The Talk Show

190: ‘Anything Luxury’ With Ben Thompson


00:00:00   Lots to talk about. What do you want to start with? Do you want to start with this Microsoft Build keynote?

00:00:05   Yeah, it was interesting. Did you watch it?

00:00:10   No, I didn't watch it.

00:00:13   I was going to, but I ran out of time.

00:00:15   Yeah, sorry. I failed to bell you out there.

00:00:18   It was good. It was funny. I really liked it as I was listening to it.

00:00:21   There was very much a coherent vision that took the idea of, "What's going on?

00:00:28   took the idea of Microsoft, by necessity, has to

00:00:33   leap over the mobile area.

00:00:36   And to an extent they certainly have in the cloud, but painting a vision beyond that.

00:00:41   And from a big picture, what I liked best is that at previous builds, there's always two keynotes.

00:00:46   And the first day is usually the Windows keynote, and

00:00:51   the second day is the Azure keynote, and this year it's the opposite. Azure is the first day and Windows is the second day.

00:00:56   and I think that's appropriate because that's realistically where Microsoft's growth and opportunities are.

00:01:01   So from that perspective, I enjoyed it.

00:01:05   I think the problem though is all that stuff on the edge, Microsoft talked about building a sort of thing from the cloud away the edge,

00:01:13   like they don't have very many edge endpoints and that continues to be a problem.

00:01:17   Edge being the devices that people use. Is that what you mean?

00:01:22   Yeah, yeah, exactly. I mean, even on not just mobile devices, but also sort of on computers.

00:01:28   I mean, the big computer, the big criticism I've always had for Microsoft, and even under Satya Daddala,

00:01:34   is they've done a great job of sort of locking in the folks that they've always had.

00:01:40   But if you're a new company starting today, which piece of Microsoft software are you going to buy and why?

00:01:46   And Microsoft doesn't have a very good answer for that question.

00:01:49   Yeah, that's a very good point. I would buy none. You would probably buy Excel, right?

00:01:58   Yeah, I have Office 365. I actually use that for my email, in part because I vastly prefer using

00:02:06   email on an offline client, even if it's Outlook, as opposed to... The problem with Gmail is I have

00:02:11   an assistant, so I have some shared mailboxes, and it only supports shared mailboxes through the

00:02:15   through the online interface.

00:02:16   So that's honestly the reason why I use Office 365.

00:02:19   But yeah, but I mean, beyond that,

00:02:23   I used Google Docs for a year,

00:02:25   or Google Apps, I should say, or whatever it's called,

00:02:27   for the first several years,

00:02:29   and there's times I miss it, times I don't.

00:02:32   But realistically, it's not really,

00:02:34   if it wasn't for my own personal,

00:02:36   I can choose software based on my own personal foibles.

00:02:38   If I were an administrator,

00:02:40   if Chuckery was a larger company,

00:02:42   I'm sure I would be on Google.

00:02:45   I mean, I'm obviously an edge case in that I've lived a Windows-free life my entire life.

00:02:52   But off the top of my head, the only Microsoft software I can think that I use regularly

00:02:56   is right now Skype.

00:02:58   I don't think I use anything else.

00:03:00   I haven't had Microsoft Office in, oh my god, at least 10 years.

00:03:06   I don't even remember.

00:03:08   I don't know if I ever even used it on Mac OS X.

00:03:13   you're probably better off for that case.

00:03:16   But I mean, if you use Excel, like for real,

00:03:19   which I rarely do, but the occasional times I do,

00:03:23   it's like there's numbers is not really competitive.

00:03:26   If you want to just display stuff,

00:03:27   like make a little chart,

00:03:29   numbers is actually arguably better and easier.

00:03:32   And certainly, you know,

00:03:33   Excel makes some really ugly charts.

00:03:35   But there are some things I occasionally do on Excel that,

00:03:39   I mean, numbers just, it's not,

00:03:42   Numbers is what it is.

00:03:44   It serves its role well.

00:03:45   It's not an Excel competitor, though.

00:03:46   I don't know.

00:03:47   I have nothing to do with Excel.

00:03:48   I haven't used Excel in a long time, but I was never a serious spreadsheet person.

00:03:51   But when I've seen serious spreadsheets, it's a very impressive piece of software.

00:03:56   Yeah, it's kind of like the ... People have made this point before, but it's very true.

00:04:01   It really is sort of the programming language for normal people.

00:04:05   Yes.

00:04:06   If you think about it, people bend it to do all kinds of crazy things, in part because

00:04:11   it's offering in-place computation in a way that is accessible for normal people who don't

00:04:18   know how to code it. Obviously there's VB, there's basic or whatever it's called, virtual

00:04:21   VB, I can't even remember what it's called. VB script or whatever.

00:04:25   VB basic. Yeah, whatever the scripting language is. So you can do actual programming, which

00:04:29   again is still different than, still pretty basic, but even just using a cell equals this

00:04:37   cell plus that cell divided by that cell. That's programming. In that respect, it's

00:04:42   even more impressive when you think of it in that light.

00:04:45   Even back in 1991, when I was a freshman in college, as a freshman, I ended up switching

00:04:53   to computer science the next year, but as a freshman, I was an engineering major. There

00:04:58   was a mandatory intro to programming course, but not—again, this wasn't the computer

00:05:06   sciences was, you know, and it was all, it was ridiculous for me. I mean, I was like a,

00:05:11   in like the, on the, on the computer programming team in high school. I was, I was, it was great

00:05:18   for me. I was the type of student you're, I don't know if you were the same, but when I got a course

00:05:21   like that, I didn't try to place out of it. I was just like, oh, this is great. I don't have to do

00:05:25   any work. But we ended up, I think, like second half of the thing was like an intro to Pascal,

00:05:32   which dates me, and we were still learning Pascal.

00:05:36   But I think the first month of the course

00:05:38   was all spent in Excel.

00:05:40   It was sort of like Excel was the,

00:05:42   this is how you learn to program.

00:05:44   And I think--

00:05:45   - Oh, that's interesting, 'cause it's trying

00:05:47   to build the mindset, not necessarily build.

00:05:48   - Exactly. - Yeah,

00:05:49   that makes a ton of sense, yeah.

00:05:51   - And honestly, going through life,

00:05:53   I bet more engineers do programming in Excel

00:05:56   than writing source code, I mean, at least in some ways.

00:06:01   I think the other thing that Excel has, and all spreadsheets,

00:06:04   but the thing that they have that really makes them

00:06:07   is so much more approachable for people

00:06:09   who think they can't program but are actually

00:06:11   creating their own custom programmatic things,

00:06:13   is it makes data structures completely visual.

00:06:18   So there's this entire layer of abstraction

00:06:21   of creating a data structure that is completely removed.

00:06:24   You just see it.

00:06:25   and so much data actually fits conceptually in a grid,

00:06:30   and you don't even know it, you don't realize

00:06:33   that as you're setting up this two-dimensional,

00:06:35   and I know you can do three-dimensional stuff too,

00:06:37   but even if it's just a simple little

00:06:39   two-dimensional spreadsheet,

00:06:41   you're creating a data structure,

00:06:42   but you're not really thinking about it that way.

00:06:45   - Yeah, I think that's exactly it,

00:06:46   and you can visualize, you can literally visualize

00:06:50   how the numbers are moving around

00:06:52   and moving through equations.

00:06:55   you're debugging, you don't even realize you are,

00:06:57   but that's exactly what's going on.

00:06:59   - Anyway, nothing but good things to say about Excel.

00:07:01   So what else happened at this keynote?

00:07:02   What are they talking about?

00:07:03   What's the big, what do people need to know

00:07:07   about where Microsoft wants people to go?

00:07:09   And build it, for those who don't know,

00:07:11   it's their developer conference,

00:07:12   so it's not necessarily consumer-focused,

00:07:15   but it's what they want people, developers, to do.

00:07:18   - Yeah, well, I think that's part of the point,

00:07:21   is there really wasn't anything for consumers

00:07:24   in this at all.

00:07:25   I mean, there was, they had the sort of Cortana skills kit,

00:07:28   you know, which it would be, you know,

00:07:30   analogous to sort of the Amazon Echo skills,

00:07:33   things like that.

00:07:34   They have a new database service for Azure

00:07:38   called Cosmos DB, which is very interesting.

00:07:40   But again, speaking of data structure is not really

00:07:43   something that people, you know,

00:07:45   most people would think about or care about.

00:07:48   And whereas tomorrow or what time is it?

00:07:51   Yeah, tomorrow.

00:07:52   I always try to speak in terms of US time,

00:07:54   even when it's not, but tonight my time.

00:07:57   Tomorrow they will have, I think,

00:07:59   more consumer-facing stuff, but again,

00:08:01   I think it's really emblematic of the shift

00:08:04   in the company that that is on day two.

00:08:06   And to me, that's kind of the biggest high-level takeaway.

00:08:09   - Yeah, it's, they're sort of doing,

00:08:14   on their own, volition under Satya Nadella,

00:08:18   what some people 10 years ago had,

00:08:21   I guess more than 10 years ago at this point,

00:08:24   had argued that should be done by law,

00:08:26   which is break the Windows division off

00:08:28   into its own subsidiary or separate company

00:08:31   or something like that.

00:08:32   - Yep.

00:08:33   - You know, let Microsoft stay focused on the future

00:08:37   and let Windows sort of ride out the, you know,

00:08:41   the role that it has to play

00:08:42   as sort of legacy infrastructure.

00:08:43   - Yeah, I think that's exactly right.

00:08:46   And I didn't think they were capable of it.

00:08:50   Windows was so long, had so much gravitational pull

00:08:55   in the company.

00:08:58   I mean, to the extent that at one of these keynotes

00:09:00   a while ago, Azure was renamed Windows Azure,

00:09:02   even though it wasn't really Windows.

00:09:05   But yeah, that's a great point.

00:09:07   One of my favorite little details here is they announced

00:09:08   that you could access the command line in your Azure dashboard

00:09:11   or whatever it is, through a web browser or on a mobile app.

00:09:15   and it supports Bash today and PowerShell is coming.

00:09:20   PowerShell is the command line program for Windows.

00:09:24   And to me, that really shows it, right?

00:09:28   Which one do they support first?

00:09:30   They support Bash because what actually matters

00:09:32   for most cloud applications is,

00:09:34   what most developers are used to is, you know,

00:09:36   Winix and the Winix shell,

00:09:38   and so that's what they're serving first.

00:09:41   And the Windows part is coming, but it will come soon.

00:09:44   - Yeah, it isn't PowerShell in a nutshell.

00:09:46   Like, there was the DOS prompt,

00:09:49   and PowerShell was sort of the,

00:09:51   okay, you want a command line terminal type thing,

00:09:53   but DOS is a piece of crap.

00:09:56   So here's something modern,

00:09:58   and at least maybe not modeled after Unix shells,

00:10:03   but at least is as powerful as a Unix shell.

00:10:05   - Yeah, I mean, it's a whole thing.

00:10:08   I mean, it's a shell and a whole,

00:10:11   its own scripting language,

00:10:12   and it's now actually open source, but it was released

00:10:16   in 2006, I believe, I'm just looking it up.

00:10:19   So, I mean, it's very far removed from the sort of DOS days.

00:10:23   I mean, it's a proper shell, like it's used very heavily

00:10:27   by system administrators and folks that are managing

00:10:30   computers and things like that, and it's used on the server.

00:10:32   So, I mean, it's a proper shell, but it's not,

00:10:35   you know, it's different than, as one would expect,

00:10:38   it's different than Bash.

00:10:41   Can I just, as an aside, it's so funny,

00:10:42   'cause I didn't think we'd be talking about shells,

00:10:44   but I, do you ever use, do you use the command line

00:10:48   on Mac OS X, you use it sometimes, right?

00:10:50   - Yeah, rarely, I have a couple servers that,

00:10:53   not my, not the Stryker server that's managed,

00:10:55   but I have a few other servers that I do stuff on,

00:10:59   and I use it for that, but I rarely,

00:11:01   I don't do much scripting on my main computer.

00:11:05   - Do you care what shell you use?

00:11:07   - No, I don't care at all.

00:11:08   I use it very rarely.

00:11:10   I've used the Unix shell since at least 1992.

00:11:16   That's when I switched to computer science at Drexel.

00:11:20   And I know enough to get whatever I need to do done,

00:11:28   but I've never enjoyed it.

00:11:30   Never really.

00:11:30   And I never really liked writing shell scripts.

00:11:33   And so if I ever had anything that most people would write a shell script,

00:11:36   once I found out about Perl, I just wrote everything in Perl

00:11:39   and just treated Perl, if I needed to,

00:11:40   as my shell scripting language.

00:11:43   So I never really got deep roots.

00:11:45   And I know-- I think Mac OS X used to, when it first shipped,

00:11:49   was using TCSH as the shell or something.

00:11:53   I don't know.

00:11:53   And at some point, it switched to Bash,

00:11:55   because Bash is the most popular modern scripting language,

00:12:00   because Linux uses it, I think.

00:12:03   But I never had deep roots.

00:12:06   people get tied up and they have like these shelf or files,

00:12:10   you know, the, what do you call it, your profile,

00:12:12   where you've got all these aliases

00:12:14   and all this stuff set up so that you can't really

00:12:16   switch shells very easily 'cause you'd have to

00:12:17   rewrite it all.

00:12:18   So anyway, recently, I switched my shell,

00:12:22   or my max, to fish.

00:12:24   Have you heard about this shell?

00:12:26   - I've heard you chatting about it, but no.

00:12:30   - It's fascinating, and I think anybody who has deep roots

00:12:33   into a Unix shell is not gonna switch,

00:12:35   But it's like a new shell.

00:12:38   It's something that this guy, Peter Ammann, made.

00:12:42   He's an engineer at Apple.

00:12:44   This isn't an Apple project.

00:12:45   It's something he did on the side.

00:12:47   But it's amazing.

00:12:47   And the thing I like about it is it's completely logical

00:12:51   in terms of how you do stuff.

00:12:53   And it doesn't have any kind of-- by separating itself

00:12:58   from the history of Unix shells, it breaks a bunch of things

00:13:04   that other Unix shells all do.

00:13:06   But just for one thing, one thing that's so nice,

00:13:08   is that instead of spewing a whole bunch of dot files,

00:13:12   the Unix way of making a file quote, unquote invisible

00:13:15   is to start the name with a dot, which is so gross

00:13:18   that we're still using that.

00:13:19   But you end up with six of these files in your home folder

00:13:26   for each shell that you use.

00:13:28   'Cause then they're on, they don't have names

00:13:30   that make any sense.

00:13:31   - No, they drag me up the wall.

00:13:32   I know exactly what you're talking about.

00:13:33   Right.

00:13:34   It doesn't make any sense at all.

00:13:36   With Fish, you still have a dot file, but it's a folder.

00:13:43   What is it called?

00:13:45   It's called-- boy, I'm really exciting tonight, aren't I?

00:13:49   I should do this late at night all the time.

00:13:53   It's called-- I think it's called like dot config or something

00:13:55   like that.

00:13:56   And it makes a folder instead of a file.

00:13:59   And it's just one folder called dot config.

00:14:02   And inside there is where everything else goes.

00:14:11   So there's like a folder in .config that says fish.

00:14:15   And then inside that folder is all of fish's stuff.

00:14:17   So if other utilities use this convention,

00:14:21   everything could go nice and neatly into one folder called .config.

00:14:25   Anyway, it's really neat.

00:14:26   I'll put a link in the show notes to fish.

00:14:28   I think it's really neat.

00:14:31   So, oh, it reminds me, when was the last time I was on?

00:14:34   Um, 2000, January 2017 looks like.

00:14:38   And we talked about the Mac a little bit then.

00:14:41   And I do have to say, I think pretty much that episode

00:14:44   holds up, I think, pretty well after the news

00:14:47   that's come out about the Mac Pro and things like that.

00:14:52   Like I think our general presumption was that

00:14:55   there was a screw up, they wound up being a bakunt

00:14:57   and they're not abandoning the platform.

00:15:00   And it was just a screw up.

00:15:01   And I think that's basically what ended up happening.

00:15:04   So I'm glad we got that one right.

00:15:08   Yeah, I think so too.

00:15:09   Anyway, before I leave Phish, I'll just say this.

00:15:11   If you're a nerd and nerdy enough to use the terminal,

00:15:13   but you've somehow never gotten attached

00:15:15   to Bash or C-Shell or Z-Shell or any of those things,

00:15:20   you should give Phish a try.

00:15:21   It's really easy to install through Homebrew.

00:15:23   And I like it so much more than any shell I've ever tried,

00:15:27   because it just somehow makes sense.

00:15:28   It makes sense that it comes from somebody who works at Apple, because it sort of makes sense in the way Apple software does.

00:15:33   Right. That's what made me think of it, is the idea of one even having access to a shell,

00:15:38   and being able to change it, and all the things you can do through a shell.

00:15:43   It's a thing you do on computers. I was trying to remember why I went back to that last episode.

00:15:48   But yeah, that's why. It's a great example.

00:15:51   It does things like it has like if you want to change the color the syntax coloring for the shell like for which?

00:15:56   Like a command is this color the arguments are this color the outputs this color an error is this color?

00:16:02   You when you config you don't have to just type in a file you can do something and it opens a little web

00:16:06   Local web browser window and so you can visually pick the colors and see actually see the colors as you edit them

00:16:12   It's it. Oh nice amazing stuff. It's

00:16:15   Anyway, it's really cool

00:16:19   So anyway, PowerShell is coming soon.

00:16:23   And Bash is already the default and first available thing.

00:16:28   That's amazing.

00:16:28   For this dashboard sort of interface for--

00:16:31   The other thing I saw was announced was--

00:16:34   I forget what they call it, but whatever Microsoft's version

00:16:36   of Xcode is.

00:16:37   What's it called?

00:16:39   Virtual Studio?

00:16:40   Visual Studio, whatever they call it.

00:16:41   Oh, Visual Studio, yeah, not Visual Studio.

00:16:42   Visual Studio.

00:16:43   Is now-- I know it wasn't a surprise,

00:16:44   but there's a version of it for Mac now, which is crazy.

00:16:49   Yep, and they did a demo and it was more like oh we're doing a demo on a Mac

00:16:54   It wasn't like a we're demoing this program

00:16:56   Actually when they were doing the I think was when they're demoing the shell and it was on a Mac. Yeah

00:17:02   And that it you know, it's of a piece. It's the exact same, you know two sides of the same coin with the windows

00:17:10   keynote being on day two

00:17:13   the entire idea that

00:17:16   if you're developing on Windows server-side technologies,

00:17:20   the assumption that you're developing with a Windows client

00:17:23   with your hands on the keyboard is no longer there.

00:17:26   Like they're completely committed and realized that,

00:17:29   I don't know if it's a majority of developers,

00:17:33   but certainly an enormous chunk of them

00:17:35   are using Macs as their client,

00:17:38   whether they're writing Mac software or not,

00:17:40   even if they're just doing like web development

00:17:41   or Windows development or something like that,

00:17:43   or anything server-side, I think.

00:17:46   there's an enormous chunk of them who are using Macbooks.

00:17:50   Yep, and the platforms that they're developing

00:17:54   for, yes on PC it's still

00:17:58   Windows still has a more than dominant share

00:18:02   but PCs aren't

00:18:06   the past in a very real way, or

00:18:10   to a topic I'm sure we'll get to, they were never even a thing.

00:18:14   And that's a reality that Microsoft has to deal with for,

00:18:18   and I think they by and large are,

00:18:20   again, that doesn't mean that they're out of the woods

00:18:22   because they still have,

00:18:24   they still have to actually reach consumers,

00:18:25   actually get in front of them,

00:18:27   both in terms, both, and that applies to business

00:18:29   just as much as it applies to end users.

00:18:32   But at least they're not stuck focused on the past.

00:18:37   - Yeah.

00:18:40   - Yeah, so now we're in an unusual,

00:18:43   how things change situation,

00:18:47   where Microsoft is the company that's flexible

00:18:49   about what machines people are using

00:18:52   to develop against their technologies,

00:18:53   and Apple's the company that makes you develop on a Mac

00:18:57   to write for their phone OS.

00:18:59   - Right, exactly, exactly.

00:19:01   - Not that I blame Apple for it.

00:19:02   That might have come out as me blaming them.

00:19:05   It makes perfect sense. - No, they can't.

00:19:07   but it's just a funny situation.

00:19:12   Apple's the company with an operating system

00:19:18   with such overwhelming market share

00:19:20   that they can compel developers to buy a machine

00:19:23   that they otherwise wouldn't buy

00:19:25   just to do development for it.

00:19:26   - Yeah, it's hard to, especially if you were following Apple,

00:19:31   I'm sure it's harder for you than for me.

00:19:34   I mean, back in, I was following Apple in the '90s,

00:19:36   I wasn't using one, and to really appreciate the extent to which they are not the underdog

00:19:45   at all.

00:19:46   It's easier for the situation to change on the ground before it changes your mental

00:19:52   state.

00:19:53   I think that's a problem for Apple.

00:19:55   That was a problem for Apple internally, too.

00:19:57   The way you act and behave changes when you're dominant as opposed to when you're the sort

00:20:04   of scrappy underdog.

00:20:06   Yeah, totally.

00:20:10   So what else is going on at Surface, or not Surface, at Build?

00:20:14   You know, that's the conference I was at the one time.

00:20:16   I was in a video.

00:20:17   Yes, that's right.

00:20:18   It feels like a long time ago.

00:20:21   Well, it's crazy.

00:20:24   It was a while ago.

00:20:25   It has to have been what?

00:20:26   Four, five years ago?

00:20:29   Three years ago, I think.

00:20:30   I think it was three.

00:20:31   Was that all?

00:20:32   I think so.

00:20:33   I thought I was still in the States when that happened.

00:20:35   Yeah, I think it was three years ago, but I could be wrong.

00:20:37   But long story short, for those who don't remember, this was when I was working with

00:20:40   Brent Simmons and Dave Whisk. We called ourselves Q branch, and we had our app Vesper.

00:20:44   And we did the syncing, our own syncing backend,

00:20:49   for various reasons. But we built it on, I guess,

00:20:53   I think we were there, we were doing it at the time when they called it Windows Azure.

00:20:58   And they made us one of the examples in a little video that they showed in the keynote.

00:21:06   It flew us out there and everything. It was kind of nice. Kind of weird though.

00:21:10   They have a real-time translator for Microsoft PowerPoint that's kind of nifty.

00:21:16   So when you can be presenting and it will show real-time translation of the...

00:21:24   Yeah, so that's kind of interesting.

00:21:29   But again, it was mostly all back end stuff, which is fine.

00:21:32   I think as far as consumer-facing stuff, the one today

00:21:39   is probably going to be more interesting.

00:21:44   But then again, they just announced the Windows S

00:21:46   and the new laptops a couple weeks ago.

00:21:49   So I think there supposedly might be a Cortana speaker,

00:21:50   like an Echo-type device, which, but again,

00:21:55   actually getting customers' hands

00:21:58   is gonna be the challenge.

00:22:01   - I guess the reason I was gonna say,

00:22:03   as somebody who observes Apple, it's weird,

00:22:05   because I have muscle memory,

00:22:10   and it's weird to see a company that's so un-Apple-like.

00:22:15   Like, it's baffling to me that they would hold an event

00:22:18   a week before their big developer conference

00:22:21   where they would talk about a new operating system

00:22:23   and unveil these new products.

00:22:25   Like why wouldn't you do that in a keynote?

00:22:27   But I'm guessing that the keynote this morning ran long

00:22:30   and then the Windows one tomorrow,

00:22:31   their keynotes already run long.

00:22:34   - Right, I mean, and today was really,

00:22:36   I mean, it was much more of, yeah,

00:22:39   it was pretty hardcore, like back-end development

00:22:42   or line of business application sort of stuff.

00:22:44   I mean, it wasn't a really consumer-facing thing at all.

00:22:48   Not in the slightest.

00:22:53   And yeah, maybe they could have announced

00:22:55   the things tomorrow, but I think, yeah,

00:22:56   there's a very clear sort of bifurcation,

00:22:59   and I think you nailed it before,

00:23:02   like Windows is sort of its own thing,

00:23:03   particularly the consumer-facing side of Windows.

00:23:06   And I think there's relatively free rein

00:23:09   to do what they can to support and earn customers,

00:23:11   but that doesn't necessarily really have much impact,

00:23:14   particularly from a strategic perspective

00:23:16   on the rest of Microsoft,

00:23:18   which is really the future of the company.

00:23:20   And this is probably a good example of that.

00:23:24   - It was weird.

00:23:26   I know today's build, they move it around,

00:23:28   I think they often move it around,

00:23:31   but this year's was in Seattle.

00:23:32   When I went two or three years ago,

00:23:34   three, four years ago, whenever it was,

00:23:35   it was in San Francisco, in Moscone,

00:23:37   which only added to this sort of--

00:23:39   - Weird feeling.

00:23:42   Bizarro, like I was in a Bizarro developer, Bizarro WWDC,

00:23:47   because they even had the keynote third floor,

00:23:50   where Apple always calls the room presidio.

00:23:52   Those big convention spaces are sort of modular.

00:23:59   There's walls that can be moved around to change the shape

00:24:02   and make rooms slightly bigger or smaller.

00:24:07   But the thing that Microsoft did--

00:24:09   and I've seen so many keynotes in that room,

00:24:11   because Mac World Expo used to have keynotes in the same room,

00:24:15   WWDC every year.

00:24:18   Well, I guess those are the two things, but they're Mac World

00:24:20   Expo and WWDC keynotes in that room.

00:24:23   And Apple's configuration of the room is almost always the same.

00:24:26   You'd almost think that the room always looks like that,

00:24:29   but it's actually like an Apple setup.

00:24:32   When WWDC is done, everything in there is out.

00:24:36   And the thing that Microsoft did was

00:24:38   they had their stage along what,

00:24:41   in Apple's configuration, is the side.

00:24:44   Like, Apple sets the room with the stage in the front,

00:24:46   and the room goes back long.

00:24:48   Microsoft set it up so that the stage was wide,

00:24:53   and the room wasn't as deep.

00:24:55   And they set-- - Right.

00:24:56   - And the way that that made sense,

00:24:58   even though it made more people,

00:24:59   everybody was closer to the stage

00:25:01   in Microsoft's configuration,

00:25:02   but people were further from the center

00:25:05   if you didn't have a center seat.

00:25:06   and they made up for that by having huge screens

00:25:09   that were just showed the same,

00:25:11   instead of having one big screen that shows something,

00:25:13   they had like a wall of screens

00:25:15   that all showed the same thing over and over again.

00:25:18   And it just weirded me out.

00:25:21   It was just, it's like coming home

00:25:24   and somebody has moved all of the furniture,

00:25:26   like everything is the same except they've rotated

00:25:29   every room in your house by 90 degrees.

00:25:31   - That would be weird.

00:25:34   But yeah, no Moscone keynote again this year.

00:25:37   I mean, they've been in the, what is it,

00:25:40   the Billy Graham Auditorium, is that what it's called?

00:25:44   - I have something like that.

00:25:46   I don't think they might, they might never do,

00:25:48   Apple might never do a Moscone keynote again.

00:25:49   - Right, that's what I was gonna say, yeah.

00:25:51   It might be, which is fine, it wasn't the greatest.

00:25:55   I didn't like the, I'm not a big fan

00:25:57   of the Apple setup in Moscone.

00:25:59   - I'm not either, really.

00:26:01   I don't have anything against it,

00:26:02   but I thought the Microsoft setup was actually very nice.

00:26:05   It worked very well.

00:26:06   And I felt like everybody got to,

00:26:10   you couldn't really see,

00:26:11   may not be able to see the actual people,

00:26:12   but if, you know, I feel like if you were seated

00:26:15   along the side, you had a much bigger screen in front of you

00:26:17   than you get seated in the back in Moscone in Apple setup.

00:26:21   - Right, exactly.

00:26:22   - Yeah, I don't think Apple,

00:26:24   Apple might never have an event in San Francisco again.

00:26:26   You never say never, I mean, who knows?

00:26:28   But I, 'cause I feel like for their smaller events,

00:26:32   are going to have them at their headquarters in the Steve Jobs

00:26:34   Theater.

00:26:34   Right.

00:26:35   I don't think you named the theater Steve Jobs Theater

00:26:38   unless you intend to use it quite a bit.

00:26:41   To unveil new products.

00:26:41   Right.

00:26:42   Like, I'm sure there--

00:26:45   Have you been to the new campus yet?

00:26:46   No, I've never.

00:26:47   I don't even know where it is.

00:26:48   I was asking about it when I was out there for the MacPro Summit,

00:26:53   whatever you want, a roundtable discussion.

00:26:57   It was a-- I guess it just isn't close.

00:26:59   I don't know.

00:27:00   To be--

00:27:00   Yeah, I used to work there.

00:27:01   So in one of the buildings that was torn down.

00:27:04   So I definitely know where it is.

00:27:06   But yeah, it's like another exit down the freeway

00:27:09   from where the current campus is.

00:27:12   And you could drive there through city roads.

00:27:15   But yeah, it's a little bit of a hike.

00:27:17   It's on the other side of the freeway.

00:27:20   So it just wasn't convenient.

00:27:21   And I didn't have a car.

00:27:22   So it wasn't like I was going to take an Uber to go

00:27:25   look at a construction site.

00:27:27   I mean, the flyovers that people publish from those drones

00:27:29   are probably better than what you'd get looking at the ground from the outside.

00:27:33   Yep, yeah, I think so.

00:27:37   I mean, maybe, you gotta imagine

00:27:41   the, well I guess we'll see with the iPhone, with the

00:27:45   iPhone announcement, but they did that in San Jose

00:27:49   also, not last year, but for the, when they did the watch,

00:27:53   the watch unveiling was in San Jose.

00:27:57   Yeah, where was that? I forget where it was. I don't think it was San Jose. No, it was

00:28:02   at the watch unveiling was at the college in Cupertino.

00:28:09   Oh, was that in Cupertino? I thought that was San Jose.

00:28:14   It's like some, I forget the name of the college, but De Anza or something, I forget what the

00:28:18   hell it is, but it was not. No, the one that was in San Jose was an iPad event in 2011,

00:28:23   I think, or 2012, I don't know.

00:28:26   It was right before Scott Forstall got fired.

00:28:29   - How was the De Anza auditorium or whatever it was?

00:28:34   - It was all right.

00:28:36   It wasn't anything to write home about.

00:28:40   That was the one where Apple built

00:28:41   a big mysterious white box out front.

00:28:43   - Right, right, right.

00:28:44   And that was De Anza College.

00:28:46   - Is that what it is, De Anza College?

00:28:48   - Yep.

00:28:49   - It was okay.

00:28:51   I'm not surprised that they haven't been back since.

00:28:54   I don't think it was great.

00:28:55   I think the one thing people don't seem to understand

00:28:58   is that the Steve Jobs Theater is not that big either.

00:29:00   Like there's no way they can't have

00:29:02   like a WWDC keynote there.

00:29:07   Some people have speculated that maybe this year

00:29:10   they'll secretly bus everybody to the new campus

00:29:12   to have the keynote there or something.

00:29:14   It's like that's, you can't bus 5,000 people there.

00:29:19   but B, it's not a 5,000 person auditorium.

00:29:21   I don't know what the seating capacity is.

00:29:22   - And C, they don't want 5,000 people

00:29:24   running around on campus.

00:29:26   - Right, I don't think they want people on their campus.

00:29:29   - Well, I mean, the old one, Town, what's it called?

00:29:33   - Town Hall.

00:29:34   - Yeah, Town Hall, I mean, that was tiny.

00:29:36   - It is tiny.

00:29:36   - But I'm sure, yeah, that makes sense though.

00:29:42   I suppose the, I bet WWSU will end up

00:29:45   back in San Francisco.

00:29:46   We'll see, they'll probably see how it goes this year.

00:29:49   And then, because the reason it's in San Jose this year

00:29:51   is 'cause Moscone Center's under construction.

00:29:53   - I don't believe that.

00:29:54   I don't believe that.

00:29:55   I really don't.

00:29:56   - Well, basically all of the,

00:29:58   but everyone is not in Moscone by and large.

00:30:01   Like have there been any big events there?

00:30:03   I mean, I know only part of Moscone's under construction,

00:30:05   but I don't think Apple's the only one to--

00:30:08   - Well, there's stuff on their schedule if you look.

00:30:10   So North and South, Moscone North and South,

00:30:12   the big, like the expo hall ones, are closed

00:30:15   and they're ripping up the street.

00:30:17   If there's an argument for it,

00:30:18   the fact that they've got the street ripped up. I guess that's Howard Street is all ripped

00:30:21   up for the north and south expansion. But Moscone West is still open and is not being

00:30:27   renovated. Before Apple made this announcement, you could look on the schedule and there was

00:30:33   like one open week in June. But otherwise, there's stuff in Moscone West all the time.

00:30:41   I could be wrong.

00:30:42   Yeah. No, you're right. I don't know.

00:30:44   I mean, who cares if the street's ripped up? I've seen people say, "Well, the street's

00:30:48   all ripped up, but who gives a crap?

00:30:50   I don't know, nobody's, it's not like everybody's driving

00:30:52   down Howard Street to get to WWDC.

00:30:54   I think if Apple wanted to have it at Moscone West this year

00:30:57   they would've.

00:30:57   I think there's other reasons, you know,

00:31:01   whether they got a better deal, whether they really,

00:31:04   you know, I do think, I think Apple is,

00:31:07   if you can put a personality on a company,

00:31:09   they're a homebody company.

00:31:11   They don't, they're not a San Francisco company.

00:31:14   I know they have a couple of offices there,

00:31:16   but they really are, as a company,

00:31:19   they're at home on their campus in Cupertino.

00:31:22   And I feel like being closer to home is better for them.

00:31:26   - Yeah, no question.

00:31:27   I mean, just being in the Valley,

00:31:30   I mean, they're not its own insular sort of culture.

00:31:34   Like, it's much less sort of interspersed.

00:31:37   I mean, obviously at an employee level,

00:31:38   that's not necessarily the case.

00:31:39   But especially once you get more into senior management,

00:31:42   I mean, it's its own world.

00:31:44   Like it's in the same geographic area,

00:31:47   but the rest of the valley I think is much more

00:31:50   intertwined with Google and there's much more

00:31:53   of a sort of back and forth in that perspective

00:31:55   when it comes to sort of big valley companies

00:31:57   and San Francisco.

00:31:59   But yeah, Apple has always been its own sort of universe.

00:32:04   And you see it all over the place,

00:32:05   not just in the valley, you see it sort of online,

00:32:07   you see it when it comes to Apple fans.

00:32:09   There's a lot of people who are Apple fans

00:32:11   that are not necessarily tech fans.

00:32:14   I certainly see that when it comes to readers.

00:32:16   And you see it in popular culture where it's interesting.

00:32:22   It really is its own sort of entity for better or worse.

00:32:27   And I think at a practical level, it's absolutely the case.

00:32:30   I mean, there's no argument, no spin.

00:32:32   It's just a fact that San Jose is so much closer to Apple's

00:32:37   campus or campuses in Cupertino that for engineers at Apple who have things to do that week that

00:32:46   they need to be at the office, they can swing by.

00:32:48   They might be able to do a couple of hours' work in their office and then go to WWDC in

00:32:53   the afternoon for labs or something like that.

00:32:56   And people might get, you know, attendees might get interaction with significantly more

00:33:01   engineers from Apple who couldn't take an entire day to go up to San Francisco because

00:33:06   it's night and day. I mean, San Francisco can be over an hour away, depending on traffic.

00:33:13   And San Jose, it's probably like a 10, 15 minute drive.

00:33:16   Yep, exactly. You found a good spot for the talk show?

00:33:21   Yeah, yeah. I'm in the California theater where that iPad event was, the one that was

00:33:27   in San Jose.

00:33:29   So is it a lot bigger than the old place?

00:33:32   The place where I had my show?

00:33:33   Yeah.

00:33:34   - My God, it's so much bigger.

00:33:35   It's, I think it has like an 1100 seat capacity.

00:33:38   And I think-- - Oh, wow.

00:33:39   - When we had it at Mezzanine in San Francisco,

00:33:43   which I love, which I still, if, you know,

00:33:45   I love that facility, I love doing the show there,

00:33:47   but I think we capped it at 500.

00:33:50   I think you could, Mezzanine's attendance cap

00:33:54   is significantly higher than that, but 500 seems to,

00:33:58   you know, and judging from people's reactions

00:34:00   over the years, it keeps it from getting too crowded.

00:34:03   Like I don't want to pack the most number of people in there.

00:34:05   I feel bad when people, like I think tickets sold out

00:34:08   in like 10 minutes last year.

00:34:10   So I feel bad that people who want to go can't come,

00:34:13   but I'd rather have everybody,

00:34:16   I'd rather have fewer people come

00:34:17   and more people excluded,

00:34:18   but have everybody be comfortable.

00:34:20   - Yeah, are there gonna be drinks?

00:34:22   I think that's probably the more pressing question.

00:34:24   - There will be drinks,

00:34:25   and I don't know how that's gonna work,

00:34:27   because it's a real theater theater,

00:34:30   and I don't know how easy--

00:34:31   - Yeah, I'm looking at the pictures right now.

00:34:32   - Right, I don't know how easy it'll be

00:34:33   for people who are sitting in the middle of a row

00:34:35   to go get drinks, so I don't know,

00:34:36   it might have to be sort of a,

00:34:38   you know, get your load on,

00:34:41   get your load on before the show starts.

00:34:42   - That was the great thing about "Mezzanine,"

00:34:44   is you could like, I mean, obviously there was the seating,

00:34:46   and if you were in a seat, well,

00:34:47   the interviewer or the show was going on,

00:34:50   you wouldn't get up and go,

00:34:51   but you could also just sort of be in the back

00:34:53   and be, you know, mingling a little bit

00:34:56   and getting a drink, and so yeah,

00:34:58   it kind of served a, you could watch the show

00:35:01   - In multiple ways, which is nice.

00:35:04   - Well, we'll see, I don't know.

00:35:06   But 1,100 people, Jesus, that's gonna be nerve-wracking.

00:35:08   There's a balcony and everything.

00:35:11   - It does, oh, it's very beautiful.

00:35:13   I'm looking at the pictures right now.

00:35:15   - Tickets still aren't on sale, but they will be soon.

00:35:19   - Oh, that's right, okay, I forgot that you hadn't.

00:35:24   Maybe you can get them on sale

00:35:27   by the time you post this podcast.

00:35:27   - I am, I'm not waiting until the last minute,

00:35:29   but there's lots of little, it's not too much work.

00:35:32   I don't have to, it's not like I'm sitting there

00:35:34   hooking microphones up and stuff,

00:35:35   but there's a lot of details to be worked out yet.

00:35:39   Anyway.

00:35:40   - Well, hopefully I didn't give anything away.

00:35:41   - No, no, no, no, none of that's a secret.

00:35:43   Even the venue is, it's right there on Apple's website

00:35:46   and stuff like that, so I'm not keeping it secret.

00:35:48   Anyway, let's take a break.

00:35:50   I'll thank our first sponsor,

00:35:51   it's our good friends at Fracture.

00:35:53   Fracture is the photo decor company that's out to rescue

00:35:57   your favorite images from the digital ether.

00:35:59   That's their words, not mine.

00:36:00   Here's what they do.

00:36:01   They take your photos and they print them directly on glass.

00:36:03   Right there, on the glass.

00:36:05   On the glass.

00:36:06   Not a piece of paper glued to glass.

00:36:08   I don't know what they have.

00:36:08   They have custom proprietary stuff.

00:36:10   They just put glass into the printer.

00:36:13   The printer puts your photo right on the glass

00:36:16   and then they mail it to you and it looks amazing.

00:36:19   It's got that retina effect where it just looks like,

00:36:22   it doesn't look, it looks,

00:36:24   there's just such a different effect

00:36:25   than a piece of paper behind a piece of glass in a frame.

00:36:29   And it takes all the pain in the ass stuff

00:36:31   out of hanging pictures up.

00:36:32   Because this happens to me every time.

00:36:35   Every time I used to get like IKEA frames

00:36:38   or something like that, you put a photo in there

00:36:39   and then you have to get those little things on the back

00:36:42   that secure the cardboard, you flip them up

00:36:45   and then you put the picture in

00:36:46   and you put the cardboard back in

00:36:47   and you flip them back down.

00:36:48   And inevitably the picture goes like two degrees off

00:36:52   and you gotta open it up, start all over again.

00:36:53   What a pain in the ass.

00:36:55   With the pictures from Fractured,

00:36:57   there's nothing like that can happen.

00:36:58   It's just a piece of glass,

00:36:59   so it's always perfectly aligned.

00:37:01   And they ship you everything you need

00:37:03   to hang it on a wall in the box.

00:37:05   They even include the wall anchor.

00:37:07   Just upload your digital photo on their website,

00:37:09   pick the size, and just wait for it to show up in the mail.

00:37:12   That's it, could not be easier.

00:37:14   Where do you go to find out more?

00:37:17   fractureme.com/podcast.

00:37:21   Every time I read it, I feel like I'm making a mistake

00:37:24   and that that's some kind of placeholder,

00:37:25   but that's really the URL, fractureme.com/podcast.

00:37:29   And then I guess they use the same URL for all podcasts.

00:37:33   But then at the end when you buy it, they'll say,

00:37:35   "Hey, where'd you find out about Fracture?"

00:37:36   And you can say, "The talk show."

00:37:38   "Hey, go buy some for Father's Day.

00:37:40   "It's a great, great gift."

00:37:41   "Too late for Mother's Day."

00:37:42   "Mother's Day is like two days from now,

00:37:43   "but Father's Day is coming up next month.

00:37:47   "What an amazing gift.

00:37:48   "Go buy a fracture for your father, your husband,

00:37:52   "anything like that.

00:37:53   What a great gift.

00:37:54   - Well, FractureMe is memorable.

00:37:59   - Yeah.

00:37:59   - And so, URLs are hard.

00:38:01   Someone was making fun of,

00:38:04   there's a tweet on the effect of,

00:38:06   tech people are so uncreative that they have a site

00:38:09   about strategy and tech culture techery.

00:38:11   And I'm like, it's true, I have no excuse.

00:38:14   I mean, Derry Firewall is always,

00:38:16   I've always like, damn it, I should've hired you

00:38:19   to get a name, to find me a name before I started.

00:38:22   but now it's too late.

00:38:27   But the other thing too is getting a URL is hard.

00:38:29   One of the things when I started, I had no money.

00:38:31   I was in debt.

00:38:34   And the idea of going out and spending money

00:38:36   to get a URL or whatever, or Twitter handle,

00:38:40   all that stuff, one of the advantages of Stereocory

00:38:43   is it was available.

00:38:45   I would, like I said, I probably wouldn't use it again

00:38:46   if I was starting over because it's hard to say,

00:38:49   hard to spell, which is not a good combo.

00:38:50   But yeah, it's hard.

00:38:53   The whole URL Twitter handle thing is tough.

00:38:57   I remember fracturing me,

00:39:00   especially now after you sort of made that little joke.

00:39:04   - You know that I have during fireball.com, right?

00:39:07   - Yeah, but it redirects to .net.

00:39:09   - Right, and some people don't ask about that anymore.

00:39:11   In the early years, people would be like,

00:39:12   "Why do you redirect to .net?

00:39:16   "Wouldn't most people, if they have both, redirect to .com?"

00:39:19   And I think it's like to me it's like I started using the internet so early

00:39:26   When most domains weren't dot-coms, you know

00:39:30   like dot orgs and dot ed use that use were probably the most popular that I used and

00:39:35   net - but to me

00:39:39   Dot-com was sort of crass in the early years and I know that in the you know

00:39:43   after the doc, you know even called the bubble the dot-com bubble like dot-com sort of became the the

00:39:49   the neutral one, right?

00:39:51   It's like ground zero of all the top level domains.

00:39:54   Like, by default, you want a .com.

00:39:57   But like, when I was, in my mind,

00:40:00   it's still sort of crass, I don't know.

00:40:02   Like in the early years, all the .com sites were garbage.

00:40:07   - Right, well, it was supposed to be like commercial, right?

00:40:09   I think that's what it stands for.

00:40:11   Then, yeah, I like, I agree, I like .net better.

00:40:15   But yes, I give in to the prevailing,

00:40:18   I own Surtakri.net also, but it redirects

00:40:20   in the opposite direction.

00:40:21   - Right, and like Kotki, I think a lot of early types,

00:40:26   you know, like me and Kotki--

00:40:27   - I always did like Kotki.org.

00:40:28   - Yeah, and it wouldn't work, like, neither,

00:40:32   it somehow is part of the domain,

00:40:33   like Kotki.net wouldn't be right,

00:40:35   and Kotki.com would be awful.

00:40:37   Like, it just, it wouldn't be the same,

00:40:39   like Kotki.org is exactly right.

00:40:41   And for whatever reason in my mind,

00:40:44   it's just, like when you rewrite a sentence

00:40:46   and just use the same words, but you put a clause

00:40:50   in the middle of the sentence as opposed to at the end

00:40:52   or something like that, and one way it reads great

00:40:54   and one way it doesn't, to me, daringfireball.net

00:40:57   reads better than daringfireball.com.

00:40:59   I remember-- - Yeah, well, the great thing--

00:41:01   Well, sorry. - Go ahead, go ahead, Ben.

00:41:03   - Oh, no, I was just gonna say,

00:41:05   the great thing about Daring Fireball is

00:41:06   it's so distinct that you can, one,

00:41:10   if you type, if you type in a URL,

00:41:12   and the thing is that no one actually types,

00:41:14   us nerds do, but the vast majority of people

00:41:17   don't even type URLs.

00:41:19   Like the, Google has the whole, you know,

00:41:22   like a huge number, back in the day,

00:41:25   like they could track how popular Facebook was

00:41:27   because of people typing Facebook into Google

00:41:30   to go to Facebook.

00:41:31   So for normal people it doesn't really register,

00:41:33   but that's the great thing about doing Fireball,

00:41:35   even if you do a URL or you do a Google search,

00:41:36   whatever, it's going to, it's memorable

00:41:38   and it's gonna come up right away.

00:41:40   - Wasn't there a thing where,

00:41:43   Off the top of my head, I'm not remembering it right,

00:41:45   but there was a thing where the number one result

00:41:47   for Facebook login was no longer the Facebook login page

00:41:51   and the poor bugger who had,

00:41:54   it was just some guy's site or something

00:41:55   and the guy was just inundated with thousands of people

00:41:59   saying, "What have you done to Facebook?

00:42:01   "This doesn't look like Facebook."

00:42:03   Do you remember this?

00:42:05   - I don't, but that would be brutal.

00:42:06   - Right, it was pretty big,

00:42:08   'cause that's how people get to the Facebook login sign.

00:42:10   They go to Google and then type Facebook login

00:42:13   and hit return, y'all expect to be taken there.

00:42:15   Funny stuff.

00:42:19   That's how my son gets around the internet,

00:42:21   he just types stuff into Google.

00:42:22   - Yeah, that's pretty normal.

00:42:26   I mean, that's pretty normal behavior.

00:42:28   I mean, if people, you know,

00:42:30   to the extent people are still using the internet,

00:42:32   I mean, it really shows the extent to which Google

00:42:37   is the sort of winch pin for the internet.

00:42:41   I mean, yes, you can type URLs, go to places,

00:42:43   but the reality is, and the way that people

00:42:45   actually experience online is through Google.

00:42:48   It's not just about like typing Facebook

00:42:50   into the Google search page, but there's just so much stuff.

00:42:54   There's so many things that it's incomprehensible

00:42:58   to anyone, even the smartest person on earth.

00:43:03   And Google, what makes Google so brilliant

00:43:06   and such a brilliant sort of invention

00:43:08   is that the old search engines,

00:43:12   the more stuff there was, the more they bogged down.

00:43:14   'Cause they were, I mean,

00:43:15   the original Yahoo was literally a directory.

00:43:17   I mean, obviously the future search engines

00:43:19   were much more sophisticated,

00:43:21   but Google by sort of building on top of the link

00:43:23   instead of building on top of the pages themselves,

00:43:26   well, it turned out when you got more links,

00:43:29   Google got smarter and understood it better.

00:43:31   And when the web got larger, everyone else got worse,

00:43:35   except for Google, which actually got even better.

00:43:37   And that's sort of the core piece of the company's dominance

00:43:42   and why they're the winchpin for the entire internet.

00:43:48   - Which brings us to Windows 10 S and the way that,

00:43:54   on Windows 10 S you can't change your default search engine.

00:43:59   You get Bing and you like it.

00:44:01   - Yeah, and I think that's,

00:44:03   I believe they're giving away 10 S to the OES.

00:44:07   So that's the primary way that they're going to,

00:44:10   I mean obviously there's app sales as well.

00:44:12   But app sales and Bing searches and stuff like that.

00:44:16   I think Bing is actually profitable now,

00:44:19   or very close to it.

00:44:21   It has been for a little bit actually.

00:44:23   - It should be, don't you think?

00:44:24   I mean it doesn't make sense that they'd keep

00:44:27   losing money on it.

00:44:28   'Cause I mean, how much could it cost other than labor?

00:44:32   - Yeah, it's one of those things where

00:44:36   It's not like a winnier sort of thing

00:44:39   where they make a little more money, a little more money,

00:44:42   and that now they're profitable and they're growing.

00:44:43   It's like you're either losing a lot

00:44:45   or you're making a good amount

00:44:47   once you get the sort of scale effects that are kicking in.

00:44:50   But yeah, it's still actually growing pretty decently.

00:44:55   I think 5.3 billion in revenue the last fiscal year.

00:44:58   - I should try it again.

00:44:59   I haven't tried Bing in a while.

00:45:01   I've done different Macs or different devices

00:45:04   at any given time.

00:45:05   I sometimes switch to DuckDuckGo,

00:45:07   which I admire as the plucky little startup,

00:45:10   and they're local to Philly too,

00:45:13   it gives me a little affection for them.

00:45:15   But I have to admit that there's a lot of times

00:45:18   with DuckDuckGo where it's semi free,

00:45:22   yeah, if you're gonna do it,

00:45:24   at some point in the week, you're gonna be typing,

00:45:27   there's a trick they have,

00:45:28   you can even type like G exclamation mark

00:45:30   and it redoes the same query but redirects you to Google.

00:45:33   because there's just sometimes it's not as good

00:45:36   as Google search.

00:45:37   I mean, they do some really cool stuff

00:45:39   and I like the privacy aspect of it, but it's not as good.

00:45:41   But the thing that surprises me is I thought Microsoft

00:45:45   might catch up to Google search with Bing

00:45:46   'cause it seems like the sort of problem

00:45:49   that Microsoft would be able to solve.

00:45:53   Like it never surprises me that Microsoft software

00:45:56   never has as nice of a UI as Apple software

00:45:59   because it's institutionally they just don't have

00:46:01   the people who have the taste for that.

00:46:04   But web search is really just,

00:46:07   you don't have to have taste for that.

00:46:08   It's a purely algorithmic challenge to get that right.

00:46:13   - Well, not quite, you need data.

00:46:14   I mean, the thing with Google is,

00:46:17   the algorithm itself is far beyond

00:46:22   any one person could,

00:46:26   it was designed by a person to start,

00:46:28   but at this point it's so complex and convoluted,

00:46:30   And a lot of it is just constant iterative feedback.

00:46:32   So when people are doing searches,

00:46:34   and I'm not talking about the individualized searches,

00:46:37   just as a whole, like which results are the quick,

00:46:40   like Google wants the first,

00:46:41   the proper result to be the first result.

00:46:43   So they are tracking which result you actually click on,

00:46:45   where, how far down you go.

00:46:47   And plus websites are optimizing themselves for Google.

00:46:50   And so Microsoft has to, you know, attach onto that.

00:46:54   But it's one of those situations

00:46:55   where thanks to the feedback loop

00:46:58   that comes from having the most data

00:46:59   and the most users and the most searches,

00:47:02   if two identical search engines,

00:47:04   if one starts at 51% market share

00:47:07   and one starts at 49% market share,

00:47:09   absent sort of any exterior force,

00:47:12   the one with 50% market share is going to get better

00:47:15   over time relative to the other one,

00:47:17   which means, and then when it gets better,

00:47:19   that lets it get more users

00:47:20   because it's a better search engine.

00:47:22   And then it gets even more data relative to the competition,

00:47:25   so it even has a bigger advantage.

00:47:27   So the reality is even Microsoft can have the smartest

00:47:30   sort of search folks in the world,

00:47:32   but because it's a problem that's not just

00:47:34   about algorithm design, it's about the entire

00:47:37   sort of system and having iterative feedback loop,

00:47:40   they will, it's very difficult to ever catch up

00:47:45   absent some sort of like incredible breakthrough.

00:47:49   - You can't buy your way out of it.

00:47:50   There's no way to throw any money at it.

00:47:52   Doesn't get you there.

00:47:53   That's interesting.

00:47:54   I think that to me has to be the explanation

00:47:57   because I just don't think the problem is that

00:48:01   Microsoft doesn't have the intelligence

00:48:03   and the engineering to do it.

00:48:04   And they obviously had no problem spending money on it.

00:48:09   For years, famously, they were losing billions on Bing.

00:48:12   I think that's just it, though, that Google's so popular

00:48:15   that their popularity feeds upon their accuracy.

00:48:20   - Right, and this is where-- - Or their accuracy

00:48:22   feeds upon their popularity.

00:48:24   - And this is where Google is, in some respects,

00:48:26   It's like a Facebook effect, but it's like there is a sort of network effect, but it's

00:48:30   not necessarily about people per se, it's the interaction between people and the sort

00:48:34   of data they generate.

00:48:36   But you get the same sort of idea where the larger service, like because I think I always

00:48:41   write a lot about user experience.

00:48:43   And the point I always have to, I sometimes forget to make this, and when I forget to

00:48:47   make this point, I always regret it because I get a bunch of people asking me, you know,

00:48:50   pointing, asking questions.

00:48:51   User experience does not mean user interface.

00:48:54   The user interface is an important part of the user experience and is critical for something

00:48:58   like a phone, for example, that's in your hand, you're interacting with.

00:49:02   And actually, we can talk about WeChat stuff in a little bit, but the user experience is

00:49:08   the totality of the experience, which means having better search results means it's

00:49:13   a better experience.

00:49:14   Having more friends on Facebook, more family on Facebook, not having to try to recruit

00:49:19   people to get on there means it's a better experience that has nothing to do with the

00:49:23   interface per se.

00:49:28   And these aspects of the experience,

00:49:29   they build on themselves.

00:49:32   And this is why you have these companies that are so dominant.

00:49:33   And what makes it so tricky, and I've been writing a lot about

00:49:36   this over the last year or so, these companies are so powerful

00:49:39   because of these sort of data effects and these network effects.

00:49:43   And they're powerful in a way that's actually better for the

00:49:46   consumer.

00:49:49   Google is popular because it's better, which means it gets more

00:49:50   users.

00:49:49   and when it gets more users, it actually becomes even better,

00:49:52   which means it's positive on the user perspective.

00:49:56   And same thing with Facebook.

00:49:57   It has the most users, so more people join it

00:50:00   because it's there, and the more people join it,

00:50:02   now it has more users, and you get the same sort of

00:50:04   feedback loop where people choose it because it's better.

00:50:08   And that sort of makes, from an antitrust perspective,

00:50:12   that makes US antitrust law fall completely apart

00:50:15   because it's based on consumer benefit,

00:50:18   and actually they're providing a ton of consumer benefit.

00:50:20   That's why they're winning.

00:50:21   - Right.

00:50:22   - Sorry, that was a summary of like 15

00:50:26   Chicago articles that I've been writing about.

00:50:29   - Did you see the story that, I think The Verge had it,

00:50:33   that the Surface laptop, now the most unique thing

00:50:37   about these Surface laptops that they announced

00:50:39   is that other than the keyboard and the trackpad,

00:50:42   what you touch on the front face is

00:50:46   like a soft touch leather, like fake leather type thing,

00:50:50   but it's like a, it's called--

00:50:52   - Which looks awful to me, but--

00:50:53   - Alcantara, apparently a lot of car makers

00:50:56   use it, high-end car makers.

00:50:58   Well, I don't wanna judge it on photos,

00:51:01   but from the photos, to me it looks terrible.

00:51:03   I would not want that.

00:51:04   I wouldn't, if I had the choice when buying a laptop,

00:51:08   whether I just have the bare aluminum surface

00:51:11   or like, no pun intended, surface,

00:51:14   or have it covered with this stuff,

00:51:15   without having seen it in person,

00:51:17   I would, zero hesitation, I would just say,

00:51:19   "Just give me the aluminum, this seems like a disaster."

00:51:23   - Yeah.

00:51:24   - But I saw people excoriating Microsoft

00:51:27   for having told the Verge that you need to

00:51:31   treat it like a luxury purse or something like that,

00:51:37   or a luxury handbag.

00:51:39   And I think people took that as meaning

00:51:44   that it's like dainty and that it's,

00:51:46   you're like, you have to treat it preciously.

00:51:49   I think that's how people reacted to this.

00:51:51   Like the headline, I think.

00:51:52   Microsoft says the fabric on the Surface laptop

00:51:54   should be cared for like a luxury handbag.

00:51:57   And I think The Verge did a disservice with that headline

00:52:01   'cause it's not really, that's not a quote.

00:52:04   The only quote in that headline is the word luxury.

00:52:07   Here's the actual statement from Microsoft.

00:52:11   I hate this use of the word luxury.

00:52:14   Just like anything luxury that you buy,

00:52:16   like that should be luxurious or something,

00:52:19   or any luxury product that you buy.

00:52:21   But it still, it seems self-serving for them

00:52:23   to describe it as luxury.

00:52:25   But anyway, just like anything luxury that you buy,

00:52:28   like great handbags or a pair of shoes

00:52:30   or even expensive cars,

00:52:32   there is a care that's needed for the device.

00:52:34   So I think there has to be some care for it.

00:52:40   But I think the thing that people aren't,

00:52:42   Maybe you and I understand it with our spouses,

00:52:46   but you can get, like, there are handbags

00:52:50   that are, might be, you know, from a luxury brand,

00:52:54   and they're not really dainty.

00:52:55   They're actually the opposite.

00:52:56   They're actually very, they're built to last for decades,

00:53:01   you know, and you do have to treat leather,

00:53:04   and if you get it wet, you have to take care of it

00:53:06   right away and stuff like that.

00:53:07   But they actually hold up surprisingly well.

00:53:10   They're not dainty little Fabergé eggs.

00:53:12   They're actually much more rugged in some ways

00:53:15   than typical lower cost bags.

00:53:19   So that's-- - Right, sometimes you buy

00:53:22   a nice bag or a nice pair of shoes that are luxury,

00:53:26   but you buy them because they last way longer

00:53:29   and hold up much better and age much more attractively

00:53:33   than something that's lower cost.

00:53:35   - Right, there was a weird Twitter account

00:53:39   I was into for a while.

00:53:41   It was one of those ones that was interesting,

00:53:42   only when it was anonymous, and then when somebody figured out

00:53:45   who the guy was, it was no fun anymore.

00:53:47   GS Elevator, remember that?

00:53:50   Oh, yeah.

00:53:50   It was written from the perspective of stuff overheard

00:53:54   in the elevators at Goldman Sachs.

00:53:58   And it was often hilarious, often very rude,

00:54:01   sort of from that--

00:54:02   Very lewd.

00:54:03   that bro, alpha male banker mentality.

00:54:08   But I remember the guy who wrote it had like,

00:54:12   it was like a, he also had like articles

00:54:15   and it was just like, all right,

00:54:16   so you got a job in an investment bank,

00:54:18   here's what, you're a kid out of college,

00:54:20   here's the clothes that you need to buy.

00:54:22   And one of his things was that you should get like,

00:54:25   I forget if he recommended Gucci or what,

00:54:29   but you know, something like,

00:54:30   get like a nice pair of Gucci shoes.

00:54:31   Yes, there's $800 or $700, but they will last you way longer

00:54:36   than 10 pairs of $200 shoes if you take care of them.

00:54:41   - Right, yep.

00:54:42   - There's obviously some things that are luxury priced

00:54:45   that are not, that you're just throwing, like a sports car.

00:54:49   Like if you buy a Lamborghini,

00:54:50   you're just pissing money away.

00:54:51   (laughs)

00:54:52   It's not really, you're not really buying it

00:54:55   for the value of, I mean, the car is valuable,

00:54:59   but it's not like you're not going to sink

00:55:01   tens of thousands of dollars in it maintenance as you go.

00:55:03   Like nobody buys a Lamborghini because it's worth it.

00:55:06   - It's a good investment.

00:55:07   - Reliability wise compared to a Honda.

00:55:09   (laughs)

00:55:11   - Yup.

00:55:13   - But there are some things like a nice shoe

00:55:14   or a nice belt or something like that

00:55:16   where you actually, yes, you're paying a lot of money,

00:55:18   but it's actually, you might be paying five times more

00:55:21   than what you're used to,

00:55:21   but you're actually getting like 10 times better product.

00:55:24   I don't think that the Surface laptop is like that though.

00:55:28   I don't know.

00:55:28   - Yeah, yeah, I went to use that word choice.

00:55:33   And yeah, now that I'm looking at that

00:55:35   just like anything luxury, that's dried me up the wall.

00:55:37   That's terrible.

00:55:38   - They have to, they have to have tested this.

00:55:41   I know, like last week on the show,

00:55:43   Renee and I were joking about that the iPad,

00:55:46   or iPod that came, I think it was like an iPod Nano

00:55:50   that was super easily scratched.

00:55:52   Do you remember that one?

00:55:53   - It was the original, the original Nano.

00:55:54   - Yeah, it was almost in a, you know,

00:55:58   - I would love, it's one of those like

00:55:59   behind the scenes things,

00:56:00   I would love to someday get that story out of Apple

00:56:03   as to how in the hell did they make tens of thousands

00:56:07   of these things or half a million of these things

00:56:09   out of a plastic that you scratch with your fingernail.

00:56:13   Like what the hell were they thinking?

00:56:14   How did that not get caught in testing?

00:56:17   - I know, 'cause if you saw one, like they,

00:56:19   within not long, I mean they would be

00:56:22   just completely destroyed, like to the point

00:56:24   where you could barely even read the screen.

00:56:26   - We-- - In the whole,

00:56:27   It was the whole front, not just the screen.

00:56:28   The entire surface would be just completely all shredded up.

00:56:33   - It's hard to remember compared to iPhones

00:56:36   where everything is so much closer to the surface now.

00:56:39   But with the iPods, even with the Nano,

00:56:42   there was sort of a thick layer of screen,

00:56:44   or not even screen, but just plastic

00:56:47   on the whole front of all these models, or a bunch of them.

00:56:50   I remember we got them when I was working at Joyent.

00:56:55   I forget, we hit some kind of milestone or something.

00:56:57   And so everybody in the company got one as a gift.

00:57:00   In our company, like chat,

00:57:06   I forget what we even used for chat.

00:57:07   It wasn't Slack, obviously it wasn't around,

00:57:09   but the equivalent of Slack's.

00:57:10   - IRC.

00:57:11   - It wasn't IRC though, I forget what we were using.

00:57:14   - Hip, hip, hip chat.

00:57:15   And that was a long time ago too.

00:57:17   - Yeah, I don't remember.

00:57:18   I don't know why I'm drawing a blank on that,

00:57:20   but we had like a company-wide chat

00:57:21   and when everybody got these and we're like,

00:57:23   everybody was having fun with their new iPod

00:57:25   and it took like an hour for people to be like,

00:57:28   holy shit, mine's all scratched up.

00:57:30   - Yep.

00:57:31   - Anyway. - 2005, man,

00:57:34   that's already been 12 years.

00:57:35   - I can't help but think that Microsoft had to have

00:57:38   stress tested these things with actual sweaty palms

00:57:42   and warm, use this for a while with,

00:57:46   maybe have us in a warm room with somebody

00:57:49   who sweats through their palms or something.

00:57:52   These things can't just pick up ugly palm sweat stains.

00:57:56   - Yeah, I mean, I'm not sure I want to admit to this,

00:58:00   but even my MacBook is always the keyboard

00:58:03   and that all ends up just totally filthy.

00:58:05   It's pretty disgusting, actually.

00:58:07   I should probably clean it.

00:58:08   - Yeah, you probably should.

00:58:09   That's gross, Ben.

00:58:10   - I don't know, it just doesn't seem like,

00:58:14   the more I think about it,

00:58:14   this just doesn't seem like a good idea.

00:58:16   I don't know, it just seems,

00:58:18   too many laptops get too grungy, as is,

00:58:21   as easy to clean a surface as aluminum is.

00:58:25   I mean, it's pretty hard to think of something

00:58:27   that's easier to clean than that.

00:58:29   - Everyone just wants them to make a nice laptop.

00:58:31   That's all they want, just a regular,

00:58:34   so they did the Surface Book thing,

00:58:35   or first they did the Surface and the Surface Book thing,

00:58:37   and now there's a laptop, but yeah, it has,

00:58:40   but I mean, I know there's lots of politics

00:58:43   and competing with OEMs, all that sort of stuff, but yeah.

00:58:49   I'd rather get a ThinkPad with the nub anyway.

00:58:53   I'd-- a nub.

00:58:56   I mean, I think it's so different.

00:58:58   I don't know.

00:58:58   Didn't they use it in the old days?

00:58:59   It was like the nub was the only thing, right?

00:59:01   They didn't even have a trackpad.

00:59:02   Yep, it used to be just the nub.

00:59:05   But yeah, they have both now.

00:59:06   That's almost like an Apple devotion,

00:59:08   like Apple's devotion to the single button mouse.

00:59:11   In a world where everybody went the other way,

00:59:14   the old IBM ThinkPad's devotion to the little red nub.

00:59:18   Well, I mean, there's lots of people that,

00:59:23   I mean, relatively speaking, not a ton,

00:59:26   but there are people like it.

00:59:28   I mean, if you're used to it, it's one of those things

00:59:31   where if you really like it, why would you,

00:59:33   you're going to just keep buying ThinkPad,

00:59:38   you're not even going to think about it.

00:59:40   And I think part of the problem, too, is this,

00:59:41   touchpads have always been so terrible on Windows.

00:59:43   Right.

00:59:45   So terrible.

00:59:46   That was the big reason.

00:59:47   Yeah, that was one of the big reasons

00:59:44   that when I was at Microsoft, I used a ThinkPad.

00:59:48   And that was the biggest reason I started using the nub

00:59:52   in the first place, that the trackpad was atrocious.

00:59:54   But then you use it and you actually grow

00:59:56   to really, really like it.

00:59:57   I mean, not having to, I mean, you're absolutely used to it

01:00:02   moving, you don't move your hand much on a computer,

01:00:07   but on a MacBook.

01:00:08   But just having it right there.

01:00:10   Once you're used to it, it's nice.

01:00:11   - Yeah, it's great.

01:00:12   - I mean, I'm an actual differentiation.

01:00:14   It's in a world, like the big problem that PC OEMs have

01:00:18   is that what's to keep, let's say you sell somebody

01:00:21   an HP laptop, what's to keep them from buying

01:00:24   a different brand the next time they buy one?

01:00:26   Nothing, really.

01:00:28   And the little red nubbin is actually a little bit

01:00:30   of a differentiator, if they have the muscle memory for it.

01:00:35   Yep, I always thought they were weird.

01:00:40   Anyway, what else do you want to talk about before we get to the WeChat thing?

01:00:52   Yeah.

01:00:53   Well, I actually think we've, through talking about various things, have set the stage nicely.

01:01:01   So, what do you think about the two new echoes?

01:01:05   There's the camera one, and then there's the one with the screen.

01:01:09   Well, let's talk about that after I thank another one of our friends.

01:01:12   It's our good friend, a new sponsor, first time.

01:01:15   I really like this company though.

01:01:17   Pingdom, P-I-N-G-D-O-M.

01:01:20   It's a service for monitoring websites and servers.

01:01:25   You can go to www.pingdom.com/lp/talkshow.

01:01:30   Pingdom.com/lp/talkshow.

01:01:36   And they have a nice little landing page there

01:01:37   for listeners of the show, addressed just to you.

01:01:41   You get a 14-day free trial.

01:01:42   And when you enter the code, the talk show at checkout,

01:01:46   you get 20% off your first invoice.

01:01:49   That's a big deal, 20%.

01:01:51   Pingda makes the web faster and more reliable for everyone

01:01:54   by offering powerful, easy to use monitoring tools

01:01:56   and services for anyone on the website.

01:01:58   You can do anything with these guys.

01:02:00   It's really great.

01:02:01   So you've got a web server.

01:02:02   You can just point something to it

01:02:03   and they can like simulate visits.

01:02:06   It's not just like a ping to the server,

01:02:08   even though that's their name,

01:02:08   but they can actually simulate an actual visit

01:02:10   to the website and you can write tests

01:02:12   to make sure certain components,

01:02:14   and modern websites have so many things

01:02:16   where you're drawing things from multiple services

01:02:19   to make your website,

01:02:21   where it's not just one server that can go down.

01:02:25   There's all sorts of fail points along the way,

01:02:27   and you can write these tests with Pingdom

01:02:29   to test if everything that you expect to be working

01:02:31   is working, and when it's not,

01:02:33   they'll notify you instantly.

01:02:36   Pingdom detects more than 13 million outages,

01:02:40   more than 400,000 outages every day.

01:02:43   Wow.

01:02:44   And if you've ever noticed,

01:02:46   stuff actually breaks on the internet all the time.

01:02:48   Here's a way to find out if your stuff broke.

01:02:51   Really great service used by a whole bunch of big names.

01:02:55   If you go to their website, I told you,

01:02:57   pingdom.com/lp/talkshow, and just look at the big names

01:03:02   that use Pingdom for monitoring their service,

01:03:05   servers and websites.

01:03:07   It's amazing.

01:03:08   So go there and check them out

01:03:09   and they will know you came from the show

01:03:11   and remember that code, the talk show,

01:03:13   and you'll save 20% on your first invoice.

01:03:17   My thanks to Pingdom.

01:03:18   Great, great service.

01:03:19   Yeah, so Amazon, they have two new,

01:03:25   what do they call them, Echo products?

01:03:27   They both--

01:03:28   - Yeah, there's the Echo Look, which is just a camera,

01:03:31   and then there's the,

01:03:33   and they're pitching it for putting in your closet

01:03:37   or wardrobe, and then the Echo,

01:03:40   the bigger, probably the one they made a bigger splash about

01:03:43   was the Echo Show, which is a, has a screen,

01:03:46   has a screen that says, now Echo can show you things,

01:03:49   I believe is the tagline.

01:03:50   - Right, and obviously also has a camera,

01:03:52   since it does like photo, video calls.

01:03:57   - Right, which I actually think is the most,

01:04:01   the most interesting part of it,

01:04:02   and it really featured very heavily

01:04:05   in the introductory video.

01:04:08   - Yeah, I have to watch that again,

01:04:10   but it did seem like it's almost more like,

01:04:13   the bigger announcement is that they're doing their own,

01:04:17   they don't have a name for it though, right?

01:04:19   There's no, they don't have a name like FaceTime.

01:04:22   - Right, no, it's just,

01:04:23   it's not just the Echo Show,

01:04:26   'cause they updated the Alexa app,

01:04:30   And so you can go between phones and the Echo Show

01:04:35   or Echo Show to Echo Show.

01:04:37   I don't know for sure if you can go phone to phone,

01:04:41   but I presume you can.

01:04:43   - Yeah, I think so. - I think I wrote about

01:04:44   yesterday I wrote that, I presume you can,

01:04:45   and I was gonna look it up,

01:04:46   and then I don't remember if I actually looked it up.

01:04:49   But yeah, it is basically a FaceTime competitor

01:04:52   without being called a FaceTime competitor,

01:04:55   but that's certainly what it is.

01:04:56   - Well, it's, 'cause it, yeah,

01:04:58   So the trick to the whole thing is that they've updated the phone app for, I guess, Android

01:05:05   and iOS.

01:05:06   I know the iOS one's updated.

01:05:07   Where both for you to have one of these calls with somebody who doesn't own an Echo or who

01:05:17   would want to use this if you had to be in the room where your Echo is to get the call?

01:05:23   It's like all of a sudden you're back to landline days where you've got a quick run to the kitchen

01:05:28   to take a phone call.

01:05:31   That's not going to fly.

01:05:32   Well, yeah, but I remember when the Echo first came along,

01:05:39   it was the original introductory video, which unfortunately

01:05:44   has been taken down.

01:05:45   But it was super corny.

01:05:48   And I remember a lot of people made fun of it.

01:05:50   But actually, I kind of liked it because it was--

01:05:53   and you can see the same thing in the new Echo Show video,

01:05:56   which is it's very sort of, there's no like fancy,

01:06:00   like marketing commercial stuff going on here.

01:06:03   It's very straightforward,

01:06:04   like showing people explicit use cases for this product

01:06:07   and people going through these use cases.

01:06:09   Like the dad is changing the baby's diaper

01:06:11   and he's ordering new diapers.

01:06:12   Like it's not subtle at all, but I kind of liked that.

01:06:14   Like it's, you're not limited to a 30 second grab.

01:06:18   You're not trying to instill sort of,

01:06:20   I think there's a mistake a lot of marketers in tech

01:06:23   have traditionally made is they've,

01:06:25   they hire these branding agencies,

01:06:26   especially in the early days of tech,

01:06:27   these branding agencies that were used to doing

01:06:29   like consumer goods, consumer packaged goods,

01:06:31   and there it's all about building sort of brand affinity

01:06:34   because the goal is when someone's in a store

01:06:36   and they're faced with like 15 options for crackers,

01:06:40   that they choose one or the owner or whatever it might be,

01:06:43   they choose one and they don't really know

01:06:45   why they chose it, they just do,

01:06:47   and that's the payoff of all that advertising

01:06:49   and branding and all that sort of stuff.

01:06:52   With tech products, it's much more of a deliberate choice.

01:06:56   So to use sort of brand-type marketing,

01:06:59   I think is much inferior to just showing it,

01:07:04   showing how it works.

01:07:05   I mean, this is something,

01:07:06   some of my favorite Apple ads actually

01:07:08   were the original iPhone ads.

01:07:10   Not the first one, like the "Hello, hello"

01:07:12   at the Academy Awards, but all the ads after that

01:07:14   for the first year, they were just showing people

01:07:16   using the phone.

01:07:18   - The ones with Bob Bircher, I think his name was, right?

01:07:21   Yeah, and at the very end, the phone would ring.

01:07:24   So they'd show them reading the New York Times.

01:07:26   They'd show them scrolling, playing a game,

01:07:29   or not playing a game, but doing stuff on the phone

01:07:30   that you could do on the phone.

01:07:32   And then at the very end of the commercial,

01:07:34   and it's the same one every time,

01:07:35   the phone would ring, say, "Oh, and it's a phone."

01:07:37   And it was so effective both in explaining

01:07:40   what the iPhone is,

01:07:41   they were also teaching people how to use it.

01:07:43   One of some of my favorite commercials,

01:07:45   just because I think the way they really,

01:07:49   It was a new way of doing commercials

01:07:51   that I think was much better for a tech product

01:07:54   and something that I was always very frustrated by

01:07:58   when I was at Microsoft

01:07:59   'cause I thought so many of the commercials

01:08:02   were in this CPG branding mindset

01:08:05   when you're selling a very different kind of product.

01:08:07   - Yeah, those iPhone commercials were brilliant

01:08:11   'cause they were fast, I mean, they were 30-second spots,

01:08:13   but they showed things and they, you know--

01:08:17   - They showed it, they showed the product.

01:08:18   But it was like real things, and they're like,

01:08:20   look, maybe you don't believe it.

01:08:22   Maybe you hear somebody saying,

01:08:23   you know, you can get maps on your phone now,

01:08:25   on these iPhones, you can get a usable map.

01:08:28   But they'd show it, they'd say,

01:08:29   here, look, type Starbucks, and hit one button.

01:08:33   Very easy, just says, you know, like search or whatever,

01:08:36   and then a map shows up showing how far you are

01:08:38   from Starbucks, or whatever the example was

01:08:40   in the commercial.

01:08:41   - Yep, yep, exactly, yeah.

01:08:42   The map one was a big one, and that was,

01:08:44   and it was so immediately became apparent

01:08:46   the value was to people, right?

01:08:48   Right.

01:08:49   Yeah.

01:08:50   Yeah.

01:08:51   This is something you can understand.

01:08:54   Apple understood that-- it sounds funny,

01:08:58   but it's the thing that I think a lot of tech people, even

01:09:00   tech marketers overlook, is that you tell a lot of people, OK,

01:09:05   you've got a cell phone.

01:09:06   We know that.

01:09:07   We know you're frustrated by it.

01:09:09   We know that you probably can't figure

01:09:11   out how to do anything on it other than make the phone calls.

01:09:15   We're trying to sell you a phone that does,

01:09:17   it browses the web, gets your email,

01:09:20   has maps, lets you watch YouTube videos.

01:09:24   But trust us, none of this is more complicated

01:09:27   and making phone calls is even easier

01:09:28   than it was on your old phone.

01:09:30   - Yep, yeah, it's exactly right.

01:09:33   So I mean, these Amazon Echo spots are not like that

01:09:38   and they're not nearly as highly produced

01:09:40   and they're still pretty corny.

01:09:42   But if you're showing a product, a $200 product,

01:09:46   and in the original echo I think was the same,

01:09:48   I think it was $99 for Prime members,

01:09:49   but people are on your, you're on the web,

01:09:52   you have infinite space, you can show as short

01:09:54   or long a video as you want,

01:09:55   you're not limited to 30 seconds,

01:09:57   and people are being deliberate about their choice,

01:10:00   why not take advantage of that and actually show

01:10:04   how this product might be useful?

01:10:05   And I think that's something they've done

01:10:07   pretty consistently with these,

01:10:08   and I think it's smart, I think it's a much better way

01:10:12   to think about marketing your product,

01:10:16   'cause you're marketing a different kind of product

01:10:17   in a different context, particularly for Amazon,

01:10:20   because it's on their, they have a big website

01:10:22   that they can use.

01:10:24   - Yeah, I know that the, I'm gonna get the name wrong,

01:10:27   I can't remember these right, 'cause there's weird,

01:10:29   like the Echo Show and Echo Look, but it's like, to me--

01:10:32   - Echo Dot is the little one.

01:10:33   - Well, Echo Show is the one with the TV set,

01:10:38   and Echo Look is the one that's like for your dressing room.

01:10:41   Right. But you could call it like it's one of those things where, all right, Echo Look

01:10:50   is the one that is a camera and you show it, you get dressed and you get like a selfie

01:10:54   and you can get like some kind of analysis as to whether your shoes match your belt or

01:11:00   whatever. But it just the name Echo Look, it could also mean the thing that you look

01:11:05   at, the thing with the screen, right? And Echo Show, which is the one with the screen,

01:11:10   That could be the name of the one that's the camera.

01:11:12   Like here, Echo, let me show you what I'm wearing.

01:11:14   Right?

01:11:15   Yeah, I would call the other one, this is just called Echo Camera.

01:11:18   I think so too, because then it's clear.

01:11:20   That's what it is.

01:11:21   Right.

01:11:22   And I think the whole gives you tips on what you wear.

01:11:26   I always feel like they put that in for the tech geeks.

01:11:29   The reality is this whole taking pictures of your outfit is a huge thing, a massive

01:11:35   thing and people do it every day.

01:11:37   They mostly do it by holding out their arm

01:11:42   and taking a selfie, or staying in front of a mirror

01:11:43   and snapping a picture.

01:11:45   It's a massive, massive, massive thing.

01:11:49   So I think that's clearly what this product is focused on,

01:11:51   then that's the point of it.

01:11:55   And maybe in the long run it will be useful

01:11:56   to do the sort of AI stuff,

01:11:59   but I almost feel like that was throwing a bone

01:12:02   to all the techies saying, "Oh, and there's this thing too."

01:12:03   It's a selfie camera, like that's what it is.

01:12:05   And that's not to belittle it

01:12:08   because that is a massive market.

01:12:10   And it's a massive market that's really interesting.

01:12:12   There's lots of stuff about retail and retail changing.

01:12:14   And one of the big drivers of this is social media.

01:12:17   And on social media, it used to be back in the day,

01:12:20   like what drove fashion was it was all a status thing, right?

01:12:23   You want to go and you go to the mall

01:12:24   and you buy the high status items

01:12:26   and then you would wear them to school or whatever.

01:12:29   Now it's much more about standing out,

01:12:31   popping out on social media.

01:12:32   and variety and having something interesting and different

01:12:35   is much more important.

01:12:37   And I think, and just playing into that.

01:12:40   - I laugh because you said you wear it to school

01:12:42   or whatever and I know exactly why you said that.

01:12:45   And I think I even know why you hesitated after saying it.

01:12:48   I think you had the same thought that I had did

01:12:49   as you said it is you're talking from the perspective

01:12:52   of me and you two guys in our 40s.

01:12:54   - I know, I know.

01:12:55   - Because when retail was the only way to buy clothes,

01:13:00   that's when you and I were in school.

01:13:02   And by the time we got out of school,

01:13:06   that was when the internet was a thing.

01:13:08   And I had the same thought.

01:13:09   It's like, well, yeah, back in the days,

01:13:10   back in the days when you used to have to buy

01:13:12   all your clothes at the mall, you'd wear them to school.

01:13:15   Everybody wore them to school.

01:13:16   But of course there were generations of adults ahead of us

01:13:20   who wore them to other places.

01:13:23   - Yeah, but it is funny.

01:13:25   Like it's always hard to, or you have to be like super,

01:13:29   You're right, because the hesitation was the snap of self-awareness, like I'm probably

01:13:33   over-personalizing this experience.

01:13:35   But you do see this sort of traditional brands that dominated malls, and they're all struggling

01:13:44   mightily.

01:13:48   You see other things, like there's this other websites and services that are much

01:13:53   more inexpensive and it's much more about having something unique and different as opposed

01:14:00   to having the same branded t-shirt as everybody else.

01:14:03   I saw a thing that, I think the New York Times just had a story that the J. Crew is in financial

01:14:08   distress.

01:14:09   I think Gap is too.

01:14:11   There's companies that would like--

01:14:13   Yeah, Abercrombie and Fitch, all of them are struggling.

01:14:17   Right.

01:14:18   thought, well Abercrombie & Fitch was always a little bit more niche, you know, because

01:14:25   they had the, you know, it smells weird and it purposefully made an unwelcoming front

01:14:31   to, it's actually kind of an interesting retail strategy where they, they kind of made the

01:14:34   front of their stores sort of hard to get into. Like I said, having a big wide opening,

01:14:39   they would just have a door and it was sort of, you know, um, like they wanted, you know,

01:14:45   It's totally contrary to most retailers,

01:14:49   but it was sort of like they only wanted

01:14:50   the right people to come in, you know,

01:14:52   young people who were shopping for Abercrombie clothes.

01:14:55   But anyway, the gap to me is more of the universal,

01:14:59   my God, everybody can go in the gap

01:15:00   and find something that they would consider wearing.

01:15:03   It's weird that they're having, not weird,

01:15:06   but it's just, it's obviously like

01:15:09   a foundation of American retail is crumbling

01:15:12   if stores like that aren't doing well.

01:15:14   - Here's a question for you.

01:15:16   Do you ever, like when you need,

01:15:19   like you feel like you need some new shirts,

01:15:21   do you go out and buy shirts in a retail store

01:15:24   or do you buy everything online?

01:15:25   - I usually, every summer, I go and just buy a ton of stuff.

01:15:31   Actually, we always, it's a thing,

01:15:35   'cause my brother lives in Minneapolis,

01:15:37   and so we always go there and see my brother,

01:15:40   and then one day we go to the Mall of America

01:15:42   and there's no sales tax on clothing there,

01:15:44   and everything's there, and we just spend one day buying,

01:15:47   or at least I do, try to buy all the clothes

01:15:49   I need for the entire year.

01:15:51   Would I do need things otherwise?

01:15:54   Yeah, I go to department stores here.

01:15:55   I don't buy online.

01:15:58   But everything online here is mostly in Chinese

01:16:01   and whatnot, and it's obviously a little more difficult.

01:16:02   But my wife buys a ton of stuff online.

01:16:04   She buys stuff online all the time.

01:16:05   - My wife buys everything online, almost everything.

01:16:08   I can't recall the last time she went out

01:16:11   shopping for clothes.

01:16:12   She just buys everything online.

01:16:14   Unlike me, she's not afraid to send stuff back.

01:16:16   Like that's my problem.

01:16:18   I don't, I hate, I just don't like packing stuff up

01:16:21   to send back. - Yep.

01:16:22   - It's irrational, it's completely irrational.

01:16:25   And it's not like I've amassed all these,

01:16:28   like a big pile of clothes that I don't like

01:16:31   or that don't fit, that I just suck the,

01:16:35   just eat the cost of it because I don't send it.

01:16:38   But it's why I don't buy stuff like shirts.

01:16:40   Like if I was gonna buy like a dress shirt,

01:16:42   I don't buy it online.

01:16:43   Unless I know-- - I'm the same way.

01:16:45   - If I know that there's like a shirt

01:16:48   from Banana Republic, that I already have one,

01:16:52   and I know the exact size, and I can judge from the picture

01:16:54   exactly what this one looks like, I would buy that online.

01:16:57   But that's because I've actually tried it on.

01:16:59   - Yeah, I'm the same way.

01:17:01   That sort of, like, yes it's a hassle to get in the car

01:17:05   and like go to the store, or however you get you

01:17:09   to the store, but for me, that sort of hassle

01:17:12   doesn't register, whereas having a bunch of boxes

01:17:14   and having to pack stuff up and put it out,

01:17:17   and oh, that just sounds like absolute torture to me.

01:17:20   Even if you were to actually go through

01:17:22   and add up the number of minutes that it takes, it's less,

01:17:24   the feeling of it is much worse.

01:17:28   So I'm completely with you.

01:17:29   - But for stuff like underwear and socks

01:17:31   and stuff like that, I don't think I've bought anything

01:17:33   like that in a retail store in 10 years.

01:17:36   I mean, why would you?

01:17:38   It's crazy.

01:17:39   You feel like you need some new underwear.

01:17:41   Boom.

01:17:42   Just click a couple of buttons and it's at your house.

01:17:45   The Amazon apparel thing is very interesting because they've not announced any numbers

01:17:49   about it, but there's hints that it's actually doing much better than you think and they're

01:17:54   growing really rapidly.

01:17:56   I suspect a lot of it is probably things like you just said, basics and whatnot.

01:18:04   At a minimum, they're for sure making massive investments in it.

01:18:07   huge, not just the Amazon book, although I think that is interesting in that regard,

01:18:13   but they have all kinds of interesting projects going on.

01:18:15   They've launched multiple brands, their brands, for different categories.

01:18:24   They own Zappos.

01:18:25   Yeah, but this is all in Amazon itself.

01:18:29   I think it's not, the Zappos thing was, I think they bought them because they were

01:18:36   doing well and they're an e-commerce site,

01:18:37   and so they wanted to take them out.

01:18:41   I mean, they just closed down,

01:18:42   or they're on the verge of closing down.

01:18:43   What's the other one they bought?

01:18:44   Oh, diapers.com.

01:18:46   Same thing.

01:18:47   I think in the long run, I would be surprised

01:18:51   if Zappos remains an ongoing concern,

01:18:52   but I mean, people like it, people go there,

01:18:54   so maybe they'll keep it around.

01:18:56   But the long run for sure is all Amazon.

01:18:59   They want, because, and this is the other thing,

01:19:01   oh, this is the topic we should talk about.

01:19:02   I haven't written about this yet,

01:19:03   but the Amazon Prime video being on Apple TV.

01:19:08   - Oh yeah, well that's, I'm making a note,

01:19:10   we'll talk about that in a minute.

01:19:11   - Yeah, well because I think Amazon is really trying

01:19:14   to own every aspect of, they want to be the facilitator

01:19:19   of basically everything in your life,

01:19:20   particularly everything in the home,

01:19:22   and this is what makes the whole Echo line

01:19:24   so brilliant for Amazon.

01:19:26   I mean, the opportunity, the reason the opportunity is there

01:19:29   is because the home is the one place

01:19:31   you don't necessarily have your phone with you, right?

01:19:32   If you're out and about, you always have your phone with you.

01:19:35   If you're at home, it's plugged in and charging.

01:19:40   The other thing is, if you're out and about to just suddenly talk at random, it's getting

01:19:44   perhaps more and more socially acceptable, but still a little weird.

01:19:47   Whereas at home, to shout at an Echo is totally fine.

01:19:52   It's your house.

01:19:53   You can do what you want.

01:19:54   Also, it fits with the long-term Amazon model of basically being the infrastructure for

01:20:03   your home.

01:20:04   It's how the things in your home get there.

01:20:05   It's how you resupply.

01:20:07   It's how you do everything.

01:20:09   The focus on clothes and Echo and all that sort of stuff fits into that.

01:20:16   Having another brand that's not Amazon, I think, doesn't fit into that in the long one,

01:20:21   especially with Prime, 'cause they want to be,

01:20:23   it's all Amazon, it's all Prime,

01:20:25   and so I, we'll see how long Zappos is for this world,

01:20:30   but I doubt it'll be a focus

01:20:31   of their sort of apparel efforts.

01:20:33   - Oh, I think Zappos is doing well.

01:20:35   Maybe it just continues to run as a sort of independent,

01:20:39   you know, I think you could easily be a,

01:20:42   well, maybe not, maybe they make you sign in with Amazon.

01:20:44   I don't know, but I was gonna say

01:20:45   that I think you can shop at Zappos

01:20:47   and not even know that they're a subsidiary, but.

01:20:50   - Yeah, but right, and I think that's fine for Amazon,

01:20:54   I mean, as long as it's not someone else,

01:20:57   as long as they own it.

01:20:59   - Here's the thing that, it doesn't surprise me,

01:21:01   but it's, it's still, I still found it striking,

01:21:06   was how much of the reaction to the Amazon,

01:21:09   or the Echo Look, the one that's a camera

01:21:11   for you getting dressed, was a sort of knee-jerk,

01:21:15   you think I'm putting a camera connected to the cloud

01:21:18   in my dressing room, you gotta be kidding me.

01:21:21   Like a sort of knee jerk, I am not putting

01:21:24   a computerized camera that uploads pictures to the web

01:21:29   that you don't trust it or whatever.

01:21:31   And I understand it and it certainly is,

01:21:34   it's a reasonable concern that you'd want it to be private

01:21:39   and you'd want it to come from a company that you trust

01:21:41   and it's common sense that you'd think,

01:21:44   at least think twice before you bought it and installed it.

01:21:47   But I think it's almost silly to take the point that you don't think that we're

01:21:53   going to have cameras all over our houses soon.

01:21:57   It's clearly, that's where it's the only way to go.

01:22:00   Yeah, and the other thing too is, is a camera really much worse than the Echo itself?

01:22:09   The entire category is very problematic.

01:22:12   But that's how people reacted to that a couple years ago.

01:22:14   They did.

01:22:15   It just dies down.

01:22:17   I'm not saying that we should...

01:22:20   I think anybody who knows me at all through the show or

01:22:25   Daring Fireball would guess that I'm...

01:22:27   it's not like I rush headlong into new things without

01:22:31   thinking about them.

01:22:33   In some ways I'm a lowercase c conservative.

01:22:36   A lot of the...

01:22:38   I don't...

01:22:40   I find out what I like and then I stick with it.

01:22:42   So I'm not drawn to new and shiny all the time.

01:22:47   But I feel like everybody's a little bit too,

01:22:50   in some ways, it's good that there's a lot of people

01:22:52   whose first concern is privacy,

01:22:54   as opposed to thinking about the cool things

01:22:56   you could do with something like this.

01:22:57   But I'm reminded of, God, it must probably be like '99

01:23:02   or something like that, but way back,

01:23:04   you know, around the millennium,

01:23:07   when like Mac apps, indie Mac apps

01:23:10   first started adding features

01:23:11   where they would phone home and just say,

01:23:15   you couldn't even upgrade,

01:23:17   sparkle the technology where you can hit a button

01:23:20   and have, you're using version 3.1,

01:23:23   version 3.2 is out, would you like to upgrade?

01:23:25   And you just hit a button and it downloads

01:23:27   and upgrades and quits and relaunches,

01:23:28   and there you go, you're running a new one.

01:23:30   But there were apps that would just put a dialogue up

01:23:32   and say, hey, there's a new version,

01:23:34   do you wanna go to the website and download it?

01:23:36   And people freaked the fuck out

01:23:38   because they were like, what the hell?

01:23:40   and sniffing the network traffic.

01:23:43   It's not like they were revealing anything,

01:23:46   but the fact that the app was phoning home with anything,

01:23:49   even just to check the version, was too much for people.

01:23:53   And there were people who would do, like, Nday meant it.

01:23:56   I'm deleting this app, I'm switching to a competitor,

01:23:58   because there's no way that any software of mine

01:24:01   is going to phone home to the developer server,

01:24:04   even if it's just to check the version.

01:24:07   And I don't want to make fun of it too bad,

01:24:10   but I mean, that's, you know,

01:24:12   is there an app that you use today

01:24:15   that doesn't notify you when there's a new version?

01:24:18   And I feel like we're going that way

01:24:21   with microphones and cameras.

01:24:23   - We are.

01:24:24   I think there's two sort of points to make.

01:24:27   One is your broader point,

01:24:29   and this is the most important point,

01:24:30   is this is sort of inevitable.

01:24:33   Like we're going down this direction,

01:24:34   and the fact of the matter is that

01:24:36   most people just don't care.

01:24:38   And this applies to their online privacy,

01:24:41   it applies to, and this is the big problem

01:24:44   with sort of fighting for privacy

01:24:49   when it comes to technology products

01:24:50   is that unfortunately people don't care.

01:24:53   And maybe at some point there'll be some scandal

01:24:56   that's so bad and so big that it will actually become

01:25:00   something that people care about,

01:25:01   but to date there's no evidence that that's going to happen.

01:25:04   People value convenience, they just do.

01:25:07   And related to that though, it actually is really concerning, like the whole echo thing.

01:25:15   I have echoes over my house, but the actual, it's not really clear.

01:25:22   Amazon says that they're secure and all this sort of stuff, but there's no really

01:25:27   recourse for people if they were used badly.

01:25:32   It really is just kind of trusting this massive corporation is going to do the right thing.

01:25:41   Obviously people can and will track their network and make sure that it's only sending

01:25:45   when Alexa is triggered or whatever it might be.

01:25:48   But then once it gets on the servers, you don't really know what's happening to it.

01:25:51   It really is a massive, massive problem.

01:25:53   Unfortunately, it's a problem that absent some sort of popular will, it's hard to

01:26:00   to see anything being done about it.

01:26:03   - Right, once you're Yodingas,

01:26:07   turn out the lights in the kitchen, command goes there,

01:26:11   you have no idea where that audio goes

01:26:13   and how long it lasts and what they do with it.

01:26:16   It is a black box.

01:26:17   So I'm not discounting the privacy concerns,

01:26:19   but I think, and it's just like,

01:26:21   it's such a small example,

01:26:22   but just like how apps that can run a version check

01:26:26   and notify you of a new version,

01:26:28   It is a trade-off of privacy where there is some information

01:26:33   of yours that is going to the developer and they can

01:26:35   maybe a lot of times send other things too,

01:26:39   like what model Macintosh you're on

01:26:41   and how much RAM you have or something like that.

01:26:43   You are trading some privacy

01:26:45   by allowing the software to do it,

01:26:46   but in return you're getting something of such convenience.

01:26:50   It is so much, the days when you used to have to manually

01:26:53   like follow, there used to be a website like Mac Update

01:26:56   where you'd, like, part of my morning was go to Mac update

01:27:00   and what was the other one?

01:27:01   Version tracker.

01:27:03   You'd go to version tracker and just see

01:27:05   if any of the software I use has a new version out

01:27:08   and if so, go and update it.

01:27:10   I mean, that was actually part of my daily routine.

01:27:13   It seems like madness at this point.

01:27:17   And there's so much of the convenience of these

01:27:19   AI assistants and we're just, just touching our toes in it.

01:27:26   like, I don't know, the more I think about it,

01:27:29   and I know I've been talking about it

01:27:30   a lot more on the show,

01:27:31   like if I were to go to a company like Apple

01:27:35   or Microsoft or something or Google,

01:27:37   like what would I wanna be working on?

01:27:39   I mean, until now, almost unquestionably,

01:27:43   what I would wanna be working on

01:27:44   is visual user interface stuff for the GUI.

01:27:47   I think if I were there now,

01:27:51   I think the AI stuff would be what I would wanna work on,

01:27:54   'cause I feel like there's so much potential there.

01:27:57   - One thing that's interesting about the Echo

01:27:59   and with the Echo Show is I think in some respects

01:28:02   it was good for Amazon to launch with just the speaker

01:28:05   because it sort of, it was like the original Mac

01:28:08   launching without arrow keys.

01:28:10   So you had to use the mouse and the foundation

01:28:14   of it being a voice interface is baked in very, very deeply

01:28:19   and so now the show comes out and it has a screen,

01:28:21   but it's not a touchscreen.

01:28:23   It's still all voice controlled.

01:28:25   But it's weird because if it came out originally,

01:28:27   we'd say, "Wow, there's a screen.

01:28:28   "It's not a touchscreen.

01:28:29   "This is so weird."

01:28:30   And people wouldn't really get how to interact with it.

01:28:32   Now it's like, "Oh, wow, it's so much so convenient.

01:28:36   "It's an echo with a screen."

01:28:38   The whole framing and the way you think about the product

01:28:40   is actually totally different

01:28:42   because it was a more limited product to start out with.

01:28:46   - I did not realize it was not a touchscreen.

01:28:48   I find that shocking.

01:28:49   It's not a touchscreen?

01:28:51   - No.

01:28:52   - Wow, that's shocking to me.

01:28:54   I find that crazy, I think that's a huge mistake.

01:28:57   I think there's all sorts of things that you'd want to do

01:28:59   that you'd want to be able to touch to confirm

01:29:01   or something like that.

01:29:02   - Wait, yeah, no, I'm totally wrong, it is a touchscreen.

01:29:05   - Oh, geez. (laughs)

01:29:07   I thought maybe someone at Amazon had a stroke or something.

01:29:12   - Yeah, no, that's funny, I don't know,

01:29:16   I knew it was a touchscreen and it suddenly got stuck

01:29:18   in my head that it was not a touchscreen.

01:29:19   The point I was meaning to make,

01:29:22   tell Cable to, or tell Cable to--

01:29:26   - No way, man, we're leaving it in.

01:29:28   - The point I was trying to make, though,

01:29:29   is the primary means of interacting with it is voice.

01:29:34   Had it been a touchscreen to start out with,

01:29:35   that's what I'm trying to say,

01:29:36   it would have been much more limited than it is,

01:29:40   because every, you know, developers, all the skills,

01:29:42   would have all been biased towards touch.

01:29:45   Now they're all biased towards voice,

01:29:46   and you can add on touch.

01:29:48   That was weird, I just completely hallucinated

01:29:50   for like five minutes there.

01:29:51   I just wrote about it yesterday,

01:29:52   I wrote about it being a touch screen.

01:29:54   - I do see your point though, I see your point though,

01:29:56   that it is voice first and it matters what's first.

01:30:00   That the Mac being mouse first influenced the design

01:30:04   of the GUI in a way that if you could have treated it

01:30:07   as keyboard first, that's how the software

01:30:10   would have been written, because that's how

01:30:11   all the other software on all the other platforms

01:30:13   was written.

01:30:13   - Right, exactly, exactly.

01:30:15   That was so weird.

01:30:16   - You could use an original Macintosh,

01:30:19   like if you had two of the original Macintosh side by side,

01:30:22   and one of them only had the mouse hooked up,

01:30:24   and the other one only had the keyboard hooked up,

01:30:27   you could get more done on the one

01:30:28   that had the mouse hooked up.

01:30:30   And there might have been things

01:30:31   that you couldn't even do on the keyboard.

01:30:32   Yeah, you couldn't even get to the menu bar.

01:30:35   The only thing you could do in the menu bar

01:30:36   was have the keyboard shortcuts memorized.

01:30:39   - Right, and I mean, in the long run,

01:30:42   they brought them back, and it's better to have

01:30:44   all the arrow keys there and whatnot.

01:30:46   But yeah, as far as like getting the paradigm watch,

01:30:49   and you know, if had it been a touchscreen to start,

01:30:54   it would have, you know, that's just kind of like,

01:30:57   it was just a phone, but worse,

01:31:00   'cause it's locked in one spot,

01:31:01   and the, to really drive home that it is a voice interface,

01:31:06   yeah, I think they're better off starting there.

01:31:09   But that said, the other thing though with the screen is,

01:31:12   I think this calling thing,

01:31:16   We mentioned, we talked more with the phone

01:31:17   and stuff like that, but I think there really is value

01:31:20   to being able to just initiate a conversation.

01:31:24   And probably the most interesting thing here,

01:31:25   and here Amazon totally sort of ripped off

01:31:28   one of their companies.

01:31:30   They have a venture fund for companies that,

01:31:33   and they have Alexa built in.

01:31:34   There's a company that built a voice communication device

01:31:38   that has Echo built in, and it's basically,

01:31:41   Amazon just completely Sherlock them,

01:31:43   which is bad enough when it's software

01:31:45   and it's probably far more painful when it's hardware.

01:31:48   But once you have trusted people, you can drop in,

01:31:52   which basically means you can initiate a call

01:31:54   without their having to go to the,

01:31:56   like actually answer it or do whatever.

01:31:57   You could just be like sort of instant sort of thing.

01:31:59   Now that sounds terrible in a lot of situations,

01:32:01   but for me, I'm in a different, a separate office

01:32:04   from down the street from the house

01:32:07   to be able to just like turn up,

01:32:09   be able to literally drop in.

01:32:11   It's someone, if I was working from home,

01:32:13   they have some ability to come in the,

01:32:15   stop at the door and stick their head in.

01:32:16   It's the same sort of idea.

01:32:18   Obviously you're not gonna use it all the time,

01:32:20   but the possibility I think is compelling and interesting

01:32:23   and fundamentally different from FaceTime.

01:32:25   Fundamentally different from having to get your phone

01:32:27   and pull it out.

01:32:28   For the kids to call grandma, something like this,

01:32:31   is really, is more convenient than having to use FaceTime.

01:32:35   - I forget what it was in the context of one of these things

01:32:41   I was like, you know, just how crude all of these things, whatever your favorite is, you

01:32:47   know, the Alexa platform or Siri or Google or whatever. It's so early days on all of

01:32:53   them that we will look back and, you know, this is like to the, you know, personal computer

01:32:58   like what the Apple II was in 1981, you know, it's, we're just at the tip of the iceberg,

01:33:04   but that you can see where we're going. And I wrote that, you know, really what I want

01:33:08   is I want like a C-3PO. But I thought about it a couple days later, I realized I was totally wrong.

01:33:14   That's too much because having the actual robot who can walk around is an entirely different set

01:33:19   of problems. For these AI assistants, what I want is HAL from 2001. And I wrote that, and I feel

01:33:25   like every time you bring up HAL, everybody just goes immediately to, "Yeah, but he killed a bunch

01:33:30   of astronauts and tried to kill the last one too and had to be put down." All right, put aside the

01:33:37   the fact that he killed people.

01:33:38   (laughing)

01:33:39   But he did kill people for a very logical reason.

01:33:43   I don't want to spoil the movie, but it's...

01:33:45   - If you haven't watched "2001,"

01:33:48   you need to go watch "2001."

01:33:49   - But if you just, if you think about the stuff

01:33:51   that Hal does in the movie,

01:33:53   and how the astronauts interact with him,

01:33:57   it's exactly where we're going.

01:33:59   It is exactly the...

01:34:01   There could not be a better,

01:34:05   everybody is racing towards HAL, where it's not just a voice and a speaker where you can ask HAL,

01:34:11   you know, what's the square root of 256 or something like that and get an answer.

01:34:16   It's that it's the home automation integration where you can say things like tell your dingus to,

01:34:24   you know, close all the blinds if you have blinds that are hooked up to the smart house or something

01:34:29   like that or change the color of your lights or something like that. Like that's how they ran the

01:34:34   spaceship is they would tell Hal to, you know, open the pod bay doors or something like that.

01:34:39   Like, that's exactly where we're going with all these things. And it's, you know, and you watch,

01:34:44   and one of the things that, you know, Kubrick got so well in that movie is that they're,

01:34:49   you know, from the perspective of somebody watching it in 1968, it was like whiz-bang,

01:34:54   futuristic stuff, like, wow, you can tell Hal to open the door and the door opens. But the

01:34:58   astronauts acted like it was the most normal thing in the world because they were used to it.

01:35:03   Right. Anyway, I think everybody needs to watch Hal and realize that that's exactly where we're

01:35:08   going. And the other thing too about Hal was that—and it would have been so easy from 1968's

01:35:16   perspective to imagine Hal as a big refrigerator computing device that's located in the bridge of

01:35:25   the spaceship. And to think of—because that's what computers were. But Hal was everywhere,

01:35:31   Right? They were just little red cameras all around the ship. He was a system that was running throughout the whole ship.

01:35:39   Right. And that's exactly the model of like, I mean, the Amazon to a T, where you sprinkle these dots throughout your house,

01:35:48   so that, you know, if you're upstairs or downstairs, you can access the exact same system.

01:35:55   The other the other I completely agree. I think it is a great example of of the

01:36:03   What what everyone is going for the other point I would make I was just thinking about this in terms of FaceTime is Google

01:36:09   launched a

01:36:11   FaceTime competitor. I can't remember what it's called. Um

01:36:14   Well, I was it aloe. No, hello is the chat app. Yeah weirdly they launched two apps

01:36:20   separately Google Duo, yeah, I mean

01:36:24   And the problem with that is it's a separate app,

01:36:29   you have to go download it, et cetera,

01:36:31   and it's work beyond, like FaceTime is built in.

01:36:36   Now obviously the advantage is you can theoretically

01:36:38   go across the platform, then you're competing

01:36:40   against Skype though, which has similar capability.

01:36:44   And it's just a hard, Google's problem is always

01:36:47   sort of the go-to-market, how they actually get

01:36:49   their products and technology into people's hands.

01:36:52   And obviously Android is one way to do that,

01:36:55   but then you have to get people on iPhones to download it.

01:37:00   Anyhow, it's hard.

01:37:01   - My impression of Google from the outside,

01:37:03   and the Allo Duo thing is a perfect example of it,

01:37:06   is that their company culture is so resistant

01:37:09   to product people that in and of itself,

01:37:14   there's nothing unproduct-like about Allo or Duo,

01:37:19   but there's clearly no overarching strategy

01:37:21   connecting the two or otherwise they wouldn't exist

01:37:23   as separate products, but there's nobody,

01:37:25   I don't feel there's anybody in a position of authority

01:37:27   to sort of crack that whip and guide it.

01:37:31   It's just a thousand individual cats

01:37:35   wandering around Mountain View

01:37:36   doing whatever the hell they want.

01:37:37   (laughing)

01:37:40   - Yeah, I don't know, it certainly does not seem ideal.

01:37:44   But the difference here with Alexa and this voice calling

01:37:48   is because of this show device,

01:37:52   there is actually a reason to download the app

01:37:57   and to use it because there is capability that is,

01:38:00   like it's not just a rip off,

01:38:02   it's actually doing something new and unique

01:38:05   that is worth going to the trouble

01:38:06   of downloading the app for.

01:38:08   And so it's actually, I would argue,

01:38:09   much more of a threat in the long run to FaceTime

01:38:13   than Google or Skype, whatever,

01:38:15   Even though those have the advantage of being cross-platform,

01:38:18   Aloe is not only cross-platform,

01:38:21   but also has this third dimension

01:38:23   that makes you want to use it.

01:38:26   - Yeah, I can sort of see that.

01:38:30   I wonder how many people use Aloe.

01:38:35   I never really hear about it anymore.

01:38:38   It seems like one of those things that, you know,

01:38:40   is anybody using it?

01:38:43   - Well, I mean, this is a, it's created for Google's benefit

01:38:46   because they felt like they needed a chat app.

01:38:48   - Right.

01:38:49   - Yeah, like there's no market need for it.

01:38:51   Like there are plenty of chat apps and this is the,

01:38:55   and you can't, they added some features,

01:38:59   like you can't just tack on some features.

01:39:01   Like you have to create a fun,

01:39:04   like the Echo Show creates a fundamentally new use case

01:39:08   for video calling because it's like this omnipresent object

01:39:12   in a specific location, like in a place where it actually makes sense.

01:39:17   Yes, it's kind of a landline, blah, blah, blah, but you know,

01:39:21   you can't, when you're wandering around your house,

01:39:23   you have your phone with you to be able to just shout out, call whoever.

01:39:25   And you can call other echoes. It's not just a show.

01:39:29   So you can call from echo to phone.

01:39:32   Like it's a fundamentally new use case,

01:39:34   whereas these Google products had some new features,

01:39:37   but the actual use case was well served by plenty of other apps that were there early.

01:39:39   And it's even more difficult because it's a network product

01:39:43   and the single most important feature,

01:39:45   the single most important feature of any chat app

01:39:47   is do your friends and family use it?

01:39:49   Like nothing else matters beyond that.

01:39:51   - Yep, because it's like the old argument about, you know,

01:39:55   who bought the first fax machine?

01:39:57   - Right.

01:39:59   - Who the hell are you getting faxes from?

01:40:01   You just bought the first one.

01:40:02   But all of a sudden, if one guy across town

01:40:05   buys the second one, all of a sudden,

01:40:07   you've got something that's valuable.

01:40:09   I mean, it has more value than it did when you,

01:40:10   yours was the only fax machine on the phone network.

01:40:14   - And this is why, one thing that was really interesting

01:40:16   was when the whole messaging app revolution went on,

01:40:21   it was very brief, it was like two or three years.

01:40:23   And what happened was, it was really one sort of

01:40:26   country by country.

01:40:28   And countries would basically settle on one service

01:40:31   and that was it, and it was over.

01:40:32   Like the fight was, it was done.

01:40:34   There was no more of a fight to be had.

01:40:37   and you had companies like WeChat and Line spending all kinds of money trying to break

01:40:42   into other countries, but once you're already established, absent some massive leap in functionality.

01:40:52   The reason why messaging was such a big deal is that in nearly every country in the world,

01:40:56   except for the US, you have to pay for SMS.

01:40:59   I think this is why the US thing is more fragmented and is much further, much more behind as opposed

01:41:07   like message app penetration.

01:41:09   I mean, and why iMessage is probably the strongest,

01:41:13   the strongest network because it's piggyback on SMS,

01:41:15   but it's different, it was different

01:41:16   in almost every other country in the world,

01:41:18   where not having to pay is a really powerful way

01:41:22   to drive adoption, right?

01:41:24   But once that was done, once everyone is already using

01:41:28   a chat app that lets them chat for free,

01:41:31   to get them to switch and not just switch one person,

01:41:34   because you have to switch everyone simultaneously

01:41:37   at the same time is basically, is extremely difficult.

01:41:42   - Right, the lack of foresight that the carriers had

01:41:46   by trying to milk the SMS revenue at the expense of,

01:41:50   well, if we just give everybody free,

01:41:53   at the very least they're attached to the phone, right?

01:41:57   Then their phone number.

01:41:59   And we've got, we've got like a,

01:42:00   at least got a sticky platform.

01:42:02   Like in the way that iMessage has been very,

01:42:04   very good to Apple,

01:42:06   even though they've never once charged to send.

01:42:08   - It's one of Apple's, yep.

01:42:09   Yeah, I mean, it's one of Apple's,

01:42:13   I've probably complained on the talk show before,

01:42:16   for sure I've complained on exponents,

01:42:18   but people often ask, or I get emails

01:42:21   whenever I write about messaging apps,

01:42:23   and people are like, oh, Apple,

01:42:26   why isn't iMessage in the stock price?

01:42:28   10 cent is worth x amount, Facebook's worth x amount.

01:42:32   Apple's stock should be higher

01:42:33   because they have iMessage.

01:42:35   And like, no, iMessage is absolutely accounted for.

01:42:39   It's accounted for in the phone.

01:42:41   Like it is a reason why Apple can maintain,

01:42:45   charge such high margins on the phone,

01:42:46   can maintain its share, can be so dominant.

01:42:49   And iMessage is not the reason,

01:42:52   but it is a significant reason why people on iPhones

01:42:56   continue to buy iPhones.

01:42:58   And so it's super valuable and it is accounted for.

01:43:02   It's just embedded in the iPhone.

01:43:05   - Yeah, I do think it might be discounted in some ways,

01:43:07   but it's different than the independent messaging platforms.

01:43:11   - Well, no, it may, yeah, but if you broke it out,

01:43:14   if iMessage was actually available on Android,

01:43:16   and, well, I guess that's the only one that matters,

01:43:19   yes, maybe the iMessage category

01:43:23   or whatever division would be worth a lot,

01:43:26   but the iPhone, I think the cost

01:43:28   that would be borne by the iPhone

01:43:31   would actually be even greater than that.

01:43:33   - Right, right.

01:43:34   - That's why when there was that rumor last year

01:43:36   that Apple was going to ship iMessage for Android,

01:43:41   I do believe, in fact, I heard from people

01:43:45   that there absolutely positively were mocks

01:43:47   that were floated within Apple,

01:43:49   but that doesn't mean that there was ever

01:43:50   any serious intention to do it.

01:43:52   It's almost more like, well, why wouldn't there be?

01:43:54   Why wouldn't they at least sketch out how it would work,

01:43:58   whether they have any intention of doing it or not?

01:44:00   But it just seemed to me so unlikely,

01:44:02   because it seemed to me like whatever they would get from it, they would lose in the stickiness that iMessage gives to the phone.

01:44:11   In terms of any kind of temptation you have, if you have tons and tons of blue bubbles in your text with your friends and family,

01:44:18   any temptation you might have to switch to an Android phone when it dawns on you that you lose all those iMessages and everything goes green, it's like, "Ehh, maybe not."

01:44:28   Right, and that's why they, that's a motivation for making iMessages more and more, have more

01:44:34   and more features and things like that.

01:44:36   I mean, I think they've done a pretty poor job of it, but the motivation is to differentiate

01:44:41   it from SMS even further so that, yeah, to switch something else doesn't, you know, feels

01:44:48   like a terrible idea.

01:44:49   Yeah, I mean, I, you know, I'm not a big fan of, I don't like using Android in part, I'm

01:44:56   I'm not used to it, but there's little things

01:44:58   that I don't like that kind of drag me off the wall.

01:45:01   But without question, the,

01:45:04   but I still, I mean, I have a Pixel now.

01:45:07   I've used Android phones occasionally,

01:45:09   but iMessage is, without question,

01:45:11   the most straight-up, frustrating aspect

01:45:15   of using a Android phone for any period of time.

01:45:19   And there's little stuff, but I mean,

01:45:20   little stuff, whatever, you can get used to,

01:45:22   you can get over it.

01:45:23   You can't really get past there not being iMessage.

01:45:25   But it's interesting to think of my message as a wholly owned proprietary to iOS and Mac OS to a lesser degree

01:45:31   Messaging platform that Apple owns and think about this tell me if you think this is interesting hypothetical, but what if

01:45:40   When Instagram was on the market what if Apple had bought Instagram instead of Facebook and kept it

01:45:49   iOS only

01:45:52   Is that interesting to think of? I think it kind of is, like in a way that people use,

01:45:57   you know, that

01:45:59   the blue bubbles are seen as having more status than green bubbles. Like imagine if there were

01:46:04   tens of millions of people sharing photos on Instagram, you know, and you the only way you couldn't even look at it

01:46:11   unless you had an iPhone.

01:46:12   It is really interesting. I mean, because it's value-destructive,

01:46:18   according to like theoretically it's value destructive

01:46:21   to buy a sort of like horizontal service

01:46:26   and limit it to where platform

01:46:28   in the context of the service itself.

01:46:29   So like Instagram is worth what?

01:46:32   However, a huge amount of money,

01:46:35   vastly more than Facebook paid for it.

01:46:37   - They paid $1 billion. - $50 billion,

01:46:39   I don't know, whatever.

01:46:40   - They paid $1 billion, but I wouldn't be surprised

01:46:42   if they tried to sell it now.

01:46:43   I mean, I would think like $50 billion, I don't know.

01:46:46   I mean, it's almost, it's worth so much

01:46:48   it's almost, you know, you have to,

01:46:52   it's like whatever somebody would be willing to pay for it.

01:46:54   It's kind of hard to get the value on it.

01:46:56   - And they'd be willing to pay a lot.

01:46:58   So it would not be worth that by itself.

01:47:03   But to your point, by the time Android came out,

01:47:07   which was like three days before Facebook bought it,

01:47:10   the momentum and sort of place that Instagram had

01:47:14   in sort of like popular culture,

01:47:16   even with only having however many users it had,

01:47:19   it was a thing.

01:47:21   It was very much a thing just being on iOS.

01:47:23   And yeah, would it still be a thing?

01:47:26   I think that's sort of the longer run question.

01:47:28   Like, would it be able to maintain that

01:47:29   or would a cross-platform service really, you know,

01:47:34   whether, I mean, Snapchat would probably be

01:47:37   in much better shape today if Apple had done that,

01:47:40   being something that's more broadly accessible.

01:47:46   It's a really interesting point.

01:47:49   Well, clearly Facebook would have--

01:47:52   if Apple had bought Instagram, Facebook

01:47:54   would have done their best.

01:47:56   We see what they do with Snapchat.

01:47:57   They would have tried seven different ways

01:48:00   to copy Instagram, whether it was with their own new app

01:48:04   or whether putting it in your regular Facebook feed,

01:48:06   just like they've copied Snapchat's stories gimmick

01:48:10   like seven different ways.

01:48:11   So maybe it would have been Facebook somehow

01:48:13   would have done it.

01:48:14   But I still think there's something interesting there.

01:48:16   And the idea would be that it wouldn't necessarily--

01:48:18   like, Instagram itself, as an Apple subsidiary,

01:48:21   wouldn't be worth anywhere near what Instagram is worth today

01:48:24   as a Facebook subsidiary with so many more users.

01:48:28   But it might--

01:48:29   Would the iPhone be worth that much more?

01:48:31   Right.

01:48:31   The iPhone might be worth more because people

01:48:33   would be terrified of getting a different phone because they

01:48:36   wouldn't be able to share their stuff to Instagram anymore.

01:48:38   And they've got 4,000 followers or whatever on Instagram.

01:48:42   And the only way they can keep that going

01:48:44   as if they keep buying iPhones.

01:48:46   And I can't help but think that that was--

01:48:48   I have never heard this from anybody.

01:48:51   So this is just complete speculation on my part.

01:48:53   No, not single birdie has ever said anything to me.

01:48:55   But I thought it was so conspicuous.

01:48:56   I thought it right at the time that Instagram for Android

01:49:00   shipped coincident with their acquisition from Facebook.

01:49:04   It was only after the Facebook acquisition was made official.

01:49:08   I forget if all the eyes were dotted.

01:49:10   Yeah, it was like the same week.

01:49:13   I cannot help but think that Apple might have at least been at the table.

01:49:18   And the fact, it would be a lot easier to never have had an Android version than to sell to Apple

01:49:25   and cancel the Android version.

01:49:27   And I think the only part of it that was even interesting to Apple was that it was iOS exclusive.

01:49:32   And famously...

01:49:34   Without question, yeah. Instagram as it is today is not valuable.

01:49:37   No.

01:49:39   And you're not cutting it off.

01:49:42   - Right, that's the funny thing is that

01:49:44   Instagram is more valuable today,

01:49:47   but it wouldn't be more valuable to Apple.

01:49:48   It was only valuable to Apple as an iOS exclusive,

01:49:51   and it emphasized their product marketing,

01:49:53   that the camera is better on the iPhone,

01:49:55   that it kind of fit in.

01:50:00   - Yeah, I think-- - Obviously, Shiller

01:50:01   deleted his Instagram account right after

01:50:03   the Android version came out.

01:50:06   - The more you mention it, yeah,

01:50:07   I think they probably should have done it.

01:50:10   Again, Instagram would not be worth what it is today

01:50:13   as a part of Apple, and it's very possible,

01:50:15   to your point, another network will come along

01:50:17   and supplant it, but would it be worth

01:50:21   more than $1 billion of value to the iPhone franchise?

01:50:24   Without question.

01:50:25   You don't have to sell that many marginal iPhones

01:50:29   to make up a billion dollars.

01:50:31   Yeah, it's a really interesting point.

01:50:35   - And even now, today, I mean, I forget what year

01:50:37   that was when that happened, but even now today,

01:50:40   it plays even more into the camera emphasis

01:50:45   of Apple's iPhone product marketing.

01:50:47   - Yeah, absolutely, yep, I agree, I agree is a miss.

01:50:50   I mean, the real shame is that Instagram sold it all.

01:50:53   I mean, I feel like things would be so much healthier if,

01:50:58   I mean, Instagram is really the purchase

01:51:00   that cemented Facebook's dominance,

01:51:03   because it's Instagram that is,

01:51:07   it's different enough from Facebook in a way

01:51:10   that it really, the market need,

01:51:13   market niche that it's filling is,

01:51:15   it was really a big hole for Facebook.

01:51:20   It'd be nice if it was an independent company.

01:51:24   - It's, yeah, yeah, it's a terrific compliment to Facebook

01:51:29   and it's a better Twitter than Twitter in some ways.

01:51:32   or at least a Twitter, it's a Twitter that knows,

01:51:34   and I love Twitter, I do love Twitter,

01:51:36   and Instagram is of course completely pointless

01:51:39   and useless for something like news.

01:51:41   Like as we speak today, 24 hours ago we just found out

01:51:44   that Trump fired the head of the FBI.

01:51:48   It was, I'm sure, I don't know what you did,

01:51:51   if you were up, maybe you were sleeping at the time,

01:51:53   but as soon as you found out about it,

01:51:54   I bet you went to Twitter, right?

01:51:56   - Right.

01:51:57   - I mean, politics over the side.

01:51:59   When I found out that Trump fired the head of the FBI

01:52:02   who's investigating his own campaigns,

01:52:04   ties us to Russia, I went to Twitter to see

01:52:07   what were the news articles that were coming out,

01:52:10   what were people whose opinion I value on such subjects.

01:52:14   Instagram has nothing to do with something like that.

01:52:16   You don't go to Instagram for breaking news.

01:52:17   But the problem that Twitter has--

01:52:18   - But that's part of Instagram's value, right?

01:52:21   - Right, and that's part why people, you know.

01:52:23   But it's Twitter-like in that it's the same basic model

01:52:29   that Twitter pioneered, which is you--

01:52:34   it's very simple.

01:52:35   It's brilliant.

01:52:36   It seems so obvious, but nobody did it

01:52:37   before Twitter, which is you have a feed of the things

01:52:41   you post, and you pick people whose feeds you want to see.

01:52:45   And then when you look at the app,

01:52:47   you see all of the posts from the people

01:52:49   who you've chosen to follow in one stream,

01:52:53   and you scroll down.

01:52:54   And then when you get bored, you hit one that you've already

01:52:57   seen before you stop.

01:52:59   It's like they took that basic model

01:53:01   and made something that was very self-assured

01:53:03   and knew exactly what it was for

01:53:05   and what people would do with it.

01:53:07   Like people don't look at Instagram and say,

01:53:09   "I don't know what to do with this."

01:53:10   Like a lot of normal people do when they see Twitter.

01:53:13   They're like, "I don't know what I'm looking at."

01:53:16   - Right, and photos are such a,

01:53:19   and this is something that Facebook knew

01:53:20   when they bought Instagram.

01:53:23   I mean, Facebook was built on photos, photo sharing.

01:53:25   But to take, to be, break that down

01:53:28   just through a stream of individual photos.

01:53:30   And not only that is it super understandable,

01:53:32   super approachable and something people like,

01:53:34   but it lends itself very obviously

01:53:36   and easily to advertising.

01:53:37   And in a way that Twitter, you know,

01:53:39   it's advertising on Twitter is hard.

01:53:43   Like, yes, you can have the promoted tweet thing,

01:53:45   but it's so, like you're scrolling past it so quickly

01:53:48   and it's hard to really sort of get immersed in it.

01:53:51   And this is part of, you know,

01:53:52   Twitter's trying to add more media in part

01:53:53   because it makes a better canvas for advertising.

01:53:56   But just the way you use Twitter

01:53:58   is not really amenable to it,

01:53:59   and Twitter's had zero luck

01:54:00   getting any sort of direct response

01:54:02   where you see something and you take an action.

01:54:04   That's just not how people think and operate

01:54:07   when they're on Twitter.

01:54:08   Whereas Instagram, you've had, there is success.

01:54:11   People like products, people have all brands on Instagram

01:54:14   because they like looking at products,

01:54:16   and sometimes they look at a product

01:54:17   and they wanna buy the product,

01:54:18   and are they making that possible?

01:54:20   - No, I've seen product, just watch stuff.

01:54:24   I follow a lot of watch accounts on Instagram,

01:54:27   And for obvious reasons, the watch stuff is way,

01:54:31   to me at least, it's way more interesting on Instagram

01:54:33   than it is on Twitter because it's all visual.

01:54:35   It's like, hey, take a look at this picture of a watch.

01:54:37   It's, if you're interested in watches, that's interesting,

01:54:41   whereas here's some text about a watch

01:54:43   is not really interesting.

01:54:45   But yeah, there's product shots that have

01:54:47   thousands and thousands of likes.

01:54:49   It's thousands.

01:54:51   It's people definitely,

01:54:54   for an advertiser to get likes on their ad,

01:54:57   that's a huge deal.

01:54:59   - I know, yep.

01:55:01   - Like in the rest of the web,

01:55:03   they're trying to get people from blocking off their ads,

01:55:07   whereas on Instagram they're looking for them.

01:55:11   - Yeah, no, it's like no one is, yeah, exactly.

01:55:14   No one is, I mean some people do complain about,

01:55:17   as the getting the ads in front of people,

01:55:22   You can play on Instagram to a degree.

01:55:25   But same thing with the sort of Facebook feed.

01:55:29   What's so brilliant about these mobile advertisements

01:55:34   and why they're actually, it turned out,

01:55:36   remember everyone was talking about,

01:55:37   oh, mobiles were so much less for advertising,

01:55:38   desktops better, blah, blah, blah.

01:55:39   Well, it turned out actually, no,

01:55:41   mobile was way more valuable.

01:55:42   You just had to figure out the format.

01:55:43   And what's so brilliant about the format

01:55:45   of both Instagram and Facebook

01:55:46   is you simultaneously have a much more of a grip

01:55:52   on a user's attention, like an ad on Facebook or Instagram

01:55:56   literally takes over the entire screen of your device.

01:55:59   - Right.

01:56:00   - But because it's embedded in this feed

01:56:03   that you're going through, it doesn't feel

01:56:04   nearly as obtrusive as, I'm looking at this article,

01:56:07   I'm looking at a webpage on the browser right now,

01:56:10   on the Mac, and there's this big banner ad on the side,

01:56:13   it's so annoying, and despite the fact,

01:56:16   if you actually think about it,

01:56:17   it's not actually obstructing me at all,

01:56:20   But it's just weird how the, yeah,

01:56:24   the feed is such a perfect advertising vehicle.

01:56:27   - Right, it's-- - As you know,

01:56:28   as you know, as the inventor.

01:56:30   - Right.

01:56:31   It just makes intuitive sense to me

01:56:36   that it always had, it always did,

01:56:40   from the moment the iPhone came out,

01:56:42   that of course it eventually is gonna be a terrific place

01:56:45   to do advertising in some way.

01:56:47   Like the hard part is only figuring out the right way.

01:56:49   but to discount it as less valuable,

01:56:52   you have to be a moron because it's obviously the device,

01:56:56   you only have to spend two minutes in 2007

01:56:59   looking at iPhone, original iPhone owners' relationship

01:57:05   with their phone and see that it's by far and away

01:57:08   the most emotionally attached computing device

01:57:10   that they own.

01:57:11   It's intimate.

01:57:13   And of course that's valuable.

01:57:15   It's super valuable.

01:57:15   And it's with them all the time.

01:57:17   Of course, how could that not be more valuable?

01:57:19   Again, I'm not saying it was obvious at all

01:57:22   that something like Instagram,

01:57:24   I mean, I'd be a very wealthy man

01:57:25   if I had come up with the idea for Instagram in 2007,

01:57:28   but I just knew though

01:57:30   that there was some kind of opportunity there, right?

01:57:33   - Right, exactly. - Crazy to discount it,

01:57:36   just because you couldn't show the same type of ads

01:57:38   that you could show on a desktop.

01:57:40   Let me take a break.

01:57:43   Let me take a break here and thank our next sponsor,

01:57:45   unless you had a good point to make.

01:57:46   Do you have a good point?

01:57:47   - No, no, I have no good points.

01:57:49   point. All right. Our third and final sponsor of the episode is our good

01:57:55   friends at Squarespace. Look, next time you have to do something new. You got a

01:58:00   new company you're starting, you want to start a podcast, your own podcast, you

01:58:04   want to start a blog, and it's May, maybe you're a student, you're

01:58:10   graduating, you want to put together a portfolio site of your work, do it in

01:58:14   Squarespace. Make your next move on Squarespace. You want to make a website,

01:58:17   do it on Squarespace.

01:58:19   I'm telling you, do it first.

01:58:20   By the time you spend half an hour trying it in Squarespace,

01:58:24   you'll be halfway to having your thing done.

01:58:28   Whereas if you did it by hand, you'd still be

01:58:30   learning PHP or something like that.

01:58:34   I'm telling you.

01:58:35   You can make your own website with Squarespace

01:58:37   with no coding experience, no programming experience,

01:58:40   no system administrator experience.

01:58:42   All of that stuff is all taken care of.

01:58:44   It's an all-in-one platform.

01:58:45   This is the thing I think people don't get about Squarespace,

01:58:48   is that everything from registering your domain name

01:58:52   to keeping the server running to collecting the stats that

01:58:55   show you which pages on site people are going to

01:58:57   and stuff like that, it's all there.

01:59:00   It's all in the platform.

01:59:01   So you don't have to do, well, you do this,

01:59:03   and then you have it just hosted.

01:59:05   But then if you want to get stats,

01:59:06   you've got to install some other analytics package

01:59:08   or something like that.

01:59:09   None of it.

01:59:10   All of it is right there in Squarespace platform.

01:59:12   And the thing I always keep emphasizing

01:59:15   is they have all these templates to choose from,

01:59:16   but they have so many templates,

01:59:18   and the templates are so easily configured

01:59:21   with your own graphics or fonts or something like that,

01:59:24   that your site doesn't look like

01:59:25   a cookie cutter Squarespace site.

01:59:27   I guarantee you, you visit Squarespace sites every day

01:59:30   and don't even realize they're Squarespace sites

01:59:32   because they look original to the brands

01:59:35   of the company of site it is.

01:59:36   So next time you need a new website,

01:59:38   go to squarespace.com/talkshow

01:59:43   and uh... use the code group my last name when you actually for cover the dough

01:59:48   and you'll save ten percent off your first order my thanks to square space

01:59:52   long-time sponsor the show good friends

01:59:56   we gotta get to china

01:59:58   that that that that that that that that that that that that that that that

01:59:59   that's always in your honor show

02:00:01   yeah i i i i this is my busy season uh... by business and i mean it's the

02:00:06   n_b_a_ playoffs itself

02:00:08   i have a chance to listen to

02:00:11   the your episode last week uh...

02:00:14   where i i think you discussed this but a little bit but it was it's uh... what i

02:00:18   wrote about was more

02:00:20   you know if you read my article then you'd

02:00:21   you know i stand

02:00:25   yet i hope i represented you for a do you feel like i represented you fairly

02:00:29   uh... yeah i think so i mean i i i i still think uh... i think the part we

02:00:32   disagree with me you're wrong which is fine because we can we can talk about it

02:00:35   so it's a we should because i i i would say

02:00:39   I would say that more, like, I got more,

02:00:43   hey, I usually agree with you,

02:00:44   but I think you're wrong on this.

02:00:46   I got more of that for that stance

02:00:49   than anything in recent memory,

02:00:50   which doesn't make me dig in my heels.

02:00:53   It makes me think, hmm,

02:00:54   there's a good chance I'm wrong about this.

02:00:56   - Yeah, and this is one of the great things

02:00:58   about writing for the web generally,

02:01:00   that like, you've made this comment before

02:01:03   and I've stolen it,

02:01:04   because I think it's such a great way to put it.

02:01:06   The goal, I love being right,

02:01:09   But the way you're right is by fixing the parts when you're

02:01:13   wrong.

02:01:14   And having tons of people giving you feedback

02:01:16   is a great way to get right much more quickly than was ever

02:01:20   possible before.

02:01:21   Right.

02:01:21   I like to be right all the time.

02:01:23   And the way to be right all the time is to catch the times

02:01:26   that you're wrong and correct them.

02:01:28   Right.

02:01:29   Like I said, I totally stole that from you.

02:01:31   But I think it's a great way to think about it.

02:01:32   Right.

02:01:32   And too many people who want to be right all the time--

02:01:35   And let's say they're right most of the time.

02:01:37   They're defensive about the times that they're wrong.

02:01:43   And when they are wrong, you see it all the time.

02:01:45   You see it in politics, you see it in tech,

02:01:47   you see it in anything you follow.

02:01:48   But when they're wrong, you can see it,

02:01:50   that they're digging in and trying to spin away

02:01:53   to make it that they're right.

02:01:55   Whereas the easiest thing in the world to do

02:01:57   is to just publish an update and say, you know what?

02:02:00   Totally wrong.

02:02:02   Yeah, I write these every now and then.

02:02:04   I actually, I like it in some respects when something comes along that I was wrong about.

02:02:09   And sometimes I'm factually wrong, and that's fine, that's an easy correction, I just mis-screw

02:02:14   something up or whatever, like saying that there was no touchscreen. Sometimes like,

02:02:19   predictions are wrong or my analysis is wrong. And in some respects, I actually value that,

02:02:24   because as soon as that happens, I will write a big post that I will say what I got wrong,

02:02:30   I'll say why I got wrong, I'll explain my thought process that went into it,

02:02:33   what part of my thought process in retrospect was incorrect.

02:02:36   And then the value that accrues is not just that now I'm right,

02:02:41   but also it kind of gives you capital to say other stuff in the future,

02:02:46   because people will take you more seriously.

02:02:49   Because even if what you're saying is wrong,

02:02:51   they will know that, one, you will correct yourself in the future.

02:02:57   But two, there's a process that goes into it

02:03:02   that it's not just sort of like shooting from the hip sort of thing. So for me, I actually think

02:03:06   it's not just a benefit of the web. I don't need an editor, although that is from a very sort of

02:03:12   small perspective the case. I think from a big perspective, it's one of the wonderful things

02:03:17   about writing for a large audience. Yeah, and it's sort of like a shows, you know, like being happy

02:03:24   with every once in a while when you, you know, have to correct a pretty big error or just,

02:03:29   you know, like, "Oh, I was convinced that it was all doors should open from the left, but

02:03:34   dude, that's idiotic. Sometimes the doors should open from the right." You publish it, you know,

02:03:39   you just say it like that. It's sort of proof that the system works. Like, you know, a way of,

02:03:45   you know, I like to think that when I'm wrong, I will recognize it instantly and, you know,

02:03:51   swallow my pride and do what I can to fix it as unambiguously as possible.

02:03:58   But if I don't do it for a while, how do I know that I'm not,

02:04:01   even though I think that that's what I'm willing to do,

02:04:03   how do I know that I'm not just going into denial every time I'm wrong?

02:04:07   Yeah, no, exactly. And this is something that I think about a ton, like this

02:04:11   idea of confirmation bias, where you always look for evidence that supports your position.

02:04:16   Right.

02:04:16   And it takes a lot of discipline to actively look for reasons why you might be wrong,

02:04:23   which I absolutely try to do. But then also just having, like I said, the fact you get

02:04:30   instant feedback and people pushing back on you forces you to think about that.

02:04:34   Yeah, so anyhow, it's just a sort of meta commentary.

02:04:39   Yeah.

02:04:41   Oh, sorry, go ahead.

02:04:42   Well, I think a good example of that, I think probably the product review that I probably did

02:04:49   the worst job on was the original Apple Watch. And that's why a month later I wrote a second one,

02:04:53   it was more or less the same basic idea of, "Here's this new product from Apple.

02:04:58   What is it? And what do I think about it?" The first one was just, I don't know, it wasn't awful,

02:05:05   but it wasn't poorly written, but it just never sat right with me and rereading it a month later,

02:05:09   I was like just I I don't know I felt like a swing and a miss and I feel like part of the problem

02:05:15   Was that it was it was?

02:05:17   Too much of a what's good about this product review whereas it should have you know, it wasn't it was written from that perspective

02:05:25   Like I don't know if that's quite confirmation bias, but it's it Apple wouldn't do this if they didn't have a good reason to do it

02:05:32   So what are those good reasons? Whereas I think the story was more

02:05:36   or this is a, especially that 1.0 watch,

02:05:38   this is a product that doesn't really know

02:05:40   what it's good for yet.

02:05:42   - Yeah, no, I mean, it's funny.

02:05:44   I was all over the place on the watch.

02:05:47   My original take was that, which is like,

02:05:49   this is a product that is lacking vision.

02:05:51   Like, it doesn't know what it is.

02:05:53   - Right. - And I think

02:05:53   that's even more accurate.

02:05:55   - Right, exactly.

02:05:55   Well, then I went back and I actually fell into the,

02:05:58   like, I had too much faith in Apple.

02:06:00   Like, are they really just launching this beautiful device?

02:06:03   And that's really the point.

02:06:05   And so I actually went back and changed my mind

02:06:08   and had this very notorious contentious episode of X1

02:06:10   where me and James were arguing about it.

02:06:12   And then eventually I didn't come back.

02:06:15   In this case, my fix was actually wrong and worse.

02:06:19   So I had to go back and like,

02:06:21   no, actually I had it right the first time.

02:06:23   And so I hate that, I hate that that happened,

02:06:27   especially because I actually had it right the first time.

02:06:30   But yeah, I mean, whatever, it happens.

02:06:32   If you're giving your analysis or opinion four days a week, you're going to get it

02:06:38   wrong, which is fine, as long as you correct it.

02:06:41   So you run into this.

02:06:42   We've spoken about this, that you don't write—strategery is not—it's the tech

02:06:49   in general.

02:06:50   I mean, and if you tend to write—

02:06:52   Stratechery, yes.

02:06:53   Stratechery.

02:06:54   Stratechery.

02:06:55   Stratechery.

02:06:56   Stratechery.

02:06:57   Tech, tech, tech.

02:06:58   It's about tech.

02:06:59   Terrible name.

02:07:00   I honestly don't even do it to razz you.

02:07:01   I honestly have done it.

02:07:02   I made the mispronounce the mispronounce.

02:07:05   No, I pronounced it differently at the beginning.

02:07:06   So I made it even worse.

02:07:08   It was already a bad name and I made it worse.

02:07:09   So it's all 100% my fault.

02:07:12   But alas, it is what it is.

02:07:14   I just tell people, when people ask about my site,

02:07:19   I just tell them to search for Ben Thompson on Google.

02:07:21   'Cause that's too hard.

02:07:23   That's the old Jason Fried thing.

02:07:24   Like we were talking about domain names.

02:07:25   Like for years and years, Basecamp,

02:07:27   they didn't have basecamp.com.

02:07:28   They have it now, but they just had basecamphq.com

02:07:32   because he didn't, you know, somebody had basecamp.com

02:07:35   and he didn't feel like paying their exorbitant price.

02:07:37   He did eventually, but he was like, screw it,

02:07:39   people just Google for basecamp anyway.

02:07:41   (laughing)

02:07:42   Right, which is true.

02:07:43   Anyway, you've written about this.

02:07:48   So you don't, it's certainly not,

02:07:51   your writing is not Apple-focused,

02:07:53   not even in the way that mine is,

02:07:55   but you certainly do write enough about Apple

02:07:56   simply because if you write about tech in general,

02:07:58   Apple is kind of a big company

02:08:01   and they kind of do, a lot of tend to do interesting things.

02:08:04   But you've spoken about this,

02:08:05   that when you write articles or have like a column

02:08:08   that's sort of critical of Apple,

02:08:10   you get like unsubscriptions sometimes.

02:08:13   It's like people don't want to hear it.

02:08:16   - No, that's always been the case.

02:08:17   I mean, it was, so when I started, I wrote a lot more,

02:08:20   probably even more about Apple,

02:08:21   in part because that was the company I knew the best.

02:08:24   Like I had been following them closely.

02:08:25   I'd written like, I'd written a huge paper

02:08:26   about them in school.

02:08:28   Like, I spent a lot of time trying to understand

02:08:32   and think about what made them successful,

02:08:33   and obviously I interned there at Apple University.

02:08:36   And came to learn and understand so much

02:08:40   about sort of the inner workings,

02:08:42   it was a fantastic experience.

02:08:43   And especially when I started also,

02:08:45   it was when the whole Samsung is disrupting Apple narrative

02:08:50   was in place.

02:08:52   And so I got tons of articles saying this is dumb,

02:08:55   like trying to explain Apple and their differentiation.

02:08:58   And back then it was controversial to say that iOS was not going to be swamped by Android

02:09:04   and developers weren't going to flee en masse and all this sort of stuff.

02:09:07   That was still a thing back then.

02:09:08   So I and-

02:09:09   And iPhone dead in the water, Henry Blodgett.

02:09:12   Right, right.

02:09:14   And the biggest, as I've recounted, the biggest event in the early Chitekri days for

02:09:20   getting readership was you linking to me and saying, "This is a fantastic new blog and

02:09:24   you link to a bunch of articles."

02:09:27   as per kind of like this column this week,

02:09:29   like, oh, this is a great blog, really good, blah, blah, blah.

02:09:32   But for the first time, I disagree with Mr. Thompson,

02:09:34   and then he explained where I was wrong.

02:09:36   But that was the--

02:09:40   - That was an outright disagreement, though.

02:09:41   Not this time.

02:09:41   This time, like I said,

02:09:42   it's a subtle difference of weight, I would say.

02:09:47   - Yeah, and I actually think you were right in that case.

02:09:49   And so--

02:09:50   - Oh, I was definitely right back then.

02:09:51   (laughing)

02:09:52   I was just waiting.

02:09:54   I was just really,

02:09:55   I was just waiting for you to make a mistake,

02:09:57   and then I knew I could link to you

02:09:58   because then instead of just saying how great it was,

02:10:00   I could also point out that you made an error

02:10:02   in your thinking.

02:10:03   I was just waiting for it.

02:10:05   - Well, the longest story of it though is sort of my initial

02:10:08   and then after that I got linked to by Marco a couple times

02:10:10   and so I really started in the sort of Apple blogosphere

02:10:14   is where awareness of me started to grow.

02:10:17   So a lot of my initial followers were in that arena.

02:10:22   So you fast forward like a year or something

02:10:25   and I wrote something about Apple and services,

02:10:30   and basically, I think it was a good point,

02:10:32   it's a point that I brought up again and again,

02:10:34   is how companies are sort of shaped by their origin,

02:10:37   and that influences the culture,

02:10:42   and the way they approach products

02:10:43   for the entire life of a company.

02:10:44   And I talked about Google, talked about Microsoft,

02:10:46   talked about Apple, talked about a bunch of examples,

02:10:48   and in this case, I was trying to explain

02:10:51   that Apple struggle with services,

02:10:53   not because they're dumb,

02:10:55   but because they're so great at products.

02:10:57   And this is a point, obviously I've returned to this point

02:10:59   in the past, to say that Apple strobes the services

02:11:02   is not to criticize Apple or say they're dumb people,

02:11:05   it's in a recognition that the same things

02:11:08   that make Apple the best product company,

02:11:11   an amazing product company,

02:11:12   work against being a great services company.

02:11:15   - Right. - Anyhow.

02:11:17   - People didn't wanna hear it.

02:11:18   - People did not wanna hear it.

02:11:20   So I had just started the daily update then.

02:11:22   And so my subscriber numbers were in the,

02:11:25   I think at that point I was only a couple months in,

02:11:27   so maybe the low hundreds.

02:11:28   And I got like 20 or 30 unsubscriptions immediately.

02:11:33   And people were mad.

02:11:34   And it was shocking.

02:11:36   I did not expect that to come at all.

02:11:38   It was good.

02:11:39   It was a good lesson to learn.

02:11:41   People were caring more about Apple than they did about me.

02:11:45   And that's fine.

02:11:46   I have no problem with that.

02:11:47   And over time, certainly I've come to build up a user base.

02:11:52   And one of the great things about my model is it's $10 a month, so if you want to quit,

02:11:55   it doesn't really affect me, my life in the slightest, which is great.

02:11:58   I actually love that about this model.

02:12:01   But yeah, it's funny.

02:12:02   Whenever I write something that is not purely optimistic about Apple, there is definitely

02:12:08   an uptick in people turning off auto renew on their subscriptions.

02:12:12   I've seen it on sports, too.

02:12:15   I follow some Yankees beat writers on Twitter, and every once in a while, they'll get in

02:12:20   argument with people and there's a certain flavor of Yankee fan who just doesn't want

02:12:26   to hear it that the Yankees aren't the best team in baseball. Now this year they actually

02:12:29   are the best team in baseball, but like last year, last couple of years, the Yankees have

02:12:33   been kind of, they haven't been bad, they haven't had a losing season, but clearly we're

02:12:38   not going anywhere, we're not going to win a championship. And any kind of sports coverage

02:12:44   along the lines of, you know, it's not really a great strategy to be paying $27 million

02:12:49   to a 41-year-old Alex Rodriguez with a bad hip.

02:12:53   And the Yankees fans are like,

02:12:54   "Wow, why do you want to write about the Yankees

02:12:57   "if you hate them so much?"

02:12:59   - Right. - Like, unfollow.

02:13:01   And it's like, actually,

02:13:02   he's just sort of an expert on baseball,

02:13:03   and he's pointing out something

02:13:04   that's actually pretty obvious,

02:13:05   which is that having old people on your team

02:13:09   is not a good way to win at sports.

02:13:11   - Yeah, and it's a great thing for Apple.

02:13:14   It's one of Apple's really core strengths

02:13:16   is the devotion that Apple has fans, right?

02:13:21   Like that's not from a business perspective.

02:13:24   I put my business analyst hat on and that's amazing.

02:13:28   And it's something that Apple uses as a tool,

02:13:32   as a strategic tool again and again.

02:13:33   Like that's how the iPhone,

02:13:37   they would go into a country and they would dictate terms

02:13:42   and the leading carriers would say no.

02:13:44   And then they'd go to the second place carrier

02:13:46   and often they say no, they go to third place carrier

02:13:48   who's desperate to catch up and say,

02:13:51   okay, we accept your terms.

02:13:52   And then the iPhone is on the carrier,

02:13:54   like Japan is probably the classic example of this.

02:13:56   SoftBank was well in third place.

02:13:59   And the iPhone is on SoftBank

02:14:02   and people started switching their carriers,

02:14:05   which they never did before, to get the iPhone.

02:14:08   And by and large, particularly at the beginning,

02:14:10   they were Apple fans who already loved Apple,

02:14:13   loved Apple products, desperately wanted an iPhone,

02:14:15   and they switched, this happened in the US with AT&T,

02:14:17   same thing, and over time, then Apple could eventually,

02:14:21   now the iPhone is on all the carriers,

02:14:23   and it's on Apple's terms with all of them,

02:14:26   and that's all because of the devotion

02:14:28   that people have to Apple.

02:14:29   It's an amazing tool.

02:14:32   - What a weird duck the Verizon iPhone 4 was, right?

02:14:37   It's like the only sort of half iPhone that was ever made.

02:14:41   It's not just like, and we'll get to this

02:14:43   in a minute or two, but not like,

02:14:45   okay, we've made the iPhone 7 in red.

02:14:47   I mean, that's just the color.

02:14:49   - It was available in white, though.

02:14:52   'Cause remember, the white phone was super delayed?

02:14:54   - Yeah, but when the Verizon one shipped,

02:14:56   the white one still wasn't even out.

02:14:57   So I think the Verizon one shipped in early February,

02:15:01   but it was weird.

02:15:02   - Oh, did I?

02:15:03   I thought it was the same time, yeah.

02:15:04   But regardless, yeah, it was still weird, yeah.

02:15:05   - Yeah, it was like eight months later,

02:15:06   and it had a different antenna.

02:15:08   It had the modern iPhone 4S antenna design,

02:15:12   the slightly problematic and tennegate one from the GSM version. Anyway, what a weird thing.

02:15:19   So basically the overall premise is that in China, the user interface, WeChat is so dominant

02:15:36   that it reduces sort of the software lock-in that an iPhone has, which makes it more viable

02:15:43   to switch. At a very sort of high level, that's it. And I would just kind of tap down one

02:15:50   level, which means, when I talk about the lock-in, it's not just a lock-in in that

02:15:55   there's no iMessage or that apps are available on both platforms, which is the case. I mean,

02:15:59   there's no app that's while using China that's not available on Android. Like, it's

02:16:02   really an iOS first sort of environment the way it is in the US where even still

02:16:07   there will be hot new apps that are that are iOS only to start. So that's not so

02:16:12   that's part of it but also it's not just the apps it's the interaction it's

02:16:16   the user interface when you're in one app all the time you're using that app

02:16:22   and that's the dominant way that you experience your phone whereas in the US

02:16:25   Yes, we may use Facebook and Uber and PayPal or Square Cash or whatever it might be that

02:16:34   are all analogs for WeChat functions, but every time you switch an app, every time you

02:16:39   use the app switcher, every time you go back to the home screen, that's all interactive

02:16:42   with the operating system.

02:16:43   You're interacting with the operating system constantly outside of China.

02:16:48   And in China, you're not really interacting with the operating system at all, so there's

02:16:53   even the little niggling things about moving stuff around is reduced.

02:17:00   And so the lock-in is not just about an actual, like, on-paper lock-in.

02:17:05   It's like in the user experience lock-in is less as well.

02:17:08   Right. It almost sounds to me like it's used for so much that it's actually a problem that iOS doesn't let you define, you know, like...

02:17:18   like, they don't show the icon anymore, but you know how like from the lock screen you

02:17:22   can jump right to the camera by swiping to the side?

02:17:25   And when they first introduced that feature, they had a little camera icon in the corner,

02:17:29   right?

02:17:30   And you could like, I think it used to drag up instead of drag over.

02:17:33   Like they've changed the interaction.

02:17:34   But the idea is, here's an app that's so important.

02:17:39   And obviously camera's a little different than WeChat because camera, it might be a

02:17:42   fleeting moment you're trying to capture.

02:17:44   So being able to get there, it's not just that you use it a lot, but that getting there

02:17:47   quickly from a locked phone can be the difference between getting the shot and not getting the shot.

02:17:52   But iOS doesn't let you do things like say, let me put WeChat on my lock screen so I can jump right

02:18:01   to WeChat from a locked phone right away. Like none of that's configurable. And it sounds to me

02:18:06   like WeChat is so central to the experience in China that the iPhone would be a better OS

02:18:12   if you could.

02:18:13   Yeah, well it's not, in many respects, all the sort of lock-in things on an iPhone that

02:18:20   are occasionally mild irritants, you know, here, but by and large, the iPhone, like the

02:18:25   Apple's built-in stuff is usually good enough that it's fine.

02:18:29   Like you know, you can't switch the default browser, you can't switch the default email

02:18:31   client or all sorts of that little stuff that can be kind of irritating if you care, but

02:18:37   at the end of the day, it's not that big a deal.

02:18:38   In China, it's much more of an irritant.

02:18:41   I mean, because remember Android there is completely, it's not Google Android.

02:18:47   They're all like Chinese variants.

02:18:50   And a lot of them offer much more sort of flexibility and little, they just use phones

02:18:58   kind of differently than we do here.

02:19:00   And so in some respects, an iPhone is not just that because you're most using WeChat,

02:19:05   the experience is mostly the same.

02:19:07   In some respects, it's arguably actually worse

02:19:10   in a way that it isn't in other parts of the world.

02:19:13   - Yeah, and that is terrible for Apple.

02:19:16   And so let's just say this before we get into speculation

02:19:19   or our analysts, but it's just a fact,

02:19:22   it's the statement of fact that iPhone sales in China

02:19:25   are down year over year.

02:19:26   I think in the just completed quarter, they were down 14%.

02:19:31   - Yeah, in the second year in a row,

02:19:32   they were down even more last year.

02:19:35   years in a row and until then there was the it was it it was an increase it's a sharp difference

02:19:42   it's almost like a v-shaped curve i i think it's fair to say where it was it was rising very quickly

02:19:48   year over year and then all of a sudden now it's dropping year over year it wasn't like it had

02:19:52   leveled off for a while there's no plateau really i don't think um and so why i mean it's a fact that

02:19:58   iphone sales are down it is also we can't say it's a fact but there's at least two market research

02:20:04   studies. You found one that was written in Chinese, and then there's another one that

02:20:10   Business Insider linked up last year. I forget who, some US analyst firm. But both of them

02:20:15   found roughly the same thing, which is that in 2016 in China, iPhone users, people who

02:20:22   already owned an iPhone, and if they bought a new smartphone, only about 50 to 55% of

02:20:28   them bought another iPhone. And in the rest of the world, that number ranges from around

02:20:34   like the mid-70s in Japan to the mid-80s in the US and UK and the high 80s in Germany.

02:20:39   And so we can't say it's a fact that 50% of Chinese iPhone users bought an Android phone

02:20:47   last year, but we can say it's a fact that two market research studies that seem pretty

02:20:52   well rigorously performed to me say so.

02:20:54   Brian Miller Right, and it's shown in Apple's numbers,

02:20:57   too. I mean, there's several data points to triangulate on here. Right, and that's a,

02:21:03   That's a stunning difference.

02:21:05   One, it's not small, but two, one of the real points

02:21:10   that I talk about going back to those Apple arguments

02:21:14   back when I first started with Techery,

02:21:15   one of the core things that was critical

02:21:17   to understand with the iPhone is that iPhone users

02:21:19   bought new iPhones, and Android users often changed.

02:21:23   And if you just play that out in the long run,

02:21:26   in a saturated market, that's actually the Apple's favor,

02:21:29   because they're going to keep their users,

02:21:31   and they're just going to slowly keep adding other ones.

02:21:33   and that's what is actually happening.

02:21:35   What's so interesting about this core, the iPhone 7,

02:21:38   both this quarter and last quarter,

02:21:40   is that if you exclude China, it's a smashing success.

02:21:44   - Yeah. - Like, it is still growing,

02:21:45   and it's growing nicely, and it's growing in,

02:21:48   quote, unquote, saturated markets,

02:21:50   and this is exactly, and this is something

02:21:52   that I've been writing since way back when,

02:21:54   that actually a saturated market

02:21:56   is going to be good for Apple,

02:21:57   because of this, if you just play out the math, and--

02:22:01   - Tim Cook has made that point,

02:22:03   but it's more compelling from you

02:22:05   because he's too droll about it.

02:22:06   (laughing)

02:22:08   You and I were chatting about this

02:22:09   and you completely convinced me.

02:22:11   You made me rethink my take on Apple's

02:22:14   just complete a quarter.

02:22:15   That it's actually pretty good

02:22:18   except that it's really stinky in China.

02:22:20   - Right, and it's good in an understandable,

02:22:25   predictable way, right?

02:22:27   It's not like these growing numbers,

02:22:29   like wow, look at Apple growing.

02:22:31   If you actually think through

02:22:32   And you've talked about it before,

02:22:34   why advertising would be compelling on mobile

02:22:36   because mobile's so important to your life.

02:22:38   Well, if mobile's so important to your life,

02:22:40   that means of all the objects,

02:22:41   even if you have to save money or cut costs,

02:22:44   what's the one object you're actually going to splurge on?

02:22:47   - Right. - Probably the object

02:22:49   that's the single most important object in your life, right?

02:22:51   And that's the iPhone, that's Apple,

02:22:53   and the iMessage thing, and having blue bubbles,

02:22:55   and the status that confers to it,

02:22:56   and the fact people use it all the time,

02:22:58   and like all that stuff,

02:23:00   Like, there's just really no reason to,

02:23:03   why would you want to switch?

02:23:05   And whereas there are reasons to go in the other direction.

02:23:08   And this has always been the problem of being an OEM,

02:23:10   whether it be a Windows OEM that we talked about before,

02:23:12   like HP and ThinkPad, or you know, what's the difference?

02:23:15   Same thing with Android.

02:23:16   Like at the end of the day, what's really the difference?

02:23:18   Yes, Samsung is doing some innovative stuff with hardware,

02:23:21   but that's not a sustainable,

02:23:23   that's not a sustainable advantage.

02:23:24   And whereas Apple has always had the software part,

02:23:28   and that's so critical.

02:23:30   I think that's worth underlining again,

02:23:35   just how interesting that observation is.

02:23:36   And I'm convinced that it's true.

02:23:38   But if you go back six, seven,

02:23:41   the last five, six, seven years,

02:23:43   I think that the,

02:23:44   and going to the era you were talking about

02:23:48   where the narrative was that Samsung

02:23:51   is coming to eat Apple's lunch

02:23:53   because of some combination of

02:23:56   you can't stay differentiated forever

02:23:59   And the majority, oh, we saw what happened the last time

02:24:02   with Windows and Mac, the majority OS eventually

02:24:05   eats the other one.

02:24:07   And I think part of that narrative at the time, too,

02:24:10   though, was that the Go-Go years were all about

02:24:13   expanding the new countries, and then within those countries

02:24:18   expanding the new carriers, like being exclusive on AT&T

02:24:22   for four years, and now all of a sudden you've got Verizon,

02:24:25   and then a year later you had Sprint and T-Mobile.

02:24:27   And obviously that was the go-go,

02:24:30   the true go-go years of the iPhone were based on that.

02:24:33   But the narrative was, well that's over now

02:24:35   and the markets are getting saturated

02:24:38   and that dooms the iPhone.

02:24:40   I think that you have a really compelling case

02:24:41   that saturated markets are actually good for the iPhone.

02:24:45   - Right, the only real danger that the iPhone faces

02:24:48   in most of the world is people

02:24:49   holding onto their iPhones longer.

02:24:51   Like no one, again, outside of China,

02:24:54   is really switching away.

02:24:56   the phones are so good now that you can use a phone

02:24:59   for two, three years, whereas maybe before,

02:25:03   like the difference in year to year,

02:25:04   the difference every two years was so huge.

02:25:06   I mean, I remember going from like,

02:25:08   I actually, you know, 'cause I was young,

02:25:10   I was, back when I was poor and a student,

02:25:13   I only got a phone every two years,

02:25:15   so I got the 3G and then I got the,

02:25:19   no, I got the 3GS, 'cause that's when I came back over

02:25:21   from the States, and then iPod touch before then.

02:25:25   And then I skipped the 4 and I got the 4S.

02:25:28   I mean, going from the 3GS to the 4S

02:25:31   was such an unbelievable leap

02:25:33   in every single aspect of the phone.

02:25:35   The form factor was so superior.

02:25:38   You had the retina screen.

02:25:39   It was a million times faster.

02:25:40   Like just, it was amazing.

02:25:42   Whereas going from a 6 to a 7, it's definitely faster.

02:25:47   You feel that?

02:25:49   And going back and the button feels weird

02:25:51   and stuff like that.

02:25:52   But at the end of the day, could I,

02:25:54   Just the Delta, from the way it's experienced,

02:25:58   is much smaller than it is.

02:25:59   And this is the case for technology.

02:26:00   It's always the case that you get decreasing returns.

02:26:03   But I'm not gonna switch away.

02:26:06   - Yeah, I think that the 4S was right around the time, too,

02:26:09   where the iPhone was arguably a reasonable

02:26:14   point-and-shoot camera in and of itself,

02:26:17   whereas the 3GS, it was still a cellphone camera.

02:26:20   - Yep, yep.

02:26:21   - It's been so long now, and people take so many pictures

02:26:24   on their phones, that it's hard to imagine

02:26:26   that in the early years of the iPhone,

02:26:27   cell phone cameras took like a second,

02:26:30   a totally, it was almost like a different medium

02:26:33   than a camera photo.

02:26:35   It was a photo. - Well, that's part

02:26:36   of how Instagram got off the ground

02:26:38   because your 3GS, I think it came out with a 3GS

02:26:41   or right around that, and your photos were so bad

02:26:43   that the filters weren't just a cool effect.

02:26:45   They actually made them like passable.

02:26:47   - Right, they disguised the lack of optical quality

02:26:50   in the originals.

02:26:52   - Right, right.

02:26:53   (laughs)

02:26:55   It was true, it was also true too,

02:26:59   like in the early years of Instagram,

02:27:00   like when people were shooting on 3GS or iPhone 4

02:27:03   or something where people would say like #nofilter

02:27:06   because it was hard to believe

02:27:07   if you got a good photo off it.

02:27:10   Like seriously, I did not use a photo

02:27:12   and people would be like, "Oh, you know, I filtered."

02:27:13   And they'd be like, "Yes, you did.

02:27:14   "This looks too good now, I swear to God.

02:27:17   "The light was nice."

02:27:19   So anyway, bottom line, something is different

02:27:21   the iPhone in China and it is not good for Apple and especially if I'm I accept it I

02:27:28   accept that the what's the what's it called the rate that people rebuy the same product

02:27:34   I found buying a new iPhone what's it called retention yeah the retention rate retention

02:27:41   rate is significantly lower and again it's not catastrophic it's you know 50 to 55 percent

02:27:47   - It's still the best of any OEM in general.

02:27:50   By a pretty significant margin.

02:27:52   - Most OEMs would kill for that rate,

02:27:54   but that's not good for Apple.

02:27:56   So something is different.

02:27:58   And you and I are in complete agreement

02:28:00   that WeChat is obviously the biggest part of that.

02:28:03   I think that you can't prove it,

02:28:07   but it just seems, I can't imagine what else it would be.

02:28:12   - Yeah, and what I think it's hard to really understand

02:28:15   is, you know, 'cause the analogy would be like Facebook.

02:28:17   Well, Facebook, you know, people spend tons of time

02:28:20   on that, blah, blah, blah.

02:28:21   But the extent to which, you know,

02:28:23   Facebook and apps like that are dominant

02:28:25   in kind of leisure time and downtime.

02:28:28   And what, WeChat is dominant in all times.

02:28:32   And it's not just, and the big thing,

02:28:34   it's not just on device times.

02:28:36   So yes, they're dominant in your social interaction.

02:28:39   They're dominant in news.

02:28:40   They're dominant in, you know, watching all sorts of things.

02:28:43   The NBA is on Tencent.

02:28:44   So they're dominant as far as on-device things,

02:28:49   but the degree to which you use your phone

02:28:51   for the real world is far more extensive in China

02:28:54   than it is in the US.

02:28:55   I mean, China is way ahead in this sort of,

02:28:57   they call it O2O, online to offline.

02:28:59   This whole arena is much bigger,

02:29:01   much more well-developed in China.

02:29:02   So you're using your phone constantly throughout the day

02:29:06   to interact with us, and it's all via WeChat.

02:29:07   So you're really living this app.

02:29:09   I mean, government interactions are through this.

02:29:12   Like not just getting cars, paying for food, paying for goods.

02:29:16   You see there's QR codes everywhere.

02:29:18   The whole thing runs on QR codes.

02:29:20   And what's the problem with QR codes?

02:29:22   You don't know what app should you use to snap the QR code.

02:29:24   Well, there's no question about which app to use there.

02:29:27   And so the pervasiveness of WeChat in just your interaction is there's no app.

02:29:34   There really is nothing outside of China that is comparable.

02:29:39   And that's why, that's good for Apple,

02:29:41   because Facebook really isn't the same.

02:29:44   - Right, like you said, it's like you go out to lunch

02:29:48   with your colleagues and go to a counter service place

02:29:51   and get something.

02:29:52   And if you're paying with cash, instead of taking

02:29:55   out your phone to pay with WeChat, you look like

02:29:57   you're trying to be a hipster or something.

02:30:00   - Right, yeah, I don't want to overstate it,

02:30:02   'cause it's still, that's more the case in specific areas

02:30:05   like Beijing and Shanghai, and some of the,

02:30:08   Whereas, there's lots of parts of China where you still use cash a lot, in the big

02:30:11   cities as well.

02:30:13   But the trend is super strong.

02:30:16   It's in surprising places.

02:30:17   You can go to markets and the little old lady will have a phone.

02:30:20   There's no square sort of thing.

02:30:22   It's all via Tencent.

02:30:24   And this gets into a point I made earlier.

02:30:27   The user experience is not just about the user interface.

02:30:29   The user interface of Apple Pay is superior.

02:30:32   To make an Apple Pay purchase is so elegant.

02:30:34   You just hold it up and put your thumb on it.

02:30:36   It's amazing.

02:30:37   But if when you consider the totality of it, where you have to figure out, "Oh, do you

02:30:42   accept Apple Pay?" and you have to be awkward and ask and look around and they have to bring

02:30:45   it up.

02:30:46   The user, whereas, yeah, maybe more clumsy, you have to open an app and get a QR code

02:30:52   to show.

02:30:54   But if that's the expectation and everyone does it and everyone is equipped for it, then

02:30:59   yeah, that specific aspect of the UI is inferior, but the totality of the user experience is

02:31:05   is far, far superior than another solution.

02:31:10   - I was at the liquor store today,

02:31:11   and I pay with Apple Pay there usually

02:31:15   because they have a chip reader,

02:31:16   and it's so much, it's worse than it used to be

02:31:19   with a credit card.

02:31:20   So they made credit cards worse and slower,

02:31:21   and Apple Pay is fast.

02:31:23   And it's my neighborhood liquor store,

02:31:25   and I know that Apple Pay works there,

02:31:27   and the guy was like a crotchety old guy.

02:31:29   I won't go into the long rant

02:31:31   about Pennsylvania liquor stores

02:31:32   being government-owned and operated,

02:31:35   but he was a total government employee.

02:31:38   And he said, "How are you gonna pay cash or credit?"

02:31:40   And I said, "I'll pay Apple Pay."

02:31:42   And he goes, "Oh, you can't do that."

02:31:43   And I thought he meant like the terminal was broken?

02:31:46   And I looked at it and didn't say anything.

02:31:47   He goes, "We don't accept that."

02:31:48   And I said, "Yes, you do, actually you do."

02:31:50   I was like, "I pay with it here in this store all the time."

02:31:52   And he goes, "No, you don't."

02:31:53   (laughing)

02:31:54   And he goes, "The state won't."

02:31:57   And I was like, "I'm telling you,

02:31:58   "I was just in here yesterday and bought something."

02:32:01   And...

02:32:04   (laughing)

02:32:06   And I just thought, you know what,

02:32:08   I am not gonna, why am I arguing this?

02:32:10   I was like, I'll pay credit.

02:32:11   - That's funny.

02:32:14   You should just want to pay credit

02:32:15   and then hold up your phone and then stealthily pay anyway,

02:32:17   'cause that will actually happen.

02:32:19   But, oh, the other thing, the other point to make

02:32:23   about this, oh, sorry, the analogy,

02:32:25   we talked a little bit about Microsoft and--

02:32:27   - I also enjoyed that I just told a story

02:32:29   that makes it sound as though I run out of liquor in a day.

02:32:32   - I know, I noted that, but I was just gonna

02:32:34   but I totally noticed what you said,

02:32:36   I was there yesterday.

02:32:37   - It actually is true that I was there the day before,

02:32:39   but it wasn't so much that I had drank myself

02:32:42   out of liquor in a day,

02:32:43   but that I'm a very poor planner

02:32:45   in terms of knowing what else I might be running low on.

02:32:48   But anyway.

02:32:49   - Yeah.

02:32:50   (laughing)

02:32:52   Oh, the point to make about this,

02:32:54   about how WeChat does so many things,

02:32:56   whereas Facebook only does some things,

02:32:58   is what happened back in the day

02:33:01   when Microsoft was dominant.

02:33:03   like we used lots of apps and those apps were actually what we use the computer for,

02:33:08   but the reason why Microsoft got all the value and was the most valuable of them all is they

02:33:13   were sort of the commonality, right? They all ran on Windows. And so it was sort of by having lots

02:33:19   of disparate apps that Windows itself got all the value. And the same thing with the iPhone.

02:33:24   We actually use apps. We don't use the iPhone. We spend most of our time inside Facebook, inside

02:33:30   whatever it might be, but they're all running on the iPhone and we use enough different ones

02:33:35   that where's the winch pin, where's the sort of, you know, the squeeze is at the OS level.

02:33:41   Right.

02:33:42   What made, what ended Microsoft's dominance was, and why Google became dominant,

02:33:49   because the web, there was so many websites and what became the common, what became the

02:33:55   winch point. It was Google. It was the search box, right? And when everything, when you

02:34:02   have sort of a one-to-one relationship where all between Google and the computer it ran

02:34:08   on, the value in sort of the value chain kind of went up the stack, where to the new platform

02:34:14   where all the sites sort of sat on top of it, right? So it went up. The analogy of the

02:34:19   phone is, as long as you're using multiple apps, multiple apps are important to your

02:34:23   then the actual value, the point of leverage is the OS.

02:34:28   But once everything consolidates into one app,

02:34:31   then that point of leverage skips up a level.

02:34:34   And that is the case in China,

02:34:36   and it's not the case in other places, if that makes sense.

02:34:39   You have to have an app that does everything.

02:34:41   If it only did some things,

02:34:42   it's not gonna steal leverage in a similar way.

02:34:47   - In the Apple's decades old, almost foundational,

02:34:52   Literally, I mean, software wasn't quite as important

02:34:57   in the Apple two days or Apple one days even,

02:35:02   as it is today, but it was the marriage of hardware

02:35:06   and software that made Apple products different

02:35:10   right from the get-go.

02:35:11   I mean, and again, like I mentioned in my thing,

02:35:13   writing about your thing, that Steve Wozniak

02:35:16   has venerated and mostly thought of as an engineer,

02:35:20   hardware engineer, 'cause that's what he was,

02:35:21   electrical engineer, but he was a software genius too.

02:35:24   I mean, he never written a compiler in his life

02:35:27   and he made the Apple basic.

02:35:29   He put the Apple base,

02:35:31   he completely created Apple basic from scratch.

02:35:34   - It's incredible.

02:35:34   - Put it in a ROM.

02:35:35   Like he didn't, he like borrowed somebody's,

02:35:40   like his neighbor's neighbor at HP in a cubicle,

02:35:43   borrowed like a compiler book

02:35:46   and taught himself to write a compiler in a ROM.

02:35:50   I mean, he was a software genius.

02:35:52   It was a great basic.

02:35:53   It was a great version of basic.

02:35:54   And it was right there as soon as you turned the machine on.

02:35:59   In that formula of hardware differentiated

02:36:02   by proprietary software, the software side

02:36:05   is way more important to Apple in the long term

02:36:08   than the hardware side.

02:36:10   Right, the hardware is how they monetize it.

02:36:12   It's a money vehicle.

02:36:14   Right.

02:36:14   And people focus on it because that's the actual thing you buy.

02:36:18   and certainly finance people,

02:36:20   tech people concentrate on it

02:36:22   because it's easier to do a review of new hardware

02:36:25   than it is slowly,

02:36:27   than it is to review slowly

02:36:29   evolving software. - Evolving software.

02:36:33   - Evolving software over time.

02:36:35   But the software's way more important than the hardware.

02:36:39   I mean, you can have something like the Mac Pro

02:36:41   that doesn't get updated for four years

02:36:43   and it's not gonna kill the Mac,

02:36:44   but if the software was as stagnant

02:36:48   as the Mac Pro hardware, it would be a disaster.

02:36:51   - Well, and that almost did kill Apple, right?

02:36:53   - Right.

02:36:54   - Back in the '90s.

02:36:55   And yeah, this was going back to why all those people

02:36:58   were so wrong about the iPhone.

02:37:00   This is exactly why.

02:37:02   They didn't properly value software,

02:37:04   and they didn't properly value software

02:37:06   because that's not, Apple didn't charge for it.

02:37:08   But that was to, that's what people always fail

02:37:11   to not understand about Apple,

02:37:13   is that the entire reason why they can charge

02:37:16   for much for the hardware is because the software

02:37:18   is different, I mean, you'd always read reviews, right?

02:37:20   There'd be like a review way back in the day,

02:37:22   like PC Magazine, like the new Mac Pro.

02:37:24   It would compare it to, or Mac,

02:37:25   or whatever they were called back then.

02:37:26   And they would compare it to the PC, blah, blah, blah.

02:37:28   - Power Mac. - And it was such,

02:37:30   yeah, it was, and it was dumb, it was a farce.

02:37:33   Because the reality is, if you're in the market for a Mac,

02:37:38   there is no competition, like that,

02:37:40   and how do you make a lot of money?

02:37:42   They call it only by having a monopoly.

02:37:43   Apple has a monopoly.

02:37:45   They have a monopoly on their software.

02:37:46   The only way to get their software

02:37:48   is by buying their hardware,

02:37:50   which lets them charge way more for their hardware

02:37:53   than anyone else can charge for theirs.

02:37:54   I mean, that's why they're the most

02:37:56   viable company in the world.

02:37:58   - Yep.

02:37:59   And again, like a perfect point,

02:38:01   the only time Apple was ever actually in real trouble

02:38:04   in circa 1996 or so

02:38:08   was when their software stack had been exposed

02:38:13   as being antiquated and had serious technical problems.

02:38:17   And there were really, you could make

02:38:20   a really compelling case that,

02:38:22   in some cases for some people, not for everybody,

02:38:24   but for some people it was decidedly

02:38:28   a worse platform than the competition.

02:38:30   That's-- - Oh, I mean,

02:38:32   Apple had been slower than PCs

02:38:34   for multiple years at that point.

02:38:36   But when you were getting a situation where,

02:38:39   like just the, I mean, no protective memory,

02:38:41   and it was, like honestly,

02:38:44   if you actually cared about the work you were doing

02:38:47   at any given time on your computer,

02:38:49   you were kind of nuts to not use a,

02:38:51   to not use, once Windows got protective memory,

02:38:54   like to not use Windows.

02:38:55   Yeah, it might have sucked, but like,

02:38:56   what, no, your computer's crashing all the time.

02:38:59   - Mine was not crashing all the time.

02:39:01   But the reason mine wasn't crashing all the time

02:39:03   was that I was sufficiently--

02:39:05   - You were careful about it.

02:39:06   Right, sufficiently expert at using a Macintosh that I knew not to install.

02:39:09   I knew what type of stuff not to install.

02:39:11   I knew exactly.

02:39:12   And if I did crash and I had MaxBug installed,

02:39:16   I wasn't like an expert at MaxBug, but I could at least see what it was that crashed.

02:39:22   I could figure out what it was that was causing the problem.

02:39:24   Right.

02:39:25   That's a problem.

02:39:26   The fact that you had to be an expert Mac user to have that ability, though,

02:39:31   is a problem because it's fine.

02:39:35   Where the Mac is today is a terrific position in that regard, where if you want to be an expert and are an expert, you can do amazing things that other people can't, but that the casual user...

02:39:46   It's not a necessity though.

02:39:47   Right.

02:39:48   Right.

02:39:49   It's absolutely not a necessity just to use the web and check your email and find out what's going on on Facebook.

02:39:56   - Right, and what really shows how dumb

02:39:59   the argument about hardware is,

02:40:01   is that the Mac became more valuable as a product line

02:40:05   once its hardware became the same as everybody else.

02:40:07   - Yeah, exactly.

02:40:08   - Like once they started using all standard stuff,

02:40:13   it was a more valuable product and they sold more.

02:40:15   And yet people couldn't get,

02:40:18   went back to the iPhone and said,

02:40:19   "Oh, because the hardware," blah, blah, blah.

02:40:21   Yeah, it's so funny how people just don't,

02:40:25   Even today, I think it's mostly the war has been won,

02:40:30   but even today, there's some, like,

02:40:32   that people don't get the,

02:40:33   the software is not sold for a dollar,

02:40:37   and it's the most valuable thing they make.

02:40:39   - There was a plan in the '90s before the next,

02:40:42   they settled on the, you know, acquiring Next

02:40:45   and using Next Step as their operating system of the future,

02:40:48   but at the point where they were evaluating their options

02:40:50   and they were thinking about buying the BOS,

02:40:55   that one of the options--

02:40:56   I think it was Ellen Hancock who was then

02:40:58   the chief technical officer, which

02:41:00   is a position that I don't think anybody even

02:41:03   held after her at Apple.

02:41:04   But I think it was her who endorsed it.

02:41:07   And if not, I apologize to Ellen Hancock.

02:41:09   But somebody at Apple seriously investigated

02:41:13   using Windows NT as the foundation

02:41:16   and just building a touchwiz, like a Macintosh touchwiz

02:41:21   interface on top of NT.

02:41:24   what TouchWiz is to Android, that Apple--

02:41:26   yeah, you just paint a little Apple-like magic on top of it,

02:41:30   but you can outsource the actual operating system

02:41:33   to Windows NT.

02:41:34   It would have completely sunk the company.

02:41:36   The company would have been gone in three years.

02:41:39   It had it exactly upside down, the way--

02:41:41   But they can do--

02:41:42   doing the exact same thing on the hardware side

02:41:44   by switching the internals to bog standard Intel PCs that

02:41:48   could literally dual boot into Windows if you wanted them to,

02:41:51   or still can today, was the best thing

02:41:54   that ever happened to Mac hardware.

02:41:56   - Right, and so the reason this matters is,

02:41:59   if you're, and why the iPhone 7 will sell well,

02:42:01   is if you need a new phone, you're gonna buy an iPhone 7,

02:42:05   right, and it's faster and it's better,

02:42:06   and yes, the camera's better, and yeah,

02:42:08   it may be it looks the same as iPhone 6,

02:42:10   but like, when that's your only choice,

02:42:13   it's not really that big of a deal, right?

02:42:15   And the problem, whereas Android,

02:42:19   It's like the what lock-in,

02:42:21   there's not really any lock-in at all.

02:42:23   Samsung's been trying to create some sort of lock-in

02:42:25   for years and they fail

02:42:26   because that's not what they're good at.

02:42:28   - So here's where we disagree, where we disagree.

02:42:30   We agree that it's a big problem for Apple

02:42:32   that WeChat's dominance is more important,

02:42:36   more central than iOS to the experience,

02:42:39   would then lend you believe that more iPhone users

02:42:41   would be willing to switch to Android

02:42:42   and we're seeing proof of that, that it's happening.

02:42:44   - Right.

02:42:46   - Where we subtly disagree is that you also think

02:42:48   it's a factor in these declining sales,

02:42:50   is the fact that the iPhone 7

02:42:52   looks so much like a 6 and 6S.

02:42:54   - Yeah, and the reason is 'cause--

02:42:57   - I agree, and this is the point,

02:42:58   that's the exact point where my sort of,

02:43:03   it's definitely contrarian to most people,

02:43:05   'cause I think that most people who opine professionally

02:43:08   about the design of phones took that,

02:43:13   emphasized the wow, it's the same form factor

02:43:15   as the last two years.

02:43:17   and that's an inherently negative thing.

02:43:20   I agree in the basics though,

02:43:25   I'm not arguing the extreme point

02:43:28   that the iPhone is now in a perfect shape

02:43:30   and should never change in any dimension

02:43:34   or something like that.

02:43:35   I just think it's less of a factor than you do.

02:43:39   In fact, almost irrelevant in the China case.

02:43:42   - Well, see, so I agree with you

02:43:44   in most of the rest of the world

02:43:46   because at the end of the day,

02:43:47   to buy an iPhone is to buy an iOS delivery device, right?

02:43:52   At the end of the day, the hardware is a vehicle

02:43:56   to get the software that you want.

02:43:58   And this is what Apple is and always has been.

02:44:00   But just set aside Apple for a while

02:44:04   and think about what drives high-end Samsung sales,

02:44:07   what drives other high-end vendors in China, Huawei and Apple.

02:44:11   Like, why would you choose one or the other?

02:44:15   Well, you're gonna choose based on hardware.

02:44:18   You're gonna choose in what goes into hardware.

02:44:20   Well, some aspect of it is features like the camera

02:44:22   and which is better or not.

02:44:24   Some aspect of it is the way it looks.

02:44:25   We're talking about a device that's with you all the time.

02:44:28   Your most personal device.

02:44:29   It's all you pull out, you put it on the table.

02:44:31   It's something that says who you are.

02:44:34   And part of that is if it's something that looks the same.

02:44:39   Here's the analogy I would take.

02:44:41   Think about buying a Mercedes or buying a BMW

02:44:45   or an Audi or whatever, or whatever you want.

02:44:47   Are there differences in how they drive

02:44:50   and their performance?

02:44:51   Yes, of course there are.

02:44:51   And some people will always only buy a Mercedes,

02:44:54   they'll always only buy a BMW.

02:44:56   And that's the same thing with using,

02:44:58   say, WeChat on a phone or using on Android.

02:45:00   Some people will only ever buy one of them

02:45:02   because it's still different.

02:45:03   It's still, there's some aspect of the experience

02:45:05   that it's still about iOS.

02:45:07   And those, it's not to say that that's not a factor in China.

02:45:10   It still is.

02:45:11   It just, it's not as big.

02:45:13   The number of people that actually care about that

02:45:15   are fewer. But the way some people will choose to buy which car to buy is, well, BMW just

02:45:22   came out with the new 5 Series, but before then the sales were really bad the previous

02:45:25   year. Why? Because they'd been the same design for five years. And now this year the

02:45:28   sales are really good. Why? Because they just came out with a new model. And it's the

02:45:33   same sort of thing. If it's the old model, maybe you'll buy it because you just actually

02:45:38   like an iPhone that much, but maybe you'll buy something else. And the implication is,

02:45:43   I'm actually a bit of an optimist in the short term

02:45:45   because a new iPhone's gonna come out.

02:45:46   I think lots of people are gonna wanna buy it.

02:45:48   - My point that it's not relevant though is that

02:45:53   even if there is a spike,

02:45:56   let's just say that the rumors are true

02:45:58   and Apple ships in September at least one iPhone

02:46:02   that's a very distinctly new design.

02:46:05   And maybe all three of them,

02:46:07   somebody came out with a report this week

02:46:10   that the 7 and 7S, or 7S Plus and 7S

02:46:14   are also going to have glass backs.

02:46:17   It would, I don't want to get down this rattle,

02:46:19   but it's nonsense.

02:46:20   If it's true that the second tier new phones,

02:46:24   not the super phone, not the iPhone Pro

02:46:26   that might be, you know, $1200 or $1400,

02:46:29   but like the ones that are replacing the 7 and 7 Plus,

02:46:33   if they have glass backs, they're not gonna call them

02:46:34   the 7S and 7S Plus because the S thing only applies

02:46:38   looks exactly the same as the last year's,

02:46:41   but with new technology.

02:46:43   If they do that, all three phones would have new names.

02:46:46   But anyway, that's a different point.

02:46:48   Let's just say, Apple comes out with exciting new phone,

02:46:53   and low and behold, Chinese sales spike again.

02:46:57   And there's pretty strong correlation that,

02:47:00   hey, new design equals Apple's back in China.

02:47:04   I'll apologize to you, I'll admit that you were right.

02:47:07   if it's a noticeable spike.

02:47:08   'Cause it would almost have to be,

02:47:13   it's not just that they'd have to be a spike,

02:47:15   but it would have to, to prove it,

02:47:16   I think it would have to mean that Chinese growth

02:47:18   would be even greater than the growth everywhere else

02:47:20   from the sale of this new iPhone, right?

02:47:22   That the argument here is that the Chinese market

02:47:25   is more sensitive both ways

02:47:28   to the hardware design of a phone.

02:47:30   That when it is new and wow, you've got the best new iPhone,

02:47:33   they're even more willing to buy it

02:47:35   than the rest of the world.

02:47:36   and when they feel like it's stale,

02:47:38   they're more willing to abandon it.

02:47:39   Do you feel like that's a fair assessment?

02:47:43   - I do think so.

02:47:43   I thought you were going to say

02:47:45   that they'd have to sell even more than the iPhone 6,

02:47:47   'cause I'm not sure--

02:47:48   - Oh, I don't know about that.

02:47:49   - I don't think that's true.

02:47:50   - Right.

02:47:51   - Yeah, 'cause there's two parts.

02:47:52   So one, yes, I do believe that's the case,

02:47:54   and I do think that iPhone growth in China

02:47:57   will be greater than in other regions of the world

02:47:59   when a new design comes out.

02:48:01   I do wonder, though, something that I've been thinking

02:48:05   lot about. And this is the real bear case for Apple in China. The iPhone 6, it wasn't just that

02:48:12   it was the big phone. That's also the first phone that came out on China Mobile, which is the

02:48:18   largest carrier in China. And at the same time, you have the continued emergence of a middle class

02:48:25   that can stretch for a luxury good that in the grand scheme of things isn't that expensive.

02:48:31   I just talked about cars, right?

02:48:33   - Right.

02:48:33   - To buy a phone is a fraction of the cost,

02:48:35   even if you're buying the very best phone in the world.

02:48:37   - Right.

02:48:38   - So my big question though,

02:48:41   and this is the bare bull case,

02:48:44   the best news for Apple would be exactly what I say,

02:48:47   where there's, I think regardless,

02:48:49   there's gonna be a big jump.

02:48:50   The question is, was the iPhone 6 a fad?

02:48:52   You know what I mean?

02:48:53   Where it was the thing to get,

02:48:55   and now, luxury goods go through this, right?

02:49:00   At one point it's Louis Vuitton, then it's Chanel,

02:49:03   then it's like Hermes, then it's Balenciaga,

02:49:05   or whatever it might be.

02:49:06   Like, is that, was the iPhone 6 a fad

02:49:09   where it was just the thing to get?

02:49:11   Or, I don't think that's the case, it may be a little bit,

02:49:15   or is the iPhone and Apple a luxury good

02:49:20   and an aspirational good, which I do think it is.

02:49:22   And this matters, it matters in China,

02:49:24   it matters way more in China than the US.

02:49:26   And like, the level of conspicuous consumption in China

02:49:30   is kind of jarring when you go.

02:49:32   Like you can be in like some rundown part of town

02:49:37   or messy and dirty and there's stuff flying around

02:49:40   and there's people walking down the road

02:49:42   with like Chanel bags.

02:49:43   Like it's very different and matters

02:49:46   and you pull out your phone,

02:49:47   you put it on the table at the coffee shop

02:49:49   and yeah, even if it's in a case,

02:49:51   you can see what kind of phone it is

02:49:53   and it really matters and Apple still has a great brand

02:49:57   and it still means something that it's an Apple

02:49:59   And I think that's why they're still maintaining cells

02:50:03   to the degree that they are.

02:50:05   And so I'm still relatively bullish.

02:50:09   If you wanna be bearish though, it'd be that,

02:50:11   oh, it was just a fad.

02:50:12   Which I don't think is true, but it's possible.

02:50:14   - But here's my point is,

02:50:16   going back to the software being

02:50:20   more important than the hardware,

02:50:21   what has you attached to the Apple brand

02:50:24   has to be the software too.

02:50:25   It's not just that Apple as a company

02:50:27   needs to be more focused on the software platform.

02:50:30   But if the software platform isn't what's primarily

02:50:34   keeping you buying iPhones, then you're so much less sticky.

02:50:38   Like if you really are just concerned, somebody else can.

02:50:42   I would argue that the competition is way closer

02:50:45   to iPhone quality hardware than they are,

02:50:48   than Android is to being iOS quality software.

02:50:51   - Right, no, that's absolutely true.

02:50:55   But I really do think it's right.

02:50:56   And this isn't like a Johnny completely observation.

02:50:58   I've made this point like three, four years ago

02:51:01   that the big differentiation for Apple in China

02:51:05   has always been the brand.

02:51:07   Like that matters more.

02:51:08   And that's one of Apple's actually advantages

02:51:12   and something they learned with the whole 5C thing

02:51:14   is having only a high-end brand or a high-end phone

02:51:19   is a good thing because there is no watering down

02:51:22   of the brand, right?

02:51:23   Yes, you can have a high-end Samsung.

02:51:24   There's also low-end crappy ones floating around.

02:51:26   Same thing with all the other Chinese brands.

02:51:29   The fact that an iPhone is always an expensive device

02:51:33   is something that actually helps preserve that brand value.

02:51:37   - It's always an expensive device or an old device.

02:51:40   - Right. - Right?

02:51:41   And so the only way-- - But it was expensive

02:51:42   at some point. - Right.

02:51:43   Okay, so what about the red iPhone?

02:51:46   I didn't mention that in my article.

02:51:48   I got a whole bunch of, well, what about the red one?

02:51:49   'Cause the red one is obviously new.

02:51:51   Like, people can quibble about

02:51:52   whether the jet black iPhone looks new,

02:51:55   but the red one is unmistakably new.

02:51:57   Do you think the red iPhone 7 will make a difference

02:52:00   in the second half of this financial year?

02:52:03   - It might.

02:52:04   I think that, you know, I think Cook was totally right

02:52:08   to say that there's anticipation for a new device,

02:52:11   which, again, I think that was about China, that comment,

02:52:15   that people are waiting for the new device.

02:52:16   So it might have an impact, but I think it will be muted,

02:52:21   that at this point, people are waiting.

02:52:23   And people are super, super up to date on this stuff.

02:52:27   I don't live in China,

02:52:31   but I will just say being here in Taiwan,

02:52:34   iPhone rumors are on the nightly news.

02:52:36   - That's amazing. - What was that?

02:52:38   - Well, I'm laughing 'cause I realize that in some circles

02:52:41   that's a politically charged sentence,

02:52:43   but I'm also laughing at the fact that the iPhone rumors

02:52:48   are on the nightly news.

02:52:50   Yeah, the pervasiveness of just mobile devices is,

02:52:55   I mean, the US is really behind.

02:52:58   I mean, they're behind in that everyone,

02:53:01   because everyone in the US had a PC,

02:53:03   what mobile means in the US is all the times

02:53:08   between, in between when you're using your PC.

02:53:11   And what happened in China is for the vast majority

02:53:16   of people, their first computing device

02:53:19   is the phone.

02:53:20   And so the reason why WeChat is what it is,

02:53:25   it's not just that it gobbled up all these services.

02:53:29   I'm not even going to gobble up, they created them.

02:53:31   But also--

02:53:32   - Can you use WeChat from a browser?

02:53:35   - No.

02:53:36   - Right, so is it mobile only?

02:53:37   - They have an app for Mac and Windows.

02:53:42   This is, actually it's worth downloading

02:53:45   'cause I think it's really interesting.

02:53:47   People, it drives people to the wall.

02:53:48   people who are used to using PCs,

02:53:49   this app dries up the wall.

02:53:51   But I think if you can understand how the Mac app works,

02:53:54   you'll start to kind of grok this.

02:53:56   So what you do is,

02:53:58   well, you can download the WeChat app

02:53:59   from like the Mac Apple Store or Mac Apple Store,

02:54:02   the Mac App Store.

02:54:04   And when you launch the app,

02:54:06   what it does is it brings up a,

02:54:10   let me watch right now,

02:54:10   I've launched a mouse, I should get it.

02:54:11   So you bring it up and it has your picture

02:54:13   and you quick log in.

02:54:15   When you quick log in,

02:54:16   you don't actually type a username or password.

02:54:19   It brings up a QR code.

02:54:21   And what you have to do is you have to open the WeChat app

02:54:23   on your phone, scan the QR code, which I'll do it now,

02:54:27   and then boom, you're logged in on the desktop.

02:54:30   'Cause it sends it up to the WeChat servers that,

02:54:32   yes, this is the right device, and then you're logged in.

02:54:36   It's honestly worth downloading just to experience this,

02:54:40   because if you're a regular PC user,

02:54:42   and I heard from people like,

02:54:43   oh man, have you tried using it on the PC?

02:54:45   It's terrible.

02:54:46   "I think they have a good user experience, blah blah blah."

02:54:48   Well, mainly that app is there for old fogies

02:54:51   like you and I who still want to use a PC,

02:54:54   but it really gets the centrality of mobile.

02:54:59   Like, you have to use your phone to log in on the PC.

02:55:03   And once you grok that, I think you can kind of start

02:55:06   to understand what it means to have mobile

02:55:08   actually be the center of everything, not to be a peripheral.

02:55:11   - All right, here's my other thing I want to get

02:55:14   before we wrap this up.

02:55:15   I think we're hitting the one hour mark here.

02:55:18   (laughing)

02:55:20   No, two hours.

02:55:21   Nope, three. - Three.

02:55:22   - Three hours, all right.

02:55:24   Well, we can't go over for four.

02:55:25   - I got it right.

02:55:28   - How do you square this obsession

02:55:30   with the appearance of, the external appearance

02:55:33   of the phones with the fact that all around the world,

02:55:38   majority of users put their phones in cases,

02:55:41   but in China, it's by all accounts,

02:55:43   is probably the highest rate of people putting their phones

02:55:47   in cases because the resale protecting the--

02:55:50   it's the whole thing with the people not wanting

02:55:53   to use the Home button and using the accessibility feature

02:55:56   to put a virtual Home button on the screen

02:55:58   because they don't want to wear out the button so that it

02:56:00   protects the resale value of the phone.

02:56:03   So if everybody puts their phone in a case,

02:56:05   how do you even--

02:56:07   like the red phone is a perfect example.

02:56:10   You put the red iPhone in a case, the button isn't even red,

02:56:12   So there's no way to tell that it's a red iPhone.

02:56:14   Yeah, which is one of the reasons why it might be dampened.

02:56:19   I think, so there's two aspects of Apple.

02:56:23   It's not just it being a new device, it's also the fact that it's an Apple.

02:56:27   Like, Apple is a meaningful brand.

02:56:29   It is a status-conferring brand.

02:56:32   So, and that remains the case and will remain the case.

02:56:35   Even if you have a case, it's not like you're worried,

02:56:39   worried, yes, it's not like a purse or something where you can see across the road that someone

02:56:44   has a purse. You're conveying status not to strangers, you're conveying status to the

02:56:48   people you're with and around you. So when you sit down at the office and you pull out

02:56:52   your phone, you put on your desk, or you're in a coffee shop, like I said, and you pull

02:56:55   it out, you can see by, you can just, even if it's in a case, you can tell if it's a

02:57:01   new phone or not. Interestingly, you can't really tell if it's a six or if it's a seven,

02:57:08   you can definitely tell if it's a 5S or a 6.

02:57:12   And you could tell the difference between a--

02:57:14   Or an Android and--

02:57:18   Right, right.

02:57:18   So you still get the Apple status,

02:57:20   because you can see that it's an iPhone.

02:57:22   But there's no status conferring for newness in the fact

02:57:26   that I can afford to buy the newest phone,

02:57:29   and I have the best phone.

02:57:32   And why buy-- yes, if you're rich and you can afford it,

02:57:38   And yes, by all means buy a new iPhone every year.

02:57:41   But if you're buying an iPhone,

02:57:43   not just because it's an iPhone,

02:57:45   but you want the status that it confers on you,

02:57:48   well, why not keep the iPhone 6

02:57:50   that looks the exact same as the iPhone 7

02:57:52   and spend your, what little cash you have.

02:57:54   I mean, China is rich, relatively speaking,

02:57:58   especially in the big cities,

02:57:59   but on an absolute dollar basis, much, much less money,

02:58:04   why not spend that money on buying a new wallet

02:58:06   or something like that?

02:58:07   And I've been thinking about it.

02:58:09   I actually think that the prominence of cases that the--

02:58:15   what's the word I'm looking for?

02:58:17   But the fact that cases are so ubiquitous

02:58:19   actually plays against the ways that the iPhone 7 is new,

02:58:25   because you can't see the jet black.

02:58:27   You can't see that it's a red iPhone.

02:58:31   The color alone--

02:58:32   You can see the dual camera.

02:58:34   Yeah, but that's it.

02:58:36   So there are some changes, but it's nowhere near as much.

02:58:39   I happen to think, and I feel like one

02:58:42   of the most fascinating things about the-- there's

02:58:45   so much rumor and so much speculation

02:58:47   about this year's new iPhones.

02:58:48   It's clearly a higher pitch than usual years,

02:58:52   because all the rumors are saying

02:58:54   that it's going to be something new,

02:58:56   and new is more exciting than something that's not new.

02:59:00   And like you said, they're on the nightly news in Taiwan.

02:59:04   But despite the fever pitch of these rumors that there's something new and we hear that it's an edge-to-edge screen and stuff

02:59:10   There's no actual leaks of what it's going to look like like that to me

02:59:14   Like you said you didn't listen, but renee richie and I talked about it last week like it's almost excruciating reading mark german's stuff

02:59:21   uh

02:59:23   At bloomberg because it's entirely written around

02:59:26   The central point which is that mark german has no fucking idea what the next iphone looks like

02:59:31   none

02:59:33   And it's really kind of hard to write the story where the gist of the story is,

02:59:39   I have no idea what the next iPhone looks like.

02:59:42   And so it's--

02:59:44   There is a little bit.

02:59:45   I mean, recently, isn't there some blueprints that got out,

02:59:48   like the vertical camera and stuff like that?

02:59:50   Supposedly, right?

02:59:51   But they're not consistent.

02:59:53   So the vertically aligned camera.

02:59:55   But I think Germin did have something about that.

02:59:59   But he wasn't first, though.

03:00:01   I don't think any of that--

03:00:02   I don't think that vertically aligned cameras came from him first.

03:00:05   I think that plans leaked and then he just wrote about him.

03:00:07   But then he wrote that it would, it would help the iPhone moving the,

03:00:11   the dual camera from horizontal to vertically aligned would help the iPhone

03:00:15   take better pictures. Oh, it wouldn't still do lenses,

03:00:19   the same distance from each other. It just,

03:00:22   it's just changes where they are on the body. But anyway, uh,

03:00:27   anyway, here's what I think. Here's my point. My point is this,

03:00:31   I think Apple is very much aware of how many people put their phones in cases, and I think

03:00:39   they're very much aware.

03:00:40   And I think that part of the design of whatever the next form factor for iPhone is, is very

03:00:45   much designed in mind with the fact that it's going to be in a case.

03:00:49   And I think they started this with the iPhone 6, because I think it's the only way that

03:00:53   they justified to themselves the camera bump, which is that for most users, the camera bump

03:00:57   is irrelevant because they never notice because it's in a case and the case even

03:01:01   the thinnest case is thicker than the camera bump the camera bump is actually

03:01:05   a penalty for people like me who don't use a case yeah I think that's a great

03:01:11   point and the other the other thing I think it's really interesting is this

03:01:15   idea of this iPhone like Plus or pro or pro or whatever it is that's gonna be

03:01:19   much more expensive to me this is a very easy it's interesting in a lot of

03:01:25   I think it's a pretty optimal path actually I think for Apple to grow revenue because

03:01:32   Like there's

03:01:36   There like right now. There is no

03:01:38   We haven't they haven't tested how high they can go like they know they can sell a lot at this price point

03:01:43   But but the iPhone Plus pushed it up $100 and they sold ton of them

03:01:46   They're selling more even more than they expected and this is the third year in a row

03:01:50   They've had the plus and for three years in a row

03:01:52   They've under produced the plus size like the the plus share of the iPhone is actually is actually becoming more and more and

03:01:59   I'm really interested about this sort of new even higher tier sort of sort of model and I think it is a

03:02:07   Something that will play very well in the China market. I mean

03:02:10   not just I think

03:02:13   it's a balance right so you don't want to ruin the brand value of the

03:02:17   seven six hundred seven hundred

03:02:20   $700 phone, I mean in once you you are getting pretty darn expensive once you're going beyond that

03:02:26   but the implication of being going beyond that is the sort of status and

03:02:31   visibility that comes from having that is even greater and where do you strike the balance between being accessible to enough people

03:02:39   versus getting in a iPhone 5c situation where it's kind of like the the there was a a

03:02:46   Gulf between or in perception because you're clearly buying the cheap iPhone, right?

03:02:51   That's gonna be very very interesting to see how that plays out and how far they try to push it

03:02:55   Yeah, I think that if it's true and Renee was talking about this last week Renee seems pretty

03:03:01   sold on the idea that the

03:03:04   successors to the 7s and 7s or 7 and 7 and 7 plus

03:03:09   It's I get the S's wrong

03:03:13   Whether they call it the 7s or they call it the iPhone 8 or something

03:03:17   Maybe if it's even newer

03:03:19   But that there will be at this, you know

03:03:20   The same price points as the 7 and 7 plus today that this iPhone Pro or whatever you want to call

03:03:26   It is gonna be significantly more expensive

03:03:28   ►</