The Talk Show

109: ‘How Many Keys?’ With Guest MG Siegler


00:00:00   Hey john mg. Seaguller. How you doing?

00:00:04   Good. It's been a long time. I know months. I feel like I

00:00:09   strongly suspect, but I would never be as industrious as to

00:00:14   actually check. But I'll bet this is the longest stretch

00:00:17   you've been without being on on the show. I think so. I think

00:00:20   that's right. But you know, I live in London now, so that's

00:00:23   part of the reason. Yeah, that is. It makes it a little bit

00:00:25   harder to communicate. Yeah, it's funny because it's going

00:00:28   back to back. It's uh last episode was Ben Thompson who's in Taipei and now it's you

00:00:35   in London. So I feel like I've gone around the world.

00:00:38   You have a very international audience hopefully.

00:00:43   Yeah I don't know that it could I honestly think it I um maybe somebody in New Zealand

00:00:49   or something could be further away but that's it's about as far away as as people can get.

00:00:55   Well this is much better you know normally I have to talk to the west coast and that's

00:00:58   eight hours. And so that keeps me up, you know, 1 a.m., 2 a.m. for those types of calls.

00:01:03   Yeah, I'll bet that that's actually pretty weird because I do feel like being a lifelong

00:01:08   East Coast U.S. person, I feel like Greenwich Mean Time isn't that far away. But for someone

00:01:18   from the West Coast, it truly is. It's an entire eight hours.

00:01:22   Yeah. We'll see how I'm going to watch the Super Bowl. I think it starts at like

00:01:27   1230 or so maybe 1130 p.m. and then it's gonna go obviously till like 2 30 a.m.

00:01:34   obviously they have a lot of different bars and stuff set up over here to show

00:01:38   it but it will be weird because it's in it's in Arizona right so is that West

00:01:42   or is that it's either Western Mountain time but yeah Arizona is definitely West

00:01:47   Coast time okay I think definitely but isn't Arizona one of the no or is it New

00:01:53   Mexico. That's like one of the like a holdout on. Yeah, one of those does not do it. And

00:01:58   then Vegas does it weirdly like they sometimes are on one time zone, sometimes on another

00:02:03   or something like that. Yeah, well, they legislate it in Vegas that there's no clocks anywhere.

00:02:09   Like a lot of you have to like hide your watch when you get to the airport there. They'll

00:02:12   confiscate it. That's right.

00:02:17   So the big news this week, I feel like we have to talk about it. I can't skip it, is

00:02:23   is the quarterly results from Apple.

00:02:26   - Yes, how do you miss that?

00:02:29   - And it's like, I know I'm not a finance blogger.

00:02:33   I try not to overemphasize it, but I feel like in this case,

00:02:37   it's so outlandishly exceptional that you can't help

00:02:42   but talk about it and write about it

00:02:44   and make links to it and stuff like that.

00:02:47   - Yeah, it's insane.

00:02:47   I remember, I guess it was a couple years ago probably

00:02:51   when I was obviously still with,

00:02:53   maybe it was three years ago then

00:02:54   when I was still with TechCrunch,

00:02:55   and I was obviously doing a lot of the coverage

00:02:59   of the Apple earnings, and each subsequent year

00:03:03   they would go up and up and up,

00:03:04   and one of the years it was like insane.

00:03:07   It was like they made $13 billion in profit

00:03:09   in the holiday quarter,

00:03:10   so it was either two or three years ago,

00:03:12   and it seemed like a time like wow,

00:03:15   I mean that's amazing.

00:03:16   It's sort of in that time when the margins

00:03:20   were still very, very high, and then everyone was thinking

00:03:24   that they were gonna start coming down

00:03:25   because of different products that were coming out

00:03:27   in the future, iPad and whatnot,

00:03:29   and so it seemed like the 13 billion

00:03:31   might be a high watermark, and now, you know,

00:03:34   that's just been totally obliterated by this quarter.

00:03:37   - The thing that comes to mind for me,

00:03:39   I keep thinking about it.

00:03:40   I don't know why, 'cause it's not like

00:03:43   it's a particularly even number of years,

00:03:46   but four years ago was the debut,

00:03:49   oh, I guess it was five years ago. No, so it is kind of, it's a half decade. So five years ago,

00:03:53   2010 was when the original iPad came out. And I remember there were two things about that

00:04:00   keynote that stand out to me, and it's not the iPad in particular, but it was, that was when

00:04:06   they introduced the A4 system chip. And I remember Steve Jobs being very, very proud of it.

00:04:12   And in hindsight, it wasn't that great of a chip, but I feel like the reason that he was bragging

00:04:18   about it. In hindsight was that he knew the pipeline of the A5, the A6, like what they

00:04:24   were planning to do year after year and how they were going to take control of their own silicon

00:04:28   in the years to come. And the other thing I remember, do you remember this? I think that was

00:04:33   the event. I'm like 98% sure that it was the event where he mentioned that Apple was now a $50 billion

00:04:39   a year company. Yeah, I think you're right. I do remember, I remember being at whatever event that

00:04:45   that was when he sort of highlighted that

00:04:47   for the first time, I do remember that.

00:04:49   - Right, and he said almost the same thing

00:04:51   that I said here, is we don't wanna talk,

00:04:53   we have all sorts of products to talk about,

00:04:55   but I just wanna take a moment and just mark this,

00:04:58   that we're now, Apple is now a $50 billion a year company.

00:05:01   And sort of saying, that's the big boys' club

00:05:06   in Silicon Valley, $50 billion a year in revenue.

00:05:10   And they did 74 billion in revenue in a quarter.

00:05:15   (laughing)

00:05:16   - It's insane.

00:05:17   - Five years later, right?

00:05:19   Like, and it really was worth marking.

00:05:20   It really was remarkable, like five years ago

00:05:23   that Apple was doing 50 billion a year in revenue.

00:05:26   Like, that's a huge number.

00:05:27   It's a ton of money.

00:05:29   It's way more than Apple did, you know, for decades,

00:05:33   or ever, really, until then, ever.

00:05:35   And all of a sudden, that's, you know,

00:05:38   two thirds of one quarter.

00:05:40   I mean, what are they going to hit this year?

00:05:41   So everyone's obviously talking about,

00:05:43   in terms of earnings, in terms of profit,

00:05:45   they're actually, you know, they set the record.

00:05:47   They eclipsed all those oil companies,

00:05:49   including the Russian state oil company, you know,

00:05:51   in terms of the amount of profit they're making.

00:05:53   But they're also very much on track,

00:05:56   this being, you know, technically the fiscal quarter one.

00:05:59   They're very much on track to break

00:06:01   the all-time yearly record for that,

00:06:03   which is also held by all the oil companies.

00:06:05   There's an outlier, the Fannie Mae outlier thing,

00:06:08   which is on the Wikipedia page,

00:06:09   but that's with the government bailout and everything.

00:06:12   It's sort of not a fair comparison.

00:06:15   So they're probably gonna set that record.

00:06:17   And in terms of, yeah, revenue, yearly revenues,

00:06:19   what's it gonna be this year?

00:06:20   200 billion, something like that?

00:06:22   Obviously this is the big quarter,

00:06:24   but then next quarter should be pretty big,

00:06:26   then it goes down a little bit,

00:06:27   and then it will spike up again,

00:06:28   sort of with back to school sales and everything like that.

00:06:31   I assume 200 billion, something like that?

00:06:34   - That seems within reach, definitely,

00:06:38   'cause what, 40, 40, 40, you know, gets you pretty close.

00:06:42   - Yeah, that's so crazy.

00:06:44   And you know, remember, I guess it was a couple years ago,

00:06:49   I was also covering this, you know,

00:06:51   talking about Apple's market cap,

00:06:53   which you can also make an argument, you know,

00:06:55   isn't really, it's sort of symbolic

00:06:58   more than it's really meaningful

00:06:59   what market cap actually means,

00:07:01   and you know, people always argue about that.

00:07:03   It was a big deal when Apple, of course, passed Microsoft,

00:07:05   which was, I don't even know now, four years ago,

00:07:08   or maybe longer than that.

00:07:10   And then Apple was chasing Exxon for a long time.

00:07:12   And at one point, I remember they were something like $200

00:07:14   billion behind in market cap.

00:07:16   And it just seemed like impossible

00:07:17   that they would ever get there.

00:07:18   And now there's something-- they're over $200 billion

00:07:21   ahead of Exxon now.

00:07:22   They might be $300 billion ahead.

00:07:25   And obviously, Exxon's depressed because of the oil situation

00:07:28   going on, their stock is.

00:07:30   But it's incredible.

00:07:32   I think someone has been tweeting today and showcasing this,

00:07:37   that I think Apple's market cap is now just about

00:07:41   the exact same as Google and Microsoft's combined.

00:07:44   - That's insane.

00:07:45   Somebody tweeted, I saw yesterday,

00:07:48   this we're recording on Friday, January 30th.

00:07:50   So yesterday, I think at the close of market,

00:07:52   that Apple closed with, when the market's closed,

00:07:59   had exactly double the market cap of Google.

00:08:02   - Yeah, that's right. - So I guess that would

00:08:03   make sense 'cause Google's ahead of Microsoft now.

00:08:05   - And they're almost neck and neck.

00:08:06   They're like very close to one another.

00:08:08   So yeah, that's right.

00:08:10   - I mean, it's almost uncanny how close

00:08:12   to exactly double it was, which is,

00:08:15   - Yeah. - I mean, again, it's,

00:08:17   you know, in years past and probably years future,

00:08:25   when Apple's stock is down,

00:08:28   for reasons good or reasons nonsensical.

00:08:31   Like you said, it's not proof of anything.

00:08:34   It's not like market cap is an infallible measure,

00:08:38   but it's at least a measure

00:08:41   of what people think of the company.

00:08:43   - Yeah, and I mean, right now,

00:08:44   the craziest thing of all this is

00:08:46   you could make a very good argument

00:08:47   that Apple is undervalued on the stock market.

00:08:50   They're trading at multiples that are way below

00:08:53   what some of their peers are trading at,

00:08:54   given the numbers they just released. I mean, it's not so insane anymore to think that they could be the first trillion dollar company if they're able to sort of, I mean, we could talk about what it would take. It would take continuing to grow iPhone and I think we all agree now, you know, they can continue to do that. They don't have a massive market share still. So there's room for growth.

00:09:20   and then China, I think is the big sort of factor in that.

00:09:25   And if they can keep doing that and if the stock market overall keeps sort of going

00:09:30   up and there's no, you know, assurances of that, of course, it's possible.

00:09:35   It's crazy, but it's possible.

00:09:37   So the, I don't know if elephant in the room is the right analogy, but it's,

00:09:46   it's clearly largely almost two thirds three course three quarters driven by iPhone like iPhone

00:09:53   has become an enormous chunk of Apple's business the Mac is historically at an all-time high but

00:10:01   still that's you know that's an established market and it's you know four million five million units

00:10:07   a quarter iPad is down which is weird it's not collapsing you know I saw somebody call it gloomy

00:10:14   It's not gloomy. I mean, they sold 21 million iPads last quarter. It's just weird, though,

00:10:19   compared to iPhone because it's down 20 percent year over year. But iPhone is up enormously.

00:10:27   It's almost unbelievable how much it's up because I think it was 51 million iPhones they sold a year

00:10:34   ago in the holiday quarter and 74 million iPhones this year.

00:10:39   Yeah, yeah, I think it's if I read the numbers right someone broke it down. Maybe it's from her

00:10:44   I think they're at 69% the iPhone is 69% of Apple's business now

00:10:50   not sure if that's revenue or profit, but you know it's about it's it's roughly probably both and

00:10:55   It's probably higher actually for profit, but that's crazy

00:10:59   But you're right if you were just if you were to take of course the iPhone business away from Apple

00:11:07   They would still be near the top if not at the top of the biggest sort of business in

00:11:14   terms of revenue and then all of those other businesses, both the Mac, the iPad and even

00:11:20   in, you know, increasingly iTunes and the app store now are becoming the if you broke

00:11:25   those out, they would each like probably be Fortune 500 companies in their own right when

00:11:30   you think about it, which is crazy, right?

00:11:32   Because the store, you know, the iTunes store, whatever you want to call it, iTunes plus

00:11:36   App Store is some some number of billion a quarter now right yeah it's it just

00:11:43   keeps going up and remember they used to say specifically about the App Store

00:11:48   that you know it's it's basically they didn't use the word sort of loss leader

00:11:52   but they just said they run it sort of break even right and then they you know

00:11:57   it's it the whole thought was that it was just out there to sell sell devices

00:12:00   which of course you could still make the argument that's that's probably the

00:12:03   biggest part of it, but they're starting to make a lot of real meaningful money from that store.

00:12:07   Yeah, and I think it's always been the case, and this is from years ago when it was the numbers

00:12:13   were much smaller, where a lot of what they made was from the float where they collect the money,

00:12:19   and it doesn't, you know, they can do stuff with the money, you know, just, you know,

00:12:24   they hold it for a little bit, and while they're holding it, they can, you know,

00:12:28   do financial guy things with money.

00:12:33   Yeah, and make a little bit of money while you hold it.

00:12:36   Like, as that money passes through their fingers,

00:12:38   it's good for them because they don't immediately pass it on

00:12:43   to who they're paying out.

00:12:45   - Right, they get a little bit of what makes Amazon Amazon,

00:12:48   sort of that aspect of the business.

00:12:50   - Right, and anybody who's a developer knows

00:12:52   you don't get paid by Apple until the end of the quarter

00:12:54   or the end of the month.

00:12:56   They hold the money.

00:12:57   like you get paid every day as people buy your app,

00:13:00   you wait and then two weeks after the month is over,

00:13:04   you get your check from them.

00:13:05   In the meantime, they're holding that money

00:13:07   and making money on it.

00:13:09   And now that it's enormous sums of money,

00:13:12   it's even more so.

00:13:13   - Yeah.

00:13:14   What do you think about the notion of,

00:13:19   correct me if I'm wrong, but they,

00:13:21   when the Apple Watch is released,

00:13:22   so they announced, of course,

00:13:23   it's gonna be shipping in April,

00:13:25   when it's released, they're not breaking that out

00:13:28   as a separate entity, right?

00:13:30   That's gonna be roped in under something else,

00:13:33   I'm not sure what, other services or something,

00:13:36   but they're not gonna break that out in terms of sales,

00:13:38   at least to begin with, correct?

00:13:39   Is that what they said?

00:13:40   - That's what they've said.

00:13:41   - Yeah.

00:13:42   - And everybody's gonna try to backwards engineer it,

00:13:44   clearly, from the, you know, whatever,

00:13:47   wherever it is that they report it under.

00:13:49   - Right, I think that's, it's sort of interesting

00:13:52   to think about it because, so,

00:13:54   I know you and I know I and many others have long railed against Amazon for sort of not

00:14:00   being transparent with their numbers, whereas Apple is.

00:14:03   We still have no idea how many Kindles have ever been sold.

00:14:06   I think with this most recent quarter, which Amazon had, there was some hint that you could

00:14:11   finally back into it in a way, but they still have never come out and directly said what

00:14:16   the number is.

00:14:19   They also announced that this quarter, the coming quarter, that they will finally be

00:14:23   breaking out AWS, their cloud services infrastructure, they'll be breaking out that revenue as a separate

00:14:30   business and so they'll be reporting on that.

00:14:33   And I think that that's smart the way that they've done it.

00:14:36   Well it has been annoying for anyone who's trying to get some idea of what Amazon is

00:14:41   actually selling, if anything.

00:14:43   Obviously they're selling candles, but fire phones and those types of things.

00:14:48   But I would imagine that Apple is first putting the Apple Watch under sort of this same type

00:14:53   of thing that Apple TV is under.

00:14:56   Though they do announce the Apple TV numbers.

00:14:58   They just announced whatever it was, five million sold recently and I think it's 25

00:15:03   million total or something like that.

00:15:07   But I would imagine that they'll keep sort of Apple Watch under wraps until there's something

00:15:11   more substantial to talk about if there ever is, sort of like what Amazon has done with

00:15:16   AWS where they wrote that into something else.

00:15:18   And now that it's substantial,

00:15:19   they're gonna break it out and actually talk about it.

00:15:22   - Yeah, I don't know, you know,

00:15:24   for the reputation that Apple has, you know,

00:15:26   well-deserved, I guess, as being secretive and relatively,

00:15:31   they don't like to explain themselves, you know,

00:15:33   they, here's our products and that's it.

00:15:35   And they don't like to talk about what they do.

00:15:37   - Right.

00:15:38   - They're very forthcoming and have been in the whole,

00:15:42   you know, modern era of Apple,

00:15:44   very forthcoming in their financial reporting.

00:15:48   - Yeah, and so, you know, now that I think about it,

00:15:51   I can't imagine that we're going to get

00:15:53   an Apple Watch launch without a weekend,

00:15:57   end of weekend sort of report as to how many units

00:16:00   were shipped, or sorry, were actually sold.

00:16:03   Unless it's, I don't know, I can't imagine

00:16:07   that they don't do that, right?

00:16:09   - I guess, it just seems weird, you know.

00:16:12   I understand it's almost not surprising

00:16:14   because they're secretive and I feel especially

00:16:18   the mix of, you know, for, you know, they don't,

00:16:21   and they don't, one thing they don't reveal

00:16:23   and have never revealed is the mix of iPhones.

00:16:26   So they don't say how many iPhone 6s were sold,

00:16:29   how many 6+, how many 5Cs, how many 5Ss.

00:16:33   They've never revealed that.

00:16:34   You can kind of get it a little bit

00:16:38   'cause they do reveal their average selling price.

00:16:40   and so you can kind of create a formula

00:16:43   that estimates it based on the prices that they have.

00:16:46   But the watch, everybody expects that the watch

00:16:49   is gonna have an incredibly wide variance in price,

00:16:53   going from the sport model at 350

00:16:56   to however much the gold one's gonna cost.

00:16:59   But most people, including me,

00:17:00   think it's gonna cost at least a couple thousand dollars.

00:17:03   So the mix on that is going to be way more,

00:17:08   way bigger divide than any other product in Apple's business.

00:17:14   Yeah, and I wonder if that sort of plays into the notion of why they wouldn't break out the

00:17:18   Apple Watch 2, because it will be, because of the widespread of prices, it would be sort of

00:17:25   maybe easier, maybe not, but to know, "Boy, they must be selling a lot of the gold version,

00:17:30   because look at these numbers," or, "Boy, they must be selling basically no gold versions,

00:17:34   because here's sort of..." Right, because if the average selling price is

00:17:38   $450 or something like that.

00:17:40   - That's right.

00:17:41   - Yeah, I don't know.

00:17:42   I'm not quite sure.

00:17:43   And who knows, maybe once the business settles down,

00:17:46   they will report it,

00:17:47   and it's just that they don't know what to expect.

00:17:49   I, you know, it's like new territory, so I don't know.

00:17:53   - So one other notion about the watch

00:17:57   that sort of has been interesting to think about

00:18:00   in recent weeks sort of leading up.

00:18:02   So, well, two things.

00:18:03   First, do you think,

00:18:05   are they gonna do some sort of other event before April

00:18:08   to more sort of put it out there

00:18:13   in front of the world one more time

00:18:15   with a proper unveiling with all functionality

00:18:19   that it's gonna ship with working?

00:18:23   - My assumption all along has been yes,

00:18:25   but now that it's getting close

00:18:29   and I'm starting to make plans for the next couple of months

00:18:34   and there's a couple conferences

00:18:37   that I might go to and I'm thinking like, hey,

00:18:39   which of these things should I maybe not do

00:18:42   because I should keep my schedule open?

00:18:44   I'm starting to wonder.

00:18:47   I've always thought that yes, they are going to,

00:18:50   'cause I think that they have to show

00:18:52   more of the functionality.

00:18:53   I think they have to reveal more of what the watch does

00:18:57   with the first-party software.

00:18:59   In other words, right out of the box,

00:19:01   the stuff that's in there.

00:19:02   And how better to do it than at an event.

00:19:06   But I kind of also feel like they can't do it

00:19:08   if they don't have anything else to show.

00:19:10   - I think you're right.

00:19:13   And I think I could, so I know now

00:19:16   that they are definitely working with some other people,

00:19:20   some third parties who you would imagine

00:19:21   that they would be working with already

00:19:23   to sort of get things ready to go for launch.

00:19:25   And so that definitely points to, you know,

00:19:29   a potential other events and unveiling

00:19:32   where they have a few of the major players up on stage sort of showing off what the third party can

00:19:39   do with this thing. Right. And I feel like there's like three levels. There's A, the first party

00:19:45   software, what the watch does right out of the box. There's the SDK that they've already revealed,

00:19:51   which is somewhat limited. It's the whole thing where you have to have an iPhone app,

00:19:56   and it's iPhone apps more or less projecting notifications to the watch.

00:20:01   And they even say, I mean, this and this is totally like new open Apple, you know,

00:20:09   Tim Cook, you know, era, where they even said when they revealed this initial third party SDK,

00:20:16   that a full SDK with native apps will be coming later in 2015.

00:20:20   Ted Kinsley Right.

00:20:21   John Green So it's not native apps that the software doesn't run on a watch the software

00:20:25   with the current SDK runs on the phone and just sort of projects a UI on the watch.

00:20:31   You can just send a notification.

00:20:32   Jared Ranerelle Right. They're almost like

00:20:33   widgets, I guess, in a way. It's like a small – it's going to be packed into the iPhone app.

00:20:38   So…

00:20:38   Darrell Bock Yeah. I feel like it's almost

00:20:41   new territory. The closest thing, though, would be something like – to call it something like a widget,

00:20:46   like a widget that you project. But then I feel like there's got to be a little – not got to

00:20:51   be, but almost certainly going to be a little bit more sort of blessed partner third parties

00:20:58   who are working with Apple and will have things that aren't in that public SDK,

00:21:06   but are a little bit more like if you are inside, if you've been embraced by Apple, if they've asked

00:21:12   you to send a guy or a team to spend three weeks in Cupertino, that you're going to have a little

00:21:18   bit more tighter integration with the watch, just to demonstrate it.

00:21:21   **Matt Stauffer** Right. And I haven't looked at the SDK,

00:21:23   nor if I did, what I really have a great understanding of it, but like something like

00:21:28   having access to the music that you can store on the watch. Like, is that available to third parties?

00:21:32   Or is it only available to Apple? Okay.

00:21:34   **Ezra Klein** It's not yet. Right now, it's only available

00:21:36   to Apple, the audio playback. Marco Arment has been looking into that for the obvious reason that he

00:21:41   has a podcast app that would be perfectly suited to actually storing some audio on the watch itself.

00:21:47   So it's not there yet

00:21:49   So you could see though that would be an obvious one for like Apple to work with a trusted third party to sort of get

00:21:54   You know give them access to it. Maybe it's Spotify or or well Spotify is sort of a weird one

00:21:59   I don't know how that would work, but something like that, you know

00:22:02   We're running app if it's something fitness app that can access those

00:22:05   Yeah, and and you know

00:22:07   there were

00:22:09   like clearly before the initial

00:22:11   event they had already been talking to some people like

00:22:16   Starwoods hotels where they said like hey, you're going to be able to check into any Starwoods hotel and

00:22:22   Use your watch as your key and then you get into your room just by putting your wrist up to the door

00:22:29   Which is awesome in my opinion as somebody who very frequently loses his hotel keys

00:22:35   Yeah, I always D magnetize mine. Like when I put it I always keep them in my pocket and I have either

00:22:40   like a

00:22:43   Or I give them to my girlfriend and she puts it in her purse and she has an iPad in there and the iPad has

00:22:48   The magnetic class and it always de magnetizes the stupid key. So yes, and they they give me a hard time

00:22:54   I've done that too, but I've done it and I don't keep it in the same pocket as my phone

00:22:57   I keep it in a different pocket and it still it doesn't work. I don't know

00:23:01   I think the technology in those things is it's pretty bad

00:23:04   But I don't know and when I check into like hotels where I've you know been a frequent customer

00:23:09   They're like how many keys do you want three keys?

00:23:11   (laughing)

00:23:14   - That's right.

00:23:15   - They've got me in the file that I need extra keys.

00:23:18   So the watch, the idea that you'll be able to do it,

00:23:20   but that's clearly something that if they're gonna announce

00:23:22   it at the event, they would have partners lined up

00:23:24   in advance.

00:23:25   - And do you think that also it gives them a sort of

00:23:29   a natural way to do a little bit deeper dive into Apple Pay,

00:23:33   where it's at right now, sort of the six month check in

00:23:37   or something, and then also to show it on the Apple Watch

00:23:39   actually working.

00:23:41   Obviously, that seems like it's already been

00:23:42   a pretty big success for them and will continue to be so.

00:23:46   And so that's another obvious thing that they would do

00:23:48   at such an event, I would imagine.

00:23:50   - Yeah, I think, and it's,

00:23:52   Apple Pay is sort of an interesting thing for Apple,

00:23:56   to me, in terms of how much emphasis they're putting on it.

00:23:59   And it's sort of like, to me, it's sort of like

00:24:01   what we were talking about just a couple minutes ago

00:24:03   with the App Store and iTunes Store,

00:24:05   where they're not making a ton of money on it.

00:24:08   they're only making a very fraction of a 1%

00:24:12   on each transaction.

00:24:13   It's a small amount per transaction.

00:24:16   But it's just about getting entrenched and having,

00:24:20   once you get used to it,

00:24:22   you don't wanna not have an iPhone anymore

00:24:24   because then you don't have Apple Pay

00:24:26   and it just is another way to sort of

00:24:29   sink their teeth into people's daily lives.

00:24:32   - Yeah, it's-- - You know,

00:24:33   the money isn't anything to sneeze at.

00:24:36   It's not bad. - No.

00:24:37   It's a great moat is what it starts out as.

00:24:40   And then over time, much like you said,

00:24:43   like with the App Store,

00:24:44   if they can get to a interesting sort of transaction volume,

00:24:47   which they're already well on their way to doing,

00:24:49   they're gonna be making a lot of money off of that.

00:24:51   And they can also, of course,

00:24:53   renegotiate the fees with the banking partners

00:24:57   to get a little bit more money off of it.

00:24:58   I think they have a lot of sort of wiggle room there

00:25:01   to be able to make that into a really,

00:25:04   really interesting business

00:25:06   if they can get it to a scale.

00:25:07   - Yeah, and I just firsthand,

00:25:11   a month ago I got a Moto, the latest model Moto X

00:25:17   just to sort of do the, every year or two,

00:25:21   what's it like to live with the latest and greatest Android?

00:25:24   And one of the, to me, weirdest things is,

00:25:28   and I've been trying to, when I'm using it,

00:25:31   the days I'm using it, I try, leave the iPhone at home,

00:25:34   just take the Moto X.

00:25:35   The single weirdest thing to me out of,

00:25:39   well, there's two things that are really weird.

00:25:41   One is not having iMessage is really awful

00:25:44   because there's so many people now who I,

00:25:46   'cause I don't get text messages anymore.

00:25:48   They're all iMessage.

00:25:49   So my phone is the one going off,

00:25:52   my phones and iPad are going off at home

00:25:55   with the blue messages,

00:25:57   while my Moto X, which has a different SIM card,

00:26:00   isn't getting these messages.

00:26:02   And the second one is Apple Pay.

00:26:04   Every time I go to Whole Foods with that Moto X in my pocket,

00:26:07   I take it out of my pocket and then realize,

00:26:09   oh, I actually have to go back and use my credit card.

00:26:12   It's actually become a habit where I take the phone out

00:26:15   before I even remember that, oh, I'm walking around

00:26:17   with the Moto X, I can't use it.

00:26:19   - So that's interesting for me to hear

00:26:21   because being over here right now where I am in London,

00:26:24   it's not actually live yet.

00:26:25   I think it might be testing in a few places,

00:26:27   but I haven't gone around and I haven't used it here.

00:26:30   I haven't seen it really anywhere.

00:26:31   It might be starting to roll out at a few drugstores,

00:26:34   or they may have that sort of hack thing,

00:26:36   where it will work with another NFC reader,

00:26:39   but it's not officially supported yet.

00:26:41   And so the only times that I've gotten to use it

00:26:43   had been when I'm back in San Francisco for work.

00:26:46   And so I've only gotten to use it

00:26:48   probably three times or something.

00:26:49   And it's definitely, it's all it was cracked up to be,

00:26:53   in my mind, it's just sort of a magical experience,

00:26:57   which almost seems like it's a little bit crazy

00:27:00   when you use it for the first time,

00:27:01   'cause it's like, are you sure I don't need

00:27:05   to do anything else?

00:27:06   And sort of the cashier still asks you,

00:27:08   "Yeah, I think you're good."

00:27:10   It's still that early stage period of the thing.

00:27:15   So you use it regularly, and it's good to hear

00:27:17   that it's sort of already in your daily flow.

00:27:21   Where do you go besides Whole Foods that sort of uses it?

00:27:24   There's like, I know there's Walgreens

00:27:25   and some of their bigger stores,

00:27:26   Do any smaller things use it that you regular?

00:27:30   The smallest are the cabs, the taxis in Philly that have...

00:27:35   Oh, interesting.

00:27:36   That have... And that's a perfect example of the sort of unofficial support for it,

00:27:41   where they have these... It doesn't have an Apple Pay logo. It just has a,

00:27:45   you know, "Stick your phone at the terminal" logo.

00:27:48   Right, right.

00:27:48   And it works there. And that was a total surprise to me. 'Cause I know I'd read those stories that

00:27:56   that said, you know, just about any place

00:27:58   that says you can pay by your phone, Apple Pay will work.

00:28:01   And it's, just in particular, it's so much more convenient.

00:28:07   'Cause a lot of times when I'm in a cab,

00:28:08   I've got my phone out because I'm bored

00:28:10   while I'm riding in the cab and I'm, you know, on the phone.

00:28:13   And digging your wallet out while you're in the backseat

00:28:16   of a cab is such a pain, you know,

00:28:18   it's like you're sitting there like a contortionist

00:28:21   trying to get your stuff out and you don't want.

00:28:23   And if you can just stick your phone at the thing,

00:28:26   it's super great.

00:28:28   And then it just gives you like a thing,

00:28:29   like what percent tip do you wanna give?

00:28:31   Do you wanna give 18%?

00:28:32   Yes, boom, done.

00:28:34   And then you're out of the cab.

00:28:36   - And maybe it gives cabs a fighting chance

00:28:39   against things like Uber and Lyft and whatnot.

00:28:41   'Cause I have the problem where I have multiple times,

00:28:44   sadly enough, I take Uber so much

00:28:46   that I will get out of a cab without realizing I have to pay.

00:28:49   (laughing)

00:28:50   And it's very awkward and it seems like

00:28:52   I'm sort of crazy or I don't know what, but yeah.

00:28:56   - Trying to scam them.

00:28:57   - Yeah.

00:28:58   (laughing)

00:28:59   Yeah.

00:29:00   - No, that's, you know what,

00:29:01   that's the same sort of convenience though.

00:29:03   Like Uber is to taxis what Apple Pay is to credit cards.

00:29:08   I mean, it's, you get used to that increased level

00:29:13   of convenience and you forget, you know,

00:29:15   it's hard to go back.

00:29:17   - Definitely.

00:29:19   - It's like trying to go back to, you know,

00:29:21   an outhouse after you've had indoor plumbing.

00:29:23   - That's a good analogy, I like that.

00:29:27   - Or so I would imagine.

00:29:29   - Right, right, back in the 1800s when I remember.

00:29:32   - Right, let me take a break and thank our first sponsor.

00:29:36   Our first sponsor is, once again,

00:29:38   our good friends at Fracture.

00:29:40   Their website is fractureme.com.

00:29:44   You guys know Fracture, I've talked about him before.

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00:29:57   They've got like some kind of proprietary technology.

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00:30:01   and then put them in a frame underneath glass.

00:30:04   They print them directly on the glass

00:30:06   and then they mail them back to you

00:30:08   in these really clever little cardboard kits

00:30:10   that are self-contained things

00:30:12   that you can either use as a prop stand,

00:30:15   like if you wanna put the photos on your desk

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00:30:20   they've got a thing on the back where you can put the hook,

00:30:23   but it's all self-contained.

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00:30:38   And they look awesome.

00:30:40   I say this all the time, that it's,

00:30:44   To me, it's like when they, with the iPhone 4,

00:30:47   when they first started laminating the LCD screen,

00:30:52   the LED screen to the touchscreen,

00:30:54   and it looked like the pixels were right on the glass

00:30:57   instead of under the glass.

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00:31:00   except that it's completely analog.

00:31:03   It's not a gadget.

00:31:06   But that's the equivalent for printed pictures.

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00:31:17   where he prints, he makes fracture prints,

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00:31:21   If you have apps, if you make apps,

00:31:23   make some fracture prints of your apps

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00:31:35   I can't imagine why you'd do it any other way

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00:31:41   I have them all over my house.

00:31:45   I can't even count how many fractures we've got in the house now.

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00:32:16   and use this code daringfireball when you check out and you'll save five bucks. So my thanks to

00:32:21   Fracture. What I like about their site is that they compare, they show you the sizes and the

00:32:27   comparison is always a Campbell's soup container. It's like a sort of a random but interesting way

00:32:34   to compare. Yeah, and because it's like a universal, everybody knows how big a can of soup is.

00:32:40   Yeah, I like that. Yeah. If you use a hand, I mean, some people's hands are way bigger than others.

00:32:45   Yeah, it's true. So, Apple's financial results. Two of the points that really stick out to me.

00:32:55   One is China, and it's clearly a huge source of growth. And one of the things that I've been

00:33:02   thinking about with that. And eight years into the iPhone era, in the early years, it's stuck,

00:33:11   it stood out a lot more, but it still is an issue is the carriers, the carrier support,

00:33:17   and the growth of the iPhone in the early years, I think was clearly largely constrained by the

00:33:24   number of carriers, you know, and especially around the world. I mean, it wasn't until

00:33:31   was it 2010 or 2011 when Verizon first got the iPhone?

00:33:34   Ted

00:33:57   But around the world, it was a huge issue.

00:34:01   Like, growth in Japan was clearly constrained

00:34:04   because they were only on the third biggest carrier

00:34:08   in Japan for a long time.

00:34:10   And China was a similar issue, where they weren't

00:34:15   on the biggest national carrier in China

00:34:18   until fairly recently.

00:34:20   - Yeah, I think it's almost been just about a year, right?

00:34:23   I think it's almost, it's coming up in a year

00:34:24   that China Mobile has been with them, yeah.

00:34:27   And as much as everybody, you know, and I, you know, I think the bigger screen sizes,

00:34:33   especially in Asia, I mean, Tim Cook even called it out that it definitely varies by geography,

00:34:38   how much, you know, the mix between six and six plugs, it varies around the globe. I don't think

00:34:44   it's any secret that in Asia, and China and Korea, and, you know, that in those countries,

00:34:51   that the 6 Plus is more popular than it is in other countries.

00:34:57   So the big screen size is definitely part of it.

00:34:59   But I think just the fact that it's available is almost overlooked.

00:35:04   Yeah.

00:35:05   What I find fascinating about that, at the highest level, is Apple…

00:35:14   There was definitely some questions when they were moving into the Chinese market.

00:35:16   Would they be able to compete?

00:35:18   Would they be able to succeed?

00:35:19   it's a high-end product, the difference in buying power versus the United States and

00:35:26   all that kind of stuff and subsidies and all that.

00:35:31   But now that it's clear that Apple's business is doing very well in China and growing very

00:35:36   quickly, all of the other tech companies that they're stacked up against in the United States

00:35:44   they're compared to of course. Google and Facebook and you know even Twitter and

00:35:51   some of these other things that are just hot properties right now. Most of them

00:35:55   have no business in China right? And Apple has a giant massive business that

00:36:02   a lot of their competition or what is viewed or often you know mentioned in

00:36:07   the same breath as them as their competition just doesn't really have

00:36:12   that opportunity at all. Yeah, I completely agree. And this is another case where to me,

00:36:18   Apple has been, if you're paying attention, very forthcoming about it for years now, I would say,

00:36:25   at least during the entire Tim Cook era, like since Steve Jobs stepped down as CEO and Tim Cook

00:36:34   took the reins, I feel like quarter after quarter after quarter, Tim Cook has always made mention

00:36:40   of China, even before China became, it was almost like, you know, he kept and continues to keep

00:36:47   mentioning their growth in China. And it's, you know, again, it goes against the idea that Apple

00:36:54   is super secretive. They've been very forthcoming about it. And now it's, I feel like they're at

00:36:59   the point where it's, everybody's talking about it because it's gotten to be an enormous part of

00:37:04   their business. Yeah. And I wonder if part of that is just honestly because, you know,

00:37:09   when he was still in charge of operations, he would go over there.

00:37:13   That's where all the operations were, the majority of the operations were happening.

00:37:19   While China was always interesting to people because of course there's a billion and

00:37:23   a half people there, it's the most populous country and everyone knew that it was sort

00:37:28   of coming online and becoming more prosperous and becoming more affluent.

00:37:34   Maybe his time on the ground there, he just knew no matter what, we have to figure this

00:37:38   this out and we need to do what it takes to sort of crack this market because eventually

00:37:43   we will saturate the United States market and the European market, you know, not as

00:37:48   big already and so where are we going to find that growth and they are positioned better

00:37:54   than anyone right now to be able to exploit that.

00:37:58   Yeah, the – this is right from Apple's press release on their results.

00:38:05   sales accounted for 65% of the quarters revenue. So exact almost exactly two thirds of the revenue

00:38:11   is outside the US now. And that's a big time, right? It used to be under it used to be under 50%

00:38:17   and then it was hovering around 50% and now it's two thirds or whatnot. Correct? Yeah,

00:38:23   definitely is way up and a big change. Years ago, many years, let's say back before, especially

00:38:30   before the iPhone existed, like in the first half of the last decade, the mobile market around the

00:38:37   world was very unevenly distributed, where BlackBerry had a huge share of the US and was

00:38:45   almost nonexistent elsewhere. And eventually, before BlackBerry sort of imploded, they did

00:38:51   get popular around the world. But I'm saying, you know, 10 years ago, BlackBerry was almost like a

00:38:57   US-centric phenomenon. And like Symbian was a European and Asian phenomenon and had no,

00:39:05   almost no footprint in the US. It was huge in Europe and in Asia and almost non-existent in

00:39:11   the US. There weren't any major carriers that had Symbian phones and none of the US, you know,

00:39:17   the companies that sold phones and the US carriers made Symbian phones. You know, it was weird.

00:39:24   And I always thought that Apple was a little, not quite as totally US-centric as BlackBerry

00:39:31   was then, but it was similar though, where the US was much, much stronger for Apple selling

00:39:37   computers than the rest of the world. Yeah, well, it's sort of, it's not directly comparable,

00:39:45   I guess, because obviously BlackBerry was big with business users, big in Washington,

00:39:49   big on Wall Street, but it's the market was still the more affluent market, right? And

00:39:54   so they both sort of tracked to that market for a long time.

00:39:58   Yeah.

00:39:59   And I wonder too as time goes on, I mean, you know, Apple is always going to be a US

00:40:07   company.

00:40:08   I mean, it's, you know, I would say in a grand scheme, I think famously that they're

00:40:13   rather, you know, in terms of like, you know, they have some remote employees, but in general,

00:40:19   if you work for Apple, you're working in Cupertino, if you're working on product

00:40:22   development, you know, hardware or software, they don't really have, you know, the yes,

00:40:26   They've just started a Seattle office.

00:40:28   They've had like a, I think the iWorks team

00:40:31   has been in Pittsburgh for a long time.

00:40:33   So there's some people who, and there's individuals

00:40:35   who can get an exception and work remotely,

00:40:37   but for the most part, people work there.

00:40:38   It's always gonna be a US company.

00:40:40   The culture is very California-centric.

00:40:43   I think that stamping, designed by Apple in California

00:40:49   and all their devices, is actually very honest.

00:40:52   That's who the company is.

00:40:54   But I do wonder as time goes on,

00:40:56   how much, and you know, we're spoiled.

00:41:00   Well, you're in London now, so I don't know.

00:41:02   But I mean, I've always felt like I'm spoiled

00:41:05   because everything comes out in the US on day one.

00:41:08   And I think it always will.

00:41:09   But I wonder how much, you know,

00:41:11   at what point will like China be on like

00:41:14   the day one list for iPhone?

00:41:15   Because you know, it was clearly close enough

00:41:18   that it made a big difference in the quarter, you know?

00:41:20   - Yep, I agree.

00:41:22   I mean, yeah, I think they talked about that even in the release or something, because

00:41:26   it was two weeks later or something like that that the iPhone came out in China.

00:41:29   So it wasn't day one, but it was sort of the second wave, I think.

00:41:34   And I actually think about that a lot when I was moving over here.

00:41:36   I'm like, "Oh, God, I'm going to have to wait a long time to get the new products when

00:41:42   they come out."

00:41:43   But London's now sort of day one.

00:41:45   They had the new iPads came out, the same thing.

00:41:48   You know what this reminds me of, though?

00:41:49   I think this tracks with sort of what Hollywood's going through as well, right?

00:41:55   So for a long time, movies were released first in the US and then they would go abroad over

00:42:01   a long period of time, sometimes months.

00:42:04   Now increasingly, they're tracking much closer to the US release date.

00:42:08   In some cases, they get released abroad before they get released in the US and sort of to

00:42:13   the point I think you're getting at which is in Hollywood increasingly of importance

00:42:19   is the Asian markets for making the actual money like the box office in the US is now

00:42:26   often a minority piece of the pie compared to what they make overseas.

00:42:31   And so you're starting to see movies like Transformers and things that are more catering

00:42:36   towards Asian audiences and I do wonder like when that happens with Apple, when the tip

00:42:43   happens fully that either the Asian markets or a combination of Asia and some other areas

00:42:52   around there end up being bigger than the US.

00:42:55   Do they change the company in any way to make it more focused on that region?

00:43:01   Do they do specific devices?

00:43:03   I think we talked about this way back when that in order to sell an iPhone in China,

00:43:08   they would have to do a special version of it or whatnot.

00:43:12   then the notion was always that they would never do that.

00:43:14   They would always just have sort of,

00:43:16   while they could, while they change up the technology inside

00:43:18   for the different carriers or whatever,

00:43:20   they would always, they would never stray

00:43:22   from having sort of a streamlined product line

00:43:24   that's offered around the world.

00:43:26   But does that change at all if China becomes

00:43:30   like 75% of the business, like in the future, say?

00:43:33   I don't know.

00:43:34   - I don't know either, but it's, you know,

00:43:36   the fact that it's within two weeks is remarkable.

00:43:39   And, you know, again, I think it's a combination

00:43:41   of multiple factors.

00:43:43   I think it's the fact that they're now on

00:43:46   the major carrier in China,

00:43:48   which makes a huge difference

00:43:50   in terms of how many people can get it.

00:43:51   I think the fact that China's economy is growing

00:43:55   and that there's an ever-increasing number

00:43:58   of Chinese citizens who have the kind of income

00:44:02   that they could buy an iPhone.

00:44:04   I mean, clearly a majority of people in China can't.

00:44:06   - Right. - No argument there.

00:44:09   there's a, you know, take any percentage of how many billion people there are in China and if,

00:44:16   you know, 10% or something like that is a huge number of people.

00:44:19   Brian Kardell Yeah, it's half the U.S. already.

00:44:21   That's great.

00:44:22   Darrell Bock Right. It's just enormous.

00:44:24   I think that they reported that they've, you know, they call it the brick countries, Brazil,

00:44:29   Russia, India, China, which is weird because they're all very different, but it's more or less

00:44:36   four countries with a ton of people and, you know, wide income disparity, I guess.

00:44:43   Brian Kardell Yeah.

00:44:44   But that they're doing well in all four of those countries.

00:44:46   Brian Kardell Yeah, I would, I haven't looked into it,

00:44:48   but I would imagine that so India is probably the farthest behind. That seems to be the case with,

00:44:53   you know, basically everything because they're, well, they also have a billion people there,

00:44:57   and I think they would, I think they're on pace to eventually eclipse China in terms of population.

00:45:03   but while they do have a billion people right now, well over a billion people right now,

00:45:09   the society is quite different there. And, you know, it's still, the iPhone is still viewed as

00:45:16   way out of reach for most people. Whereas in China, you know, there's a, there's,

00:45:21   as you mentioned, there's a growing segment of the population that can and is buying the iPhone

00:45:25   right now. Yeah. And I think, I think in broad strokes, that's exactly right, that India,

00:45:31   it might be growing faster population-wise, but that the economy is nowhere near as strong as

00:45:37   China's in terms of a growing, you know, Western-style middle class.

00:45:41   Pete: And that's what Xiaomi, right, is going after, right?

00:45:44   Ted, is like their big focus because they know that they have an opening there that Apple probably

00:45:50   can't go after at least any time in the next couple of years or something.

00:45:54   Trenton Larkin Right. I totally agree. And I think that they

00:45:57   have a great opportunity, but I feel like all of the and you still see it, you still see it where

00:46:03   it's, you know, when Xiaomi comes out with something and it's what does it mean for Apple? How can

00:46:07   Apple compete? It's, to me, they're a huge problem for Samsung and for all the other hand, Android

00:46:14   handset makers. And not that they're irrelevant to Apple, but it's, it's all in that segment

00:46:22   underneath what Apple is targeting.

00:46:24   - That's right.

00:46:25   I mean, just look at what has happened to Samsung.

00:46:28   They've been, while they're still making a lot of money,

00:46:31   their growth has been just totally eaten into

00:46:35   and likely by Xiaomi and Apple, of course, at the top end,

00:46:40   but they're being squeezed, not unlike Microsoft,

00:46:43   is squeezed in the US from sorta, you know,

00:46:46   the Chrome OS on the low end

00:46:47   and MacBook's still sales rising.

00:46:50   It's the same thing, just happened,

00:46:52   in a very condensed time to Samsung. It's sort of incredible how fast it happened to Samsung, but

00:46:56   they're in this precarious situation right now because of that.

00:47:00   Pete: Yeah, actually, I think Samsung revenue and profits are actually down, not just stagnant.

00:47:05   Brian

00:47:18   So, another thing about the Chinese market that you hear come up time and time again

00:47:22   is actually that the watch industry is pretty massive there.

00:47:26   As the population grows in affluence, they're sort of looking to these different traditional

00:47:31   areas of affluence like wine and watches, of course, is one.

00:47:36   And so, what does that mean for Apple Watch there?

00:47:39   And I don't know, but it could mean major things if the product is successful.

00:47:47   becomes if maybe from day one it's a bigger seller in China than it is in the US.

00:47:51   Yeah, I think so. I don't know if I've mentioned this on the show before. I saw a documentary a

00:47:57   couple months ago. It was great. It's on iTunes called Red Obsession. Have you seen this?

00:48:03   No.

00:48:03   It's about the wine industry. Great documentary. Just note the name Red Obsession, but the gist

00:48:10   of it is about how the Asian market has completely disrupted the sale and price of wine. Like,

00:48:21   they'll go in, there's Chinese buyers of wholesale wine who will go into like,

00:48:27   you know, high end French, what do you call a wine maker? Not a distillery. What's the word?

00:48:37   - Winery?

00:48:38   - Yeah, winery.

00:48:39   And just buy, they would just come in and just say,

00:48:43   "We'll buy all of it, we'll just take it all."

00:48:45   And they're like, "What?"

00:48:46   And they're like, "We'll just take all of, this is great,

00:48:49   your wine this year, this Bordeaux is fantastic,

00:48:54   just give it, just send all of it to China."

00:48:57   That's it, all of it.

00:48:58   And then there's people who are used to buying the wine

00:49:01   from this place in America and elsewhere in Europe,

00:49:05   And they're like, "What do you mean you don't have any?"

00:49:07   And they're like, "We sold it all to China."

00:49:09   That's it, it's gone.

00:49:10   - I have a first-hand account of that.

00:49:12   I was being situated in Europe now.

00:49:15   It's pretty easy to obviously get around

00:49:17   and go places like Paris.

00:49:19   I think we were in Switzerland over the summer

00:49:21   and we're in a small little vineyard place

00:49:24   in the middle of nowhere.

00:49:26   And we are there with the only other people in the room

00:49:29   is a Chinese family sort of tasting the wine.

00:49:32   and you look around and we were thinking about buying a bottle or whatever, they had so few

00:49:39   bottles that were actually earmarked that could be sold to people who walk in. So much

00:49:48   was earmarked to go to China and they even print Chinese labels and this is in the middle

00:49:51   of Switzerland and it's like this little winery we were in, they are experiencing just what

00:50:00   you're talking about where they just know that their market now is basically China is

00:50:05   a huge part of it. I don't know what the percentage was, but say it's 75% and then

00:50:09   the rest of the world is like 25%. So they store some for the rest of the world, but

00:50:13   then the most of it is just going to be sent to China.

00:50:16   Right. And extrapolate from that what happens if China, if their economy keeps growing and

00:50:23   a bigger and bigger percentage of their citizens grow into what we would consider like middle

00:50:29   or upper class incomes. And the potential for growth there is just phenomenal.

00:50:34   And so what does, so do you, I mean like the Apple Watch really could be the first product

00:50:40   that's a massive hit in China, bigger than it is in the US. And like that's weird to think about,

00:50:46   right? That there would be, it's always been that the US has sort of been the leader ahead of the

00:50:53   game, I guess, in terms of Apple and technology, and then the rest of the world sort of catches on

00:50:58   by stages and that doesn't also just mean in terms of the US being more affluent and

00:51:02   having more buying power or whatever.

00:51:06   Sometimes it's just everything from Apple releases the products here first, traditionally

00:51:13   they have, to it being sort of the benefits of scale and so everyone you know has an iPhone

00:51:20   and so you can use things like AirDrop and things like that and so it becomes, and iMessage

00:51:26   so it becomes a more compelling option. But it hasn't been that another country has really

00:51:32   taken off first. And I don't think that it's a crazy notion that Apple Watch could be one of

00:51:38   those things. Yeah, I don't think so either. And I think that the gold models, the edition level

00:51:46   plays right into that. And that's right. You know, it's totally like a feel thing, not a

00:51:56   think thing. It doesn't make logical sense, right? Logically, it makes no sense for anybody to buy

00:52:01   the gold version of the watch if the aluminum one does the exact same function at $350. But that's

00:52:08   jewelry. Jewelry is entirely a, you know, how it makes you feel type thing, not like a logical

00:52:14   thing. Nobody needs any kind of jewelry. And, you know, it's a long, you know, it's a long standing,

00:52:20   you know, it's, you know, it goes back to the beginnings of human civilization. It's, you know,

00:52:26   there's no, you can't argue with it. But I feel like in America, it's, you know, let's just say,

00:52:33   when they, when they do come out with the watch, and they announce the final pricing,

00:52:36   and let's say that the addition ones are $4,000. There's, I'm telling you, I still think even after

00:52:43   all these months of people saying, "Hey, I think these gold ones might cost thousands of dollars.

00:52:46   I think these gold ones might cost thousands of dollars." When they announce it, I'm telling you,

00:52:50   America, people are going to shit their pants. They're going to be like, "I cannot friggin'

00:52:55   believe this. They're out of—Johnny Ive has lost his frickin' mind. Why in the world is anybody

00:53:01   going to do this?" And in the meantime, people in China and Asia, other places in Asia, are going to

00:53:07   start lining up to buy them. I totally agree with you. I mean, it's because there needs to be a

00:53:15   a mindset change which only can happen sort of over time I think. Everyone, including

00:53:20   me even when I think about it, I'm viewing this as a technology product. What technology

00:53:24   product would I buy these days that costs say $4,000 or $5,000? I mean it used to be

00:53:29   televisions cost that much, now they don't anymore, they've come down in price a lot.

00:53:34   It used to be computers cost that much, now they don't anymore, they're about half that

00:53:37   price for a high-end one. And so what else is there out there in the technology world

00:53:42   that would cost that amount of money. I mean, I'm trying to think of something now and

00:53:47   I can't really come up with anything, right? So, all of a sudden this small little gadget

00:53:52   becomes the most expensive piece of technology that you can buy on the market and why on

00:53:57   earth would anyone do that when you can also get basically the same thing for $350 for

00:54:02   the sport edition or whatnot. Yeah, it's exactly what you said. The mentality has to

00:54:08   shift around it that this is actually jewelry and that's, I mean, you know, that's why Apple's doing

00:54:13   what they're doing and that's why they're hiring the people that they're hiring, obviously.

00:54:17   And there's some serious cultural differences too where, and I'm not an expert on it, I mean,

00:54:23   Ben Thompson is, he lives over there, but I mean, I know enough about Asia though to know that

00:54:27   they're culturally, their view of money is very different than us in the West. In the West,

00:54:35   not that we're ashamed of it, but it's money is considered like a private matter. You don't flaunt,

00:54:40   if you're wealthy, it's considered uncouth to flaunt it. And in Asia, that's not the case at all.

00:54:46   So like I remember specifically like when the watch was first announced, I was listening to

00:54:50   Accidental Tech Podcast and Marco Arment had just said something, something I think in reference to

00:54:56   the gold one that like if he was at WWDC next year after the watch was out, he would be embarrassed

00:55:01   to be out like, you know, having cocktails at five or six in the afternoon after WWDC and have a gold

00:55:08   watch if everybody could know it was four thousand dollars. And I know exactly what he's talking

00:55:13   about. I know, you know, I sort of feel the same way. Whereas in Asia that wouldn't, nobody would

00:55:18   ever, that nobody would ever say that. Nobody would ever say I'm embarrassed to have what

00:55:22   everybody knows is a four thousand dollar watch on my wrist. Right. Yeah, no, that's a, that's a

00:55:26   great point. I mean, and I think that's true. You see that even before the watch, like when,

00:55:31   When you buy one of the new iPhones for the first time,

00:55:35   day one, you get it.

00:55:36   And you know that plenty of people all know that this is,

00:55:41   especially, say, with the 6 Plus,

00:55:43   because it's such a different size.

00:55:44   And so everyone's looking at that like, wow,

00:55:46   that guy just dropped whatever, $700 to get that phone.

00:55:50   And I'm still stuck here with the 3GS model.

00:55:54   And one day, I hope to get that.

00:55:55   But there's already that sort of thing

00:55:59   where you're looking at this.

00:56:00   It's like, yeah, everyone's gonna know that I just spent $700

00:56:03   and it's, even though it's an awesome device

00:56:05   and I wanna use it out there,

00:56:06   it's like, should I really take this out of my pocket here

00:56:08   and sort of flaunt it in front of everyone?

00:56:11   - Yeah.

00:56:12   Let's take a break.

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00:59:14   Here's another thing about the iPhone. I want to talk to you about this,

00:59:21   because I know you've written about it. The iPhone 5C, I think, is the most misunderstood iPhone

00:59:31   that Apple's ever made. Do you think the iPhone 5C… What do you think the point of the iPhone 5C

00:59:39   So my thoughts have changed.

00:59:43   I don't know, obviously.

00:59:45   I mean, I haven't talked to anyone

00:59:46   sort of with first-hand knowledge of this,

00:59:52   of like what the point was.

00:59:54   And I don't know,

00:59:55   I don't have a good enough sense of that to know for sure.

00:59:58   But my thought process has changed over time.

01:00:00   At first, everyone was talking about it, of course,

01:00:04   is the quote-unquote cheap iPhone,

01:00:06   which ended up being incorrect.

01:00:08   And then it became sort of the first product that was launched under the unified Johnny

01:00:17   Ive design and software and hardware design at Apple.

01:00:22   So it was iOS 7 and we got the new flat design, the colorful sort of fluorescent look and

01:00:29   those phones seem to go nicely with that.

01:00:32   I still think, even I still have a blue model of the iPhone 5C that I still think is, I

01:00:42   know I'm sort of in the minority here, but I thought it was a beautiful device when paired

01:00:45   with iOS 7 at the time.

01:00:47   I don't even know if I've upgraded it to iOS 8.

01:00:49   It's sitting in a drawer somewhere obviously with iPhone 6 out now.

01:00:53   But I thought it was a beautiful device and sort of the way it played with the wallpapers

01:00:58   that they had for iOS 7, and it just seemed like it was a device that Johnny Ive wanted

01:01:03   to create to showcase the new software that he was creating for the first time.

01:01:08   Whereas the iPhone 5s was also a great design, great industrial design, but different.

01:01:17   It was sort of the extension of what they had already done before doing this new software.

01:01:22   And so that was my thought process for a while.

01:01:26   You know Apple just didn't sort of continue the line right and so now we have the six and the six plus and we have

01:01:32   No, we have three colors three sort of ten each of those but no no more colorful range anymore and

01:01:39   Now we're sort of going towards as we head towards Apple watch where that's obviously going to be the most

01:01:45   customizable Apple device that Apple's ever done

01:01:48   You know, maybe that's enough to sort of placate the people who want

01:01:52   a

01:01:54   different type of design and and I don't know what are your what are your thoughts on it?

01:01:58   I I feel like I feel like I gave myself credit for not really buying into the whole like

01:02:05   It leaked

01:02:07   Months in advance that they were doing a plastic phone and that's just inevitable

01:02:11   when you're making things in this quantity that it the news leaks from the Asian supply chain and

01:02:17   Every you know, not everybody but the the conventional wisdom was Oh apples going after cheap the cheap market

01:02:23   They're gonna sell this thing cheap, cheap, cheap, cheap.

01:02:27   And then it wasn't cheap.

01:02:28   It was unlocked.

01:02:29   It was started at like 550 bucks,

01:02:31   which is not by anybody's,

01:02:35   it's certainly cheaper than the 5S was, but it wasn't cheap.

01:02:39   And I never bought into that.

01:02:40   It never made sense to me that Apple would suddenly lurch

01:02:43   after the low end of the market and just go for market share.

01:02:47   So I gave my, patted myself on the back

01:02:49   for getting the 5C just because I didn't,

01:02:53   never bought into it being cheap.

01:02:55   But I think I missed the boat though.

01:02:56   I think just by thinking, well, it's not going to be cheap,

01:03:01   isn't enough.

01:03:02   And I almost feel like in hindsight, when it came out,

01:03:05   it wasn't even, not that they didn't wanna sell it

01:03:08   in the first year, but it almost wasn't even meant

01:03:12   for that year.

01:03:13   I think it was meant for the long haul

01:03:17   and like where it is now, like at the, you know,

01:03:20   the free with contract level of iPhone,

01:03:25   that it had the new aspect ratio for the screen.

01:03:30   It wasn't three and a half inches,

01:03:32   it was four inches and 16 by nine.

01:03:34   And the, I do think, I agree with you,

01:03:39   I think they're proud of the industrial design of it.

01:03:41   I think Apple really likes that look.

01:03:44   And I think, again, I think you're right,

01:03:46   I think it's very astute that it does seem

01:03:49   to be much more in harmony with the aesthetics

01:03:52   of iOS 7 and 8 than the aluminum phones,

01:03:56   the 5S and the 6s.

01:04:00   And I know a lot of people, not tons,

01:04:04   but I know enough who have the 5C

01:04:08   because they just like the way it looks.

01:04:11   - Right, even though it was slower,

01:04:12   even though it wasn't as fast.

01:04:14   - Yeah, that the iPhone has sort of gotten

01:04:17   the point where you know whatever the difference in performance is doesn't matter. They're not

01:04:22   waiting for anything anyway. It doesn't take any longer. You're mostly waiting for stuff to download

01:04:26   right. Instagram doesn't run slower on the 5C. It's you're just waiting for the pictures to come

01:04:31   down the pipe. Yeah, they just like the way it looks and I almost feel it was all about like

01:04:37   establishing an aesthetic that fits at the lower end of the product lineup so that they don't have

01:04:45   the free with contract phone being a premium device.

01:04:50   - Yeah, that's a really interesting thought.

01:04:52   I totally understand what you're saying there.

01:04:55   Because it's weird when you buy something brand new,

01:04:59   like say the 6 now, and then you know in two years

01:05:03   this is going to be viewed as sort of the quote unquote,

01:05:06   whether it's fair or not, the cheap version, right?

01:05:08   It's going to, not only will it,

01:05:11   we all know things degrade in value over time

01:05:13   as they're sort of used and everything,

01:05:15   But it's weird, the notion that as soon as you buy it,

01:05:19   you know that in two years this will be on, you know,

01:05:22   sort of Verizon ad spreads saying like, free,

01:05:27   and this is the cheap version now.

01:05:30   And so if Apple can get around that by creating a product

01:05:34   that's sort of separate from the high end to begin with,

01:05:38   from the high end meaning their actual most expensive things,

01:05:41   even though as we just talked about,

01:05:42   it's not that much cheaper,

01:05:44   that creates a different sort of psychological dynamic to it.

01:05:47   I also think, and I, so I had written a post a long time ago, maybe a year ago I guess,

01:05:53   talking about like how odd it is that every advertisement I see around, I think it was

01:05:59   around still San Francisco and sort of, I think it was in Seattle actually when I saw

01:06:03   one that sort of made me think about this, that every ad I was seeing was for the iPhone

01:06:09   5C and not the 5S.

01:06:10   There were a few ads for the 5S, but almost all of them, certainly around the Bay Area,

01:06:14   were for the 5C.

01:06:16   And at first I interpreted that as it must not be selling well

01:06:18   and Apple feels like they need to pump up the advertising

01:06:21   to sort of boost it up.

01:06:22   And that may have been the case.

01:06:23   I don't really know.

01:06:24   But I did get a lot of pushback for it.

01:06:25   And I think some of it was astute pushback, thinking,

01:06:29   like, actually, this is sort of the perfect device.

01:06:31   Along the lines of what we were just talking about,

01:06:32   this is sort of the perfect device for Apple

01:06:34   to showcase in their advertisements,

01:06:36   because it's colorful.

01:06:37   It sort of goes perfectly with iOS 7.

01:06:39   It's sort of part of this--

01:06:42   the playful ads that Apple likes to do.

01:06:45   And so it ended up being, in a way,

01:06:47   like the poster child for a long time

01:06:49   for all those ads around different cities,

01:06:52   and certainly in the US.

01:06:53   I don't know about the rest of the world.

01:06:55   And what if it was like, you know,

01:06:57   just sort of a product that they thought

01:07:00   was really beautiful and they knew

01:07:01   that it could sort of get people in the stores

01:07:03   by having these colorful ads,

01:07:05   and then, you know, then either they buy this device

01:07:08   and that's great for them,

01:07:08   or they, you know, they decide to buy

01:07:11   the more expensive device.

01:07:12   - Yeah, I remember that post

01:07:13   and it's actually why I brought it up with you.

01:07:15   I don't know how.

01:07:16   I'll look it up and I'll put it in the show notes,

01:07:17   but I do remember that post.

01:07:18   And I remember disagreeing with it

01:07:20   because it was right around the time

01:07:22   when it first started dawning on me

01:07:23   that I had underestimated the 5C.

01:07:27   And like I said, I think that this year

01:07:30   is the year where the 5C

01:07:32   is exactly where Apple wants it to be.

01:07:34   I feel like it's,

01:07:36   I feel like the hardest part of Apple's business

01:07:38   is now that they've hit these insane quantities

01:07:42   for iPhones, it's really, really hard.

01:07:46   And their pipeline is so long.

01:07:48   Like, how do you ship 74 million iPhones?

01:07:52   And who knows what percentage of them were the iPhone 6?

01:07:54   But I think it's a majority of them last quarter.

01:07:57   How do you make that many in the first quarter

01:07:59   that it's available?

01:08:01   Well, part of how they do it is that it's planned out

01:08:05   years in advance.

01:08:07   I mean, like, I think it's about a two-year pipeline

01:08:10   for their iPhones, like more or less

01:08:14   that the iPhone 6 and 6 Plus were about two years

01:08:17   in the making, and it's dangerous for them.

01:08:20   And I feel like that's partly why they're,

01:08:22   I think in hindsight, they were probably a year late

01:08:24   to the big phone market.

01:08:27   I think that if they could go back

01:08:29   and do everything over again,

01:08:30   I think that they would probably put the iPhone 6 and 6 Plus

01:08:34   one year ahead on the schedule,

01:08:36   'cause it was, but it takes too long for them

01:08:38   to get everything set up so they can make these quantities.

01:08:41   They can't act fast and just say,

01:08:44   "Okay, we'll make a five and a half inch phone,

01:08:47   "but we're only gonna be able to make a million of 'em

01:08:49   "because it's new and we're not ready for it."

01:08:51   Well, they can't do that.

01:08:52   They can't have a phone that they can only make a million of

01:08:54   in the first quarter.

01:08:55   - Yep, I agree.

01:08:57   - But I feel like the 5C was something

01:08:59   where they were thinking ahead over a year,

01:09:03   and they wanted to have a phone that sat at this sort of,

01:09:08   well, in fact, they've gone to four levels, right? They've got the six plus, which is $100 more for

01:09:13   the same specs compared to the six. So they've got the six plus where you pay $100 premium for

01:09:18   the bigger screen with the extra pixels. Then there's the six, which sits where the iPhone

01:09:27   always had, the new iPhones always have same price levels. Then one cut down, $100 down is the five S,

01:09:35   which is still a premium device, right? The 5S is – and we could do a whole show about it,

01:09:41   but in my opinion, it's still my favorite iPhone that they've ever made.

01:09:44   And now the 5C at that free with contract level is so much more natural than if they were selling – if

01:09:52   they had stuck to the original plan and hadn't made this one device that is so unusual with

01:09:59   the plastic body and it never was at the high end. Effectively, though, the 5C is where,

01:10:05   if they had stuck to the plan and done the same thing they've done every other year,

01:10:09   that would still be the original iPhone 5 without the S.

01:10:12   Benji M

01:10:12   Right.

01:10:13   And instead, which is like visually indistinguishable from the 5S, except it doesn't have touch

01:10:20   ID, but at a glance it looks the same.

01:10:24   Whereas now, at a glance, it's instantly recognizable as a different phone.

01:10:29   Yes, that's a good point.

01:10:30   I've thought, I think I've written about that as sort of that notion as well, that

01:10:35   there was the problem with the S lines where they look the same.

01:10:40   And so it's like, well, yes, they're faster inside.

01:10:44   Like, what is it that's sort of differentiating on the outside?

01:10:48   There was nothing for a while, and now the 5C gives you

01:10:51   a very differentiated factor.

01:10:53   But what do you think, then, sort

01:10:55   of the obvious lead-in to that is,

01:10:58   what do you think they end up doing the next iteration?

01:11:02   So we're coming up on the fall of 2015.

01:11:07   the assumption I would assume is that they do an iPhone 6S

01:11:12   and then do they have an iPhone 6C

01:11:17   and what do they do with them?

01:11:19   Do they have a Plus S and how do they keep the line going?

01:11:24   - Yeah, and how big would it be, right?

01:11:25   How big would it be?

01:11:26   Would it be 4.7 inches or would it be 5.5?

01:11:30   Would it be both?

01:11:31   I don't think it would be both.

01:11:32   I think that they, it's an excellent question.

01:11:35   I'm really kind of at a loss to guess

01:11:38   what they're gonna do this year.

01:11:39   Like I kind of guess they're gonna do at the high end,

01:11:43   6S and a 6S+, which would be this,

01:11:45   look a lot like the, you know,

01:11:47   just the typical S, you know, TikTok revisions.

01:11:52   - Right.

01:11:53   - But then what did they do at that pricing level below

01:11:55   where the 5S is now?

01:11:57   And I really wonder.

01:11:59   - Do they keep the 6 and 6+ and, you know--

01:12:03   - I don't think so.

01:12:03   - We're getting pretty convoluted then at that point.

01:12:05   to what the what the offerings are. Yeah, I don't think so. I kind of feel and I kind of feel like

01:12:11   the way that they're and it's somewhat arbitrary because I don't think that the actual cost is

01:12:17   that much different for the different sizes but I kind of feel like they'll if I had to guess

01:12:25   maybe like they'll call it a 6c and it would be a four inch screen but with the specs of the iPhone 6.

01:12:33   So that's interesting because one thing that has always been humorous to me for the past couple years now

01:12:38   Remember when the iPhone first came out and everyone was clamoring like we need an iPhone Nano

01:12:43   And you know and this is when the iPhone was a 3.5 inch screen the original iPhone and people were saying

01:12:50   It's too big like we you know

01:12:52   We're coming from a world of flip phones like the in the razor and things the Motorola razor

01:12:56   We need a smaller device like I don't want anything bigger and now it's like no one talks about that anymore

01:13:02   more and when you do hold even a 5 and 5s next to the 6 plus, it's sort of comical

01:13:09   how small it seems and I don't even know when the last time I held a 4 was, let alone

01:13:14   you know some of the even the older ones, but do you think that they go to a world where

01:13:21   we have now the 6 inch screen, is it a 5, 5 and a half inch screen and then is it a

01:13:29   in screen or do they do some other variation on that?

01:13:33   But is the three SKUs, it seems to me like three SKUs is pretty good because you can

01:13:37   offer different things at each for what people want.

01:13:40   Some people might want a smaller phone.

01:13:43   The problem of course is with developers, it's a pain in the ass to have to support

01:13:48   all of these different screen sizes still.

01:13:50   And so Apple traditionally, as you know, has been pretty good about retiring older sort

01:13:56   of technology and making it so that you don't have to support that. Rather, you know, they

01:14:00   push forward. But what do you think that they would do there?

01:14:04   I don't know. It's interesting to me. Whether they say 4.7—like, one way they could go

01:14:11   would be to say 4.7 is the new small iPhone size. And now the $99 mid-tier—$99 with

01:14:19   contract mid-tier phone is also 4.7 inches. They could do that. And then that, to me,

01:14:25   be a strong signal that the four inch size, you know, I'm sure that they would still have something

01:14:31   at the, you know, free with contract level that still has a four inch screen at the end of, you

01:14:36   know, next year. But that it's on the way out. But on the other hand, I could see them going though,

01:14:43   where they still say you can still get a four inch phone, you know, we've got the, you know, small,

01:14:48   medium and large screen sizes, and four inch is our mid-tier size. And it would have the same,

01:14:57   the A8 from the iPhone 6, the camera from the iPhone 6, but in a four inch form factor. But

01:15:08   would that form factor be plastic, like the 5C, or would it be metal, like the 5S? I don't know.

01:15:13   Yeah, and I guess the other thing to bring up is that I think now, are we at the point

01:15:19   now where everything has the Lightning connector?

01:15:21   We are, right?

01:15:22   Yeah, we are with iPhones.

01:15:24   But we're not at the place where everything has Touch ID, and I assume that Apple wants

01:15:29   to get there for Apple Pay especially, and then just overall to simplify and make it

01:15:34   easier for developers who are trying to support Touch ID and there's the fallback, of course,

01:15:39   of just using passwords, but I would assume that they want to get everyone on Touch ID,

01:15:43   even the low-end ones? Do you think you agree with that? Well, I don't know, because that's the—so

01:15:48   the weird thing, it's like I said, like, I think like this year, right now until the end of the

01:15:53   year, the 5C is exactly what Apple wanted. They've got this, you know, a nice phone,

01:15:59   everybody likes it, it's easily advertised, it's colorful. But because they didn't rev it last year,

01:16:06   my assumption is, at the end of this year, the 5C as we know it goes away. That just, you know,

01:16:12   falls off the bottom of the product list and it's gone and it's replaced by what? If they just keep

01:16:20   moving things down the line, it would be replaced by the 5S, which does have touch ID but doesn't do

01:16:26   retail Apple Pay. Like, it only does Apple Pay like in apps, which it doesn't seem to have taken off

01:16:33   yet. Right. Because it doesn't have NFC. Right. And it also, if they do that, it goes against my

01:16:40   thinking that they want the bottom of the line phone to not have that premium metal industrial

01:16:47   design like so I don't know like do they come out with a new plastic model that debuts at that free

01:16:54   tier I I well it seems like an awful lot of new SKUs right yes yes um because I also feel like part

01:17:03   of it just part of the reason that they can make all these new iPhones is that they're only making

01:17:09   one or two new phones a year and the other ones are these things you know

01:17:12   like the 5s that they already know how to make and it just you know just keep

01:17:17   making them like you did last year you know the other thing that throws a wrench

01:17:20   into it is what they did this year and and this is another discussion you know

01:17:25   to the iPad mini where they didn't update the internals at all but they

01:17:30   gave it touch ID and like why why even bother to do that you know when they're

01:17:35   when that was the only sort of upgrade that they did and now there's the whole

01:17:38   debate, you know, is the iPhone 6 Plus eating into iPad mini sales specifically, and what

01:17:44   do they do with the future of that line, and is there a future of that line?

01:17:48   Yeah, it's a good question.

01:17:50   So maybe, I don't know, like could they come out with like the equivalent of a 5C,

01:17:55   but just add Touch ID?

01:17:57   Yep, potentially.

01:17:59   That would be something that I might guess would be something that they do, because I

01:18:03   do agree that they want to keep, obviously they want to have differentiating factors

01:18:07   for the premium.

01:18:08   But I do think that their strategy is pretty strong

01:18:12   right now around Apple Pay.

01:18:14   And I would imagine that they want--

01:18:16   like we talked about earlier-- they

01:18:17   want that to be a moat, a new moat, that sort of creates

01:18:21   a reason why you're in the Apple ecosystem,

01:18:23   regardless of which device you have.

01:18:25   And so my guess would be yes.

01:18:27   They have something like an iPhone 6C that

01:18:31   has Touch ID and NFC.

01:18:33   They add both of those to it.

01:18:35   - Yeah, but maybe like old, a seriously older A series chip,

01:18:39   like an A6 or something like that.

01:18:41   - Right, and that's how they differentiate.

01:18:43   It's not nearly as fast as sort of the high end,

01:18:45   and it's maybe plastic, so plastic not as fast,

01:18:48   the camera's not quite as nice,

01:18:50   but it does still have Apple Pay and Touch ID.

01:18:54   - Yeah, at the very least, I can't imagine that they'll ever,

01:18:58   at any price point, I can't imagine that they'll ever

01:19:00   come out with any new iPhones that don't do NFC

01:19:03   and Apple Pay.

01:19:05   - Yeah, I agree.

01:19:06   - But it's a question, a big question is,

01:19:08   if they keep the 5S around though

01:19:11   and move it down the product tier,

01:19:15   that's another year then though that they have a phone

01:19:18   that doesn't have Apple Pay and NFC.

01:19:21   - Yeah, and yeah, I mean that's an interesting dilemma

01:19:25   for them to have, though they've always dealt

01:19:29   with that fine in the past, sort of keeping those products

01:19:31   around longer than anyone else thinks that they should

01:19:33   and obviously they have the data to back that up

01:19:36   that they should do that.

01:19:37   - Yeah, totally.

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01:24:12   All right, anything else on your mind?

01:24:14   - No, I mean, I'm still, so I was back in San Francisco

01:24:20   when, a couple weeks ago, for a while.

01:24:24   And I've been sort of going back and forth

01:24:28   about Apple Watch, so unlike you,

01:24:29   I wasn't at the event, the unveiling,

01:24:32   and so I didn't get a chance to sort of see it

01:24:34   and sort of get a better sense of what it was.

01:24:36   I watched the keynote, sort of it's great

01:24:39   that they stream it live, and so I could watch it here,

01:24:41   despite their technical hiccups,

01:24:42   which I'm sure you heard about.

01:24:43   You know, they-- - Yeah, that was bad.

01:24:46   - Yeah, it was really bad.

01:24:48   But they fixed it a little bit for the later one.

01:24:51   So I wasn't sure really what to make of Apple Watch,

01:24:55   and I'm still sort of trying to get there,

01:24:57   but I had a number of interesting discussions

01:25:00   with people more in the know while I was back,

01:25:03   and sort of thinking through things

01:25:07   of where this is gonna go.

01:25:08   And I'm starting to get a lot more bullish on Apple Watch

01:25:11   than I was to begin with.

01:25:13   Not to say that I was bearish on it,

01:25:14   but I was sort of wondering a lot of what we talked about.

01:25:18   Sort of how many people are going to pay a premium

01:25:21   for a gold one, how many people are going to buy

01:25:23   the edition one, how many people are going to buy

01:25:27   the cheaper sport one, and what does it mean.

01:25:29   And then when they released the SDK,

01:25:31   and just like we were talking about earlier,

01:25:33   it sort of seemed like there were more widget-like apps

01:25:36   rather than true apps and it seemed like Apple was already telepathing into the future where

01:25:42   they're going to make them more robust apps.

01:25:44   So they're almost saying like, "Yeah, we're going to put this out there, but V2

01:25:47   of this is when things get really interesting."

01:25:50   And so it's sort of the old problem that Apple has had amongst many people who believe

01:25:56   like, "Don't buy the first version of something.

01:25:58   They always make it better the second version."

01:26:02   I am definitely getting more bullish on it now

01:26:05   after having sort of had a few chats

01:26:08   and learned a lot more about what it's actually doing.

01:26:12   Where's your mind at with it?

01:26:13   - I've never been either bullish or bearish.

01:26:17   Even having been at the event and even having,

01:26:20   I didn't get to use it

01:26:21   because they were all running the demo software,

01:26:23   but I did get to at least try one on.

01:26:25   I've always been ambivalent, like tell me more.

01:26:30   Like I need to know more about this

01:26:32   before I can even decide either way.

01:26:34   To me, the big, and I still feel that way.

01:26:37   That's why ultimately I still feel like

01:26:40   they're probably gonna have another event

01:26:42   before it comes out.

01:26:43   And if the other rumors are right

01:26:45   and they're gonna do like a bigger iPad,

01:26:48   that would make sense to do it all in one event.

01:26:50   And so there's a new thing, which is a bigger,

01:26:53   pro-sized 11-inch or 12-inch iPad.

01:26:56   So here's a new thing.

01:26:58   And here is more on this thing we announced in September, the Apple Watch, which is now imminent.

01:27:04   And he'd let us show you more. That to me feels like they don't even need to do anymore. That's

01:27:10   a perfect Apple event, a new iPad at a new size. You know, and if the thing about the stylus is

01:27:17   right, there's all sorts of demos they can do there, you know, bring up somebody, some third

01:27:21   party with, you know, show some kind of Wacom style professional artwork being drawn on the

01:27:26   thing and then, you know, show me more about the Apple Watch. The thing that gets me and

01:27:32   is the confidence that Apple seems to have about the Watch. It's not what they've told us and what

01:27:38   you can read at apple.com/watch. It's the confidence that Tim Cook has and everybody else

01:27:45   who's spoken about it publicly. They're so confident about it that to me it's it seems like

01:27:52   like it would be reckless to bet against it because they're just not they're not

01:27:56   the type of people who breathlessly promote everything and anything that

01:28:01   they do I agree with you definitely I think that that is something that makes

01:28:07   it so you can't obviously you can't write it off well you could never write

01:28:10   it off being from Apple these days but their confidence is is pretty

01:28:15   fascinating the the way that they're positioning it they're obviously still

01:28:19   doing this world tour of going around and talking to all the various people in the fashion

01:28:23   industry, hiring the various people in the fashion industry to bring them in to make

01:28:28   sure that they're ready to go for this.

01:28:32   It all adds to the feeling I'm getting.

01:28:34   But I also just am starting to get a better sense of what I think that they think they

01:28:43   can do with it.

01:28:44   do think that the early days will be maybe a little bit underwhelming at first because

01:28:51   they're only going to work with a handful of people as they always do behind the scenes

01:28:57   to get third party apps sort of ready to go for when this thing launches and there are

01:29:02   going to be obvious things and it will be largely predicated around push notifications

01:29:05   I would assume. But I am starting to believe more that there's different types of things

01:29:11   that third-party developers will be able to accomplish.

01:29:14   And maybe it takes to the second SDK, the more robust thing, for it to really get there.

01:29:19   But I'm reminded back to when the iPhone first came out and we had developers making the

01:29:26   web apps because they didn't have access to actually making native apps at the time, only

01:29:29   Apple did.

01:29:30   So it's not exactly what's going on here, but we are getting a little bit of what feels

01:29:34   like a muted SDK for third-party developers right now.

01:29:39   I think it's somewhat analogous.

01:29:41   I think it's a little bit better than the web apps of 2007,

01:29:45   but it's close.

01:29:47   It's not a bad analogy.

01:29:50   - I agree.

01:29:50   And so now I'm trying to think through,

01:29:53   when Apple did release the second sort of SDK for the iPhone

01:29:58   that allowed for native app development,

01:30:01   it was insanely exciting to everyone,

01:30:03   but no one really knew what would happen.

01:30:05   We knew games would come

01:30:06   and there would be sort of silly little apps to begin with,

01:30:09   which there were, there were many.

01:30:11   And then it wasn't clear if there would ever be

01:30:13   like big businesses, right, or real businesses

01:30:15   built on top of that.

01:30:16   And look at it now, I mean, how many billion dollar

01:30:19   businesses have been built on top of the iPhone alone?

01:30:22   You know, and Android and stuff,

01:30:24   but the iPhone is what kicked it off.

01:30:25   It's like Instagram and all these other things

01:30:27   that were iOS only at the time.

01:30:31   And is there a way, this is what I'm trying to think through,

01:30:33   is there a way for the watch to do something similar?

01:30:37   And your instinct is that sounds ridiculous, right?

01:30:40   Like that there's this watch, this small little device that just seems like more of

01:30:46   a novelty, or is it going to actually be something that big businesses can be built on?

01:30:51   And I think that there's two camps.

01:30:53   There's people who believe that eventually we will get to that place and there can be

01:30:57   sort of new interactive paradigms with sort of the taptic feedback stuff and there will

01:31:02   be new types of messaging apps that we haven't thought of yet.

01:31:05   But then there's the other group that I think is more along the lines of, look, the

01:31:09   Apple Watch, here's what it is.

01:31:11   It's just another moat for the iPhone.

01:31:14   It's a way, you can't use it right now without the iPhone.

01:31:17   It's a paired device with that, and so it makes the iPhone more attractive to iPhone

01:31:22   owners and it gives people maybe another reason to buy an iPhone rather than choosing an Android

01:31:28   device or some other similar device.

01:31:31   Yeah, I don't know.

01:31:34   I feel like both of those scenarios are possible.

01:31:37   I do feel like ultimately it's, you know,

01:31:40   just the march of technology is that eventually

01:31:42   it will be independent.

01:31:43   Like it won't need, you know,

01:31:45   it'll have its own internet access without an iPhone.

01:31:48   Just to me exactly the way that the iPhone

01:31:52   used to need a Mac or PC running iTunes to sync.

01:31:57   I mean, it's still, it seems crazy.

01:31:58   Like there was only way to get contacts on your iPhone

01:32:00   was to sync it with your computer using a cable.

01:32:04   And I kind of feel like the watch needing a phone

01:32:07   Within Bluetooth range to get internet is the same thing like, you know, three four or five years from now

01:32:14   We're gonna laugh at the fact that you couldn't get text messages on your phone unless you were within

01:32:19   You know 20 feet of your or on your watch unless you were within 20 feet of your phone

01:32:23   But in the meantime, I do feel like that's the way that you bootstrap it is that it's again

01:32:30   Like you said like a moat around the iPhone

01:32:32   I think that's how it debuts and then all of a sudden you realize it's you know, two three four years from now

01:32:37   It's its own thing. That's right. I agree with that

01:32:40   And I think I think they're going about it the right way with everything that they've sort of shown so far

01:32:46   You know having used a lot of these other sort of wearable devices. They're all they all range from either very bad to sort of just

01:32:53   Mediocre there's no great one right now

01:32:54   And I think a lot of it is that a lot of a lot of these companies have just basically taken

01:33:00   the phone paradigm that the smartphone the touchscreen paradigm and strapped it on the wrist and

01:33:05   Apple with this crown sort of interaction they're trying to actually think about what they should do

01:33:11   I mean you're putting your hate when you're touching the screen all the time

01:33:15   You're completely covering the screen like why would you do that?

01:33:18   You know so like the crown where you can zoom in and out that that's like sort of

01:33:22   Is an obvious thing in hindsight that I think is is going to be sort of a?

01:33:27   a killer feature that everyone ends up copying, of course,

01:33:30   but it's things like that that make me more excited

01:33:33   about the prospects for it, though I agree

01:33:37   with sort of everything we're saying,

01:33:38   which is that the first iteration,

01:33:40   it will take a while to prove these things out.

01:33:43   - Yeah, I think that the crown in particular

01:33:46   is one of the reasons, like why did they announce it

01:33:49   when they announced it?

01:33:50   Well, part of it is, like I wrote this week,

01:33:53   part of it, I think, is that they wanted to announce it before it went into production,

01:34:00   because once it went into production, it was inevitably going to leak. And in fact, it did

01:34:04   leak. There was, like, one day before they announced it, there actually were, like,

01:34:09   blueprints that leaked that were, in hindsight, were pretty much spot on, or exactly spot on.

01:34:15   They didn't get a lot of publicity because they weren't real pictures, but if it had happened even

01:34:20   a week earlier somebody you know could have done like a 3D rendering and and and spoiled it i think

01:34:27   they really wanted to be the ones to unveil it and they're glad they did um six months is about the

01:34:34   outer limit i think for when apple could do it i think and you know i think it's also possible that

01:34:41   in in like an ideal world if everything had gone according to plan maybe it wouldn't be shipping in

01:34:45   April, maybe it would have been shipping like in February. And it's just, you know, enough bugs

01:34:53   still remain, enough kinks still remain in the software that they need the extra two months

01:34:58   before they feel comfortable shipping. But well, I also I definitely heard that they did want to

01:35:03   do this in the fall. And it just Oh, originally, yes, definitely. Yeah. Like, and in hindsight,

01:35:09   with some of Tim Cook's remarks, like it all things D or whatever. That's right. You know,

01:35:14   I think the year before that they, you know, they have a, they have products to release all

01:35:17   throughout 2014. Yeah, I think, like two years ago, they were thinking like a holiday release

01:35:23   for 2014. So I think it's, I think that's definitely the case. I've heard the same thing,

01:35:26   too, like internally that it's, you know, yeah. Not that they're shocked. I don't think it's

01:35:32   like a disaster. I just think it's, yeah, it just took it just was not the best case scenario.

01:35:38   Yeah, there's soft it's and it's, I think it's largely software rather than

01:35:42   Yes, the hardware that's going on. It's a software. It's hard to nail this this new sort of paradigm that they're trying to do

01:35:48   Yeah, I think that the hardware that they and who knows I mean because you know

01:35:53   It's not like they were letting us crack open the demo units back in september

01:35:57   But i'm pretty sure that the hardware they showed us at the event in september

01:36:01   Is exactly the hardware they intend to show. I think i'm pretty sure that it is. Yeah

01:36:05   Yeah, and that they're like internally like johnny ives team is already working on the next

01:36:12   revision of the hardware like that's they've you know, the hardware is done and defined and you know, it's that screen and

01:36:19   That chip and that metal and you know everything down to the bands that that stuff is all done. It's yeah

01:36:25   I think it's all software that's still

01:36:27   being worked on and of course the

01:36:30   component of that is the battery life and what do you think about sort of I'm sure you saw the the Mark Gurman report about the

01:36:37   The breakdown of the battery life issue and so it's you know, I think it was 2.5 hours of full active usage

01:36:43   Which is a little bit?

01:36:46   You know misleading because are you gonna be sitting there on your watch for two two and a half straight hours using it straight through?

01:36:52   No, but what do you think is that like in the ballpark you thought it would get to?

01:36:57   Yeah, I think that the basic gist is that they need to make it so that if you're an act if you use your Apple

01:37:04   watch thoroughly that you can still get through a day, no problem.

01:37:08   I've seen some stuff.

01:37:11   You know the demo units they showed us on all the screenshots they show us don't show a battery meter all the time.

01:37:18   And the simulator in Xcode does.

01:37:24   So there's some question as to whether you know where they've you know what are the actual production ones are going to do?

01:37:30   Yeah.

01:37:31   how are you going to check the battery? Like it seems as though what they've shown us so far is

01:37:35   that you're not supposed to even, I'm sure there's some way to do it, like go into settings and

01:37:39   there's, you know, if you really want to check your battery there'll be a way. I feel like what

01:37:44   they want to do is just get it so that it, you know, if you charge it every night you'll be fine

01:37:50   and you don't have to worry about it. And if you forget to charge it one night you're probably

01:37:54   gonna, it's probably gonna die the next day. And you know, one thing, so as we know with the phones

01:38:00   now and iPad and everything else.

01:38:02   The biggest power draw is the screen of all these things.

01:38:06   I think that it seems like they're doing smart things that the other smart watch makers haven't

01:38:12   done by the way, which is when you get notifications coming in, rather than illuminate the screen

01:38:19   right away, they're using their haptic thing, the haptic engine to be able to alert you

01:38:24   to that.

01:38:25   The screen is going to be on probably less than you think it is because we all see these

01:38:29   smartwatches out there right now that light up when whenever you get something

01:38:32   and that's not gonna be the case with this yeah I mentioned last week with

01:38:36   when Ben Thompson was on the show that from what I've heard from a couple

01:38:39   people again not firsthand not anybody who has a watch but all secondhand from

01:38:43   people who've talked to people who are testing a watch is that an enormous

01:38:47   amount of effort has gone into making it so that when you do want to look at the

01:38:51   screen it comes right on like the detection of your wrist and you know the

01:38:55   the motion detection of what angle the watch is at. Hey, I'll bet this, you know, the person

01:39:01   wants to look at me right now. And then when you move it away, it goes off. That they've,

01:39:05   you know, an enormous amount of work over the last three years has gone into just turning the screen

01:39:11   on and off when it wants to be on and off. And I feel like the Gurman stuff is interesting. It's,

01:39:17   you know, I have no reason to doubt that those are the actual numbers. I just feel, though,

01:39:21   that it's like it almost doesn't it isn't really helpful to thinking about how you're going to use

01:39:26   the watch it's it's just sort of their enumerating that's right i'm 100 in agreement with that it's

01:39:35   sort of it's thinking it's it's yes it's it's sort of the spec sheet it's what it will be like if you

01:39:41   were just in a in a vacuum if you just said like give me the numbers of what it's going to do when

01:39:45   it's like this and this but i think the key is that the way that it's been engineered the apple

01:39:50   watch will change the way that people at least right now think that they're going to use it

01:39:56   it's not going to be all the time coming on and it's not going to be you have a hard time you know

01:40:01   turning the screen off or you have to hit a button to turn the screen on and off and all that kind of

01:40:05   stuff and so yeah i think it will end up lasting a lot longer than people are sort of thinking about

01:40:09   just reading that that that stat line yeah the polar opposite to me would be the um the now

01:40:17   defunct iPod nano or whatever it was called the one that was square and then yeah there was the

01:40:24   I think it was yeah the watch fans yeah the tick tock kick card yep starter which is like it right

01:40:29   I bought I did too which I think at the time was like the broke the record for like a kickstarter

01:40:34   project it did and it really was well done it was as well done as a turn your iPod nano into a watch

01:40:43   could be done, I think. But I got it, I popped my iPod into it, and five minutes later took it off

01:40:52   and never used it again because the idea of a watch that you had to hit a button to read

01:40:57   drove me nuts. Because there was no motion detection because the iPod wasn't meant for that.

01:41:02   So to see the time or do anything with it, you had to use your other hand and hit the button.

01:41:07   and as a watch it was you know and I you know I could see why some people's liked

01:41:14   it but for me as somebody who wears a watch and just wants to glance at the

01:41:18   time it was maddening and I feel like the Apple watch is the opposite of that

01:41:22   and that sort of also leads to one last thing I know we were going for a while

01:41:26   but I don't know when we'll talk again so I want to there's so with that you

01:41:30   know you also had if you wanted to listen to music which is what you do of

01:41:32   course mainly with an iPod you had to have you know your your white earbuds

01:41:37   plugged into your wrist and then they would be going up to your ears right and

01:41:41   it's like yeah if you're trying to run you could you know rip the earbuds out

01:41:45   of your ears if you were for some reason you know moving your arms too far or

01:41:49   something that leads to a question which I have no idea but I and I don't know if

01:41:55   they're gonna do this anytime soon or if this waits till sort of the fall or the

01:41:58   next version or something but like they have to be doing something with Bluetooth

01:42:02   earbuds right I mean there's no way that they can they're they're already saying

01:42:06   that you'll be able to store music and some podcasts and they'll have limited storage

01:42:10   to be able to do that and they want you to be running with it and you can have sort of

01:42:15   be able to listen to your music. And they're saying, I think they said in the press material

01:42:18   or whatever, you can use your Bluetooth running. People have special running Bluetooth headsets

01:42:24   that they already use and they're decent or whatever, but that's not going to be good

01:42:27   enough for Apple. They're going to want to do their own, right? And when are they going

01:42:29   to do that?

01:42:30   - Yeah, it's a perfect has to happen eventually idea.

01:42:35   And again, I think having used the iPod Nano

01:42:41   with the TikTok watch strap, I had the exact same thing.

01:42:43   I thought, well, when I sent it for the Kickstarter,

01:42:46   I thought, I'm probably not gonna like this as a watch

01:42:48   because I'm not gonna like a watch

01:42:50   that I have to hit a button to see,

01:42:51   but I might like it as something to use my iPod

01:42:54   when I go running.

01:42:55   And in fact, I hated it because of exactly what you said,

01:42:58   that having the cable go to my wrist

01:43:01   and my arm is moving while you run, it was maddening.

01:43:06   It just felt like I was, I don't know.

01:43:11   It felt like the sort of thing that you,

01:43:13   like when you're on probation and they put like a, right.

01:43:18   But I can't help but feel the same thing

01:43:23   with the Apple Watch.

01:43:24   I mean, the watch clearly doesn't even have a headphone jack

01:43:27   So it's going to, and it does do Bluetooth audio.

01:43:32   So if the watch does Bluetooth audio

01:43:34   and the future is to not have a cable

01:43:37   between your headphones and your device period,

01:43:40   Apple has to do Bluetooth.

01:43:42   My question though is if Apple goes

01:43:44   and does Bluetooth headphones of their own,

01:43:47   are they going to be included with devices?

01:43:50   Or-- - Yeah, interesting.

01:43:52   - And/or if they're not, will they do them themselves

01:43:56   will it be like a beats thing? Well, so remember how they used to have, I think they still

01:44:01   probably sell them. They had those more high-end version of any ear earbuds because I bought

01:44:06   them at one point. They were like $100 or something.

01:44:08   Yeah, I remember that.

01:44:09   Or $20 for the other ones. And they were pretty good. They were okay. They had like three

01:44:12   different sort of sizes that you got the earbud gel things that you could sort of stick in

01:44:18   your ears depending on how big your ears are. And they were okay. They were definitely better

01:44:22   than the old version of the earbuds that came with all the iPods and everything. I don't

01:44:28   think they're better than the new version of the earbuds, at least I don't use those

01:44:33   higher end versions. I'm not even sure if they sell them. I think that they still do.

01:44:37   But I would imagine that's how they do it at first at least, that they sell them as

01:44:40   like, because it'll probably be expensive to make, more expensive than the current iteration.

01:44:44   So maybe they sell them for those $100 and then eventually they sort of move towards

01:44:50   because that is something I always think about, you know, like what else can they do to improve

01:44:54   the iPhones right now? And the biggest pain point now is honestly untangling the damn

01:44:59   earbuds when they're in my pocket. I know that they're like, you know, everyone, I

01:45:03   complain about this from time to time on Twitter and everyone comes at me with like, "You

01:45:07   should get these ties," or, you know, "This thing," and they have all these like third

01:45:10   party products to like make it better. But like really, I just want, I don't want to

01:45:14   carry around more stuff. I just want to have my earbuds and I want to have the phone in

01:45:18   in my pocket and I want the earbuds not to somehow defy the laws of physics and get so

01:45:24   tangled up that it seems like you have to cut them almost to in order to untangle them.

01:45:29   And so it's another thing that really strikes me in the winter too because it's so much

01:45:34   more of a pain in the ass when you're wearing a coat and yeah and you've got these these

01:45:40   things dangling right and it's like when do you there's no good way to do it like if you

01:45:46   you know, wanna listen to podcasts.

01:45:47   Like, you know, I walk almost everywhere in the city

01:45:49   and I run errands and that's when I listen to podcasts

01:45:52   and it's great, but when it's winter

01:45:53   and I have to wear a coat, it's like, what do I do?

01:45:55   Do I put it in my pocket and start listening to podcasts

01:45:58   and put the coat over the headphones?

01:46:00   And then it like, it pulls.

01:46:02   But if you put the coat on first

01:46:04   and string it over the coat,

01:46:06   it, there's just no good way with the cable.

01:46:08   Like, as opposed to when you're not wearing a coat,

01:46:10   you can just put your phone in the pocket

01:46:12   and it's not too much of a hindrance

01:46:13   to have the headphone cable going

01:46:14   your jeans pocket to your ears, put a winter coat on and it there's no good way. It's hard to do.

01:46:20   Have you have you tried one of the bluetooth ones before? So it's like funny, you know,

01:46:24   going back into the late 90s or whatever when they first came out, obviously they sort of got this

01:46:28   douchey, you know, sort of aura around them. But I use the I use the jawbone era, I think it's

01:46:37   called the era quite often now. The problem is that it's only obviously one year so it's not

01:46:42   great for music, you can do it for music, but for podcasts and stuff it's pretty good.

01:46:48   The only other downside is with one ear, you have to turn it up quite high sometimes, like

01:46:53   if you're in a louder environment to be able to hear.

01:46:56   And I never use it for calling or anything, but I honestly don't make that many calls,

01:47:00   so I don't use the speaker part.

01:47:02   But I use it a lot just to listen to things.

01:47:05   It's a little bit wonky, the Jawbone software isn't great, and so it can take a little

01:47:09   a while to pair and sometimes it drops and it's great not great audio quality I would

01:47:13   say but it's good for podcast definitely yeah I would probably enjoy that if I had

01:47:18   one but I've never tried it yeah I you know I haven't tried any of the others but the

01:47:22   job on one is pretty solid I kind of wonder what the form factor would be for like an

01:47:26   Apple Bluetooth headset like you know would would would they be connected somehow and

01:47:32   if so what would it be like a thing that goes around the back of your head hmm yeah that's

01:47:38   an interesting point there. I've seen both. I've seen ones that are like that, where they have a

01:47:41   thing that goes around the back of your head. I think I've also seen one where they still have

01:47:45   something dangling, but it's not connected.

01:47:47   Right, because somewhere there's got to be a battery.

01:47:49   So it can't just be the earpieces. Ideally, it would just be two earpieces that you put in

01:47:56   independently.

01:47:57   Right, but then you'd need two batteries, and one of the reasons why I think the jawbone one is

01:48:04   bigger than it even needs to be is just because of the battery, obviously. And the battery's not

01:48:08   great by the way either that thing lasts for it says four hours of talk time i think it's it's

01:48:12   usually like two and a half hours max it will last yeah i feel like that's it's gotta happen but i

01:48:18   don't have i have no idea how it's gonna happen i feel like bluetooth has you know the headphone

01:48:22   cables have got to go the way to the dodo and the other thing too that's got to be a motivation for

01:48:27   apple is just staring at my iphone 6 right now i can't help but look at it and think that the

01:48:32   headphone jack has now a gating factor on making it thinner.

01:48:36   Yes, that's the biggest part.

01:48:38   You know, the lightning adapter is so much thinner than the headphone jack.

01:48:45   And whatever the thickest port is on your device is going to be the next one Apple gets rid of,

01:48:53   and right now it's the headphone jack.

01:48:54   Well, and obviously they're starting, I think, pretty soon. I think they have a few already,

01:48:59   But they there was some story that they're gonna start shipping the lightning ones, right?

01:49:03   So you'll be able to do audio through the lightning port and so I'd imagine that's how they do it

01:49:07   Maybe even starting next year or something that they they just sort of get rid of the headphone jack and and my god

01:49:14   I can't wait for people to complain about that

01:49:15   That will be you know

01:49:16   That's gonna be the next getting rid of the optical drive and you know

01:49:19   Killing the mouse and all these types of things like when they kill that audio that headphone jack. It's gonna be

01:49:26   It's gonna be a shit store and people are gonna say it's because they own beats and beats. Well, that's right. That's right

01:49:32   Yeah, it's all we'll have an antitrust

01:49:34   investigation, you know like

01:49:36   It's all it's all a scheme to get you to buy beats headphones

01:49:39   But I would assume that that's what they're gonna do

01:49:44   It seems like only natural because you can actually drop it. You can draw power from that too

01:49:49   Which is pretty interesting, right? So you could have a pair of headphones that are connected still but

01:49:55   you know, like the noise canceling ones,

01:49:57   where right now you need like AAA batteries,

01:50:00   but like the Bose ones that cancel out the noise,

01:50:03   but they need AAA batteries to put in them.

01:50:05   And if you could just draw the power from the phone,

01:50:07   that's interesting, but that doesn't alleviate the,

01:50:10   that actually probably exacerbates the cord issue still.

01:50:13   - Yeah, probably.

01:50:14   Yeah, well, it would have to.

01:50:16   Yeah, and then the other thing,

01:50:19   I was thinking like, 'cause noise canceling,

01:50:21   whenever I think of noise canceling,

01:50:23   I used to have a pair of Bose noise canceling,

01:50:26   and I do, I kind of miss them whenever I'm on a plane,

01:50:28   because they really do work, and I always think of them

01:50:31   as something you wear on a plane.

01:50:33   - But they're just so bulky to carry around.

01:50:35   - Exactly, it's such a huge,

01:50:37   they're so big compared to earbuds.

01:50:39   And if they drew power, that's the other thing too,

01:50:44   is that you don't wanna get off the plane

01:50:45   and have your phone be dead

01:50:46   because you were powering your headphones.

01:50:49   And if you've, there's only one lightning adapter,

01:50:51   So even if you're on a plane depending on your airline if you have a you're lucky enough to be on a plane where you

01:50:56   Can have a power port?

01:50:58   Are you gonna charge it while you're while you're using it for lightning to do the headphones?

01:51:03   Yeah, I feel like Bluetooth is the way to go

01:51:06   Yeah, the only way that that would their trade-off would be good

01:51:09   There is if is if by drawing power from the phone you could significantly reduce the bulk of the noise cancelling

01:51:16   So they didn't need the battery obviously

01:51:18   But I don't know. I don't know what's involved in sort of the noise canceling technology

01:51:22   But I cannot help but think that the headphone jack is going the way of the dodo

01:51:26   I mean, I really I honestly don't know how much thinner they could make the device and still have it

01:51:30   I mean a little bit just looking at it, but it's really and then could they could they do stereo speakers then?

01:51:36   do you think on the

01:51:38   You know at the bottom where they only have the one sort of side is is the speaker could they do both would they do?

01:51:43   both

01:51:46   I feel like I've never gotten a definitive answer on it, but when I've brought it up with people at

01:51:51   Apple, they've always said that it's a gimmick because it's too close. It doesn't make it,

01:51:55   it actually doesn't make a difference. Yeah, that's right. I've heard the same thing. It's sort of,

01:51:59   it wouldn't matter. You're exactly right. I think it might matter a little bit if, and I've seen

01:52:04   some phones, you know, like with Android, you can find a phone that does anything, you know, there's

01:52:08   some obscure Sony one that has like speaker on the top and the bottom. So that when you hold the phone

01:52:14   in horizontal mode like you would when you're watching a video, there's a little bit more

01:52:20   separation and I could see it would make a difference. But for the most part, you know,

01:52:23   if you have stereo speakers on the bottom, just on one side of the phone, it's pointless.

01:52:28   And in fact, when you're watching video sideways, it's counterproductive.

01:52:32   Right.

01:52:33   Because, you know, what's the point of having left and right when they're both on the right,

01:52:36   because that's how you're holding the phone. Like it's, you know, so that's what I've heard,

01:52:41   Is that it's just a stupid marketing checkpoint that they're not going to go for

01:52:44   That was one of the rumored features though of the ipad pro right that it might have stereo like because it would have

01:52:51   Speakers on both sides who knows if that's that's gonna end up being legitimate at all

01:52:55   But I think that was at one point like I thought I still think though

01:52:58   It would only make sense if they were at the top and bottom not left and right because yeah

01:53:02   That's how you watch video and video is when you want it like who cares if your alert sounds come in stereo

01:53:07   that's right or

01:53:10   what they could do if they do actually do some sort of keyboard device with the iPad Pro.

01:53:17   Maybe they could do it just like they do with MacBooks now where they have the speaker sort

01:53:20   of built under the keyboard. Yeah, something like that I could see. I don't know, but I

01:53:23   don't think putting them on the actual sides of the device makes any sense. Yeah. All right,

01:53:30   I think that about does it. Good talking to you. We shouldn't make it so long this next time.