of course you know we we
0:01:34invested a lot of things that are actually competitive with what Google
0:01:36itself is doing and you know that's our our mandate is really to go up there and
0:01:41find the best stuff regardless of what it is
0:01:44yeah that's a very googly mindset in a good way
0:01:48yeah yeah definitely so it's been good the sort of try everything and see what
0:01:55sticks mind yep
0:01:57so you had a piece and and you know and again just like with your previous game
0:02:05you're still writing at TechCrunch still still raining Paris lemon but you had a
0:02:09great piece this week Jeff Bezos and Amazon yeah so right
0:02:16writing is also sort of an interesting thing for me now because again I just
0:02:20have to sort of do it when I have free time in my day which is hard to do it's
0:02:25a lot harder than I could have imagined it was going from being a full-time
0:02:29writer to sort of a part-time writer it's it's it wasn't as easy of a
0:02:35transition cause I used to be I was just one of those people who I never really
0:02:38got writer's block and i could just write about whatever sort of any topic
0:02:42just go on and on and on about it and it was really just sort of trying to rein
0:02:46in thoughts and make it a coherent piece but now when you're doing the day-to-day
0:02:51stuff of of going from meeting to meeting its right to think about you
0:02:55know the the future of these different on startups and then you try to go back
0:02:59in certain to write and think about big picture of things it's it's not as easy
0:03:04as it is a imagined it would be which is which is definitely something I've
0:03:08struggled with but when they're so when there's news like this happens to this
0:03:12you know this was a surprise to everyone Jeff Bezos buying the washington post it
0:03:18hits whatever time it was in a midday a few days couple days ago and it's
0:03:25something like that where I start to feel like you know my old self again
0:03:28because they just like so many thoughts about that and that's so interesting and
0:03:31fascinating and and so instead of kind of opening up you know WordPress or
0:03:36whatever and said I immediately now go to Twitter to start reading about it and
0:03:40then sort of the the back and forth their sort of gets me ideas as to what
0:03:44what I should write about and so for this particular topic it wasn't so much
0:03:48about Jeff Bezos barring washington post because i dont really know the backstory
0:03:53of that I don't know I don't actually know why he did that I think it's it's
0:03:56fascinating that it could be a disaster could be great I don't really know but I
0:04:01i realize that like so many people you know we can to starkly making the the
0:04:05references to Amazon's overall business model of course an abandoned by
0:04:10washington Post exhausted but the same idea where Jeff Bezos is a great honor
0:04:14because he doesn't care about profits and I even made that joke too and it's
0:04:17like but people like really get into that and so I thought that there would
0:04:21be a good in business to start writing about sort of my change in mentality
0:04:25about Amazon I guess over the past year
0:04:28yeah I'm right behind you really on that I think used in your piece I really
0:04:34liked it and it kind of clicked for me because it it's like I said I was behind
0:04:39you on this where I was sort of having the same thoughts but hadn't put them
0:04:44together and I thought your piece put it together in the same connected the same
0:04:49thoughts in my head that that it didn't float around yeah thank you I think I
0:04:56think we've all been under no I don't want to speak for everyone but for me in
0:05:00particular obviously a lot of us read a lot about a fuller have in the past and
0:05:04there's a way of thinking about Apple that is that is different than a lot of
0:05:08companies of course is as you know better than anyone but there's also a
0:05:14feeling there can be an issue with that because Apple in many ways is very
0:05:19straightforward when it comes to business right they they make they make
0:05:23products that they want to sell for money at a profit and that earns them a
0:05:28lot of money and that's great of course it's more nuanced and that they've lot
0:05:31of other businesses have iTunes and its etcetera etcetera but you know just
0:05:35looking at a high level picture it's pretty straightforward what Apple does
0:05:38and I think Amazon is not straightforward at all and that's why a
0:05:43lot of us were very confused as to like how is this company you know not only
0:05:47continuing to do well but to thrive certainly in the in the stock market and
0:05:50we can argue you know whether that's a meaningful metrics are not but you know
0:05:55it's it's a bit confusing when you look at it first
0:05:57yeah and I think I I've said this many times over the years that in a lot of
0:06:01ways especially as a business Apple is so simple even though they're they're
0:06:07literally the biggest company in the world or second exon
0:06:11never but you know certainly you know massive corporate entity by any measure
0:06:17but they're actually fundamentally simple as a business like you said they
0:06:20make products that people buy and do it for a profit you know set a price that
0:06:27people are willing to pay that significantly higher than the cost it
0:06:30takes to make the product and it it stands out they stand out in technology
0:06:36because there aren't a lot of other companies making computer type devices
0:06:43that that keep its so simple and that do it so successfully but in other
0:06:48businesses it you know it's as old as the way business is always have worked
0:06:54right especially with the luxury brands like you know that's that's the good
0:06:58analogy of you know like a luxury car maker luxury watchmaker they're selling
0:07:03their selling things more expensively than you can get another version of a
0:07:10similar product but they're doing it with quality and so people are willing
0:07:14to pay for quality right you know or like you know and and the luxury thing
0:07:19can be a little distracting because a lot of time to start thinking about you
0:07:23know like retail they're often compared to Tiffany and company because of the
0:07:28profit as revenue per square foot and that's a little bit off-putting because
0:07:33Tiffany sell stuff that very few people by I mean Apple you know it's this weird
0:07:39intersection between
0:07:41affordable luxury it's like mass-market luxury
0:07:44maybe good maybe I don't think maybe a good comparison be like Nike where you
0:07:50know Nike sneakers cost more than average sneakers but they're not on you
0:07:57know almost anybody you know very very many people can and do by Nike sneakers
0:08:02yeah that's that's good thought I actually I would be interested to know
0:08:06what the margins are on on Nike shoes I have no idea I assume you're right
0:08:11though that they're making a pretty healthy margin selling the shoes market
0:08:15from say
0:08:17you know like New Balance or something and yeah that's that's a good way to
0:08:22think about it you know and then there's you know there's certainly you know they
0:08:26probably much like Apple you know marketshare wiser not a majority most
0:08:32seekers are denied him in most people probably despite discount sneakers just
0:08:36by counting all six billion people on the planet but what shoes are on there
0:08:41right but it is it's a simple business and Amazon and and and the other parts
0:08:47of Apple's business stuff like iTunes and stuff like that which is not quite
0:08:51as simple as make a product sell it for a profit is not a significant part of
0:08:57Apple's business yea though it is interesting that it was a few quarters
0:09:02ago it happen right that iTunes pass iTunes revenue I think past Mac revenues
0:09:09at right is that it is now possible I think overall stuff including absolutely
0:09:14everything right something like that yeah but I still think it's up in the
0:09:19air and they don't break it down i mean it's you know they're fairly open in
0:09:22their financials compared to most other companies but they still don't break a
0:09:25lot of stuff down but I think like horse did you as has made the case that he
0:09:29thinks that iTunes even though the revenues varied gotten very high it's
0:09:33still effectively a breakeven business right which I think yeah and and so we
0:09:39can talk about you know obviously horace had a happy sort of countering which I
0:09:44found interesting and i felt like you get mad at me last night on and on
0:09:48Twitter when I sort of said you know well I don't really understand what he's
0:09:52going after but you know I'm going to debate it with you on this podcast and
0:09:55so he's certain responded he thought that he thought that using quotes like
0:10:00anti Apple was was suggesting that I was sort of making fun of his his stance
0:10:06which wasn't really his stance which was my stance and there's some confusion
0:10:09there but I usually do think that Amazon in many ways the anti Apple and he he
0:10:14does not at all it seems like he thinks it's not that that cut and dry that
0:10:18there's I think you know not to go too deep into what his thinking is on this
0:10:25cuz he should speak to their himself but
0:10:27from reading his post my sense is that he feels like it won't be as easy for
0:10:32Amazon to flip the switch and turn to a profitable company which was sort of one
0:10:39of my main points
0:10:40yeah I think it just it it it's not a disagreement fundamentally I think it's
0:10:46in disagreement over what aspects of the company you want to say opposite each
0:10:50other yeah that's that's right you know and if you just look at the desire to
0:10:54turn a profit
0:10:58agro hopefully a growing profit each quarter they are opposite as Apple's
0:11:03goal clearly is to turn a profit
0:11:07a large profit each quarter and in the long run you know have that profit
0:11:11continued it stretch whereas amazon has never really endeavored to do that right
0:11:17but you know I think we're we're overthinking this in some ways I believe
0:11:23Apple again straightforward business Amazon seemingly not so straightforward
0:11:29but it's also like if you if you go back and read the Jeff Bezos shareholder
0:11:34letters from the beginning sort of in the late nineties right when they when
0:11:36they went public
0:11:38there's a lot of interesting stuff in there because you know he basically lays
0:11:43out his vision for the company in in the most high level terms in that like you
0:11:50know they're they're going to sell things you know it low as lower prices
0:11:55they can to you know to benefit the customers and they realize that this
0:11:58will sort of hurts their their margins in her and hurt their potential profit
0:12:02but from time to time you know when he said this they will have to sort of
0:12:08again to flip the switch but but more or less that that the check and i think is
0:12:14what he would say they're gonna check in to make sure that they can actually
0:12:17still make a profit when they need to and the problem now is that we haven't
0:12:23seen that all time right
0:12:24like this last quarter Amazon actually lost money they you know they posted a
0:12:30loss for the quarter and previously it's been very small profits if any certainly
0:12:36compared to Apple I mean we're talking about
0:12:38a single-digit millions tens of millions while Apple's making you know
0:12:42double-digit billions in some quarters in profit and so Amazon actually lost
0:12:47money last quarter and so so we're trying to figure out how are they ever
0:12:55going to be able to make a profit but again you know many not not even that
0:12:59long ago several years ago they were making some you know pretty good profits
0:13:03off of much less revenue that they're at now the revenue of course keeps growing
0:13:06over time and you know to go back to her spine he thinks that it's going to be
0:13:11hard to flip the switch and they do i do agree with the overall sense that it
0:13:15that it could be hard just because you don't know what's coming down the road
0:13:19there could be there could be a competitor that that comes around in the
0:13:23buzz phrase but disrupts app Amazon and they won't they want to see that coming
0:13:28and they're they're so focused on building out that they're they're not
0:13:33focused on the right things but I do think that that severely downplays some
0:13:40of the innovation that that Amazon could do I think a good example of that is is
0:13:44like what they've done with Amazon Prime so like they now have a lot of people
0:13:48paying a recurring fee a yearly fee for products and like when you just think
0:13:53about it think about their business if people are paying for something that
0:13:57razor thin margin you know of course that doesn't seem like the best business
0:14:01to be in from a profit perspective but they have all these people paying Amazon
0:14:05Prime which is sort of interesting because that has you know that while not
0:14:10infinite margins you can assume that that has very good margins I don't know
0:14:15though because I i mean i'm i'm a prime subscriber I guess you call a
0:14:20subscription yeah but I can't help but think that over the course of a year I
0:14:25make my crime pays 800 bucks I don't think it's eighty 80 in nato that sounds
0:14:36about right but I think that we get more than
0:14:39$100 worth of shipping out of it well and so this is another thing when when
0:14:45you're at the scale that Amazon is at you know shipping costs are relative so
0:14:51Amazon is building infrastructure out to build these warehouses all over and now
0:14:54now that they had their shit nude the new taxes in place for Internet taxing
0:14:58they can actually build warehouses in somewhere like California where they
0:15:01couldn't before right because you couldn't have a a physical you couldn't
0:15:05have any physical space in California
0:15:07otherwise they would have made you collect sales tax there and so now that
0:15:10that they you know they've come to an agreement that they are going to collect
0:15:13sales tax over the internet now amazonas starting to build warehouses all over
0:15:16the place they did they didn't have before and so when they when they do
0:15:20things like build a brand new warehouse right outside of San Francisco they can
0:15:25you know the cost of delivering to San Francisco of course goes way down and so
0:15:30this is sort of the game
0:15:31Amazon explain I do think that you're right that that there are a lot of
0:15:35people and certainly your power you know a power user of Amazon Prime and I am
0:15:39too and there are a lot of people who are probably the margins aren't as good
0:15:44for Amazon Amazon Prime but I do I would imagine that there's a lot of people who
0:15:47buy you know a couple things here and there making you know quite a bit of a
0:15:51substantial came from that I'll do stupid things I'll do things can I know
0:15:57its Amazon and so I know I don't feel bad for them I don't feel like i'm
0:16:00taking advantage of them but it was like a mom-and-pop business I would never do
0:16:04like it if it was just like a small business that happened to offer the same
0:16:09shipping offers that Amazon does I wouldn't do it like last week or two ago
0:16:17I bought a little tiny screwdriver just I just needed a real blast size
0:16:26screwdriver and I so I bought one on Amazon for like three dollars and had it
0:16:33sent to me on Prime shipping for free I mean I mean like it's like super low
0:16:39cost I mean yeah I would never do that if it was like a small business would
0:16:44wait and
0:16:46and waited till I needed you know three or four things back together and nets
0:16:52and then i dont ridiculous right it sounds like ridiculous that Amazon would
0:16:55would in any way allow you to order a $3 thing and let you get you do not pay
0:17:00shipping for it but at the same time at the same time because of the scale
0:17:05Amazon operates at they probably have you know say a thousand trucks going
0:17:09going around to your area you know any any given week or something and they
0:17:16just happen to have extra space on it so because you're using the Prime thing
0:17:19you're not doing overnight which of course you have to pay extra for you
0:17:23know they'll be able to find room on one of those trucks that's just on
0:17:26unutilized rate right I would probably be be surprised at how maybe how
0:17:34efficient they're shipping is and how little it does set them back to me for
0:17:39free and remember that they you know with the purchase of Kievan they've been
0:17:43doing some other things they'd there this is all a lot of these processes is
0:17:46completely automated now where they just have robots going around their
0:17:49warehouses and and picking up your mini screwdriver and and putting it in a
0:17:53truck and that's it and there's no you know there's there's very little human
0:17:56costs and you know their their business is pretty interesting at the scale and
0:18:02you know and I have to admit I've always thought that point of prime I mean it
0:18:06may be there for some people it actually is very profitable because they pay the
0:18:1080 bucks and they don't use up 80 bucks worth of prime services right in a year
0:18:17and so that's just free money for him but I've always thought it was a way to
0:18:21sort of encouraged loyalty that there's like you know once you pay for prime you
0:18:26feel like 10 me to look at Amazon first because I know I can get Prime shipping
0:18:31yep and I i do think that that's right I would imagine you know I just bought a
0:18:35Samsung Panasonic supplied no idea what the actual margins are on that but I do
0:18:40think you're you're probably right in that they view it
0:18:43well maybe not a loss leader and I do think like office certain people they're
0:18:48probably making a pretty good profit off of that but they do view it as a way to
0:18:52just keep people coming back and keep people buying more using him as far as
0:18:57I've always said that was the point
0:18:58of like the way that like Sam's Club or forget some of the other big-box
0:19:04retailers were you have to be a quote unquote member ready to be a member
0:19:08eases pay 25 bucks a year or something like that but I've always thought it was
0:19:13you know sure the membership fees are are nice but I don't think that Sam's
0:19:18Club runs on membership fees I've always just thought that there's like a
0:19:22psychology to it where once you remember and you have paid you feel like one
0:19:26telephone gonna buy toilet paper I'm gonna go to Sam's Club because i've you
0:19:29know I'm a member
0:19:30yeah right and thats so that you know that that plays into the idea that that
0:19:36Amazon's business at least at first I think Amazon again is super complicated
0:19:41because they're doing so many things I mean we've even talked about like AWS
0:19:44and and and sort of their digital services which are which are really
0:19:48fascinating but from the beginning of Amazon Chris asserted selling books but
0:19:52even when they're just trying to sell sort of everything online you know of
0:19:56course everyone recognizes that what they're trying to go after his basically
0:19:59Walmart where wal-mart has an insane amount of revenue and relatively low
0:20:05profit compared to that but that doesn't matter because the revenue is so high
0:20:09that the profit is also high even though the margins are so bad that so Amazon by
0:20:13doing things like Amazon Prime and keeping people coming back in just
0:20:17keepin on using the revenue profits will go up the thing that of course we're
0:20:23talking about now is the fact that the profits are going up because they're
0:20:26spending so much of this money on other things are let's take a timeout couple
0:20:31sponsors shows get one out of the way and then we'll keep going on and I want
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0:21:55show eight and you'll save 10% back to Amazon and profit so my summary and this
0:22:12was I hadn't had this thought until I read your piece but my summary is there
0:22:16Dave Bezos has said Amazon up from investor perspective that that profits
0:22:23are sort of like a will of the west and that's always investors believe in
0:22:28Amazon or Amazon investors certainly do and the revenue growth is certainly
0:22:35there right it's it's you know maybe one quarter over another there been dips but
0:22:39a pretty steady pace since the company was founded in 1994 revenues have grown
0:22:45at a remarkable rate Lake you know it used to behave Amazon might someday be a
0:22:52major retailer on the scale of like wal-mart and target and no physical
0:22:58world retailers like that and you know in the nineties some people thought that
0:23:02was not some people truly thought hey come on to buy stuff on
0:23:06but normal gonna buy stuff online it that's totally turned out to be true and
0:23:12so that's sort of investor faith from a long time ago has panned out the revenue
0:23:17growth is there but I think Bezos I think they want to put words in your
0:23:22mouth but I think this is the point you're sort of making his basis is sort
0:23:25of set up the expectation that profits never have to come now they only have
0:23:31two potentially come in the foreseeable future right and I do so this is why I
0:23:40think basis is sort of what do you think he's business genius certainly but I
0:23:46think he's sort of underappreciated and I think that's what we're seeing with
0:23:49the washington post up like what would you do this and maybe he doesn't have a
0:23:53plan for us to put again I don't know but you know when people are sort of
0:23:56saying like like crazy guy who just doesn't care about profits by as well I
0:24:02think that I mean when you look at his history right he worked on Wall Street
0:24:06he understands how this works maybe better than most other CEOs do because
0:24:11they don't have that experience wherever he didn't start he didn't start until he
0:24:13was thirty hedge fund announced twenty right to hedge funds so he totally
0:24:18understands are you can assume that he totally understands wall street and so I
0:24:22think what we've been seeing the past two years which is really interesting
0:24:25when compared to Apple AAPL has just done profits so much so so good of
0:24:32business they the profits you know that what the one the couple quarters of it
0:24:36thirteen billion dollars and the only thing to that's comparable to that or
0:24:40the oil companies right i mean this is that's amazing and it's not even though
0:24:43companies often don't do that well it's like there's there's three best quarters
0:24:47stack up against Apple's best quarters now and so does profits are huge and
0:24:54while they were showing those giant profits and the profit growth more
0:24:58importantly and the revenue growth while she was loving Apple pushed the stock up
0:25:02to 700 past seven hundred dollars a share right now that the growth is
0:25:08slowing even if the profits are still pretty good you know I forget what it
0:25:11was last quarter eight billion or something like that I mean it's still
0:25:13insane for almost any company
0:25:15the growth is no longer there and
0:25:19the problem and and sort of one of the points and I made it in my post which i
0:25:23think people just don't really think about it so obviously people don't think
0:25:28about it
0:25:29Apple's problem with wall street is that they're looking for future potential and
0:25:33the fact that the iPhone was such an incredibly good business and still is
0:25:38for Apple that it's gonna be almost impossible I think for them to find a
0:25:42business that's similar to that maybe I'm wrong I hope I am I hope that you
0:25:46know they come out with with some kind of crazy new device that no one is
0:25:50thinking about but I think even with like you know the rumored television
0:25:54stuff and in the watch I think that they'll be hard-pressed to get the sort
0:25:59of profits that they do offer the iPhone because of the way the unique market
0:26:04that iPhones in the smartphone market especially the subsidized and
0:26:08unsubsidized markets where they're getting paid so much money up front for
0:26:12these devices and so that's going to naturally if you can't get another
0:26:18iPhone like product the the growth is naturally going to come down and so you
0:26:23know when people talk about has Apple you can maybe make an argument that they
0:26:27have in terms of revenue and profit growth just because the iPhone was such
0:26:32a good business
0:26:33Amazon is the opposite right where those is playing this way and and and just go
0:26:39back to Apple for a second so so Tim Cook you know that the operator he
0:26:43understands how to make the the machine as well oiled as possible and as soon as
0:26:47he took over 44 steve Jobs was found that both on an interim basis and then
0:26:51in a permanent basis
0:26:52you know people don't give him credit but the stock went crazy you know after
0:26:57after Jobs passed away and and cook is is the CEO and the man in charge that's
0:27:01what it do the run up to $700 Sharon Apple sort of hit its peak and then you
0:27:06know everyone talks now like oh my god he's lost so much value but he created a
0:27:09lot of that was under him that that value was created and so pesos though is
0:27:16playing at the the the opposite way we're rather than focus on
0:27:20the profit you know of course you want revenue growth especially in the
0:27:25business Amazon is in but rather than than focus on the profit in showing
0:27:29investors what you know showing him your hand basically he's focused on trying to
0:27:35trying to ground that revenue that that profit into the into the ground and make
0:27:39it almost you know break even
0:27:42yeah I totally agree and I and it's you know Matt Iglesias who rides on
0:27:48economics its slate has has commented on Amazon several times as well as his
0:27:52phrasing that he called them that effectively that they run like a
0:27:57charitable charitable foundation for the benefit of consumers rate at which which
0:28:03is funny I mean that's a really funny way to think about it and and I used to
0:28:06totally agree with that but you also remember that Amazon Amazons business
0:28:11and in anything was eugene way he used to work at at Amazon pointed this out in
0:28:16a really good way a few months ago remember that Amazon because of the
0:28:21business there and they have cash constantly flowing in and yet they don't
0:28:26have to actually pay for things necessarily right away so they have the
0:28:30day of the sort of interesting buffer that other companies do not have and
0:28:35that's why when you talk about free cash flow in like how Amazon could possibly
0:28:38keep operating in and bring in money when they're losing money it's because
0:28:42their business is is unlike sort of any other where they actually do constantly
0:28:48have a flow of cash coming in and if that dried up they would be yeah yeah
0:28:53there would be there would be a problem but that's not a drying up certainly
0:28:56things like you like Amazon Prime are probably hoping that were people just
0:28:59keep buying stuff and so they have this cash that they can use for things where
0:29:02they don't need to focus solely on making a profit there's the classic
0:29:09eighties Saturday Night Live a commercial for the first union change
0:29:17bank I do remember this is Kevin Nealon
0:29:21in the gist of it was it a bank where all they do is make change
0:29:25and they're like hey you can come in with a dollar bill and if you want
0:29:29twenty nichols will give you 20 nichols' you want ten dimes you can get ten times
0:29:34you want half nichols have times we can make that happen and it was funny and
0:29:39then you know the punch line was people say how do you turn a profit
0:29:46how do you make money right right and that it's funny and that i think is sort
0:29:54of been the the knee jerk and it has been mined the knock against Amazon you
0:29:59know that you know if you're breaking even there is no profit but it did you
0:30:04could actually turn a profit as a change bank if you can hold the money before
0:30:09giving them their change right now and that's why you know I think Amazon
0:30:13wasn't that the PCR citing from the guy who worked at the date they hold some of
0:30:17that money for up to 90 days right that they only have to pay like the book
0:30:21distributors I give you buy a book they pay at the end of the quarter and the
0:30:25time they've helped them money and they can earn interest on it do it do you
0:30:28know do you actually can make money as a change bank if you have money for 90
0:30:33days right it's it's an interesting way to think about it is like maybe maybe
0:30:37more simplified way that like you know someone just on a day-to-day can think
0:30:41about it like imagine that your you pay a you have to pay a down payment on your
0:30:48on your renter you have to pay basically a holding fee or whatever to to get an
0:30:54apartment right and see you give that to your landlord in your landlord then has
0:30:58that money he could put it in a in his checking account and he's earning
0:31:02interest on that money so it's like your money is being used to make him more
0:31:07money because eventually he's going to give that money to back that you
0:31:10treasure apartment or whatever but he is earning money off of the money that
0:31:15you've given in so there's so there's the interest component of it which I do
0:31:19actually don't know how much Amazon doesn't that I assume that there that
0:31:23they have you know somebody invested in making interest off of that but yes and
0:31:26then there's also the free cash flow component where they're just they can
0:31:29hold onto this money and use it for whatever they want to use it for until
0:31:33they have to to to pay it ninety days later but at that point they already
0:31:37have
0:31:38their money that has come in for the same purpose so it's
0:31:46I know that this is this is this is fairly complex in this took me a little
0:31:49while to understand how exactly this could possibly work is it almost seems
0:31:53like it's such an interesting idea that it seems like a scam right where it's
0:31:57like they don't actually they're they're not selling something and getting money
0:32:03and then distributing it the rather there's they're selling something
0:32:06they're getting the money and then they're distributing what they already
0:32:11took the last money for right it's like it's a pretty complex idea but this is
0:32:17this is sort of the genius of basis that he realized that you could do this and
0:32:21certainly that's not at all of Amazon's business they have many different you
0:32:24know AWS and stuff where they were they can't do this kind of stuff but in in
0:32:28the retail side of things there are there are some interesting ways that
0:32:33they can that they can make money out of seemingly having no profit right yeah
0:32:40it's totally interesting I isn't the story with AWS that day wasn't like
0:32:46they've really I mean who knows how many you know you have to take their public
0:32:49statements with a grain of salt I guess because maybe there won't be a little
0:32:53cagey about what they say publicly but publicly they've said more or less that
0:32:57they've built up a lot of infrastructure so that they could handle their peak
0:33:03traffic which affect you know for Amazon right retailer is like holidays you know
0:33:07like giving night and the day after Thanksgiving and stuff like that so they
0:33:11want to be able to handle that they don't want the site to crash
0:33:14on Monday the day after Thanksgiving when everybody's trying to order and so
0:33:19they've filled out an infrastructure to handle that level of traffic smoothly
0:33:23but then you know three hundred and fifty five days a year they don't need
0:33:28it right it's sitting there unused and said it will why don't we sell it to
0:33:33people other people take advantages yeah I think you're right in that that was
0:33:38the initial impetus behind how they do it I don't actually know that their full
0:33:41story but I think that that I believe that that's right but but now I imagine
0:33:46that they realize that this is actually pretty big business and so we should
0:33:49just have these sort of we should just run this is as a separate business aside
0:33:53from having having the same excess inventory of storage for win her sick of
0:34:00a city for women it's not a holiday season and I think that they do not
0:34:04recognize how big of a business this this actually is anything about yeah you
0:34:08know you always talk to me with startups I mean the number of them that are built
0:34:13on top of Amazon's cloud infrastructure is amazing I mean I don't know what the
0:34:18you know the actual percentages but I it's it's way over 50% for me at least
0:34:24in startups in San Francisco that it that are built on top of Amazon in some
0:34:27way at least and that that's pretty incredible when you think about that and
0:34:33when you if if they can keep doing that you know there there's already there's
0:34:37big businesses that are built on top of Amazon I don't know if Instagram is
0:34:40still using Amazon for for their picture hosting they were and I don't know if
0:34:46they've moved over to Facebook's infrastructure sense but it's no
0:34:49guarantee that they have and they may still be using Amazon to host all their
0:34:53images member when when they first announced iCloud and people sort of
0:34:58poked around and and it ended up it was like a retard hodge podge on the back
0:35:04end where it had built some of it and it was in Apple datacenters but they were
0:35:07also using Windows cloud I know they're using Microsoft for some of it yeah I
0:35:18think I think they may have been
0:35:20I think Apple is using them in there you know nobody's more security but that's
0:35:29pretty tellin ya and it's in that that brings up something that's that's sort
0:35:33of some people have have sort of said in response to 20 this Apple and Amazon
0:35:38argument it's like so obviously we had the the dead center is down all hits
0:35:42high right it was supposedly hacked or whatever but they also they've had it
0:35:46was down again yesterday briefly and of course had a lot of issues with with
0:35:51various things I message and in all kinds of services iCloud just being down
0:35:55so why doesn't Apple take a page from Amazon's book and just spend a sliver of
0:36:02their hundred and fifty billion dollars or whatever it is in cash and just go
0:36:06crazy on on building out the the infrastructure and so I think the
0:36:10argument there is that like you have to assume that they're doing they're doing
0:36:14that right I mean I don't know what are your thoughts on that Lake people get so
0:36:18frustrated about this and assume that that Apple is like so obsessive about
0:36:23holding onto their cash that they don't want to spend it even when there's a
0:36:26very obvious thing that they should spend it on I have to assume that
0:36:29they're not doing that that we don't know the whole picture like maybe they
0:36:33just don't maybe they can't build it fast enough maybe they're spending as
0:36:35many billions as they can to do it but they just can't do it at quite a pace
0:36:39that they want and need to you yeah that's a good question but with data
0:36:46centers they can't keep them secret because they're a man I don't think that
0:36:51they can I mean I guess it would depend where you build it but you know like the
0:36:53big one in north carolina I mean it's not a secret I mean everybody knows
0:36:57where it is and because they're so big like to build a data center that is
0:37:02significant to Apple's needs that you know just what just happened to have
0:37:09some sort of significant impact on the services they provide is a huge
0:37:14undertaking and therefore it requires you know deals you know the whole reason
0:37:19I went to North Carolina's the deals from the government
0:37:22right tax breaks tax breaks and whatever zoning permits I guess and stuff like
0:37:28that that it's not secret because all that stuff you know when you're
0:37:33negotiating with the government is all you know has to be out in the open right
0:37:37so you know to my knowledge there's not a lot of brick-and-mortar building out
0:37:44of of data centers on that Apple's undergoing so I what else could a
0:37:51senator Mian well so you know i mean certainly they have to be spending money
0:37:55on infrastructure for components right i mean you know there's always talk that
0:38:01they've debt while they work with third parties overseas and they built a lot of
0:38:05factories for them in sort of built built the infrastructure needed to do a
0:38:10lot of what they're doing which is customized and so they're certainly
0:38:13spending money on that but it is crazy if they're not spending as much as they
0:38:19possibly can on the on the database the data warehouses because everyone knows
0:38:26that this is such a problem for them and we see it on it on an almost daily basis
0:38:29now and so you know what are they holding onto that money for a net that
0:38:33that sort of goes back to again the argument between Amazon and Apple and
0:38:38answer the wall street component of it of course Apple started going under fire
0:38:42when they when they passed a hundred billion dollars in cash that was
0:38:47overseas as we know but you know there there were activist shareholders who are
0:38:51rising up and saying you need to distribute this money and they are of
0:38:54course now but Amazon doesn't have that problem again because they just aren't
0:38:59you know posting these these giants amount of profit and holding on all this
0:39:03case I think they do have plenty of several billions I don't know what the
0:39:06number is that they actually hold in cash but it's nowhere near what Apple is
0:39:09holding and so why exactly is Apple holding onto this you know they say it's
0:39:13for for future considerations are you know for defensive purposes but they're
0:39:18really not doing anything for it so was it you know you start to wonder at least
0:39:22I'm starting to wonder was it a miscalculation to actually build up this
0:39:26amount of cash
0:39:27started asking these hordes of money yes I also feel like they you know I'm not I
0:39:34i dont know I don't work for the SEC so I might be off base here but the money
0:39:38that they have quote unquote in the bank
0:39:41the profits from past 10 years that they're sitting on if they'd spent a
0:39:46huge chunk of it in the next like two quarters to build out like another
0:39:51massive data center
0:39:53you know Texas you know alaska
0:39:57doesn't matter where they'd still have to account for that in those quarters
0:40:01right so that's not just because they have the money in the bank doesn't mean
0:40:05that they don't it wouldn't have an impact on their quarterly earnings
0:40:09right-o it would and it would just look bad
0:40:13investor wise if if their profit for like two orders from now
0:40:21was way lower than it would have been if they hadn't made this massive up-front
0:40:25capital expenditure they can explain it in people who are paying attention could
0:40:31listen to them and say look this is you know we were doing this for this reason
0:40:34and it you know it's in our best interest going forward but we all know
0:40:39that people don't really listen to the actually explanations they just CEO
0:40:43Apple made you know turned lower than they were expected to you know there
0:40:47must be going under and again that just goes back to my thought on why basis is
0:40:53a genius with this you know I won't call it manipulation but it's it's the way
0:40:58that he's he's playing it right where he doesn't have to worry about spending a
0:41:03billion dollars one quarter on a datacenter because that bill like the
0:41:08investors aren't used to seeing that billion anyway and they think they'll
0:41:11see that billion down the road somewhere as a result they think you'll see two XE
0:41:15billion down the road as a result of him sending this billion right now right
0:41:19maybe oversimplifying but I see it's the way he's set them up from an investor
0:41:25perspective that really does contrast with Apple rebels and never really ever
0:41:30even in the old days when they were relatively a small company
0:41:34has never been held in high regard by Wall Street right now the stock I think
0:41:41has long been was old days long undervalued because they were
0:41:47misunderstood company and the company was never really set up to make
0:41:52investors happier you know it was always about the product it was always the
0:41:57company has always been set up to make great products great experiences and and
0:42:02everything else is secondary whereas I think pesos is experience it's like
0:42:07what's coming with what's becoming clear to me is that he set the company up in a
0:42:12way that it's always been set up to make investors happy or satisfied you know
0:42:18that it's not a coincidence not like the way matt Yglesias put it it's almost
0:42:25like investors are delusional you know to support its crazy that they support
0:42:31Amazon's lack of profitability quarter after quarter whereas I think the truth
0:42:35is that that was by design
0:42:40yeah and again I go back to the earlier point where you know basis is obviously
0:42:46aware of this because he's put it in the shareholder letters it's like we at some
0:42:50point we realize we recognize that we need to turn a profit
0:42:54eventually and we're gonna do that down the road you know we may have to check
0:42:57in from time to time to make sure that we can do that and maybe that means just
0:43:01not spending billions of dollars on infrastructure costs in a one-quarter
0:43:04something like that then all of a sudden a show like you know like a five hundred
0:43:08million dollar two billion dollar profit of a sudden and then then the very next
0:43:12quarter they go right back to building out again and so maybe they do do that
0:43:14sometime in the next couple of years or something like that I don't know if
0:43:19they're not showing any signs that they're going to do that but yeah I
0:43:23think I think you're right that that basis is just playing this sort of thing
0:43:28this perfectly that everything is in the future and everything is going to going
0:43:35to be going to be rosy at some point but what really is the point is to go back
0:43:39to the to the to the idea of what Apple is doing with their money what is the
0:43:42point of caring all these profits if you know when you get beyond a certain point
0:43:46I mean Apple couldn't buy enough companies nor were they want to because
0:43:50it would be a disaster if they spent a hundred billion dollars buying companies
0:43:52they're not gonna do that there there are you know probably investing in
0:43:57infrastructure as much as they feel comfortable with so they clearly have
0:44:01more money than they need for that and so what is the point at the end of the
0:44:05day of having all these massive profits beyond it kinda having a major headache
0:44:09I mean it's good if if the economy turns that's what that's one argument right
0:44:13like you know if the if the economy goes bad again Apple doesn't necessarily have
0:44:18to change anything they're doing because they have so much money and they could
0:44:22sort of dip into that but Amazon seem to whether you know the last downturn
0:44:28perfectly fine I don't know you know what their numbers exactly word then but
0:44:32certainly you know they are not going well and I think that's that's the other
0:44:38that's another thing that to me through at least threw me off that Amazon is
0:44:42that my first impression of Amazon was was formed in the go-go dot com nineties
0:44:48right and I i mean I was an early Amazon user but I memorable an Amazon with just
0:44:53a bookstore and they were you know had crazy customer service and it and it was
0:44:58free shipping for everybody and crazy low prices on the books and they had
0:45:03just amazing customer service like if you wanted to send a book back you just
0:45:07pay for the shipping to send it back just like a lot of form on the website
0:45:11and they'd be like your print this out and UPS guy I'll pick the book up
0:45:15tomorrow you know or whatever it is you bought one day started selling more
0:45:18stuff right and but the bottom line is that they ran did that run up in the mid
0:45:25to end of the nineties they were they were running a real they were losing
0:45:30money quarter after quarter after quarter right in a typical dot com
0:45:35mindset lots and lots of dot coms had that same I did lose money to build
0:45:40market sharon's blah blah blah something well blah blah blah something to happen
0:45:44for Amazon
0:45:46they did kind of turn it around and so yeah they don't make big profits and a
0:45:52quarter and sometimes they lose a little sometimes they they make a little but
0:45:56it's not at all that it's not at all like it was in the nineties when they
0:46:03were burning money they're not be right money right and even you know I brought
0:46:09this up briefly in the peaceful lake it's funny that they you know Amazon
0:46:12invested in things like pets.com which of course you know is one of the great
0:46:15dot com flame outs and even more recently they invest in LivingSocial
0:46:20which is they've had to write down their investment and so they're still sticking
0:46:25some risks and you know making sort of crazy bets but in the nineties pets
0:46:28upcoming was total disaster while they were losing money and they still don't
0:46:32go under now we have LivingSocial thing is a total disaster but they're able to
0:46:38easily withstand something like that it doesn't even really make it did you know
0:46:42they did lose whatever that was a few quarters good that they wrote it down
0:46:45you know they posted some some losses but you know investors still don't mind
0:46:50it's like they they trust Amazon because the amazon has lived through kind of
0:46:55some seemingly impossible things to live through like you were saying in the in
0:46:59the sort of the dot-com bubble and you said like basis has been upfront about
0:47:04it forever
0:47:05you know he has been you know I Amazon investors are getting exactly what they
0:47:10were promised yeah you know but maybe someday there gonna need to turn a
0:47:14profit I mean you have to assume that they will it it becomes like it just
0:47:19becomes a very weird thing and I would have thought I think I like two years
0:47:22ago I think at some point they will have to show profit right like winter I don't
0:47:29get it this is madness when are they ever going to actually show a profit
0:47:33again are meaningful profit again and you know investors just the stock has
0:47:38passed $300 whatever and and they show no signs of slowing down so I don't know
0:47:43actually win win that is that they have to do that and basil seems like he's a
0:47:47step ahead and that he does know when they'll have to do that
0:47:50and I don't know when that is and maybe it's her but I think that it will be
0:47:55sometime relatively soon I have to believe that I think so let me take a
0:48:00break here and thank our second sponsor second sponsor back from last week is 10
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0:48:35save money they have an online calculator go to the website at
0:48:41talk-show . 10.com that way don't know you came here from the show even online
0:48:49calculator and it's amazing you do you pump in what you're paying now for
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0:48:57sign up do tell them how much data you use how much Voice use and they'll tell
0:49:03you how much you'll save per month and if you're using something like AT&T or
0:49:07Verizon I I think it's almost guaranteed you gonna say it's kind of amazing when
0:49:13you sit there is a catch the catches they don't have the iPhone right now
0:49:17that's obviously going to effect a significant number of people listen to
0:49:21the show but there's also a lot of people like John Siracusa out there who
0:49:26don't have an iPhone don't want to spend the money on $120 a month iPhone plan
0:49:31and if that's you I would seriously suggest looking at 10 there an MVNO that
0:49:36build on the Sprint network so it's got great coverage all over the country
0:49:40whole bunch of great features great support from the same parent company
0:49:44that does however the great great domain registrar and like I said last week
0:49:52domain registration is notoriously as scummy business however has a great
0:49:56reputation no scams no tricks
0:49:59mobile services exact same way mobile service is notorious for all sorts of
0:50:03hidden charges and overage fees and wow I signed up for $100 a month plan in my
0:50:08bill is a hundred and fifty how'd that happen is the complete opposite totally
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0:50:15great support unbelievable prices so again check them out at talk-show dot
0:50:20dot com you'll be surprised at how much money you can see and you can see also
0:50:28you can sign up to be notified when they when they do support the iPhone which
0:50:32they're working on so boris did you in His peace following up on on Amazon I
0:50:41think he focused a lot on the idea of flipping the switch which would be sort
0:50:46of switching from breaking into suddenly making big profits I think if there's
0:50:51anything I liked his piece of that he made a lot of great pieces Island it up
0:50:54but I think maybe flipping the switch is the wrong notion I think it's maybe a
0:50:59little bit more like turning this pick it up a little bit you know and yes
0:51:04order or the opposite turning the spigot down on the expenditures that they have
0:51:09right right it's it's not flipping a switch and suddenly piles of profit
0:51:15start piling in
0:51:16I think it's turning dials little downturn this little downturn this
0:51:20little up you know maybe raised prices just a little maybe decrease
0:51:27expenditures on you know capital in ventures expenditures a little bit and
0:51:32all of a sudden you know the little better profits turn into a little bit
0:51:37more profits suddenly turned into more profits turned into more profits quarter
0:51:40after quarter and it's you know or you know like water boiling on the stove you
0:51:48know it doesn't just go from cold to hot but eventually it is very hot
0:51:51yeah I think I guess there was one of my main problems with horses post was just
0:51:59that it seems like to me that he was trying to squeeze Amazon into a easy to
0:52:06understand
0:52:07and Apple business model right where at some point Amazon will have to flip a
0:52:14switch meaning turn up the cost I assume of the goods they sell it to make it
0:52:22better margins and then to to make better profits what I think he's
0:52:26discounting is the fact that they can instead just not spend as much money on
0:52:30dated warehouses or things of that nature and the fact that Amazon is in
0:52:36there in an increasing number of businesses remember we talked about AWS
0:52:40there now getting into this sort of the web threat FreshDirect stuff right where
0:52:47they're doing sort of grocery deliveries and I don't know I don't know what the
0:52:50margins are on that they're probably not very great but still that's a that's
0:52:53another new business that they're getting into and we haven't even talked
0:52:55about things like where they could potentially you know they could get into
0:53:00the advertising business more certainly they have a lot of interesting user data
0:53:04and they have all those credit cards on file they could get more into the in-app
0:53:08purchase stuff certainly they already have their own app store they're just
0:53:12doing a lot of stuff that i think is is is totally discounted in the notion that
0:53:17Amazon is still just the one company that sort of you go to buy anything
0:53:21online there's so many different things now so I don't think that it's just a
0:53:24matter of flipping a switch I think you're right it's turning
0:53:27just tweaking nozzles for all of these different businesses that they have that
0:53:30that is the way that if they do eventually decide that they want to show
0:53:34profits again at least for a little bit that's how they're going to do it
0:53:39yeah I totally agree with that
0:53:42backtrack a little bit and like you said you were talking about like the almost
0:53:48the perfect storm that the iPhone was for Apple may be one of the reasons
0:53:55they've amassed so much cash is that they deserve
0:53:59it's almost a surprise to them that the iPhone turned into such a success
0:54:05yeah and that three years later that all of that technology software and hardware
0:54:11that the iPhone was gave them the perfect opportunity to do the iPad and
0:54:18start suddenly after all these years taking massive chunk of the PC industry
0:54:27has faced as the years have gone by that this is what has happened is that the
0:54:32iPad and tablets in general have have overrun just completely almost overrun
0:54:39the sub thousand dollar portable computer market
0:54:44yes i think thats I think that you're the first point is definitely right
0:54:49where I would imagine that they were surprised at how good the business could
0:54:54be because you know they were they were entering a new space jobs you know
0:54:59famously said what was what percentage did he want to get like five percent or
0:55:04whatever it was
0:55:05of the of the smartphone million and one percent of the phone market one percent
0:55:09of the overall vote phone market or so and by the way while Nokia and some
0:55:14other ones had hit great businesses at that point they were nowhere near the
0:55:17business that the iPhone is from you know that the carrier at least in the
0:55:22you s carrier market where where these things are subsidizing the money gets
0:55:26paid up front to Apple and so it's almost like they were it really was the
0:55:31perfect storm because right as
0:55:33Tim Cook was taking over Tim Cook had its streamlined the art of making you
0:55:39know beautiful products that people want for a relatively inexpensive you know
0:55:46manufacturing write the thing is we we talked about you know I am making
0:55:51premium products and so most of the time when you make a premium product you know
0:55:55the the problem at a very high level I know this isn't the way that it always
0:55:59is but the thing is it it it costs more because it costs more to make great but
0:56:04Apple cats so streamlined it getting at getting good at making things like the
0:56:08iPhone where it's like they could make this this this thing is so much higher
0:56:12quality than everything else they could almost make it the same cost of their
0:56:15rivals making these these decidedly less quality phones and so that along with
0:56:21the fact that the smartphone market you know Apple timed it perfectly that it
0:56:25took off and with the with the sort of the carrier subsidy model already in
0:56:29place and I think the carrier sort of underestimated sort of how big something
0:56:35like the iPhone and Android phones would would become it really was the perfect
0:56:40storm in making this like the absolute perfect product that I don't think that
0:56:44anyone can really match again at least anytime soon in terms of just how much
0:56:50profit making off of that and think about what Apple's margins used to be
0:56:55and then remembered like a few quarters ago when they got up to it was like 42
0:56:59percent or something like that
0:57:01loser like software margins for a hardware company which is crazy
0:57:05significantly higher than Microsoft's in Google's which is crazy because of
0:57:10Microsoft and Google are primarily overwhelmingly software companies right
0:57:15right yeah I'm so I you know I think you're right there with me where I am
0:57:20really have no almost zero down i mean you know nothing certain but I have
0:57:25zeroed out that innovation is far from over a couples should be good for the
0:57:30decades to come in terms of coming up with new products
0:57:34in new categories I don't know that they'll ever come up with a new product
0:57:39in a new category that of the massive profitability as as the iPhone and iPad
0:57:45because you know I just think about the size of the market it almost everybody
0:57:52on the planet is gonna have a mobile phone and certainly you know there's a
0:57:57huge huge chunk of of the world that can't even dream of buying a $700 phone
0:58:06but it doesn't matter to Apple in all for just talking about profitability and
0:58:11revenue you know I'm not saying those people no matter but their money doesn't
0:58:15matter because if they don't have the money it's irrelevant but in terms of
0:58:19the people who could in theory by a $700 so it's it's almost everybody who has
0:58:29money is going to at least consider yourself it's a massive market it's a
0:58:35very expensive product I think in the grand scheme of things you know $700
0:58:40foner 67 $800 tablet these are expensive things in the grand scheme of things I
0:58:46mean compare and contrast with the iPod which really didn't take off until it
0:58:51hit like the 199 markers so I mean even then it's expensive for a music player
0:58:57and at the end the flip side of what you're saying which is exactly right is
0:59:03that the iPhone didn't take off in a meaningful way either until it got down
0:59:07$299 because it was subsidized and there's no other there's just no other
0:59:13business that's like that right there's not gonna be some some weird entity
0:59:17that's not Apple that's going to pay Apple to lower the price of their
0:59:21products and in terms of Apple not maybe not knowing quite what they were getting
0:59:25into at the outset I think the thing that they knew that they had was they
0:59:30had an amazing device right i mean as everybody knows you know the one product
0:59:35that Apple introduced that wasn't banned on day one
0:59:38as you know for whatever I mean there were some people who thought they were
0:59:41going to be a failure but nobody denied that the thing wasn't incredibly cool
0:59:47right
0:59:48they knew that they had a great product is amazing holy shit you have a computer
0:59:53in your hand and it's all touching it was so smooth and everybody knew that
0:59:57was great so they were focused on that he knew it they had a great then but
1:00:01just think about the way that with the original iPhone in 2007 they actually
1:00:05tried to circumvent the traditional carrier subsidy thing where you you
1:00:11bought your to buy your iPhone on june 28 thru whatever it was
1:00:182007 you paid they are paid 599
1:00:23$4.99 we bought unsubsidized iPhone and what we've gotten turned forget our
1:00:34monthly fee from AT&T was a little bit lower as we didn't have any kind of
1:00:38contracting we still had contract with AT&T but we weren't buying subsidized
1:00:44devices and I can't help but think it was because they wanted they somehow but
1:00:48they don't want to get into that because then it would it would tie them to the
1:00:55carriers too much yup that's exactly right and then they that what I think it
1:01:01was the real genius was the fact that they stayed exclusive to AT&T for so
1:01:06long and they forced the other carriers to sort of been to there will be no
1:01:11Verizon
1:01:12especially because otherwise it just they would have had to make so many
1:01:17sacrifices we would have Verizon and on the back of the phone we would have had
1:01:20like little stickers who had all these apps installed like we see any Android
1:01:24because you know you remember that Google tried to do the same thing with
1:01:28the I think it was the Nexus One the original one where they tried to sell it
1:01:32online at full price without can you could pick your carrier and it just did
1:01:39not work same ideas didn't work for the same reason because no one's gonna pay
1:01:42that much for a phone
1:01:43the problem was exacerbated by the fact that unlike Apple Google doesn't have
1:01:48retail stores so like Apple's you know secrets
1:01:51access really could you could also say why they could they could pressure the
1:01:54carriers as much as they have those stores which moved the iPhone so they
1:01:58don't need it really AT&T and Verizon they do that at a certain scale of
1:02:02course because you know more people you know by them based on what carrier they
1:02:07want but they have their backup plan which is just that will try to push them
1:02:10in the stores and you hear that even now they're trying to ramp up the amount
1:02:14that are sold through the stores versus through the other day other carrier
1:02:17partners yeah I and it it just I think the African how many iPhones sold in the
1:02:25first year but is only like a million or something like that yeah yeah if even
1:02:30that of something small small I mean it's you know they saw like five million
1:02:34in the opening weekend when they come out with a new one like this there was a
1:02:39whole year like so late in the grand scheme of things that first iPhone was
1:02:43not a hit product in in the mass market it was among people like us probably
1:02:48listeners of the show probably you know huge number of people who listen to the
1:02:51show probably bottomed original iPhone right but it wasn't a mass market it
1:02:56because it was $699 $599 phone even though when you buy a subsidized for
1:03:03$1.99 or $99 you are paying the price you pay more right to actually do pay
1:03:11more right but it it the psychology the truth is the psychology works yep it
1:03:16does people it feels like only buying a hundred $999 iPhone because you're
1:03:23already prepared for that
1:03:24monthly bill that has the subsidy charged built-in baked into it that's
1:03:31exactly right and so you know it's over now with all this talk of this this
1:03:34cheaper iPhone which I don't know anything firsthand about but I do
1:03:37secondhand I do think I do think that we're finally in the in the in the point
1:03:42at the point where this is legitimate and there will be some sort of you know
1:03:46cheaper version of the iPhone because of everything we just talked about but also
1:03:52the fact that Apple wants to expand the market they need to have a bigger bigger
1:03:56share of the Chinese and Indian and
1:03:59and some other different countries where they don't have the subsidy model and so
1:04:03that's the only way to do it and you know we'll see what the what the price
1:04:07point ends up being of that thing with his what are the things floating around
1:04:09now that would be like $300 or something like that unsubsidized
1:04:14might be too much money I don't know and I don't cheap might be the wrong way to
1:04:19look at it but i i think i think pricing wise what it's going to turn out being
1:04:23is the thing that we've all been talking about since the fall of 2007 when the
1:04:28first iPod Touch coming came out which is if the iPod Touch only costs three
1:04:34hundred and fifty dollars or $300 or whatever
1:04:37how much would it cost for them to put a cell chip in there i mean of course it
1:04:42would make it thicker let's just assume that putting an extra extra antenna and
1:04:46chips etcetera and to make it do
1:04:49LTE invoice and you know but it can't be that big you know i mean that has always
1:04:55been better than the iPhone but why could they make an iPod touch if its 350
1:05:00bucks why can't they make a cell phone costs and I think that's what this you
1:05:04know lower-cost iPhone is an iPod touch that can make phone calls yet so I
1:05:09wonder what they'll do that in the you s market where you know the the carrier
1:05:13syst dominate certainly they got the carriers to agree to do the ala carte
1:05:19iPad stuff originally right like where you could just you can pay one month and
1:05:24not pay the next month and was really easy to flip on and off right there was
1:05:26no contract I don't know how that will go over with this with this new device
1:05:32like will will just not be available in the USA Thompson saying it has to be
1:05:36right but there's no way that they would do it and only launched overseas know
1:05:39let's come back to that I have some thoughts on that but let me just do the
1:05:43final sponsor and we'll come back to them we would be a great way to finish
1:05:47the show gonna tell you about batched geo da TCH Ji Hyo they've sponsored to
1:05:54show before
1:05:55maybe the sponsor during fireball sometimes I confusing but I know they've
1:06:00come back and they're great it's amazing it's fast easy way to visualize location
1:06:05data so one thing you can do if you have like a bunch of addresses in like an
1:06:10Excel spreadsheet just copy and paste them in too bad geo website and hit a
1:06:14button and boom you have a map with all of those addresses on and i i tried it
1:06:19it sounds to get that to me sounds like way too good to be true I figured that
1:06:23after they'd spend some time putting the data in a certain way or whatever no you
1:06:27just put addresses in hit a button and you get a map with the addresses of all
1:06:33sorts of other things you can do to they have an easy way that you can make a
1:06:36locator app for your website like if you have a website with locations in a
1:06:42restaurant or something like that they have an easy way to do that thing where
1:06:46you can find a location near you just go to their website they have fun and very
1:06:52simple video that explains the whole product way better than I could do here
1:06:56if you have any kind of location data wanna make maps of any kind
1:07:01go to bad geo dot com and check out the video and it will explain the whole
1:07:05thing it really is amazing it's a fascinating fascinating that can't
1:07:09believe how easy it is to make to make maps with this thing so here's my
1:07:14thought on low-cost iPhone my thought is why now
1:07:17like they have had a low cut they did the the coverage of it has to me for
1:07:23years been misguided because they've had a lower cost iPhone four years and years
1:07:29ever since they started the strategy of selling the previous year's phone for
1:07:35another year at a lower price and then they run to three levels where they had
1:07:3922 year old phone which is now free with a contract and then a year old phone for
1:07:4499 bucks and it gets lost in the tech press because the tech press doesn't
1:07:49care about anything other than new products right it's new it's not new
1:07:52that's so it doesn't count and somehow that spread to the business version to
1:07:59you know like the business journalists also somehow discount the fact
1:08:04that Apple has a pretty darn good free with contract phone right now the the
1:08:10iPhone 4 but again the key is with contract at how much are they selling it
1:08:16for I don't know how much are they selling it for on subspace you know I
1:08:20honestly don't know because they don't they don't sell them any less I think
1:08:23though I think it's still so so basically they're taking you know a $200
1:08:28thing down to $99 and get a free right so I think what I think not sure about
1:08:33this but I think that they're selling it for about 450 or whatever you know it's
1:08:36basically full price of the iPhone 5 minus $200 for that thing so I think it
1:08:42still four hundred and fifty and I do think that that's still a non-starter in
1:08:47some of the other countries around the world and so I don't know what the price
1:08:53point they need to get to is I don't know if it's if it's $300 that's that's
1:08:58what they're aiming for it maybe two hundred dollars in subsidized that they
1:09:02need to get to to actually make it a viable thing and I don't know what kind
1:09:05of what kind of corners they'd have to cut to do that but like you're talking
1:09:08about how much is the cheapest iPod Touch right now it's got it's like it's
1:09:13a 250 is it is it in between
1:09:17let's take a look 229 229 that's and that's the 16 gig one that doesn't even
1:09:25have a camera doesn't have a rear-facing camera yes so ok so they'd like
1:09:31basically shaved 2001 with the camera are $2.99 ok so and does it have more
1:09:39surgeries at the same 32 and 64 akka so conceivably they could do a 16 gig sort
1:09:48of iPod touch with cellular radio right for I don't know I don't know how much
1:09:53it would cost 250 yeah maybe I don't know it seems like 299 is definitely
1:10:00reachable for sure
1:10:03I would I can't help but think that the plastic back that all reports about this
1:10:08device you know claim and which makes sense of its a point to make it cheaper
1:10:13you know has got to be cheaper than a little or no I don't know if the
1:10:16aluminum is that significant factor in the $300 costs but right now no I mean
1:10:22couple sense here a couple sense there and you know you might have a $250 and
1:10:29so i think thats good guess I think that's like it probably will be 299 try
1:10:35that at least at first maybe they have to lower to 250 can still do that within
1:10:38their their margins have a $250 1 to get you in the door but everybody's gonna
1:10:45buy the 299 1 because there's some more stories right yeah but by a mean and you
1:10:54know I don't know I don't remember what the margin on the iPod touches but it's
1:10:57clearly not what the iPhone is and that's that's gonna be a huge problem
1:11:02for wall street again you know where the margin later talked about a few quarters
1:11:07ago was that forty-something percent and now all of a sudden it's gonna go below
1:11:10you know maybe goes below 30 percent because maybe if they if they do this in
1:11:16a successful way at any kind of meaningful volume this is just going to
1:11:19drive down the margin and that's what that's unfortunately one of the things
1:11:23that Wall Street will focus on and you know say like well you know the the time
1:11:29of of riding high for Apple is is over now they're now they're going into
1:11:34margin volume business yeah I have some serious questions about how they're
1:11:40going to bring this one to market to because I don't know I I'm sure they'll
1:11:44say I'm almost like you I can't believe they wouldn't sell in the USA but in the
1:11:48USA I don't know how they sell it
1:11:51unsubsidized I think right so I think they would I think I think this is all
1:11:56coming together there's a lot of pieces out there right and we're in we're
1:12:00starting to see them starting to make sense why is Apple pushing for Apple
1:12:06stores to sell more iPhones within the store why do they can hear certainly you
1:12:11know they're in more control the experience you could argue and it's just
1:12:15a better overall experience for the customer and you know they like having
1:12:19that relationship and not having to worry about using the carrier certainly
1:12:22that's all true but if it's also that they're they're only going to sell this
1:12:25through the Apple stores and they want to get people in the mindset that if you
1:12:30want to buy an iPhone you go to an Apple store you don't go to Verizon anymore
1:12:34AT&T because and now by the way we have this lower-cost new iPhone that comes in
1:12:41a variety of colors and it's only available exclusively at the Apple Store
1:12:46so come on and get it and so maybe there maybe they're trying to lead into that a
1:12:50little bit with this maybe that's interesting I hadn't thought of that but
1:12:54that's definitely makes some sense with the again this I guess we know because
1:13:00people who work at Apple stores have even said so that it's come down from
1:13:05Cupertino that you know that that's the retail Apple stores are supposed to be
1:13:10trying to sell more phones right then they had been
1:13:14here's the other factors I've been thinking and I gotta write this up for
1:13:17daring fireball but long story short why this year to switch to a new phone at
1:13:25the low price point as opposed to previous years you know when they've
1:13:29sold these years old
1:13:30phoned and and there's a couple of technical reasons why they might wanna
1:13:34do that now which are to me the two big ones I see are the screen to get
1:13:41everybody on 605 every 15 mins
1:13:44yeah four-inch screen 16 29 aspect ratio and to get everybody on do lightning
1:13:52adapter yes that's a big thing that no one really talks about but that's still
1:13:58a problem for them right that there's so many devices out there that are not on
1:14:01this lightning adapter and it would be if they followed the old-time this is
1:14:06just a theory of mine is that they're going to announce this they're gonna
1:14:12stop selling
1:14:14while obviously the for the old strategy would have been that the four would go
1:14:19out the door for a sore ass would be a free so I think that they're gonna get
1:14:25rid of the four and the 40 S and it makes sense because it doesn't have the
1:14:30foreign screens right that eases developer pain a bit and kind of pushes
1:14:36everything forward especially if I don't know who your thoughts on this but if
1:14:40you know if they do want to do a different size again slightly larger
1:14:45than four-inch screen they have to get rid of the three and a half inch screen
1:14:50when they do that right I would think so I don't know I mean only way I could see
1:14:54it
1:14:55well yeah i just i just think that they want to get rid of that I think it's
1:15:00more about the aspect ratio than the size is in theory and the rumors are
1:15:04that this low cost you know if that leaks or truth that cases are true it's
1:15:09the same size as the iPhone right 55 in theory I could still see them coming out
1:15:16with Ace physically smaller phone that maybe would have a three and a half inch
1:15:22screen but it would be sixty-nine
1:15:24it would be an interesting year yeah you know and then shrink the chin and
1:15:29forehead or something like that you know make it so that the device is almost
1:15:33just the size of the screen I can see them doing that a lot maybe three and a
1:15:39half is too small if it keeps the aspect ratio of 3.7 or something that's
1:15:45interesting about that you know I just expected but I wouldn't be shocked you
1:15:50know and I think if they come out with a bigger one to address the people who
1:15:53really do want a bigger screen again the aspect ratio I think problem certainly
1:15:58stay the same 16 I really do think they want to get everybody on that and I
1:16:02think getting rid of the thirty port adapter just makes sense I just feel
1:16:06like at this point it looks just looks antiquated and so the idea of them
1:16:10selling iphone4s for another year just seems outdated yeah I think that that's
1:16:17that's all pretty pretty good good reasoning for why they would do it right
1:16:22now I also wonder how much because the flying I have my old for us right here
1:16:27in front of me because I'm using it for testing I was seven
1:16:32it's a premium product right it's got this steel band around the side its
1:16:39class front guard class back and it just feels premium and I you know I can't
1:16:45help but think I don't know how big a cost of the device the premium materials
1:16:50are but you know however much that the chips have gotten cheaper you know
1:16:57obviously when the four s came out it was a cutting-edge mobile processor
1:17:01cutting-edge mobile GPU and now it's you know two-year-old technology it's
1:17:06certainly a lot cheaper but the glass-and-steel still cost the same
1:17:10whereas if you really want to get a lower unsubsidized price I feel like
1:17:16switching to a new material makes a lot more sense and how much do you think I
1:17:22know it's sort of silly but it it you know it it may be silly to discount how
1:17:26much sort of customization we we see that you know what the new Moto X right
1:17:30where they're they're highly customized just from our perspective right and so
1:17:35that's the rumor course with this this low-cost iPhone that they would have
1:17:38maybe some different colors and certainly that's been the case of the
1:17:42iPods for a long time the iPod nanos at least and so how much do you think that
1:17:48that plays into it you think that that's important for them I guess I think it's
1:17:52does it is starting to get old I mean I'm just gonna buy a black one but I
1:17:57feel like it's starting to get old that you can only get in there and I'm just
1:18:01I'm staring here right now ever since we're talking about it a few minutes ago
1:18:04at the iPod Touch page and to me it looks more happily to have a array of
1:18:09colors of a device and certainly with the new I was seven color palette that
1:18:16it sort of is sort of the way they're going so here's a question I wonder I
1:18:20mean I just presume
1:18:22and it seems like the rumors are way more about the lower-cost iPhone quote
1:18:26unquote iPhone 5 see than the presumed iPhone 5 s new phone but if they come
1:18:36out with the lower cost one and it comes in five colors can they still do the
1:18:42high end one just in black and white
1:18:44I mean presumably they want people to buy them in a preferred with they bought
1:18:48the more expensive but I think I know can't think about what they did with the
1:18:54regular iPod and then the iPod nanos rights of the nanos run colors the
1:18:59iPod's remained in black and white right there are you 21 or whatever but yeah so
1:19:07I don't know I have no idea but I would I would guess that maybe they do that
1:19:10and then in the selling point on the higher end is you know like like you're
1:19:15saying this is this is the premium product the city's top of the line the
1:19:18best we can do for everything it has a faster processor more RAM which they
1:19:23won't talk about and it may be it has you know that the fingerprint reader has
1:19:28it been rumored and that's like that sort of the marquee differentiator of
1:19:34like what's new about this device and have a better camera for saturday right
1:19:38and so maybe they do just rely on that if you want this go with this if you're
1:19:44interested in sort of personalization and fun and colors and maybe they think
1:19:48that's more the teen market or you know some of their market that they're going
1:19:53after maybe they think that they can differentiate those enough for it where
1:19:57it makes sense to do that I wonder too I would love to know I don't know how who
1:20:01who could do such a survey but I would love to know what percentage of iPhone
1:20:07users use a case with their device yeah that would be interesting to know i you
1:20:12know i mean I'm certainly i mean the the the the heart of the bubbles for this
1:20:18where in you know in San Francisco it's sort of considered I i've had discussion
1:20:23of many people search considered a full body is the case right and and in you
1:20:27even remember the event all those years ago and attended Gatorade
1:20:32you ask them jerry is anyone using the bumper and they all you know jobs and
1:20:36and cooking everyone pulled out their right hands they put out their populist
1:20:41iPhones and so I feel like it's sort of a faux pas in like in the tax year to
1:20:46use a case I certainly don't use a case except when I'm using the Mophie to to
1:20:50recharge it but I would bet that it's much much higher percentage use a case
1:20:56in the day today you know regular regular world out there
1:21:00yeah we've had the family we're down at Disney World last week and I was doing
1:21:08two things I was caught a whole bunch of pictures of people using tablets as
1:21:14cameras nice to say to have went to most of them overwhelmingly none surprise
1:21:18where iPad but I saw a few obviously 16 2910 which meant that they were you know
1:21:25Android tablets of some sort but I was also I just was looking I Drive had this
1:21:31on my mind thinking about this plastic iPhone I was looking at people's iPhones
1:21:34and disney world which i think is a pretty good cross-section of the whole
1:21:40country
1:21:41Disney World in July boy i i would guess I seventy-five eighty percent of the
1:21:46people had him in the case really really sad that can and do you think that that
1:21:56goes back to the idea of personalization or protecting it could be both of course
1:22:01I think it's both because the cases that I was seeing where especially you know
1:22:06don't think it's surprise especially the cases that women had we're very colorful
1:22:13patterned you know
1:22:16just everything anyway you know any almost any sort of just go and look at
1:22:22the wall of of of cases like at the Apple store and i stood you know you see
1:22:27all of them in real life
1:22:28somebody's brain every one of those I wonder though with the plastic if it's a
1:22:32plastic iPhone will people see the need to buy a case for ya yeah potentially
1:22:38not though I don't know why would I think this is one of the things will be
1:22:43surprised about where people do anyway yeah because it's it's not like we
1:22:46haven't had plastic I funds before we had 23 dry 3ds and I seem to recall that
1:22:51in the real world most people put him in cases yeah they just like when I first
1:22:56got an iPhone ridiculously I used to I insisted on getting one of those over
1:23:04screens on the planting protector thing it's like any like I can't imagine doing
1:23:09that right now but it was just in my head that I need to do that each time
1:23:13like I was protecting it and so I just did that until until they start to talk
1:23:17about whatever the allele phobic we are exactly
1:23:22coding yeah yeah you know and I'm over the years I've always had good luck with
1:23:28my phones not carry him in a case I've never had one shattered and neither of
1:23:32which everyone thinks is so strange this one I guess is nine months old one tiny
1:23:38scratch on the glass and it's only visible against like a white background
1:23:43and only when I heard it at a certain angle it's a tiny little hairline
1:23:49scratch a mean it's almost I would I would venture to say it the screen at
1:23:55least is would be qualified as near mint and that's no I'm not particularly
1:24:00careful with it but i dont I think a big part of it is the personalization I do
1:24:05think I think people are cautious cuz I think people see that their iPhone is
1:24:09you know a valuable thing that you carry around in your pocket
1:24:13so it's certainly part of it but I think the customization and personalization is
1:24:17a huge part of it yeah I mean and and the fact that Apple carries so many
1:24:22cases in their stores like you were saying says that they recognize that too
1:24:28totaling so it's wrapped up I will say this though just one more thing on the
1:24:33future and what's coming up you know next year or two from Apple just tossing
1:24:38it out there like I know that the watch the iWatch is certainly one that a lot
1:24:41of people are you know seemed almost expect in a business week and others
1:24:46have literally reported that there are people working on it right I just don't
1:24:51see like finding it back in with your thing about this you know another iPhone
1:24:54size hit I just don't see how anything that you wear on your rest no matter
1:24:59what it does
1:25:00could possibly grow into an iPhone sized business cuz I don't see how it could
1:25:04possibly cost more than 200 bucks like no I don't think anybody is going to buy
1:25:09if it costs as much as an iPhone which is six seven eight hundred dollars some
1:25:14people would buy it but nowhere near as many people would buy it is who bought
1:25:18an iPhone so it wouldn't be couldn't even at the same prices the iPhone
1:25:21wouldn't make nearly the amount of money the outcome does it matter how cold it
1:25:26and if it's a hundred and fifty bucks then there's no waiting to there's no
1:25:30way for you know even if everybody who bought an iPhone but one which would be
1:25:35huge
1:25:36it wouldn't make it nearly as much money as it doesn't cost us want to watch can
1:25:40can be the iPhone financial I totally agree and this this has been sort of an
1:25:45interesting discussion just amongst watch people right because it's like
1:25:48watches are considered for many people a premium product you know you can buy
1:25:53watch that's that's tens of thousands of dollars and many people buy watches that
1:25:58are least several hundred dollars if not a thousand dollars but that's a premium
1:26:03product and could Apple potentially tap that market I don't know I think that
1:26:08this watch I think it's it's almost like an away a misnomer to call the watch
1:26:11right it's it's going to be something that that lives on your wrist and is
1:26:16doing all different kinds of things beyond telling time it will make it may
1:26:20look like a watch but it's really going to be a screen that's on your wrist a
1:26:24screen and a monitor for different health things or whatever
1:26:26that that resides on your wrist the computer on your wrist it's fun to watch
1:26:30and so I think I think that they'll have problems trying to go after you know
1:26:35that the nice watches of the world
1:26:38certainly because the design will have to be different than than what those are
1:26:42of course and so I do think you're right I think that they'll probably do you
1:26:47know $200 $300 price point at most for something like that and the lead singer
1:26:55heard on that you never know for sure but I it's a ways out still like we're
1:26:59doing next year not this year
1:27:01yeah I think there's a to go into rumor rumor central here but the let the
1:27:08latest things like I've heard that some sort of television product not the not
1:27:15some not necessarily a television screen but something and could be coming as
1:27:20soon as as soon as this November and I think there's there's some surprises
1:27:26there about about what it could actually be and I don't know this for sure yet
1:27:29but there's been whispers about and I have something to write anything about
1:27:33it but it's just there's with Chris out there that that the interaction with it
1:27:38could be like the interesting thing people talk about voice but I think that
1:27:41that's that might be out the window and there might be something some new way to
1:27:44interact with whatever this thing is just think price and that's a way that
1:27:48both in a way both of those mythical products are are like the iPhone maybe
1:27:53and to your point about though watch not really being a watch and not really
1:27:58competing with Seiko and Rolex or something like that
1:28:03it wouldn't be any more of a watch than the iPhone is just a phone radio exactly
1:28:08really about putting a tiny laptop in your pocket pocket it was a computer not
1:28:14a phone just happen to also make phone calls I think the right to be the same
1:28:18way and that's that's that's the mistake one of the main mistakes people make
1:28:21about happened i think is that like they think like oh they're gonna go after
1:28:24going to go after the phone category they're gonna go after the television
1:28:27category they're gonna go after the watch category both the way that they
1:28:30think about it is they're not going after any specific like category being
1:28:35pigeonholed into going after something because if they do that that's going to
1:28:39be a failure of a product it's just something they're trying to like certain
1:28:42extend what people already know and make it slightly better the only way that
1:28:45Apple succeeds at all these things that make it so much better that people have
1:28:48to buy this this new thing that isn't that isn't just to watch it's not just
1:28:52the phone and it's not just a television yeah and I think your point on the TV
1:28:56and the interaction model that's really the key to the iPhone's success was dead
1:29:01everybody's idea prior to the iPhone 4 how to make a more computer II
1:29:06smartphone was bad more and more buttons and lots of buttons and keyboards and
1:29:12wheels and it's the interaction model that was really the breakthrough with
1:29:16the iPhone where it's no we're gonna get rid of all the buttons except for one
1:29:19and you just touch stuff on screen and we're gonna do it on software and I feel
1:29:24like there's I don't know what it is you know I'm terrible at pled conceiving
1:29:29ideas like that but I do think that's maybe where the future of Apple TV is i
1:29:33think is right now if there's one thing that's the most disappointing that Apple
1:29:35TV is that it still is just the interaction model is infrared remote
1:29:41with up down left right yes right and you know they're trying to date just
1:29:45started doing you to thinking right with the so you can use your phone for it but
1:29:50I still think that there's there's gonna be a different way whether it's whether
1:29:54it's touch your movement or something there's going to be a way that they that
1:29:57they break ya break the mold of the way that you interact
1:29:57they break ya break the mold of the way that you interact
1:30:00right I think that the breakthrough has to be more me maybe it's still a remote
1:30:03of some sort I don't know how I get a bad idea of magic but it's got to be
1:30:07more than just switching from infrared the Bluetooth it's gotta be you know
1:30:11there's got to be some kind of potential great leap forward in the interaction
1:30:15yep that's another one to know where I just don't see how it could make as much
1:30:19money as the iPhone yeah I mean so Apple TV as it is currently made up is it does
1:30:27what it says is doing very well right and it's it's because it's $99 and you
1:30:32know the most compelling thing about this new chrome casting is it a $35 like
1:30:35these are things that are sort of no-brainers to buy because they're so
1:30:38cheap the television you know everyone's focusing on an actual television i mean
1:30:44that would sell for a it would have to sell for at least a couple thousand
1:30:47dollars and that's you know if if they do that the TV market is just so
1:30:54different than what the phone market is going to subsidize it and I guess in
1:31:00theory you could maybe they can work out a deal in Comcast's sub to subsidize its
1:31:04interesting interesting but they're not really in the business I don't know it
1:31:08would be shocking to me if that's what it turned out to be but you know I guess
1:31:13it's possible but it's the only way that if it is in fact a thousand $2,000 TV
1:31:18said that's the only way it would work at scale would be to somehow figure out
1:31:23a way to sell it subsidized because normal people aren't going to replace
1:31:26their TV just cuz Apple came out with a TV right and if they do by the one first
1:31:32appt this first Apple theoretical television it would be you know what's
1:31:36gonna be five years until they buy another one they're not gonna upgrade
1:31:39every year and they're they're not gonna get every two years
1:31:41one of the other ways that the phone market with such a perfect opportunity
1:31:44is that people even before Apple got in we're already sort of in the habit of
1:31:49getting a new one every two to three years
1:31:51yea and yea and getting a new TV is a hassle would be a hassle you know you
1:31:55mounted or or its just a heavy clunky think 22 to move in and out of your
1:32:00living room and the set you know the same selling points don't work like
1:32:04people upgrade to the new iPhone because it has a better camera often
1:32:07you know there is no such thing in itself television you can upgrade you
1:32:12can upgrade your cell phone on a whim real yeah he can't do that with UTV know
1:32:18and so yeah I don't know I would be surprised if if there's some sort of
1:32:27actual screen television anytime soon I would look for something more akin to
1:32:34what we already have with a different thoughts around it and you know the app
1:32:38that model is just there for the taking and they're going to destroy that right
1:32:42but I just don't see it as being an iPhone sized business and I feel like
1:32:45that they might run into problems with the Investor Relations I mean could you
1:32:51can you think of anything in the world that would be an iPhone sized business I
1:32:55keep making the joke that they would have to get into the oil business to do
1:32:58something like that or or cars I don't know I mean I know and I'm sorry the
1:33:03first just as a blue sky idea that what if Apple but Tesla I don't see it
1:33:08happening but it just in theory if they did and turnout will stores into car
1:33:15dealers potentially that seems like a big business because of cars cost twenty
1:33:21thirty forty thousand dollars and you know you don't need a huge market share
1:33:25to have that turn into a lot of money but that's the only thing I can think of
1:33:29the people by that is very expensive year that I think you're right that's
1:33:35that's one of the few things that they could do that would they would have a
1:33:39meaningful impact on revenues and profits something of that just that size
1:33:44so I don't know I mean and I think that the potential is there for Apple to have
1:33:48a really healthy and he's already doing well in terms of numbers I think it go
1:33:54even higher
1:33:54I think that they could monetize it further with an app store for it I think
1:33:58it could turn into a great little business but it just wouldn't be the
1:34:03iPhone yet the only other the only other thing that they could do I think you're
1:34:08a cars and then there's the unknown right there could be some new market
1:34:14that no one thing about right now like like the very first computer that PCs
1:34:17right
1:34:18they would have to conceive of some entirely new market which would be
1:34:23impossible for us to think about right now what whatever their whatever they
1:34:27they may or may not be dreaming up but you know that that's that may be a once
1:34:31in a lifetime thing for a company in Apple's already done it you can argue
1:34:35they could have done it a few times right so the likelihood that they do it
1:34:38again as is diminishing each time right
1:34:41jet packs or something like that right
1:34:44probe rosy the voters the jetsons robot rose is a rose roses are over
1:34:49yeah yeah yeah something like that that's the only way thanks great show
1:34:54oMG really appreciate the time I thought this was a great show
1:34:59yeah good stuff thankyou very much and everybody can find out more of your
1:35:04website Paris lemon dot com follow you on twitter everybody should follow onto
1:35:10her up when I talk about sports but you do a lot to ya
1:35:15Yankees