The Talk Show

196: ‘Actually, You Can Buy a Better Coke’ With Rene Ritchie


00:00:00   René, welcome back to the talk show.

00:00:03   Thanks, always a pleasure.

00:00:05   Oh man, how's your summer going?

00:00:11   Good, good. I mean, summer is supposed to be where things are slower, but it's been super hectic.

00:00:17   Work-wise, you're saying?

00:00:19   Work-wise, family-wise, you know, this business when people come over to visit, you know, you still have to work, so it's always odd.

00:00:26   Right, I totally know what you're talking about.

00:00:30   How's the weather up there?

00:00:34   It's muggy, so Canada, I don't know if Guy English ever explained

00:00:38   this to people, but it goes from like minus 40, which I guess is like minus 30

00:00:42   Fahrenheit, to plus 40, which is like 100 degrees over the course of a couple weeks,

00:00:46   and it's 100% humidity because Montreal is an island, so we just don't get

00:00:50   nice weather. I don't think you do.

00:00:54   - I don't, I've only been to Montreal during Singleton

00:00:57   and one time long, long, long, long before that,

00:01:00   but I don't remember when it was.

00:01:01   But I could tell that even in the winter,

00:01:04   you can kind of tell it's high humidity.

00:01:07   - The equinoxes are nice, that's about it.

00:01:09   - Yeah.

00:01:10   Pretty hot here in Philadelphia as well.

00:01:13   I don't even know where to start.

00:01:17   There's a lot going on.

00:01:18   Don't you think?

00:01:20   - Yes, it's a sillier season than usual.

00:01:22   - Yeah.

00:01:23   Did you see the article?

00:01:25   I didn't even want to link to it.

00:01:27   Did you see the stupid fucking article

00:01:28   in the Wall Street Journal over the weekend?

00:01:31   I know Trip Merkle or whatever the hell his name is,

00:01:34   byline was on it, and somebody else,

00:01:36   about how Samsung is like the true design company

00:01:39   that's built its company for decades around design first.

00:01:44   - It felt like a sponsored post from Samsung Mobile

00:01:46   that was rebranded with an Apple headline

00:01:48   so people would click on it.

00:01:50   - It was a really, really strange article.

00:01:51   It was just it was just like it was like a profile piece about Samsung but shoehorned into and

00:01:55   Apple's losing a clickbait title and it was it didn't fit anything right and and I it's like it wasn't worth I

00:02:02   Decided not to even link to it to shoot it down because it was it's just anybody who would go for it. It's just so

00:02:08   You know, it's like is the galaxy s8 a good-looking phone. Yes, is it ahead of Apple on the side-to-side?

00:02:16   Bezels and you know, very small chin forehead. Yes

00:02:20   And you know, there's no argument about that.

00:02:25   And that sort of leads into what we're actually talking about

00:02:27   that's substantive about what might be coming up

00:02:30   with the iPhone and stuff.

00:02:31   - But that's true to an extent.

00:02:33   But you look at their, even their recent history,

00:02:35   the pen and the Galaxy S6, I guess 'cause they skipped

00:02:37   the 7, got stuck if you put it in backwards,

00:02:40   which is not good design.

00:02:41   The Galaxy Note 8 or 7, sorry, famously blew up,

00:02:44   which is really, really, really bad design.

00:02:47   They've had screens come off.

00:02:48   They've had, people were making fun of one of their phones

00:02:51   'cause you could stick cards in it

00:02:52   because the gap became so big in the side of the screen.

00:02:55   These are all design issues.

00:02:57   It's just not how a phone looks.

00:02:59   - And even with the S8, there are tons of complaints

00:03:04   about the Bixby button and that it's,

00:03:07   people are, there's a dedicated button

00:03:10   to bring up their version of voice-driven AI thing

00:03:12   called Bixby, dedicated button on the hardware,

00:03:16   which in and of itself is a questionable design.

00:03:19   Questionable, maybe it's good, I don't think so,

00:03:21   but it's absolutely the fact that it seems

00:03:25   to get triggered accidentally a lot

00:03:27   when you're trying to hit other buttons

00:03:28   is probably a design issue.

00:03:30   The fingerprint sensor of this thing is on the back

00:03:34   because they couldn't put it on the front,

00:03:36   which is definitely, in my opinion,

00:03:40   I have a Google Pixel and it has a great fingerprint sensor

00:03:42   that seems to work about as fast as an iPhone's.

00:03:46   having it on the back is worse than having it on the front.

00:03:48   There's no question in my mind.

00:03:49   Is it horrible?

00:03:50   No, I mean, but it's worse.

00:03:53   That's the-- - So Samsung's even worse

00:03:54   because they put it next to the camera lens,

00:03:56   so half the time you swipe the camera lens,

00:03:57   and then they have to have software

00:03:59   to tell you your camera lens is all grossed up

00:04:01   and you need to clean it.

00:04:02   - Right, and yeah, and I think it's actually,

00:04:04   while trying to feel you, and it's not even centered,

00:04:07   it's like off-center, which is bad design.

00:04:10   And famously, you have a year's worth of documentation

00:04:15   when you look at the side at the bottom where all the ports are and the screws and stuff,

00:04:22   noticing how nothing on a Samsung phone is actually center aligned with each other, which

00:04:26   is design and which would bother me greatly.

00:04:29   And yes, the fact that the speaker grills aren't aligned with the USB slot on a Samsung

00:04:35   phone, is that the sort of thing that of the tens of millions of people who buy one that

00:04:40   most of them aren't going to notice?

00:04:42   Yes.

00:04:43   But, boy, I sure notice it.

00:04:46   - And it's something Apple builds for.

00:04:47   Like, they specifically build everything from the board

00:04:49   on up so that those things do align.

00:04:51   Just a question of taking the time to do it.

00:04:55   I'm sure it's more difficult,

00:04:56   but it's something that they could easily do.

00:04:58   - Anyway, of course it doesn't get into any of that stuff.

00:05:06   - No, it was, again, it was marketed as news,

00:05:09   which was a bad decision.

00:05:11   Neil Seibert had it really good.

00:05:13   People don't describe to his newsletter,

00:05:14   he does a really good job of analyzing the Apple market.

00:05:17   He used to be a financial analyst,

00:05:19   and I think he was a sell-side analyst,

00:05:21   but he does a really good job of delving

00:05:22   into Apple's decisions from sort of

00:05:24   the business point of view.

00:05:25   And he was saying just how odd recent Bloomberg

00:05:27   and Wall Street Journal pieces have been

00:05:29   because they have been marketing opinion as news,

00:05:32   and he thinks it's what you've been talking about,

00:05:34   which is it's getting harder and harder

00:05:36   for them to score rumors.

00:05:37   So absent rumors, they'll do anything they can

00:05:39   to get the same sort of clicks out of people.

00:05:40   - Yeah, I actually am a subscriber to Above Avalon.

00:05:44   That's Neil Seibart's newsletter.

00:05:45   And I read that today and it actually,

00:05:48   the fact that he eviscerated it.

00:05:49   So it's a shame, and I don't blame,

00:05:52   it's a good business model and Ben Thompson does it

00:05:55   and others, to have these subscriber-only newsletters

00:05:59   with a once a week free post that's everywhere.

00:06:01   And it's frustrating for me because if Neil's newsletter

00:06:04   today had been public, I definitely would have linked to it

00:06:06   rather than, I don't wanna write it up myself, but yeah.

00:06:10   And his main point, and it's a good one,

00:06:12   and it's kind of inside baseball for journalism.

00:06:16   But like, Daring Fireball is very easily categorized.

00:06:21   The entire thing is sort of my opinion column.

00:06:24   And everybody knows that I'm writing from my perspective,

00:06:28   and I'd make clear by how I phrase my sentences

00:06:31   what I'm stating as a fact that I know,

00:06:34   or that is just simply what happens

00:06:36   when you click this button as a fact,

00:06:38   and what's my opinion.

00:06:39   And so I can mix them interchangeably

00:06:43   and you know what you're getting if you're a regular reader.

00:06:46   In a newspaper, especially a traditional one

00:06:48   like the Wall Street Journal or the New York Times,

00:06:50   there's a separation between the opinion sections

00:06:52   and the news sections.

00:06:56   And so somebody like, say, Walt Mossberg,

00:06:59   wrote, they may not call,

00:07:03   it's not like he wrote on the op-ed page,

00:07:04   but his personal technology column,

00:07:06   you know, like where Joanna Stern is now,

00:07:08   is a subjective column where it's here's this columnist's view on whether this technology

00:07:16   is good or bad or whatever. The piece about Apple and Samsung design ran in the news section.

00:07:22   Again, you can have profiles that run there, but it's really hard to justify a lot, most

00:07:28   big chunks of that article based on it as a news article because it really wasn't.

00:07:35   news of it. And the way that the cheat is the quotes that he said, I guess it was two

00:07:42   people, Tripp, whatever his name is, but the quotes that they picked from quote unquote

00:07:47   analysts and quote former Apple executives and stuff like that. That's the cheat that

00:07:53   a news article can use to kind of come across as an opinion column. So the byline article

00:07:57   writers aren't giving their opinion, but they're quoting these people who are saying

00:08:02   these things that are clearly opinion.

00:08:04   getting quotes from Samsung mobile about the state of Apple design is not something that a legitimate

00:08:09   news article would do. Right. And it's the part about Neil Seibard's article that really made me

00:08:16   like, yes, this is exactly what I suspected, but he did the work and went to do it. Here, let me

00:08:22   actually just bring it up because I don't want to get it wrong. But there was a quote from somebody

00:08:27   who was attributed as a, said Hugh Dubberly, a former Apple Creative Director and former

00:08:36   member of Samsung's Global Design Advisory Board.

00:08:39   The pipeline that Steve Jobs started is over.

00:08:42   This is a guy who's saying, here's his full quote.

00:08:44   This is a quote from the guy.

00:08:45   It's not so much that Samsung has gotten better, but Apple has fundamentally changed, said

00:08:49   Hugh Dubberly, a former Apple Creative Director and former member of Samsung's Design Advisory

00:08:54   Board.

00:08:55   The pipeline that Steve Jobs started is over.

00:08:57   That pretty much summarizes the gist of the article, which is positing that Samsung, from

00:09:04   its outset, has been a design-first company, and that Apple is the shell of its former

00:09:13   self.

00:09:14   It's a stream of opinion that's actually been thankfully fading away recently, which

00:09:19   is that Apple is doomed without Steve Jobs.

00:09:23   But here's a guy going back to it.

00:09:26   Now, it's an interesting pedigree,

00:09:28   because I'm personally not aware of very many people.

00:09:31   In fact, I can't think of anybody off the top of my head

00:09:33   who's worked at Apple and Samsung in any,

00:09:37   I can't think of any former Apple people

00:09:39   who've also worked at Samsung,

00:09:41   so that's certainly interesting.

00:09:42   - But there was a guy who worked at Apple in UI

00:09:47   and then went to work at Blackberry in UI,

00:09:48   and it's very similar sort of things,

00:09:50   is they wanna claim the crown,

00:09:51   and that's sort of what this does.

00:09:53   And they're also from periods,

00:09:55   I forget when this guy was there, but it was way before any of the modern things that Apple

00:09:59   has done before iPhone, before all of these things.

00:10:01   Well, here's the biggest—

00:10:02   And it's like—

00:10:03   Here's where Seibart does the work. The authors quote Hugh Dubberley, a former Apple

00:10:06   creative director, and these are Seibart's words, "Whenever I see former Apple executive,

00:10:11   I raise an eyebrow or two. There seems to be a high correlation between former Apple

00:10:15   executive or some kind of negative view as to how Apple is currently operating. Weird,

00:10:19   huh?" Upon closer examination, Dubberley worked at Apple during the late 1980s and

00:10:25   early 1990s. That means he joined Apple after Steve left to start next, and he was long

00:10:30   gone before Steve returned to Apple in 1996.

00:10:34   So, it's just sort of what you expect the editor of the Wall Street Journal to do.

00:10:39   Right. It's, it's, that's really, it's downright misleading, in my opinion. It's,

00:10:45   it's, it's exactly the sort of thing that I expect better from, from the Wall Street

00:10:48   Journal, where, technically speaking, it is, it is technically accurate to describe him

00:10:54   as a quote "former Apple executive." Right? That's not incorrect. But as a casual reader

00:11:01   of the Wall Street Journal, it leaves you with an incredibly false perception. The perception

00:11:08   I would draw from that if I weren't skeptical because of my familiarity with the company

00:11:14   and the lack of interchange between employees, especially at an executive level between Apple

00:11:21   Samsung. You and I can be very skeptical of that. Probably most people who are listening to this

00:11:26   podcast are at least halfway skeptical. But think about the Wall Street Journal is a super mass

00:11:30   market. It's one of the most read websites and newspapers in America, if not the world.

00:11:34   Somebody who's just sort of casually familiar with this, I would think would naturally assume

00:11:40   that this guy was relevantly employed at both companies, right? I mean, absolutely.

00:11:49   I don't think most people from the Wall Street Journal or reading the Wall Street Journal

00:11:54   could name a single product Apple made between the late 80s and early 90s. I don't think they

00:12:02   could name a single product. I don't even know if they could name just the Mac, just quote unquote

00:12:07   the Mac. Maybe. And this, you know, called it a hit piece and that's, you know, it reels like that.

00:12:13   And I remember previously these things sort of go in phases. There was a whole bunch of anti-Apple

00:12:17   Pay articles, and I don't believe it was a Wall Street Journal, but it was a similar paper of

00:12:20   record, did a story about how terrible, how people, they didn't think that Apple Pay would get any

00:12:24   adoption. And the person they quoted was, was said like, you know, mobile payment expert, blah, blah,

00:12:29   blah. And anyone who was in the industry knew that that was the guy who started the company that

00:12:33   Samsung bought to make Samsung Pay. And it wasn't identified at all in the article. So someone

00:12:37   casually reading it would think that an expert had said that this will have never get any traction.

00:12:41   Pete: Well, it's just inaccurate. They're just looking for hits. And I think, I think the basic

00:12:45   I suggest I've written about this

00:12:46   and Sybarth touched upon it.

00:12:48   The fact that they know they want to write about Apple

00:12:50   and they want to write about this upcoming phone

00:12:52   and they know, 'cause it gets clicks, it gets headlines,

00:12:56   and people are interested in it.

00:12:57   And it is a super successful product.

00:13:00   Financially, it makes sense

00:13:02   that they would have articles about it.

00:13:04   And the truth is, most people, everybody,

00:13:06   the collectively, we seem to know almost nothing

00:13:09   about what's coming up with the new iPhones.

00:13:11   Like here's where this article

00:13:13   that I didn't really want to write about,

00:13:14   which is exactly what I like having a podcast to talk about,

00:13:17   leads into something that really is worth talking about.

00:13:20   - Absolutely.

00:13:20   - I'm gonna take a break here and thank our first sponsor

00:13:24   before we get into talking about new iPhones.

00:13:29   And our first sponsor I'm very excited about,

00:13:31   it's our good friend at Casper.

00:13:34   Casper makes an obsessively engineered mattress

00:13:38   at a shockingly fair price.

00:13:40   Go to casper.com/thetalkshow and use code thetalkshow

00:13:44   and you will save 50 bucks towards any mattress.

00:13:49   Put a little asterisk right there.

00:13:50   I'll get back to that.

00:13:51   Now Casper created one perfect mattress.

00:13:53   This is one of my very favorite things about the company.

00:13:56   And they sell it directly to consumers.

00:13:58   So when you go to Casper, you don't have to pick

00:13:59   like medium firm or extra firm,

00:14:04   or you want coil springs, or do you want memory foam,

00:14:07   or do you want, how do you know?

00:14:09   Especially if you're ordering online.

00:14:11   You don't know.

00:14:13   No, they have mattress engineers, actual engineers,

00:14:16   who all they do is design mattresses,

00:14:17   and they develop one in-house type of mattress.

00:14:21   It has a sleek design, 'cause it's a foam type thing.

00:14:24   It's vacuum packed when it gets delivered to you,

00:14:26   and it comes in a remarkably small box.

00:14:28   I don't know if they still do this,

00:14:31   but at one point they were delivering,

00:14:32   like in Manhattan, if you ordered in New York,

00:14:35   they actually delivered them by bicycle courier.

00:14:37   That's how small, I mean, it's a pretty big box

00:14:40   for a guy riding a bicycle,

00:14:41   but it's actually small enough that a guy could,

00:14:44   somebody could put an entire mattress,

00:14:47   the way they compress it into a box, onto their back,

00:14:49   and deliver it to you on a bicycle.

00:14:52   It's really, really neat.

00:14:53   It's actually fun to open up and use.

00:14:55   We've got them here.

00:14:57   We use them in the Gruber household.

00:14:58   We've just been away on vacation,

00:15:00   and you know, hotel beds, we stay in nice places,

00:15:05   and they have nice beds.

00:15:06   My son, number one complaint by the end of the vacation

00:15:09   was that he wanted to go home

00:15:10   get back on his Casper mattress.

00:15:12   Just totally true, absolutely true.

00:15:14   He wanted to leave Disney World

00:15:15   and go back home to his regular mattress.

00:15:18   I don't know how much more of a,

00:15:21   I don't know how much more of a compliment I can pay

00:15:25   (laughs)

00:15:27   than that a 13-year-old wanted to,

00:15:29   was ready to go from Disney World

00:15:30   to get home to his Casper mattress.

00:15:32   Really, really great stuff.

00:15:33   And they're just great prices.

00:15:37   I know what you're saying.

00:15:38   I know if you've ever heard me do a Casper pitch before,

00:15:40   Here's the whole thing. How do you blue? It seems weird to buy a mattress. It seems weird without ever ever like trying it

00:15:45   Like just even just putting your hand on it squishing it

00:15:47   Number one, you don't want to go to a mattress store go into a mattress store of all the type of brick-and-mortar stores

00:15:53   They're suck mattress stores are way up near the top number two. They rip you off

00:15:58   But here's the solution Casper has a hundred night risk-free guarantee. So you buy it try it

00:16:04   However, skeptical maybe you're highly skeptical

00:16:07   Buy it try it you get a hundred nights

00:16:09   And if you don't like it, you just you just give them a ring get on a website tell them

00:16:13   I don't like it and they will come pick it up and give you all your money back and

00:16:17   Casper mattresses were designed developed and they are assembled right here in the USA

00:16:23   So anyway, you get 50 bucks towards any mattress go to casper.com slash the talk show use that code the talk show

00:16:28   You'll get the money off. The only hitch on that the asterisk I was telling you about before is that they also have dog mattresses

00:16:34   I've been selling these things

00:16:36   pitching these things on this sponsor of ever since they came out and and I have so many

00:16:40   Reader emails saying my god, my dog loves this mattress. My dog won't get up in the morning loves the mattress

00:16:46   You don't save 50 bucks on a dog mattress because the dog mattresses are cheaper. So they don't have a discount for it, but

00:16:52   The affection from your your pooch will will more than more than make up for the fact that you don't get the discount on that

00:16:59   So there you go. My thanks to Casper

00:17:01   Great company great mattress. I really I really love this product

00:17:05   So that leads us to what we do know about new iPhones number one

00:17:09   I think I do I think it's a fact and you and I follow this stuff pretty closely

00:17:12   I really do think that while we know some stuff about what seems to be we have some hunches about what's coming up with new iPhones

00:17:19   I think we know less than we have in just about any year in the past. I think that's true

00:17:23   I mean we all it's it's almost certain

00:17:26   There's no reality in which Apple just pieces out stops making iPhones and switches to making hot tubs

00:17:29   So I'm fairly certain there will be a new iPhone.

00:17:32   But there is just so much up in the air now, especially with--

00:17:37   I don't want to say the iPhone 5C was similar,

00:17:38   but that was the last time where there was, for me at least,

00:17:41   a curveball, where there was a consideration

00:17:43   that they were going to make, instead of just bringing

00:17:45   over the previous year's flagship

00:17:47   and dropping it $100, that they were

00:17:48   going to make something that was less expensive that might

00:17:51   better address mainstream markets or emerging markets.

00:17:54   And we sort of didn't know what that was going to be.

00:17:56   Some people thought it was going to be a cheap iPhone.

00:17:57   Some people thought it was going to be something else.

00:17:59   and it ended up being the 5C.

00:18:01   And this is similar, but at the opposite end of the spectrum

00:18:04   where the rumors suggest heavily

00:18:05   that they're gonna be looking at the higher markets this time.

00:18:08   - So the rumors we do know

00:18:10   are the ones that have been pretty consistent

00:18:12   for a while now.

00:18:13   I mean, number one, a long time ago,

00:18:15   and I hate to, I really do, I'm laughing here,

00:18:18   but I hate to brag, but I really do feel,

00:18:20   I really do think I was the first person to mention this

00:18:25   was about two years ago, maybe longer, I don't know.

00:18:28   But I heard from a reputable little birdie

00:18:33   that Apple was working on a couple years out from then

00:18:37   and an iPhone with an edge-to-edge display

00:18:41   that got rid of the bezels on the sides

00:18:43   and most of them on the top and bottom.

00:18:45   And that it's drop dead gorgeous.

00:18:46   And I didn't write about it 'cause I don't like

00:18:49   writing about stuff like that anymore,

00:18:50   but I talked about it on this show

00:18:51   and it got picked up, I think, by MacRumors.

00:18:56   So the idea that there's an iPhone coming

00:18:58   with smaller bezels, you don't even need to know anybody

00:19:02   or have any sources to see, you know,

00:19:04   you don't need a weatherman to know

00:19:05   which way the wind blows, right?

00:19:07   I mean, it's, you know, iPhone's, you know,

00:19:10   Apple products tend to get thinner, you know?

00:19:13   - Well, I think I wrote about the losing the home button,

00:19:15   I think, in January of 2015.

00:19:17   So this, at least, that should put aside the rumors

00:19:19   that this is a last minute thing

00:19:20   that they're struggling towards.

00:19:22   - Right.

00:19:22   I think here it was this 2017 iPhone may feature edge to edge display.

00:19:32   Yeah.

00:19:33   So this was, it wasn't two years ago, it was me, it was back in May 2016 when I talked about this on the talk show.

00:19:39   Here I will put this link in the show notes.

00:19:40   Actually I think what I heard about two years prior was the dual camera system.

00:19:45   That's right.

00:19:45   I get my, I get my little birdie stuff.

00:19:47   Well, you and I had a discussion, I forget when it was, but it was roughly two years

00:19:51   ago about the practicality of removing the home button because people were just so used

00:19:55   to it as an escape mechanism.

00:19:57   Right.

00:19:58   And I think our conclusion was that you just need some other way to have the escape mechanism.

00:20:04   It doesn't have to be an actual button.

00:20:06   There just needs to be some sort of affordance for that.

00:20:09   Yeah, it's the same as the touch ID/face ID thing.

00:20:11   Touch ID is an instance of doing something, and there are other ways of doing the same

00:20:16   thing.

00:20:17   - A great example would be mute switches, right?

00:20:21   And the iPhone still has one.

00:20:24   We could go off on a huge tangent on this

00:20:26   'cause I've thought about it a lot.

00:20:27   Apple in general is a company that is generally,

00:20:33   I think everybody would agree whether you like them

00:20:35   or dislike them or are ambivalent towards them,

00:20:37   they tend to edge towards minimalism on buttons.

00:20:41   I mean, they've famously, infamously,

00:20:44   the smart keyboard gets rid of things like the escape key,

00:20:47   The buttons tend to go away.

00:20:49   Apple tends to be conservative on this.

00:20:51   And yet they're the only company that I know of

00:20:54   that makes a smartphone that has a dedicated mute switch.

00:20:58   So I think Apple obviously thinks the mute switch

00:21:00   is an important thing.

00:21:01   It's been there on every iPhone ever since.

00:21:03   But the iPads started with them,

00:21:06   and now a couple years ago,

00:21:07   I think probably more iPads have shipped

00:21:10   without mute switches than had them in the first place.

00:21:13   But there was--

00:21:14   - I think you and I talked about this at WDC,

00:21:15   where the next, like the rumors for the next,

00:21:17   maybe the next or next iPhone is no buttons and no ports.

00:21:21   And people thought that was ridiculous,

00:21:22   but now the Pixel 2 is rumored not to have any buttons,

00:21:25   and there's rumors of phones with no ports.

00:21:28   So the future keeps going.

00:21:29   - Right, no headphone port, that's sort of like getting,

00:21:32   you know, getting rid of anything hardware.

00:21:34   You know, just reducing the thing ultimately to--

00:21:37   - Things that can fail on the device.

00:21:38   - Right, things that can fail, things that have moving parts.

00:21:42   Moving parts tend to go away,

00:21:44   and moving parts tend to have problems.

00:21:46   I have mixed feelings about the missing mute switch

00:21:50   on the iPad personally.

00:21:51   I like it.

00:21:53   And I like the way that you don't have to turn the thing on

00:21:57   or unlock it or do anything on the screen

00:21:59   to just shut the thing up if it's making noise.

00:22:01   But I understand that that can be less of a, ooh,

00:22:06   the whole fact that you could have your phone in your pocket

00:22:07   and maybe you are the idiot at the movie

00:22:09   who forgot to silence your phone,

00:22:12   and if it starts making a noise,

00:22:13   the fact that you can get that thing silenced so much quicker with that switch than you

00:22:18   ever could no matter what genius invented a software interface for it on the screen

00:22:23   is a big deal. Plus the fact that in that scenario in a movie theater, the fact that

00:22:27   you don't have to have the screen light up is an even bigger deal if you're a good human

00:22:31   being who doesn't take their phone out during movies.

00:22:40   So that was a huge controversy too. I don't know if you remember, but some people want

00:22:42   the mute switch to mute everything,

00:22:44   and some people wanted only to mute some things

00:22:46   and not alarms, for example,

00:22:47   and that was hugely controversial at the time.

00:22:49   - I actually still don't even remember how it works.

00:22:51   Like, if I have my phone on mute,

00:22:52   my morning alarm clock still makes a sound, right?

00:22:55   I think so.

00:22:56   - Yes, yes.

00:22:58   And some phones didn't do that,

00:22:59   and then it was a controversy,

00:23:00   like who was doing that right?

00:23:01   - Right, well, and then you run into that with phones

00:23:03   where instead of having a dedicated mute switch,

00:23:05   if you just, the idea is you just hold volume down

00:23:08   until it gets to zero,

00:23:09   well, that's definitely different to me than a mute switch.

00:23:12   But anyway, I digress.

00:23:14   The idea of an edge to edge phone

00:23:16   has been floating around for a while.

00:23:18   And out of, it seems like,

00:23:22   and I've mentioned this all the time,

00:23:24   but it seems like a huge source of leaks for Apple,

00:23:26   historically, especially for the iPhone,

00:23:29   has been the Asian supply chain.

00:23:31   There was an interesting thing earlier this summer

00:23:33   where it was the outline,

00:23:36   got a leaked copy of an internal Apple presentation

00:23:39   about how they, a presentation to employees

00:23:41   about how they deal with leaks

00:23:43   and their policies towards leaks,

00:23:45   where internally Apple claims

00:23:46   that they've actually gotten to the point

00:23:48   where fewer of the leaks are from the supply chain

00:23:51   and from within Apple,

00:23:53   which is interesting that Apple would say that,

00:23:54   but doesn't really jibe with what I see personally

00:23:57   in terms of what gets published.

00:23:59   I'm not disputing that that's what Apple thinks internally.

00:24:02   I mean, they know what they know.

00:24:05   - They can think anything they want.

00:24:06   - Right, well, and they might know things that I don't know.

00:24:09   I mean, one thing that they know that's interesting,

00:24:11   it's always interesting to me, is they know which ones are bullshit and which ones aren't.

00:24:15   And some of them are. There's enough stuff, I have enough claim chowder bookmarks,

00:24:22   that not everything that's been published can possibly be true. There's contradictory reports

00:24:27   out there. And the ones that are contradictory often cover themselves. The ones that know that

00:24:35   that they're on shaky ground.

00:24:38   My favorite trick is to say that Apple is still deciding.

00:24:43   - Yes, that's okay like a year or so out.

00:24:47   It gets less and less believable

00:24:48   when it becomes closer to August and September.

00:24:50   - Right, but one thing that seems very leaky to me,

00:24:53   and still is this year, is the display providers,

00:24:57   the display suppliers for Apple.

00:24:59   And I know they're sharp, and I guess Samsung

00:25:03   is the contracted company for OLEDs.

00:25:06   And some of this stuff, it's like not even like rumors.

00:25:11   I mean, some of the stuff like,

00:25:12   it's like in, they may not say it's Apple,

00:25:16   but there's like filing, regulatory filings

00:25:18   where these companies have said we have a,

00:25:20   we're providing 10 million of these displays

00:25:23   for a major company for a late--

00:25:26   - Yeah, and some of them even say Apple.

00:25:27   And I wonder if they get a real good phone call after that,

00:25:29   like at their earnings statements

00:25:30   or at their press conferences in China,

00:25:31   they'll say Apple's buying blah, blah, blah.

00:25:33   and you just wonder how fast that phone rings.

00:25:35   - Yeah.

00:25:36   I don't know.

00:25:38   I do wonder.

00:25:41   But, and Ming-Chi Kuo,

00:25:48   I think is the top rumor person for Apple,

00:25:54   wears the crown right now,

00:25:56   has been on this for a while

00:25:58   and has been very consistent

00:26:00   that Apple has three new phones coming out this year.

00:26:02   a 4.7 inch with an LED display,

00:26:06   which would be the same size display and technology

00:26:09   and display of the iPhone 7,

00:26:12   and also the 6S and the 6.

00:26:14   A 5.5 inch LED display,

00:26:17   which is the same technology

00:26:18   and the same exact diagonal size as the 7 Plus,

00:26:22   and also the 6S Plus and the 6 Plus.

00:26:25   And, and here's the weird one,

00:26:28   here's the, or at least the new one,

00:26:29   a 5.8 inch diagonal display

00:26:33   that is a different aspect ratio, skinnier and taller.

00:26:38   Therefore, like a wider aspect

00:26:42   or whichever way you want to hold the phone.

00:26:44   If you hold it in portrait, a skinnier, taller display,

00:26:49   that's an OLED from Samsung that can curve

00:26:54   and therefore go edge to edge

00:26:56   and has greatly reduced the need

00:26:58   for side bezels on the phone.

00:27:00   He's been very consistent on that.

00:27:02   What I bet on it, I mean, is it possible that he's wrong?

00:27:06   Of course, I think.

00:27:07   I never would bet the house on any of these rumors,

00:27:10   but it seems pretty good.

00:27:12   - Yeah, and I think the crux of what you and I

00:27:15   were talking about years ago was that,

00:27:17   how do you solve the problem of people who want,

00:27:18   like we were talking about the iPhone,

00:27:20   I guess it was the 6 Plus back then,

00:27:22   and it's just too big a phone for some people,

00:27:24   and so they go with the 6,

00:27:25   or back then they would stick with a 5S or something,

00:27:27   and you can say make a better 5S,

00:27:30   but what Apple was thinking is why can't we make

00:27:32   something that's the size of a 6

00:27:34   but has a display of a 6S?

00:27:36   And that's sort of a different way to solve that problem,

00:27:38   and this is the phone that tries to solve that problem.

00:27:41   - Apparently, you know, let's assume that it's right.

00:27:44   - Yeah.

00:27:45   - I've mentioned this to you

00:27:48   before we started recording the show.

00:27:49   I don't think that there's a ton of smoke

00:27:53   on the two, let's call them the regular new iPhones,

00:27:58   the 4.7 and 5.5 inch LEDs.

00:28:01   The most obvious thing Apple could do

00:28:03   would be to make an iPhone 7S and 7S Plus

00:28:06   because every single time they've come out with a phone

00:28:10   with a number, starting with the 3G,

00:28:12   then the 4, then the 5, then the 6,

00:28:15   the following year they've come out with a phone

00:28:17   with the exact same name, with an S tacked to the end,

00:28:22   and with a more or less roughly same form factor, usually

00:28:27   case compatible.

00:28:29   And if not case compatible, so close to case compatible

00:28:33   that you can effectively use--

00:28:36   you can use an iPhone 6 case on a 6s.

00:28:39   You can use a 6s case on a 6.

00:28:40   And everything lines up.

00:28:42   The buttons line up.

00:28:43   And there have been changes.

00:28:47   You know, I think it was the 5s that introduced Touch ID,

00:28:51   which is more, you know, you could tell just by looking at it. There, you can just eyeball

00:28:55   it. You don't have to turn it on. You don't have to run like a benchmark or something

00:28:58   to tell that it was new. But the Touch ID sensor was where the old home button was,

00:29:04   so it didn't really interfere with any kind of case design or something like that.

00:29:08   And this, the 4S had the better antenna, though, with the extra piece of plastic in it.

00:29:13   Right. Right. We had the, it's actually, it's like one of my favorite eras of iPhone

00:29:19   because there was the weird Verizon iPhone in between, which had the futuristic antenna design.

00:29:27   Yeah, I think it had the dual antenna that could switch intelligently depending if your hand was

00:29:31   blocking too much of it to get a signal. Right, and those black lines that separated the pieces

00:29:36   of the side frame, the Verizon iPhone 4 had the black lines that separated the components that

00:29:44   matched with the next year's 4S.

00:29:48   Yes.

00:29:48   So there was a weird--

00:29:50   it was sort of like the iPhone 4 and 1/2.

00:29:52   Really.

00:29:53   It really was.

00:29:54   Yeah, yeah, exactly.

00:29:56   Well, I had to get the CDMA antenna in there,

00:29:59   and that was the best way to do it.

00:30:00   The Verizon iPhone 4 is one of my all-time-- probably

00:30:04   maybe my second or third favorite iPhone of all time.

00:30:07   Because I had the better antenna,

00:30:09   and the other little thing that it had that no iPhone had

00:30:12   until recently was it didn't have those regulatory body

00:30:18   logos inscribed on the back.

00:30:20   Because they didn't need to sell it worldwide,

00:30:22   they were only going to sell it in the US.

00:30:24   And so they didn't have to put all those stupid logos

00:30:26   on the back.

00:30:27   Yeah.

00:30:29   It was beautiful.

00:30:30   I really liked it.

00:30:33   So anyway, the most obvious thing Apple

00:30:35   could be planning for this year would be to do an iPhone 7S.

00:30:39   Assuming that there is new 4.7 inch and 5.5 inch phones

00:30:44   and they're not just going to keep selling the 7

00:30:46   and the 7 Plus and introduce one new phone,

00:30:50   the iPhone 8 or whatever you wanna call it,

00:30:52   that's what Apple has done for years,

00:30:54   is they've made one new phone per year.

00:30:56   Or at least that's the narrative.

00:30:59   I think that with the Plus phones

00:31:01   that they've already started,

00:31:04   it's like a slow-breaking, like a--

00:31:07   - Yeah.

00:31:08   It's like that big landmass breaking off Antarctica.

00:31:11   It takes a while, but you can sort of see the cracks coming

00:31:13   for a while and then all of a sudden--

00:31:15   - You go from Pangaea to a bunch of continents.

00:31:17   - Yeah, and all of a sudden it's, wow,

00:31:19   that's a different strategy.

00:31:21   - So if they did that though, if they went with 7S

00:31:23   and 7S+, it's usually, like they introduce a new color

00:31:27   and then they do one special feature.

00:31:29   So it could be, it will have an A11 chip

00:31:31   and it'll have inductive charging or something

00:31:33   and that would be the positioning for it.

00:31:35   - Right, but the general rules,

00:31:38   and again, Apple can do whatever it wants.

00:31:40   These are just names, right?

00:31:41   I mean, Apple could make the thing a perfect square,

00:31:45   like an old Polaroid, and still call it the iPhone 7S.

00:31:48   - Triangle-shaped and called it the Galactica phone.

00:31:50   - No, and they can still call it the iPhone 7S, right?

00:31:53   You know, they could make it totally different,

00:31:56   make it a circle, make it a triangle,

00:31:57   and still call it the iPhone 7S,

00:31:59   and we'd have to worry about the mental health

00:32:04   Phil Schiller, but they could do it, right?

00:32:07   - Yeah, they just go and enter a name in the machine

00:32:09   and it gets printed on boxes.

00:32:11   It's not easy for them.

00:32:12   - I have no idea.

00:32:15   I have no, I heard things for a while.

00:32:18   I haven't heard anything in a long time

00:32:21   about anything related to new iPhones.

00:32:23   So I have no inside sources, no secret birdies

00:32:26   on any of this stuff.

00:32:27   All I know is what I read on the rumor reports.

00:32:29   And I also know what makes sense.

00:32:34   I kinda hope that that's not what they're doing.

00:32:38   I kinda hope that, assuming it's true,

00:32:41   this is all based on the assumption that Ming-Chi Kuo

00:32:44   knows exactly what he's talking about,

00:32:46   and that there is a new phone, some kind of new hardware,

00:32:49   4.7 inch, 5.5 inch.

00:32:50   I hope that those are the iPhone 8 and 8 Plus,

00:32:55   and maybe they get new names too.

00:32:58   Maybe they just drop numbers completely,

00:33:01   but that they have physical changes

00:33:04   that make them, if not radically different,

00:33:06   significantly different.

00:33:07   Like, for example, if all three phones

00:33:10   have dual camera designs.

00:33:12   Like that would totally render iPhone 7 cases

00:33:17   inadequate for this new phone,

00:33:19   even though it's a same-sized display

00:33:21   because there wouldn't be room for the second camera lens.

00:33:24   - And that fits sort of what they ended up doing

00:33:26   for the iPad is that they went to iPad Mini, iPad,

00:33:30   and then iPad Pro for a while,

00:33:31   and you had the existing designs, two sizes,

00:33:34   almost identical, 'cause the Air 2 and the Mini 4,

00:33:37   I think, were identical except for size,

00:33:39   and then the Pro got introduced on top of that,

00:33:41   and I could see something where they have those two iPhones,

00:33:43   it's the iPhone, iPhone Plus, and then iPhone Pro,

00:33:46   if that's what you really want.

00:33:47   - Right, I could totally see them going with that,

00:33:49   and we can talk about naming separately,

00:33:50   but I could, just as an example,

00:33:52   I could totally see the names iPhone, iPhone Plus,

00:33:56   and iPhone Pro as the three names of the product.

00:33:58   And that next year they just have the new iPhone,

00:34:01   new iPhone Plus, new iPhone Pro until, you know, whatever.

00:34:04   But that would, that would,

00:34:09   I just don't, I don't feel like anybody knows.

00:34:11   I really, I really don't.

00:34:13   - And we get so much, there's so much angst

00:34:15   about all of this.

00:34:16   Like one of my favorite lines from you has always been,

00:34:18   "Everyone drinks the same Coke,

00:34:19   "whether you're the janitor or the president,

00:34:21   "you drink the same Coke."

00:34:22   And this year, even though Apple has not announced anything,

00:34:24   the mere speculation that there'll be an iPhone

00:34:26   that is in some ways subjectively, objectively better

00:34:30   than previous iPhones has created an incredible

00:34:33   sense of offense among some people in the community.

00:34:35   Like how could Apple make an iPhone that's more expensive,

00:34:38   that's more premium, that if I buy an iPhone

00:34:40   it's not the best iPhone?

00:34:42   - Yeah.

00:34:43   - Which is what they didn't get with the iPad Pro.

00:34:45   - Wait, wait, say that again.

00:34:51   - They didn't get that sentiment with the iPad Pro.

00:34:53   that didn't seem to be a huge sentiment in the community,

00:34:55   but how dare they make a better iPad?

00:34:56   - Yeah, I don't think people are as emotional

00:34:58   about iPads as they are iPhones.

00:35:00   And the iPad has sort of,

00:35:03   but long ago bifurcated into,

00:35:08   it's not quite obvious what the best iPad was.

00:35:11   Like I think that there was a case

00:35:12   when they first came out with the iPad mini

00:35:14   that the iPad mini, I liked it,

00:35:16   I thought it was the best iPad,

00:35:18   even though it was like a year behind on the,

00:35:21   It was like, let's take last, you know,

00:35:23   for a couple of years what they were doing was,

00:35:25   let's take last year's 9.7 inch iPad,

00:35:28   put that system in a chip and components

00:35:30   into the smaller case and sell it at a lower price.

00:35:33   - Didn't even have a retina display when it debuted.

00:35:34   - Right, and I thought, you know,

00:35:37   it really was, it's just the case,

00:35:39   I've mentioned this before,

00:35:41   but it's just me hitting my 40s

00:35:42   and my eyesight deteriorating.

00:35:46   The fact that the iPad mini screen

00:35:47   was just pixel for pixel, exactly the bigger iPad screen,

00:35:50   so everything was just shrunk pixel for pixel,

00:35:53   exactly the same.

00:35:54   Like your software didn't have to,

00:35:55   developers didn't have to do a damn thing

00:35:57   to support the iPad mini.

00:35:59   Even if your layout was completely based on

00:36:02   the assumption of the pixels of the screen

00:36:05   being exactly the same, it literally was

00:36:07   because it was just the same number of pixels

00:36:09   and they were just two thirds smaller, roughly.

00:36:12   I liked it better, at least when my eyesight was smaller.

00:36:16   And my son, who's still very young and still has,

00:36:18   He much prefers the mini iPad size.

00:36:22   So I think that the iPad line sort of split where it wasn't

00:36:25   quite clear what was best.

00:36:27   Whereas the basic gist of the iPhone has been for years,

00:36:34   one new model per year at the high end.

00:36:37   Like even with the 5C, which you mentioned before,

00:36:39   which was clearly a strategic exception,

00:36:42   dipping their toes in an experiment that--

00:36:45   I don't think it was the failure that people call it,

00:36:47   but it clearly wasn't as big a hit as they had perhaps hoped.

00:36:51   - And I like that they do that.

00:36:52   Like one of the things that scares me is that when,

00:36:54   we get this, we have two sentiments.

00:36:55   We get that Apple is boring and that Apple changes too much.

00:36:58   And they're both, they're sort of two truths.

00:37:00   And people believe both of them at the same time.

00:37:02   And I think it's just human nature.

00:37:03   But if Apple doesn't take risks,

00:37:05   then Apple is losing a sense of innovation.

00:37:06   They're nothing since Steve Jobs.

00:37:08   They're boring.

00:37:08   You know, everyone else is running circles around them.

00:37:11   But when they do, when they try something like iPhone 5C,

00:37:13   or if they do this iPhone X, iPhone 8 thing,

00:37:16   then how can Apple do this?

00:37:17   You know, they're betraying us as customers.

00:37:19   Why are they-- it's a huge risk.

00:37:21   How can they-- you know, it's-- they can't win either way.

00:37:23   And I don't think the goal is for them to win.

00:37:25   But I think as a company, to be Apple,

00:37:26   they have to keep trying these risky things.

00:37:31   Yeah, I agree, too.

00:37:32   And I've-- you know, from talking to people at Apple,

00:37:37   you know, in product briefings and stuff like that,

00:37:40   I mean, it's very--

00:37:41   I mean, again, you never know what's bullshit and what's not.

00:37:43   but I really do believe it,

00:37:45   that they don't have any kind of magic science

00:37:50   behind the scenes that predicts demand.

00:37:53   They don't, there is no, I think there's a lot of people

00:37:55   who assume that Apple is so effective and so smart

00:37:58   and that they've, that there's some kind of spreadsheet

00:38:02   on Tim Cook's, I was gonna say MacBook,

00:38:05   but let's just say Tim Cook's iPad Pro even,

00:38:07   that he can hit a button and it tells him exactly what to do

00:38:13   how many of each phone to make and which design is going to sell and what quantities in which country

00:38:18   and none of that's true and that they you know one of the most surprising things from Apple's

00:38:22   perspective every year is how things change from country to country and like how the 5c sold in the

00:38:28   United States versus in Germany and stuff like that and they're saying who would have known

00:38:32   that something I don't even know if that's true maybe it's the other way around but

00:38:35   that you know that that in Germany the 5c was surprisingly popular and they had no no idea of

00:38:40   and they had to redirect all these shipments

00:38:44   that were originally meant for the US from there,

00:38:46   instead go the other way, go over to Germany,

00:38:49   because that's where people are buying them.

00:38:51   They don't know.

00:38:52   And you see it--

00:38:53   - Steve Jobs was a,

00:38:53   I was gonna say Steve Jobs was a really good

00:38:56   taste predictor too, but he didn't,

00:38:58   not everything he did was a huge success.

00:38:59   Just the things that were were so successful,

00:39:02   they obliterated almost any memory

00:39:03   of the things that didn't do as well.

00:39:05   - Right, and even so, I mean,

00:39:08   People often look back at the Mac G4 Cube,

00:39:13   and the first thing that comes to mind

00:39:16   is that it was susceptible to cracks.

00:39:18   But that could have been fixed.

00:39:21   If it had sold in good enough quantities,

00:39:23   they could have just fixed whatever it was

00:39:26   that was causing the plastic to crack.

00:39:28   The problem with the Mac Cube was that in the market,

00:39:31   people didn't see enough value to pay a premium

00:39:33   for a small box that was beautiful on your desk.

00:39:36   people instead would pay less for a less elegant iMac,

00:39:41   you know, a big, you know, it's at the time was a big CRT,

00:39:46   I think, or pay the same amount and get a Mac Pro

00:39:51   that had way more performance than the Mac cube.

00:39:53   Nobody wanted to pay the premium just for the small box.

00:39:56   And--

00:39:56   - And they went to be, there was the iPod fatty nano

00:40:00   and there was the iPod shuffle with no buttons on it,

00:40:03   you know, that they all walked,

00:40:04   that they both walked back very quickly.

00:40:06   - Yeah, yeah, you know, they, you know, they, yeah,

00:40:09   Fat Nano, Fat Nano, Fat Nano was one of the most

00:40:13   curious ones, someday I would love to get the story on that

00:40:16   because I have to say right from when I first saw it,

00:40:18   I was like, well, I don't like that anywhere near

00:40:20   as much as last year's.

00:40:21   - Yep.

00:40:22   - And there were no features on it

00:40:23   that were compelling either.

00:40:24   It wasn't like, well, I don't like the way it looks,

00:40:26   but it has blank that the other one didn't have.

00:40:28   It just was the exact same thing, but in a--

00:40:31   (laughing)

00:40:32   - It was a portrait device with a landscape video

00:40:34   that was very--

00:40:35   - Weird. - Very strange.

00:40:36   - My point is that those things happened

00:40:39   and Apple took those risks,

00:40:40   and once in a while they had much bigger hits.

00:40:41   But I think it's almost like that criticism of Pixar.

00:40:45   Not everyone is gonna be a huge hit,

00:40:46   but they have to try, they have to swing.

00:40:49   - And though it's also the case,

00:40:50   it is a similar, it's a decent analogy to Pixar

00:40:53   in so far as that they have to take chances sometimes,

00:40:58   but they do have to be very careful about those chances

00:41:02   because they can't really afford a complete dud,

00:41:04   and the iPhone is certainly that case.

00:41:06   It's worth going back to that Warhol thing

00:41:10   'cause I've quoted it and people,

00:41:12   I wrote a piece about two weeks ago,

00:41:15   basic gist of it, making the case of,

00:41:19   I don't think people are thinking through this,

00:41:22   the rumors of these three new phones,

00:41:24   which were covered a couple minutes ago.

00:41:26   People aren't thinking this through.

00:41:27   If those rumors are true, I think that people's assumptions

00:41:32   about how these new iPhones are gonna be priced

00:41:34   and how they're gonna be available are way wrong.

00:41:37   Insofar as that what it seemed,

00:41:39   and the reaction to my article made clear

00:41:42   that this is what people were thinking,

00:41:43   is that they were thinking that the fancy new iPhone

00:41:46   with the OLED display,

00:41:47   I've been calling it the iPhone Pro,

00:41:50   people have been calling it iPhone X, iPhone edition,

00:41:53   whatever you wanna call it,

00:41:54   that it's going to be the new iPhone for the year,

00:41:59   just like in previous years.

00:42:01   and it will come in at around the same prices

00:42:04   as the iPhone 7 and 7 Plus,

00:42:06   meaning like a 650, 700ish starting point

00:42:10   for the lowest end configuration,

00:42:12   which is really just about storage space

00:42:14   and a high-end option up to,

00:42:17   right now I think that the 7 Plus sells for 969,

00:42:20   so maybe somewhere, but under 1,000.

00:42:23   And the gist of my argument is,

00:42:26   if you look at the rumors,

00:42:27   especially that there's going to be, quote,

00:42:28   new 4.7 and 5.5 inch phones.

00:42:31   And some of the rumors include that they're going to get more than just--

00:42:34   it's not just like the series one Apple Watch, where it's a very--

00:42:42   pretty much like the series, the original Apple Watch,

00:42:45   but just with the new system on a chip, but otherwise almost

00:42:50   indistinguishable.

00:42:52   I don't think it's going to be like that at all.

00:42:54   And if it is, then that would mean that these new 4.7 and 5.5 inch phones

00:42:58   would probably come in at the same prices as the 7 and 7 Plus today.

00:43:03   And therefore, the new OLED phone would have to have a higher price.

00:43:09   And combine that with the fact that all these rumor mill things coming from the supply chain

00:43:13   are saying that this thing is going to be supply constrained, might not even ship, period,

00:43:18   until surprisingly late in the iPhone cycle, like November or even December, they're saying.

00:43:25   may not get one in their hands until December.

00:43:29   Again, if that's the case, it has to have a-- well,

00:43:32   it doesn't have to.

00:43:33   I mean, obviously Apple could just eat money, you know,

00:43:35   and--

00:43:35   Yes.

00:43:36   --and leave money on the table.

00:43:38   But the rules of supply and demand

00:43:41   would suggest that it should have a higher price.

00:43:44   And I say should not, again, not in a moral sense,

00:43:47   but according to the rules of supply and demand,

00:43:49   where if there's a product--

00:43:50   They could do like AirPods, where they sell them

00:43:52   close to what they can, and then they're continually out

00:43:54   of stock or they could price them so that it sort of balances and normalizes

00:43:57   out the supply. Right, and AirPods are worth going back to as an example. I

00:44:01   think, for example, if Apple wanted to right now or at least and if they had

00:44:04   any idea of how tightly constrained they were going to be all along, they could

00:44:09   have sold out AirPods for at least double the price or almost double, let's

00:44:14   say $2.99, which is a little less than double because they sell for $1.59, but

00:44:18   if AirPods sold for $2.99, I think that they would still be supply constrained

00:44:22   right now. I think there'd be enough people buying them for $2.99 that the people who do buy them

00:44:26   would say enough rave things about them. I mean, I would still rave about them. I would still be

00:44:33   happy if I had purchased them. I would obviously at $2.99 would be a little bit more conservative

00:44:39   about recommending them, and obviously people would have double the anxiety about losing them,

00:44:44   et cetera, but I still think that they'd be sold out because clearly there's not enough of them.

00:44:49   And I don't think the people who do buy them are particularly price sensitive at that point.

00:44:53   They want the new technology now.

00:44:55   I think that they set the price because that's the other thing is that Apple does see prices

00:44:59   as part of the marketing of a product.

00:45:03   And that's outside just the simple rules of supply and demand.

00:45:09   They're not looking to just price gauge what they can get right now this year, this quarter

00:45:14   for this product.

00:45:15   about setting a value proposition for this product

00:45:18   line for years to come.

00:45:19   That's why the Mac Pro, as a perfect example,

00:45:22   didn't drop in price even when it wasn't updated for 17 years.

00:45:26   Yeah.

00:45:27   Yeah, they don't want anyone to see a race to the bottom

00:45:29   in their market.

00:45:30   Right, because 18 years later, next year,

00:45:32   when they come out with the new Mac Pro,

00:45:33   they still want those high price points.

00:45:35   Absolutely.

00:45:36   You know, it's the complete opposite of, say, Dell.

00:45:38   And this drives people nuts who know

00:45:40   what these components cost.

00:45:41   But like, you go and configure a Dell whatever

00:45:45   with this CPU and this much RAM and it's this type of RAM,

00:45:49   it's DDR4, whatever, and this graphics card.

00:45:53   And you wait, and then you go back next week

00:45:56   and configure the same machine, the price might be $20 lower.

00:46:00   Dell actually swings their--

00:46:02   and you get these weird prices that the system

00:46:05   is going to cost $1,373.

00:46:09   They don't--

00:46:09   And I'm not convinced if you log in again a few hours later,

00:46:11   it won't just randomly give you a different price.

00:46:13   Right.

00:46:13   Whereas Apple picks these numbers that are--

00:46:15   the numbers are part of the pricing,

00:46:17   and they tend to pick even numbers, like $9.99 or whatever.

00:46:26   And the prices do not move as the year goes on.

00:46:29   It's part of the marketing.

00:46:33   Anyway, I wrote this article.

00:46:36   Got some attention.

00:46:38   It really-- I knew it was going to make some people upset,

00:46:41   but it surprised me how far outside the normal sphere

00:46:44   of things it got.

00:46:46   I got a phone call or email from CNBC.

00:46:49   CNBC wanted me on in the afternoon on TV to talk about it.

00:46:52   And I might have done it, depending

00:46:54   on where they wanted me to go.

00:46:55   But I was on vacation at the time.

00:46:57   There's no way I could do it.

00:46:59   But that does not happen typically for me

00:47:02   with my articles.

00:47:03   I'm not trying to be fake, humble.

00:47:07   But you know my audience.

00:47:08   I write, and it's popular.

00:47:10   but it's popular within a very narrow niche.

00:47:12   It's not the type of thing where I write a column

00:47:15   for "Daring Fireball" and CNBC wants me to talk about it.

00:47:18   - Yeah, you're not a sensationalist,

00:47:19   which is typically what they favor.

00:47:21   - Right, although I think suggesting

00:47:24   that the starting price might be as high as $1,200

00:47:26   qualifies as sensational, but I think sensational

00:47:29   in that it might be realistic.

00:47:31   - Well, you provided a lot of logic to back it up.

00:47:33   It wasn't, you know, how, like someone else

00:47:35   might have put a headline like Apple looking to gouge you

00:47:37   for 1500 bucks on the next iPhone.

00:47:39   Right. So anyway, you mentioned the Andy Warhol quote, and I've mentioned it many times before,

00:47:44   and people have written to me, and this is, I need to, I think I need to bring it up and respond to

00:47:48   it. Many times over the years I've mentioned that the iPhone reminds me of Andy Warhol's quote about

00:47:54   Coca-Cola in America. Here's the quote. This is Andy Warhol. "What's great about this country is

00:47:58   that America started the tradition where the richest consumers buy essentially the same things

00:48:03   as the poorest. You can be watching TV and see Coca-Cola and you know that the president drinks

00:48:08   Coke, Liz Taylor drinks Coke, and just think,

00:48:11   you can drink Coke too.

00:48:12   A Coke is a Coke and no amount of money

00:48:14   can get you a better Coke than the one the bum on the corner

00:48:17   is drinking.

00:48:18   All the Cokes are the same and all the Cokes are good.

00:48:20   Liz Taylor knows it, the president knows it,

00:48:22   the bum knows it, and you know it.

00:48:24   It's a great quote, and it's totally true, or it was true.

00:48:28   And there is some aspect of that to the iPhone.

00:48:33   But Cokes cost like $1.

00:48:39   Cokes are things that a literal panhandler could afford.

00:48:45   A bum on the corner really can buy a Coke.

00:48:49   I think a lot of them buy other beverages,

00:48:51   but if they're really thirsty for a Coke, they can buy one.

00:48:56   They can't buy an iPhone.

00:48:57   Let's face it.

00:48:58   Number one, the analogy breaks down to some degree,

00:49:01   insofar as that the cheapest iPhone Apple has ever sold is,

00:49:04   in the grand scheme of this globe and humanity,

00:49:07   an extraordinarily expensive premium product.

00:49:10   - I think they also, that quote is absolutely true,

00:49:13   but it doesn't really understand.

00:49:14   Coke as a business sells Coke,

00:49:16   but they would, sort of like Apple just selling iPhone,

00:49:18   they would never have grown as a business

00:49:20   if all they ever did was sell that one same Coke,

00:49:23   which is why Coca-Cola is one,

00:49:24   if you would go and look at Coca-Cola,

00:49:26   it's one of the most diversified companies you'll find.

00:49:28   They have their fingers into almost everything,

00:49:30   and they have whole lines of beverages

00:49:31   that are more expensive than Coke.

00:49:33   It's just they're smart about branding

00:49:35   and sometimes people don't know exactly what they do.

00:49:37   But Pepsi has, what is it, Pepsi 1897

00:49:40   that has real sugar in it.

00:49:41   - And it costs more money.

00:49:43   - Yeah.

00:49:44   - And I personally do not care for the taste of Pepsi Cola.

00:49:47   I never have.

00:49:48   I do enjoy the taste of a Coca Cola.

00:49:50   And at least here in United,

00:49:52   do you guys have Mexican Coke up in Canada

00:49:54   or are you too far away?

00:49:55   - We have some, I don't know if it's similar,

00:49:56   but we have kosher Coke that has real sugar in it.

00:49:59   then it might be very similar.

00:50:00   So in America, there's this,

00:50:02   it's to the point now where you can buy it at Target.

00:50:06   It's really become almost a mass market.

00:50:09   It seems like a Coca-Cola company at first

00:50:11   was sort of almost trying to,

00:50:14   almost considered it like a gray market product

00:50:16   that they wanted retailers not to sell.

00:50:19   And you'd have to go to,

00:50:20   when I first heard of it,

00:50:22   you had to go to like Mexican restaurants,

00:50:25   like real Mexican restaurants here in the city,

00:50:27   like not like a chain Mexican restaurants.

00:50:31   - No Taco Bell.

00:50:32   - Right, but like a little mom and pop

00:50:33   real Mexican restaurant and they would sell

00:50:35   Mexican Coca Cola because in Mexico,

00:50:37   like there's this whole complicated,

00:50:39   I don't wanna go too far into it,

00:50:41   I think most people probably know it,

00:50:42   but because the United States is A, grows a lot of corn

00:50:45   and B, because of weird government subsidies,

00:50:48   ends up paying farmers to grow way more corn

00:50:51   than anybody would ever actually eat

00:50:53   in terms of eating things that are made with corn.

00:50:57   It actually is super cheap to use excess corn

00:51:00   to turn it into corn syrup, which is a form of sugar,

00:51:03   that it becomes phenomenally cheaper

00:51:05   than cane sugar made from sugar cane.

00:51:09   And the hitch is that corn syrup,

00:51:13   most people do not consider things that are,

00:51:15   if you substitute corn syrup for cane sugar

00:51:17   in most recipes, it does not taste as good.

00:51:20   It's nowhere near as different

00:51:21   as substituting a sugar substitute,

00:51:24   you know, like what's in Diet Coke or Coke Zero

00:51:26   or something like that.

00:51:28   But it's definitely a difference.

00:51:31   And I don't know anybody who can't taste test the difference

00:51:34   between a corn syrup Coke and a,

00:51:37   well, I'm sure there are some people

00:51:38   who just don't drink sugared stuff, period.

00:51:40   But I could easily, I would bet thousands of dollars

00:51:43   that I could Pepsi challenge the difference

00:51:44   between a corn syrup Coke and a Mexican Coke.

00:51:47   And I prefer the Mexican Coke. - Yeah, Pepsi Retro,

00:51:48   I think, too, which is the same sugar-based Coke.

00:51:50   - Well, anyway, guess what?

00:51:51   Mexican Coke tastes or it costs more money.

00:51:54   So you can buy a better Coke.

00:51:58   Not all the Cokes are the same anymore.

00:52:00   - And they test a lot of things and some of them fail

00:52:02   and they get rid of them and if some of them succeed,

00:52:04   they double down on them,

00:52:05   which I think is what Apple needs to do.

00:52:07   - My favorite part of this, and again,

00:52:10   it's just a thing that popped into my head

00:52:13   and it is obviously a first world privilege type situation.

00:52:18   But I remember, I've told this story before,

00:52:21   One of the, when I used to go to South by Southwest,

00:52:24   so I don't know, it was before,

00:52:26   I think it's been at least four or five years since I did,

00:52:28   but sometime four or five years ago, roughly,

00:52:30   where I was at South by Southwest,

00:52:34   and some friends and I went out to a steak dinner,

00:52:39   and we had a nice little meal,

00:52:43   and as we were leaving,

00:52:44   and this South by Southwest takes place in Austin, Texas,

00:52:48   we were leaving, people had to go to the restroom

00:52:50   before we left or waiting to get seated,

00:52:55   standing by himself, was Michael Dell.

00:52:58   And I knew who he was, and I was like,

00:52:59   "Wow, there's Michael Dell."

00:53:02   And he was poking at some kind of Windows-based cell phone.

00:53:07   And I thought, "Wow, there's Michael Dell, a billionaire."

00:53:10   Great innovators, guy who truly changed the world.

00:53:14   He was the guy who more or less invented

00:53:15   the PC clone business.

00:53:17   - And a lot of supply chain stuff,

00:53:19   Logistical management.

00:53:20   Right.

00:53:21   It's all sorts of stuff.

00:53:23   Well-deserved, tremendous success.

00:53:25   But there he is using--

00:53:26   I don't know if it was--

00:53:27   I don't even know if Dell made phones.

00:53:29   But he wasn't using an iPhone.

00:53:30   He was using some kind of Windows phone type thing.

00:53:32   So my first thought is, wow, there's Michael Dell.

00:53:34   And then my second thought was, holy shit,

00:53:37   I have a better cell phone than Michael Dell.

00:53:39   Yeah.

00:53:41   And then I thought, I presume that Bill Gates doesn't

00:53:45   use an iPhone, that he was-- at least at the time,

00:53:47   because Microsoft was still trying to be a part of,

00:53:52   a provider of mobile phone platforms,

00:53:59   I thought, holy shit, wherever Bill Gates is,

00:54:01   I have a better cell phone than Bill Gates.

00:54:04   There's nothing that he can do,

00:54:06   the richest man in the world who cares about computers,

00:54:09   both of these guys obviously care about computers,

00:54:11   there's nothing they can do, no amount of money

00:54:13   that they can spend to get a better cell phone

00:54:16   than the one I had as a guy who runs Daring Fireball.

00:54:21   And that's sort of the thinking in my mind

00:54:24   behind the analogy to the Coca-Cola thing.

00:54:27   It breaks down so easily because, like I said,

00:54:29   there are billions of people on the planet,

00:54:32   the most, more people on the planet

00:54:34   than there are who can afford an iPhone,

00:54:36   even if they wanted one, who can't,

00:54:37   can't possibly afford one.

00:54:39   So that analogy breaks down.

00:54:42   And the other problem with it, too,

00:54:44   is that even if I'm exactly right

00:54:46   and that the iPhone X or iPhone Pro

00:54:48   or whatever it's gonna be called,

00:54:49   costs, starts at $1,200 and goes to like $1,400 or $1,500

00:54:53   or something like that.

00:54:55   That's not a luxury product.

00:54:57   I mean, it is by some standards,

00:54:59   but it's not like the difference between a Honda

00:55:01   and a Ferrari.

00:55:02   It's more like the difference between a Honda and a Acura

00:55:09   or something like that.

00:55:10   It is not something that's outside.

00:55:12   It might be more than people want to pay,

00:55:14   But most people, a lot of people who can afford a $969 iPhone 7

00:55:20   Plus could, if they so choose, also afford a $1,200 iPhone

00:55:26   Pro.

00:55:26   They just may not be happy about the extra $200 in price.

00:55:29   But it's not like it's trying to ask somebody to buy--

00:55:34   perfect example.

00:55:35   It's not like trying to ask somebody to buy a $20,000 gold

00:55:37   Apple Watch.

00:55:39   No, and I know a lot of people who

00:55:40   buy the Honda instead of the Acura

00:55:41   and then laugh at the person who wasted their money

00:55:43   on the Acura.

00:55:44   I mean, people are funny in all different ways.

00:55:46   Right.

00:55:46   Right.

00:55:49   And there's some people.

00:55:50   And I think that my audience and your audience,

00:55:53   our collective audience, are skewed by the fact

00:55:56   that the whole reason they are our audience

00:55:59   and they're listening to us go on and on about this

00:56:01   is because they care really deeply about this.

00:56:03   And they really know exactly what

00:56:04   the difference is between the iPhone 7 and the iPhone 6S.

00:56:08   And whether they chose to buy one or not,

00:56:10   they know exactly what they're missing out on

00:56:11   if they didn't buy it.

00:56:12   And they know exactly what they're getting

00:56:14   if they do buy it and upgrade from whatever iPhone

00:56:16   that they had, and they're tuned into these rumors,

00:56:18   and they really are excited about the idea of a iPhone

00:56:21   that maybe has an exciting new industrial design.

00:56:24   And they've been basing their hopes on the assumption

00:56:28   that they'll be getting it for six or $700.

00:56:31   - Yeah, totally.

00:56:34   - And I get it.

00:56:36   - I think the hard thing is,

00:56:39   'cause a lot of the feedback that you and I got

00:56:40   is that why are you not attacking Apple over this?

00:56:43   why are you not standing up for us

00:56:44   and telling Apple this is bad?

00:56:46   - Right.

00:56:47   - And I don't know about you, but my strategy is

00:56:48   when there's rumors about Apple's things,

00:56:49   I wanna understand it first, because nothing exists.

00:56:52   These products have not been announced yet.

00:56:53   Apple's revealed no products, no pricing, nothing.

00:56:56   All we have is speculation,

00:56:57   and I wanna sort of see if it's valid or not,

00:57:00   and the only way I can do that is sort of try to understand,

00:57:02   if Apple is doing this, what world does it make sense?

00:57:05   'Cause Apple's usually a pretty logical company.

00:57:07   What world does it make sense for Apple to do this?

00:57:09   And I'm not gonna take a position on it yet

00:57:11   because I'm still trying to understand it.

00:57:13   It's sort of like Nielle's famous article

00:57:15   about the headphone jack being user hostile and stupid.

00:57:17   That was written before it launched.

00:57:19   And I think that's a fine article to write

00:57:21   when it's launched because if you write it based on rumors,

00:57:24   Apple's already made that phone.

00:57:25   There's nothing you can do to have them go

00:57:28   and have Phil Schiller to use a little hammer

00:57:29   and knock a headphone jack.

00:57:31   But it doesn't really exist,

00:57:32   so you can try to understand it.

00:57:33   But once it launches, I'll take an opinion

00:57:35   on whether I think it's good or not.

00:57:37   Now I just wanna understand it.

00:57:38   - Right.

00:57:42   I got in even further trouble because the first time

00:57:44   I mentioned this wasn't even in an article devoted to it,

00:57:47   but in a, I forget what I linked to,

00:57:49   but I linked to something and offhandedly,

00:57:52   I tossed out the idea, and I guess I was being slightly,

00:57:55   sensationalist is the wrong term,

00:57:56   'cause I didn't put it in a headline, it wasn't clickbait,

00:57:59   but I at least wanted to poke the bee's nest.

00:58:03   And I said, you know, what if it just,

00:58:05   what if it starts at 15, what if the starting price

00:58:07   for this new iPhone is $1500?

00:58:10   And I said, and I was saying that I would,

00:58:12   I think that would be a good idea.

00:58:14   Or I would like that.

00:58:15   And when I really thought about it,

00:58:18   I think 1500 is probably too high.

00:58:19   And when I really thought about it,

00:58:21   I came up with 1200 as a starting price.

00:58:23   But I still think that I would like that.

00:58:25   And some people took it the wrong way

00:58:27   of me saying I would like it

00:58:29   because I think I'll be able to afford that

00:58:31   and then I'll have an iPhone that fewer people can afford.

00:58:35   - Yeah, like an elitist thing.

00:58:37   - An elitist thing.

00:58:37   And that is absolutely not the way I look at it.

00:58:40   at all, I really don't.

00:58:42   I actually, and again, the people who have a better argument

00:58:45   or at least demand a more nuanced argument for me,

00:58:49   which I hope I've been able to deliver so far

00:58:50   here on this show, is that analogy to the Coke thing,

00:58:54   which I still stand behind and I still like, right?

00:58:56   I don't say this because I think,

00:59:00   I want a phone that other people can't afford.

00:59:03   I certainly didn't buy the gold Apple Watch.

00:59:09   I bought the stainless steel one, the space black one,

00:59:12   and ultimately regret it.

00:59:14   I actually think the best, I've said this before,

00:59:16   I think the best Apple Watch is the sport models,

00:59:20   or as they don't really call them that anymore,

00:59:22   but like the Nike ones and the ones that,

00:59:26   the ones that are made of aluminum.

00:59:28   I think they're the best ones.

00:59:29   I think they actually have better haptics.

00:59:31   I think that they're actually,

00:59:32   I think that the material that they're made out of

00:59:34   is actually more honest to the product.

00:59:38   The only thing I really like better about the stainless steel ones is that they have

00:59:42   the sapphire front, which is truly scratch-proof.

00:59:48   Like an aluminum one with a sapphire front would be ideal to me.

00:59:54   So it's not elitism.

00:59:56   It's what I hope to go into in the rest of the show, which is that I really think that

01:00:02   current strategy is not sustainable, or at least opens them up to certain risks.

01:00:09   Yeah, I think it's also interesting because there are a few dangers with Apple punditry, and that is

01:00:17   when you have an angry critic yelling at the clouds, Apple gets trained to just dismiss it.

01:00:22   Like people said, "Making a gold-colored iPhone is stupid. It was made fun of on Conan." People

01:00:27   said it was going to be garish. There were so many jokes. And then when it shipped and people actually

01:00:31   saw it, the complaints rapidly turned to, "Why can't I get them? Why didn't Apple make enough?

01:00:35   Why are they jerks?" And AirPods was the same. "These are stupid. Why is Apple making these?

01:00:39   And then it quickly shifted to, "These are terrific. Why can't I get them?"

01:00:43   And Apple, I think that was part of the problem with the touch bar, is that Apple is so used to

01:00:47   people telling them that everything, every rumor is garbage, that they've become desensitized

01:00:51   to legitimate criticism. And that's why I'm very careful about what and when I choose to apply that,

01:00:56   because otherwise it'll be a bunch of people saying, "Oh, this new iPhone is stupid," before

01:01:00   before it ships and Apple go, "Ah, you always say that."

01:01:02   - Yeah, all right, let me take another break here

01:01:03   and thank our next sponsor.

01:01:05   It's Hullo Pillow, H-U-L-L-O, pronounced Hullo.

01:01:10   Have you ever tried a buckwheat pillow?

01:01:13   They are totally different than the fluffy soft pillows

01:01:15   most of us are used to.

01:01:16   They're similar to a bean bag,

01:01:18   which allows you to adjust its shape and thickness.

01:01:22   Kinda heavy, too.

01:01:23   It supports your head and neck how you want it to,

01:01:26   unlike traditional squishy soft pillows,

01:01:28   which collapse under the weight of your head, soft pillows.

01:01:30   Allow your neck to fall on a downward bend,

01:01:34   adding uncomfortable pressure to nerves

01:01:36   and discs and muscles.

01:01:38   Hello pillow really supports your neck,

01:01:40   it supports your head.

01:01:41   And also, and this is important,

01:01:43   we talked about the weather,

01:01:44   it stays cool and dry compared to pillows

01:01:46   filled with feathers or foam.

01:01:50   Most pillows absorb and retain body heat and moisture,

01:01:53   making your pillow feel warm and humid

01:01:54   the longer you lay on it.

01:01:55   Buckwheat tends to breathe better,

01:01:57   No more flipping to the cool side of the pillow.

01:02:00   You don't need to do that.

01:02:01   I can vouch for it.

01:02:03   Again, we have them here.

01:02:04   We're pretty much, the sponsors on this episode

01:02:07   are pretty much the things we sleep on here

01:02:09   in the Gruber household.

01:02:10   The mattress, the pillow.

01:02:13   They sent me some.

01:02:15   We love them.

01:02:16   My wife, this was actually the thing my wife misses

01:02:18   when we travel.

01:02:19   She not so much cares about the mattress,

01:02:21   but really misses the pillow.

01:02:24   She actually, she wants to,

01:02:26   she did this on her own podcast, Just The Tip.

01:02:29   She loved doing the reeds.

01:02:30   I think she made Paul Kvassest do the reeds

01:02:32   for most of the sponsors,

01:02:33   but when they had Hello Pillow as a sponsor,

01:02:34   she insisted on doing it

01:02:35   because she loves this pillow so much.

01:02:38   It's like one of her favorite things.

01:02:39   It does sound weird.

01:02:41   Like you think it's like a bean bag?

01:02:43   That is not like a pillow that I've ever seen anywhere else.

01:02:45   I've never heard of it before.

01:02:47   They sent me one and started sponsoring the show.

01:02:49   It is totally different.

01:02:50   It is not like somehow they've turned a bean bag-like pillow

01:02:53   into something that is light and fluffy

01:02:56   like a feather-filled pillow.

01:02:57   It is totally different.

01:02:58   And you first put your head on it

01:03:01   and you can hear that there's beans in there.

01:03:02   You're like, this is a little weird, I don't know about it.

01:03:05   But then you actually give it a try

01:03:07   and whew, it is different and it is good.

01:03:10   Do you use two pillows or fold one pillow

01:03:14   to get your proper support?

01:03:16   That's what I used to do.

01:03:18   That's a sign that your pillow isn't firm enough

01:03:22   or thick enough.

01:03:23   Hello, pillow.

01:03:23   two pillows. You just have one and it does the job. And you can add or remove fill from

01:03:30   the zippered opening. So if you feel like the one you get has too much, you'd rather

01:03:34   have it have even less support. You just unzip it, take some of the buckwheat things out,

01:03:40   zip it back up, and you're ready to go. Again, this is another product that is made in the

01:03:45   USA with quality construction and materials. And here's the deal. You think, "I just don't

01:03:52   know about this, buying a premium pillow without even feeling it or whatever, they have a 60

01:03:58   night sleep on it guarantee. So you buy it, try it for 60 days, and again, if you don't

01:04:03   like it, send it back. They'll take it for free and give you a full refund. You cannot

01:04:07   lose. So if you're in any way dissatisfied with your current pillows, if you've got like

01:04:11   a crick in your neck or just a crick in your neck every once in a while just from sleeping,

01:04:15   give them a try. It's a great product. Really do sleep on it. I sleep on one every night.

01:04:19   My wife does too.

01:04:20   I wouldn't say it if it weren't true.

01:04:23   HelloPillow.com/talkshow is where you go to find out more.

01:04:28   That's H-U-L-L-O, pillow, P-I-L-L-O-W.com/talkshow.

01:04:34   And if you try more than one pillow, you get a discount of up to 20 bucks per pillow, depending

01:04:39   on the size.

01:04:41   Fast free shipping on every order too.

01:04:43   And last but not least, 1% of all of Hello Pillow's profits are donated to the Nature

01:04:49   Conservancy. Great company, great product, and if you get more than one pillow, you'll get a

01:04:54   tremendous discount, 20 bucks, up to 20 bucks per pillow. So try them out at hello pillow.com/talkshow.

01:05:01   So we're talking about this idea of what if, what if there's this new fancy OLED phone is a higher

01:05:10   end, new tier. I don't think, and I wrote, I tried to emphasize this, I just don't think it's getting

01:05:17   through people's heads, some people, just how unbelievably

01:05:24   difficult it is for Apple to produce iPhones at the scale

01:05:29   that they produce every year.

01:05:30   I think last year they sold around 70 million iPhones

01:05:33   in the first quarter that the iPhone 7 and 7 Plus went

01:05:36   on sale.

01:05:37   And just by looking at average selling prices,

01:05:39   which is what they-- they don't break down unit sales.

01:05:42   I mean, Apple is a little bit more

01:05:43   forthcoming with iPhone sales than--

01:05:45   They're more forthcoming than any other company

01:05:48   in the phone business.

01:05:49   And they're more forthcoming than they are

01:05:51   with Apple Watch and stuff like that.

01:05:54   But they don't break down by model.

01:05:56   They give some hints in the quarterly finance calls.

01:06:00   Like we learned last year that they underestimated

01:06:05   the demand for the 7 Plus.

01:06:08   Yes.

01:06:09   And that touches back on what I said earlier,

01:06:12   which is that Apple is not,

01:06:13   they don't have a perfect forecast for these things.

01:06:15   - No, their demand forecasting has been like the SE,

01:06:18   the Undimated Later Estimated Demand for the smaller phone.

01:06:20   It's been a few of those.

01:06:21   - Yeah, the SE, really, I think they were way off.

01:06:26   You would think that that would be one of the easier

01:06:30   to produce devices, 'cause the form factor was the same

01:06:32   as the 5S, and it was using the then

01:06:36   six-month-old system on a chip.

01:06:40   And instead, they so vastly underestimated it

01:06:44   that they was behind for months before they--

01:06:46   - The rumor was that they thought people would buy it

01:06:48   because it was less expensive

01:06:49   and they didn't realize how many would buy it

01:06:50   simply because it was smaller.

01:06:51   - Yep, exactly.

01:06:53   And everybody I know who has one bought it

01:06:54   because it's smaller.

01:06:55   I have a ton of friends who own and love the SE

01:07:00   simply because it's smaller.

01:07:02   - Yep.

01:07:03   And especially because the 7 Plus was more expensive

01:07:07   than the previous Plus phones have been.

01:07:08   I think it was 20 bucks more.

01:07:10   And they thought maybe that would dampen enthusiasm for it,

01:07:12   but instead the dual camera system was enough.

01:07:14   And I think that was too late

01:07:16   to sort of change their thinking on this,

01:07:18   but if they did have any reservations

01:07:19   about whether they could test the upward price elasticity,

01:07:22   I think that quickly evaporated them.

01:07:23   - Yeah, and I think that that term price elasticity

01:07:28   is an important one to think about,

01:07:29   which is that Apple has not really tested it.

01:07:32   I mean, they've sort of tested it slightly

01:07:34   with the first plus models,

01:07:36   and they tested it even more last year

01:07:40   by adding $20 to the cost of the Plus models

01:07:43   and having a very compelling, I think.

01:07:46   I think in hindsight, the dual camera system

01:07:50   is a very big selling point.

01:07:52   I think enough people, casual users of the iPhone,

01:07:56   see it as-- whether they think of it that way or not,

01:07:59   they probably think of it as a communications device first,

01:08:02   texting and messaging and reading web pages

01:08:07   and the stuff you do.

01:08:08   Everybody does.

01:08:09   and I think as a camera second.

01:08:11   And I think being able to take better photos,

01:08:14   in some cases noticeably better photos, right?

01:08:18   And in a worse case, exactly equal to the iPhone 7, right?

01:08:22   If you're using the wider angle lens,

01:08:26   in most conditions, the worse you're going to do

01:08:28   is get the exact same photo you'd gotten on the iPhone 7.

01:08:32   And in other cases, like with portrait mode,

01:08:34   when portrait mode works, it is unbelievable.

01:08:36   It really is, in my opinion.

01:08:39   - It's emotional.

01:08:41   - Right, I just can't believe it came from a phone.

01:08:43   I really can't.

01:08:44   As somebody who still shoots a lot of photos

01:08:47   using quote unquote real cameras,

01:08:49   before we went on vacation, we had a family wedding.

01:08:54   And it was down in South Carolina,

01:08:59   and the family rented a beach house for people to stay at

01:09:03   for a couple of days because it's a lot of family

01:09:05   who doesn't get to see each other regularly,

01:09:07   people from all over the place.

01:09:09   So I took my Fuji X100S and shot a whole bunch of photos there.

01:09:14   And there were some of them where--

01:09:16   and I would just as a test, because I'm a nerd.

01:09:18   Even when I'm at a family outing like that,

01:09:20   I'm doing stuff like this where I'm taking

01:09:22   a photo with the X100S, and I quick take out my iPhone

01:09:25   and take the exact same photo, and then later go back and look

01:09:28   at it on a big screen and see what the difference is.

01:09:31   And I could see it.

01:09:32   There were some cases where I took a photo.

01:09:34   I was like, wow, this is why it's worth it.

01:09:36   Don't be a dummy and never take your X100S out with you.

01:09:39   Sometimes you really, if it's an event like that, do it.

01:09:42   But then I also, I still have the RED 7 Plus review unit.

01:09:49   When the RED phone came out,

01:09:50   Apple sent me a review unit for that.

01:09:52   Probably around that time I should send it back,

01:09:55   but I still had it.

01:09:57   And I took some photos with that when I was on vacation.

01:10:00   And some of the portrait mode photos,

01:10:01   I cannot believe that they were from a phone.

01:10:03   That they gave me the same feeling I got

01:10:05   when I looked at the photos from the X100S

01:10:07   compared to the same photo on the 7.

01:10:08   And just in terms of,

01:10:10   it's not just the trickery of having a blurred out background

01:10:15   it's just, like you said, it's like an emotional truth

01:10:18   to the photo that isn't there.

01:10:20   So it's compelling.

01:10:21   - iOS 11's even better at it in their lower light

01:10:23   so they're just working,

01:10:24   they're continuing to improve it through software

01:10:26   which you can't do on a normal camera.

01:10:28   - Right, and that's before they tell us

01:10:29   about whatever improvements they've made

01:10:31   to dual camera hardware technology, right.

01:10:33   that for 7+ users, iOS 11 is going

01:10:37   to be a significant camera update.

01:10:38   It's pretty exciting.

01:10:40   So I think what happened in hindsight with demand

01:10:46   was that so many people were waiting for a big iPhone,

01:10:51   quote unquote, "big one," that the iPhone 6+ was more

01:10:54   popular than they expected, because they

01:10:56   knew there was pent-up demand.

01:10:57   Famously, it came out in the Samsung emails

01:11:00   that had to be released during the Samsung lawsuit, where

01:11:05   there was a slide presentation that before iPhone--

01:11:07   I think around 2013 or so-- that the quote was--

01:11:10   this is from an Apple internal presentation--

01:11:12   consumers want what we don't have, bigger phones.

01:11:16   So they knew that.

01:11:16   They knew that.

01:11:17   And I think even they underestimated it.

01:11:20   And then I think with the 6S, they were like, well,

01:11:24   these Plus phones are super--

01:11:26   we underestimated them.

01:11:27   We'll make more of them.

01:11:28   and then with the 6S Plus, it was a little bit,

01:11:31   they overshot demand for that.

01:11:33   And then with the 7, I think they went back to,

01:11:36   well, I think the 6 just, you know,

01:11:38   6 Plus was popular just 'cause there was pent-up demand,

01:11:41   so we'll decrease it this time.

01:11:42   And I think they underestimated just how compelling

01:11:44   the dual camera was going to be.

01:11:46   - Yeah, again, yeah, it wasn't about the size,

01:11:48   it was about the camera.

01:11:49   - Right, but moving the upper price all the way to 969

01:11:53   is certainly starting to stretch,

01:11:55   to test the limits of pricey elasticity.

01:11:59   But anyway, even with the plus ones though,

01:12:03   they still have to make them in massive quantities,

01:12:05   truly massive, tens of millions per quarter quantities.

01:12:09   - And it's a, people have talked before

01:12:12   about how it's a miracle that Windows boots up

01:12:13   on as much hardware as it does every time,

01:12:15   and it's become an equal miracle

01:12:16   that Apple can get every single component

01:12:18   of the 100 million iPhones they need to produce ready

01:12:21   by the same sort of September deadline every year.

01:12:23   - Right, yeah, it's unbelievable.

01:12:25   And I think, you know, and there's been a lot of stuff

01:12:29   recently because we just passed the 10-year anniversary

01:12:32   of the original iPhone shipping to consumers.

01:12:34   I think people forget just how much the original iPhone

01:12:38   was a sort of, we can't make many of these sort of device.

01:12:43   You know, I think Apple famously, Steve Jobs said famously

01:12:47   that they were hoping to sell 10 million iPhones

01:12:49   by the end of the next year.

01:12:51   So in other words, like in the first 18 months

01:12:53   that it was on sale, they wanted to sell 10 million phones.

01:12:58   And they surpassed that, but not by much.

01:13:00   It was a pretty good ballpark estimate.

01:13:04   And now, of course, they sell 200 to 300 million per year.

01:13:08   But they couldn't have sold-- it makes sense.

01:13:11   It's one of those jumping the chasm marketing things,

01:13:14   where obviously the first iPhone,

01:13:16   no matter how much consumer awareness there was,

01:13:19   and no matter how much goodwill and how many happy iPod users

01:13:22   they had out there, the idea of buying a $600 or $700 phone

01:13:28   and the idea of buying something with this all new touchscreen

01:13:33   technology where there's no hardware button to make

01:13:36   a phone call or to hang up or no hardware keypad to dial

01:13:40   phone numbers was the sort of thing that-- of course,

01:13:44   it was going to take a couple of years for the mass market

01:13:47   to move there.

01:13:48   But even if somehow magically there

01:13:50   had been demand for 100 million iPhones in that first year,

01:13:54   Apple couldn't have made them.

01:13:55   There's no way they could have made them.

01:13:57   They were on one carrier in one country,

01:13:58   and even then, it was only people

01:14:00   who were not on a contract who were

01:14:02   willing to break their contract to get it

01:14:03   that they had to sort of service.

01:14:05   Right.

01:14:05   So to me, it makes sense.

01:14:10   I can't think of any other product that's

01:14:11   quite like the iPhone, where the best selling market--

01:14:15   or best selling product is the highest tiered one,

01:14:19   year after year after year.

01:14:20   And it's been fantastic for Apple financially.

01:14:26   And it's been exciting for consumers

01:14:28   in so far as that they can, you know,

01:14:30   you can always go in and every time,

01:14:32   whether you upgrade every year or two years

01:14:34   or every three years, you can go in

01:14:35   and for the same price get the quote best iPhone.

01:14:39   It's, I don't think it's sustainable

01:14:42   at the quantities that they've reached at this point.

01:14:46   - No, and it's also not a,

01:14:47   Like one of the biggest challenges Apple's had

01:14:49   in the market is growth.

01:14:50   It doesn't matter how much you've sold,

01:14:51   it matters how much more you are going to sell.

01:14:54   And eventually they'll get to the point

01:14:55   where there's just every human who wants an iPhone has one

01:14:57   and there's no Apple stores on Mars.

01:14:58   So you have to start adding other markets.

01:15:01   Well, you literally do, you have to start adding

01:15:02   other markets and they did that.

01:15:03   They were like, everyone who was willing,

01:15:05   who was on AT&T or willing to switch to AT&T has an iPhone.

01:15:07   So we have to add Verizon and international carriers.

01:15:10   And then everyone had those, finally they got China Mobile.

01:15:13   So the easy growth steps by just simply adding

01:15:15   more territories were done.

01:15:17   And then it was everybody who was willing to have

01:15:19   an under four inch phone had one.

01:15:22   And if they wanted to grow the market,

01:15:23   they had to add an over four inch phone

01:15:25   because that's the only part of the market

01:15:26   that Samsung was actually dominating

01:15:28   was the premium phone market over four inches in size.

01:15:31   So they added 4.5 and five, sorry, 4.7 and 5.5.

01:15:34   And then those people bought iPhones.

01:15:36   And then it was, well, are we leaving space underneath this?

01:15:38   Are we creating an umbrella?

01:15:40   We can't keep addressing it with things like the last phone.

01:15:42   Can we make a phone that appeals,

01:15:44   That's like a TV show, not like a big blockbuster movie,

01:15:46   but that's like a TV show and people will buy it

01:15:48   and it's less expensive.

01:15:49   And maybe it was the wrong product

01:15:50   or maybe that's not a good market for Apple

01:15:52   or whatever reason, it didn't work,

01:15:54   but there's still other questions.

01:15:55   Can we grow the market by creating a premium tier

01:15:58   where people would love the iPhone so much

01:16:01   they're willing to buy more iPhone from us?

01:16:03   And all you can do in business is annex

01:16:05   the next nearest neighbor market,

01:16:06   and that's sort of what Apple has been strategically doing.

01:16:08   - Yeah.

01:16:09   I also think it's risky for them not to try it.

01:16:14   And Samsung is obviously their biggest rival

01:16:18   and it's in terms of quantity and in terms of,

01:16:21   it's no mistake that that's where

01:16:23   the Wall Street Journal's article about who's taken

01:16:26   the design crown from Apple is that it's Samsung.

01:16:28   I don't think that Apple can count on that though.

01:16:35   Can't count on Samsung not making a better leap.

01:16:38   Can't count on some other company making a dent.

01:16:41   It would be foolish.

01:16:43   The Pixel is a very nice phone.

01:16:45   I've actually had it out in the last few days

01:16:48   because I've been mostly on Twitter writing about-- I

01:16:51   don't know if we'll get to it on the show--

01:16:53   but changes to the iOS 11 notification center

01:16:57   that I don't like compared to iOS 10

01:16:59   and comparing it to the latest and greatest on Android

01:17:02   where some-- long been held by some people

01:17:05   that Android has a better-- whatever you think of Android

01:17:07   versus iOS overall-- that Android has a better

01:17:09   notification UI, which I kind of disagree with, especially

01:17:13   compared to iOS 10, but I'm not sure I disagree with it

01:17:15   compared to iOS 11. - They're both worse

01:17:16   than WebOS, we all know that.

01:17:18   - Yeah, that's true, it's absolutely true.

01:17:20   I've been thinking about WebOS and the Palm a lot too

01:17:23   in this iPhone 10 year nostalgia.

01:17:28   My God, my biggest regret is that Palm didn't make it,

01:17:33   or that somebody didn't, somebody like Microsoft,

01:17:36   like instead of wasting all that money on Nokia,

01:17:38   what if they bought Palm instead,

01:17:39   and just thrown money at the hardware

01:17:42   to get it to go fast enough to make that work.

01:17:46   That's my deepest regret, 'cause man,

01:17:49   that was, that's the only other UI that I ever liked,

01:17:54   really liked overall, and in some ways,

01:17:58   I really did like it better than the iPhone OS.

01:18:01   Anyway, that's a long digression.

01:18:03   - There's a lot of things, right, yes.

01:18:04   - There were enough former Apple people at Palm

01:18:06   that it made sense, but the gist of my reaction,

01:18:11   My overall take to WebOS was that WebOS was a more

01:18:16   Apple-y product, historically.

01:18:18   If you look at the heyday of the original Mac,

01:18:21   like that 1985 through 1995, '96, the best of Apple design,

01:18:28   and the sort of thinking that made the Newton great,

01:18:32   and it really made the original--

01:18:34   when the classic Mac OS had the biggest advantage UI-wise

01:18:38   over Windows and everything else,

01:18:40   that a lot of the sentiment that made it great then

01:18:43   was in webOS.

01:18:44   And not in ways, not that iOS was bad in any of those ways,

01:18:48   but it was sort of like it overlooked some of it.

01:18:51   Like the notification, the way that notifications in webOS

01:18:55   were years ahead of iOS and very, very elegant,

01:18:59   it's a different problem that's being solved,

01:19:01   but it reminds me of the control strip in classic Mac OS,

01:19:04   which was still to me, every time I sit here and fiddle

01:19:07   with these stupid little icons,

01:19:09   menu bar icons on Mac OS X, it just pains me to think of how nicely the classic Mac OS solved

01:19:18   that problem of wanting to have persistent little icons for adjusting things without cluttering the

01:19:24   freaking menu bar, which should really be for menus. But anyway, I digress. It's a very good

01:19:32   digression. But anyway, I've got the Pixel here, and I've been using it—I hadn't used it for

01:19:37   for, I don't know, I could tell by some of my notifications,

01:19:41   I hadn't used it for like 20 weeks.

01:19:43   It's a nice phone.

01:19:46   - I gave mine to Serenity, she was just in town

01:19:48   and she wanted to try it, so mine is currently on loan

01:19:49   as Serenity calls will.

01:19:50   - It's a nice phone, it's way better than any Android phone

01:19:54   I've ever seen before, and the combination of hardware

01:19:57   and software, I still like way more than any Samsung phone.

01:19:59   I just can't stand the Samsung UI Chrome

01:20:04   that they insist on adding to their phones.

01:20:06   no matter how nice the S8 looks,

01:20:09   without thinking about the software.

01:20:12   But it's, you know,

01:20:15   there, it's, I repeat myself,

01:20:20   but I cannot believe how much criticism the iPhone 7

01:20:23   got last year for looking quote unquote just like

01:20:26   the iPhone 6 and 6S when the Google Pixel

01:20:32   looks exactly like an iPhone 6.

01:20:34   - It got created on a curve.

01:20:35   - Right, it's one of the greatest curves I've ever seen,

01:20:39   grading curves I've ever seen in my life.

01:20:40   - And this was apparently a rush job,

01:20:42   like they couldn't get the hardware they wanted,

01:20:43   so they just got HTC to put this together for them.

01:20:45   So hopefully we get a better pixel this year.

01:20:47   - Well, and it's particularly inexplicable in so far

01:20:49   is that it has the exact same proportioned chin and forehead

01:20:53   as the iPhone 7, and, okay, uses the forehead

01:20:58   for the same purposes as the iPhone to have a speaker grill

01:21:01   and front-facing cameras and other sensors,

01:21:04   but then has the chin that literally has nothing.

01:21:08   It doesn't have a--

01:21:08   A pretty empty, barren chin.

01:21:09   Has no button, has no sensor for your fingerprint,

01:21:12   has no soft buttons.

01:21:14   Yeah.

01:21:15   So anyway, but you can't count--

01:21:17   Got antenna lines and an antenna window.

01:21:19   It's very confusing.

01:21:20   Look, Google has a ton of money.

01:21:22   And I don't think that they would do it,

01:21:25   what I'm about to say.

01:21:26   But you can't count them out strategically,

01:21:28   that they could come in and design a Pixel phone.

01:21:33   'Cause they do have liberties with the Pixel line,

01:21:36   'cause they're not trying to sell 100 million of them.

01:21:38   They know that Samsung is going to sell

01:21:40   the most high-end phones,

01:21:41   and they know that the meaty middle of the Android market

01:21:45   that makes up that chunk that gives them

01:21:47   the overall market share value

01:21:50   is cheap phones around the world,

01:21:52   lower-cost phones around the world

01:21:54   from dozens of different little manufacturers.

01:21:56   So they can do whatever they want with the Pixel brand.

01:21:58   And so I don't think strategically that Apple could

01:22:00   count out the fact that they could build a Pixel super phone

01:22:05   that Apple not couldn't beat because they couldn't do it,

01:22:08   but that they couldn't sell at $200 to $300 million of a year.

01:22:13   Well, that's the rumor.

01:22:14   There's a rumor that the CFO at Google

01:22:16   has taken over a lot of things, which

01:22:17   is why you see so many of the product managers just running

01:22:20   for cover and not releasing a new chat client every three

01:22:24   days anymore.

01:22:25   And one of the things she apparently wants is an iPhone.

01:22:27   And the rumor was this year Pixel 2 would have

01:22:29   like the squeeze sides, like the HTC 11,

01:22:31   where it doesn't have buttons anymore,

01:22:33   or there's a portless prototype apparently,

01:22:35   which is sort of where you hear Apple going

01:22:37   in the future too.

01:22:37   So it sounds very much like that's exactly

01:22:39   what Google wants to do.

01:22:40   - Yeah.

01:22:41   I just feel, so here's a tweet, somebody tweeted us,

01:22:45   'cause you and I are sort of on the same page with this,

01:22:47   but somebody tweeted to us,

01:22:49   I think you and Renee Ritchie, this is to me,

01:22:54   are understating what a huge gamble this strategy

01:22:57   would be the strategy, meaning Apple introducing

01:22:59   a new super tier of post $1,000 iPhones

01:23:03   that sell in smaller quantity.

01:23:04   There's so much brand power in the new iPhone.

01:23:10   I totally get that.

01:23:11   I totally get that that has been a huge part of the iPhone's

01:23:16   success.

01:23:17   And it is part of the brand that every year you can get excited,

01:23:20   and there's going to be a new iPhone,

01:23:22   and you're going to find out all about it in September.

01:23:24   and you'll be able to place a pre-order,

01:23:26   what, is it three days later?

01:23:30   Do they take the pre-orders?

01:23:31   - Yeah, it's usually the Friday, right, after the event.

01:23:33   - Right, so they have a Tuesday or Wednesday event,

01:23:36   and then on Friday you can place a pre-order,

01:23:38   and the pre-orders will ship in two weeks or something,

01:23:42   or 10 days, and then there's reviews come out

01:23:45   the next Wednesday or something like that

01:23:47   from people who get seated with pre-release hardware,

01:23:49   and there's this whole formula we go through.

01:23:51   Totally get it that that's part of the brand

01:23:54   of the iPhone.

01:23:56   But my big take is that it's risky.

01:23:58   Yes, so it would be risky for them to do this,

01:24:01   because it would be a change, and who knows

01:24:02   how it's going to go over.

01:24:03   And the disaster would be if they think, hey,

01:24:05   we can only make 10 or 20 million

01:24:07   of these super phones in this first quarter.

01:24:09   It goes on sale.

01:24:10   So no matter how popular it is, that's the most we'll get.

01:24:12   But if it really dampens demand for the other iPhones,

01:24:16   that could be a problem.

01:24:17   And they'll sell fewer overall iPhones and worse,

01:24:20   generate fewer, less revenue in profits.

01:24:23   or if it alienates traditional customers,

01:24:25   or they start looking elsewhere, I think is a big risk.

01:24:27   - Right, and I don't think that's a ridiculous idea to have.

01:24:30   I think it's a huge,

01:24:32   I think this is a huge product marketing challenge

01:24:34   in every sense of the word product marketing,

01:24:39   in Apple's way, where, and I've said this before,

01:24:41   and you know this probably even better than I do,

01:24:43   based on some of your sources at Apple,

01:24:45   but people think marketing, and they think,

01:24:47   well, marketers are the people who,

01:24:49   somebody goes out in a company and designs a product,

01:24:52   and they make a product, and then at the end, here it is,

01:24:55   and then they give it to marketing,

01:24:56   and they're like, now sell this.

01:24:57   And then marketing makes a box for it,

01:25:00   and then comes up with an ad campaign,

01:25:02   and it goes out to the world.

01:25:04   And then that's marketing's job.

01:25:05   And there might be, in some companies,

01:25:07   that is how marketing works.

01:25:08   Marketing is told, here's what we're gonna sell,

01:25:10   you come up with a way to sell it.

01:25:12   At Apple, product marketing is involved

01:25:15   at every step of the way of the conception of a product

01:25:19   and the design of the product.

01:25:21   and that the selling points aren't determined

01:25:25   after it's given to them.

01:25:26   The selling points are determined before it's even made.

01:25:29   - Yeah, absolutely.

01:25:31   I mean, they sort of have a, what I love about Apple,

01:25:33   and I think it's one of their best qualities,

01:25:35   is both in hardware and software,

01:25:36   they have features that marketing really wants,

01:25:39   or someone like Johnny Ive really wants.

01:25:40   And I still laugh when people think Johnny Ive

01:25:42   is not connected with Apple,

01:25:42   because all the stuff goes through him.

01:25:45   It gets pitched in, but there's things,

01:25:47   some of the biggest things we've seen in recent years

01:25:49   have been an engineer who came up with an idea

01:25:51   and pitched it to Johnny or pitched it to Craig.

01:25:53   And then it goes through marketing and they figure out,

01:25:55   can we sell this, can this be a flagship feature?

01:25:57   And then everything in Apple lines up behind it.

01:25:59   - Right.

01:26:01   And so this is a huge product marketing challenge,

01:26:04   not in terms of starting a couple of weeks ago

01:26:08   when they start coming up with ad campaigns

01:26:10   for these phones, but in terms of the years-long conception

01:26:14   of the phones that were slated for the end of 2017

01:26:17   to come up with, if you're going to switch

01:26:20   to a new super tier, how do you keep the mass market tier

01:26:25   still popular?

01:26:26   Both in terms of how do you actually,

01:26:28   what features do you actually put in there

01:26:30   and then how do you position them in advertising

01:26:33   and in a keynote and et cetera,

01:26:35   so that people want to buy it.

01:26:37   It's a huge challenge, absolutely.

01:26:39   I think it's the hardest challenge Apple's ever done

01:26:42   since the original iPhone.

01:26:43   I really did. - And they've had

01:26:44   little steps to prepare for this.

01:26:46   Like, we're gonna make two phones this year,

01:26:47   which is different.

01:26:48   Is that gonna have any problems with it?

01:26:50   we're gonna make a less expensive iPhone,

01:26:52   are we gonna bring the average selling price down too much

01:26:54   because people are gravitating towards the 5C

01:26:56   more than they are towards the 5S.

01:26:58   I mean all of those were sort of practice for this,

01:27:01   but none of them had the risk associated with this.

01:27:03   - Right, the risk wasn't there.

01:27:05   Like if, worst case like with the 6 Plus,

01:27:07   let's say that they had, by a factor of 2X,

01:27:11   underestimated just how many people wanted a 5.5 inch phone.

01:27:15   It would've taken them a few quarters

01:27:16   to get into, to get that fixed,

01:27:19   but it wouldn't have sunk them because at least people

01:27:21   would have been shifting towards the more expensive

01:27:23   of the two models.

01:27:25   And it would have been remediable for the next year

01:27:28   because the next year's phones, the 6S and 6S Plus,

01:27:31   wouldn't have to be redesigned,

01:27:32   they would just have to reappropriate

01:27:34   which one's gonna be made in which quantities.

01:27:39   Whereas if this new, if, and again,

01:27:44   I could be wrong about all of this, who knows?

01:27:46   I really do emphasize that.

01:27:47   But if they're introducing a new higher tier iPhone X

01:27:52   with an OLED display, but that even if they buy

01:27:55   every single OLED display that meets their standards

01:27:58   for what they need for this thing to look good,

01:28:01   in the world that they can only make, say,

01:28:03   15 million of them in the first quarter.

01:28:07   If it, just the mere existence of that phone

01:28:10   means people buy fewer other phones,

01:28:13   even if they're lined up to buy it in later quarters,

01:28:16   but backordered by three months.

01:28:18   That's a problem for Apple financially.

01:28:20   - Yeah, and we saw the reverse of that

01:28:23   when people, sort of iPhone 6 pulled upgrade cycles forward

01:28:27   and people were super happy with it,

01:28:28   but then they paid for that in the 6S quarter.

01:28:31   And those things are very,

01:28:32   the consistency of that is important.

01:28:34   - Right, so I totally, and I think you agree,

01:28:35   but I totally agree it's a risky strategy.

01:28:38   But I also think it is risky to maintain the status quo

01:28:42   where all new iPhones must be producible

01:28:45   200 to 300 million units per year for roughly $650 to $950.

01:28:52   To both not be able to take advantage of components that

01:28:57   maybe may not be available in hundreds of millions per year,

01:29:00   but only tens of millions per year,

01:29:03   means that they're seeding any of those type of features

01:29:06   to companies that are willing to make high-end phones

01:29:09   in smaller quantities.

01:29:11   And by not testing the post above $1,000 price points,

01:29:20   they're ceding the opportunity to create phones

01:29:23   like that to other companies.

01:29:26   Yeah, and you were right earlier when you said that iPad Pro,

01:29:29   people think about it differently than iPad.

01:29:30   And MacBook Pro, people don't think MacBook Pro

01:29:32   is an elitist thing because I can only afford a MacBook.

01:29:36   But I was joking on Twitter, and I kind of

01:29:38   regret this in hindsight because it

01:29:39   doesn't feel very Canadian.

01:29:39   but I was joking that this is the company

01:29:41   that replaced the iPod Mini with the iPod Nano,

01:29:44   and they take risks to grow,

01:29:46   otherwise you put on your blinders

01:29:47   and you end up owning a basketball team.

01:29:49   And I think that's really true

01:29:50   because Microsoft was the classic example

01:29:52   of never being able to look beyond Windows.

01:29:54   And you can milk every cent of profit that you want

01:29:56   out of an existing product,

01:29:58   but unless you're willing to take that gamble

01:29:59   on what's next or what's more,

01:30:01   that product will eventually hit too low

01:30:02   for you to salvage.

01:30:03   - Right.

01:30:07   It is not Canadian, but it is what happened.

01:30:11   And one of the points I made--

01:30:18   and again, part of it may be fueled by the-- and again,

01:30:21   I'm anti-ten-year anniversary mania.

01:30:27   Is Apple not going to even mention

01:30:29   that it's been 10 years in the next keynote?

01:30:32   I guess they'll probably mention it.

01:30:33   But I think it's the sort of thing

01:30:35   that they might mention in the keynote.

01:30:37   I absolutely do not think that they're going to build an ad campaign around these phones

01:30:42   being "ten-year anniversary iPhones."

01:30:45   In fact, even if they do, maybe they'll surprise me and I'll judge.

01:30:48   Again, like you said, let's judge them once they come out and I pre-judge them.

01:30:51   I'll judge the ads when they come out and maybe there's a way to do it that I would

01:30:55   find, wow, that is actually pretty good.

01:30:58   I tend to think an ad campaign based on this being the 10th anniversary of the iPhone is

01:31:03   a who-gives-you-shit thing.

01:31:06   in the real world, 300 million people buying iPhones

01:31:10   don't give a shit if it's the ninth year or tenth year

01:31:12   or the eleventh year.

01:31:13   They just don't.

01:31:14   I think it's really informative.

01:31:16   And I don't know if you got this vibe, too.

01:31:17   But when we looked at the 10-year celebrations,

01:31:19   it was former Apple people who were celebrating.

01:31:21   People inside Apple, they didn't really--

01:31:23   it wasn't like the Macintosh anniversary

01:31:25   where the signatures of everybody

01:31:26   were suddenly on the wall.

01:31:27   It really feels like Apple is not

01:31:28   making a big deal out of this.

01:31:30   Right.

01:31:30   And it's like the difference between strategy and tactics.

01:31:33   It certainly is a tactic to have a campaign this year,

01:31:36   but it's a terrible long-term strategy because then what happens next year when it's the 11th year which isn't a nice round number for

01:31:42   Species that happens to have been born with five

01:31:45   five fingers on each hand

01:31:47   Do you know what I mean?

01:31:50   It's it's yeah, if we if we'd been born with four fingers on each hand, we would have been celebrating this two years ago

01:31:57   And I didn't make a big deal out of iOS 10. I mean, it's just right they

01:32:00   Shipped it in the car with iOS 11, right? I don't know. So I

01:32:05   I don't want to go on a long rant about this,

01:32:07   but I don't know, just deeply suspicious

01:32:11   that 10th Year Anniversary,

01:32:12   again, they might mention it in the keynote

01:32:14   and do a thing where they run through

01:32:15   and show us pictures of every single iPhone up until now

01:32:18   and then use that as a way to say,

01:32:20   and now we've got something

01:32:20   even more exciting to show you.

01:32:22   But that's a keynote.

01:32:23   That's a way of framing something in a keynote.

01:32:25   It's not an ad campaign.

01:32:26   And certainly not--

01:32:28   - It's not like the 10th Anniversary Mac.

01:32:30   Make an iPad stick in iPhone form.

01:32:32   - Right, and in fact,

01:32:33   And that's another thing I'd like to shoot down

01:32:36   is the idea that this OLED,

01:32:39   just doing two phones at once and having an OLED model

01:32:43   that might be more expensive and more exclusive

01:32:45   would be a one-off, one-time thing

01:32:48   just to celebrate the iPhone 10th anniversary.

01:32:50   That to me would be a canary in the virtual coal mine

01:32:53   of wow, sell your Apple stock,

01:32:56   they really have lost their goddamn minds.

01:32:58   Because that is absolutely horrible strategically.

01:33:02   You know, again, it's a tactic where at one point and one time they might rally up a bunch

01:33:07   of their best fans to have them buy this phone, but it's not a strategy that they can use

01:33:12   as they evolve year after year after year.

01:33:17   It's putting a bunch of arrows in one shot, you know.

01:33:22   And it's not even that dissimilar because right now today I can buy the best iPhone

01:33:25   in the world, but for a hundred bucks less I can buy last year's iPhone.

01:33:29   And this will be sort of a riff on that,

01:33:30   where I can buy the mainstream iPhone for 100 bucks less

01:33:33   I can buy last year's, 100 bucks more, I can buy next year's.

01:33:36   - Right, I love that.

01:33:37   - Or whatever the 100 bucks more is.

01:33:39   - I love that framing of that it's not so much about

01:33:43   raising the price of the best iPhone,

01:33:44   but more like making,

01:33:46   making, you know, making it possible to spend more

01:33:50   to get a 2019 iPhone today.

01:33:54   - Yeah, which was the MacBook thing.

01:33:56   Like the MacBook was literally technologies

01:33:58   that were too expensive for them to sell

01:33:59   at the $999 MacBook Air pricing.

01:34:04   The screens were incredibly advanced.

01:34:06   All the technology, the tiered batteries,

01:34:08   they could not make it for much less.

01:34:09   So they made it as well.

01:34:11   We're putting this on the market.

01:34:11   It's for a very specific sort of customers.

01:34:13   And you don't have to get angry if it's not for you.

01:34:16   But for people who do want it, they can pay and get it.

01:34:18   - Right, and we can actually measure

01:34:19   how many years ahead it is by how long it takes

01:34:22   for a just plain MacBook to be sold for $999.

01:34:26   - I mean, the MacBook Pro just got that display this year,

01:34:28   or I guess at the end of last year.

01:34:30   That's how long it took to get that display technology

01:34:33   into the more mainstream computer.

01:34:35   - Right, and that brings me to my suggested name, iPhone Pro,

01:34:40   which I stick to for a couple of reasons, which is one,

01:34:44   and I've mentioned this before,

01:34:45   Apple uses the word pro to mean something,

01:34:48   sometimes it does mean professional,

01:34:50   like in the Mac Pro is a perfect example

01:34:52   where there's really no reason for anybody

01:34:54   to have ever bought any computer called the Mac Pro

01:34:57   for anything other than professional purposes

01:35:00   that I can think of.

01:35:01   I can't think of any reason.

01:35:02   MacBook Pros though, for example, and even iPad Pros,

01:35:09   aren't necessarily about professional uses.

01:35:11   Like in Apple's terms, Pro is just a way of denoting Deluxe.

01:35:16   But plus, in the iPhone sense, at first just meant bigger.

01:35:21   Now it's a little bit more because it's iPhone with more

01:35:24   because the camera does more, even though the first two

01:35:26   models did have optical image stabilization.

01:35:28   But that's a much, much smaller photographic advantage

01:35:32   than this dual-camera system.

01:35:34   It was like they were like--

01:35:36   it's the same as the other phone,

01:35:38   but just a little bit bigger and has a slightly more--

01:35:41   It's the plus-size model.

01:35:42   Right.

01:35:44   And it was almost like an asterisk point.

01:35:46   And it has optical image stabilization,

01:35:48   which is kind of nice.

01:35:50   But in a lot of circumstances, you're

01:35:51   not even going to notice it, whereas the dual-camera thing

01:35:53   is.

01:35:53   Bigger battery.

01:35:54   Right, the dual camera thing is like, you know,

01:35:56   you put your phone into portrait mode

01:35:57   and you don't notice the difference,

01:35:59   then you've got some problems.

01:36:01   It, you know, Pro means something different.

01:36:05   And I think that calling such a phone the iPhone Pro

01:36:09   actually works both ways,

01:36:11   where it's in one way it means deluxe,

01:36:14   it means yes, this costs more.

01:36:15   And it's not for everybody,

01:36:19   it's not the mass market default model.

01:36:22   It's not meant to be the best-selling model by quantity.

01:36:26   But I also think it works in the context of this

01:36:29   is a tool for professionals.

01:36:30   Because I think one of the things-- again,

01:36:34   I'm not making this in a marketing sense,

01:36:35   but just in a nostalgic sense of looking back

01:36:37   at this 10th anniversary of the iPhone, of the role of what--

01:36:43   and even the meaning of the word phone

01:36:45   has changed so much in the last 10 years

01:36:47   because of the iPhone that it would have been ridiculous

01:36:52   uh 10 years ago for someone to say their most important professional tool was their cell phone

01:37:00   in a computing sense there certainly were people like a maybe like a real estate agent or somebody

01:37:05   whose job is to person yeah it to be on the telephone making phone calls all day long who

01:37:11   would say their phone is their most important professional tool you know but nobody i nobody

01:37:16   thinks of the iphone is changing the world in terms of how long you spend on the phone calls

01:37:21   In fact, I think most of us would think that one of the great advantages of the post-iPhone

01:37:25   world is that we get fewer phone calls per day because things that used to be phone calls

01:37:29   now come as text messages and iMessages, et cetera.

01:37:33   And we can deal with companies.

01:37:35   And if you have a customer service product with a company that you can just go to their

01:37:39   app and deal with, "Oh my God, I got to send this thing back.

01:37:42   Let me send it," instead of waiting on hold.

01:37:45   Again, in a lot of ways, the post-iPhone world is about spending less time on the goddamn

01:37:49   phone call than not.

01:37:51   So forget about phone calls.

01:37:53   But I mean in a computing sense,

01:37:55   I know tons of people first hand

01:37:57   whose most important tool is their iPhone.

01:38:00   Or whatever phone they use. - It's true for me.

01:38:02   Absolutely. - Whatever phone they use.

01:38:04   So why not make a pro model for people

01:38:07   who can take advantage of, I don't know,

01:38:10   better battery life or better screen or,

01:38:14   I don't know what features are in it.

01:38:16   - A bigger screen and a smaller,

01:38:17   that would be huge for just a lot of people

01:38:19   who do find the big phone too big

01:38:20   do their one-handed typing and all their work and all the stuff that they want to do but

01:38:22   still need a big display.

01:38:24   That itself is...

01:38:27   That's the thing.

01:38:28   It's like people will pay for the MacBook even though the price to performance ratio

01:38:31   is nowhere near what a MacBook Pro is, even though they're at roughly the same price.

01:38:35   Will people pay for a phone that has...

01:38:38   This is more portable.

01:38:39   It's more mobile.

01:38:40   It's miniaturized.

01:38:41   It's got this better screen.

01:38:42   It's easier to use in one hand.

01:38:43   It's got these better features.

01:38:44   Right.

01:38:45   And that's a perfect example.

01:38:46   13-inch MacBook Pro, by far the most popular pro model

01:38:50   for MacBooks.

01:38:51   Why would you buy that instead of buying a MacBook Air

01:38:56   or a MacBook?

01:38:57   For some people, it's professional context,

01:39:01   like the fact that it's bigger, it has better battery life,

01:39:04   or it's faster and you do things, you do so much on it,

01:39:07   whatever.

01:39:10   I can think of other truly professional contexts.

01:39:13   More and more people, I see it, and again,

01:39:15   I'm not saying most professional photographers shoot

01:39:17   their stuff on their cell phone.

01:39:19   But they can.

01:39:20   And photographs get used in a professional context.

01:39:24   So if, just for example, like the iPhone,

01:39:27   the new regular 4.7 and 5.5 inch phones get new cameras,

01:39:32   maybe the 4.7 inch gets the dual camera design too.

01:39:35   It's tended to trail the plus model by one year

01:39:39   in terms of the video image stabilization came to the 6S,

01:39:44   didn't it, I think?

01:39:45   I don't know.

01:39:46   But the 7--

01:39:47   - Yeah, I mean the biggest concern is a space

01:39:48   inside that one.

01:39:48   - Right, the 7 though does have optical image stabilization,

01:39:53   which was previously only in the Plus models.

01:39:55   And so it might make, you know,

01:39:56   just in terms of following previous examples,

01:39:59   I wouldn't be surprised if the new 4.7 inch regular,

01:40:03   quote unquote regular iPhone has dual cameras

01:40:05   that are pretty much like last year's 7 Plus.

01:40:08   So let's just say those phones get camera improvements

01:40:13   along the lines of what we have expected for years

01:40:16   in the year-to-year camera improvements

01:40:18   in regular and new iPhones.

01:40:19   But maybe the iPhone Pro gets an even better camera

01:40:22   that actually costs Apple $30 or $40 more per component.

01:40:28   It has those sensors that you were talking about a couple

01:40:30   years ago.

01:40:30   Exactly, right.

01:40:32   What were those?

01:40:33   They were like--

01:40:34   The PrimeSense.

01:40:35   Yeah, exactly, the PrimeSense sensors that cost more.

01:40:39   Maybe it's not even an issue of the quantity

01:40:41   that they can be made of, but the simple fact

01:40:42   that they're $50 components,

01:40:46   that in a phone where it's typical,

01:40:50   Apple's used to having a $15 component in there.

01:40:53   It makes a difference, and for a true professional,

01:40:57   in a professional context, that might make a difference.

01:40:59   It might be, would you pay for it?

01:41:00   No questions, no questions, no blinking.

01:41:04   And considering what people pay for cameras,

01:41:07   regular, good cameras, an extra $200 premium

01:41:10   over the other iPhones is actually a bargain,

01:41:14   if you're used to spending 500 to 1,000 or more on a camera.

01:41:18   Like a pocket-sized camera.

01:41:19   - The hilarious thing about all of this

01:41:21   is that what humans will pay for,

01:41:22   we've seen this in gaming,

01:41:23   where people won't pay $10 for a great game,

01:41:25   but they'll pay $100 to have a better looking farm

01:41:28   or to get on the racetrack faster.

01:41:30   Like if it's ego gratification or instant gratification,

01:41:32   we'll pay for it.

01:41:33   And I can't help but think

01:41:34   that if Apple made exactly the same phone,

01:41:36   like they did with Apple Watch,

01:41:38   if they made iPhone 7S,

01:41:40   and then the iPhone X was just that with ceramics,

01:41:42   no difference.

01:41:43   As a fashion thing, we'd have zero problem

01:41:45   paying the price difference.

01:41:46   It's when the feature parity changes,

01:41:48   and Georgia Dow, my colleague,

01:41:49   shared this great video that she showed me

01:41:51   where you have these two monkeys in a cage,

01:41:53   and both monkeys are being given cucumber,

01:41:56   and they're both completely fine.

01:41:57   But when one monkey is given something better,

01:41:59   and I forget if it was chocolate or something,

01:42:01   not only does the other monkey feel jealous,

01:42:04   but he gets angry and starts throwing his cucumber

01:42:06   at the feeder.

01:42:07   He's irate and he would rather have nothing

01:42:10   than have something that is worse than somebody else has.

01:42:12   - Yeah, it could, you know.

01:42:14   In some ways, I get it, you know,

01:42:17   and we're all just bald monkeys, really.

01:42:20   (laughing)

01:42:23   I get it, but I think back,

01:42:26   and to the, you know, I think back to the iBook G3,

01:42:35   I forget if, I think it was a G3 that I bought

01:42:38   in around 2002 or so, I think, 2001, 2002.

01:42:43   I bought an 11-inch white iBook.

01:42:48   It was back when they had the clear keys,

01:42:50   which were kind of gross. - Yeah.

01:42:52   - And my main computer at home,

01:42:55   was this, you know, when I first,

01:42:57   it was like when I was,

01:42:59   it was when I, after I left Barebone Software

01:43:02   and I was gonna work for myself for a while

01:43:04   doing freelance web development and other work.

01:43:07   And my main work machine was a Power Mac 9600

01:43:11   from a while back, which I had bought for, I don't know,

01:43:13   how many thousands of dollars, and which was still

01:43:15   a super, super fast machine, and I'd upgraded some stuff

01:43:18   and ran Mac OS 9.

01:43:21   I felt super fast, but I wanted a machine.

01:43:23   I needed to own a machine that I could run Mac OS 10 on,

01:43:27   just so I could-- I needed two machines for it.

01:43:30   My 9600 couldn't run OS 10.

01:43:33   And I didn't want to replace it with a high-end thing that

01:43:37   could dual boot.

01:43:38   I actually wanted both running at the same time,

01:43:40   long story short.

01:43:41   And at the time, I just could not

01:43:42   justify the price of buying the Power Mac G4.

01:43:46   12 inch?

01:43:46   Remember that?

01:43:47   I know you remember.

01:43:48   It was the one where the keyboard went edge to edge.

01:43:51   And to me, still to this day, is one

01:43:53   of the most beautiful machines Apple's ever made.

01:43:56   I've said this before on the show.

01:43:58   I remember just several years ago,

01:44:00   just 10 years after it came out, like 2012,

01:44:02   I was in a coffee shop and I saw somebody with one but I might it took my breath away because I thought maybe I was

01:44:07   Even here in Philadelphia. I thought if I look it's some Apple employee here using a prototype

01:44:12   MacBook no, it's absolute classic and it would defer it wasn't until I recognized what it was

01:44:18   It was when I recognized how thick it was that I was like

01:44:21   Oh

01:44:21   it was the thickness of the device that and then I but just looking at the screen and the

01:44:26   Edge to edge keyboard the edge edge keyboard is sort of like those infinity pools, you know it

01:44:32   Beautiful machine.

01:44:34   Almost the exact same footprint as the iBook that I bought.

01:44:37   Faster, but just so much less, you know.

01:44:40   But I couldn't justify it at the time.

01:44:43   I just did, you know, for what I wanted to use it for

01:44:46   and for how much money I had, I just couldn't justify it.

01:44:48   But it didn't make me angry at the people who had,

01:44:51   you know, my iBook G3, which I didn't like as much

01:44:54   as I would have loved the G4.

01:44:56   It didn't make me angry at people who had the G4.

01:44:59   So I don't--

01:45:00   I came was the plastic MacBook when it was a hundred bucks more for black and I just didn't justify I couldn't justify buying

01:45:05   But anytime I saw someone with a black one. I got a little angry

01:45:08   Especially because I don't think Apple had at the time it wasn't just whether you like black or white better

01:45:16   I the black war better like apples whites at the time would tend to get a little grungy over time. Yes

01:45:26   Yeah, I didn't buy either of those machines.

01:45:28   I think my wife had the white one, though, of that vintage.

01:45:30   And I think she got, but she preferred white.

01:45:32   She wanted the white one.

01:45:34   But I remember that was, you know,

01:45:35   people were mad about that one,

01:45:37   because people wanted the black, and Apple was charging.

01:45:39   And the only advantage was that it was black.

01:45:41   It was just literally $100 for the color.

01:45:43   So it is, like you said, it is funny

01:45:45   what people will pay for and what people

01:45:47   will get angry about.

01:45:49   - Absolutely.

01:45:50   - So who knows?

01:45:51   And you know, this is what podcasting is for,

01:45:53   is talking about things that are ephemeral,

01:45:56   because this whole discussion could be mute

01:45:59   by what Apple actually announces come September,

01:46:03   but I don't know.

01:46:06   - Then it'll be what it is.

01:46:07   There'll be nothing to talk about.

01:46:08   We can talk about whether we like it or not,

01:46:09   but now before they announce anything,

01:46:10   it's what I think you do so well,

01:46:13   which is sort of just trying to understand Apple.

01:46:16   I think a lot of people attribute to sources

01:46:18   what is really Apple's a logical company,

01:46:21   and if you start to understand Apple,

01:46:22   you can start to sort of see not exactly the path forward,

01:46:25   but where they might go going forward.

01:46:26   - Yeah.

01:46:27   All right, let me take one last break here

01:46:29   and thank our third and final sponsor,

01:46:31   good friends of the show, Audible.

01:46:32   Audible has an unmatched selection of audio books

01:46:38   and original audio shows, news, comedy, and more.

01:46:43   You can get a free 30-day trial at audible.com/talkshow.

01:46:47   If you want to listen to it, Audible has it.

01:46:50   Listen to audio books from virtually every genre,

01:46:52   anytime, anywhere.

01:46:53   You can play audio books on phones, tablets, computers,

01:46:57   most Kindles, even iPods.

01:46:58   Anything that you think you might be able

01:46:59   to play audio stuff on or that you ought to be able to,

01:47:02   you can do it.

01:47:03   It's great for long flights, it's great for road trips,

01:47:05   great for people like you, listener of the talk show,

01:47:08   who are currently, right now,

01:47:10   if you hear me saying this sentence,

01:47:11   are obviously a consumer of audio, audio content.

01:47:15   Guess what?

01:47:17   got time to fill in your audio listening schedule.

01:47:23   Audible is where you can go to fill it up.

01:47:27   Absolutely great.

01:47:28   Audiobooks are probably more popular than they ever

01:47:30   have been before.

01:47:31   It seems to me like as I look at them,

01:47:33   whenever I look to see what's going on,

01:47:36   bestsellers or recent books that I've heard of

01:47:38   are coming out on audiobooks more recently or more quickly.

01:47:43   It's treated as like a first class target

01:47:46   for best-selling books.

01:47:48   A lot of them these days are read by the authors themselves,

01:47:51   which is just great.

01:47:53   It just somehow, you know,

01:47:55   it depends on the author, I'm sure,

01:47:57   but when it works, it works unbelievably well

01:48:00   because you really get the cadence and punctuation

01:48:02   of the sentences right from the person who wrote them.

01:48:06   When you begin your free 30-day trial,

01:48:08   you get your first audiobook for free,

01:48:10   and then there's no stress or obligation,

01:48:11   and you can cancel your membership at any time.

01:48:15   So anyway, if you want more to listen to that's great,

01:48:18   and you want to do it with no risk,

01:48:20   go to audible.com/talkshow, know the,

01:48:23   and they will know where you sent them.

01:48:25   My thanks to them for their continued support of this show.

01:48:28   All right, let me toss this out.

01:48:30   Here's a company that I think made a terrible mistake.

01:48:33   Andy Rubin's Essential.

01:48:35   So Essential is Andy Rubin's new company.

01:48:39   They've decloaked right before the, what's that conference,

01:48:43   Recodes conference and they revealed a phone with a very nice-looking phone over for the most part with an edge-to-edge

01:48:50   design top and bottom

01:48:52   Very weird not dissimilar to the iPhone rumors

01:48:56   Not dissimilar at all. Although they've got like a weird little black Dracula

01:49:01   Thing over the front facing camera in the center of the phone

01:49:08   Which I understand why they couldn't you know, technically put a they needed a front-facing camera and the front-facing camera

01:49:15   Couldn't go underneath the display

01:49:17   But I think that the design wise they should have done something else to accommodate that there some of the rumors of the Apple

01:49:25   You know edge to edge thing have a sort of you know

01:49:29   Not quite as pointy as the essential one island in the sea of an owner

01:49:34   Yeah, and it's some kind of isthmus coming down there

01:49:37   But I think people's speculation in the mock-ups is that

01:49:40   Apple would fill in the area

01:49:44   that to make a bar they could fill it in with black and

01:49:48   On OLED black is truly black. And so you wouldn't it really would be seamless visually in it. You could just have things like

01:49:56   The signal strength indicators and the battery strength indicator up there as white on

01:50:02   black and have it look like it's just magically part of the forehead of the

01:50:07   phone and you wouldn't really think of that as being the display but that

01:50:11   aside it's a pretty nice-looking phone and it's obviously meant to be sort of

01:50:15   like it's like Rubens take on what the pixel should be I guess like here's what

01:50:21   a high-end low-volume Android phone can be it's like shatterproof or something

01:50:27   yeah I think the mistake that that they made because I think it

01:50:32   It sells, obviously they were promising a June delivery date

01:50:36   and we're recording in mid-July and it's not out yet.

01:50:40   So they've obviously run into some problems.

01:50:43   But I think the mistake they made is that the thing

01:50:45   sells for like 900 and some dollars.

01:50:48   I think that they should have made, I swear to God,

01:50:50   I think they should have made like a $2,000 phone.

01:50:53   Or at least like a $1,500 phone.

01:50:55   And put more in it.

01:50:57   Do more.

01:50:58   Do more with the materials, do more with the thing.

01:51:02   and make a phone that for Android enthusiasts

01:51:06   or people who are, what would you call it, bilingual,

01:51:11   and who can adeptly, enthusiasts who can jump

01:51:15   or do jump between iOS and Android devices,

01:51:18   something that they can hold up and say,

01:51:20   wow, this is unabashedly higher quality than the iPhone.

01:51:25   - Yeah, sort of a status symbol.

01:51:28   - Right, I feel like part of the problem

01:51:30   with the Pixel is that the Pixel, at least up--

01:51:34   I'm not judging the upcoming new one based on rumors,

01:51:37   but the one that I have in my hand--

01:51:38   is that their target was just the iPhone 6S.

01:51:42   It was, let's make a phone.

01:51:44   Let's do our best.

01:51:45   And they came close, arguably close enough even.

01:51:49   But that's not good enough if you're

01:51:51   trying to overcome a deficit in terms

01:51:54   of how you're perceived as and which is really

01:51:56   the better premium product.

01:51:59   And I think they could take advantage,

01:52:01   or in that they've missed it.

01:52:02   They've missed their opportunity to take advantage

01:52:06   of the fact that Apple is hamstrung by what they can do

01:52:09   by the price points of the iPhone.

01:52:11   - And I wasn't sure when he announced it

01:52:13   if this was a bid to be, you know how,

01:52:15   I forget the guy's name, is it Nguyen or something?

01:52:17   He keeps selling his company to Apple over and over again.

01:52:19   - Yeah, yeah, yeah.

01:52:20   - I was just wondering, I was just like,

01:52:21   he sold color and he sold Lala and all these things.

01:52:23   I was wondering if this was Andy Rubin's sort of take

01:52:25   on that, where he sold Android and now he's gonna sell

01:52:27   essential because you know again they really want an iPhone and if he can make something that Google finds compelling

01:52:32   but he just didn't seem to have carrier relationships like as

01:52:35   Poor as some of the carry relationships like Blackberry used to have great ones and now they're struggling

01:52:40   But it just didn't seem like he had great carrier relationships or he had anything that would make this a viable product

01:52:45   So it right

01:52:46   I don't know if that's true now or whether it was just a trial balloon to get Google to take him back

01:52:50   Right and just buy them and have it have the essential takeover as the pixel, you know, or the high-end pixel

01:52:57   whatever it would be.

01:52:58   Right.

01:52:59   Pixel Pro.

01:53:00   Again, would it have made a huge difference?

01:53:01   I don't know.

01:53:02   Maybe not.

01:53:03   I don't know.

01:53:04   But it just seems to me like they missed an opportunity by shooting for just $900 because

01:53:08   then you're only shooting for the same level that the iPhone's already at.

01:53:12   Why not try to make a $1500 phone for people who truly live on their phone and truly treat

01:53:17   it?

01:53:18   It really is their most important device in their day.

01:53:21   If you're—and again, I know people who've vouched for this or at least on many days

01:53:26   that their iPhone or whatever their phone is, is their more important, most used device

01:53:32   all day every day.

01:53:33   Well, if those people have been buying $2,000 or $2,500 laptops for years as professional

01:53:39   devices, why not let them buy a $2,000 phone?

01:53:44   Dave: Yeah, and marketing is entirely about perception.

01:53:48   There's very little that's attached to reality.

01:53:50   we pay $100 more for more gigabytes

01:53:52   because it just seems like an acceptable thing

01:53:55   and we've become accustomed to it being an acceptable thing.

01:53:58   But there really is no reality behind that.

01:54:01   And this is the same thing.

01:54:02   I bought the Apple Watch Edition, the ceramic one,

01:54:04   and it's the same as the aluminum one.

01:54:06   It is a great Apple Watch,

01:54:08   just because I thought, oh, ceramic, it's neat.

01:54:11   We'll do all of those sorts of things.

01:54:13   You just have to give us a compelling product

01:54:15   and a compelling story for it.

01:54:17   And this had neither of those things.

01:54:19   It was a sort of interesting product

01:54:20   that Samsung has kind of done already,

01:54:22   but there was no hook to make people want it, I don't think.

01:54:26   - Yeah, and the ceramic, the second gen Apple Watch edition,

01:54:30   the ceramic one, is such a more compelling device

01:54:32   than the first generation gold one.

01:54:34   And I got caught up in it and kind of did a good job

01:54:37   guessing about just how high those prices were gonna be,

01:54:40   because at the time, people were thinking

01:54:43   it was gonna be like $1500, maybe $2000,

01:54:46   like a ridiculous $2,000 for a gold Apple Watch.

01:54:49   And I'm like, you guys are out of your freaking minds.

01:54:51   This thing is gonna be like at least 10,000,

01:54:53   maybe $20,000.

01:54:55   And everybody was like, no one's gonna buy that.

01:54:58   And it ends up we were both right.

01:55:00   It was 15 to $20,000 and nobody bought it.

01:55:03   Whereas the new edition is so much more compelling

01:55:06   because it's, again, it's more than most people

01:55:11   are gonna spend on an Apple Watch.

01:55:12   And I can't say, I'm not sure I've ever seen one in the wild.

01:55:16   I know I've seen yours.

01:55:17   - Yeah.

01:55:18   - But it's--

01:55:19   - I've seen one, I think.

01:55:20   That was by Leo, Leo Laporte doesn't count.

01:55:23   - Although I remember being in Vegas and I did see,

01:55:27   I've seen gold Apple watches.

01:55:29   You know, it truly is conspicuous consumption.

01:55:31   - I've seen them in Palo Alto, which is not a surprise.

01:55:35   - I just saw a video, I know,

01:55:38   I was watching a video in, what's her name?

01:55:42   I don't even know her YouTube name.

01:55:44   iJustine, Justine Zarek.

01:55:47   She has one, and it was like, wow, that looks great.

01:55:49   She had the white ceramic Apple Watch with a blue band on,

01:55:52   and it's a really good look.

01:55:53   Much more compelling.

01:55:55   Anyway, it's interesting, and I thought this last year,

01:55:58   I remember when it came out, I was like,

01:55:58   it'd be interesting if that's something

01:56:00   they're gonna do for an iPhone.

01:56:01   And the response was, people who know about making ceramics

01:56:05   are like, well, you can't make 200 million ceramic cases

01:56:08   in a year, it's impossible.

01:56:09   So it'd be interesting if it's maybe something,

01:56:12   Well, we don't plan to make 200 million of these.

01:56:15   - Yes, it's titanium or ceramic or some combination

01:56:18   like the essential is of different materials.

01:56:20   - Right, let me think, what else?

01:56:23   What else do we have time?

01:56:24   I wanna wrap, we gotta wrap up soon, but naming.

01:56:26   I have this, I have this note that I get it,

01:56:32   I get it at least once a day when this stuff comes up,

01:56:35   somebody suggests that they're going to say,

01:56:37   well, the new regular phones will be iPhone 7S and 7S Plus,

01:56:40   or maybe they'll be iPhone 8 and 8S or 8 Plus.

01:56:44   And at the new SuperPhone, instead of being called iPhone,

01:56:47   they're gonna call it the Apple phone.

01:56:49   - Yeah, I saw that too.

01:56:50   - I get this, I get a couple of these a week.

01:56:53   And I understand the logic of it,

01:56:54   where it seems like for a long time in the Jobs era,

01:56:59   new Apple products would come out named i-something.

01:57:01   iPod, iPhone, iPad.

01:57:05   And it can't help but suspect that that was something

01:57:09   Jobs was particularly fond of and in the post-Jobs era they tend to name new products with the

01:57:16   just Apple and then a very plain description of what it is. The Apple Pencil, the Apple

01:57:22   Watch, so I get that and if they so if the first iPhone, first phone Apple was ever going

01:57:28   to ship was coming out this year I would heavily bet that it would just be called the Apple

01:57:32   Phone. But it's not. I'm so surprised it was an Apple hub that was HomePod you know

01:57:39   I mean, they throw curveballs.

01:57:41   Yeah, they still do use non-Apple names,

01:57:46   or Apple speaker.

01:57:46   I wonder if that was the second running name.

01:57:50   Anyway, there is absolutely no way

01:57:52   that they can change the name of any iPhone from iPhone

01:57:55   to anything else, no matter what you

01:57:56   think about what they're doing.

01:57:58   And you have to understand that even products like the iPod

01:58:01   Touch, people still call it-- even though they don't even

01:58:04   sell many of them anymore-- people still call it the iTouch,

01:58:06   because they thought it would be named iTouch.

01:58:08   And I still hear people calling the Apple Watch the iWatch.

01:58:12   So even a product that never was called the iWatch

01:58:14   gets called the iWatch.

01:58:16   The strength of a brand is outside the control

01:58:19   of the brand owner once it's established.

01:58:21   And the strength of the i--

01:58:22   - I hear normal people calling the Apple Store

01:58:24   the iPhone Store when they won't buy it.

01:58:26   - Yeah, I remember when it was called the iPod Store.

01:58:30   - Yeah.

01:58:31   - That's when I knew that the, what do you call it?

01:58:34   What do they call it?

01:58:35   The, what was the theory of how they might end up

01:58:38   selling more Macs because of the iPod's popularity.

01:58:42   Oh, right, yeah, the Halo.

01:58:43   The Halo effect.

01:58:44   That's how I thought that the Halo effect might definitely

01:58:47   be real, because it seemed to me like there was more brand

01:58:49   awareness of iPod than Apple.

01:58:52   The strength of the iPhone brand is far outside Apple's control.

01:58:56   There's nothing Apple can do to bottle that up.

01:59:01   Brands have a life of their own.

01:59:03   And they couldn't change the name to Apple phone,

01:59:04   even if they wanted to.

01:59:05   But I think they shouldn't want to.

01:59:08   It makes no more sense to change the name of the iPhone

01:59:10   to Apple phone at this point than it

01:59:12   would be to change the MacBook to Apple Book.

01:59:14   Apple Book, yeah.

01:59:15   I mean, they could do it, but it would be a huge risk

01:59:17   for very nebulous rewards.

01:59:18   Yeah.

01:59:19   It's so-- I get it.

01:59:22   It's not silly, but if you really think about it,

01:59:25   it's not worth really going into.

01:59:28   That's about it.

01:59:29   I have this whole rant about iOS Notification Center and 3D

01:59:32   Touch, but we don't have time for it.

01:59:34   Yeah.

01:59:35   That's why the same rants. That's why we that's why we that's why there's next week's show.

01:59:39   [Laughter]

01:59:43   Anything else you really want to talk about this week? Anything about this stuff?

01:59:46   No, this was the big thing. And again, my whole point is because we're getting a lot of really

01:59:51   weird feedback on this is like we're putting these I always think that part of my job is

01:59:56   I think you do this too is to try to understand what Apple is doing and express that. And that

02:00:01   way if people want to hate on something, they can hit on it in an informed way because I really

02:00:04   hate when, see I'm going to say hate on somebody now, like for me the classic example is the

02:00:08   iPhone smart battery case where it came out and Apple absolutely did not do any messaging.

02:00:13   If ever a product needed Phil Schiller on stage explaining it, that one did.

02:00:17   But it was inarguably a better, more efficient, smarter take at the case and all reviewers

02:00:21   did is look at like the cost per milliamp hour or the hump on it and they didn't try

02:00:26   to understand that it got out of the antenna's way, that it didn't block signal, that it

02:00:29   actually amplified it, that it did all these really smart things.

02:00:34   And if you did like it, then you were just an apple shill.

02:00:36   And I think all of this stuff, all this,

02:00:39   us thinking out loud like this,

02:00:41   it sort of comes to terms with Apple's doing.

02:00:42   And then when they actually announce something,

02:00:44   I don't know about you, but I'll decide then

02:00:46   whether I like it or not, but I'll do it for a reason.

02:00:48   It's not just because it's easy to get a headline

02:00:50   for hating on Apple.

02:00:51   - And the other thing about the Apple battery pack case

02:00:56   that I don't think got anywhere near enough critical thought

02:01:00   is how it doesn't change your charging needs at all.

02:01:05   So like let's say you're already traveling,

02:01:06   what do you need?

02:01:07   You absolutely need a wall thing,

02:01:09   you need a thing to put in a wall,

02:01:11   and you need a lightning cable

02:01:13   that has USB on one side to plug into the charger

02:01:17   and lightning to plug in the phone.

02:01:19   So now you wanna get a battery pack or a battery pack case.

02:01:23   Now what do you need?

02:01:24   Well, if it's any other battery pack,

02:01:26   you need, now you need a micro USB cable

02:01:29   because that's what charges all the other battery packs

02:01:31   and battery pack cases, and now you need two cables.

02:01:34   And depending on how the case works,

02:01:36   if it does charge through, you might still need both

02:01:39   because you might overnight need to charge the phone

02:01:41   separately from the battery pack.

02:01:44   And now you need two chargers with two different cables.

02:01:46   And that's, as somebody who often packs a battery case

02:01:51   while going on vacation, or especially to like

02:01:53   a technical conference like Macworld or something,

02:01:55   or, well I guess there is no more Macworld,

02:01:57   but like WWDC where I know I'm gonna be on the phone

02:02:00   all the time and it's gonna be bad

02:02:02   in terms of cell phone reception and wifi and stuff.

02:02:05   It's a huge pain in the ass.

02:02:08   It's a huge pain in the ass.

02:02:09   God, how much I wish somebody would make,

02:02:12   somebody would pay whatever it takes to license it

02:02:14   to make a regular battery pack that just charges

02:02:17   by lightning so I don't need to pack anything

02:02:19   other than lightning cables.

02:02:20   Anyway, totally agree.

02:02:22   - That was my, not that I'm bitter.

02:02:27   - What do you mean? (laughs)

02:02:31   All right, I can't think of anything else.

02:02:33   Rene, Richie, I appreciate your feedback.

02:02:36   - Thank you so much.

02:02:38   - And I got a thing in here to the article you wrote.

02:02:42   I swear to God it's gonna be in the show notes

02:02:43   on the iPhones of future past.

02:02:45   You beat me to it, I really love it,

02:02:47   is this, that how are they gonna sell this thing?

02:02:50   I think you're onto something where the best way to sell it

02:02:53   is to, here's this year's new iPhones.

02:02:55   They're just as great as you'd expect

02:02:57   this year's new iPhones to be,

02:02:58   and we have this new thing that we're doing,

02:03:00   which is we're giving you a sneak peek

02:03:01   at the future of iPhones,

02:03:03   and you can buy it today for whatever.

02:03:06   I totally think that that's the best idea I have

02:03:10   of how they make this go down.

02:03:12   - It's gonna be an incredibly interesting

02:03:14   marketing challenge to watch either way.

02:03:16   - Yeah, I'm super excited about it, who knows?

02:03:18   And again, who knows, the other thing

02:03:19   that could render this whole thing moot

02:03:21   would be like an avalanche of super spot-on

02:03:24   accurate leaks in August.

02:03:26   I mean, Jaws knows, but he's not telling us.

02:03:28   Oh, no, definitely not.

02:03:30   No, I think Jaws--

02:03:32   you know, we said this.

02:03:33   I said that the role that product marketing plays

02:03:36   in this, and I mean, there's--

02:03:39   obviously, Phil Schiller is obviously involved,

02:03:41   and Johnny's involved, and whoever else.

02:03:43   But god, the weight of the world's

02:03:45   got to be on Jaws' shoulders, because Jaws is really--

02:03:48   his title didn't change, but it did a little-- is he--

02:03:54   - Yeah, so he used to be a head of product marketing

02:03:56   for iOS devices, now he's head of product marketing

02:03:58   for everything, for all devices, like Macs, iPhones,

02:04:00   everything.

02:04:01   - It's, you know.

02:04:03   (laughing)

02:04:05   I'm sure, it's been a busy year for Steve.

02:04:08   - He's a good person for it though.

02:04:09   - For jobs. - A good person for the job.

02:04:11   - Yeah, exactly.

02:04:11   So anyway, I'm excited about it.

02:04:13   We've got, what do we have?

02:04:14   Probably about seven weeks.

02:04:16   And I guess that's the last thing,

02:04:17   we wanna talk about one more thing,

02:04:18   is do you think the event is still going to be

02:04:20   early September, combined with these rumors

02:04:23   of at least one of the, you know,

02:04:25   the one phone being delayed and possibly all of them.

02:04:28   - Yeah, I mean, I think that for a variety of reasons,

02:04:30   it just is better for Apple

02:04:31   if they get that event out of the way.

02:04:32   Sometimes they've done it a little bit later in September,

02:04:34   but in general, they've had a September event

02:04:36   for as long as I can remember.

02:04:37   And even if they do say, you know,

02:04:39   this product is coming at this date,

02:04:40   like it was two years ago where the iPad Pro came out

02:04:43   a month later and then Apple TV came out two months later

02:04:46   or vice versa, they still did the announcement in September.

02:04:49   - Yeah, I keep track of this stuff.

02:04:52   Last few years, iPhone 5 was Wednesday, September 12.

02:04:57   iPhone 5S was Tuesday, September 10.

02:05:01   This iPhone 6 was Tuesday the 9th,

02:05:03   so it went from the 12th to the 10th to the 9th,

02:05:05   Wednesday, Tuesday, Tuesday.

02:05:07   iPhone 6S was a Wednesday on the 9th,

02:05:10   and iPhone 7 and 7 Plus last year were on Wednesday the 7th.

02:05:14   So if anything, it's actually moved down

02:05:16   from September 12th to 10th to 9th to 9th to 7th.

02:05:20   And I think the Tuesday, Wednesday thing

02:05:21   has always been about a Labor Day thing.

02:05:23   And that day, if the Monday of the week

02:05:25   that they wanna have it is Labor Day,

02:05:28   they don't make everybody travel on Labor Day,

02:05:32   combined with not making anybody

02:05:34   who has to do setup for the thing,

02:05:36   give 'em an extra day for Labor Day.

02:05:39   So-- - And I think one of them,

02:05:39   the 6S, was a three-week delay for shipping

02:05:42   instead of a two-week delay, which they usually do.

02:05:43   So they can play around with all that as well.

02:05:45   - So Labor Day, actually don't know

02:05:49   when Labor Day is this year, hold on a second,

02:05:51   Is it the fourth?

02:05:52   Yeah, it's the fourth.

02:05:53   So if they do it the week of Labor Day,

02:05:55   they would have the event on the sixth,

02:05:57   which would be the earliest they've ever had it.

02:05:59   Otherwise, I'm guessing it would be the September 12th.

02:06:03   - Yeah, which is also a normal day for them.

02:06:05   - Yeah.

02:06:06   And the 12th is a date that they have used before

02:06:10   with the iPhone 5.

02:06:11   That's what I expect.

02:06:13   That would be the normal schedule.

02:06:14   It's either going to be September 6th or September 12th.

02:06:18   If they move it back, I don't know.

02:06:19   I wouldn't be surprised.

02:06:20   - The 4S was October, so that was the latest

02:06:23   they've ever done it, and that was for a variety

02:06:25   of reasons that are not normal.

02:06:27   - Yeah, yeah.

02:06:28   (laughing)

02:06:30   This is not even gonna go there.

02:06:31   But anyway, I think that it's probably gonna either

02:06:36   be the sixth if they're on schedule,

02:06:38   or the 12th if they're a little late,

02:06:39   and then they'll just have a three week delay

02:06:41   after the 12th or something like that.

02:06:43   But we shall see.

02:06:45   So what do we have? - We shall see.

02:06:47   - So anyway, thank you, Rene.

02:06:50   No, my pleasure, thank you.