The Talk Show

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00:00:18 ◼   ► Oh man, so I took a vaca- you know, took most of August, or a bit of August, or I don't know, all of August off.

00:00:28 ◼   ► and lots happened. It's kind of anti-traditional for August.

00:00:35 ◼   ► So you've probably talked, I have to admit I'm a little bit behind on the ATP, so I mean

00:00:42 ◼   ► you've probably talked about some of this stuff, but people like to hear about it over

00:00:46 ◼   ► and over again. Steve Ballmer, out at Microsoft.

00:00:51 ◼   ► That's true. Did you not talk about this in your last show?

00:00:55 ◼   ► I believe no.

00:00:57 ◼   ► No, because it didn't happen then?

00:00:58 ◼   ► I guess not.

00:00:59 ◼   ► Yeah, it didn't happen.

00:01:00 ◼   ► Yeah, no, we did talk about it.

00:01:02 ◼   ► That's how long ago it's been since I've recorded

00:01:04 ◼   ► an episode of the talk show.

00:01:05 ◼   ► Yeah, I hadn't realized there had been a gap.

00:01:07 ◼   ► Maybe I'm caught up.

00:01:08 ◼   ► Who was your last guest?

00:01:09 ◼   ► It was MG Siegler.

00:01:10 ◼   ► We talked about Amazon.

00:01:11 ◼   ► No, I heard that one.

00:01:12 ◼   ► Yeah, I heard that one.

00:01:12 ◼   ► That was the last one, I guess.

00:01:13 ◼   ► Wow, you did take a break.

00:01:14 ◼   ► Yeah.

00:01:16 ◼   ► And in fact, the Siegler one I recorded before I took off.

00:01:23 ◼   ► And it was held, I think, a week.

00:01:25 ◼   ► It's possible. It's possible. I actually...

00:01:28 ◼   ► It's all a little blurry, but it's possible that

00:01:31 ◼   ► Balmer announced his retirement before the episode came out, but I don't think so.

00:01:35 ◼   ► I think the episode came out like on Wednesday and then Balmer's announcement was Friday.

00:01:41 ◼   ► That was the week. But the episode was recorded like the Friday before.

00:01:46 ◼   ► Yeah, so not surprising, right? I mean...

00:01:49 ◼   ► No, I don't think so. I think it was a little overdue. I think some of the reaction to it has been

00:01:53 ◼   ► a little surprising. I think some of the defense of Vollmer as CEO, it surprises me a little

00:01:59 ◼   ► bit.

00:02:00 ◼   ► Well, it's like backlash, backlash. So you get the story is he's out, and then it's like,

00:02:04 ◼   ► "Well, good riddance, he needed to go." That's the main story. And then the backlash story

00:02:08 ◼   ► is, "Oh, he wasn't as bad as you thought he was." And now we're going to do the backlash,

00:02:11 ◼   ► backlash, which is, "No, really, he was pretty bad." And it just oscillates back and forth

00:02:14 ◼   ► until it finally settles on the central thing. We'll get there eventually.

00:02:20 ◼   ► that. Yeah, I mean, you were posting on your side that he was kicked out and that people

00:02:27 ◼   ► freaked out about that because you're really just speculating, but I don't think it really

00:02:30 ◼   ► matters at this point. It was clear what his job was when he took over for Bill Gates,

00:02:36 ◼   ► and he hasn't pulled it off, and it's time for a change, right? And it seems like, again,

00:02:43 ◼   ► reading the tea leaves, it doesn't seem like that he graciously stepped aside to allow

00:02:48 ◼   ► someone else to have a crack at it. It's not his personality. That's not the type of guy

00:02:52 ◼   ► he is. So what's the only way to get rid of him? The only way to get rid of him is to

00:02:57 ◼   ► kick him out, right? He's not going to leave on his own. You're going to wait for him to

00:03:00 ◼   ► die. He's going to live to be a thousand, powered by his anger or whatever. So yeah,

00:03:05 ◼   ► you got to get rid of him.

00:03:06 ◼   ► And I think, you know, there were a couple of people who wrote about it. I forget who

00:03:10 ◼   ► had the good piece, like what it would look like when a board forces a CEO out. And some

00:03:16 ◼   ► of the tells are that there's no named successor, you know, that if this was orderly, there'd

00:03:22 ◼   ► be a named, you know, somebody ready to go, you know, that there's, you know, if this

00:03:26 ◼   ► was part of a plan, well, there wouldn't be a, you know, we need 12 months to name somebody.

00:03:32 ◼   ► And the interviews with them, like, you know, the things you're supposed to say when if

00:03:37 ◼   ► you're stepping down, you say all and he wasn't saying those things, like, he couldn't even

00:03:41 ◼   ► like they were asking questions like, what made you decide to leave that he's got to

00:03:44 ◼   ► make some crap up, he's like, "I didn't decide to leave."

00:03:47 ◼   ► It seems like it could have got much worse.

00:03:48 ◼   ► It could be adversarial and they're all trash talking to each other.

00:03:51 ◼   ► It wasn't.

00:03:52 ◼   ► He eventually was convinced that he's a company man.

00:03:54 ◼   ► He's not going to go out and burn bridges and say, "Microsoft is doomed there.

00:03:58 ◼   ► Not going to have Steve Ballmer to kick around anymore."

00:04:01 ◼   ► He went out as graciously as you can imagine, but again, I don't think he wanted to go.

00:04:07 ◼   ► He thought he could still pull it off.

00:04:09 ◼   ► I think the thing that was keeping him there for such a long time is that he was there

00:04:12 ◼   ► from the beginning. And he was, I'm assuming, Bill Gates' friend. And all those things,

00:04:17 ◼   ► all those intangibles kept him there for longer than he should have been.

00:04:22 ◼   ► My one question that I have that I didn't really know the answer to when we were talking

00:04:26 ◼   ► about ATP is the transformation into along functional lines and the sort of amplification

00:04:32 ◼   ► of Microsoft, was that his idea? And then it was like his last gasp and then they kicked

00:04:40 ◼   ► him out or was that sort of something that the board wanted to happen and he was allowed

00:04:44 ◼   ► to make it seem like it was his idea on his way out?

00:04:47 ◼   ► My guess is that it was the latter, that it was Balmer's thing, because I can't imagine

00:04:58 ◼   ► that they would institute something. And it seems like a true – if it is as they've

00:05:05 ◼   ► described it. It's a true company-wide reorganization along functional lines,

00:05:09 ◼   ► which is not the way Microsoft has ever operated. I mean, and it's a true

00:05:13 ◼   ► transformation of the company. I can't see why they would do they, the board,

00:05:17 ◼   ► would do that if they knew they were gonna bring in somebody new and they

00:05:21 ◼   ► didn't have someone specific in mind. But on the other hand, why would you let him,

00:05:26 ◼   ► if you know you want to get rid of him, they must have known it before. It's not

00:05:29 ◼   ► like this was the last straw. Like, that's another theory that like they're like,

00:05:31 ◼   ► "Okay, well, let's see what he has," and then let him announce and put into motion this

00:05:37 ◼   ► plan to totally transform his company and then kick him out?

00:05:40 ◼   ► This plan was a surprise to the board, I would imagine, right?

00:05:43 ◼   ► Why let some guy do something?

00:05:47 ◼   ► That was one of the theories in ATP, is like, "Did he announce this?"

00:05:50 ◼   ► Then the board was like, "Okay, that's it.

00:05:52 ◼   ► This guy's nuts.

00:05:53 ◼   ► He's going to destroy the company.

00:05:54 ◼   ► He's got to go out."

00:05:55 ◼   ► That seems unlikely to me because this type of transformation, you'd get him out before

00:05:58 ◼   ► he implements the plan.

00:05:59 ◼   ► We'd hear about, "Oh, he was going to transform the company, but he got kicked out."

00:06:03 ◼   ► So it's kind of weird.

00:06:05 ◼   ► My question is, is this transformation still going on right now?

00:06:08 ◼   ► Are parts of the company reorganizing?

00:06:11 ◼   ► Are they continuing a pace to implement this transformation plan despite the fact that

00:06:14 ◼   ► it was the idea of the guy they're kicking out?

00:06:17 ◼   ► Does the plan survive him because it wasn't just him?

00:06:20 ◼   ► They really thought this was a good idea.

00:06:21 ◼   ► They just didn't think he was the guy to lead it.

00:06:23 ◼   ► It's a good question.

00:06:24 ◼   ► I hadn't really thought about it, but it is interesting.

00:06:27 ◼   ► it was along the lines of Ballmer goes to the board with his plan to do this

00:06:34 ◼   ► and the board is like maybe unsettled about his future and they're like hmm

00:06:40 ◼   ► you know and they know they know there's a bad smell about the place you know

00:06:44 ◼   ► that that that they're they're big thing windows is in decline and it doesn't

00:06:49 ◼   ► seem like their next big things like mobile are gaining any traction at all

00:06:54 ◼   ► They know there's it's it's at the point now where even the Microsoft optimists have got to see that there's problems in the near future for the company

00:07:02 ◼   ► But at he says alright, I'm gonna do this

00:07:05 ◼   ► And they're like, okay, and then it's like in the weeks after that there, you know, you know what maybe you know

00:07:12 ◼   ► We got to get we got to we got to push this guy out

00:07:14 ◼   ► And that's not the way you want that to go though

00:07:16 ◼   ► Like that's another another fumbled seems like by the board or like you'd want to go and like and well

00:07:22 ◼   ► Well, I mean, this sounds like, "Oh, who really cares?

00:07:23 ◼   ► Who really cares if he was kicked out or he left or whatever?"

00:07:26 ◼   ► It's all you'll find out in the tell-all books 10 years from now or whatever.

00:07:29 ◼   ► But it makes a difference for the future of the company because I guess we will find out

00:07:33 ◼   ► when the new CEO comes in, if his first order of business is to undo that entire plan, we'll

00:07:38 ◼   ► know that that plan was clearly, it was Balmer's thing and the new guy is reversing.

00:07:42 ◼   ► He says, "No, this is actually how we want to do things."

00:07:45 ◼   ► But if the new CEO comes in and just tweaks the plan and says, "Okay, now I'm going to

00:07:50 ◼   ► But it's not really what we're going to do.

00:07:52 ◼   ► It's how we're going to be organized.

00:07:54 ◼   ► So it could be that the organization survives him, and it's just that the new CEO says,

00:07:57 ◼   ► "Now we're going to make toasters or something."

00:07:59 ◼   ► And that would still be a radical shift.

00:08:02 ◼   ► Because the new guy could come in and just immediately undo this plan and say, "Yeah,

00:08:07 ◼   ► we're not going to do that.

00:08:08 ◼   ► We're going to do something different.

00:08:09 ◼   ► In fact, we're going to reorganize in a hub and spoke pattern.

00:08:12 ◼   ► I'm in the hub," or whatever.

00:08:13 ◼   ► Who knows?

00:08:14 ◼   ► Yeah, I don't know.

00:08:16 ◼   ► There's a line here.

00:08:17 ◼   ► is the the internal email that Balmer sent to the company on the day of his

00:08:22 ◼   ► the announcement. Second and third sentences to me are the ones that are

00:08:29 ◼   ► almost that this is as close as ever gonna tell to the fact that he was kind

00:08:33 ◼   ► of pushed or actually pushed. He says there's never a perfect time for this

00:08:38 ◼   ► type of transition but now is the right time. My original thoughts on timing

00:08:44 ◼   ► would have had my retirement happened in the middle of our transformation to a

00:08:47 ◼   ► a devices and services company focused on empowering customers and the activities they

00:08:52 ◼   ► value most. That, my original thoughts, that to me is translate as I would have stayed,

00:08:59 ◼   ► but blank.

00:09:01 ◼   ► Yeah, he's choking it down. Like, I mean, that's the one break in that I read that thing.

00:09:06 ◼   ► That's the one break from his, like, you know, corporate veneer of, like, he's not going

00:09:09 ◼   ► to bad math now. He's not going to trash the company. He loves Microsoft, right? He wants

00:09:13 ◼   ► see them succeed so he can't he's not going to go down in flames but he also can't help

00:09:18 ◼   ► like that little bit leaks out and I bet he regrets that I bet see it's a my original

00:09:21 ◼   ► thought because that totally makes it clear it's like oh all right and I'm in the interviewer

00:09:25 ◼   ► like if you're interviewing you'd feel bad at that moment right yeah you know I do kind

00:09:30 ◼   ► of you know I mean I there's a lot of I told you so in the fact that I've seen to me it's

00:09:35 ◼   ► been very clear for years that the guys you know been making profound mistakes of judgment

00:09:42 ◼   ► But I don't hold any personal animosity against him.

00:09:44 ◼   ► And I think it is very clear.

00:09:46 ◼   ► I don't see how anybody, whether you

00:09:49 ◼   ► have been a fan of the guy of the company's products

00:09:52 ◼   ► or whatever or not, the opposite,

00:09:55 ◼   ► I don't see how anybody could deny that the guy has put

00:09:57 ◼   ► his life into the company.

00:09:59 ◼   ► I mean, he is truly the company's man company man

00:10:01 ◼   ► for Microsoft.

00:10:03 ◼   ► Yeah, I think I would have personal animosity towards him

00:10:05 ◼   ► if I was a big Microsoft fan and enthusiast.

00:10:08 ◼   ► Because I would feel like he was steering

00:10:11 ◼   ► ship into the iceberg over the past decade and just not, you know, I would be screaming

00:10:16 ◼   ► and yelling for, you know, it's like when you scream and yell at the manager to pull

00:10:22 ◼   ► a picture, right, because you're a fan of the team, right? You have personal hatred

00:10:25 ◼   ► towards that guy. I see I'm gonna put all the baseball analogies for you. You know,

00:10:29 ◼   ► but if you don't care, you're like, "Yeah, I'm gonna..." You know, because he did do,

00:10:32 ◼   ► like, the things he did was he sort of took the businesses that he knew how to be successful

00:10:39 ◼   ► because they work the same as they used to work and continued to, you know, sort of build those

00:10:45 ◼   ► and, you know, didn't fumble the ball on those. He just was unable to break into any new businesses

00:10:52 ◼   ► with Microsoft in a successful fashion. I also think there's a profound irony in the fact that

00:11:00 ◼   ► his dad was an executive in fat Ford in Detroit. And, you know, he grew up as a in a car company.

00:11:13 ◼   ► And that, you know, apparently, you know, it's still to this day, you know, has driven nothing

00:11:17 ◼   ► but cars from the Ford Motor Company. I think it was Ford. I don't think it was GM. I'm almost sure

00:11:22 ◼   ► Balmer's dad was Ford. But regardless, his father's generation of Detroit car

00:11:30 ◼   ► executives were the generation that that ran the Detroit companies into real

00:11:35 ◼   ► problems when a disruptive new class of cars came about in the 70s. And that his

00:11:43 ◼   ► read bombers reaction to the disruptive technologies of the last 1015 20 years

00:11:49 ◼   ► cars is, you know, in broad strokes very similar to Detroit's where they kind of just stuck

00:11:54 ◼   ► with their old, you know, in broad strokes. Again, broad strokes. Let's just make big

00:11:59 ◼   ► gas guzzling cars and let's just laugh off the threat from smaller, cheaper Japanese

00:12:06 ◼   ► imports.

00:12:07 ◼   ► Now, the idea of him only driving Ford cars despite being like a multi-billionaire because

00:12:14 ◼   ► his father was a Ford man.

00:12:18 ◼   ► It clicked together in my mind with Melinda Gates forbidding--

00:12:22 ◼   ► was it her forbidding her children to have iPods?

00:12:26 ◼   ► That attitude, not that--

00:12:28 ◼   ► I'm taking Bill Gates and Steve Ballmer,

00:12:30 ◼   ► like the one, two at Microsoft.

00:12:31 ◼   ► And you can't say this pervades the entire company.

00:12:33 ◼   ► But that attitude of like--

00:12:35 ◼   ► and it's kind of like being a company man.

00:12:38 ◼   ► You're Bill Gates' children.

00:12:39 ◼   ► You're not going to have iPods.

00:12:40 ◼   ► And Steve Ballmer, his father is saying, you're my son.

00:12:43 ◼   ► I don't know if his father is saying this,

00:12:44 ◼   ► He's doing it out of loyalty to his followers, and I'm only going to buy Ford's, despite

00:12:47 ◼   ► the fact that I can have any car in the world, right?

00:12:50 ◼   ► Compare this to Steve Jobs coming to Apple and continuing to use a ThinkPad because he

00:12:55 ◼   ► can run Next Step on it.

00:12:56 ◼   ► He's not going to run their friggin' classic Mac OS with the platinum windows and all this

00:12:59 ◼   ► crap because it's not good enough for him, right?

00:13:03 ◼   ► That whole idea of towing the line, being a company man, like it's a loyalty type thing,

00:13:11 ◼   ► versus ruthlessly using what you think is the best product no matter what and trying like sort of being aspirational like you would hope that Steve

00:13:18 ◼   ► Ballmer will be driving, you know, a Ferrari or BMW or Mercedes or something to give him a taste for what amazing products can be like

00:13:27 ◼   ► And to aspire to make not that he has to make all his products expensive a Ferrari

00:13:31 ◼   ► But like that type of that attitude to me is alien that that I'm only gonna drive forwards because my father

00:13:36 ◼   ► I mean maybe he's fine if you can only afford Fords and it's like, you know picking Ford Chevy or Honda

00:13:40 ◼   ► whatever, fine, stick with Fords. But it's just so crazy to me, that type of attitude,

00:13:45 ◼   ► you know, from the Gates children not having iPods and just Steve Ballmer only driving

00:13:49 ◼   ► Fords. That highlights, I think, the difference between Apple and Microsoft.

00:13:53 ◼   ► Yeah. And, you know, like a Lincoln is made by Ford and is a higher quality car than,

00:13:59 ◼   ► you know, like a Ford Escort or something like that. But point taken, I totally agree.

00:14:06 ◼   ► I don't think Ballmer would fit in a Ferrari, by the way.

00:14:09 ◼   ► They are very accommodating if you have enough money.

00:14:12 ◼   ► They'll move the seat back.

00:14:14 ◼   ► I don't know.

00:14:15 ◼   ► I've never tried to sit in one.

00:14:16 ◼   ► I've heard that they're pretty difficult for even – I don't even know if you or I would

00:14:20 ◼   ► fit very well in a Ferrari.

00:14:22 ◼   ► Italians all fit in Ferraris.

00:14:23 ◼   ► Yeah.

00:14:24 ◼   ► Well, Italians are very – well, typically very short men.

00:14:27 ◼   ► Oh, God.

00:14:29 ◼   ► There goes the Italian audience.

00:14:36 ◼   ► I haven't seen a lot of speculation yet on who Microsoft might replace Balmer with.

00:14:44 ◼   ► And it seems, this seems like a fun game to play.

00:14:47 ◼   ► Yeah, I've heard a lot, I mean there's a lot of fun suggestions that you know aren't realistic.

00:14:53 ◼   ► The favorite one is that, I think Marco was the one I saw, I said this first, but many

00:14:56 ◼   ► people have as well, like, "Scott Forestall's available here."

00:15:00 ◼   ► Not that he would ever, seems like, want to run Microsoft, ever.

00:15:05 ◼   ► But that's a fun one to think about.

00:15:07 ◼   ► - Yeah, let's take it seriously.

00:15:08 ◼   ► I've definitely seen that one on Twitter.

00:15:10 ◼   ► I saw that from five minutes after,

00:15:14 ◼   ► when I first saw the announcement that Ballmer was out.

00:15:16 ◼   ► - Right.

00:15:17 ◼   ► - I don't think, I mean, I certainly cannot claim,

00:15:22 ◼   ► I've met Forstall once,

00:15:24 ◼   ► but I did have a nice conversation with him.

00:15:27 ◼   ► Or maybe, and I've said hi to him at events

00:15:29 ◼   ► a few times after that.

00:15:31 ◼   ► But can't claim that I know him.

00:15:34 ◼   ► but what I know of him, I can't imagine that he would want the job.

00:15:37 ◼   ► Yeah, well think about this. Who would want the job?

00:15:41 ◼   ► It's a good question to ask when you throw anybody's name out.

00:15:45 ◼   ► Because it's the type of position where

00:15:48 ◼   ► at this point in Microsoft's history, almost anybody

00:15:52 ◼   ► who would claim to want the job is probably not the right guy for the job.

00:15:55 ◼   ► Because if you want the job, it's like you know you have a lot on your plate,

00:15:59 ◼   ► right? And you know it's going to be super difficult to

00:16:02 ◼   ► to turn this big ship around.

00:16:03 ◼   ► But you also know that no matter how bad a job you do,

00:16:06 ◼   ► you're gonna be filthy stinking rich

00:16:08 ◼   ► and be extremely powerful for the time

00:16:10 ◼   ► you're in the position.

00:16:11 ◼   ► So there's a whole class of terrible,

00:16:13 ◼   ► sort of aspiring C-level executives

00:16:16 ◼   ► from Fortune 500 companies who would jump at the chance

00:16:18 ◼   ► to further take Microsoft down the tubes

00:16:22 ◼   ► because you would make a lot of money

00:16:24 ◼   ► and you would be powerful and you would be in the press

00:16:25 ◼   ► and you would be interviewed in all these magazines,

00:16:27 ◼   ► you know what I mean?

00:16:28 ◼   ► And so for all the wrong reasons,

00:16:30 ◼   ► If you're motivated by all the wrong things, yeah, those people want the position.

00:16:34 ◼   ► But that's not who Microsoft wants.

00:16:35 ◼   ► Microsoft wants someone who loves the company, who believes they can do better, and who's

00:16:40 ◼   ► going to do something amazing and radical.

00:16:43 ◼   ► And that's tough to find that person, the person who's motivated by all the right things

00:16:47 ◼   ► but is also capable of it.

00:16:49 ◼   ► Right.

00:16:50 ◼   ► I would say with Forstall, I would bet everything that we have not heard the last from Scott

00:16:55 ◼   ► Forstall.

00:16:56 ◼   ► is that the terms of his departure from Apple were that he got a boatload of

00:17:03 ◼   ► money. I mean like maybe literally like an entire boatload of money. And the

00:17:10 ◼   ► terms were now you go away and you remain completely quiet for 12 months or

00:17:16 ◼   ► 18 months or something you know somewhere around there. I think maybe it

00:17:18 ◼   ► was 12 months. So whenever that when was that it was last November when it was

00:17:22 ◼   ► announced. I wouldn't be surprised if you first see his name even just in an

00:17:26 ◼   ► interview or something come December but I think it was a 12-month period where

00:17:30 ◼   ► he is not allowed to say anything in public whatsoever he's not allowed to

00:17:34 ◼   ► tweet he is not allowed to I mean even like tweet a picture of like flower

00:17:39 ◼   ► can't do it complete radio silence for 12 months not allowed to work anywhere

00:17:43 ◼   ► not allowed to do anything and then after that you know it's probably some

00:17:47 ◼   ► kind of standard list of non competes for some period of time yeah that's how

00:17:52 ◼   ► long he needs to start gathering his future employees and his new company

00:17:56 ◼   ► anyway, right?

00:17:57 ◼   ► But look what other similarly having been successful people

00:18:00 ◼   ► who left Apple, even if they left on better terms than him

00:18:03 ◼   ► have done.

00:18:03 ◼   ► There's Tony Fidell, the guy who led the original iPod team,

00:18:07 ◼   ► went on to make the Nest thermostat.

00:18:09 ◼   ► And he didn't leave on that much better terms than Forrestal

00:18:11 ◼   ► when you think about it.

00:18:13 ◼   ► I think maybe it was a little better, but not much.

00:18:18 ◼   ► I mean, certainly he wasn't-- well, both of them

00:18:20 ◼   ► had been named by various random quote, unquote,

00:18:25 ◼   ► analyst is like potentially future people who could run the company but I

00:18:28 ◼   ► forced all I think people took more seriously as that as a possibility but

00:18:32 ◼   ► both of them believe they were kind of could have been in that you know your

00:18:36 ◼   ► career path and then both booted out yeah but yeah but that like forced all I

00:18:40 ◼   ► think has is a me gonna aim higher than a nest level thing yeah but it the point

00:18:45 ◼   ► though is that it's a new company founded by Fidel in you know it exactly

00:18:50 ◼   ► as he wants it. Bertrand. Now, we don't know exactly what he's working on yet at that mystery

00:18:56 ◼   ► startup, some kind of... They've got like a slogan or something, but it's a new company

00:19:04 ◼   ► that he's working on down in San Jose somewhere secretly. Obviously, he could go almost anywhere

00:19:11 ◼   ► he wanted to if... The guy has an unbelievable record, but made a new company.

00:19:17 ◼   ► Well, yeah, so I think those are two very different things.

00:19:20 ◼   ► Because think about this.

00:19:21 ◼   ► Bertrand, I think, would have no problem if his company makes something amazing selling

00:19:26 ◼   ► the company back to Apple.

00:19:28 ◼   ► Right.

00:19:29 ◼   ► That's very true.

00:19:30 ◼   ► Whereas Forstall, at this point in his career, wants to be the Steve Jobs of whatever he

00:19:34 ◼   ► does next.

00:19:35 ◼   ► And Steve Jobs, you know, I mean, Steve Jobs did sell next back to Apple, but it was a

00:19:39 ◼   ► long time coming, and that was not his first choice, right?

00:19:42 ◼   ► Right.

00:19:43 ◼   ► ever coming back to Apple is after some sort of decade-long disastrous drought?

00:19:49 ◼   ► No, I mean, you know, I mean, is it possible? It certainly doesn't seem possible right now, but...

00:19:54 ◼   ► Right, and after Tim Cook dies in a private jet accident or something.

00:19:57 ◼   ► Well, you know, if we get to the year 2022 and Apple has had, you know, their stock's been flat

00:20:05 ◼   ► ever since 2011 and they're losing money and the iPhone, you know, is no longer a viable platform,

00:20:13 ◼   ► etc, etc, who knows? But I mean it would take, you know, like Apple back to where they were

00:20:18 ◼   ► in 1997 sort of disaster for Forstall to come back. And like a complete execution of the

00:20:24 ◼   ► entire current executive staff. So no, I don't think Scott Forstall has any interest in the

00:20:32 ◼   ► Microsoft job.

00:20:33 ◼   ► Yeah, I mean, I think he wants to do his own thing. I mean, at the very least, you have

00:20:36 ◼   ► you'd have to give someone like him time to go off, try to do your own thing and decide

00:20:39 ◼   ► if they didn't like it, or fail once or twice or something like that.

00:20:44 ◼   ► If they're smart, they'll court him.

00:20:46 ◼   ► Like if they're smart, they're going to at least make the call, make the offer, talk

00:20:49 ◼   ► to him about it, find out what the deal is, but I think he will rebuff them.

00:20:53 ◼   ► So that's why people don't take it seriously.

00:20:55 ◼   ► It seems so unlikely because I've never even spoken to him, but from what I can tell him,

00:21:00 ◼   ► he doesn't seem like the type of person who's just interested in being the CEO of something

00:21:04 ◼   ► or just interested in being powerful.

00:21:06 ◼   ► And he also seems like the kind of person who would turn up his nose at Microsoft for

00:21:09 ◼   ► the same reason that all Apple snobs turn up their nose at Microsoft, right?

00:21:12 ◼   ► Right.

00:21:13 ◼   ► I don't think that their technology is appealing to him.

00:21:16 ◼   ► You know, that the whole technology stack they have in place, I don't know that he'd

00:21:19 ◼   ► be – he'd have any interest in.

00:21:21 ◼   ► Yeah.

00:21:25 ◼   ► But that is – it certainly is an interesting what if.

00:21:28 ◼   ► But I don't think it's going to happen.

00:21:29 ◼   ► I don't think it's feasible.

00:21:32 ◼   ► So here's one.

00:21:33 ◼   ► How about Jeff Bezos?

00:21:34 ◼   ► Or Bezos.

00:21:35 ◼   ► Bezos however you want to say it. What could they possibly say that would make him

00:21:38 ◼   ► Interested. I mean he's already got a massive

00:21:42 ◼   ► You know massive corporation that's entirely built in his own image

00:21:47 ◼   ► Yeah, but the other thing about him is though he he strikes me as a person who is able to see

00:21:55 ◼   ► how

00:21:58 ◼   ► Seemingly unconnected things can be worked together worked together for mutual benefit

00:22:02 ◼   ► Like he's the guy who took the company that was selling books on the internet

00:22:04 ◼   ► and decided to build a storage service and like, you know, and EC2 for cloud

00:22:11 ◼   ► computing and stuff.

00:22:11 ◼   ► And yeah, some of that is because, well, okay, we need something like that for it

00:22:14 ◼   ► to run our own servers, but, but reselling it and deciding to make tablet computers

00:22:18 ◼   ► and like an E Ink reader, like, and, and, you know, it's not that farfetched, but.

00:22:22 ◼   ► If you were the CEO of a company selling books on the internet, those are not your

00:22:26 ◼   ► first, like it, the things Amazon has done seem like if you, if you were

00:22:31 ◼   ► told me in like 1995 or whenever Amazon started, fast forward a couple of years and Amazon's

00:22:37 ◼   ► going to have this and this and this. You're like, "What? Why would they have that? It

00:22:40 ◼   ► doesn't even make sense. It doesn't even seem like it's in the same business." So what could

00:22:45 ◼   ► he do owning both Amazon and Microsoft? How could those two things work together? And

00:22:51 ◼   ► I can think of lots of ways those two things could work together to make Amazon and Microsoft

00:22:54 ◼   ► better.

00:22:55 ◼   ► Well, what do you say, though, that he'd be like where Jobs was the CEO of Pixar and Apple,

00:22:58 ◼   ► he'd be the CEO of both Amazon and Microsoft?

00:23:00 ◼   ► Oh, yeah. No, yes, that he would be the CEO of both. That they would not pull him away.

00:23:04 ◼   ► Yes, exactly.

00:23:05 ◼   ► I can see if Bezos said I'd be interested, I can certainly see why Microsoft would want

00:23:10 ◼   ► to listen to him. I can't see why Bezos would want to do it. I can't see why he would even

00:23:15 ◼   ► spend 30 seconds thinking about it.

00:23:17 ◼   ► Yeah, because it has the smell factor of like, you know, Amazon is the – if not on the

00:23:24 ◼   ► ascent, then it's a survivor and it's doing well and people like it and stuff. And Microsoft

00:23:29 ◼   ► seen as being on the downslope, and I don't think he really feels the need. He wants to

00:23:33 ◼   ► rescue Microsoft.

00:23:34 ◼   ► Like, one thing he clearly has at Amazon, and you know, I've spoken and written a bit

00:23:39 ◼   ► about Amazon in the last month or so, but I mean, and there's a lot of dispute from

00:23:43 ◼   ► from more financial-minded people that I've got it all, you know, I've got Amazon all

00:23:48 ◼   ► wrong. But one thing I don't think anybody could deny is that Bezos has effectively carte

00:23:54 ◼   ► Blanche from his investors and Mike and and the board. He doesn't really have to

00:24:00 ◼   ► answer to anybody and the board and Amazon investors are very happy with

00:24:04 ◼   ► what he's doing. Whereas that big problem with Microsoft right now is that

00:24:08 ◼   ► investors are very unhappy with them. There was a story just today that a what

00:24:12 ◼   ► do you call it a activist investor group has successfully gotten a new member of

00:24:20 ◼   ► of the board at Microsoft, which is, according to the Wall Street Journal, almost unprecedented

00:24:25 ◼   ► for a company their size. You know, that investors are very unhappy. And that it's the investors

00:24:31 ◼   ► being unhappy that seemingly has gotten the board agitated. And now, you know, it's the

00:24:35 ◼   ► board that made the move to do this. You know, he's not--there's a lot of people to answer

00:24:40 ◼   ► to there. I mean, I guess you could theoretically get a contract written that says, you know,

00:24:44 ◼   ► you're going to have to, you know, get off my back and I don't have to run ideas by you.

00:24:49 ◼   ► going to make me the CEO and I get to do whatever I want.

00:24:51 ◼   ► But it doesn't really work like that.

00:24:54 ◼   ► That's like the worst thing that could happen to a company like Microsoft in this situation

00:24:57 ◼   ► is to have suddenly the board sort of get emergency powers or whatever.

00:25:04 ◼   ► To have the future of the company be decided by a committee, even if that committee is

00:25:08 ◼   ► only a handful of people, that is the worst possible thing.

00:25:11 ◼   ► The reason it worked at Apple is because Jobs came in and the board, I don't know if he

00:25:18 ◼   ► Shuffled through the border replacing people whatever but like it was a hundred percent backing of him

00:25:22 ◼   ► They just rubber-stamped what he did like him and he talked to them and he got advice or whatever

00:25:26 ◼   ► But it was not as if they were like, okay Steve

00:25:28 ◼   ► But we're really watching you and maybe they were but like it was not

00:25:31 ◼   ► You can't run the company by committee it you when you have a company situation Microsoft is in you need like strong

00:25:38 ◼   ► Decisive leadership that also happens to be correct. Yeah jobs almost

00:25:42 ◼   ► I mean I might be getting this slightly wrong and there might be

00:25:45 ◼   ► Maybe one or two board members who he kept on, like maybe Bill Campbell was already on

00:25:49 ◼   ► the board.

00:25:50 ◼   ► But he, you know, but he's was friends, personal friends with Steve Jobs.

00:25:54 ◼   ► So it's not surprising that he did.

00:25:55 ◼   ► Or maybe, but I might be wrong, maybe even Bill Campbell was somebody who Jobs brought

00:25:59 ◼   ► on after he came back in 97.

00:26:01 ◼   ► But he effectively got most of the existing Apple board to commit seppuku, you know, even

00:26:08 ◼   ► longtime members like what's his name Mark Mark Kula, the guy who is like the third or

00:26:14 ◼   ► fourth founder of Apple, like the big investor. I mean, no surprise there since he was one

00:26:19 ◼   ► of the guys who forced Jobs out in '86. But when the board got Jobs to come back, they

00:26:27 ◼   ► more or less, part of the deal was, "And all of you have to sit step down. Or at least

00:26:32 ◼   ► all of you have to submit a resignation, and I'll pick which ones of you stay."

00:26:35 ◼   ► Yeah, I was saying on ATP that the advantage that Apple and Jobs had was that Apple was

00:26:39 ◼   ► in way worse shape than Microsoft.

00:26:43 ◼   ► It's so much easier to do the radical scary thing when it's your only choice.

00:26:47 ◼   ► Like, "Look, we're going to go bankrupt otherwise."

00:26:49 ◼   ► So then, how about the whole board steps down with a Steve Jobs takeover and he populates

00:26:53 ◼   ► the board with his friends and does whatever the hell he wants.

00:26:55 ◼   ► You're like, "Well, we're going to be out of business if we know to do something, and

00:26:58 ◼   ► so that sounds good."

00:26:59 ◼   ► And the board stepping aside, they probably thought they were leaving a sinking ship,

00:27:02 ◼   ► the people who didn't have faith in Jobs or whatever.

00:27:06 ◼   ► The fact that the board was populated with people who were just going to more or less

00:27:09 ◼   ► give thumbs up to whatever Steve did, let him execute his plan over the years that he

00:27:13 ◼   ► was with the company in his second reign.

00:27:19 ◼   ► If Microsoft board suddenly like, "Oh, shareholders are pissed off and they're putting a guy on

00:27:22 ◼   ► the board and the board is like, I don't know, but the board doesn't know what the hell to

00:27:25 ◼   ► do."

00:27:26 ◼   ► Those people have no idea of how to fix Microsoft.

00:27:27 ◼   ► None of those people, if elevated to CEO, could fix the company.

00:27:31 ◼   ► As far as we know, it seems very unlikely.

00:27:34 ◼   ► They've been overseeing the Baltimore reign and just kind of going, "Mm-hmm," and hemming

00:27:37 ◼   ► and hawing.

00:27:38 ◼   ► Like, you do not want rule by committee.

00:27:42 ◼   ► You want something exciting and radical.

00:27:44 ◼   ► And you probably also need to be willing to take Microsoft down further to bring it up.

00:27:51 ◼   ► So like, pick businesses that, you know, not that you have to go by the Steve Jobs playbook,

00:27:56 ◼   ► but when he came in, he cleaned house in an already dying company, canceling projects

00:28:03 ◼   ► left and right.

00:28:04 ◼   ► You have to decide what do you want Microsoft to be, and everything that's not totally concentrating

00:28:07 ◼   ► on achieving that gold, you ditch.

00:28:09 ◼   ► You don't put it into maintenance mode.

00:28:11 ◼   ► You don't say, well, they're going to get less updates

00:28:13 ◼   ► or whatever.

00:28:13 ◼   ► You just say, we've got to cut it off.

00:28:14 ◼   ► And at this point in Microsoft's history,

00:28:16 ◼   ► you can't do that because each one of those businesses,

00:28:19 ◼   ► it's worth-- maybe not percentage-wise a lot,

00:28:21 ◼   ► but in real money, it's worth a lot.

00:28:22 ◼   ► And then the boards are going to be like, whoa, what are you

00:28:24 ◼   ► doing?

00:28:24 ◼   ► And our revenue is going to go down, and you can't do this,

00:28:26 ◼   ► and I'm not going to give you-- Microsoft

00:28:28 ◼   ► doesn't have a year or two years to reboot a bunch of things.

00:28:31 ◼   ► And they're in a tough situation.

00:28:34 ◼   ► And I feel like it would be better

00:28:36 ◼   ► if their business was failing monetarily. Unfortunately, it's not.

00:28:39 ◼   ► Right. To draw an analogy, clearly it's hard to get everyone to act on climate change based on

00:28:48 ◼   ► evidence that we may be seeing trouble ahead. Whereas it would be a lot easier to get everybody

00:28:53 ◼   ► on board if Manhattan were under 20 feet of water. Yep.

00:28:57 ◼   ► Right? And you can say, "Well, then it's too late." But that's where Apple was in '97.

00:29:04 ◼   ► Apple in 97 was you know Manhattan's got 20 feet of water

00:29:07 ◼   ► Yeah entire ground floor of every building in Manhattan is underwater and well jobs thing Steve Jobs decision was Manhattan has lost screw Manhattan

00:29:15 ◼   ► We start building a new city inland, right and you're not allowed to use gasoline anymore, right?

00:29:20 ◼   ► Right, and you know and that's you know, nobody was gonna nobody would have gone for that, you know, three four years earlier

00:29:26 ◼   ► When they should have maybe

00:29:31 ◼   ► So I will and I'll just say one more thing before I take the first sponsor break

00:29:35 ◼   ► There is one person who's currently on the Microsoft board who could conceivably take over as CEO. I

00:29:40 ◼   ► Have no ideas on the Microsoft board so well Bill Gates. Oh no forget that. Yeah

00:29:47 ◼   ► No, I've heard that one as well. But like he's someone who did leave

00:29:50 ◼   ► On his own terms, right?

00:29:53 ◼   ► Tote, you know he decided when he was gonna leave he decided who the successor was gonna be

00:29:56 ◼   ► he took like a year to walk out the door and

00:29:59 ◼   ► He is totally the wrong person. I think even if he wanted to do it because

00:30:03 ◼   ► Well, I don't know maybe not totally the wrong person he he missed the internet thing

00:30:09 ◼   ► But he did turn the company around in time to I mean time to crush Netscape using illegal tactics

00:30:16 ◼   ► I mean like it like I don't know if that's who you want running the show

00:30:19 ◼   ► But he is definitely of the old Microsoft mindset like I don't I don't know if that mindset that mindset served him

00:30:27 ◼   ► well in the environment that he was in at that time.

00:30:30 ◼   ► And I don't know if he has the--

00:30:32 ◼   ► even if he wanted to, had the mindset and the skills

00:30:34 ◼   ► to succeed in the current market.

00:30:36 ◼   ► Because he oversaw a lot of the--

00:30:39 ◼   ► wasn't he still the CEO when they were doing the--

00:30:42 ◼   ► well, he's certainly for the pen computing, and the tablet,

00:30:44 ◼   ► and the speech recognition.

00:30:45 ◼   ► And I think for a little bit of the smartphone stuff

00:30:47 ◼   ► that they were doing, he was there in all those fields,

00:30:50 ◼   ► doing crappy things before everyone else

00:30:52 ◼   ► was doing anything.

00:30:53 ◼   ► Those were there for the taking, and he didn't take them,

00:30:56 ◼   ► And he missed them.

00:30:57 ◼   ► He miscalculated.

00:30:58 ◼   ► He had to spend all his money on R&D and all these different research projects.

00:31:00 ◼   ► And every year at CES, he would be up there telling you, in the future, we're going to

00:31:03 ◼   ► be like blah, blah, blah, blah.

00:31:04 ◼   ► And then he would never ship it.

00:31:05 ◼   ► And then he walked out the door.

00:31:07 ◼   ► So I don't think he is the guy you want anyway.

00:31:10 ◼   ► And I don't think there's a chance in hell that he's coming back.

00:31:14 ◼   ► I don't think so either.

00:31:15 ◼   ► But it would be a credible choice in the eyes of at least a significant -- certainly, I think,

00:31:23 ◼   ► the business world would be seen as a credible choice and would be seen as a credible choice

00:31:28 ◼   ► in some portion of the tech world.

00:31:30 ◼   ► Yeah, it would get a thumbs up from everybody.

00:31:32 ◼   ► Well, not everybody.

00:31:33 ◼   ► Like the stock market, well, most, I think the stock market would like it.

00:31:35 ◼   ► I think the board would like it and they would say, "Oh, it would be just like Steve Jobs

00:31:38 ◼   ► coming back to Apple.

00:31:39 ◼   ► Here comes Bill Gates."

00:31:40 ◼   ► It's the one with the best optics because anybody else you bring is either going to

00:31:46 ◼   ► be an unknown and that's like bad, it makes people nervous.

00:31:49 ◼   ► Or like best case, like so they get Scott Forstall or whatever, people are like nervous

00:31:52 ◼   ► then, right?

00:31:53 ◼   ► Right.

00:31:54 ◼   ► And so Bill Gates is like, "It's a devil you know."

00:31:56 ◼   ► And he's the one who made like, that is their best choice if you want the highest ratio

00:32:01 ◼   ► of positive to negative stories and the best reaction of the stock price.

00:32:04 ◼   ► But long term, I don't think it's their best bet.

00:32:07 ◼   ► I don't think so either because the question you have to ask is, what would Bill Gates

00:32:12 ◼   ► have done differently if he had stayed on as CEO for the past, what, 12 years instead

00:32:20 ◼   ► of taking the chairmanship and having Balmer take over, what would he have done differently?

00:32:25 ◼   ► And I don't know that the answer is much at all.

00:32:28 ◼   ► He strikes me as being more ruthless and Machiavellian than Balmer in that he just wants to win the

00:32:35 ◼   ► game, whether it's a board game or the game of companies, and he will do whatever it takes

00:32:40 ◼   ► to win the game, which is sort of why he was able to crush Netscape and why he was willing

00:32:46 ◼   ► to turn the whole company around with the internet tidal wave memo and all that other

00:32:50 ◼   ► But I think it takes more than that, but that is at least showing a little bit more scrap

00:32:54 ◼   ► and fight than Balmer has shown, where Balmer has kind of been tepidly trying to move in

00:32:58 ◼   ► the right direction, but Gates would just be like up at night thinking about how can

00:33:02 ◼   ► I outmaneuver these companies?

00:33:03 ◼   ► Who are my competitors and how can I defeat them?

00:33:06 ◼   ► And that fire, I don't know if that fire has gone in him now or if it's still there,

00:33:11 ◼   ► but if he was in charge, I feel like Microsoft would have done more bold things than they

00:33:17 ◼   ► did under Balmer.

00:33:18 ◼   ► And it does seem true that he was more hands-on, maybe significantly more hands-on in product

00:33:25 ◼   ► development than Balmer ever was.

00:33:28 ◼   ► That major software products went before Bill Gates for review, and certainly without the

00:33:35 ◼   ► level of taste, which we should get back to because I think it's a fundamental failing

00:33:40 ◼   ► of Balmer and Microsoft's culture as a whole.

00:33:45 ◼   ► But in terms of being strongly opinionated and by his word alone, you've got to go back

00:33:51 ◼   ► to the drawing board. Bill Gates had that, and I don't know that Gates ever really involved

00:33:55 ◼   ► himself at that level.

00:33:56 ◼   ► A bomber, you mean?

00:33:57 ◼   ► A bomber.

00:33:58 ◼   ► Yeah, no, Gates was a nerd, and he was a programmer, and he wanted to hear stuff. And bomber was

00:34:03 ◼   ► like NBA type, right? He can't tell you... I mean, there's that famous tale from Spolsky's

00:34:10 ◼   ► things on his site about coming to them about some calendaring function in Excel and having

00:34:14 ◼   ► Ballmer quizzed him on like leap year and leap second and crazy edge cases about dates

00:34:18 ◼   ► and stuff that he brushed up on before he came to the meeting, and then having to have

00:34:22 ◼   ► answers for him. And that's not happening with Ballmer. I mean, not that you're saying

00:34:24 ◼   ► you don't have to be an engineer to be CEO. I mean, Tim Cook's not an engineer either.

00:34:27 ◼   ► But that was Gates' type attitude. And because it was a tech company and because he was a

00:34:31 ◼   ► tech nerd, he failed to do that. But even just the thing where Gates would go away for

00:34:35 ◼   ► like a week or two every year to do like his thinking time with his books and everything,

00:34:39 ◼   ► like that's when he came back with the internet title wave memo. Just like I've read about

00:34:42 ◼   ► I've been reading about this internet, I've been keeping up with it, and I've decided

00:34:45 ◼   ► it's a big deal now.

00:34:46 ◼   ► He was always going away and coming back with ideas like that, and he was usually right

00:34:50 ◼   ► about the areas they had to be in.

00:34:51 ◼   ► It's just that then they executed poorly and made crappy products, and that gets back

00:34:56 ◼   ► to the taste thing of like, he knew that they should be into tablet computing and pen computing

00:35:02 ◼   ► and speech recognition and mobile.

00:35:05 ◼   ► Just the products they created there were not good enough, didn't break far enough

00:35:09 ◼   ► with the past, and he just couldn't get it done.

00:35:12 ◼   ► One of my favorite Bill Gates stories is from Andy Hertzfeld's folklore website and what

00:35:19 ◼   ► was the book version, Revolution in the Valley, where the first time, I think it was Andy's

00:35:25 ◼   ► story, but the first time he showed Bill Gates a Macintosh, this was before it was released

00:35:32 ◼   ► and Microsoft, they were trying to get Microsoft on board as an app developer. The thing that

00:35:39 ◼   ► he caught onto was the mouse pointer animation, which was terrific and was the sort of thing

00:35:46 ◼   ► like to get it to animate without like trails and lagginess. And Gates accused them of cheating,

00:35:56 ◼   ► that it was somehow like a hardware cheat, that there was something that was in the hardware

00:36:01 ◼   ► just to get the mouse pointer to animate as well as it did on 1980, you know, probably

00:36:07 ◼   ► then 1983 hardware.

00:36:09 ◼   ► And then he grilled Hertzfeld on how they were doing it.

00:36:13 ◼   ► But he caught on to a little detail like that

00:36:16 ◼   ► and knew that there must be some-- either they were cheating

00:36:19 ◼   ► or it was genius, that it was working as well as it did.

00:36:23 ◼   ► Yeah, I believe that scene was dramatized

00:36:27 ◼   ► with varying degrees of accuracy in the Pirates of Silicon Valley

00:36:30 ◼   ► terrible TV movie, ways back.

00:36:32 ◼   ► But yeah, Andy's recollection of it

00:36:33 ◼   ► is I would take that as more accurate than the thing

00:36:36 ◼   ► Noah Wiley, but that's what you get when you show something to an engineer.

00:36:41 ◼   ► And I think this is unfair to Bill Gates, but he's kind of the...

00:36:47 ◼   ► What's that guy's name from Amadeus who wasn't Amadeus?

00:36:49 ◼   ► Salieri?

00:36:50 ◼   ► Was that his name?

00:36:51 ◼   ► I forget.

00:36:52 ◼   ► Well, anyway, have you seen the movie Amadeus?

00:36:54 ◼   ► A long time ago.

00:36:55 ◼   ► All right.

00:36:56 ◼   ► So Amadeus is Mozart.

00:36:57 ◼   ► He's amazingly talented.

00:36:58 ◼   ► And there's his contemporary guy who is sort of Mozart's competitor, but is smart enough

00:37:05 ◼   ► to realize that Mozart is a genius and is so pissed that he's never going to be that

00:37:10 ◼   ► good.

00:37:11 ◼   ► Right?

00:37:12 ◼   ► And that Mozart gets...

00:37:13 ◼   ► And so Bill Gates was smart enough to see the Mac and immediately notice that cursor

00:37:17 ◼   ► and be technical enough to ask, you know, to grill them, "I got to find out how you

00:37:20 ◼   ► did this."

00:37:21 ◼   ► And it's like every time he would see Apple do something, he'd be like, "Look, you know,

00:37:25 ◼   ► Microsoft is bigger than Apple.

00:37:26 ◼   ► I'm better than Apple.

00:37:27 ◼   ► I'm richer than all the people at Apple.

00:37:29 ◼   ► I'm the richest man in the world.

00:37:30 ◼   ► I have my software on every desktop.

00:37:32 ◼   ► But damn those Apple people when they do this crap.

00:37:34 ◼   ► He's got Apple envy.

00:37:35 ◼   ► Bill Gates had Apple envy.

00:37:36 ◼   ► He was smart enough to have Apple envy.

00:37:39 ◼   ► And when he talks about Steve Jobs after his death and everything like that, I believe

00:37:42 ◼   ► that the admiration he talks about with Steve Jobs is not BS sort of business people who

00:37:46 ◼   ► got to say nice things about my contemporary competitors.

00:37:48 ◼   ► I believe he really did admire and respect Steve Jobs and envied a lot of the products

00:37:54 ◼   ► that Apple and Steve Jobs were able to make.

00:37:56 ◼   ► And that's to Bill Gates' credit that he did that, and it just pissed him off.

00:38:01 ◼   ► Why can't we make things that nice?

00:38:03 ◼   ► Why aren't our things that nice?

00:38:04 ◼   ► Like he could he had just enough taste to be able to know that the cursor movement on

00:38:09 ◼   ► the Macintosh is way better than the cursor movement on that they've been able to do with

00:38:12 ◼   ► their you know attempts to do similar types of thing and he could see it and he pissed

00:38:16 ◼   ► them off and he had to know how it was done.

00:38:18 ◼   ► Right.

00:38:19 ◼   ► It was the same reason why so much of everything you drug on the original Mac was an outline

00:38:25 ◼   ► just a little bit because it was hard to to make things animate like that and there was

00:38:29 ◼   ► kind of trick that probably Hertzfeld didn't even come up with it was probably

00:38:34 ◼   ► what's his name the quick-draw guy Bill Atkinson yeah Atkinson but it was some

00:38:41 ◼   ► and had something to do with the fact that it was exactly 16 by 16 pixels and

00:38:45 ◼   ► they couldn't do use the same trick to make say live animation of a whole

00:38:49 ◼   ► window or even a whole icon but for a 16 by 16 square they could do it on then on

00:38:55 ◼   ► that hardware. Yeah, I think it says everything about Gates that he like latched onto it immediately.

00:39:00 ◼   ► Let me take a break and we'll get back to I think we should get back to the taste issue

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00:41:00 ◼   ► **Matt Stauffer** They probably like the fireball theme because

00:41:02 ◼   ► do you remember the old Backblaze site had a little movie in the header that showed someone

00:41:09 ◼   ► squirting lighter fluid on their laptop and lighting it on fire?

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00:41:13 ◼   ► **Matt Stauffer** That was one of the early versions of their

00:41:15 ◼   ► website was like, "What, torch your computer? Don't worry, we got your data backed up."

00:41:19 ◼   ► The other thing I liked about Backblaze is that I use it on the computer I'm sitting

00:41:22 ◼   ► in front of now. So they mail you the hard drive thing, and I've been a Backblaze customer

00:41:26 ◼   ► since back when they did the lighter fluid thing on their website. And they'll be like,

00:41:33 ◼   ► "Okay, and we'll send you... You can get your data online, but we'll also send you a hard

00:41:38 ◼   ► drive because it's way easier to get that amount of data." And they showed the hard

00:41:41 ◼   ► drive size they will send you, and it's like if your stuff doesn't fit on one hard drive,

00:41:45 ◼   ► we'll send you multiple hard drives. And I looked at the size of the hard drives, and

00:41:47 ◼   ► like, "Ooh, my stuff's not going to fit there because I've got so much stuff. I don't have

00:41:50 ◼   ► to get multiples if I've got a backup." But that was so long ago. They keep increasing

00:41:54 ◼   ► the size of the hard drives they'll send you. So I'm still paying the same rate I was always

00:41:59 ◼   ► paying, but now they'll send you a three terabyte hard drive or something. I forget how big

00:42:03 ◼   ► it is, but it's way bigger than it was when I first signed up.

00:42:07 ◼   ► You can imagine a company like, "Well, when you signed up, your $5 a month only got you

00:42:10 ◼   ► a 320 gigabyte hard drive in the mail. So if you want the better version, you have to

00:42:14 ◼   ► sign it. Nope, they just keep making the hard drive sizes bigger, which is great, but that's

00:42:17 ◼   ► what you want. You want them to FedEx you like the biggest drive you can. At that point,

00:42:21 ◼   ► you know, paying for them to FedEx you a big hard drive is like the least of your concerns

00:42:25 ◼   ► of like your house burned down.

00:42:26 ◼   ► What are the cardinal sins of backup are? Let me think here. Not backing up everything.

00:42:32 ◼   ► Well, they back up everything, right? If you only back up X, Y, and Z, but you don't back

00:42:35 ◼   ► up W, guess what? W is what you're going to need when trouble strikes. So if you don't

00:42:39 ◼   ► don't back up everything Murphy's law says it's the thing you don't back up that you're

00:42:43 ◼   ► going to regret. Well, they back up everything. Not backing up frequently enough. If you only

00:42:48 ◼   ► run manual backups, it's the time when you don't run it for two weeks that that's when

00:42:53 ◼   ► you're going to that's when disaster is going to strike Murphy's law guarantees it. Their

00:42:58 ◼   ► software just you know, you do a big backup and then it just you know, updates incrementally

00:43:02 ◼   ► without you doing anything. And then what's see off site? Well, they're off site by definition,

00:43:09 ◼   ► It's an online backup service.

00:43:11 ◼   ► I would add a fourth one, which is not testing restores.

00:43:14 ◼   ► And you can test restores anytime you want.

00:43:16 ◼   ► You can go to their website and pick files at random

00:43:19 ◼   ► and get a zip file containing them

00:43:21 ◼   ► and confirm that they are the--

00:43:23 ◼   ► The files you need.

00:43:24 ◼   ► Right.

00:43:24 ◼   ► I've not done it just to test restores.

00:43:26 ◼   ► I've done it to actually restore stuff.

00:43:28 ◼   ► But since they have an iOS app now, I think, too, don't they?

00:43:31 ◼   ► Yes.

00:43:32 ◼   ► So testing restores is something I

00:43:35 ◼   ► should be doing on a more regular basis just to check.

00:43:37 ◼   ► But over the matter of course of just having the service,

00:43:40 ◼   ► it's like, where the heck is that file?

00:43:41 ◼   ► Sometimes it's easier to dig through it in your backups

00:43:43 ◼   ► and get it back.

00:43:44 ◼   ► Then I am, as a side effect, I'm also

00:43:47 ◼   ► testing the restore process every time

00:43:49 ◼   ► I pull a file from Backblaze Backup.

00:43:50 ◼   ► All right, so you're at some meeting,

00:43:52 ◼   ► all you brought with you is your iPhone.

00:43:54 ◼   ► And all of a sudden in the meeting,

00:43:55 ◼   ► you need some file from your computer.

00:43:56 ◼   ► You could use Backblaze, the app, and you could get it.

00:43:59 ◼   ► Anyway, great stuff, www.backblaze.com/daringfireball.

00:44:04 ◼   ► My only problem with them is I have trouble

00:44:06 ◼   ► pronouncing their name. I want to say black bays, which is probably a website you don't

00:44:13 ◼   ► want to go to. That's true. I don't even know what that would mean. So I really think that

00:44:20 ◼   ► part of you know, bombers come up and is that the man has no taste. And whatever lack of

00:44:27 ◼   ► taste Bill Gates had, I think bomber is worse. And I keep pointing to I've pointed to it

00:44:34 ◼   ► for years. I've pointed to it for years as proof that they should have fired him years

00:44:40 ◼   ► ago. The infamous interview he gave when the iPhone was first announced when he laughed

00:44:44 ◼   ► at it on camera and said, you know, a $600 phone with no keyboard? You've got to be kidding

00:44:51 ◼   ► me and just laughed and laughed and laughed. I've pointed to that for years as proof that

00:44:58 ◼   ► this guy, you know, was not asleep at the switch and was the wrong guy for the job.

00:45:02 ◼   ► And the point that the people--every time I link to it, I get e-mail from people saying,

00:45:08 ◼   ► "Well, what do you expect him to say? That's not proof of anything. He's the CEO of a rival

00:45:12 ◼   ► company. He can't say good things about the iPhone." But that's the point. He didn't just

00:45:17 ◼   ► not say good things about the iPhone. He laughed at it. There's a video you can look at now

00:45:22 ◼   ► and it looks horrendous in hindsight.

00:45:25 ◼   ► It's not just him pooh-poohing the iPhone

00:45:28 ◼   ► or saying, you know, pointing out one bad thing about it,

00:45:33 ◼   ► like the price.

00:45:34 ◼   ► The original 2007 iPhone, which they

00:45:36 ◼   ► tried to sell unsubsidized, was very expensive.

00:45:39 ◼   ► $600 iPhone was not going to take over the market.

00:45:44 ◼   ► So he could have just said, look, it's too expensive,

00:45:46 ◼   ► and then talk up whatever the best Windows mobile phones were

00:45:49 ◼   ► of the time.

00:45:50 ◼   ► There is a way to play that on camera that stuck to a Windows mobile-centric line, but

00:46:00 ◼   ► which didn't dismiss the iPhone or didn't mock the iPhone, I should say.

00:46:06 ◼   ► Well, I don't think he really believed that.

00:46:08 ◼   ► I do.

00:46:10 ◼   ► I don't think he looked at the iPhone and thought, "Holy shit, we're fucked."

00:46:15 ◼   ► Well, he wouldn't...

00:46:16 ◼   ► I don't think he understood the depth of the problem, but it's kind of like a Cold War

00:46:20 ◼   ► era mentality where as soon as the US does anything, the Soviet Union would be like,

00:46:25 ◼   ► "Our fighter jets are ten times, our pilots are ten times better than theirs are, and

00:46:30 ◼   ► we have more tanks and you will never..."

00:46:32 ◼   ► It's propaganda.

00:46:33 ◼   ► As soon as the iPhone comes out, again, he's a company man.

00:46:36 ◼   ► He's going to say, "Windows Mobile," and he would pull out the stats about, "We sell this

00:46:41 ◼   ► many phones and we've been doing this for this long, and look at this thing, and it's

00:46:43 ◼   ► It's terrible in every possible way.

00:46:45 ◼   ► It's propaganda against the enemy.

00:46:50 ◼   ► And that is his first instinct.

00:46:51 ◼   ► And the problem with having that be your first instinct as CEO, to have that reaction, I

00:46:55 ◼   ► think it's disingenuous or whatever.

00:46:57 ◼   ► But eventually you start to convince yourself.

00:46:58 ◼   ► Because if you keep saying those things, I think eventually because he doesn't want to

00:47:02 ◼   ► believe that this thing is better as everyone says it is, because that pisses him off, he

00:47:09 ◼   ► saying these things and eventually starts to believe them more than he should.

00:47:14 ◼   ► But I don't think, no matter how much he convinced himself, I don't think he ever really believed

00:47:18 ◼   ► all the things he was saying about how terrible the iPhone is.

00:47:21 ◼   ► I think he went back to the people on his team and said, "Why aren't iPhones like this?

00:47:24 ◼   ► Why?"

00:47:25 ◼   ► At the very least, just simply saying, "Why doesn't the press say the same things about

00:47:28 ◼   ► the latest version of Windows Mobile that they're saying about this?"

00:47:30 ◼   ► You know what I mean?

00:47:31 ◼   ► Because he's going to go back and yell at his people and ask why that's the problem,

00:47:35 ◼   ► even if he doesn't understand why.

00:47:37 ◼   ► And the taste thing, like when we say they have bad taste, like what we kind of mean

00:47:40 ◼   ► is they don't have the same taste as us or the same taste as Apple.

00:47:44 ◼   ► Because he does have a form of taste, but his taste runs towards things that don't make

00:47:48 ◼   ► for a successful consumer product, right?

00:47:50 ◼   ► So it's not like he has no taste.

00:47:52 ◼   ► He has a taste and a design aesthetic, you know, as embodied in, I don't know, what can

00:47:57 ◼   ► you look at to figure it out?

00:47:58 ◼   ► As embodied in the product, the way he managed Microsoft, as embodied in his wardrobe, his

00:48:03 ◼   ► transportation choices. Like he has some taste, it's just different than the taste that we

00:48:08 ◼   ► have. And at this point, you say, "Well, so what? Your taste is just different. Apple's

00:48:13 ◼   ► taste is just different." But I think Apple at this point has vindicated in showing it.

00:48:17 ◼   ► Or even just saying, there's a sameness to saying, "What was Sony's taste like when they

00:48:21 ◼   ► were the king of the consumer electronics sale? What does Apple's taste like?" There

00:48:24 ◼   ► is a through line between those companies, and it is not like the taste of Microsoft

00:48:29 ◼   ► or Steve Ballmer. So it's the incorrect taste to have if you want to be in this type of business.

00:48:34 ◼   ► [0:14]

00:48:35 ◼   ► Glenn: Sony, when they were on top, had a very distinctive taste. I liked it. It was usually black,

00:48:42 ◼   ► like black devices. And when they weren't, they would go in almost radical directions,

00:48:51 ◼   ► like the waterproof Walkman that were bright yellow.

00:48:54 ◼   ► Yeah.

00:48:55 ◼   ► No, Sony's still like that.

00:48:58 ◼   ► I continue to be amazed that Sony, they've fallen so low, right?

00:49:02 ◼   ► But they still have some designers and they're doing interesting things.

00:49:06 ◼   ► Look at the design of the PlayStation 2, for instance.

00:49:08 ◼   ► It was very futuristic and impressive.

00:49:11 ◼   ► And the PlayStation 3 did look like a George Foreman grill, but always everything you do

00:49:15 ◼   ► is interesting in terms of design.

00:49:18 ◼   ► Unfortunately, the rest of the things that the company does is not probably doing that

00:49:22 ◼   ► And now they're like a movie studio and all sorts of other entanglements and messed up things

00:49:26 ◼   ► but design wise there is there are some good designers still at Sony and

00:49:30 ◼   ► They do make things that sort of capture the imagination more than like compare the original Xbox

00:49:36 ◼   ► Which is also black plastic, right?

00:49:38 ◼   ► I like it's like oh just like a ps2 but that like if you can't tell the difference between the original Xbox and the ps2

00:49:43 ◼   ► In terms of design like there's your problem, right?

00:49:46 ◼   ► If you can't detect that difference like well, they're both plastic

00:49:49 ◼   ► They both have the black plastic, they have slats in them.

00:49:51 ◼   ► Damn, they look about the same.

00:49:53 ◼   ► One's obviously bigger than the other, but you know, ignoring the size difference, like

00:49:55 ◼   ► there's a huge difference design-wise between those two things.

00:49:58 ◼   ► Yeah, and I would say the controllers too.

00:50:00 ◼   ► I mean, and I know that controllers are – it's almost like we're going to get into how

00:50:04 ◼   ► clicky your keyboard should be, but – and I'm not a gamer, but I've just thought

00:50:08 ◼   ► just at like a snap judgment level that PlayStation controllers have always looked very appealing

00:50:13 ◼   ► to me, and Xbox ones, for example, not so much.

00:50:16 ◼   ► Yeah, unfortunately when it comes to controllers or things you're going to hold in your hand,

00:50:20 ◼   ► how it looks like, that's when Sony's failing there. And Apple's failing to many degrees.

00:50:25 ◼   ► Think of the hockey puck mouse or even the current Magic Mouse, which I feel like is

00:50:27 ◼   ► too low. If you have a visual design aesthetic and you want things to look just so, that

00:50:35 ◼   ► is exactly the wrong instinct to indulge when you're making something that fits inside someone's

00:50:39 ◼   ► hand.

00:50:40 ◼   ► And that they're not supposed to look at while they're using.

00:50:41 ◼   ► Right. I mean, Sony does make, they did make their controllers beautiful and symmetrical

00:50:45 ◼   ► with conical sections for the little things that you hold, but that's not what shape people's

00:50:49 ◼   ► hands are in.

00:50:50 ◼   ► And so it looks like a nice piece of art, but it's not great to hold.

00:50:53 ◼   ► Whereas Microsoft, in the other direction, said, "We're selling to 30-year-old guys.

00:50:58 ◼   ► Make the controller bigger.

00:50:59 ◼   ► Make it bubblous and strange."

00:51:01 ◼   ► And yeah, it's an ugly thing, but I think the Xbox controller is actually a more successful

00:51:05 ◼   ► controller than the PlayStation controller.

00:51:08 ◼   ► But yeah, looking at the two of them, one of them looks like a hamburger, and the other

00:51:10 ◼   ► one looks like a sleek, futuristic thing.

00:51:14 ◼   ► Yeah, I totally agree with that.

00:51:18 ◼   ► Here's another bit of taste.

00:51:21 ◼   ► Remember the – this is back in September 2010 when Windows Phone 7 was released to

00:51:28 ◼   ► manufacturing and they held a funeral parade on Microsoft's campus for the BlackBerry

00:51:36 ◼   ► and iPhone.

00:51:37 ◼   ► Yeah.

00:51:38 ◼   ► Like, compare that to Apple, which had a funeral for its own operating system, Mac OS 9.

00:51:43 ◼   ► That's very true.

00:51:44 ◼   ► They had a coffin on stage, and it was for their own product that they were crossing.

00:51:47 ◼   ► Not that Apple hasn't beyond propaganda.

00:51:49 ◼   ► They do the start your photocopiers and trashing Windows or whatever.

00:51:54 ◼   ► But that's, I mean, in all cases, that always seems kind of unseemly.

00:51:59 ◼   ► If you're the underdog, sometimes you need that to motivate the troops.

00:52:04 ◼   ► When Apple was the underdog, that's when it worked, and then they started to become the

00:52:07 ◼   ► overdog.

00:52:08 ◼   ► That's when it became a little bit distasteful.

00:52:09 ◼   ► But at that point, Microsoft had this momentum of being the big dog, and it's kind of unseemly

00:52:16 ◼   ► for them to be trashing the other competitors.

00:52:19 ◼   ► But that just fits into the Cold War mentality and the propaganda.

00:52:22 ◼   ► It's like, "Oh, everything we do is 100% better than them.

00:52:24 ◼   ► Everything they do is terrible.

00:52:25 ◼   ► We are the best.

00:52:26 ◼   ► We're going to win."

00:52:27 ◼   ► And that's not helpful.

00:52:30 ◼   ► That type of propaganda doesn't motivate the troops, because they know it's not true

00:52:33 ◼   ► just as much as you know or should know that it's not true.

00:52:37 ◼   ► There's a measured rational response that will let the people in your company know that

00:52:42 ◼   ► you understand what is better about those other products and you're still behind, you

00:52:46 ◼   ► still believe your company can best them, but now you know what you have to do.

00:52:50 ◼   ► And that is not communicated by just blind, rah-rah cheerleading for everything that your

00:52:56 ◼   ► company does.

00:52:57 ◼   ► Right.

00:52:58 ◼   ► And I think it's kind of dispiriting if you're the troops, if you can't believe everything

00:53:04 ◼   ► that your leader says, right?

00:53:05 ◼   ► I mean, I think everybody at Microsoft knew that Windows Phone 7, no matter how well it

00:53:11 ◼   ► did and no matter how good it was, and it was certainly a lot better than everything

00:53:16 ◼   ► Microsoft had done in mobile before, but it wasn't going to kill the iPhone.

00:53:21 ◼   ► I don't think there was anybody there who believed it, maybe except for Ballmer.

00:53:24 ◼   ► They could have had that meeting if they had Windows Phone 7 series, Phone 7, you know,

00:53:29 ◼   ► a year before the iPhone, right?

00:53:30 ◼   ► Right.

00:53:31 ◼   ► Because then it really would have been like, wow, where the hell did this come from?

00:53:34 ◼   ► it was so much better than what they had before. They were justifiably proud of it, but again,

00:53:38 ◼   ► they overshoot. And the thing about burying RIM, I think that was their one good call,

00:53:43 ◼   ► because I think everyone at that point could – anyone with a brain could see that RIM

00:53:46 ◼   ► was in serious trouble. So that was actually a good call on their part.

00:53:49 ◼   ► I think everybody in the computer industry could see it, because I think what everybody

00:53:53 ◼   ► could see – and that was the whole basis of the big "Why I thought RIM was screwed"

00:53:57 ◼   ► thing in 2008 – was simply from the basis of, look, we call them smartphones, but they're

00:54:02 ◼   ► not phones. They're little tiny personal computers that happen to have cell phone networking.

00:54:09 ◼   ► And RIM has no experience making computers. They make little messaging devices. They're

00:54:15 ◼   ► screwed because they can't make computers. And they eventually realized that when they

00:54:20 ◼   ► bought, what do you call it, the QNX? Yeah, yeah, the QNX, which was, you know, got them

00:54:26 ◼   ► in the game with a, you know, by all measures, you know, say what you want about the BlackBerry

00:54:31 ◼   ► OS, but the QNX core underneath is super well regarded. It's the real deal. But it was way

00:54:41 ◼   ► too little too late. And I think that's clear. Even Microsoft could see, hey, these things

00:54:46 ◼   ► are all little computers now. RIM's out of the game.

00:54:49 ◼   ► Yeah. Which one were they burying? They were at a half-uneral for RIM. Who else?

00:54:55 ◼   ► It was BlackBerry and iPhone.

00:54:56 ◼   ► Oh, and iPhone. No, they didn't even put...

00:54:58 ◼   ► That's the two they lumped together.

00:55:00 ◼   ► No.

00:55:01 ◼   ► The reason they probably didn't mention Nokia is the same reason everyone thought Nokia

00:55:03 ◼   ► was invincible because you look at the sales number and you're like, "Well, Nokia sells

00:55:06 ◼   ► like a hodgillion phones every year."

00:55:08 ◼   ► So we're not even going to talk about that because obviously nobody can touch Nokia and

00:55:11 ◼   ► they'll be on top forever.

00:55:12 ◼   ► That's the business sense of not realizing that what they're selling are feature phones,

00:55:18 ◼   ► dumb phones.

00:55:19 ◼   ► Well, and I wouldn't be surprised.

00:55:20 ◼   ► I forget when Steven Elop took over as Nokia CEO, which is certainly when it became much

00:55:27 ◼   ► more likely that they would license Windows as an operating system. But I wouldn't be

00:55:31 ◼   ► surprised if they already had Nokia, you know, on the list of lined up, we'd like them to

00:55:36 ◼   ► make Windows Phone seven, they, you know, the big thing, the big similarity between

00:55:41 ◼   ► rim and Apple was that they were the two companies that built the whole kit, you know, the hardware

00:55:47 ◼   ► and the OS, you know, the companies they couldn't afford to mock where anybody who was a potential

00:55:52 ◼   ► OEM for Windows. Yeah, that's probably true. But yeah, but yeah, you're right. Like, if

00:55:57 ◼   ► company should know that some other company having a huge head start on the software ecosystem

00:56:03 ◼   ► is a big problem, it should have been Microsoft, because that was such a key factor in their

00:56:08 ◼   ► success with the PC, getting the apps, getting all this.

00:56:11 ◼   ► By that point, the App Star had moved along and had enough momentum that, you're right,

00:56:16 ◼   ► nobody in Microsoft believed, even the people cheering the audience believed in their heart

00:56:20 ◼   ► of hearts that Windows Phone 7 was going to sweep the iPhone off the table anytime soon.

00:56:27 ◼   ► And best case, they're thinking, boy, three years from now, we may be tied with them in

00:56:32 ◼   ► terms of developer support and number of apps.

00:56:34 ◼   ► And that's best case scenario.

00:56:35 ◼   ► Right.

00:56:36 ◼   ► I think anybody at Microsoft, even at Ballmer, anybody who should have been the CEO of Microsoft,

00:56:42 ◼   ► should have been able to realize immediately the day of the iPhone being unveiled on stage

00:56:48 ◼   ► at Macworld in January 2007 that, wow, we've been caught flat-footed, and we need to start

00:56:54 ◼   ► today.

00:56:55 ◼   ► I mean, right now, immediate emergency meeting, we've got to we've got to think about how

00:57:01 ◼   ► we're going to catch up to this, just by looking at what Apple showed on the first day with

00:57:08 ◼   ► the iPhone. But even if you didn't have the taste to recognize that the moment where everybody

00:57:13 ◼   ► at Microsoft should have had that, you know, this is an emergency meeting would have been

00:57:18 ◼   ► a year later when the App Store was announced and response was so incredibly strong from

00:57:26 ◼   ► such a diverse array of developers.

00:57:29 ◼   ► Yeah, no, like, I can forgive them for not believing or not wanting to believe day of

00:57:34 ◼   ► announcement and because it was so different. The iPhone was so different that there was

00:57:37 ◼   ► a good chance like if you didn't if you didn't understand like what they were showing there,

00:57:41 ◼   ► there's like, this seems kind of weird could go either way, right. And I would say like

00:57:46 ◼   ► A year later, that's way too late.

00:57:47 ◼   ► I would say the time when you should have that meeting if you didn't have it immediately,

00:57:52 ◼   ► because I think it makes sense not to have it immediately.

00:57:54 ◼   ► Wait and see.

00:57:55 ◼   ► Let's see what's going to happen here.

00:57:56 ◼   ► The time to have that meeting is once any of the C-level executives at Microsoft or

00:58:01 ◼   ► anybody is able to go to the store, buy an iPhone, bring it home, and play with it, then

00:58:04 ◼   ► you damn well better have that meeting because you're like, "Uh-oh.

00:58:07 ◼   ► We've got a problem here," because you play with that phone and you realize, "I don't

00:58:10 ◼   ► want to go back to my other phone."

00:58:12 ◼   ► The iPhone was a compelling product once you had it in your hands, and that's when you

00:58:15 ◼   ► need to have that meeting because the proof is in the

00:58:17 ◼   ► product, right? $600 or no, if you play around with that thing,

00:58:22 ◼   ► you know, on day one, the original iPhone and don't

00:58:24 ◼   ► realize, Oh, damn, I cannot go back to my Windows mobile phone

00:58:27 ◼   ► after this, we need to have a meeting. That's, that's the

00:58:29 ◼   ► problem.

00:58:30 ◼   ► That's a good point. And because it was it was it was a product

00:58:33 ◼   ► that was as good as the demos claimed it was.

00:58:36 ◼   ► And you can't be sure of that. Like they put up on screen like

00:58:38 ◼   ► Yeah, like, oh, Microsoft does that. Right? You can't you can't

00:58:42 ◼   ► tell until we didn't all know either. We seemed amazing. We

00:58:45 ◼   ► trust we had faith in Apple, but until you get that thing in your hand, you're not sure,

00:58:48 ◼   ► because it was so weird and different, and it's like, is that even going to work?

00:58:52 ◼   ► But yeah, the proof is in the product.

00:58:55 ◼   ► Microsoft had to know by the time they all had iPhones.

00:58:57 ◼   ► Maybe the fact that Microsoft has a history of sort of sham demos, maybe that actually

00:59:03 ◼   ► set them back six months, because they just, you know, much like RIM's famous response

00:59:09 ◼   ► where they actually had a meeting the week after the iPhone came out and came away with

00:59:14 ◼   ► the conclusion that Apple had faked the whole thing because it wasn't possible, you know,

00:59:19 ◼   ► maybe Microsoft had a similar reaction.

00:59:21 ◼   ► Yeah, but it's the type of, you know, Cold War analogy again. So they watch the demo,

00:59:26 ◼   ► right? And they go down to their phone team and they say, "We just saw this iPhone demo.

00:59:31 ◼   ► We're not sure if that's going to fly or if it's BS or we don't know, but, you know, what

00:59:36 ◼   ► do you think of it, head of Windows Mobile?" And Windows Mobile says, "Our phones are strong.

00:59:40 ◼   ► We don't have to worry. Strong Windows Mobile." You know, because that's what they have to

00:59:43 ◼   ► As a company man down the chain of command, you never tell your superior,

00:59:47 ◼   ► "We're screwed in the thing we've been working on for these past few years.

00:59:50 ◼   ► This does not hold a candle to what they have and we need to regroup."

00:59:52 ◼   ► Right?

00:59:53 ◼   ► Your initial reaction is always, "Don't worry, everything's fine."

00:59:56 ◼   ► Because that's how you got your job, that's how you keep your job.

01:00:00 ◼   ► You always just say, "No, everything's great. We're great.

01:00:02 ◼   ► Our phones are the best."

01:00:03 ◼   ► Because that's the company line.

01:00:04 ◼   ► And just if everyone keeps repeating that to themselves

01:00:06 ◼   ► while having a sinking feeling in the pit of their stomach, that's bad.

01:00:10 ◼   ► I completely agree. I think you had a good point too about the developer support. And

01:00:20 ◼   ► one thing that I think should have been terrifying to Microsoft and that because like you said,

01:00:23 ◼   ► if any company understands the value of having third party developers support for your platform,

01:00:32 ◼   ► it's them. The scariest thing was that Apple almost literally

01:00:42 ◼   ► didn't do any work to get that support. They actually worked

01:00:46 ◼   ► against it. And we're telling developers at the beginning,

01:00:49 ◼   ► we're not even going to let you write apps for this. And third

01:00:53 ◼   ► party developers were like, please let us write apps. And

01:00:56 ◼   ► they said, No, you can write little web apps. No. And then

01:00:59 ◼   ► they were like, please let us write apps. And then like within

01:01:01 ◼   ► And then a month of the thing coming out, Craig Hockenberry and Lucas Newman figured

01:01:08 ◼   ► out how to write apps around Apple's back with no actual support, no SDK.

01:01:14 ◼   ► Lucas Newman had the, what was it, the Lights Out game and--

01:01:18 ◼   ► Yeah, that was like when the iPhone was announced.

01:01:21 ◼   ► That was the-- and it's amazing to me that Apple, for all its foresight, doesn't see

01:01:25 ◼   ► these things, or at least Steve Jobs did initially.

01:01:29 ◼   ► I think it was Macworld, right, when it was announced?

01:01:31 ◼   ► - Yeah, it was January Macworld.

01:01:33 ◼   ► - So at Macworld, you and Cable Sasser did a podcast

01:01:37 ◼   ► in the Macworld fishbowl or whatever you were,

01:01:40 ◼   ► talking about, of course, talking about the iPhone.

01:01:42 ◼   ► And I wasn't there, but I did a,

01:01:45 ◼   ► the one video I've ever posted on our stack,

01:01:47 ◼   ► I did a little video, and my video was not

01:01:49 ◼   ► of how awesome the iPhone is or anything.

01:01:51 ◼   ► My video was about the fact that every single person

01:01:55 ◼   ► at Macworld, in our circle of people

01:01:57 ◼   ► who are like Mac developers who saw that phone said

01:02:00 ◼   ► the same thing that I quoted from Cable Sasser

01:02:02 ◼   ► from your podcast and interview, which is like,

01:02:04 ◼   ► can we write apps for this phone?

01:02:06 ◼   ► Because that would be awesome.

01:02:07 ◼   ► I'm paraphrasing, but I think I got it almost exactly.

01:02:09 ◼   ► That was the story.

01:02:11 ◼   ► Macworld was like, we see this phone, this phone is amazing.

01:02:13 ◼   ► Everyone wants, like immediately,

01:02:15 ◼   ► not like a month later, a year later, thinking about apps.

01:02:18 ◼   ► Like as soon as all the tech nerds saw that phone,

01:02:21 ◼   ► they're like, I want my apps to be on that phone.

01:02:24 ◼   ► I want to write apps.

01:02:24 ◼   ► That was the day of the announcement.

01:02:26 ◼   ► He was saying that.

01:02:27 ◼   ► And that, you know, and that's the video I have was like the song "Dance With Me" because

01:02:31 ◼   ► everyone's just like, "Yes, you, me, phone, we together make beautiful apps, right?

01:02:35 ◼   ► We don't even know how to make apps.

01:02:36 ◼   ► We don't know anything about this thing.

01:02:38 ◼   ► We don't know what makes a good iPhone app, but we know we want to be there and we want

01:02:40 ◼   ► to write apps."

01:02:41 ◼   ► There's a template to Apple's keynote presentations.

01:02:46 ◼   ► And you can almost see, well, not like a literal keynote template, but there probably is for

01:02:50 ◼   ► that too, but a form that they typically follow.

01:02:55 ◼   ► one of them often is for a new thing, they'll say, "Here's ten things we want

01:03:01 ◼   ► you to know about it," and I'll go through the ten. But you can also see then how

01:03:04 ◼   ► that maybe they started with 40 things, and they say, "Here's the 40 things we

01:03:09 ◼   ► might want to talk about. What are the ten that'll be the best to talk about in

01:03:12 ◼   ► the thing?" And I'm sure that, you know, it's a weeks long, we could do these ten,

01:03:16 ◼   ► you could do these, you could do this. They pick the ten, they rehearse the ten,

01:03:20 ◼   ► they have them ready to go. And then there's often a slide where they'll show

01:03:24 ◼   ► like the other 30 or 40 things. It's like one slide with all these different other features

01:03:30 ◼   ► in various sizes of myriad. And they'll say look, and there's all this stuff too. And at the iPhone

01:03:38 ◼   ► debut at Mac world, that slide had up in like the upper right corner, one of the words was cocoa.

01:03:45 ◼   ► Like they never had Steve Jobs never said cocoa. It was just a word on a slide with like 30 other

01:03:52 ◼   ► features of the iPhone but but here's what he did say though that's why I was

01:03:55 ◼   ► flipping out he said it runs OS 10 OS 10 was that right that brief naming thing

01:04:01 ◼   ► of fun right he said it runs OS 10 and up on that slide it said Coco and it

01:04:07 ◼   ► like you said in our crowd everybody was already over the fact that it was so

01:04:11 ◼   ► awesome looking but it was that they'd already start you know they realized

01:04:14 ◼   ► that this thing you know if it was if that was true that you could build apps

01:04:19 ◼   ► because that's how they made their apps you know that it was you know all these

01:04:24 ◼   ► like Jurassic Park this is a unique system I know this I know Coco I can

01:04:28 ◼   ► write an app for that phone right that that just by him saying it runs OS 10

01:04:33 ◼   ► and that word Coco that everybody in our crowd had already figured out that iOS

01:04:37 ◼   ► was what iOS is that it was the mythical stripped down version of OS 10 with the

01:04:44 ◼   ► next step frameworks for application development and everyone wanted to write

01:04:48 ◼   ► an app like we all saw the app and it's kind of like Apple falling ass backwards

01:04:52 ◼   ► into success like the same thing with jobs you know refusing to make iTunes

01:04:56 ◼   ► for Windows for so long it had to be argued down by the rest of the you know

01:05:01 ◼   ► slightly less stubborn executive team at Apple like fine we'll make it for

01:05:06 ◼   ► Windows and let these stupid iPod become a runaway success if that's what you

01:05:09 ◼   ► want fine go ahead don't ask that was like more or less how it happened all

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01:09:14 ◼   ► Really great guys, great company.

01:09:16 ◼   ► What were we just talking about?

01:09:20 ◼   ► What was the last thing?

01:09:21 ◼   ► Microsoft, I don't know, we're probably done with Microsoft.

01:09:26 ◼   ► Yeah.

01:09:27 ◼   ► There's a little bit of dancing on their grave, I feel like.

01:09:29 ◼   ► Yeah.

01:09:30 ◼   ► But it's kind of a little bit unseemly to, you know, Microsoft.

01:09:33 ◼   ► Any other names we want to toss out?

01:09:35 ◼   ► What about Steven Sinofsky?

01:09:36 ◼   ► What about bringing him back?

01:09:38 ◼   ► I don't know if he knew, I don't know if he knows how to make Microsoft successful.

01:09:43 ◼   ► I think he's a smart guy and I think he has some good ideas, but, I mean, he's not, it's not terrible.

01:09:49 ◼   ► It's not terrible. I don't think if they brought him back. I wouldn't say that like

01:09:54 ◼   ► It would require there to be like unbeknownst to us

01:09:58 ◼   ► You know that before he was pushed out by Ballmer that you know the board said Tori

01:10:05 ◼   ► Well or that you know whatever the disagreement was with Ballmer that the board agrees that

01:10:11 ◼   ► Sinofsky's should have won that argument

01:10:13 ◼   ► You know seems a little antisocial though like he seems like hard to get on with this in the same vein as forestall

01:10:19 ◼   ► Yeah, but that might work better if he's the CEO.

01:10:22 ◼   ► Yeah, it only works better if he has good ideas, though.

01:10:25 ◼   ► Right.

01:10:26 ◼   ► Well...

01:10:27 ◼   ► I mean, he did, like...

01:10:29 ◼   ► I don't know.

01:10:30 ◼   ► I can't get a read on him.

01:10:31 ◼   ► He certainly has a lot of the aspects that you want, and that he's got that quality of

01:10:35 ◼   ► he's going to boldly do things.

01:10:38 ◼   ► I just don't have quite enough faith that he is going to do the right things.

01:10:43 ◼   ► And I also don't have quite enough faith to believe that he is going to bend in the way

01:10:48 ◼   ► that you would want him to bend.

01:10:50 ◼   ► Steve Jobs was pig-headed, stubborn, and obnoxious with the best of them.

01:10:54 ◼   ► He defined that practically in the CEO space.

01:10:56 ◼   ► And yet, he was able to be argued down into doing iTunes on Windows and being pissy about

01:11:02 ◼   ► it and everything.

01:11:03 ◼   ► But the fact that he was able to allow that to happen speaks volumes.

01:11:10 ◼   ► If the stereotype of Steve Jobs was actually true, there's no way he would have let that

01:11:13 ◼   ► happen and that would have been a terrible mistake.

01:11:15 ◼   ► So I don't know if Sinofsky is the type of guy who is going to be bold and have great

01:11:19 ◼   ► ideas and power through, but know when all the other smart people you surrounded yourself

01:11:24 ◼   ► are arguing against you that sometimes you should give in.

01:11:26 ◼   ► You know what I mean?

01:11:27 ◼   ► And that, I think, is key.

01:11:28 ◼   ► Yeah.

01:11:29 ◼   ► I don't know him well enough.

01:11:31 ◼   ► I don't know.

01:11:32 ◼   ► I was just trying to pick somebody from within Microsoft, and even though Sinofsky is no

01:11:35 ◼   ► longer within Microsoft, I think if they named him as CEO, it would be seen sort of as an

01:11:40 ◼   ► internal.

01:11:41 ◼   ► You know it would be a repudiate a big repudiation of balmer. Yeah, definitely

01:11:45 ◼   ► What about the all the guys who got kicked out with the courier project didn't get kicked out?

01:11:51 ◼   ► But like they can't courier and then that team sort of spread to the four winds who is there was Jay Allard

01:11:56 ◼   ► Jay Jay just just the letter J. I went to school with him, so now I can't imagine somebody went to school with Ryan Microsoft

01:12:03 ◼   ► So I'm cutting him off the list

01:12:05 ◼   ► Robbie Bach

01:12:07 ◼   ► Yeah, like that's what I was thinking of.

01:12:09 ◼   ► So if the vision is Microsoft is going to be remade as a consumer electronic services

01:12:16 ◼   ► company that makes devices and hardware and software, like that's the vision which Ballmer

01:12:20 ◼   ► articulated, that the board agrees that Microsoft should go and just sort of be kind of like

01:12:24 ◼   ► Apple in that way.

01:12:27 ◼   ► Pulling somebody from the side of Microsoft that was always on the consumer electronics

01:12:31 ◼   ► thing, like the Xbox guys, like Robbie Bach was involved with Xbox, I believe, in Courier

01:12:34 ◼   ► and all that type of stuff.

01:12:37 ◼   ► If this is what you want Microsoft to be in the future, those guys might be someplace

01:12:41 ◼   ► to look because that was always their passion.

01:12:43 ◼   ► It was always to pull Microsoft in that direction.

01:12:45 ◼   ► I mean, Jay Lard and those guys brought the plan to Bill Gates and said, "Why doesn't

01:12:50 ◼   ► Microsoft make a game console?"

01:12:51 ◼   ► And we're able to make that happen within Microsoft, which shows that they have some

01:12:54 ◼   ► ability to navigate the political dangers of the company and make things happen.

01:12:58 ◼   ► And they were doing the courier thing and got candid.

01:13:00 ◼   ► Who knows if courier was any good or not, but their instincts are in that direction.

01:13:04 ◼   ► So if you want Microsoft to do that, maybe those guys.

01:13:07 ◼   ► And pulled it off without having it called Windows Game Platform Certified 2000 and without

01:13:15 ◼   ► a win.

01:13:16 ◼   ► I mean, I guess Xbox has always, yeah, I'm almost certain it has always run with the

01:13:21 ◼   ► Windows NT kernel and that programming games for the Xbox was always, part of the appeal

01:13:28 ◼   ► was supposedly that it was a lot like writing Windows PC games.

01:13:33 ◼   ► The DirectX box, DirectX was their 3D API.

01:13:35 ◼   ► Right, but from a consumer standpoint, a branding standpoint, and a user interface standpoint,

01:13:42 ◼   ► no legacy whatsoever.

01:13:45 ◼   ► This is what a game platform should look like.

01:13:47 ◼   ► People keep crapping on the Xbox, that product line in terms of, if you look over its entire

01:13:52 ◼   ► life, I believe it has either been money neutral or losing money.

01:13:55 ◼   ► They had huge write downs for their hardware problems with the red ring of death.

01:14:00 ◼   ► the beginning the Xbox are really expensive to make or whatever but I

01:14:02 ◼   ► always come back to it as that that should be held up as a Microsoft success

01:14:06 ◼   ► financially maybe not but like they entered a very difficult market with you

01:14:11 ◼   ► know fierce competitors an established market and were able to make a name for

01:14:15 ◼   ► themselves that now they are always a serious contender to be number one in

01:14:19 ◼   ► any console generation and the value of that may be diminishing but it shows

01:14:23 ◼   ► that Microsoft like it's it's it's like Microsoft did something right they you

01:14:27 ◼   ► you know, kind of, sort of with fumbles or whatever, but there are so many people who

01:14:31 ◼   ► would never even think of entering that market. It's like a bunch of sharks in there, right?

01:14:35 ◼   ► And Microsoft did it and succeeded, and I think it's to their credit.

01:14:39 ◼   ► Yeah, and I think that, you know, it's like they could have, like one of the ways that

01:14:47 ◼   ► come the day that the iPhone shipped in 2007 and they had the, what they should have had,

01:14:52 ◼   ► the what the hell are we going to do moment, that that team could have proposed, you know,

01:14:57 ◼   ► something called like the X pad and base it on the Xbox branding and say look why don't

01:15:02 ◼   ► we make something you know a gaming type thing and we can also you know I don't know.

01:15:10 ◼   ► They could have made a part like the portable gaming space has been a real thing for a long

01:15:13 ◼   ► time Sony's got a portable system that you've all heard of the Game Boy right so the next

01:15:17 ◼   ► logical step for Microsoft you know say we are now established player in the in the console

01:15:21 ◼   ► space why don't we also make a handheld and that like is the limit of Microsoft's

01:15:26 ◼   ► corporate tolerance for strategy tax type things.

01:15:29 ◼   ► Like, whoa, whoa, whoa.

01:15:30 ◼   ► If there's going to be anything portable in your hands that's

01:15:32 ◼   ► going to play Xbox games, it's going

01:15:34 ◼   ► to be name whatever the group is that's

01:15:36 ◼   ► working on Microsoft's current tablet computing initiative.

01:15:39 ◼   ► And that one gets killed by the strategy tax.

01:15:40 ◼   ► Like, are we let you do this Xbox thing

01:15:42 ◼   ► without having Windows logo pop up and stuff like that?

01:15:44 ◼   ► But there's no way in hell you're

01:15:46 ◼   ► making the Microsoft Game Boy, because the phone group

01:15:49 ◼   ► doesn't like that.

01:15:50 ◼   ► The tablet group doesn't like that.

01:15:51 ◼   ► And then it's a whole strategy tax thing.

01:15:53 ◼   ► And that's why the Xbox Moment was

01:15:56 ◼   ► kind of amazing that they were able to get that product, but like, there was that was

01:16:00 ◼   ► like their limit. Like, look, this Xbox thing is losing money, you are in no position to

01:16:03 ◼   ► dictate that we should make a portable. Everyone knows Nintendo has that, you know, market

01:16:07 ◼   ► sewn up anyway, so forget it. And so they never did make the Microsoft Game Boy. And

01:16:12 ◼   ► yeah,

01:16:13 ◼   ► And it's it speaks to the credibility of the Xbox, though. And like you said, like that

01:16:17 ◼   ► it should be seen as a long term success that it would such a thing would have had instant

01:16:21 ◼   ► credibility.

01:16:22 ◼   ► Yeah, no, totally. Like at this point, like if the Xbox was spun off as a separate company,

01:16:27 ◼   ► just completely cleanly separated, people would still say, "Come, you know, the next

01:16:32 ◼   ► generation of game consoles in, you know, eight years or something, if there is a next

01:16:37 ◼   ► generation of game consoles," they would be talking about them as like, you know, people

01:16:42 ◼   ► to watch.

01:16:43 ◼   ► Company worth listening to.

01:16:44 ◼   ► Yeah.

01:16:45 ◼   ► I'll go to the big announcement that they've scheduled for next year.

01:16:47 ◼   ► Yes, no, totally. Like, because there are so few, I mean, it's like the personal computer

01:16:50 ◼   ► operating system space. How many people, if you had a company now and said, "You know

01:16:54 ◼   ► what? I'm going to get into personal computer operating systems." You're going to do what?

01:16:58 ◼   ► That's crazy. It was like the same thing with the game console. "I'm going to make a game

01:17:01 ◼   ► console." It's a platform. Who wants to make a platform? RIM, to its credit, made another

01:17:08 ◼   ► platform, which was unheard of practically. They did it not in the PC space, but they

01:17:11 ◼   ► said, "We're going to make a new platform." That is so unprecedented and so rare to happen

01:17:16 ◼   ► it's so difficult to do. It was short lived platform. It's going down the tubes, but

01:17:20 ◼   ► they did it. You know, you're talking about the bb 10.

01:17:23 ◼   ► Yeah, no, like, they're, you know, they're messaging service. Like, they, it was a platform.

01:17:31 ◼   ► And it's so hard to make those and to make them succeed.

01:17:34 ◼   ► Even if even if only fleetingly. Yeah. Yeah.

01:17:43 ◼   ► One last, well, any other names you want to toss out as a possible CEO?

01:17:46 ◼   ► I don't know many executives.

01:17:51 ◼   ► My gut feeling is it's going to be somebody and somebody I've never heard of.

01:17:55 ◼   ► Someone from inside Microsoft, like, yeah, you just go down the corporate letter of Microsoft

01:18:01 ◼   ► and pick for one of the 800 vice presidents and say, I mean, the thing is, there could be

01:18:04 ◼   ► untapped talent inside Microsoft. I don't want to poo poo that either. Like, I don't know all those

01:18:08 ◼   ► people. It might be the best case scenario for them too. It's like, you need the right guy.

01:18:12 ◼   ► Like I you know, that's that's the key decision

01:18:14 ◼   ► You don't we talked about the optics before of like oh

01:18:17 ◼   ► How's this gonna look in the press and who is what does it happens gonna stock price whatever all that is gonna you just gonna

01:18:21 ◼   ► Have to deal with whatever happens

01:18:23 ◼   ► That you just got to find the right person at the right person is in Microsoft fine

01:18:27 ◼   ► If they're outside Microsoft fine

01:18:29 ◼   ► Whatever you got to do get the right person and don't worry about what's going to happen the day you announce it because that is

01:18:34 ◼   ► Who cares?

01:18:35 ◼   ► Yeah

01:18:36 ◼   ► Somebody who you know and and Microsoft has to be Microsoft, you know

01:18:41 ◼   ► They can't beat that. They're never gonna win if they try to be Apple or anybody else or Google I

01:18:45 ◼   ► Would say this I would say in mobile I would say maybe and just that maybe the last point I want to make about

01:18:54 ◼   ► bomber and Microsoft is

01:18:56 ◼   ► That maybe the iPhone is almost not irrelevant

01:18:59 ◼   ► But is not the thing people should look at as the main failing of Microsoft in mobile

01:19:05 ◼   ► I would say the two companies that show what a failure Microsoft has been in mobile are rim

01:19:10 ◼   ► and Android, which I sort of separate from Google.

01:19:15 ◼   ► But that RIM's long-term success, I mean the whole bread and butter of

01:19:20 ◼   ► RIM through their heyday was in the

01:19:23 ◼   ► corporate market. I mean it was a long time before they even became a consumer

01:19:26 ◼   ► brand.

01:19:27 ◼   ► That, like RIM's days as a consumer success

01:19:31 ◼   ► were pretty fleeting, but they spent, you know, a long time as a big success in IT.

01:19:36 ◼   ► That market should have been Microsoft's.

01:19:40 ◼   ► The fact that they let RIM become the de facto corporate mobile OS should have been seen

01:19:48 ◼   ► as a failure very early.

01:19:50 ◼   ► And I think that if they had somehow, if Windows Mobile, crummy as it was taste-wise, had been

01:19:57 ◼   ► the success that RIM was all along, I think Microsoft would have had something to parlay

01:20:04 ◼   ► off a lot sooner and they'd be in a much better position today even in the consumer market.

01:20:09 ◼   ► That was classic low-end disruption because Microsoft had a smartphone platform, but Microsoft's

01:20:15 ◼   ► like, "When we feel the smartphone platform, it's going to be Windows on a phone.

01:20:19 ◼   ► It's going to be Windows CE, Windows Consumer Edition, the whole nine yards."

01:20:24 ◼   ► Whereas BlackBerry, unconstrained by that kind of attitude of, "Well, it has to be full

01:20:29 ◼   ► Windows," they gave you basically a pager that you could type on.

01:20:31 ◼   ► Exactly.

01:20:32 ◼   ► That was really good.

01:20:33 ◼   ► And then they ramped up from, "A pager you can type on?

01:20:35 ◼   ► Whatever.

01:20:36 ◼   ► We're making Windows on a phone.

01:20:37 ◼   ► Have you seen our thing?

01:20:38 ◼   ► It's a friggin' smartphone.

01:20:39 ◼   ► one megabyte of RAM and you can run these, you know, it's a stylus, right? And if we don't care

01:20:44 ◼   ► about this pager with a keyboard and you know, it was low on disruption that pager with a keyboard

01:20:48 ◼   ► grew smarter and bigger and better. And you know, servers were attached to it. And like,

01:20:52 ◼   ► even when it was just a pager with the keyboard, the utility of being able to just, you know,

01:20:55 ◼   ► tap out emails on your little pager with a keyboard thing was unbelievable. And it was

01:20:59 ◼   ► easy to use. You know, you could, the function it was designed to use, you could use it for

01:21:03 ◼   ► immediately. And that, that's what made Blackberry and Microsoft was too tied up and thinking we have

01:21:09 ◼   ► have to ship you an entire PC in your hand, which they weren't ready to do yet, you know?

01:21:13 ◼   ► Right. Yeah, because BBM is always sort of like a halfway between email and texting.

01:21:19 ◼   ► And it was exactly, you know, it was the exact thing that the technology of the Times, it

01:21:25 ◼   ► was like optimal for the technology of the Times.

01:21:28 ◼   ► Targeted the people who needed to be able to basically send email from anywhere in the

01:21:31 ◼   ► world.

01:21:32 ◼   ► And had the money to pay for it.

01:21:33 ◼   ► Yeah.

01:21:34 ◼   ► know, paid paid relatively large monthly fees. And then I say

01:21:39 ◼   ► Android, because clearly what and you know, it's it's Android,

01:21:43 ◼   ► not the iPhone that is now where Microsoft thought it was going

01:21:47 ◼   ► to be, you know, an OS that OEMs make device, you know, like what

01:21:51 ◼   ► Windows was, I mean, and you know, a lot of people pointed

01:21:54 ◼   ► this out that in broad terms, you know, maybe the percent, you

01:21:56 ◼   ► know, certainly the percentages of market share are different.

01:21:58 ◼   ► But in broad terms, it's almost uncanny how much Android is to

01:22:04 ◼   ► mobile what Windows was to PCs and iOS and the iPhone are to mobile what the Mac and

01:22:11 ◼   ► Mac OS were to PCs.

01:22:13 ◼   ► How can you blame Microsoft for not doing what Android did though?

01:22:16 ◼   ► Because Microsoft must have been looking at Android and saying, "They're doing exactly

01:22:20 ◼   ► what we do except for the part where you collect the money."

01:22:22 ◼   ► Exactly.

01:22:23 ◼   ► Because they gave it away to everybody, right?

01:22:26 ◼   ► And that works with Google's business because their business was get people on the internet,

01:22:29 ◼   ► get them to do Google searches, collect their personal information, because they were an

01:22:32 ◼   ► advertising company.

01:22:33 ◼   ► But Microsoft didn't have that business model.

01:22:35 ◼   ► And so it's like, how could you compete with Android?

01:22:38 ◼   ► How could you out Android Android?

01:22:39 ◼   ► You had to get there first, which Microsoft was.

01:22:41 ◼   ► So they could have done that.

01:22:41 ◼   ► But once Android is out the door,

01:22:43 ◼   ► it's like, so do we subsidize this

01:22:46 ◼   ► with our exchange licenses?

01:22:47 ◼   ► Do we become an advertising company?

01:22:49 ◼   ► Because it was so hard for them to go to the OEMs

01:22:52 ◼   ► and say, you should make Windows phones.

01:22:54 ◼   ► For a while, they could use their licensing terms

01:22:56 ◼   ► for the Windows operating system for their PCs as leverage.

01:22:58 ◼   ► But that starts to fade in power.

01:23:00 ◼   ► And Google was a tough competitor,

01:23:02 ◼   ► because they had the skills and they gave the thing away for free.

01:23:06 ◼   ► And they subsidized it.

01:23:07 ◼   ► I think maybe the only chance they had, and it is true, and it's part of what makes Google

01:23:14 ◼   ► such a difficult competitor in any market it gets into because they give everything

01:23:20 ◼   ► away and subsidize it through advertising, that they're very, very good at monetizing

01:23:27 ◼   ► you know, in, you know, very small pennies, you know, pennies, pennies per view multiplied

01:23:34 ◼   ► by a very large number ends up being, you know, billions of dollars. But I think Microsoft's

01:23:41 ◼   ► opportunity was to have Windows Mobile be way better than what Android was sooner. Because

01:23:48 ◼   ► the first few years of Android after it shipped, it was really bad. I mean, it got, it's gotten

01:23:54 ◼   ► a lot better very quickly. But like, you know, 2009, 2010, Android was a really, really crummy

01:24:01 ◼   ► system. And maybe there was an opportunity there where, look, you know, your competitors

01:24:07 ◼   ► might be paying $0 to Google for Android, but you can pay us $10 for a license for Windows

01:24:14 ◼   ► Mobile and your phone is going to look a hell of a lot better in the cell phone store.

01:24:19 ◼   ► Yeah, and they did that for a while. They had a lot of people making Windows Mobile

01:24:22 ◼   ► phones, and sometimes either also making Android phones

01:24:25 ◼   ► or making Windows mobile phones instead of.

01:24:27 ◼   ► And they'd go to the big name people, and they'd like, oh,

01:24:29 ◼   ► you should make a Windows mobile phone,

01:24:30 ◼   ► because you're a brand name.

01:24:32 ◼   ► And they'll let those other random Asian manufacturers

01:24:34 ◼   ► make Android phones.

01:24:35 ◼   ► But it was like the product they were offering,

01:24:37 ◼   ► it was maybe better, and it had a big Microsoft name

01:24:40 ◼   ► and everything, but it was not better enough.

01:24:42 ◼   ► Right, and I don't think it was.

01:24:44 ◼   ► And for example, I mean, to me, this is the biggest tell,

01:24:46 ◼   ► is that HTC is the perfect example.

01:24:49 ◼   ► Because at one point HTC was by far the world's biggest Windows phone maker.

01:24:55 ◼   ► I forget what percentage of Windows phones were HTC, but I think it was like a majority

01:24:59 ◼   ► share.

01:25:00 ◼   ► Like at least 50% of all Windows phones were HTC.

01:25:04 ◼   ► Maybe a lot higher.

01:25:07 ◼   ► And you know, clearly now it's a, I mean I don't think, I guess HTC maybe tried making

01:25:12 ◼   ► one Windows 8 phone or something like that, but almost everything HTC sells is Android.

01:25:17 ◼   ► The HTC is kind of like a cautionary tale, though.

01:25:19 ◼   ► Like, this is what happens when you listen to the siren

01:25:21 ◼   ► song of Microsoft and try to get on board with their Windows

01:25:24 ◼   ► thing.

01:25:25 ◼   ► It distracts you.

01:25:25 ◼   ► And by the time-- like, now they're kind of recovering,

01:25:28 ◼   ► and they have-- the HTC One is an amazing phone that

01:25:31 ◼   ► people feel like should be doing better than it is.

01:25:33 ◼   ► But it's like, well, you spent all that time off

01:25:35 ◼   ► with Microsoft.

01:25:36 ◼   ► And while you were doing that, Samsung came

01:25:39 ◼   ► and became the name and face of good Android phones.

01:25:42 ◼   ► And despite the fact that you now have a great phone

01:25:45 ◼   ► the HTC one, you know, Samsung, people associate, you know, the name Galaxy tab, the whole product,

01:25:51 ◼   ► you know, like, as like, Damn, if we didn't spend all that time making those windows phones,

01:25:56 ◼   ► we would, you know, maybe we could be Samsung. Yeah, maybe. Alright, let me do the last sponsor

01:26:00 ◼   ► break. And then we'll talk to you about about video games. Do you play any video games?

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01:29:06 ◼   ► He's quite talented.

01:29:09 ◼   ► All right, video games.

01:29:11 ◼   ► So I wrote a big piece today based on -- it was funny.

01:29:15 ◼   ► I didn't plan on it.

01:29:17 ◼   ► Somebody on Twitter said the reason that I stirred up so much shit by saying that Nintendo

01:29:20 ◼   ► should make -- I wrote like a two-line link list entry that said they should just give

01:29:24 ◼   ► in and make iOS games when they announced the new 2DS last week. And I got so -- I got

01:29:30 ◼   ► great feedback from it. I don't mean it in terms of you dummies shouldn't send me feedback.

01:29:34 ◼   ► It was great. I mean, I thought -- I couldn't believe how much interesting stuff came out

01:29:38 ◼   ► of a two-sentence piece that I wrote. But I had a lot more to say, and I wrote it today.

01:29:43 ◼   ► I won't repeat it here. I'll assume everybody who's listened has read it. But the gist of

01:29:48 ◼   ► it is I stand by it. I think Nintendo is screwed at least in -- maybe especially in handhelds.

01:29:54 ◼   ► and I think that I think they should seriously consider making iOS games even if that means

01:30:00 ◼   ► that the company is going to shrink in uncomfortable ways.

01:30:05 ◼   ► I think you probably get a lot of crap about it for the obvious reason is that like normally

01:30:11 ◼   ► I mean you said yourself you're not a gamer and you do write about game technology occasionally

01:30:15 ◼   ► but most of your beat is like you know personal computers, mobile phones, stuff like that

01:30:19 ◼   ► So the people who are inside that circle are going to say, "This guy doesn't know the history,

01:30:25 ◼   ► doesn't have the depth of background and personal experience to comment knowingly on this topic."

01:30:31 ◼   ► So you get crap from those people, right?

01:30:33 ◼   ► And the flip side of that, which I'm always cognizant of, is that when you're inside that

01:30:39 ◼   ► circle, it's very easy to have preconceived notions about what Nintendo is and how they

01:30:45 ◼   ► have to behave and sometimes it's the people who are outside that as assuming that you

01:30:49 ◼   ► know that they're you know smart people they can give you a view on it that you're not

01:30:53 ◼   ► willing to accept because it goes against you know central tenets of your belief system

01:30:58 ◼   ► from being a gamer for the past 20 years or whatever so it's always important that when

01:31:01 ◼   ► the outside guy says something crazy maybe he's wrong because he doesn't have the background

01:31:05 ◼   ► to know about it but on the other hand maybe you can't conceive of that possibility because

01:31:11 ◼   ► because it just it runs counter to everything you've felt about Nintendo for the past, you

01:31:15 ◼   ► know, 30 years of your life or whatever.

01:31:18 ◼   ► I agree with you there. And I, you know, and I'll just say this, I if I end up being proven

01:31:23 ◼   ► wrong and have to eat my hat on this one, I'll be happy. Like, let's say 10 years from

01:31:28 ◼   ► now, Nintendo still has never made a game for anything but their own systems. And they

01:31:32 ◼   ► have a successful handheld platform and it's still a successful plug into your TV platform.

01:31:38 ◼   ► news. I would be that would be delighted. And I'm sure that would be good news for the

01:31:42 ◼   ► gaming industry. And for people who like to play games and for fans of longtime fans of

01:31:47 ◼   ► Nintendo's franchises. Great. I'm I will be happy to be proven wrong. I just don't think

01:31:54 ◼   ► so. And to me, you know, the comparison and it's uncomfortable, but I do think that they're

01:31:59 ◼   ► in a similar situation to where rim was five, six years ago, in so far as that they're unable

01:32:07 ◼   ► to compete as computer makers with iOS and, to a lesser degree, Android.

01:32:14 ◼   ► I think that there's a kernel of something in there that you're on the right track about,

01:32:23 ◼   ► but in that duality, and again, I'm being very cognizant to try to think outside the

01:32:28 ◼   ► box and not accept the accepted narrative of the game industry because I consider myself

01:32:34 ◼   ► someone who is deeply entrenched in that world.

01:32:36 ◼   ► But I think you are missing a lot of things

01:32:40 ◼   ► about Nintendo here,

01:32:40 ◼   ► and that's why you're getting a lot of crap.

01:32:42 ◼   ► Because you're like, you're off,

01:32:44 ◼   ► you veered off in the wrong direction.

01:32:45 ◼   ► And the kernel of truth that you have here

01:32:47 ◼   ► is what you're getting at.

01:32:48 ◼   ► That like, that you see competitors

01:32:52 ◼   ► taking the attention and time and money

01:32:55 ◼   ► that used to be Nintendo's,

01:32:58 ◼   ► and you're thinking, Nintendo doesn't have what it takes

01:33:01 ◼   ► to match up with those competitors, right?

01:33:05 ◼   ► That you see how people are playing iOS games,

01:33:06 ◼   ► people doing this.

01:33:07 ◼   ► Can Nintendo compete with that on those terms?

01:33:15 ◼   ► And it's like, well, no, they can't.

01:33:16 ◼   ► Like you said with BlackBerry,

01:33:17 ◼   ► could they make iPhone-caliber hardware and software?

01:33:19 ◼   ► Because that's what it was gonna take

01:33:20 ◼   ► to stay in the phone business.

01:33:21 ◼   ► It's like, all right, here's the iPhone,

01:33:23 ◼   ► what do you got, BlackBerry?

01:33:24 ◼   ► And they just kept putting out these phones

01:33:26 ◼   ► that were not iPhone-caliber,

01:33:28 ◼   ► but either in the hardware or the software,

01:33:30 ◼   ► Like it's sticking with the hardware keyboard and it's just like no BlackBerry. That's not the bar

01:33:34 ◼   ► That's not the minimum entry price is like Windows Phone, right?

01:33:37 ◼   ► Windows Phone 7 and 8 like that is a valid entry in the field Android is a valid entry in the field

01:33:43 ◼   ► But you are putting out is not you are not competing on the end. It's like well, you know BlackBerry, you know rim BlackBerry is a company

01:33:49 ◼   ► Couldn't do that

01:33:51 ◼   ► They you know, they didn't they maybe they didn't have time. They didn't have people they were too late whatever

01:33:55 ◼   ► They just just couldn't get it together and you know that and so that's what you're saying about about Nintendo

01:33:59 ◼   ► But your suggested remedies are not good, I think,

01:34:02 ◼   ► and not good at all.

01:34:04 ◼   ► Because-- and the other thing you get right

01:34:07 ◼   ► is that Nintendo has problems.

01:34:09 ◼   ► Like, I think we all agree that Nintendo is in not

01:34:12 ◼   ► a terrible spot, but they're not doing well.

01:34:14 ◼   ► Like, they're not certainly coming down

01:34:16 ◼   ► off the high of the Wii.

01:34:17 ◼   ► They're not doing as well as they had to.

01:34:19 ◼   ► So I think those are the two parts that, underneath it all,

01:34:22 ◼   ► that you're kind of getting right,

01:34:23 ◼   ► that you could recognize from seeing the technology.

01:34:25 ◼   ► But the rest of the details, I think you're off of that.

01:34:28 ◼   ► Well, and one thing I didn't even get into, and this is where I maybe it's even maybe I should

01:34:32 ◼   ► have because I think maybe it's even harder problem is I think going forward to remain competitive

01:34:36 ◼   ► both handheld and on console. I feel like the ever-growing complexity of the things that the

01:34:49 ◼   ► competitors they're against are such that they need a better operating system and

01:34:56 ◼   ► and like developer system.

01:35:00 ◼   ► And that, you know, that they, you know, I think by all reports that they really have

01:35:04 ◼   ► like a crummy one. Like they can't, they still don't think that they can do like

01:35:08 ◼   ► patches to games once they've been released.

01:35:12 ◼   ► So this is where you get into trouble. Alright, am I wrong? Downloadable content.

01:35:16 ◼   ► So, here's what I think Nintendo's problems are. Because like I said, there is, there is a core

01:35:20 ◼   ► issue here, right? And here's how I would define Nintendo's problems.

01:35:24 ◼   ► the first question you have to ask about Nintendo's problems. Is there a future for game only

01:35:29 ◼   ► or sort of game mostly hardware devices that something something that you buy that mostly

01:35:35 ◼   ► plays games, maybe just streaming video or things or whatever? Is there a market for

01:35:39 ◼   ► that? You know, currently or in the future? And so what's your answer to that question?

01:35:43 ◼   ► My answer is yes, but it's shrinking so fast that it doesn't remain, that market doesn't

01:35:55 ◼   ► remain big enough to sustain Nintendo.

01:35:57 ◼   ► Yeah.

01:35:58 ◼   ► So the, I think the question of this is like, I think it's still an open question and I

01:36:02 ◼   ► think the upcoming TV console generation, the Xbox one and PlayStation four will give

01:36:08 ◼   ► us a really important data point.

01:36:10 ◼   ► If they sell in radically lower numbers than expected,

01:36:14 ◼   ► like than the previous generation of consoles did,

01:36:17 ◼   ► then we'll know that the market for game machines, things

01:36:21 ◼   ► that pretty much mostly do games,

01:36:22 ◼   ► despite the fact that both the Xbox One and PlayStation 4

01:36:25 ◼   ► were also doing Netflix and all these other things,

01:36:27 ◼   ► like all the stuff we expect them to do.

01:36:28 ◼   ► If they don't sell in high numbers,

01:36:29 ◼   ► then we'll know that what you just said

01:36:31 ◼   ► is that now is that time, that it's shrinking,

01:36:34 ◼   ► and that it's only a matter of time before it goes away.

01:36:36 ◼   ► If, on the other hand, they sell in the expected numbers

01:36:40 ◼   ► and they sell huge numbers on them, we'll say, All right, well,

01:36:42 ◼   ► apparently there is still a market for game only devices. We

01:36:46 ◼   ► don't know how long that market's gonna be around. But

01:36:47 ◼   ► nobody knows around but like, it hasn't gone away.

01:36:49 ◼   ► Let me let me revise and say, for ones that you plug into your

01:36:53 ◼   ► TV, in your home entertainment system, non portable ones, non

01:36:58 ◼   ► mobile ones. Let me say I don't know. And I'll let me plead

01:37:02 ◼   ► ignorance and say that I'm so far out of it that I really

01:37:05 ◼   ► don't know. But maybe because I can imagine that as you know, as

01:37:09 ◼   ► computing power grows, you could do more and more amazing stuff. And that one that's primarily

01:37:14 ◼   ► centered on games will remain unbeatable. And that people have historically, consumers

01:37:20 ◼   ► have historically been willing to plug numerous things into their TV. There's a limit. And

01:37:25 ◼   ► people get annoyed when you reach a certain limit. But people have, you know, for decades

01:37:30 ◼   ► now have had like a cable box and a DVD player and a game machine, you know, and or, you

01:37:37 ◼   ► some kind of a streaming box like an Apple TV or a rock you or something like that. So there's

01:37:41 ◼   ► a history of that and TVs are made for it with multiple HDMI ports. And it's not that painful

01:37:47 ◼   ► to have one more box plugged in. And so I'll say maybe if not probably plugged into the TV. But

01:37:52 ◼   ► for mobile for handheld devices, I think the answer is no.

01:37:57 ◼   ► Well, I think the question is, like, I don't think you can separate those two because you're saying

01:38:04 ◼   ► there is a market attached to your TV and there isn't for handheld, if what you say

01:38:09 ◼   ► about handheld is true, there's no reason that that same technology couldn't come and

01:38:14 ◼   ► displace the television attached one. You know what I mean? Because we're already at

01:38:18 ◼   ► the point where the high-end iPad has previous generation game console caliber power close

01:38:23 ◼   ► to it anyway.

01:38:24 ◼   ► Right, because the iPad, as small as it is physically, has more pixels than your TV.

01:38:28 ◼   ► Oh, yeah, no, but even just the GPU itself, just like if you had it run 1080p, if what

01:38:33 ◼   ► say is true and that the market for handheld gaming only hardware doesn't exist, then I

01:38:38 ◼   ► think that the power we already have in our phones, like it's only, it's a short distance

01:38:42 ◼   ► to say that why can't something similarly small and portable also be your television

01:38:47 ◼   ► gaming device, or in addition be your television gaming device? Like, I don't know if you could

01:38:53 ◼   ► separate them, because like, the only difference between handheld and attached to your TV is

01:38:57 ◼   ► one of like time. It's like the technology that used to be required a big box attached

01:39:01 ◼   ► television with the fan now can fit in your phone and that just that will just

01:39:05 ◼   ► continue apace right that's why I think the key question is is there a market

01:39:09 ◼   ► for any kind of game only a game mostly device and I think for now for this

01:39:14 ◼   ► generation I predict that the Xbox one and ps4 will sell in reasonable numbers

01:39:19 ◼   ► the time of the game only a game mostly device is not over and the reason I

01:39:23 ◼   ► think this is an extremely relevant question for Nintendo is because I don't

01:39:27 ◼   ► think Nintendo has what it takes to feel the device that is not a game only a

01:39:30 ◼   ► game mostly device. They can't make a personal computing platform. They can't make an app

01:39:34 ◼   ► platform. They're not going to compete with Android. They're not going to compete with

01:39:38 ◼   ► iOS or even Windows Mobile. I don't think the company has it in them to sell a device

01:39:42 ◼   ► that's a general purpose. Because again, like we said, who makes a software platform? How

01:39:47 ◼   ► often does that even happen that you make a successful platform? That is not what Nintendo

01:39:51 ◼   ► is designed to do. They can't compete in that market. If that's where the market is going,

01:39:55 ◼   ► that is more or less the end of the line for Nintendo as we know it as a company, and they

01:39:59 ◼   ► could go on and become just a software company, do all the things you talked about or whatever,

01:40:03 ◼   ► but that is the line that I would draw. And I don't think that right now is that line.

01:40:07 ◼   ► I don't think that you can say that, nope, that time is over. There's no more market

01:40:11 ◼   ► for game only devices. Nintendo, your only choice is to become a different kind of company.

01:40:15 ◼   ► And that's where I part ways with your suggested solution of them trying out an iOS game.

01:40:21 ◼   ► I see it mostly, I don't see that. You might be right though about the fact that if anything

01:40:26 ◼   ► is going to end the demand for console.

01:40:33 ◼   ► Is console the right word for the ones you plug in?

01:40:35 ◼   ► Yeah.

01:40:36 ◼   ► All right.

01:40:36 ◼   ► Right.

01:40:37 ◼   ► But the distinction I'm drawing is game only hardware.

01:40:39 ◼   ► You buy it to play games and stream video.

01:40:42 ◼   ► You don't run apps.

01:40:45 ◼   ► The problem I see for them is more specific.

01:40:49 ◼   ► I see it more clearly.

01:40:50 ◼   ► And it is in a lot of ways-- and it

01:40:52 ◼   ► was hard for me to write the article

01:40:53 ◼   ► because I didn't want to just say I have a gut feeling.

01:40:55 ◼   ► and I tried to justify it as logically as I could,

01:40:58 ◼   ► and I stand behind it.

01:40:59 ◼   ► But to me, I see it, and I certainly

01:41:01 ◼   ► feel it more viscerally with the handhelds,

01:41:06 ◼   ► with the 3DS versus iPhones and Android phones.

01:41:12 ◼   ► And number one, I don't think they could even

01:41:15 ◼   ► make an iPod Touch caliber device.

01:41:18 ◼   ► And if they did, I don't think that they could make it

01:41:21 ◼   ► at a cheap enough price.

01:41:23 ◼   ► And they're competing.

01:41:24 ◼   ► And this is the part where they're almost screwed and it's not even fair, which is that

01:41:28 ◼   ► they're competing against the iPhone and Galaxies and other high-end Android phones, which are

01:41:35 ◼   ► subsidized in so many markets around the world. And, you know, complain all you want about

01:41:41 ◼   ► how subsidized phones, you still end up paying as much or more over the long run. The fact

01:41:45 ◼   ► is most people think a brand new iPhone 5 costs $199. And it, you know, it doesn't actually.

01:41:53 ◼   ► But how can they compete with that when it's in fact a $700 gadget?

01:41:59 ◼   ► I think you're off on this comparison as well because it gets back to the RIM thing where

01:42:04 ◼   ► you were saying that RIM was sticking with the hardware keyboard and making the crap

01:42:09 ◼   ► your hardware and they just couldn't compete, which was true in the smartphone space.

01:42:13 ◼   ► But the key difference between what you're describing and what happened with RIM and

01:42:18 ◼   ► is that right now, like you said,

01:42:20 ◼   ► Nintendo can't make an iPhone-caliber piece of hardware.

01:42:25 ◼   ► When RIM was circling the drain,

01:42:30 ◼   ► the devices they were putting out gave inferior experiences.

01:42:34 ◼   ► If you bought an iPhone and you bought whatever thing

01:42:36 ◼   ► RIM was promoting as their top-of-the-line touch-type thing,

01:42:39 ◼   ► the iPhone was better to use.

01:42:41 ◼   ► It was nicer, you had access to better apps,

01:42:43 ◼   ► they were more fun to use, it was easier,

01:42:45 ◼   ► everything about it was better.

01:42:47 ◼   ► If you give a kid an iPod Touch and a significantly cheaper

01:42:53 ◼   ► Nintendo 2DS, the Nintendo 2DS delivers a far superior gaming

01:42:57 ◼   ► experience than the iPod Touch.

01:43:01 ◼   ► I kind of disagree with that.

01:43:02 ◼   ► Totally superior gaming experience

01:43:04 ◼   ► for all but the very, very most casual games-- Angry Birds,

01:43:09 ◼   ► Cutthroat, stuff like that.

01:43:12 ◼   ► The Nintendo handheld is more valuable.

01:43:15 ◼   ► That's why the games can command a higher price,

01:43:17 ◼   ► because they're more valuable.

01:43:18 ◼   ► The people who really, really love games

01:43:21 ◼   ► love the Nintendo handhelds.

01:43:23 ◼   ► To the degree you like games,

01:43:24 ◼   ► you would like the Nintendo handheld

01:43:26 ◼   ► better than an iPod touch.

01:43:27 ◼   ► And in the same way, the people who are gaga for smartphones

01:43:30 ◼   ► and love smartphones love the iPhone.

01:43:32 ◼   ► They did not, you know, the rim started to look ancient.

01:43:34 ◼   ► And I think you're judging on the wrong criteria.

01:43:37 ◼   ► Like, retina screens, it's meaningless

01:43:39 ◼   ► on a Nintendo handheld.

01:43:41 ◼   ► - I'm gonna disagree with you there.

01:43:44 ◼   ► - Because they're not displaying text.

01:43:45 ◼   ► It's not just playing apps, right?

01:43:50 ◼   ► And it's not-- it's definitely not better at all things.

01:43:52 ◼   ► And like I wrote, there's certainly

01:43:54 ◼   ► some games where you want a D-pad and buttons.

01:43:56 ◼   ► No doubt about it.

01:43:57 ◼   ► And those are traditionally Nintendo's bread and butter

01:44:00 ◼   ► games, because they've built the game specifically

01:44:02 ◼   ► for the hardware.

01:44:04 ◼   ► And again, I'm not advising that they just

01:44:06 ◼   ► take the existing games and put a virtual D-pad on iOS

01:44:10 ◼   ► and call it a day.

01:44:11 ◼   ► I think if they're going to do it,

01:44:12 ◼   ► They've got to make games that are meant to be run on iOS.

01:44:16 ◼   ► But the same -- there was a few things, though, that BlackBerry was and maybe even today is

01:44:21 ◼   ► still better at than iOS.

01:44:23 ◼   ► There are very few, but it's specific to messaging, like going through email.

01:44:27 ◼   ► And I remember one time years ago -- I don't know, it was probably back in 2008, and I

01:44:31 ◼   ► think it was one of the reasons that it was sort of grist for my "Why RIM is screwed"

01:44:37 ◼   ► post.

01:44:38 ◼   ► I remember getting picked up at the airport in San Francisco with my friend Jason Hoffman,

01:44:46 ◼   ► who I used to work at. He's still there, but at Joyent. And it was like by coincidence,

01:44:53 ◼   ► like we were both—I think so. I might be misremembering the details. But I was in San

01:44:56 ◼   ► Francisco probably for an Apple event, and he was arriving from somewhere, and a mutual

01:45:00 ◼   ► friend picked us both up. And I was in a car with him. And he was one of those guys who

01:45:05 ◼   ► at the time had a Blackberry and an iPhone. And I was a little surprised by that because

01:45:09 ◼   ► I knew, you know, I used an iPhone for most things. And he used the Blackberry just for

01:45:13 ◼   ► email. And I he gave me in the car like a big demo of who here's why I use and he was

01:45:18 ◼   ► so efficient. It was so amazingly quick to go message to message to message and peck

01:45:23 ◼   ► out a return that he could get through. And he had had like a long flight and it was in

01:45:28 ◼   ► the air when it was a lot harder to maybe there weren't even a Wi Fi flights at the

01:45:32 ◼   ► time but he did not want so we had like a whole days where the female and went

01:45:37 ◼   ► through them boom boom boom boom boom in a way that it would be a lot slower on

01:45:41 ◼   ► iOS and less efficient and I was a that is pretty interesting and then his

01:45:44 ◼   ► complete he is his conclusion was yet and rem is totally screwed that you know

01:45:48 ◼   ► that I bet they're out of business in two years that he used the thing and

01:45:52 ◼   ► enjoyed it but completely recognized why they were totally screwed

01:45:56 ◼   ► all the hardware software keyboard difference I think is another one

01:45:58 ◼   ► another instructor one because I think they

01:46:00 ◼   ► Although they seem similar, like, hey, Nintendo, yeah,

01:46:02 ◼   ► I know you got hardware controls now,

01:46:04 ◼   ► but that's the past come to touch games.

01:46:05 ◼   ► But it's not.

01:46:07 ◼   ► Well, the big thing with the comparison with BlackBerry,

01:46:09 ◼   ► though, is that they had the hardware for going up and down

01:46:12 ◼   ► in your messages, which is way better than any way

01:46:14 ◼   ► to get from message to message in iOS still.

01:46:17 ◼   ► Well, I was thinking more of the hardware keyboard,

01:46:19 ◼   ► because that was the thing that people were like, oh, I can't

01:46:20 ◼   ► type on that software keyboard.

01:46:22 ◼   ► But it's so different than touch controls

01:46:25 ◼   ► for gaming versus buttons and D-pads and analog sticks

01:46:28 ◼   ► and stuff.

01:46:28 ◼   ► Like with the hardware versus software keyboard,

01:46:30 ◼   ► it was the same number of buttons,

01:46:33 ◼   ► and there were advantages to the software keyboard

01:46:35 ◼   ► that the hardware one couldn't match.

01:46:36 ◼   ► Like you could reconfigure the software keyboard,

01:46:37 ◼   ► you can do predictive hit areas,

01:46:39 ◼   ► which you couldn't do with the hardware keyboard.

01:46:40 ◼   ► The buttons couldn't get bigger because it knows

01:46:42 ◼   ► that the next likely character's probably an R, right?

01:46:45 ◼   ► The software keyboard had advantages,

01:46:47 ◼   ► so it was like a superset.

01:46:48 ◼   ► It was like, you can do everything

01:46:49 ◼   ► the hardware keyboard can do.

01:46:50 ◼   ► We got all the same buttons,

01:46:51 ◼   ► and also we can do fancy things that you can't do,

01:46:53 ◼   ► and it gets out of your way when you don't want it, right?

01:46:56 ◼   ► touch versus hardware buttons on gaming devices,

01:46:59 ◼   ► touch only has an advantage in a narrow band of games

01:47:02 ◼   ► like Angry Birds or Cut the Rope

01:47:03 ◼   ► or any kind of touch type games,

01:47:05 ◼   ► but it has massive sort of exclusionary disadvantages

01:47:09 ◼   ► in different kind of games.

01:47:10 ◼   ► Like you can't make a whole class of very popular games

01:47:14 ◼   ► that people like to play if your finger is on the screen.

01:47:17 ◼   ► - True.

01:47:18 ◼   ► - And so it's like, it's not like,

01:47:21 ◼   ► oh, this is exactly the equivalent.

01:47:22 ◼   ► You've got shoulder buttons, you've got face buttons,

01:47:24 ◼   ► you've got a D-pad.

01:47:25 ◼   ► just that now they're all software.

01:47:27 ◼   ► Never mind that that would be terrible to use as well,

01:47:28 ◼   ► 'cause you know from trying to use D-pad type games.

01:47:32 ◼   ► It's not a superset.

01:47:33 ◼   ► It is really, really narrowly defining things,

01:47:35 ◼   ► and it fences you into a certain area of gaming.

01:47:38 ◼   ► The whole question is like,

01:47:39 ◼   ► all right, maybe that is the old way.

01:47:40 ◼   ► I'll know that's the old way when people stop wanting

01:47:43 ◼   ► to play games that require those controls.

01:47:44 ◼   ► So you're watching, you're watching.

01:47:46 ◼   ► Who's gonna buy these things?

01:47:47 ◼   ► Are they selling 3DSs?

01:47:48 ◼   ► Are they gonna sell 2DSs?

01:47:51 ◼   ► Are they selling game only hardware?

01:47:52 ◼   ► Are people buying consoles?

01:47:53 ◼   ► That's how you'll know when it's a problem.

01:47:56 ◼   ► Well, that's why I think it's already a problem,

01:47:58 ◼   ► that the numbers that Lucas Mathis cited in his response

01:48:01 ◼   ► to me that, hey, the 3DS is selling OK,

01:48:04 ◼   ► it was 130 months in, or weeks in, I guess weeks in,

01:48:10 ◼   ► which is a decent measure, like 2 and 1/2 years,

01:48:13 ◼   ► that the last generation DS was at 43 million,

01:48:17 ◼   ► and the 3DS is only at 33 million.

01:48:19 ◼   ► So it's 23% down generation to generation.

01:48:22 ◼   ► And it just happens to coincide with the rise

01:48:26 ◼   ► of modern smartphones.

01:48:28 ◼   ► I think that's the cause.

01:48:30 ◼   ► I don't think it's anything specific to the 3DS.

01:48:32 ◼   ► I think it's the fact that it's in the era of the smartphone.

01:48:37 ◼   ► Well, that gets back to the idea of game only hardware.

01:48:40 ◼   ► Is that something that's still going to be?

01:48:42 ◼   ► Do you still just want to buy something--

01:48:43 ◼   ► And I also know.

01:48:44 ◼   ► I know.

01:48:46 ◼   ► And we've owned a bunch of-- I've

01:48:47 ◼   ► owned Nintendo hardware, a lot of Nintendo hardware

01:48:49 ◼   ► over the years.

01:48:51 ◼   ► never been a serious game role of a man younger played a lot more but uh...

01:48:56 ◼   ► you know and i know that nintendo has a cultural explicit cultural policy of of

01:49:01 ◼   ► embracing

01:49:02 ◼   ► older

01:49:04 ◼   ► lesser

01:49:05 ◼   ► cheaper technology

01:49:07 ◼   ► you know and that the gameboy famously didn't have a color screen

01:49:11 ◼   ► uh... until years after other competing ones did outsold them all

01:49:15 ◼   ► and that you know the we famously was was

01:49:19 ◼   ► Like I wrote today, it was standard def.

01:49:21 ◼   ► I mean, for, you know, it's almost ridiculous

01:49:23 ◼   ► that it wasn't high def.

01:49:24 ◼   ► And, you know, outsold on a unit share basis

01:49:26 ◼   ► PlayStation and Xbox.

01:49:28 ◼   ► But I think the big difference

01:49:30 ◼   ► that they're facing against smartphones,

01:49:33 ◼   ► technically, is that with the smartphones,

01:49:35 ◼   ► it's about the, you're asking me to carry a second device.

01:49:40 ◼   ► That their policy of having lesser technology

01:49:43 ◼   ► worked for them when it was,

01:49:45 ◼   ► will you buy our thing that's cheaper and more fun,

01:49:48 ◼   ► even though it's less technically advanced, or the other guy's thing, which is more technically

01:49:55 ◼   ► advanced but not as fun.

01:49:57 ◼   ► I think that's going to protect them in handheld though because handheld gaming, kids don't

01:50:03 ◼   ► have smartphones. I guess at a certain age they do, maybe middle school or high school

01:50:07 ◼   ► or whatever, but younger kids still play games. That's a market that may be protected from

01:50:13 ◼   ► smartphone infiltration for a while anyway because people aren't going to give their

01:50:17 ◼   ► kids smartphone but they will give them an intended 2ds for Christmas.

01:50:20 ◼   ► Yeah, but I you know and and this is a lot of it is a very very small sample size on

01:50:24 ◼   ► scientific polling based on the fact that I have a nine year old son but he has a sample

01:50:31 ◼   ► size of one has both a 3ds and an iPhone and he does play the 3ds but he plays the iPhone

01:50:40 ◼   ► more and if it's like hey we're going out to dinner you can take something he takes

01:50:45 ◼   ► And this is not by me pushing him.

01:50:47 ◼   ► I'm certainly no-- in fact, I almost

01:50:49 ◼   ► wish he played the 3DS more.

01:50:51 ◼   ► I almost feel like maybe we haven't gotten

01:50:53 ◼   ► our money's worth out of it.

01:50:54 ◼   ► I mean, he plays it.

01:50:55 ◼   ► But it just seems to me like when push comes to shove,

01:50:58 ◼   ► he'll take the iPhone.

01:51:00 ◼   ► And it's hard.

01:51:03 ◼   ► I try to ask him about it.

01:51:04 ◼   ► And he's only nine, so it's hard for him

01:51:08 ◼   ► to explain his choices.

01:51:09 ◼   ► But definitely part of it is that when

01:51:12 ◼   ► you take your iPhone with you, you take all your games with you. And maybe none of the

01:51:16 ◼   ► games are as fun as the best game for the 3DS, but you've got them all. And you can

01:51:21 ◼   ► never lose the cartridge. He's lost one 3DS cartridge, which I think is pretty good for

01:51:27 ◼   ► a nine-year-old. But he's never lost an iOS game.

01:51:29 ◼   ► So this is like --

01:51:30 ◼   ► And if he wants to take all of his 3DS games with him, he's got to take a little, like,

01:51:34 ◼   ► a briefcase.

01:51:35 ◼   ► Yeah. So, like, Nintendo's problems, even if you assume that there is still a market

01:51:40 ◼   ► game-only devices, even if you give that as a given, because I think that is like, that's

01:51:43 ◼   ► like the red line in Nintendo's future, and probably the future of the Xbox and Playstation

01:51:48 ◼   ► as well, is, you know, game-only hardware is still a viable business, and I think currently

01:51:52 ◼   ► it still is, don't know about the future, right?

01:51:55 ◼   ► Even if you allow for that, you have to say, "Okay, Nintendo has other problems, and a

01:52:01 ◼   ► lot of those have to do with the things that iOS does better than Nintendo as a gaming

01:52:04 ◼   ► platform."

01:52:05 ◼   ► Ease of purchase and installation and the whole ownership experience, you just went

01:52:07 ◼   ► through it.

01:52:08 ◼   ► Cartridges?

01:52:09 ◼   ► Digital downloads, yes.

01:52:11 ◼   ► Nintendo's digital commerce stuff is way behind even like Steam on the PC, let alone the App

01:52:15 ◼   ► Store.

01:52:16 ◼   ► It's so much easier to deal with games in the App Store than really any of the platforms,

01:52:22 ◼   ► Microsoft, Sony, or Nintendo.

01:52:23 ◼   ► So Apple's way ahead there, and you're seeing that factor when making choices of what device

01:52:29 ◼   ► you want to bring with you.

01:52:31 ◼   ► Nintendo is super dumb in this area.

01:52:33 ◼   ► They would tie their games to their hardware.

01:52:35 ◼   ► So, "Oh, you can do a digital download, but those are tied to your particular Wii hardware."

01:52:38 ◼   ► You get a Wii U, you got through this crazy transfer process that makes our DRM elves

01:52:42 ◼   ► happy and could screw up and do all these terrible things, right?

01:52:46 ◼   ► Sony has actually some interesting ideas about this for the PlayStation 4 where they say

01:52:50 ◼   ► all the right things.

01:52:51 ◼   ► They always say all the right things, right?

01:52:53 ◼   ► But like, yeah, we're going to have downloadable games.

01:52:55 ◼   ► They'll be downloaded day of.

01:52:56 ◼   ► You don't have to buy discs you don't want.

01:52:57 ◼   ► And they also have the interesting technology they've been touting like, say you're going

01:53:00 ◼   ► to download this gigantic game for your PlayStation.

01:53:02 ◼   ► You can start playing it even before the whole game is downloaded.

01:53:05 ◼   ► We'll tailor them so we'll immediately start streaming you like the first level so you

01:53:08 ◼   ► so you can start playing immediately.

01:53:09 ◼   ► That's something that's ahead of Apple,

01:53:11 ◼   ► if it turns out to work, right?

01:53:13 ◼   ► Because Apple, if you want some multi-gigabyte game

01:53:15 ◼   ► on your iOS device, you gotta wait for the whole game

01:53:16 ◼   ► to download before you can play it.

01:53:18 ◼   ► So Sony is at least saying the right things.

01:53:20 ◼   ► Microsoft had some really interesting ideas

01:53:22 ◼   ► about like lending games and resale.

01:53:24 ◼   ► Like you could lend the game to any person

01:53:26 ◼   ► in your family for free, like up to 10 people or whatever,

01:53:30 ◼   ► without having them rebuy it, and it would transfer.

01:53:33 ◼   ► People freaked out about that for DRM reasons,

01:53:35 ◼   ► and they did some other stupid things as well,

01:53:36 ◼   ► and they backed out a lot of decisions.

01:53:37 ◼   ► What's the joke that it should be called the new platform, the Microsoft 180?

01:53:42 ◼   ► Yeah, the Xbox 180.

01:53:44 ◼   ► They had all these grand plans, and half of them were actually really awesome, and half

01:53:47 ◼   ► of them were terrible, and they just said, "Oh, never mind, we're going to do what we

01:53:49 ◼   ► did with the 360."

01:53:50 ◼   ► Right?

01:53:51 ◼   ► And you could just take your disks back and sell them at GameStop.

01:53:53 ◼   ► Yeah, exactly.

01:53:54 ◼   ► But Nintendo is way behind there, and that, I think, is a much more pressing problem than

01:53:58 ◼   ► the things you've listed that they...

01:54:00 ◼   ► Even if you say gaming things are going to be future, you've got to get your act together.

01:54:03 ◼   ► It's got to be as easy to buy and deal with games as it is on the App Store, and it's

01:54:06 ◼   ► And it's not, and that's really going to hurt them.

01:54:08 ◼   ► And online gaming and collaboration, I don't know if Apple is ahead here, but Microsoft

01:54:13 ◼   ► certainly is in the lead with Xbox Live where you get all your friends and you can go online

01:54:16 ◼   ► and play with them.

01:54:17 ◼   ► And Sony and Nintendo both have not been doing well.

01:54:19 ◼   ► Nintendo's always been trying to be like family-friendly and stuff, but like limiting access to online

01:54:24 ◼   ► so you don't have people like cursing at you in the chat and everything.

01:54:27 ◼   ► But that's an area where they're all kind of like fumbling and are not quite up to the

01:54:31 ◼   ► standards you'd want them to be.

01:54:33 ◼   ► And the final thing is market access.

01:54:35 ◼   ► Like, it's still easier to get a game in the App Store than it is to get a game on Nintendo,

01:54:40 ◼   ► Sony, or Microsoft gaming platforms.

01:54:42 ◼   ► Those are the biggest problems facing Nintendo right now, aside from the meta question of

01:54:46 ◼   ► whether game-only products are valid.

01:54:50 ◼   ► All that stuff that iOS does better and that makes it so that people say, "Me and my buddy

01:54:54 ◼   ► are going to make an iOS game, and why aren't you making Nintendo games?"

01:54:57 ◼   ► "Oh, because that's a pain in the butt.

01:54:58 ◼   ► I don't even know how I would do that, and it's not easy to buy things there, and I could

01:55:02 ◼   ► just tell people to go on their phones and download this app."

01:55:05 ◼   ► Those are all the big problems that Nintendo has, but all the things that you listed about

01:55:11 ◼   ► the hardware and everything I think are missing the forest for the trees because, like, I

01:55:14 ◼   ► could, like, you listed resisted touch screens as a problem, like you said they're like a,

01:55:19 ◼   ► I feel like a relic for a museum.

01:55:23 ◼   ► Like, there are reasons for resisted touch screens.

01:55:26 ◼   ► Not that they're never, they're gonna have them forever, but, I mean, the first reason

01:55:30 ◼   ► is like precision, because fingers get in the way more than a stylus does, and Nintendo

01:55:37 ◼   ► had specific games in mind that it wanted you to be able to use a stylus, but that you

01:55:40 ◼   ► needed that kind of precision, like to draw the path for Link's Boomerang in one of the

01:55:42 ◼   ► Zelda games or whatever.

01:55:44 ◼   ► So you're going to have a stylus, and if you have a stylus, pressure sensitive was the

01:55:47 ◼   ► only option they had at that time.

01:55:50 ◼   ► And also, once you give someone a stylus, they're going to jab that thing to the screen

01:55:53 ◼   ► like crazy, and you cannot have someone jabbing a pointy thing into a glass screen, because

01:55:57 ◼   ► it will crack, or at the very least,

01:55:59 ◼   ► if you make it thick enough, it'll skitter off

01:56:01 ◼   ► and be unpleasant, and it won't be as nice.

01:56:03 ◼   ► So you gotta have resistive touchscreen for that.

01:56:05 ◼   ► And for the resolution, it's not a retina screen,

01:56:08 ◼   ► but the specs of Nintendo's handhelds, anyway,

01:56:12 ◼   ► are pretty easily explained by their focus

01:56:14 ◼   ► is gaming-only machines, so you don't have to show text

01:56:17 ◼   ► or beautiful things like retina graphics or whatever,

01:56:19 ◼   ► and the price.

01:56:20 ◼   ► 'Cause super high-res has diminishing returns

01:56:22 ◼   ► in terms of fun factor over a certain res.

01:56:24 ◼   ► You do not need 300 dpi for your 3d graphics game. You won't even notice that it'll just be it's just a it's completely

01:56:30 ◼   ► I'll sunk you know hardware cost that you're just paying to put all those pixels out

01:56:33 ◼   ► And so Nintendo chose the balance

01:56:35 ◼   ► They let to hit like a low price point and still make a profit on their things and and I was trying to look up

01:56:41 ◼   ► Before the show like what the power specs are for like what is more powerful in terms of 3d processing power a 3ds or?

01:56:47 ◼   ► You know an iPad 4 and all I could find were specs for like the you know

01:56:52 ◼   ► the previous generation of iPad hardware and yeah, the iPad GPUs have way more fill rate because they're filling a retina screen and

01:56:58 ◼   ► Nintendo ones don't have to have that kind of power but the 3d power on those things

01:57:02 ◼   ► It's not I'm not gonna say it's impressive and I'm pretty sure they're using 64 nanometer chips in there

01:57:06 ◼   ► Which is insane because Apple's like using 32 and soon to be 28 I think and you know state-of-the-art is like 22, right?

01:57:12 ◼   ► So it is you're right. It is older technology, but that their focus is so much on like durability

01:57:18 ◼   ► Price, you know accessibility to young people as a product for the handhelds very specifically

01:57:24 ◼   ► That I can justify every one of their decisions that they made and I think like I predicted them on ATP that the 2ds is

01:57:31 ◼   ► Not doomed in the market like it's not it's not crazy to think that when Pokemon xy come out that a bunch of parents are

01:57:38 ◼   ► Gonna buy their kids this thing is it's the cheapest way to get this game

01:57:40 ◼   ► And I remember you on the site also were I think it was you was poo-pooing it like oh, it's only $40 cheaper

01:57:46 ◼   ► Yeah, like it doesn't seem like a lot well. What if I told you that you had to take you know the the iPhone

01:57:53 ◼   ► 5 and shave $40 off the price