The Talk Show

189: ‘Long Press on the French Fries’ With Rene Ritchie


00:00:00   So, how are you? It's been a while.

00:00:03   I'm very well, thank you.

00:00:04   I have a lot to cover because my last episode was the Lisa Jackson episode, so it wasn't

00:00:08   really news-related. There's a lot on the agenda. I'm trying to think of even where

00:00:14   to start. I guess we could start with quarterly results. I don't know. I just wrote a big

00:00:22   piece about iPhone sales in China. I don't know. I don't think it's major. I don't

00:00:28   I don't think the quarterly results this time were all that bad or good.

00:00:35   I think long story short, my take on them is that it was a pretty good quarter everywhere

00:00:39   except China.

00:00:40   And it was iPhone sales continuing to slide in China turned a pretty good quarter into

00:00:45   an eh, okay quarter, where it was flat.

00:00:48   Overall.

00:00:49   Yeah, flat I think is a great word to describe it.

00:00:51   And there were two things that Tim Cook said that really stood out to me.

00:00:54   One was when they're talking about new customer acquisition,

00:00:57   that the rate of switchers from Android to iPhone

00:01:00   was up everywhere when you discounted China,

00:01:03   which is a different story than they used to tell.

00:01:05   - But that's a big but, because part of what I wrote

00:01:09   about today based on a very good column

00:01:13   by a friend of the show, Ben Thompson,

00:01:16   with some market research, at least two pieces

00:01:20   of market research, one from China and another

00:01:24   from UBS analysts that came out last year,

00:01:27   show that in China, there's a lot lower retention rate,

00:01:33   meaning when somebody who already owns an iPhone

00:01:37   goes to buy a new phone, do they buy another iPhone

00:01:39   or do they switch to another brand?

00:01:41   That's retention rate.

00:01:42   And it's really pretty, in the West,

00:01:44   it's pretty consistently in the mid to high 80s.

00:01:47   In the US, in the UK, in Germany,

00:01:50   for two or three years now,

00:01:52   very consistently 80-45. Germany's even a little higher 88-89. Japan is a little lower

00:01:59   like mid 70s but pretty flat year to year. But in China it went from like Western levels

00:02:05   in the 80s like in a couple years ago to around 50% now which is not good from Apple's perspective.

00:02:12   No, it's a very different narrative than what they spoke about previously. If you flash

00:02:16   back a couple years when they were talking about the lack of low entry level pricing

00:02:20   on iPhones, one of the things that Apple said

00:02:22   is they didn't need to be your first phone

00:02:24   if all you wanted was the cheapest phone.

00:02:25   If cheapness was your primary feature, that was great,

00:02:29   but it wasn't a feature they were competing on.

00:02:30   And they would count on the fact

00:02:31   that you would get into smartphones

00:02:33   and then if you wanted a better phone experience,

00:02:35   you'd upgrade to an iPhone.

00:02:36   And a lot of people did that either for status

00:02:38   or for iOS for iOS apps,

00:02:40   but that's no longer the case in China.

00:02:42   There is still the status symbol implement,

00:02:44   but as Ben pointed out, the platform layer has shifted

00:02:47   from base operating system to messaging.

00:02:50   Yeah, and especially, it's particularly this app, WeChat,

00:02:52   which is, I think, only in China.

00:02:55   I don't know.

00:02:56   Or at least it's really only a sensation in China.

00:02:58   But it's truly staggering numbers.

00:03:00   It's a four-year-old app from another company.

00:03:03   But it's, I don't know, 900 million monthly active users,

00:03:07   something like that.

00:03:09   And I don't want to go too-- I'll put a link,

00:03:12   I swear to God, in the show notes, at least in my article,

00:03:18   which has a link to the post from a woman named Connie Chen

00:03:23   at Anderson Horowitz, explaining more or less for what is WeChat

00:03:30   and why is it a sensation in China.

00:03:33   And long story short, it's sort of like an OS in an app

00:03:36   where it's a messaging app, but you can do so much stuff.

00:03:42   You can pay for-- it's like an Apple Pay type competitor

00:03:45   where you can go into a store and use

00:03:46   WeChat to pay for the lunch while you're in line.

00:03:51   And like Ben has said, that in China, it

00:03:54   makes you look like a rube if you pay with cash.

00:03:56   Everybody else is paying with WeChat.

00:03:59   Just all sorts of stuff.

00:04:00   You can buy stuff.

00:04:01   It's a shopping app.

00:04:03   That all sorts of companies that would

00:04:05   like to be on the WeChat platform

00:04:07   set up their own authorized accounts,

00:04:11   like a special account status that opens up a bunch of APIs

00:04:15   So you can have a programmatic backend

00:04:17   so other WeChat users can, when they're chatting with,

00:04:21   you know, Renee and John Incorporated,

00:04:25   we can sell them t-shirts or sneakers or whatever

00:04:27   right in the WeChat app.

00:04:28   - Yeah, and messaging is fragmented,

00:04:32   so it doesn't really,

00:04:33   like you don't have to own messaging everywhere.

00:04:35   As long as you own the China market with WeChat,

00:04:36   you're fine, the Japanese market with Lion.

00:04:38   It's almost like people who are such casual computer users

00:04:41   that all they ever use is Facebook.

00:04:43   It makes no difference to them

00:04:44   they're on a Mac or a Windows PC or a library terminal

00:04:46   or anything, their entire computing experience is Facebook

00:04:49   and it makes it easy to migrate.

00:04:50   - Right, my argument, and I've said this,

00:04:52   I've always thought this and I still believe

00:04:54   it's always been true and always will be true,

00:04:56   is that in the basic Apple's model is selling nice hardware

00:05:01   differentiated by proprietary software that's also nice.

00:05:06   But the software part is more important

00:05:08   than the hardware part because that's what makes people

00:05:13   people sticky to the platform.

00:05:16   And so like a Mac user, and I've put this forth before,

00:05:20   I think you would agree with me,

00:05:21   I just love it as a thought experiment,

00:05:23   but would you rather use Apple's OS on competing hard,

00:05:27   on some other hardware, or would you rather use

00:05:32   some other hardware platform that's running,

00:05:39   wait, some other hardware platform running Apple's OS,

00:05:41   would you rather use Apple's hardware running the other OS?

00:05:44   So for example, would you rather have,

00:05:46   like I would rather have a Google Pixel that runs iOS,

00:05:49   hypothetically since that's not really possible,

00:05:52   instead of say an iPhone 7 that's running Android?

00:05:56   - Totally, and I think it's easy to see

00:05:57   because there are other companies

00:05:58   that can manufacture beautiful hardware

00:06:00   and they're in fact the suppliers

00:06:01   of a lot of Apple's components,

00:06:03   so we know they can make really good components,

00:06:04   but no one else has proven

00:06:05   they can make really good software yet.

00:06:06   That's a much more rarer skill.

00:06:09   - Right, and with the iOS example,

00:06:11   It's a real hypothetical, because I don't even

00:06:13   think it's possible.

00:06:14   I really think that there's technical aspects

00:06:16   of the secure enclave and stuff like that that

00:06:20   would keep something from iMessage from working.

00:06:22   In my hypothetical example, I'd have everything.

00:06:25   My iMessage would work.

00:06:26   My iCloud ID would work on this Pixel running iOS.

00:06:30   But I would rather have that, even though I do,

00:06:32   in any abstract, prefer an iPhone 7 over the Google

00:06:36   Pixel, which is the latest Android phone that I'm

00:06:38   most familiar with.

00:06:39   which I have to say is actually the nicest Android phone I ever saw, versus the other

00:06:46   way around. It would drive me nuts to—

00:06:47   You'd have to use Qualcomm's crappy processors instead of the A-series, but you could live

00:06:51   with it. Yeah, I could live with it. It's fast enough.

00:06:55   If you look at the specs, they're somewhere around 18 months to 24 months behind. I would

00:07:01   rather use a two-year-old iPhone 6 than use a cutting-edge Android, because the platform

00:07:08   is most important to me.

00:07:09   It's just my mind is warped around it.

00:07:11   It's part of the way I think about how

00:07:13   to do stuff on the phone.

00:07:16   And whenever I pose that question, with computers,

00:07:19   it actually is possible.

00:07:20   Because you could create-- you can create a hackintosh

00:07:23   that works, although there still is things like iMessage still

00:07:26   has problems and stuff like that because there's security.

00:07:29   It's not perfect.

00:07:30   Hackintoshes don't work perfectly, but they do work.

00:07:34   I'd rather have a hackintosh on a ThinkPad running Mac OS X

00:07:38   than anything, Windows, you name it, Chrome or whatever else desktop PC operating system

00:07:46   I could have running on a MacBook.

00:07:47   Steve McLaughlin Yeah, absolutely the same.

00:07:49   Dave Asprey But I've heard, I know there are people

00:07:51   that are probably listening to the show right now. I've heard from them whenever I bring

00:07:54   this up, because I do think it's an interesting hypothetical question. There are definitely

00:07:58   people who I hear from who read my stuff or listen to the show and say, "No, I used

00:08:04   used Windows forever, but switched to a MacBook

00:08:08   just because of the hardware.

00:08:09   And a lot of times, they'll say--

00:08:11   and not just the way it looks, but I just

00:08:13   got sick of the fact--

00:08:14   I wanted a laptop that just, when I opened it up,

00:08:16   it turns on.

00:08:17   When I close it, it shuts.

00:08:18   It's never had--

00:08:19   Trackpad works.

00:08:19   Trackpad works.

00:08:20   Trackpad working is a huge thing.

00:08:23   And I know Joanna Stern, friend of the show, is often--

00:08:25   she's like the absolute queen of trackpad judgments.

00:08:31   She's got the ranking in her head

00:08:33   of every single trackpad quality in the whole market.

00:08:36   And I totally trust her judgment on trackpad quality.

00:08:41   That's a huge one.

00:08:42   But the people who say that they switch like that, a lot of times

00:08:45   say, but that's the only reason.

00:08:46   And that they're-- for example, very common scenario

00:08:49   among my audience, at least, are web developers

00:08:51   whose entire life revolves around Chrome, a text

00:08:56   editor, and a terminal window.

00:08:58   So somebody like that, if that's your life,

00:09:00   If your life is just Google Chrome, a text editor, and a terminal, you can easily switch

00:09:07   to some other brand of laptop running another operating system, because those things are

00:09:11   available on every platform.

00:09:13   Yeah, absolutely.

00:09:14   Same as the Facebook example.

00:09:16   It's just your entire environment is abstracted away from your computer.

00:09:19   Right.

00:09:20   Well, that's why I think Facebook is such a—not really a threat to Apple, but like

00:09:25   a direct threat, but certainly looms large as an indirect threat.

00:09:37   Facebook is far more threatening to Apple than, to me at least, than say Samsung, even

00:09:42   though you would think Samsung would be the one who's the threat because they do the same

00:09:47   thing.

00:09:48   They make $700 cell phones that when somebody goes into a store to decide what to buy, they're

00:09:54   they're only gonna buy one.

00:09:55   Whereas I feel like Apple has,

00:09:59   it successfully has always been,

00:10:03   or at least has been for 20 years,

00:10:05   in a position where the quality of their products

00:10:08   are enough that they don't really have to worry

00:10:10   about somebody else who also sells nice things

00:10:12   because they've got the software platform

00:10:14   to differentiate themselves.

00:10:16   The problem with something like Facebook

00:10:18   is that Facebook, in a way, is sort of like

00:10:20   the WeChat of the West,

00:10:22   where if it's the most used app, and from a lot of people

00:10:27   it is, and it does all the same things in mostly the same ways

00:10:32   on iOS and Android, it's a lot easier for somebody

00:10:37   to switch from an iPhone to Android

00:10:39   if their most important app just works exactly the same way

00:10:43   and lets them do all the same things.

00:10:45   And it's interesting because the web arguably

00:10:46   helped Apple at a time when they were very far behind in terms

00:10:50   of just market share and mind share with PC,

00:10:53   but the web let them compete.

00:10:55   You could just have a web browser

00:10:56   and you have access to all these things

00:10:58   and it did ease the transition back to Mac,

00:11:01   but that door goes both ways

00:11:03   and it can let people leave as quickly as it let them in.

00:11:05   - Right, it was, that sort of cross-platform parity

00:11:10   that the web created was helpful to Apple

00:11:14   when Apple was struggling,

00:11:17   but it's detrimental to Apple

00:11:19   now that Apple's in a position of strength.

00:11:22   - And it's interesting because there's different layers

00:11:23   of abstraction where Facebook abstracts away

00:11:25   a lot of the operating system and you're just interfacing.

00:11:27   'Cause for a normal person, the interface is the app

00:11:29   and the interface is the hardware.

00:11:30   It's the face that they, literally the face that they see

00:11:32   and they work with.

00:11:33   And you can change all the plumbing behind it

00:11:35   and they may not notice.

00:11:36   But if you change one button on an interface,

00:11:38   you'll get complaints or, you know,

00:11:40   people will tell you about it.

00:11:42   And there's voice analysis too,

00:11:43   where you use Siri, for example,

00:11:45   which totally disintermediates Google

00:11:46   and all they see is queries coming from Apple.

00:11:49   and Apple could switch the plumbing for that,

00:11:51   and then Alexa intermediates things.

00:11:53   And it's almost like this battle

00:11:55   for who can be the final point of the user interface,

00:11:57   and that's the experience that becomes sticky.

00:11:59   - Right, and Facebook is doing WeChat similar things

00:12:02   with Messenger and stuff,

00:12:03   where there's apps within apps,

00:12:06   and it's the sort of thing that Apple, in its way,

00:12:11   has tried to discourage in the App Store all along.

00:12:17   They were never going to allow, say,

00:12:20   it's part of the whole Flash thing in the early years

00:12:22   when that was contentious and when Adobe first had

00:12:25   a sort of Flash to native iOS development chain

00:12:30   and Apple like put the kibosh on it.

00:12:33   It was sort of, you know, I'm sure there,

00:12:37   strategically there were multiple reasons,

00:12:39   but one of them was they were never going to allow

00:12:41   something like an Adobe app that when you open the app

00:12:44   gives you a secondary homepage of Flash-based games

00:12:47   that you can play, right?

00:12:49   You can't have an app store within the app store.

00:12:52   Except that if you already have a certain momentum

00:12:57   and size and importance like Facebook

00:12:59   and like WeChat has in China,

00:13:02   you can kind of get away from it,

00:13:04   get away with it because Apple can't really afford,

00:13:06   they can't say we're not gonna allow WeChat

00:13:08   on the iPhone in China and they can't say

00:13:11   we're not gonna allow Facebook on the iPhone.

00:13:14   - Yeah, people would just buy something else at that point.

00:13:16   - Right, but so, you know, they even talk about apps.

00:13:19   Like, you know, Facebook has things they call apps

00:13:21   that you can have within Messenger.

00:13:23   And like if you and I started a new chat app

00:13:27   and came out with it and we said that there were apps

00:13:30   you could have within the app,

00:13:31   it would not make it through app approval

00:13:35   in the iOS app store, or probably wouldn't.

00:13:40   It's just something that a company like Facebook

00:13:43   that has that sort of, what would you call it, stature?

00:13:47   - Yeah, well it also blurs the web services line

00:13:49   because like Apple wouldn't blink with,

00:13:50   just like you go to Google.com and there's your Gmail

00:13:52   and your Google Calendar, those are just

00:13:53   normal web experiences, and they've done that,

00:13:56   but they've packaged those things up inside chat clients

00:13:59   or inside social networks instead of having them

00:14:01   as a bunch of standalone URLs,

00:14:03   and that gives a very different experience

00:14:04   and probably a lot more compelling experience.

00:14:06   - Right, and you know, one of the ways that Facebook

00:14:09   is sort of threatening to Apple is in theory,

00:14:12   like I don't think this would happen.

00:14:13   I think it's, you know, so far it's actually

00:14:16   more likely the other way around where something like,

00:14:19   you know, Facebook's subsidiary Instagram

00:14:21   was iOS only for years before it came out for Android.

00:14:25   But if in theory Facebook somehow got better,

00:14:31   it was a better experience on Android

00:14:33   than it is on the iPhone, that's a threat to Apple

00:14:36   if people's favorite app and most used app is Facebook

00:14:39   and word spreads around that, oh, but you can't do

00:14:42   the cool new X, Y, and Z that all your friends

00:14:44   who have Android phones are doing on Facebook

00:14:46   unless you get an Android phone.

00:14:48   Facebook is so big and so popular

00:14:50   that if something like that happened hypothetically,

00:14:52   that's a problem for Apple.

00:14:54   - Yeah, I don't wanna relitigate the whole App Store thing,

00:14:56   but when you look at it, if you look at the App Store

00:14:57   and you look at Google Play, for example,

00:14:59   Google Play offers freedoms and features

00:15:01   that a lot of App Store developers

00:15:02   have been wanting for years,

00:15:04   but you can't really point to things on Google Play

00:15:06   and say those are apps that aren't,

00:15:08   those are transformative apps

00:15:09   that are simply not possible on iPhone.

00:15:11   You can get Snapchat on iPhone, you can get Uber on iPhone.

00:15:14   But if there was ever a case where an app

00:15:15   could only exist on Android because the policies

00:15:17   or capabilities of Google Play and the Android ecosystem

00:15:21   were such to make it so, that would I think be the only thing

00:15:24   that could really change Apple's outlook on how all that thing

00:15:26   on how iOS and the App Store works.

00:15:28   - Right, if you really think about it, it's Apple's...

00:15:31   They have control over the app store that software vendors haven't had previously over

00:15:43   their platforms, right?

00:15:45   That they didn't have over the Mac because you can install any app you want on the Mac.

00:15:53   And so technically, yes, they could ban anything.

00:15:54   But practically speaking, they have lots of control, but they don't really have total

00:15:59   control.

00:16:00   only so far that they can push Facebook on,

00:16:04   if Facebook is doing shady stuff behind the scenes

00:16:06   like they have in the past, like when they use--

00:16:08   - Of used audio APIs or bloatware, yeah.

00:16:11   - You know, like, that was one of them,

00:16:13   like where over the years when you look and say,

00:16:16   well, why in the world is Facebook doing so much

00:16:18   in the background and how are they doing it

00:16:19   where there's rules of, you know,

00:16:22   that apps get killed in the background?

00:16:24   And Facebook at one point, one of the things they did

00:16:27   is they were playing, there was an API

00:16:31   so that an app that's playing audio

00:16:33   can keep playing it in the background indefinitely

00:16:35   and it won't get killed.

00:16:36   Because if you, let's say you're playing a podcast

00:16:38   and you're not, you're doing other things on your phone,

00:16:41   like you're going through email and browsing the web

00:16:43   while you're listening to the podcast,

00:16:45   you don't want your podcast player to get killed by iOS

00:16:47   because it's quote unquote in the background

00:16:49   because you're getting something from it, it's playing audio.

00:16:52   So Facebook used that API to play completely silent audio

00:16:57   track so that they keep going in the background while they do other things like waiting for

00:17:03   notifications and whatever else they're doing.

00:17:07   It's almost as egregious as when they had two hamburger buttons on both sides of the

00:17:09   app.

00:17:10   Right.

00:17:11   I'd say that this was worse.

00:17:12   Two hamburger buttons don't run your battery down.

00:17:15   And this problem still exists.

00:17:17   I think it was a month ago people started complaining about the same issue with Pokemon

00:17:19   Go and I started investigating and if you go it says with two or three hours on the

00:17:23   background audio, which is not something that any app besides a streaming client should

00:17:27   ever present. It should get Jetson'd immediately.

00:17:30   Right. And so Facebook can get away with stuff like that in a way that other companies can't.

00:17:37   The other good example of that—I mean, I don't want to tie too many stories together,

00:17:40   but while we're on it—is the story that came out a few weeks ago about Uber getting

00:17:49   caught by Apple.

00:17:50   We could save that though.

00:17:53   Maybe we should save that for after the break.

00:17:55   So anyway, iPhone in China,

00:17:56   what else do we have to say about that?

00:17:58   - Well, I think just beyond China

00:18:01   is that Tim Cook used the same sort of wording

00:18:03   when he spoke about iPad and said that

00:18:05   large screen iPads were up.

00:18:08   Sales of all large screen iPads were up

00:18:10   when overall iPad sales were down again.

00:18:12   And that sort of was pointing the finger

00:18:14   right at the iPad Mini.

00:18:15   - Yeah, I think so.

00:18:16   I think the reading between the lines on that,

00:18:19   that is a good, that did strike me too.

00:18:21   Reading between the lines on that

00:18:23   and also looking at the revenue number,

00:18:26   which wasn't really up either.

00:18:29   Like for example, for the Mac, unit sales were up 4%.

00:18:36   Good, year over year from the same three months last year.

00:18:40   But revenue was up 14%.

00:18:42   So 4% units, 14% revenue, that tells me

00:18:47   that the new MacBook Pros are selling pretty well.

00:18:51   Because that's the only thing that's new in the lineup.

00:18:55   - And the ASPs are higher on those models.

00:18:56   - And the ASPs are higher on those models.

00:18:58   And so, you know, if there's any concern out there

00:19:03   that the sort of mixed reviews those MacBook Pros got,

00:19:06   it doesn't seem like it's had an adverse effect on sales.

00:19:08   It seems like the opposite,

00:19:09   that they're actually proving to be pretty popular,

00:19:11   because they've driven the revenue per unit up.

00:19:17   But with the iPad, with them saying--

00:19:18   and again, those analyst calls, they can't lie on them

00:19:24   or else they're committing securities fraud.

00:19:28   They're very, very careful.

00:19:29   I mean, you know because you read the transcript

00:19:31   and read every word.

00:19:32   I mean, it's not loosey-goosey talk.

00:19:35   No, and they are well-prepared.

00:19:36   They have every fact in front of them

00:19:37   before they get on that microphone.

00:19:39   Right.

00:19:40   So if they say-- I mean, again, in the actual PDF data

00:19:46   document for the quarterly numbers,

00:19:48   they give you units per product line,

00:19:52   like just for iPad, and the revenue for the product line.

00:19:55   And that's it.

00:19:56   And so they don't break down.

00:19:58   In the old days, like 10 years ago, they used to break down,

00:20:00   for example, Mac sales by desktop and notebook.

00:20:04   But they don't have any breakdown like that for iPads,

00:20:06   like between big and small.

00:20:07   But if they stay on the call, the big ones are up.

00:20:10   But they must be up.

00:20:12   Like, either that or they're committing securities fraud.

00:20:15   But given that everything was still down,

00:20:17   that must mean that iPad Mini sales have just dropped off

00:20:20   the face of the earth.

00:20:22   Which makes sense given the advent of the larger phones

00:20:24   and the lack of updates to the iPad Mini platform.

00:20:27   Yeah, it's sort of a chicken and egg question for me,

00:20:29   is are they not even updating the iPad Mini because people

00:20:35   aren't buying the iPad Mini?

00:20:36   or are people not buying the iPad Mini

00:20:37   because they haven't updated the iPad Mini in a while?

00:20:40   - Well, this is a bit of a tangent,

00:20:41   but I went to, a mutual friend of ours

00:20:43   sort of prodded us about macOS Server the other day.

00:20:46   So I went to pick up a Mac Mini

00:20:48   so that we could write a series of articles on iMore

00:20:50   about the benefits of macOS Server.

00:20:51   And I went to the Apple Store, I bought it,

00:20:54   took it home, and it was running LCAP.

00:20:56   Which, I mean, that to me shows

00:20:59   there's not a huge turnover rate on Mac Minis.

00:21:01   And we talked about how Mac Mini is a languishing product,

00:21:04   and it's the same chicken and the egg problem,

00:21:05   That's what I gave me an indicator about how few magnities might actually be moving

00:21:08   It's pretty telling

00:21:12   Be funny if it opened it up and it was running like tiger or something. Oh, that'd be great, right?

00:21:26   Yeah, the old awkward stripes

00:21:28   Say how old is this?

00:21:31   Power PC apps

00:21:34   I'm trying to think of anything else from the quarterly results.

00:21:40   Services are way up, which is as predicted.

00:21:42   I mean, they've been saying this for a while that, "Hey, we're hell-bent on services,"

00:21:50   and it's showing in the results.

00:21:52   And it's repeatable revenue from the same customer base, so it's sort of the revenue

00:21:55   that Wall Street likes.

00:21:56   Because like we saw in China, you can't guarantee someone's going to buy the next iPhone, but

00:22:00   if they're paying you subscription revenue, you have a certain amount of period you can

00:22:02   look forward to that revenue.

00:22:04   Well, and I think the other thing that--

00:22:07   and it ties into my argument on the software being

00:22:10   more important than the hardware in terms of not

00:22:13   in any particular quarter, but in the long run of having

00:22:17   a loyal customer base that when they go to replace their blank,

00:22:22   whether it's their watch or whether it's their phone

00:22:24   or whether it's their laptop, if they've already

00:22:26   got an Apple one, they're going to buy another Apple one.

00:22:31   And to have the services revenue is a sign

00:22:35   that they're creating new ways

00:22:36   that make more stickiness in that regard.

00:22:39   - Yeah, I mean, it's good in both directions too.

00:22:41   And I think they've even said this on the call

00:22:42   is that you, not in these terms though,

00:22:45   is that you can either double your amount of customers

00:22:47   or you can double the amount of revenue

00:22:48   you get from your customers.

00:22:49   And both of them result in substantial increases.

00:22:51   And as Apple starts to reach those big numbers

00:22:53   where it's really hard to start opening up

00:22:55   new iPhone markets, you've got Verizon,

00:22:57   you've got international carriers, you've got China Mobile,

00:22:59   getting people onto higher revenue streams

00:23:01   with things like subscription services

00:23:02   just creates more value from each customer.

00:23:04   - Right, and I think it's important too

00:23:06   because if Apple is Apple, they're never going to,

00:23:10   they're never gonna have market share,

00:23:13   like monopoly market share of these products

00:23:16   because they're just, it's just not what Apple does

00:23:19   is make products that are so low priced

00:23:22   as to take over the commodity level market.

00:23:26   I mean, it just wouldn't,

00:23:28   An Apple that tried to do that would no longer be recognizable

00:23:31   as the Apple we know.

00:23:32   There are certain markets they just choose not to compete in.

00:23:34   Right.

00:23:35   And whatever percentage of the PC market they have--

00:23:39   4%, 5%, 6%, 10%, whatever you want to call it--

00:23:43   their market of the phone is significantly higher than that.

00:23:47   But it still is a minority and not even close to 50%.

00:23:52   Even in the most popular iPhone countries,

00:23:55   it's 20%, something like that.

00:23:57   is where we see the differential between their market share

00:23:59   and their profit share.

00:24:00   - Right.

00:24:01   And being able to get more money out of the existing

00:24:04   customers is a path to growth that lets them still be Apple.

00:24:09   - And there was one other thing that I thought

00:24:11   was really interesting and that's when he was talking

00:24:12   about Apple Watch and they still won't give numbers.

00:24:14   They did the Amazon-like thing where they said we had

00:24:16   almost twice the amount of sales as last year.

00:24:18   So X was last year, this was 2X.

00:24:21   But then Tim Cook said that if you take Apple Watch

00:24:22   and you combine it with AirPods and with Beats,

00:24:25   although he wasn't specific which Beats products,

00:24:26   just the W1 or all of them,

00:24:28   that makes a Fortune 500 company.

00:24:30   Yeah, my guess is there's a large amount

00:24:31   of Beats money in there.

00:24:32   It makes a Fortune 500 company.

00:24:34   - Yeah.

00:24:35   Well, let's take a break and we'll come back to that

00:24:40   'cause I have some comments on the watch.

00:24:44   But let me take a break and thank our first sponsor.

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00:25:33   you just drag them around.

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00:25:36   to want to put your own JavaScript in or modify

00:25:40   the CSS or something like that, you can do it.

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00:25:44   Here's the other thing, too.

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00:25:49   And they have so many of them from different types of sites

00:25:51   and have a professionally looking website.

00:25:53   But I hear that.

00:25:54   If I hear that, if I'm listening to this show and I hear that,

00:25:57   my thought turns to, well, I don't

00:25:58   want to have a cookie cutter site that

00:26:00   looks like everybody else's.

00:26:01   Like, say, back in the day when you'd get a Blogspot blog,

00:26:06   and you'd know it was a Blogspot blog because there

00:26:08   were two or three templates to choose from,

00:26:10   and everybody had one of those.

00:26:12   Squarespace has so many templates to choose from.

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00:26:16   to customize them to your own brand

00:26:19   that you don't even know when you're on a Squarespace site.

00:26:21   It's unbelievable to me how many sites,

00:26:23   when you start poking around and looking in the source code

00:26:25   and you see that it's Squarespace site,

00:26:26   you're like, wow, I never would have guessed that

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00:26:42   and use the code GRUBER, my last name,

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00:26:49   Remember that next time you need to make a website.

00:26:53   So sometimes I worry that I repeat myself too often,

00:26:56   Rene, that I've got like three or four columns,

00:26:59   and I just keep writing them all over and over and over again.

00:27:02   But the one I just wrote a couple of weeks ago was--

00:27:06   I forget the guy's name, but somebody wrote a column that

00:27:08   the Apple Watch hasn't changed Apple,

00:27:10   hasn't done anything for Apple at all.

00:27:14   And I think if you read between the lines of his arguments,

00:27:17   It's more or less that the Apple Watch is nowhere near

00:27:21   an iPhone-sized product and probably never will be,

00:27:25   and therefore it's meaningless to Apple

00:27:28   or close to meaningless.

00:27:29   And I just think that's such a wrong way to look at it.

00:27:33   It's like there might never be another iPhone-sized product

00:27:38   in any industry, let alone Apple.

00:27:40   Like Apple may not ever have an iPhone-sized hit.

00:27:43   it may well be that no other company has an iPhone size hit

00:27:47   in terms of just how much money

00:27:49   and how many people around the world the market size is.

00:27:52   And so I think judged by that,

00:27:56   nothing Apple ever does will succeed by that merit.

00:28:00   And I think if Apple internally took that mindset,

00:28:02   it would paralyze the company.

00:28:04   - Yeah.

00:28:04   Yeah, I mean, iPhone creates more profit than companies

00:28:08   that have oligopoly control

00:28:09   over scarce fossil fuel resources.

00:28:12   and people forget that perspective,

00:28:13   and they create this false equivalency

00:28:15   where everything for Apple has to be measured

00:28:17   by the success of iPhone,

00:28:18   and then everything is seemed to be lacking.

00:28:20   Where for other companies,

00:28:21   you could sell three Surface Books,

00:28:22   and it's a rousing success,

00:28:24   and you'll get 19 articles out of that.

00:28:26   When we saw that, I think,

00:28:27   I forget if it was Neil Seibert or Benedict Evans

00:28:30   who tweeted that, based on their metrics,

00:28:33   Apple Watch vastly outsold,

00:28:35   by, it was a factor of two or three,

00:28:38   Amazon's Alexa, sorry, Echo product,

00:28:40   And yet people were touting how great and transformative

00:28:43   Echo was and what a dismal failure Apple Watch was.

00:28:45   And it was completely out of whack with anything resembling,

00:28:48   any resemblance to facts.

00:28:49   Right.

00:28:50   It's graded on such a bizarre curve.

00:28:53   And it's a perfect example because Alexa,

00:28:57   like every other Amazon product, the Echo

00:29:00   doesn't get numbers reported.

00:29:01   And Apple Watch gets a Bezos curve of twice as much as ever.

00:29:07   Yeah, and it's true.

00:29:08   It's really important technology.

00:29:10   You can kind of, at least with Apple Watch, it's in that other category, and there is

00:29:14   a revenue number for the headphones and beats and Apple TV and Apple Watch.

00:29:29   And given Apple TV is almost certainly pretty static.

00:29:35   There hasn't been an update.

00:29:36   There hasn't been a big promotional push.

00:29:37   There hasn't been a big change since the fall 2015 when the current Apple TV came out.

00:29:44   So it's pretty reasonable to assume Apple TV is flat at best.

00:29:50   Aeropods is a little hard to gauge for this quarter because they're obviously popular

00:29:53   enough that they're backordered, but it's hard to tell just how constrained they are.

00:30:01   I think you pointed out that they're not sold at a huge margin.

00:30:04   They're sold as cheaply as possible.

00:30:06   Well, the revenue number, though, might be big, because they're not going to break that

00:30:10   down by profit.

00:30:11   But I have reason to believe that they're not a big moneymaker at this point.

00:30:16   And it makes sense that they must be hard to make, because it's four months in, and

00:30:20   they're still six weeks out if you go to order them.

00:30:24   As an aside on that, for anybody looking to buy AirPods, I wrote about that on Daring

00:30:28   Fireball a couple times recently.

00:30:30   And a couple of people have written to me and said

00:30:32   that they scored AirPods on the fly recently from AT&T stores,

00:30:41   or Verizon stores.

00:30:44   They're showing up.

00:30:45   If you really want them and you don't want to wait six weeks,

00:30:48   try stores like AT&T and Best Buy and stuff like that.

00:30:52   And you might just get lucky and get them

00:30:53   before you would if you place an order at Apple.com.

00:30:55   So that's my tip for anybody out there looking for AirPods.

00:31:00   But the numbers from those that Apple reported another

00:31:03   back up the idea that Apple Watch is selling pretty well.

00:31:08   And personally, I mean, this is obviously very unscientific,

00:31:11   but personally, I see more and more Apple Watches

00:31:16   on real people out in the streets than ever before.

00:31:19   I see an awful lot of them.

00:31:21   - I went to the deli the other day

00:31:23   just to order a Montreal smoked meat sandwich,

00:31:25   and the waiter was wearing an Apple Watch,

00:31:26   and I asked him how he liked it,

00:31:27   and he said, "Best thing in the world.

00:31:28   not allowed to have our phones with us when we work,

00:31:30   but I can still check my text messages on my Apple Watch.

00:31:33   - Yeah, there's a big construction project

00:31:35   across the street from my house.

00:31:37   And I just, I noticed the other day

00:31:39   that the guy who controls the crane

00:31:44   is wearing an Apple Watch.

00:31:45   And I thought that, you know, it might be the same,

00:31:47   that might be the exact reason for that,

00:31:49   is, you know, that he, you know, while he's doing this,

00:31:52   he can't have his phone out, but if he glances at his wrist,

00:31:55   he can see, you know, text notifications.

00:31:57   I don't know, but just seems, you know,

00:31:59   I see 'em all the time.

00:32:00   I see an awful lot of 'em.

00:32:01   It backs up the idea, again,

00:32:02   not like it's as popular as the iPhone,

00:32:05   but nothing is, really, literally.

00:32:07   But I sure see 'em a lot, I really do.

00:32:11   - It does a subset of important brief tasks for you

00:32:13   in a way that saves you having to go to your iPhone,

00:32:15   the same way your iPhone does a subset

00:32:17   of really important tasks

00:32:17   that saves you having to go to your Mac.

00:32:19   - Yeah.

00:32:20   - So it just depends how important those are to you.

00:32:21   - While we're talking about Apple Watch,

00:32:22   we can tie in the other story from this week

00:32:24   where Apple Insider discovered that a couple of big-name apps, iPhone apps, have dropped

00:32:32   their Apple Watch counterparts.

00:32:35   Was it Amazon, eBay?

00:32:37   And the one that, to me, was most telling was Google Maps.

00:32:39   Yeah, I have to admit, when I first heard this story, my guess—and I checked into

00:32:44   it, but I couldn't get an answer—was that it happened at the same time they launched

00:32:47   their iMessage app, and I just thought they screwed up something in their bundle and enabled

00:32:50   the iMessage app and disabled the Apple Watch app by accident.

00:32:52   And I don't know if that's true or they're going to be updating it for our watch OS 4 or whatever

00:32:57   But their state their subsequent statement made it sound like it was it was returning. It was not a deliberate removal

00:33:02   Well the but the telling part is that it seemingly happened weeks ago and nobody really noticed

00:33:07   It's very notice right away. She's like what's happening here and sort of looking into it, but it wasn't a huge story now

00:33:13   I just think though I really do I think and I think it's you know

00:33:18   I think the emphasis that Apple I think Apple is fully aware of this based on

00:33:22   What they worked on for iOS 3 and what how they build it that

00:33:26   Even with the iPhone it was true that they'd you know, they certainly obviously at the be outset didn't see how much

00:33:35   How big a deal it would be to be an app platform?

00:33:38   They might have had the inkling but it certainly you know, and I think it's played out in ways that

00:33:44   That even they couldn't foresee. I don't think Apple would have predicted in 2007

00:33:50   That the iPhone would become the most important and popular camera in the world

00:33:54   you know, it's you don't know, you know, and I feel like they rolled out the Apple watch and

00:34:00   Obviously, I think initially thought that apps were going to be a bigger part of what might make it

00:34:06   Popular and in real use in even their own use like not just surveying users, but I think you know

00:34:13   Apple people using the watch themselves that the health tracking and

00:34:19   and that using it as a notifications input and output device

00:34:24   are far more important than the app story.

00:34:30   - I think that's absolutely true.

00:34:31   It's almost like they overcompensated

00:34:33   for the lack of an app store at launch for iPhone

00:34:35   by making sure no matter what happens

00:34:36   or how poorly it performed,

00:34:38   they had one available for Apple Watch.

00:34:40   And almost the heartbreaking part about that is

00:34:43   they launched it at the same time that Extensibility

00:34:45   was launched and Extensibility was one of the technologies

00:34:47   allowed them to have apps on the Apple Watch.

00:34:49   But at the same time, you've written this really well,

00:34:53   what HTTPS, what web services were to websites,

00:34:57   where they basically, you didn't need a website anymore,

00:34:58   you could just provide an API.

00:35:00   Extensions were like that to apps.

00:35:01   You didn't necessarily need a binary blob

00:35:03   on the same device.

00:35:03   You could have features and functionality

00:35:05   that could be on the same device,

00:35:07   but could be projected or surfaced

00:35:09   in many different places in many different ways.

00:35:12   And they had that with Apple Watch,

00:35:13   but instead they sort of took this mentality

00:35:15   of binary blobs, where you had to have an app

00:35:17   on a carousel screen that you could tap with your finger

00:35:19   to launch.

00:35:20   And we've seen them move away from that.

00:35:21   But I think in hindsight, we're going

00:35:23   to see that the watch has to be a feature device and not

00:35:28   an app device.

00:35:30   Yeah, and I think-- and I played around.

00:35:35   He's a friend, and I appreciate the feature.

00:35:37   But Marco Arment has worked on a much improved watch

00:35:41   app for Overcast.

00:35:43   and I know that he spent an awful lot of time

00:35:47   in the last few months on it.

00:35:49   And it shipped recently, and then over the weekend

00:35:52   I thought, well, I was gonna go for a run,

00:35:55   and I thought, in theory, I would love to go

00:35:58   with just my watch and AirPods,

00:36:00   and not have to figure out a way to carry my phone,

00:36:07   because there's just no great way.

00:36:08   I've got some kind of like belt-like thing

00:36:10   that I put underneath my shirt where I can strap it in,

00:36:13   but I don't want to run with it in my pockets.

00:36:15   I don't like using an armband.

00:36:17   There's no good way to go with a phone.

00:36:20   So I thought, well, this is perfect.

00:36:21   I'm not just trying this watch app of Overcast out.

00:36:27   I actually want this feature.

00:36:29   I would love to do this.

00:36:30   And it was absolutely horrible.

00:36:32   It was just terrible.

00:36:33   It was hard to get it installed on the watch

00:36:35   in the first place, which shouldn't be the case.

00:36:38   It was like from the watch app on the phone,

00:36:41   it said installing, and it just said installing dot, dot, dot,

00:36:44   forever.

00:36:46   And then once it was installed, getting audio--

00:36:49   it's like getting audio from the phone to the watch

00:36:51   takes forever.

00:36:52   And even once it did, and I got a podcast over there

00:36:57   to listen to, and I went to play,

00:36:58   I got my AirPod synced to it, the audio was whisper quiet.

00:37:02   And I mentioned this to Marco, and it's obviously not always

00:37:05   the case.

00:37:06   And other people are saying it happens sometimes,

00:37:08   but he has no idea why.

00:37:11   And I wasted like 45 minutes, and I was just like,

00:37:14   you know what, screw it, I'm just going with my phone

00:37:16   like I always do.

00:37:17   (laughing)

00:37:18   It was so much better.

00:37:19   I mean, it's just too finicky.

00:37:22   It's way too finicky.

00:37:23   Whereas there are other things like,

00:37:26   did you ever use this app,

00:37:28   did you ever use this service Nuzzle and use ZZEL?

00:37:31   - I've seen it, yeah, I've used it on the iPhone.

00:37:32   - It's really great.

00:37:33   It's a service you sign in with your Twitter account.

00:37:36   And what it does is it's really, really great

00:37:40   if anybody out there wants to try it.

00:37:41   I find tons of stuff that I link to on Daring Fireball from it.

00:37:44   But what it does is it follows your own-- the people you

00:37:46   follow on Twitter.

00:37:48   And when a certain threshold of the people you follow

00:37:51   have all tweeted the same link or a link to the same article,

00:37:53   it gives you a notification about it on the assumption

00:37:56   that if like five people you follow

00:37:57   have all tweeted the same link to blank,

00:38:00   you want to know about blank.

00:38:02   And it gives you a notification for that.

00:38:04   And when I first heard about it, I

00:38:07   thought that this is going to be something

00:38:08   that I'm going to try and quickly get rid of,

00:38:10   because I'm sort of sensitive to getting--

00:38:12   I don't want too many notifications from anything.

00:38:15   I find that whatever algorithm Nuzzle uses to do this--

00:38:18   I mean, maybe it's super simple.

00:38:19   Maybe it's just-- I don't--

00:38:21   but just the idea that if five of the people I follow

00:38:25   on Twitter link the same thing I want to know about it,

00:38:27   the ratio of interesting links to the times they notify me

00:38:33   is so high that I have no interest in turning it off.

00:38:38   but they don't even have a watch app,

00:38:39   but the notifications go to my watch just automatically.

00:38:42   Like you don't, you know,

00:38:42   like the only thing I would want from them on my watch,

00:38:45   they don't even need a watch app for

00:38:46   because the notifications, if my phone is in my pocket,

00:38:49   automatically go to my watch.

00:38:51   It's so great. - I remember Brad Ellis

00:38:53   was saying that when, I forget when, right,

00:38:54   when watch was introduced that, in his opinion,

00:38:57   developers should spend more time making

00:38:58   a really awesome notification experience

00:39:00   and not worry about an app at all,

00:39:01   and I think that turns out to be canny advice.

00:39:03   - Right, so like Nuzzle doesn't even have a watch app,

00:39:06   And to me, the watch app that I get is exactly what I want.

00:39:10   And poor Marco spent months working on an advanced watch

00:39:15   app that maybe someday will turn into something that's

00:39:17   actually good and useful, like a future version of the watch.

00:39:21   Maybe the foundation will be there

00:39:22   so that when the watch actually gets its own LTE or something

00:39:25   like that, it actually will be useful.

00:39:28   But he spent all this time on it,

00:39:29   and I don't want to use it at all,

00:39:31   even though I use Overcast almost every day.

00:39:34   Yeah, I've tried it.

00:39:35   I like it.

00:39:35   It has the issues that you mentioned,

00:39:36   and I always have my iPhone with me even if I'm out,

00:39:38   so I haven't been forced to use it.

00:39:40   But it's a problem that people want solved,

00:39:43   but it is not something

00:39:44   that is technically solvable right now.

00:39:45   - Right, like in all honesty,

00:39:47   if Overcast didn't have a watch app,

00:39:49   it wouldn't matter to me at all

00:39:50   because the only thing I ever really do,

00:39:52   I can do through the now playing anyway.

00:39:54   - Yeah.

00:39:55   - So I don't know.

00:39:58   I feel like there's something that Apple,

00:40:00   I think they're well aware of it, that's what I think.

00:40:03   And I think we'll see more,

00:40:04   I think we'll see it go that way.

00:40:05   - Yeah, I think it's a classic example of,

00:40:07   they saw everything as a nail.

00:40:09   They had an App Store hammer,

00:40:10   and then everything looked like an app nail to them.

00:40:12   And in hindsight, you can look back and say,

00:40:14   we needed a different approach for this.

00:40:15   - Yeah.

00:40:16   - And I think they've known that for over a year and a half,

00:40:18   which is why we saw watchOS 3

00:40:20   and we'll see watchOS 4 be different.

00:40:22   - Yeah.

00:40:23   Yeah, it'd be interesting to see what they do with that.

00:40:28   Anything else on quarterly results before we move on?

00:40:32   - No, I mean, I saw at the same time

00:40:35   Tim Cook was on Jim Cramer

00:40:37   and said that he used Apple Watch to lose 30 pounds.

00:40:39   - Right.

00:40:39   - Which, I don't know where that was from.

00:40:41   - Right.

00:40:43   Like, and again, and Tim Cook does not strike me

00:40:45   as a bullshitter, right?

00:40:46   - No.

00:40:47   - Like, he's, if he says he lost 30 pounds,

00:40:50   I think he probably lost 30 pounds,

00:40:51   but I mean, I've seen him on stage every six months

00:40:56   for five, six years, and there was never any point

00:41:00   where it looked like he put on, you know,

00:41:03   or put on or lost 30 pounds.

00:41:05   - Yeah. - I mean, that's,

00:41:06   but anyway. - And more power to him,

00:41:08   it just, it was amazing. - Right.

00:41:10   What did the, it was a pretty good interview.

00:41:12   I mean, for, you know,

00:41:13   I give Jim Cramer credit for a guy

00:41:18   who's not really an Apple person,

00:41:20   but rather a finance person.

00:41:22   I thought it was a pretty informative interview.

00:41:25   I think that this announcement of a billion,

00:41:27   a $1 billion fund to promote advanced manufacturing jobs

00:41:32   in the US is pretty interesting.

00:41:34   That's cooking out.

00:41:36   So details aren't out yet.

00:41:37   I think he said to come in at the end of May.

00:41:39   - Yeah, I think so.

00:41:42   It was entirely, I mean, it was super interesting

00:41:47   when you started to decompose the interest,

00:41:48   the relationship that Apple has with the administration

00:41:50   who is heavily pro US jobs and US manufacturing

00:41:54   and all these elements where Apple has

00:41:56   massive manufacturing capacity outside the US, but also a massive amount of money, which

00:42:00   we heard about on the call as well, that they want to repatriate.

00:42:03   And the last time that happened was under the Bush administration, and this administration

00:42:06   might be more amenable.

00:42:07   So I think it's a very careful balancing act.

00:42:10   Right.

00:42:12   And it's—yeah, because one thing that has happened in recent years is Apple's had

00:42:22   large cash poured for a long time now, although the definition of large keeps growing.

00:42:30   Yeah, letting out the waste band.

00:42:33   But it has changed, even though they've sort of capped it off now where it's not

00:42:37   really growing so much, and rather, however much it would be growing, they just keep giving

00:42:42   to the shareholder, whatever they call it.

00:42:45   It's growing despite the biggest giveback, one of the biggest givebacks in corporate

00:42:48   history.

00:42:49   One shift that has happened, though, is that their US holdings have shrunk, and it's almost

00:42:55   entirely overseas. What they have now is almost entirely overseas. And so for this billion-dollar

00:43:00   fund in the US, they're going to borrow to get the money rather than use it because they don't

00:43:06   really have a billion. They have a billion, but it's—

00:43:11   I don't have it on me.

00:43:12   Right. It's in my wallet over in Ireland.

00:43:17   No, very true.

00:43:20   But it'll be interesting to see what comes of that.

00:43:22   And I don't think Apple is a--

00:43:27   and they've been thinking about this for a while.

00:43:29   I mean, with the Mac Pro, that was

00:43:33   2013 where they announced that it

00:43:35   would be assembled in the US.

00:43:36   I mean, so it's not like they haven't--

00:43:38   like all of a sudden, just with Trump in office,

00:43:41   they're now looking to toe the line on bringing manufacturing

00:43:45   jobs back to the US.

00:43:48   But I don't think-- and I think if there's

00:43:50   a Trumpian aspect to it, I don't think

00:43:53   it's so much about toeing the line

00:43:55   or wanting to please the Trump administration,

00:44:00   but more a pragmatic, let's make sure we don't get caught

00:44:06   flat-footed if they start a trade war with China

00:44:10   or impose some other tariff or something like that.

00:44:14   like let's be ready for anything that might happen now that somebody with his temperament

00:44:19   and his stated policies toward overseas manufacturing jobs is in office.

00:44:25   It's almost like preemptive positioning when they bought Steak and Didi in China because

00:44:30   there's certain volatility in that leadership as well.

00:44:34   And it's true.

00:44:35   I think that was back when they were doing the iFactory series in New York Times and

00:44:39   and that was a big story, and Apple making Macs,

00:44:43   MacBook Pros, sorry, Mac Pros in the US

00:44:45   was a very good story for that too.

00:44:47   It'll be interesting to see where this goes.

00:44:49   - Yeah, it will be.

00:44:51   I mean, you know, again, you can say,

00:44:53   like I saw it on CNBC after the Kramer thing had aired,

00:44:58   where somebody was like, you know,

00:45:01   given Apple's $250 billion cash holdings

00:45:07   and their quarterly revenue.

00:45:11   It's easy to say a billion dollars isn't that much to Apple,

00:45:13   but still, a billion dollars is a billion dollars,

00:45:15   and saying you're gonna commit a billion dollars

00:45:17   to assembling, to advanced assembly

00:45:19   and manufacturing jobs in the US is significant.

00:45:22   - Yeah, if you have $250, you gotta give a dollar away.

00:45:25   It's still a dollar you gotta give away.

00:45:26   - Right, and it's, a billion is a little different

00:45:29   than one dollar.

00:45:29   - And any problem is easy to solve

00:45:32   provided you're not the one in charge of solving it.

00:45:35   That's what the media keeps forgetting, I think.

00:45:37   (laughing)

00:45:39   - Let me take another break here

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00:48:25   What else happened recently?

00:48:26   I guess this week, Microsoft had their education event, and they unveiled two things. They

00:48:30   unveiled on the hardware side, their own—this is their first true laptop, something that's

00:48:36   not like a detachable tablet type thing that they call the Surface laptop. And they unveiled

00:48:44   a new operating system called Windows 10 S. Which do you want to talk about first?

00:48:50   I was going to say Joe Belfiore's new blonde haircut.

00:48:52   Wow.

00:48:53   (laughs)

00:48:55   He famously Windows phoned Joe Belfiore,

00:48:57   who went away for a year and decided to focus on education

00:48:59   and then came back and is now leading this initiative.

00:49:02   - I didn't see that part of the show.

00:49:03   - Yeah, I don't think they put him on stage,

00:49:05   which was interesting.

00:49:06   - Oh, that's why I didn't understand.

00:49:07   - They had Meyerson on stage, yeah.

00:49:08   He was out front beforehand.

00:49:10   I think maybe the hardware first, because--

00:49:12   - Were you there?

00:49:13   - No, we had Daniel Rubino, one of my colleagues was there.

00:49:16   - I watched the video, but I really only watched the video

00:49:18   for the 10S part, I didn't watch the hardware part.

00:49:23   So what do you want to talk about first?

00:49:25   The hardware?

00:49:26   Alright, let's talk about the hardware.

00:49:27   It's so interesting, and I'm going to start off with this because why not, it's

00:49:31   the talk show.

00:49:33   If this laptop had an Apple logo on it, I think the coverage would have been very different

00:49:37   than what we saw.

00:49:39   How so?

00:49:40   Because there was a lot of things about this laptop that were very Apple-esque.

00:49:44   The design looks almost identical to a MacBook Air.

00:49:46   The price was almost identical to a MacBook Air.

00:49:49   You know a lot of the video and the language that they used for it was very similar to

00:49:54   Apple.

00:49:55   It's got one port on it, USB-A port instead of a USB-C port, but just one port on it and

00:49:59   it does have the Surface dock, you know, so you can do other things with it.

00:50:02   But I think a lot of people who were highly critical of Apple for doing things like a

00:50:06   single port MacBook or any of a dozen decisions they've made recently were strangely silent

00:50:12   when it came to Microsoft making very similar moves with this laptop.

00:50:15   Yeah, one port it's USB a which seems outdated and then they have a proprietary

00:50:19   Displayport right? Yeah, and the surface talked that to me that the proprietary

00:50:24   Displayport seems like the weird the part that like whoa if Apple did that that would be that would seem to generate a lot of criticism

00:50:31   I don't get you you are true. I wasn't even gonna bring that aspect up, but there's

00:50:36   How can Apple release a laptop with one port and get like in a month of criticism?

00:50:42   or years of criticism. People still complain about the MacBook, you know, people call it the MacBook One, and then

00:50:48   Microsoft releases one with one port. It happens to be outdated. The only other port is a proprietary one, which is an Apple move, and

00:50:56   it gets headlines like

00:50:59   here's the laptop, the Apple's, Apple's, or Microsoft's

00:51:03   MacBook killer that Apple can't ignore. And it gets, it gets funnier after that because it is running Kaby Lake,

00:51:09   which is a generation beyond what Apple ran, and there's reasons for that.

00:51:12   that the quad-core version of Kaby Lake wasn't ready when Apple needed it.

00:51:15   The graphics that Apple wanted, the more powerful graphics, were not available when Apple wanted

00:51:18   to put them into the MacBook Pro.

00:51:20   And this, in fact, doesn't have those sorts of graphics options.

00:51:22   So Microsoft made a different choice.

00:51:24   They went with a better CPU, but arguably a much worse GPU.

00:51:27   But at the same time, there's 8 gigabytes and 16 gigabytes of RAM, but the 16 gigabyte

00:51:31   version doesn't ship for months.

00:51:32   And can you imagine if Apple announced the new MacBook Pros that we went to in October

00:51:36   and said, "Oh, by the way, the 16 gigabyte version is not going to ship for a few months"?

00:51:41   And I also think I went through the configuration on it because there was also some initial

00:51:45   Twitter feedback that I saw where it was that it shows how overpriced the MacBook Pros are.

00:51:52   And I found the exact opposite where I configured one with a Core i7, 16 gigs of RAM, and a

00:52:01   512 megabyte SSD.

00:52:03   the price was $2,199 and a MacBook with Core i7 and 16 gigs of RAM and a 512

00:52:11   gigabyte SSD was $2,199. The exact same price. $2,199 for both. And Apple offers a

00:52:20   one terabyte SSD. Microsoft doesn't. And Apple will let you get a 16 gigabytes of

00:52:26   RAM configuration in the Core i5 variant of the MacBook Pro and Microsoft doesn't.

00:52:33   If you want to get 16 gigs of RAM,

00:52:35   you've got to also upgrade to the Core i7.

00:52:38   And I'm personally, me personally,

00:52:41   I've actually totally changed my personal take on

00:52:44   laptops where for me, I think,

00:52:50   I'm podcasting from it right now.

00:52:53   I have a 2015, or is it 2014?

00:52:57   Jeez, I don't even remember.

00:52:58   MacBook Pro, 13-inch MacBook Pro.

00:53:00   Let's see what they say in here.

00:53:02   I don't even remember.

00:53:03   That's a...

00:53:04   Um...

00:53:05   I...

00:53:06   My...

00:53:07   My take for years...

00:53:09   Oh, mid-2014.

00:53:10   So, yeah.

00:53:11   It's a late 2014 MacBook Pro.

00:53:13   13-inch.

00:53:14   It's one of the best computers I've ever owned.

00:53:16   Um...

00:53:17   I maxed out everything when I bought it.

00:53:19   I got three...

00:53:20   Like what?

00:53:21   Three gigahertz Intel Core i7.

00:53:22   I got the 16 gigs of RAM, which is the most I could get.

00:53:25   And I got the one terabyte SSD.

00:53:28   And I'm happy with all those decisions, because I've got a couple hundred gigabytes

00:53:33   left but way more than 512.

00:53:35   I'm like 700 or something like that.

00:53:37   So I need the one terabyte was useful to me.

00:53:41   RAM is the biggest thing I need, because I'm lazy and I always keep all the Safari tabs

00:53:46   open and Slack takes, Slack itself, even if you run it as an app, takes like a gigabyte

00:53:52   of RAM.

00:53:55   I don't think I need a Core i7.

00:53:57   I think-- and I thought this when I was testing.

00:54:00   I had a couple of the review units of the new MacBook Pros

00:54:04   from October.

00:54:08   There's nothing I do on a day-to-day basis

00:54:11   where having a Core i7 instead of a Core i5

00:54:13   really makes a difference.

00:54:14   I don't use Xcode.

00:54:16   Or if I do, I do it rarely enough

00:54:19   that the difference in build times.

00:54:21   I'm not doing it all day long where

00:54:23   shaving some time off the build and run cycle

00:54:26   would really make a difference.

00:54:30   Other things I do that might be like batch processing,

00:54:32   it doesn't matter to me because it's running in the background.

00:54:36   The difference between a Core i5 and Core i7, performance wise,

00:54:39   isn't meaningful to me personally.

00:54:40   And the Core i5 is going to get better battery life.

00:54:43   And that actually is-- that's more important to me.

00:54:45   So I think the next time I get a MacBook Pro,

00:54:47   I'd get a Core i5 that would get better battery life.

00:54:50   And it's way more than fast enough.

00:54:53   And then just max out the SSD and the RAM.

00:54:56   Microsoft won't let you do that and I find that to be a very useful configuration

00:54:59   I have the exact same MacBook Pro that you have from before the exact same

00:55:03   Configuration and I came to the exact same conclusion about this one

00:55:05   And in fact, I can't mention any names, but someone who knows those chipsets inside and out just told me point blank

00:55:10   Don't give and tell the extra money. I

00:55:12   Really I

00:55:16   I believe that I really do and it's not so much that there's anything wrong with the core i7

00:55:20   But that the core i5 is just good enough and I really do on that curve

00:55:25   And I think that's why Apple has wisely made it the default,

00:55:28   even on the Pros.

00:55:31   It's not just that it's more expensive,

00:55:33   but that it's really a good--

00:55:35   even for someone who needs a hyper--

00:55:37   relatively on the scale of all of Apple's MacBooks,

00:55:40   higher performance model, the MacBook Pro, the Core i5

00:55:43   is a good one.

00:55:44   So anyway--

00:55:44   And for that money, you get an extra port.

00:55:45   I mean, you're actually getting one port from MacBook Pros.

00:55:48   So anyway, I do find that interesting on the surface.

00:55:51   I'll give them kudos.

00:55:52   I don't think it looks like a MacBook Air.

00:55:54   I think Apple has largely defined the modern laptop in a way that there are some basic

00:56:02   fundamental similarities to the MacBook Air.

00:56:06   The wedgey design.

00:56:07   Yeah, the wedge design is certainly one.

00:56:10   But I don't think that's the sort of thing that even me, as somebody who's relatively

00:56:13   sensitive to people ripping off MacBooks, I don't think that's something that they could

00:56:17   lay ownership to.

00:56:21   sort of like, Tim Cook mentioned this, I think, at the event last year when they introduced

00:56:28   the MacBook Pros, when they went through all of Apple's portables from the beginning,

00:56:33   at least from the first PowerBook. I think they skipped the Mac portable. But all the

00:56:38   ones that you would identify as a laptop, like the Mac portable was portable but wasn't

00:56:42   a laptop. It seems crazy now, but Apple was the first one who put the keyboard back so

00:56:50   so that you have palm rests in front.

00:56:53   All previous laptops had the keys

00:56:55   right up to the front of the device.

00:56:57   I just think that's just something that when you see it,

00:57:01   you're like, oh, that's an obvious way to do it.

00:57:03   I think that the wedge-- - Optimized design, yeah.

00:57:05   - Right, I think the wedge shape of the MacBook Air

00:57:06   is an obvious way to shave weight off a device,

00:57:10   where only some of the components

00:57:12   need the full thickness at the back,

00:57:15   and if you can make it thinner in the front,

00:57:17   you might as well.

00:57:18   So I don't hold that against them.

00:57:19   And at a glance, you don't look at it,

00:57:21   and you wouldn't look at that

00:57:22   and think that's a MacBook Air.

00:57:23   - I did, but I'm willing to concede the point.

00:57:26   I watched the video, 'cause the video, again,

00:57:28   is very similar to Apple Design Language,

00:57:30   and you see that computer opening up,

00:57:31   and if you squint a little bit,

00:57:32   you can't tell the difference.

00:57:33   - All right, and they obviously took a lot of pride

00:57:36   in the video, and it is an Apple-style video,

00:57:39   but there's a lot of pride in the internals, too.

00:57:41   They show the, what would you call it, the...

00:57:47   It's obviously done in CGI, but the computer--

00:57:50   The renders.

00:57:51   Yeah, coming apart.

00:57:53   The different parts of it are in the little screws

00:57:56   and everything going in.

00:57:57   The federalists, too, they've gotten much--

00:57:59   I mean, for a software company, they've

00:58:00   gotten remarkable hardware chops over the last few years.

00:58:03   Well, it's funny, though.

00:58:04   They've always had a good reputation

00:58:06   for making mice and keyboards, right?

00:58:09   Microsoft mice and keyboards have,

00:58:10   ever since they got into the business,

00:58:12   have had reputation as world class.

00:58:15   But the Xbox line, not so much.

00:58:18   No.

00:58:20   Red rings and squeaky boxes.

00:58:23   But yeah, they-- and I even like the way that the--

00:58:27   I think-- is it the Windows logo or the Microsoft logo,

00:58:30   the four rectangles thing?

00:58:31   The Windows logo, yeah.

00:58:32   Is that what it is?

00:58:34   It looks good.

00:58:35   They've finally gotten it to a point where it's reduced to a real icon.

00:58:40   It was probably the de facto Microsoft logo by now,

00:58:43   because I think they use it everywhere.

00:58:45   They're using a different material.

00:58:46   They've got a soft touch, I forget the name of it.

00:58:51   There's a brand name that I wasn't familiar with.

00:58:53   - Yeah, acetyl something.

00:58:55   - Yeah, it's some kind of fake leather type,

00:58:58   artificial synthetic leather.

00:59:00   - It's still leather, what AstroTurf is to grass

00:59:01   or something.

00:59:02   - Yeah, but that it's used by premium luxury automakers

00:59:06   for components and the dashboards of cards

00:59:09   or stuff like that.

00:59:10   So it's supposedly a great material.

00:59:13   It will be interesting to see how it wears.

00:59:16   And you might think, hey, well, duh, of course

00:59:18   it's going to wear well.

00:59:19   Why would they use it if it doesn't wear well?

00:59:21   But then you think about the-- remember the iPod Touch that--

00:59:24   Yep.

00:59:25   Yes, sir.

00:59:26   Well, not an iPod Touch.

00:59:27   It was an iPod Nano or something that was like-- you could

00:59:31   scratch it with your fingernail.

00:59:33   Yeah, no, totally.

00:59:33   You can't-- it's hard to-- there's no amount of Q&A that

00:59:36   can prepare you for a million customers hitting your product.

00:59:38   So we'll see.

00:59:38   But that's new.

00:59:39   I don't recall ever seeing a premium laptop that

00:59:42   was something other than aluminum or plastic as the surface.

00:59:47   - Yeah, they said they wanted it to be less sterile,

00:59:52   to be less cold, to be more like a warmer feeling.

00:59:54   I just thought, ah, that's gonna pick up a lot of stains

00:59:56   and a lot of dirt.

00:59:57   - At least the lighter colors would, I would think.

00:59:59   I don't know.

01:00:01   - But the argument, I guess, is that it's gonna patina

01:00:03   like a good leather.

01:00:04   - I don't know, but it's--

01:00:05   - Which is a fancy way of saying a stain.

01:00:07   - Yeah, but it's weird, though.

01:00:08   I think things that patina by touch are different

01:00:10   things like if you have like a leather watch strap or a leather belt it will get a patina over time

01:00:21   but it doesn't look like too sweaty palm print. Yes. Right? No, yeah, exactly. You know, it's

01:00:29   coming from use as opposed to coming from just sweat on two spots, right? Right on the palm rest.

01:00:35   And those are heavily used. I mean, that's heavy traffic there. Yeah, so we'll see, you know,

01:00:38   but give them credit for something original.

01:00:40   - Yeah.

01:00:42   - And it looks pretty good.

01:00:42   But I don't think the price is all that compelling.

01:00:45   I mean, I don't think it's bad,

01:00:46   but I don't get the argument

01:00:48   that it makes Apple's MacBook pricing look out of line.

01:00:51   - No, the one thing you could criticize Apple for

01:00:53   is that at $99, $999, they do not have a retina computer.

01:00:57   The MacBook Air is still a non-retina machine,

01:00:59   although it does have a wider variety of ports

01:01:02   than this machine does.

01:01:03   - Right.

01:01:04   - But for people who always wanted a retina MacBook Air,

01:01:07   the MacBook Pro Escape is not quite that,

01:01:10   and this is closer.

01:01:11   - Right, and that is the take,

01:01:13   there are a couple of tweets along the lines of,

01:01:15   this is the MacBook Air, the Retina MacBook Air

01:01:18   that Apple never made.

01:01:20   And you can kinda see that and squint your eyes,

01:01:23   and that's sort of basically what it is.

01:01:25   It's the wedge shape, it's 13 inches display,

01:01:28   it has a Retina display, it's got the Core i5

01:01:31   and Core i7 chipsets, as opposed to the Intel M3, M5,

01:01:35   seven chips that the MacBook has.

01:01:37   Yeah, which I still don't like.

01:01:40   Whenever those chips see my iPad Pro, they just cry.

01:01:45   That's the truth.

01:01:46   For people who don't pay attention to those specs, and I know some of you people listening

01:01:49   obviously do, but I think a lot of you probably don't.

01:01:53   But the MacBook, the one-port MacBook that we have today is very, very, very similar

01:02:00   conceptually to the original, when the iPad Air--

01:02:04   not iPad Air, MacBook Air first came out,

01:02:07   where it was not priced based on performance.

01:02:14   And in traditional computer thinking,

01:02:18   you spend more to get a faster computer, and you spend less,

01:02:21   and you get a slower computer, by some multiple measures,

01:02:26   often of speed. I/O, CPU, graphics, you name it. You spend more, you get faster, you

01:02:33   spend less, you get slower. And the MacBook Air was a dramatic exception to

01:02:38   that, where the MacBook Air was a lot more expensive and a lot slower, but what

01:02:43   you got was something remarkably thinner and lighter. You know, famously taken out

01:02:47   of a manila envelope by Steve Jobs on stage to announce it. To gasps, outright

01:02:52   gasps from the audience.

01:02:54   The appeal was immediate.

01:02:56   But in terms of how is it priced, it was very different.

01:02:58   It was a premium-priced product, even though the performance was

01:03:01   far behind a MacBook Pro, like far less expensive computers.

01:03:05   The MacBook today is sort of like that.

01:03:07   The difference isn't as dramatic.

01:03:08   It's not super expensive.

01:03:10   I think-- what does it start at, $1,299?

01:03:11   And a reasonable config is, I would say, around $1,500, $1,600.

01:03:18   But it's slower than a $999 MacBook Air.

01:03:22   - Yeah, and I think it's also,

01:03:24   if you actually look at that computer,

01:03:25   the components that Apple used in it are expensive,

01:03:27   and it's a really bad analogy,

01:03:29   but they delivered futuristic computer technology

01:03:31   in the present, and that's always expensive.

01:03:33   And I remember sort of asking why it was this price,

01:03:35   and it seemed overpriced,

01:03:36   and I got this aghast sort of look,

01:03:38   and then I got a very behind-the-scenes rundown

01:03:41   of what actually went into making it.

01:03:42   That display is incredibly sophisticated,

01:03:45   and a lot of technology they had to invent

01:03:46   to make that computer the way it is

01:03:48   is incredibly expensive and sophisticated.

01:03:50   And you could argue that they don't need to do that kind of thing.

01:03:53   And I think we'll see that again with the iPhone 8 when it ships, that it's going to

01:03:56   be more expensive than the current iPhones, but because the technology they're putting

01:03:59   in it would otherwise not come to market for a couple years.

01:04:02   And that's the cost of bringing that stuff forward sooner.

01:04:05   So you really, we're skipping ahead, but you really think that they're going to ship an

01:04:09   iPhone Pro or X or 8 or something that actually raises the prices from the current iPhone

01:04:15   7 and 7 Plus prices?

01:04:17   Yeah.

01:04:18   I think they saw that there's price elasticity

01:04:20   when they made the iPhone 7 Plus 20 bucks more

01:04:23   than the previous iPhone 7, sorry, the previous iPhone Plus

01:04:26   and that's gonna carry forward.

01:04:27   And when they start introducing things,

01:04:28   it's always a balancing act.

01:04:30   If we wanna put something like distance charging in,

01:04:31   if we wanna put a much better camera system in,

01:04:33   if we wanna put much better screen technology,

01:04:35   all these things have a cost

01:04:36   and they'll come down over time.

01:04:37   But if we do it today, it's gonna be this price.

01:04:40   If we do it next year or the year after,

01:04:41   it's gonna be this price.

01:04:42   And once in a while, I think they're gonna gamble

01:04:44   and say, we can afford to test the upper limits

01:04:46   of iPhone pricing.

01:04:48   - Yeah, and the other factor that comes into that

01:04:49   is that they can not have to bank on having 70 million

01:04:54   of those components in the first three months.

01:04:57   - Oh yeah, it controls demand.

01:04:58   And the price is higher, less people want it,

01:05:00   and then the constrained supplies don't matter as much.

01:05:02   - I think if that's going to be their strategy

01:05:04   with the iPhone, which I don't think

01:05:07   they would call the iPhone 8, I really don't.

01:05:09   I think they would call the iPhone Pro,

01:05:11   or the iPhone something.

01:05:14   Because I think, and then if they also have iPhone 7S

01:05:18   and iPhone 7S Plus that stay at these same prices

01:05:20   we know today and just do a typical S upgrade,

01:05:23   which is often, if not usually, a better upgrade

01:05:27   component-wise than the non-S years.

01:05:30   I think calling the new one the iPhone 8

01:05:34   makes the iPhone 7S look older than it would

01:05:39   if they gave it a non-numbered name.

01:05:41   Like iPhone Pro. - Or I think iPhone edition

01:05:42   was the other-- - Right.

01:05:43   - Because Macbook was Macbook stealth originally

01:05:45   and then they just went with Macbook.

01:05:46   - Right.

01:05:47   - So they can play around with those things

01:05:48   until they just make a last minute decision.

01:05:50   - Right, and those things, the leak the least

01:05:52   because they don't print the names on the devices

01:05:56   so they don't come out of the,

01:05:57   like you look on the back of your iPhone 7,

01:05:59   it doesn't say iPhone 7, it just says iPhone.

01:06:01   And so it's just a small number of product marketing people

01:06:06   who do not leak.

01:06:08   - And they back that stuff around for a while.

01:06:11   Anyway, back to Surface laptop.

01:06:16   The other thing-- so the flip side of the event

01:06:20   was the software, which was Windows 10 S, which is--

01:06:24   and again, the comparisons were all to Apple.

01:06:27   Apple was so-- it's fascinating to me,

01:06:29   as somebody who's been following this stuff obsessively for--

01:06:34   I was a teenager.

01:06:38   It is absolutely fascinating to me how central Apple is

01:06:43   to this entire announcement, both software-- everything

01:06:46   on the hardware was compared to the MacBook,

01:06:48   and everything software was compared to iOS and Mac OS.

01:06:55   But the big news-- so Windows 10 S,

01:06:57   it's a cut-down version of Windows 10.

01:07:00   And it is iOS-style in some ways,

01:07:04   where apps can only come from the Windows App Store.

01:07:09   And to get out of that, it's not like the Mac

01:07:15   where you can click a checkbox and there's

01:07:20   a radio button in the Mac in the security thing where you can

01:07:22   choose--

01:07:23   The Gatekeeper switch.

01:07:23   Yeah, the Gatekeeper switch.

01:07:25   Allow apps only from the App Store

01:07:26   or allow apps from the App Store and from known

01:07:31   identified developers.

01:07:33   And you can also, even with that checked, you can also use apps from unsigned developers,

01:07:40   but you have to be nerdy enough to open them by not just by double clicking them.

01:07:45   You have to control click and choose open or use the gear menu in the Finder just to

01:07:51   double ensure that you know exactly what you're getting into in terms of using an app from

01:07:55   an untrusted developer.

01:07:57   So you can do that on the Mac.

01:07:58   Windows 10 S is like iOS where there are no options like that.

01:08:03   no options to get side load apps from outside the store from known developers, and certainly

01:08:08   no options to get unsigned apps.

01:08:12   Yeah.

01:08:13   You have to pro your way out of it.

01:08:15   It's a huge, huge deal.

01:08:16   I mean, it's the sort of thing that, like, if Microsoft had tried it 10 years ago, would

01:08:21   have had antitrust regulators.

01:08:24   Well, that was a suspicion.

01:08:25   When the Mac App Store was first announced, there was a whole bunch of people who panicked

01:08:29   immediately and said that we're one step away from Apple locking down the Mac the way

01:08:32   They locked down iOS.

01:08:33   And this is just the first stage.

01:08:35   And Apple has thus far not done it at all.

01:08:37   And it's interesting that Microsoft got there first.

01:08:39   Right.

01:08:40   Because that's everybody's fear.

01:08:42   And I highlighted a tweet during Fireball

01:08:44   from Dieter Bohn of The Verge who said that Apple--

01:08:49   Microsoft's the first-- I might be paraphrasing,

01:08:52   but Microsoft's the first-- Microsoft

01:08:53   ships a completely locked down computer before Apple.

01:08:57   Odd.

01:08:58   Which I thought was interesting just because it's-- when he's

01:09:01   talking about a computer, it's clear that what he means is that he only thinks of Macs

01:09:05   as real computers and not iPads, because the iPad's been out since 2011 and has been locked

01:09:10   down the exact same way the whole time.

01:09:14   Other changes that they've done that are even tighter than Apple's iOS restrictions in some

01:09:18   ways are with web browsers. You can download other web browsers, but only from the store,

01:09:26   Chrome is not in the store.

01:09:29   It was at one point, so it might return.

01:09:31   But my understanding-- I've poked your ass around--

01:09:34   was more or less that Microsoft went to Google and said,

01:09:38   hey, with the version of Chrome in the Windows App Store,

01:09:41   you're turning it into Chrome OS.

01:09:42   That it had its own app store.

01:09:45   It did, again, circling back to our discussion of Apple

01:09:48   and apps that have, quote unquote, "apps within apps."

01:09:51   They were like, knock it off.

01:09:53   And so rather than sort of take out that Chrome OS style

01:09:57   integration of, quote, "apps within Chrome,"

01:09:59   Google just took their ball and went home.

01:10:04   But even if you do get a browser from their app store,

01:10:08   you can't set it as your default.

01:10:10   So if you get an email with a URL in it and click it,

01:10:13   it's always going to open in Edge.

01:10:16   And here's the part that would have

01:10:18   been so much more interesting if they had done this years ago

01:10:21   and if they had done it in Windows itself, is the search feature in Edge is Bing and

01:10:29   only Bing, and you have no other options.

01:10:31   So unlike, say, even iOS, which is pretty locked down, you get Google Search by default

01:10:37   still, but you have the option for Bing, Yahoo, and DuckDuckGo.

01:10:42   Yeah, it's hard to take things away from people, and I think the expectations are different.

01:10:48   With iOS, the expectation has always been that you've never been able to have third-party

01:10:51   rendering engines which means like you know you've never been able to you've always been able to change your

01:10:56   Your default browser and with Microsoft in they're calling this windows. It feels like windows

01:11:00   It looks like windows those features now feel taken away. You've taken away my ability to get chrome

01:11:05   You've taken away my ability to search with Google rather than being a feature of the operating system. Yeah, it's interesting to see

01:11:10   I'm intrigued to see how it plays out because I don't know who the market is for this exactly and

01:11:14   There is an option last but not least there's an option

01:11:17   Where you can get this?

01:11:20   You could get if you buy any I guess any of these Windows 10s devices

01:11:24   If you pay 50 bucks you can upgrade to Windows 10 Pro

01:11:30   But it's clear

01:11:32   It's not just like you're paying 50 bucks to toggle a checkbox like you're changing the OS in certain ways

01:11:39   Yeah, it's not like a keeper where you can turn it off download the app you want turn it back on

01:11:42   It's not like you can download Windows Pro get Chrome turn

01:11:44   Then we go to it to Windows s you know, and I don't know enough about Windows to say for sure

01:11:49   But it's clear that the difference between Windows 10

01:11:52   S and Windows 10 Pro is more like it's

01:11:56   two different versions of Windows 10,

01:11:58   and there's obviously a lot of shared stuff in there.

01:12:00   And it's not like the difference between iOS and Mac OS,

01:12:03   where it's two entirely different operating systems.

01:12:08   One Windows.

01:12:09   But they did advertise repeatedly during the event

01:12:12   that Windows 10 S-- I forget what they call it,

01:12:16   but they don't call it sandboxing.

01:12:18   But there's the equivalent idea of sandboxing,

01:12:20   where apps from the Windows Store

01:12:26   can't do it like the old days, where you can do it right

01:12:28   all over the file system and add DLLs to the system level,

01:12:32   blah, blah, blah.

01:12:34   They repeatedly said that as you use a Windows 10s device

01:12:38   over time, it won't slow down, which is-- again,

01:12:42   I haven't used Windows on a regular basis in 10 or 15

01:12:45   years.

01:12:46   but it was always true and as far as I have heard recently is still true that if you know people

01:12:51   can't nobody who's like an expert Windows user gets a Windows machine and four years later is

01:12:56   still using it without having reinstalled at some point just to clean out the gunk.

01:13:00   Yeah, it's super interesting to me the a lot of the choices that they made with this operating

01:13:07   system and are they competing? It's clear they're competing with Apple in some aspects,

01:13:12   but they're also competing with Chrome and Chrome OS and the growth of Chrome OS in schools and

01:13:18   Chrome OS is the virtue is like the Chromebooks are super super cheap. Chrome OS is essentially free

01:13:23   Chrome services Google services are essentially free makes it an incredibly easy to manage environment which education, you know schools

01:13:29   everybody loves

01:13:30   And is Windows S really an answer to that is a way to get a super cheap free version of Windows onto a bunch of

01:13:36   Super cheap really inexpensive laptops. I think the surface laptop aside a lot of the third-party

01:13:42   the Surface laptop style machines

01:13:44   will be much less expensive.

01:13:46   But that brings with it a whole other set of concessions

01:13:50   or compromises.

01:13:51   - I get the impression that at a practical level

01:13:56   and from their business,

01:13:57   what they really need to be concentrating on

01:14:01   is Chrome and Chromebooks.

01:14:03   And they announced that through their,

01:14:06   nothing Microsoft branded, but through their partners,

01:14:08   OEMs like I think Acer and a couple of others,

01:14:11   that they're coming out with $189 notebooks

01:14:15   that run Windows 10 S, which is a pretty good price point.

01:14:19   And clearly, very specifically,

01:14:21   the event was education themed,

01:14:23   marked at the education market.

01:14:25   The Surface laptop is clearly not aimed

01:14:31   at that part of the education market,

01:14:35   the tray full of laptops for grade school kids

01:14:40   get as they come in the school.

01:14:43   There is, though, it's still quote unquote education,

01:14:47   but there's the teenagers who are

01:14:50   going to own their own computer for high school and college.

01:14:56   And that's where Apple thrives.

01:14:59   So Apple, because their prices are so much higher,

01:15:02   and because Chrome-- for various reasons,

01:15:04   Chrome has really, really taken off in the classroom education

01:15:09   market.

01:15:09   And it's going to be interesting to see if it repeats.

01:15:14   Because when I was young, a lot of us had Apple computers.

01:15:17   But you'd go to schools, and sometimes they

01:15:19   would have PC computing labs because they were cheap.

01:15:22   And all you'd hear is kids go, ah, I hate this.

01:15:23   My Mac at home is so much nicer.

01:15:25   And I wonder if we're going to get to the point where,

01:15:28   because schools are regimented the way that they are,

01:15:30   there's a bunch of cheap Windows S and probably a lot more

01:15:32   Chromebooks.

01:15:33   And kids will go in and go, ah, this is not like the iPad

01:15:35   I have at home.

01:15:35   I hate it.

01:15:36   and that sort of builds a whole separate cache

01:15:39   where maybe Apple isn't as competitive

01:15:41   in the schools anymore,

01:15:42   but they're super competitive in the homes

01:15:43   with the same sort of population.

01:15:45   - Yeah, I think it's definitely true.

01:15:46   As the father of a seventh grader,

01:15:49   and seventh grade is a little different,

01:15:51   but in the lower grades, just in the last few years,

01:15:55   at Jonas' school, most of the computers

01:15:58   that they had access to were Chromebooks,

01:16:00   and the kids hated them.

01:16:03   But, well, not hated them,

01:16:04   But they didn't really see them as something desirable.

01:16:07   Hate's a wrong word.

01:16:08   But they more or less were just Google Docs machines, really.

01:16:12   That's really all they were.

01:16:13   And I guess they do some research on web browsers.

01:16:17   But they're just literally just used

01:16:19   for searching the web for some amount of research

01:16:22   and for writing.

01:16:25   If you had a written assignment, you'd do it in Google Docs

01:16:28   and it saves to a folder where the teacher can get it.

01:16:31   And they're kind of junky, and they're kind of squeaky,

01:16:33   and they're kind of mushy.

01:16:34   Just like, I've asked, 'cause my co-workers

01:16:36   are the same way, they have Chrome at school now,

01:16:38   so they went all in on it, but they have iPads at home.

01:16:41   And they can tell, like it's not,

01:16:42   they don't put it in those terms,

01:16:44   but they can tell that it just feel like a sub,

01:16:46   like they're not the same experience.

01:16:47   - Right, and that's not necessarily a bad thing,

01:16:49   and I totally understand it from the school's perspective,

01:16:51   'cause I don't, you know, that they don't think,

01:16:54   you know, you don't want more expensive, you know.

01:16:58   The price is a huge issue, and durability is a huge issue,

01:17:01   and if you can combine it and have a device that at least is reasonably rugged and even

01:17:06   if it does break, it's only $180 to replace or whatever, I totally get it. But the mind

01:17:13   share of the kids and what they actually used and wanted to use in their own time was iPhones,

01:17:19   really.

01:17:20   I think that's an important part of the discussion in the overall education market.

01:17:25   But the Surface laptop clearly is aimed… I feel like from a business sense, Microsoft

01:17:30   really needs to stem the growth of Chromebooks.

01:17:34   They need that market.

01:17:35   They need that, you know, their business is set up

01:17:37   on the assumption that all of these low-end machines

01:17:40   will be running Windows and we'll figure out a way

01:17:44   to make money even if the margins are really low.

01:17:46   That that's, you know, that Windows Everywhere strategy

01:17:48   is important to them.

01:17:49   I feel like it's more of a psychological pride thing

01:17:53   that they are, and for years now,

01:17:56   it's not just with the Surface laptop,

01:17:58   but that they've sort of been, not even sort of,

01:18:00   that they've been outright gunning for the MacBook

01:18:03   in advertising with their products, right?

01:18:06   They had a whole ad campaign based on the,

01:18:09   I forget the name of their products,

01:18:12   but I think it's the Surface Book?

01:18:14   - Surface Pro and the Surface--

01:18:15   - Or the Surface Pro?

01:18:16   I don't know, but it's one--

01:18:17   - Surface Pro was the first one

01:18:18   that was the convertible tablet,

01:18:19   and then Surface Book was the laptop-y convertible.

01:18:22   - Right, so the laptop-y convertible.

01:18:24   There's an ad campaign that was pretty big where they ran,

01:18:26   And the whole thing was based on,

01:18:28   can't do this on a MacBook,

01:18:30   and it's usually just drawing or touching the screen.

01:18:32   Trying to make that,

01:18:35   look, we've made a high quality laptop

01:18:37   and it has a touchscreen,

01:18:39   trying to make that into a differentiating issue.

01:18:43   And they mentioned, in that campaign,

01:18:45   they mentioned MacBooks specifically and nothing else.

01:18:48   I mean, and they can't really mention anything else

01:18:50   because it's not targeted at Chromebooks.

01:18:53   It's a very, these are different class machine.

01:18:55   or like the thousand dollar range machine, and they can't piss off their OEMs by talking

01:19:00   about other Windows laptops.

01:19:02   It feels like Microsoft is caught in a hard—it's sort of caught in the middle right now.

01:19:06   You have Apple at one side and Google at the other side, and Microsoft is sort of running

01:19:09   back and forth between them, not really certain of its own identity, sometimes competing with

01:19:13   Google, sometimes with Apple.

01:19:16   And I don't want to bring up the toaster fridge thing, but I think it's an apt description

01:19:19   of it sort of botches your focus with products because you don't have your own clear destination.

01:19:25   You're sort of like what Apple's doing over here, what Google's doing over here, and you're meshing them together

01:19:29   And I think that's sort of the disconnect that I see in the Surface Book. Yeah, okay the Surface Laptop

01:19:34   well, and the other thing too is that they they

01:19:37   Tried to make some hay at the end of last year in the wake of the mixed reviews of the new MacBook Pros

01:19:45   And

01:19:48   It said you know

01:19:50   this is the end of 2016-- that I forget

01:19:54   if they said their surface in particular,

01:19:56   or that the premium market, which

01:19:59   is defined as like $9.99 and up for laptops,

01:20:02   that they're taking share away from Apple in that market.

01:20:06   And there were a couple of statements that they had.

01:20:08   But it was all Bezos numbers, where

01:20:10   they didn't give specific numbers or sources

01:20:12   and just set it.

01:20:15   But the actual numbers that have been released,

01:20:17   and were released since then, don't bear that out.

01:20:20   Apple's Mac sales have been up.

01:20:22   And again, Apple doesn't, in their numbers,

01:20:24   release the split between notebooks and desktops.

01:20:27   But there's no reason to believe that their desktop

01:20:29   sales are up, because their best selling one, the iMac,

01:20:32   is over a year old.

01:20:34   And there are other ones.

01:20:35   The Mac Pro and the Mac Mini are 17 and 23 years old,

01:20:40   respectively.

01:20:41   And even in the best desktop year, the laptops dwarf.

01:20:45   Just dwarf the desktop sales.

01:20:48   And so there's absolutely--

01:20:50   Apple's Mac sales are up the last two quarters

01:20:53   they've reported.

01:20:53   So there's absolutely no sign that Mac sales are down.

01:20:58   And so if it's true that Windows PCs in the premium market

01:21:02   have taken share from Apple, it doesn't make any sense.

01:21:06   Because if Apple's sales are up, technically it

01:21:08   would be possible if the overall market were growing so fast

01:21:11   that they could take share away, even though Apple is still

01:21:14   growing by outgrowing it.

01:21:16   But absolutely nobody is reporting

01:21:19   that premium Windows laptop sales are

01:21:22   a growing part of the market.

01:21:24   In fact, everybody's reporting that it's

01:21:26   a shrinking part of the market.

01:21:27   Not collapsing, but like a slowly deflating tire.

01:21:32   And there's no sign of that abetting.

01:21:39   Yeah, and it's funny that-- again,

01:21:41   going back to the Apple Watch thing,

01:21:43   The Apple Watch is considered beleaguered, it's considered doomed in a lot of the angles

01:21:47   taken in reports, where Surface was by no measure selling—well, we had no idea what

01:21:52   it was selling, but it was being ballooned.

01:21:54   It was being propped up.

01:21:55   There were headlines all over the place saying the resurgence of the Windows laptop.

01:21:59   And the coverage of the numbers you talked about that had no backing from Microsoft,

01:22:04   as far as I can tell, that was pretty extensive, and the coverage of the Surface not doing

01:22:07   well has not been similarly extensive.

01:22:08   No.

01:22:09   Right.

01:22:10   sales are, not again, not collapsing,

01:22:12   but the surface sales were down pretty significantly

01:22:14   in the last quarter that they reported.

01:22:16   So I don't see that happening.

01:22:18   All right, let me take a break here

01:22:20   and thank our third and final sponsor of the show.

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01:23:58   - I should point out when I talk about the coverage,

01:24:04   I don't mean that Apple should be given

01:24:05   a free ride on these things.

01:24:06   I think it's the same thing as like when Touch ID

01:24:08   is considered a disaster at launch,

01:24:10   but the botched facial recognition is fine.

01:24:12   I think everybody should be scrutinized

01:24:13   to the level that Apple is.

01:24:15   It's not that they should give Apple a break,

01:24:16   but they should hold everybody to that same standard

01:24:18   because as a consumer, I want to know all that stuff

01:24:20   when I make my decision on what I want to buy next.

01:24:22   And I feel like I'm being underserved right now

01:24:24   because I hear every little, all the hot takes about Apple

01:24:27   and everything else sort of just skates by.

01:24:29   - Yeah.

01:24:31   Well, I think it's worth talking about.

01:24:32   The elephant in the room of Apple's MacBook lineup

01:24:36   is the MacBook Air because it's,

01:24:39   I think I checked today, I think it's 788 days

01:24:42   since they updated the specs, so it's two years old.

01:24:46   It still costs $999.

01:24:48   It doesn't have a retina screen.

01:24:50   It's the existence of that product that gives rise to the,

01:24:56   hey, Microsoft just put out this thing

01:24:58   and it makes the MacBook lineup look overpriced.

01:25:02   I don't think that's true if you look at the MacBook, the MacBook One port.

01:25:07   Even though I think we're probably due for an update on that because the last one came

01:25:10   out a year ago.

01:25:11   Yes.

01:25:12   But a year is not an unreasonable period of time to wait for an update.

01:25:16   So if we get one at WWDC, I would say right on time.

01:25:20   MacBook Pros obviously just came out last fall.

01:25:23   And I think our … I don't buy the argument that they're overpriced.

01:25:27   I think for what they are, they are correctly priced, even though at certain price points

01:25:32   that means that getting a "new MacBook Pro" has a higher price.

01:25:36   It's the price of a MacBook Pro plus the Apple Watch that's essentially embedded inside

01:25:40   it.

01:25:41   Right.

01:25:42   Exactly.

01:25:43   And I think that if you spec things out, like when I did the comparison to the Surface laptop,

01:25:52   what I was configuring it against, I don't think I mentioned this, I was configuring

01:25:55   it against the new MacBook Pro with the buttons, not the touch bar, because that's, to me,

01:26:02   the most apt comparison.

01:26:04   To me, that is the MacBook Air with retina that everybody claims that they want Apple

01:26:09   to make.

01:26:10   The MacBook Air with a retina screen is the new MacBook Pro that doesn't have the touch

01:26:16   bar.

01:26:17   I think Phil Schiller said as much when he introduced it.

01:26:18   Yeah.

01:26:19   Well, yeah, it's so much in so many ways.

01:26:22   by comparing it to the size and weight and thickness of the MacBook Air, which it compares

01:26:26   very favorably. It matches up with and it's way faster and has a beautiful screen, et

01:26:33   cetera.

01:26:35   But the MacBook Air is old and is sitting there at $999 and doesn't have a retina screen.

01:26:40   Not arguing, but just having a very nice debate with people on Twitter about it recently.

01:26:45   Marco Arment on Twitter made the point—and it's hard to argue with—that in 2017, Apple

01:26:50   should not be selling any device that has a display that's not retina caliber in terms

01:26:55   of resolution.

01:26:56   And I agree with that.

01:26:57   In theory, 2017 is too late to still be selling a brand new product.

01:27:03   Brand new meaning that you're buying it out of the box and it's factory sealed.

01:27:06   Full price retail, yeah.

01:27:09   Right.

01:27:10   I think the non-retina MacBook Air is like the new 16 gigabyte iOS device.

01:27:16   I can't defend it.

01:27:17   I think it's I would recommend against it

01:27:20   I would if somebody asked me if they should buy one I would say no and that would be the reason why what you pointed

01:27:24   Out so well with the Mac Pro thing is that Apple doesn't have a game plan for this

01:27:28   It's like if we don't have something new to announce and we're not canceling it

01:27:30   It just stays at exactly the same price in the catalog because they want to keep something at that

01:27:34   999 price that is a Mac laptop, but they feel like they can't sell the MacBook

01:27:43   One port at that price yet. Yeah and still keep the margins they want

01:27:47   You know, I think what they're doing is waiting and and I don't know if it's this year

01:27:53   I don't I have no inside information. But my theory is what they will do is eventually they'll have an updated

01:27:59   State-of-the-art MacBook just playing MacBook. Yeah and put the year-old

01:28:04   Just playing MacBook at a lower price point until it gets to 999 and then at that point the MacBook air goes away

01:28:12   Yeah, and I'll be a little sad if they stick to the mint the Intel core M platform for that because it just it's not the

01:28:17   same

01:28:18   Either analysts its fan list, which is great

01:28:20   But it's just I don't know how to get out of that though because I don't you can't use a core

01:28:24   I don't know

01:28:25   You know

01:28:25   I think you're I think you're stuck waiting for the for the the M series to get fast enough that you don't mind

01:28:30   I mean and it can happen. I mean, you know the

01:28:33   The a10 is a fan list design and you know, it's fast

01:28:38   That's the other thing that sort of greats about the MacBook.

01:28:42   It's that the iPad Pro, in my opinion, has a faster CPU.

01:28:48   I think that the single core Geekbench scores

01:28:51   are a reasonable-- I realize that they don't correlate

01:28:54   exactly to real world use.

01:28:56   No, and they're purpose built. So the two things

01:28:58   that you note right off the bat is

01:28:59   that Apple can build those cores exactly for what they want.

01:29:01   So they can have super fast single threaded operations,

01:29:04   because that's what people hit when they do interface

01:29:06   and stuff like that.

01:29:07   But I remember the initial review unit I had

01:29:09   for the second generation MacBook,

01:29:11   it could barely handle one stream of 4K.

01:29:13   Well, the A9, not even the A10 version of the iPad Pro,

01:29:17   there is no A10 version yet.

01:29:18   The A9 version of the iPad Pro could handle three streams

01:29:21   of 4K because Apple built that chip exactly to do that.

01:29:23   And they don't have control over Intel.

01:29:25   And Intel will do things like,

01:29:26   as far as I can tell, the Core M3

01:29:28   is a deliberately hobbled chip

01:29:30   that maybe Apple shouldn't use.

01:29:32   But Intel just makes it worse than the M5

01:29:34   just because they want a lower price point for that chipset.

01:29:36   So there's a waiting game involved there.

01:29:40   And because part of it, I think, too,

01:29:42   is like you just alluded to, a big part of it

01:29:46   is out of Apple's hands where they were waiting for Intel.

01:29:49   And that opens the door to the whole, well,

01:29:51   maybe they'll go put an ARM chip, their own custom

01:29:54   ARM chip in a Mac.

01:29:55   Or buy AMD.

01:29:56   They have all this money.

01:29:57   Right, or buy AMD.

01:29:59   And who knows?

01:29:59   Who knows what they're thinking?

01:30:01   But switching to ARM on one model of Mac

01:30:04   is a lot more complicated than we have time to discuss.

01:30:08   And I don't think it's going to happen.

01:30:09   And therefore, there might be something I don't foresee.

01:30:12   There might be some way out of this.

01:30:14   But basically, they're waiting for Intel on that.

01:30:16   So I don't know.

01:30:17   I don't know what to say.

01:30:19   But I can totally see.

01:30:20   I also wouldn't recommend that Apple update the MacBook Air

01:30:24   and put it right in the screen in there.

01:30:26   Yeah, it feels like there's something--

01:30:28   and there were rumors of a device in between that

01:30:29   was sort of a larger version.

01:30:30   It was a 14-inch MacBook or something.

01:30:32   Yeah, it would never happen to that.

01:30:34   - It hasn't shipped.

01:30:35   - Right.

01:30:37   - There's no Kaby Lake version of the MacBook.

01:30:39   There's no 14 inch version of the MacBook.

01:30:41   There's just, then the updated iMac's not here yet.

01:30:44   - Yeah, yeah, the 14 inch MacBook was a weird rumor

01:30:48   that some people seem certain of and never shipped.

01:30:51   Anyway, let's move on.

01:30:56   WWDC stuff.

01:30:58   I just quickly want to say, I am having a live show.

01:31:02   It's announced.

01:31:03   People keep asking about tickets soon.

01:31:05   As you listen to this, it will be very soon.

01:31:07   We are moving.

01:31:09   But I don't have anything to announce yet.

01:31:10   So patience.

01:31:15   Sorry.

01:31:17   There are a couple of other events.

01:31:19   I know that they're on the same web page on Apple's WWDC.

01:31:22   It's very, very nice of Apple to promote these alternative--

01:31:25   or I forget what they call them-- but community events.

01:31:29   There is a CocoConf taking place in a hotel right

01:31:32   adjacent to the convention center where WWDC is.

01:31:37   CocoConf is held a couple times a year.

01:31:39   I've never been, but I have friends who have spoken there and have attended and swear up

01:31:44   and down that it is an amazing conference, like a $12.99 conference for developers.

01:31:49   They have a great speaker lineup.

01:31:51   They'll be right there next to WWDC.

01:31:53   So I think CocoConf is sort of a great plan B for people who wanted to go to WWDC and

01:32:00   It lost the lottery for tickets.

01:32:03   So look into that if you're a developer and you want something like that.

01:32:06   There's AltConf, which is also in a hotel adjacent to the convention hall.

01:32:12   I've never been there, but it seems to me like there's two hotels that are literally

01:32:16   connected to the convention center and that those hotels themselves have convention space.

01:32:22   And so one of them is a CocoaConf.

01:32:24   The other one is AltConf.

01:32:25   Alt Conf is free, so that's a great option

01:32:28   if you're not looking to spend money.

01:32:30   But I think it's also sort of developer oriented.

01:32:33   And then last but not least, in fact,

01:32:34   last but probably the opposite at least

01:32:37   is the Layers Conference, which is a great,

01:32:41   great, great conference.

01:32:42   It's more design oriented.

01:32:44   It's not a developer conference.

01:32:46   So for those of you who aren't interested in design,

01:32:50   or in development, you're not coders, but you're a designer.

01:32:52   It is a great conference.

01:32:54   I was, it was two years ago where I got to interview

01:32:58   Susan Care, the designer of the original Macintosh icons

01:33:01   and all the original Macintosh fonts,

01:33:03   which is still maybe the,

01:33:05   I can't believe I'm, the most I can't believe

01:33:08   I'm doing this moment of my entire career.

01:33:10   Like, you know, like having Phil Schiller on the talk show

01:33:12   or whatever was a thrill,

01:33:14   and meeting Steve Jobs was a thrill.

01:33:16   But for me personally, the, not necessarily thrilling,

01:33:20   but just like, I can't believe I'm doing this,

01:33:21   Interviewing Susan Carrer on stage was just absolutely amazing because she's just one

01:33:27   of my favorite designers of all time.

01:33:30   Like literally got me, you know, it was as famous to me as Steve Jobs was at a very young

01:33:36   age because I knew that she did all of this amazing work almost single-handedly on the

01:33:40   original Mac and it was all down to the pixel, just perfect.

01:33:44   That was great.

01:33:46   But the speakers there, it's great and it's so, so nice.

01:33:48   Layers is just one of those conferences where it's like,

01:33:50   I cannot believe that once a year,

01:33:53   these people put together a conference

01:33:54   where everything is so nice, and you get nice coffee,

01:33:56   and it's a nice room, and stuff like that.

01:33:58   So I have a special deal for people

01:33:59   who listen to the talk show.

01:34:00   You go to layers.is, that's the website,

01:34:03   or you can just Google for Layers Conference,

01:34:05   but the website is layers.is.

01:34:07   And if you use this code,

01:34:09   you'll save 100 bucks on registration.

01:34:12   And I know they're doing pretty well,

01:34:13   but there's definitely still openings.

01:34:15   And if you're gonna go, if you're thinking about

01:34:17   an excuse to be in the WWDC area during WWDC. You're going to want to book stuff. Now's

01:34:24   the time to book so you're not making arrangements at the last minute. You will save 100 bucks

01:34:30   and here's the code you can use. They'll know you came from me. This is not a sponsorship.

01:34:33   This is something I'm doing as a friend to Jesse Char who runs the conference. Because

01:34:38   I wholeheartedly recommend it. This isn't a sponsorship, but it's just a great conference.

01:34:43   You save 100 bucks, here's the code, martini.

01:34:46   Use that code.

01:34:48   And I worked it out.

01:34:50   I added test it.

01:34:51   You can also get the same code, same discount,

01:34:56   if you type the martini emoji.

01:35:01   I dare you to try it.

01:35:02   I think it'll work.

01:35:02   Perfect.

01:35:03   That's perfect.

01:35:04   Isn't that perfect?

01:35:05   I hope it works.

01:35:06   Try that out.

01:35:07   Layers.is.

01:35:08   It is such a good conference, and it's such a great-- I

01:35:10   think it's going to be pretty exciting.

01:35:11   I don't know.

01:35:12   Who knows? This whole thing could be weird.

01:35:14   But if you're thinking about it,

01:35:17   if you're hoping to make last minute,

01:35:18   I'm just talking to somebody else today

01:35:19   who is like on the fence about whether they are gonna be,

01:35:23   can they get to San Jose for WWDC week?

01:35:26   So I know that there's people out there

01:35:29   who are just still thinking maybe they will,

01:35:30   maybe they won't.

01:35:31   But if you wanna have a good reason to be there,

01:35:33   layers is as good as anything.

01:35:36   - Yeah.

01:35:37   And if you're a designer, it's a perfect compliment

01:35:38   to WWDC because I know every year they try more and more

01:35:41   more and more design sessions and they have the design review labs but it's really a developer

01:35:44   show and layers is such a great complement to it yeah and i forget what else they do

01:35:48   there's some integrations with wwc where apple people come and do talk about interface design

01:35:54   and stuff like that so check out their website you have all the info also i just love the layers

01:35:59   logo this year it is so great because it is so self-referential to the name where it's very

01:36:06   design looking but anyway check out their website even if you're not interested in conference just

01:36:10   just to see the excellent graphic design.

01:36:12   What else do you got?

01:36:17   There was the, we didn't talk about it,

01:36:18   but the, we mentioned it before,

01:36:21   but we didn't go into it though.

01:36:22   The whole thing with Uber tagging iPhones.

01:36:25   - You can tell it's an interesting week for Uber

01:36:27   when they have not one but two controversies on the same day.

01:36:30   - What was the other one?

01:36:31   - I heard you had them both in your original write-off.

01:36:33   - I don't remember.

01:36:34   - Yeah, and now he's canceled his recoded.

01:36:37   I mean, it's just, it's--

01:36:38   - Well, that was, it had to happen.

01:36:39   There was no way that he could possibly get up there.

01:36:44   I almost wish what they should have done

01:36:47   is like Kickstarter, just like, "All right, I'll do it,

01:36:50   "but we've got to like Kickstarter a million dollars

01:36:53   "for AppCamp for girls," or some good cause like that.

01:36:57   Can you imagine how much money you would have raised

01:36:59   to get Kara Swisher and Walt Mossberg to skewer him on stage?

01:37:03   Oh my God.

01:37:06   But anyway, the story came out.

01:37:07   Mike Isaac of the New York Times had a story

01:37:09   a profile of Kalanick, the CEO, co-founder of Uber,

01:37:15   and mentioned that a couple of years ago,

01:37:18   he got called in for a meeting with Tim Cook at Apple's

01:37:23   campus.

01:37:24   And Cook confronted him with the fact

01:37:27   that Apple had figured out that they were--

01:37:29   and this is where the story was murky initially,

01:37:32   where the initial version of the story that

01:37:34   was up in the New York Times in the morning

01:37:36   said that they were tagging and tracking iPhones,

01:37:39   even after the app was deleted or even if the OS was erased

01:37:45   from the phone and reset.

01:37:48   And then the word "tracking" was taken out

01:37:50   in a subsequent edit in the afternoon.

01:37:52   But the horses were out of the barn

01:37:56   at that point, where people were panicked.

01:37:58   And part of it is rightfully fueled by, well,

01:38:00   Uber has been caught with so many shady practices

01:38:04   that if they could do that, of course they would.

01:38:07   It passes the sniff test of--

01:38:09   Yes, it's believable.

01:38:11   Right.

01:38:11   But there was no tracking, meaning

01:38:14   you hear tracking phones and you think, well,

01:38:16   I had the Uber app.

01:38:17   And if I have the Uber app, it can use my location,

01:38:20   because that's how the car comes and gets you.

01:38:24   And so you hear that.

01:38:25   And what people think is, well, I deleted the Uber app,

01:38:27   because I don't like the company.

01:38:28   I've used Lyft.

01:38:29   Or for whatever reason, they deleted the app.

01:38:32   And the fear that Uber is still tracking them and doing

01:38:35   something like figuring out if they're using Lyft,

01:38:38   even if you don't have the app.

01:38:39   And if you know iOS, you'd know, well,

01:38:42   that sounds like it should be impossible.

01:38:44   Because when an app is deleted, you

01:38:46   can't do things like you could do on traditional PCs,

01:38:49   like sneakily put a background process in a system directory.

01:38:55   So even if your app is deleted, you've

01:38:57   still got this remnant of you behind.

01:38:59   That's the whole point of these containers

01:39:01   that AppShip in now is that when you delete the app

01:39:03   as a user, just hold the app, make it jiggle, hit the X,

01:39:07   anything it could run on your phone is gone.

01:39:10   But that's not what they were doing.

01:39:13   I think basically, we're still not sure exactly

01:39:15   what was going on, but basically they were quote unquote

01:39:17   fingerprinting the phone, and they were figuring out a way

01:39:20   to get a uniquely identify a phone.

01:39:23   Phoning that home to Uber so they could store it.

01:39:26   - Yeah, it's not like they were just essentially

01:39:28   fingerprinting it and then using that fingerprint

01:39:29   as a way to tell when the same device

01:39:31   was re-accessing the service.

01:39:32   - Right, I lost my train of thought there,

01:39:34   but that's exactly right.

01:39:35   And it was to counter some sort of fraud

01:39:37   that was going on in China,

01:39:38   where I think basically the story was

01:39:40   that they had a promotion to get people

01:39:42   to start using Uber, where you could get a free ride,

01:39:45   if you're new to Uber.

01:39:46   And if you're a driver and you pick up

01:39:49   one of these free rides,

01:39:50   you still get the credit as a driver.

01:39:53   Uber is, the corporation is eating the free ride,

01:39:57   not the drivers, because drivers would rightly revolt.

01:40:01   So what drivers are doing is setting up some kind of scam

01:40:03   where they would get stolen iPhones

01:40:06   and configure them as new and put the Uber app on

01:40:08   and get the free ride and pick them up.

01:40:11   Like me and you could work as a team

01:40:13   and I'll pick you up with the free thing and drop you off.

01:40:16   And then you erase the phone and put it on all over

01:40:20   and pretend to be somebody new

01:40:22   and get another free ride and I pick you up.

01:40:24   and somehow bilking them out of free rides like that.

01:40:27   And so if they could uniquely identify the phone,

01:40:32   I guess it did actually allow them to sort of block

01:40:36   that sort of thing where they could tell,

01:40:37   "Hey, this phone's collected free rides twice already.

01:40:39   Forget it."

01:40:40   - And Uber's not the kind of company

01:40:42   that lets regulations get in the way

01:40:43   of them doing business.

01:40:45   - Right.

01:40:45   So the basic story, and again,

01:40:49   this certainly did not seem to come from Apple's side

01:40:53   that seemed to more likely come from somebody on Uber's side.

01:40:58   But the gist was that Tim Cook supposedly told them, hey,

01:41:01   so knock it off.

01:41:02   And they did.

01:41:03   Oh, and the other thing that they had

01:41:04   was that they somehow knew that Apple might

01:41:06   look at this in app review.

01:41:08   And they put, at Kalanick's request,

01:41:10   put a geofence around Apple's campus

01:41:12   so that when the Uber app was running

01:41:15   within x distance of Cupertino, it

01:41:18   wouldn't do the fingerprinting.

01:41:21   - It's remarkable to me that a company

01:41:23   that is based on such geolocation technology

01:41:26   would not think about Apple having other offices.

01:41:29   Like, "Whoa, Sunnyvale, what are they doing?

01:41:31   "Oh, San Francisco, what's happening with Uber?

01:41:33   "Boston, what's going on here?"

01:41:34   I don't know if it's hubris or naivete

01:41:38   or some mixture of both.

01:41:40   - Well, both, but I think hubris, largely an arrogance.

01:41:43   And the outrage on Twitter,

01:41:45   and in a moral sense it was correct,

01:41:47   was why in the world does Uber,

01:41:50   Just Tim Cook give Uber a hey, knock it off,

01:41:53   slap on the wrist and give them a chance

01:41:57   to just remove this and stay in the app store

01:41:59   when other apps, again,

01:42:04   if me and you jointly together make an app

01:42:07   or put a new version of Vesper out

01:42:10   and it tags and identifies phones,

01:42:12   they're just gonna kick the app out of the app store.

01:42:15   I get it.

01:42:18   I see that in a certain moral sense,

01:42:23   I see the argument there, or justice sense,

01:42:26   that it doesn't seem fair that a small guy would get kicked

01:42:28   out and a big company, let alone a big company full of jerks

01:42:32   like Uber, gets to stay in.

01:42:35   But that's the way the world works, right?

01:42:37   Uber has more stature because it's a super popular app

01:42:43   that iPhone users use.

01:42:44   And in some ways, yes, it's up, you know,

01:42:47   Apple's doing the right thing by making,

01:42:49   identifying this and making it stop.

01:42:51   But our iPhone users as a whole,

01:42:56   all, you know, however many, 100 million of them there are,

01:42:59   happier or sadder if Uber is literally

01:43:02   kicked out of the App Store.

01:43:04   - Yeah, and Apple has to be, I mean,

01:43:05   it's the same thing, discussion we had with Facebook earlier

01:43:07   where Apple has to be pragmatic about these things.

01:43:09   They have a certain amount of,

01:43:11   you have to weight these things.

01:43:12   They can't all be done on a strict black and white scale

01:43:13   because that sounds great in the abstract,

01:43:15   but doesn't work in life.

01:43:17   And we make those decisions all the time.

01:43:18   We, as much as we'll be upset

01:43:20   that Apple's not doing things fairly or morally,

01:43:22   we have the same problem when we're dealing with our client

01:43:24   or the same issues when we're dealing

01:43:25   with different people in our lives.

01:43:26   It's that these companies are all not, they're not equal.

01:43:29   They're companies which Apple has beholden.

01:43:31   They're companies which Apple has absolutely no interest in.

01:43:33   And they're companies where maybe Uber is like this,

01:43:35   where they sort of both need each other.

01:43:37   And it would be devastating for Uber to be off of the iPhone

01:43:40   but it would hurt Apple considerably

01:43:41   to have Uber off the iPhone as well.

01:43:43   - Yeah, I think, and I don't know,

01:43:46   I don't know the backstory on this.

01:43:47   I don't even know how much of it is technically,

01:43:49   exactly what happened.

01:43:50   It's all from this one Mike Isaac story

01:43:52   and doesn't seem like anybody's gotten a followup.

01:43:54   But what I would have liked to have seen

01:43:56   is not for Apple to have kicked Uber out of the store.

01:43:59   I really, from a pragmatic standpoint,

01:44:00   I understand why that, you know.

01:44:03   I mean, I think it might have happened

01:44:05   if Kyle and the kid said to Tim Cook,

01:44:07   "Screw you, we're gonna keep doing it."

01:44:09   I mean, there's a certain, you know,

01:44:10   all right, you get called into the principal

01:44:12   and maybe the principal gives you another chance,

01:44:14   but you can't give the principal the finger, right?

01:44:17   - Yeah.

01:44:18   - But I think what Apple,

01:44:20   what I would have liked to have seen them do,

01:44:21   if everything that we know about this,

01:44:23   we think we know about this story is true,

01:44:25   is I think that they should have made Uber disclose

01:44:28   what they'd been doing in exact detail,

01:44:31   and say here's the information

01:44:32   we were collecting about phones,

01:44:34   here's how we did it,

01:44:35   and you have our word that we've deleted our database

01:44:39   of these identifiers.

01:44:41   - Yeah, I mean it's-- - And if they refuse,

01:44:42   then I think Apple should have disclosed it.

01:44:45   The part that doesn't sit right with me from what Apple did

01:44:49   is that Apple knew that they were doing this.

01:44:51   They knew that their customers had had their phones

01:44:53   fingerprinted by Uber, and Apple was apparently

01:44:58   willing to let that go unknown.

01:45:03   I mean, there's a chance that maybe Apple did do something,

01:45:06   which is that maybe Apple-- somebody at Apple

01:45:08   was the source for Mike Isaac for that story,

01:45:11   And that by leaking that, that was their way of disclosing

01:45:14   that that's what Uber had done.

01:45:16   But I would have liked to have seen them do it

01:45:19   in a way that's on the record.

01:45:20   Even if it was Apple, somebody at Apple

01:45:22   who was the anonymous source for that,

01:45:24   I still think that there should have been

01:45:26   some sort of official acknowledgement that this went on.

01:45:28   Even though I don't think it was all that gross

01:45:30   of a privacy violation

01:45:32   in the grand scheme of privacy violations.

01:45:34   - Yeah, so I think if Uber had been

01:45:36   literally tracking people,

01:45:38   I think it would have forced a much greater response

01:45:41   Apple or a much more public response from Apple because there's some offenses that are just so

01:45:45   egregious that there's no other alternative. But this to me is, and again, this is a horrible

01:45:49   analogy, but if Grenada does something the US doesn't like, they can literally just drop in,

01:45:53   take over the airport and do whatever they want. It doesn't work in Moscow.

01:45:56   Right. Right. It is- Because there's mutually assured destruction there.

01:45:59   Right. Well, and maybe there's other countries that are bigger that wouldn't be mutually assured

01:46:04   destruction. Like London. You can't just take the London airport.

01:46:08   Right.

01:46:09   Well, pick a country without nukes.

01:46:10   But Australia, let's say.

01:46:13   Yeah, OK, Sydney.

01:46:14   I don't know.

01:46:15   Because our relations with Sydney,

01:46:17   I don't know if you've heard, they're a little rocky.

01:46:21   But yeah, it's not a bad analogy.

01:46:24   Grenada's a little different than bigger countries.

01:46:30   I just feel like they should have figured that out.

01:46:32   No, I agree with you.

01:46:32   Now, in the old days, the funny part

01:46:34   is in the old days, in the innocent days of iOS,

01:46:38   It's just funny because I think it's hard for people who work

01:46:44   at Apple to even think from the perspective of these ad

01:46:47   networks that want to do all this tracking and stuff.

01:46:49   But in the old days, there were APIs, official APIs,

01:46:52   not like private APIs.

01:46:53   But the idea that you might want to uniquely identify a phone

01:46:57   was like a feature.

01:46:58   And it was only once that started

01:47:00   getting abused by ad networks in privacy invasive ways

01:47:03   that Apple deprecated and then removed those APIs.

01:47:06   Yeah, you could just take the UDID, right, and share it, I think, as you wanted to.

01:47:10   Right, like when you plug your phone into iTunes, iTunes can still see it. You see there's

01:47:14   a unique device identifier. I think it's printed on the back of the phone still in that small

01:47:19   print? I can't read it. It's too small for iOS. But they used to sometimes, on some models,

01:47:24   they would print it on. But you can go to the settings screen in iOS and get the UDID.

01:47:31   You can get the MAC address. In other words, each Ethernet port in the world has a unique

01:47:35   Mac address that can uniquely identify a device. I mean, I remember in the old days when that first

01:47:42   started being used and it wasn't all that reliable because people building their own PCs would take

01:47:48   the Ethernet, it was a card that you could take out. And so you couldn't necessarily associate

01:47:56   the Ethernet ID, the Mac ID with a device, but obviously nobody is changing the Mac ID of an

01:48:01   iPhone. There were all sorts of ways to uniquely identify a device that were

01:48:05   officially supported, and Apple's one-by-one eliminated them all. But it's,

01:48:11   you know, it's obvious to anybody when Apple eliminated those things that

01:48:15   figuring out a way around it to still get a unique identifier on an iPhone was

01:48:19   contrary to Apple's intentions. Like, this is not a loophole. This was a direct

01:48:25   circumvention, you know, of a locked door. You know, I mean, somebody leaves a door

01:48:31   unlocked and you go in, you can maybe argue, "I didn't know I wasn't supposed to go in.

01:48:34   The door wasn't locked."

01:48:35   If you get to a door and it's locked, but you figure out a way to unlock it, you have

01:48:40   no excuse.

01:48:41   Yeah, no, totally.

01:48:42   And again, Uber is famous.

01:48:44   Sometimes they've been applauded for their pugnacious combative, "Do what you want to

01:48:50   do.

01:48:51   Don't ask for permission."

01:48:53   And this is the flip side of that.

01:48:57   The other thing that rolled out of this story was sort of an aside in this Mike Isaac story

01:49:04   about Uber and this collection of data, was that Uber had one of the other things, the

01:49:10   greatest hits of all the shady stuff that they've done, but that they paid money to

01:49:14   a company called Unroll Me.

01:49:18   Or no, I guess it was the parent company of Unroll Me, and they slice analytics.

01:49:23   And that's a company that's come up before in iPhone and Apple-related products, where

01:49:27   Slice is this company that claims to have, and does have, access to people's inboxes

01:49:33   because they offer these services where they let people sign up and get some kind of rewards

01:49:39   in exchange for Slice getting to see their incoming email.

01:49:42   Which, again, sounds crazy to me, but some people have different...

01:49:52   People do not see the value of their data the way they see the value of their cash or

01:49:57   their time despite the fact that these companies will spend unlimited amounts of time and money

01:50:01   just to get your data.

01:50:02   Well, Slice has come up before where they've used this data to come out and make projections

01:50:06   about what iPhones people have bought and how it compares you over a year because their

01:50:10   customers last year got so many iPhone receipts in their email in the first 72 hours since

01:50:16   it went on sale and this year it's this and that.

01:50:19   And so my mention of them previously is, I don't really--

01:50:22   it's interesting.

01:50:23   I don't think it's complete noise,

01:50:25   but I don't trust data when it only

01:50:27   comes from people who've signed up for a service that lets

01:50:30   internet marketing firm read all of your email.

01:50:33   But they bought a company called Unroll Me

01:50:37   that offers a service that, again, you

01:50:39   filter all your email through them,

01:50:40   and they make it easy to unsubscribe from things

01:50:45   you can unsubscribe to or to put all of your, not spam, but newsletter type things that

01:50:54   would have an unsubscribe me link at the bottom.

01:50:56   Put them all together in a folder or collapse them or something like that.

01:51:01   And these bastards, it turns out, were then selling it.

01:51:04   So they sold information to Uber that using their access to these people inboxes gave

01:51:10   you know, Uber bought like all of the Lyft receipts from these people. Supposedly anonymized,

01:51:15   but like I wrote on Daring Fireball, well supposedly, you know, an iPhone that you do

01:51:20   a factory reset on is anonymized too, and Uber was tracking that.

01:51:24   Yes. Yeah, you can't trust them.

01:51:28   There's all sorts of ways that they could, you know, backwards correlate, you know, even

01:51:32   somewhat. Anyway, I think a lot of people, and a lot of people were rightly like, "Whoa,

01:51:36   I use this on Romy.

01:51:38   There's absolutely no way that I thought that something like my Lyft receipt would be sold

01:51:42   to Uber.

01:51:43   Ben

01:51:50   There's a bunch of apps that you can just give permission.

01:51:52   I remember when I signed up for TripIt, I would just forward them an email with my travel

01:51:56   information.

01:51:57   They said, "Why are you going to this trouble?

01:51:58   Just give us access to your Gmail."

01:51:59   I said, "No."

01:52:00   Eventually, I stopped using Gmail because there's just so many services that want to

01:52:04   tie into it.

01:52:05   That's not exactly an equivalency, but I just don't want to provide access to that stuff

01:52:09   because there's so much information in there.

01:52:11   And mine is all just a business email.

01:52:12   It's all just a bunch of travel stuff.

01:52:14   But that data is incredibly valuable to me, and they're not really making a fair purchase

01:52:20   decision there.

01:52:21   Dave Asprey So the CEO and founder of this company, Joe

01:52:25   Heday, in the day after this came out, he wrote a blog post where he said, "Our users

01:52:33   are the heart of our company and service,

01:52:34   so it was heartbreaking to see that some of our users

01:52:37   were upset to learn about how we monetize our free service.

01:52:40   And while we try our best to be open about our business

01:52:43   model, recent customer feedback tells me

01:52:45   we weren't explicit enough.

01:52:47   And it really-- again, if you read their terms of service,

01:52:51   yes, it was in there in certain words.

01:52:54   But people don't read the terms of service,

01:52:56   and everybody knows they don't.

01:52:57   And there was certainly no bullet point in the main,

01:52:59   like, hey, why you should sign up for this service?

01:53:03   Here's how we make money.

01:53:04   And I think what it is is that people who haven't--

01:53:08   because they don't think like this.

01:53:09   Good, honest people who just don't

01:53:11   think that someone would do something like this

01:53:13   hear about the service.

01:53:14   They know that their inbox every day, that 2/3 of it

01:53:17   isn't spam, but also isn't the most important stuff.

01:53:21   And so something that could help organize that

01:53:23   so that the actual email from colleagues or family or friends

01:53:27   is all there organized.

01:53:28   sounds like a good deal, signs up for it.

01:53:32   And even if you say, well, you know,

01:53:33   you're giving them access to your email,

01:53:34   they might think, ah, you know, I don't really care.

01:53:36   There's nothing in there that I care about.

01:53:38   But then later on, you tell them, you know,

01:53:40   I know exactly what you bought your husband

01:53:42   for Father's Day last year.

01:53:44   What? - Yeah.

01:53:45   - Yeah, you bought him this,

01:53:46   and because we have your email.

01:53:48   And it's like, all of a sudden,

01:53:49   you tell them an example like that,

01:53:51   or you tell them, yeah, yeah, they, you know,

01:53:54   those four times you got a Lyft,

01:53:56   yeah, we sent those to Uber.

01:53:57   - Well, they knew when you were out of that.

01:53:58   we knew you were traveling, you were out of the house.

01:54:00   Nobody was at your home.

01:54:01   I mean it's, and this is not new.

01:54:02   I remember 10 years ago, 15 years ago,

01:54:06   for example, if you go to 7-Eleven and buy a Coke,

01:54:08   Coke has no idea you bought it, but 7-Eleven does,

01:54:10   and they'll sell that information back to Coke,

01:54:12   but they'll also sell it to Pepsi for competitive analysis,

01:54:14   and to like Lay's potato chips, so they can say,

01:54:16   "We wanna be positioned next to Coke on the shelf,

01:54:19   "not next to Pepsi."

01:54:20   And you think that it's anonymous, but it's not,

01:54:22   because they could figure out,

01:54:23   based on one unique identifier, one phone number, one time,

01:54:26   or one email address, or something,

01:54:28   that you were the person buying the diapers and the beer

01:54:30   at that supermarket that day.

01:54:32   - Anyway, I wrote about this.

01:54:33   Give me a fucking break that they're heartbroken

01:54:35   that their user's upset.

01:54:36   They're not upset.

01:54:37   If they knew their users would be upset,

01:54:38   which is why they hid exactly what they're doing

01:54:41   in the small print of the terms of service.

01:54:43   They're upset because they're suddenly the focus

01:54:46   of a massive spotlight of a story

01:54:48   that every reasonable person would say,

01:54:50   "Wow, that is outrageous and is offensive

01:54:52   "and I wouldn't use that service,"

01:54:54   which was obviously gonna hurt their brand

01:54:56   and make people,

01:54:57   I never even heard of this on Roll Me before.

01:54:59   So the first time I heard of it was

01:55:01   in the context of don't sign up for this thing.

01:55:04   Why don't people use it?

01:55:05   And they were shocked.

01:55:06   Right.

01:55:07   Like if you think in the back of your mind

01:55:09   that signing up for a free service that

01:55:11   can read and index all of your email is a bad idea,

01:55:14   guess what?

01:55:15   It is.

01:55:16   They were heartbroken.

01:55:17   They got caught.

01:55:17   I think you said that well.

01:55:19   Right.

01:55:19   And there was somebody on Hacker News

01:55:23   who posted that he worked for a company that

01:55:26   was thinking about acquiring them,

01:55:27   and when they did their due diligence,

01:55:29   that Unroll.me was literally keeping an archive

01:55:32   of every single email, of every single email

01:55:36   that all of their customers ever got

01:55:37   since they signed up for the service.

01:55:39   - Yeah, calling. - And that they were just

01:55:41   sort of served in a scary fashion in Amazon AWS buckets.

01:55:45   - Yeah, and that's part of the problem here,

01:55:46   is those buckets could be hacked,

01:55:48   it could be an employee decides

01:55:49   to abuse the information contained in there.

01:55:50   When there's extra copies of your stuff hanging around,

01:55:52   you no longer have control over that information.

01:55:54   - Yeah.

01:55:55   What else we have? I got this Hulu Live. They've shipped a new live TV thing, a $40 a month

01:56:01   cable cutter package. Did you see this? It just came out today.

01:56:04   I did. I'm jealous. There's all these great services in the US I just simply don't have

01:56:07   access to.

01:56:08   And you guys have none of that in Canada?

01:56:10   No. We allow our telcos to own our broadcasters. So we have Bell and Rogers who own those things,

01:56:16   and they don't want to give it to us.

01:56:18   So I looked into this recently,

01:56:20   'cause I had to switch, we moved,

01:56:25   so I had to get new cable service

01:56:27   and internet service and stuff.

01:56:28   And at first, 'cause we're a TiVo family,

01:56:32   we've always been a TiVo family,

01:56:33   and I couldn't get, and this always happens,

01:56:35   this has happened to me for 10 years,

01:56:36   every time I've tried changing

01:56:38   or getting a new TiVo or something like that.

01:56:40   The cable card thing doesn't work.

01:56:42   There's like a card, and it's,

01:56:44   I guess the idea is that they try

01:56:47   make this super secure. It's the way that they can get the security of the cable signal

01:56:51   on a device they don't own. Part of it, I think, is just that they want you to buy their

01:56:56   stupid box, their box. I don't want their box. I want TiVo. But we had a hassle getting

01:57:02   our TiVo working. I looked into these services for the first time seriously, because I don't

01:57:08   watch a lot of TV or cable TV, but my wife does.

01:57:15   I looked at the PlayStation Vue service, and it looks great.

01:57:19   I think it's like $30 a month or $40 a month.

01:57:21   I don't know, but it's a reasonable price

01:57:23   compared to cable.

01:57:25   And I looked at the list of channels they had,

01:57:27   and I couldn't find any channels missing that I ever watch.

01:57:31   And I asked Amy to look, and as far as she could tell,

01:57:34   they had all the channels that she watches.

01:57:37   It varies by city here in the US, but in Philadelphia,

01:57:41   You get ABC, all the major networks, not just the cable networks.

01:57:45   You get the broadcast networks.

01:57:48   Apparently in some cities, the PlayStation View misses something.

01:57:51   But honestly, just because I don't watch a lot of TV and I'm happy with the TiVo and

01:57:59   for what I do watch, and when I watch on my TV, I'm using Apple TV usually, I just hadn't

01:58:06   been paying attention.

01:58:07   I know the phrase cable cutting.

01:58:08   I know what it means.

01:58:09   I wasn't aware that when you sign up for something like this, just how much it's equivalent to having

01:58:15   cable TV in terms of what you get per month. You know, that it's the same channels and content,

01:58:20   it's just delivered in a different fashion.

01:58:22   And so Hulu's getting into it now.

01:58:25   But it's weird, like Hulu, like one of the networks that they don't get is AMC, and there's a couple of good shows on AMC.

01:58:31   And I don't understand, you know, what the, how that, you know, obviously,

01:58:38   I guess it's all negotiations, but somehow Hulu doesn't have AMC.

01:58:43   My question for you is, where's Apple in this?

01:58:45   Because I feel like this PlayStation view thing is so much exactly like what we've

01:58:51   been hearing Apple might do.

01:58:55   What the heck do you think is going on?

01:58:56   Yeah, and it's especially frustrating because one of the reasons that we kept hearing that

01:58:59   the Apple TV, who didn't launch earlier, is that they were working on these over-the-top

01:59:03   services or originally an Apple video version of what Apple Music was, where you'd pay

01:59:07   one price $30 and you have access to all the major channels and then the

01:59:11   negotiations broke down and then we heard that again they become like a set

01:59:13   top box sort of thing and those broke down and it sort of reminds me of music

01:59:18   when it went DRM free they just didn't give it to Apple it was DRM free on

01:59:21   Amazon mp3 first and they wanted to break Apple's hold on the music industry

01:59:26   and that was one of the levers they tried to pull and then eventually it

01:59:28   broke down and Apple got DRM free mp3 music like everybody else and I wonder

01:59:33   if there's still this sort of feeling in the entertainment industry that Apple

01:59:37   Apple destroyed their music business.

01:59:39   And they'll be damned if they let Apple

01:59:40   destroy their video business.

01:59:41   And it ends up being not an advantage to Apple

01:59:43   that they did iTunes, they did Apple Music,

01:59:45   but a disadvantage.

01:59:46   And now these companies are more reticent

01:59:48   to give Apple this product.

01:59:49   And they wanna make sure they seed the market

01:59:51   with a lot of active competitors

01:59:52   before they agree to terms with Apple.

01:59:54   - Yeah, I think that that might be it.

01:59:56   I really do, that Apple is having a much harder time

01:59:58   negotiating just because of exactly what you said.

02:00:01   And it has nothing really to do about dollar amounts,

02:00:03   but just sort of a vague notion

02:00:05   that the entertainment industry feels like Apple

02:00:07   picked their pocket last time.

02:00:09   Even though I don't think there's any aspect of it

02:00:11   that wasn't above the board, I just think that they,

02:00:14   I think basically they thought when they first

02:00:16   allowed Apple to create the iTunes Store

02:00:19   that Apple has had this reputation as a niche player.

02:00:22   And the iPod at the time was a Mac only device,

02:00:27   and so it limited, even if it was wildly successful

02:00:30   among all the people who could get an iPod, got an iPod,

02:00:32   it still wasn't that big of a market,

02:00:34   because it would only be one to one

02:00:35   a number of people who have a Mac, and that they just never foresaw that Apple—and even

02:00:41   people who don't pay close attention to the computer industry—had the basic, rough

02:00:46   outline of a sketch where Apple was this little, tiny California company that was like a 99-to-1

02:00:53   dwarf compared to Microsoft and Windows and PCs.

02:00:57   No, I think that's it entirely.

02:00:59   And there was that famous quote—and I know you referenced this recently in the Netflix

02:01:01   article where Steve Jobs said your competition is free and it's piracy and

02:01:06   it's theft and it was Napster and we just saw that's with Netflix where

02:01:09   Orange is the New Black was essentially stolen and held for ransom but the the

02:01:13   privacy like the piracy rates for Netflix are extremely low because the

02:01:17   service is so popular but also so reasonably priced. Right and so

02:01:21   reasonably policed in terms of like sharing you know that you're you know

02:01:26   your kid goes to college and still has the family Netflix password so what they

02:01:31   They don't care.

02:01:32   They don't care if your kid's going to University of Michigan and your family lives

02:01:36   in Philadelphia and they do the geolocation on IP and they know that.

02:01:42   They don't care.

02:01:43   I'm sure that there's some kickoff where at a certain X number of people using the

02:01:48   same Netflix account, it automatically triggers something.

02:01:52   But if that number is reasonable, they don't care.

02:01:54   They feel like…

02:01:55   And it's so reasonable.

02:01:56   I actually had a family member who was using my account when they were staying with me

02:01:58   and they went and got their own place.

02:01:59   And they used my account for a little while,

02:02:02   I think a month, but then they got their own

02:02:03   because it was so reasonably priced,

02:02:05   they just didn't want to be bound to my,

02:02:06   like they didn't want to see the same things

02:02:08   that I was watching all the time.

02:02:09   Sorry.

02:02:11   - I just feel like you cannot overstate

02:02:13   how important that is to Netflix's runaway success,

02:02:18   their generosity in terms of,

02:02:21   or not generosity, but relaxedness of this.

02:02:23   - It's almost like a pragmatism.

02:02:25   - Right, compare and contrast with the Comcast attitude

02:02:28   with these cable cards in the TiVo,

02:02:29   where literally an actual service person

02:02:32   came to the house twice and failed to get one

02:02:35   to actually work and register.

02:02:37   - They treat you like a criminal, not like a customer.

02:02:39   - Well, they were very nice to me.

02:02:42   It's just that they've set up the technology.

02:02:43   The service people were super nice,

02:02:45   but that the technology is designed from a perspective

02:02:48   to be super, super persnickety in terms of this.

02:02:52   And the only logic behind it is that they're fearful

02:02:54   that I'm gonna pop the cable card out of my TiVo

02:02:57   and go to your house and put it in your TiVo

02:02:59   and watch Game of Thrones one Sunday night

02:03:02   for free at your house.

02:03:03   - Or hook it up to a computer

02:03:04   and get their high quality stream of Star Wars

02:03:06   and put it up on the internet.

02:03:08   - Whatever, it's crazy.

02:03:09   But the Netflix style has proven,

02:03:11   and their runaway success in every regard shows that.

02:03:15   - Well, it's like iTunes,

02:03:15   and instead of assuming that you're someone

02:03:17   who wants to rip them off,

02:03:19   they assume that you're a customer who wants to be good

02:03:21   and they give you a product that engenders that.

02:03:22   - Right, and so it's very interesting to me

02:03:24   to see that the BitTorrent rates

02:03:26   for all this stuff has actually gone down.

02:03:29   - Yeah.

02:03:30   - And that a lot of what is left,

02:03:33   it seems to be attributable to content

02:03:35   that's not available in certain places.

02:03:37   So like Game of Thrones in particular is probably,

02:03:41   I think, I don't even think there's a question,

02:03:42   it's the most pirated content on BitTorrent.

02:03:45   But-- - And apparently Travelers,

02:03:47   because a lot of the stuff was stream only for a long time

02:03:49   and they just wanted to have it with them on a plane or something.

02:03:51   - A huge part of that though is the parts around the world

02:03:54   where Game of Thrones isn't even legally available.

02:03:56   So it's pretty interesting.

02:03:58   And I do think that there is a huge convenience

02:04:00   factor on that.

02:04:00   I mean, part of it for me is that-- I do.

02:04:04   I know there's some people who pirate all sorts of stuff

02:04:08   and don't think twice about it.

02:04:09   But when I was younger, I did.

02:04:11   I had pirated copies of Photoshop

02:04:14   when I was in college because what was I going to do?

02:04:17   Spend $600 for Photoshop?

02:04:18   No.

02:04:20   But I stopped pirating stuff as soon

02:04:22   as I could afford to buy stuff.

02:04:25   'cause I knew it was wrong, I just, you know, I don't know.

02:04:29   So there is a, honestly, I'm not trying to make anybody

02:04:31   feel bad, but I do, I don't know.

02:04:33   And I create, you know, partly I'm biased,

02:04:35   I create content, I happen to give my stuff away,

02:04:37   but in theory, I can imagine selling it,

02:04:42   and it would not make me happy if people were

02:04:45   bootlegging it.

02:04:49   - Well, you still want them to go to Daring Firewall

02:04:50   to get it, you don't want someone else

02:04:51   that's reproducing your entire website

02:04:52   on Google for other websites.

02:04:54   Exactly, perfect example.

02:04:55   Right.

02:04:56   You know, as a content creator, I might be more sympathetic, but it just seems like it's

02:05:01   the right thing to do.

02:05:02   But also, even just putting the morals of it behind, as a lazy person, the BitTorrent

02:05:07   thing just seems like so much work.

02:05:09   Oh my god, it's just like, how can you bother?

02:05:12   And you can get malware and all sorts of things.

02:05:14   Yeah, just, and it's these crazy file formats and part one, part two, part three, and you

02:05:20   got to stitch them together and all.

02:05:22   What the hell?

02:05:23   I honest to God I really and you know, I just want to talk to the microphone and say put the Godfather part 2 on

02:05:29   Yes, I really do and yeah spins for a little bit and then I'd hit a button and it starts playing. Yeah

02:05:35   No, it's totally

02:05:37   So I can't do it. All right

02:05:39   Anything else you want to talk about?

02:05:41   No, I mean I think we hit on all the major points now

02:05:45   That was that that minor flare up again and in Apple's role in App Store and and indie apps

02:05:49   But that's what was that a new argument?

02:05:52   Well, Apple put out their job creation, and they often tout how many iOS developers they've

02:05:59   empowered to this.

02:06:00   So Matt Gamble put up a post saying that Apple, you know, and he also mentioned consumers

02:06:04   and developers and everything, once again, but the App Store was responsible for devaluing

02:06:08   software.

02:06:09   Yeah, I saw that, and I was nodding my head the whole time, but I didn't see anything

02:06:16   as new, and I don't know.

02:06:17   I mean, there is something to be said there, and I sort of agree with it.

02:06:23   I don't know, though, that anything has actually changed in that regard.

02:06:26   No, I wrote about it earlier today because I talked to a lot of our developer friends

02:06:29   and a lot of people who are involved in the industry, and there's sort of this consensus

02:06:33   that—and I think this is true—that it sort of hit traditional software developers

02:06:37   hard because they thought that they were the new thing, but they turned out to be traditional

02:06:41   in every sense of the word, and that's just as open to disruption as any industry.

02:06:44   And we no longer live in an age where only a few people

02:06:47   have computers and you spend $500 for WordStar

02:06:49   and there's a box of software on the shelf

02:06:51   and all of those things are true.

02:06:53   We now have, almost everyone has access

02:06:54   to ubiquitously connected computing devices

02:06:58   thanks to the smartphone and what we perceive of as apps

02:07:01   is incredibly different.

02:07:02   There's millions of apps and no one's gonna spend

02:07:04   $30 to $40 for a thousand apps a year.

02:07:06   It's just, it's not possible.

02:07:08   And the same token, no one's gonna spend $500 on WordStar

02:07:11   now that Google Docs is in every browser.

02:07:13   So the entire industry is turned upside down.

02:07:15   And I think the app store may have hastened that,

02:07:17   but I think it's more a reflection

02:07:19   of where the industry went,

02:07:20   not a single-handed, dastardly villain sort of a thing.

02:07:24   - Right, but you know, people,

02:07:27   tens and hundreds, maybe thousands of people

02:07:30   are spending 10, $15 a week on Clash of Clans

02:07:33   and Candy Crush. - Candy Crush, yeah.

02:07:36   - End game upgrades, and then somebody like TapBots,

02:07:40   puts exquisite, a year-long exquisite work into a Twitter client and wants to charge

02:07:46   $4 for the upgrade from the old one, and the same people are outraged. So I get it. I get

02:07:52   it.

02:07:53   Yeah, I mean, it's traditional. We will pay for ego and instant gratification. That's

02:07:55   why tulips were worth our fortune. It made no sense, but we wanted to have more tulips

02:07:58   than our friends had.

02:07:59   Right. It's like a Twitter client could make—a for-pay Twitter client could make

02:08:04   more money by locking you out of features than by just charging up front.

02:08:09   Yeah, no, it's absolutely true. It's just I think it's a far bigger

02:08:13   Movement than an app store can account for it's just the if the guy English said this really well a couple years ago

02:08:19   It's we've gotten to a pop culture for apps. It took longer to get there than it did for other mediums, but it still got there

02:08:25   Yeah

02:08:26   I know it's just a small thing

02:08:28   It's just a small thing but I and it's funny because it actually popped into my head yesterday after you agreed to be on the show

02:08:34   but I keep

02:08:37   an Apple note, an iCloud note,

02:08:40   with the list of all the episodes of the talk show

02:08:42   and who's been on them and the episode number

02:08:43   just so I have it to reference.

02:08:45   And I type, like, you know, this episode

02:08:50   that we're doing right now is episode 189.

02:08:52   And then I type tab, and then I type berna-richie.

02:08:55   And then I might put in parentheses, you know,

02:08:56   just like the basic topics, you know, of what we did.

02:08:59   And then it's there, and I can look back to it in the past.

02:09:01   But I was doing it on my phone, and I can't type a tab.

02:09:05   I have to type a space.

02:09:06   And then I go on-- later on, I'll open it up on my Mac

02:09:10   and replace the space with a tab.

02:09:12   And I want to do that because I'm a picky, picky person.

02:09:17   But San Francisco, the font that Apple Notes uses now,

02:09:22   doesn't have proportionate numbers.

02:09:25   So in other words, in a lot of fonts, especially older

02:09:28   digital fonts, they would make-- even if the font itself was not

02:09:31   a monospace font like Courier, the numbers

02:09:35   are so that if you type 111 and then 444 underneath it,

02:09:40   the numbers line up.

02:09:41   The number one is just as wide as the number four.

02:09:46   San Francisco isn't like that.

02:09:47   It's a non-proportionate font.

02:09:49   So the ones in particular are narrower

02:09:51   than the other numbers.

02:09:52   And so if I use the space, if I type the episode number

02:09:55   and the space and then your name,

02:09:57   then the names don't line up.

02:09:58   And that bothers me.

02:09:59   So I type a tab.

02:10:01   But I can't type the tab on my iPhone.

02:10:03   And that seems like a bizarre oversight in 2017.

02:10:08   And it just hits me with,

02:10:10   if it's the ongoing debate over,

02:10:12   can you, you know, is there a need for a Mac,

02:10:14   can you do all your work on iOS?

02:10:16   Well hell, you can't even type a tab on the iPhone.

02:10:18   - No, it's very true.

02:10:20   I mean, there's just, there doesn't seem to me like

02:10:23   there's any reason why the basic actually characters

02:10:25   not be available on an iPhone.

02:10:26   I mean, especially not in 2017.

02:10:28   - I think, here's my suggestion,

02:10:30   anybody at Apple who's listening.

02:10:31   I would suggest it be a little pop-up on the space bar.

02:10:36   Tap and hold on the space bar.

02:10:37   Make tab if you're looking for a place to put it.

02:10:40   But the Mac, here's the thing.

02:10:44   The Mac had a way to type all of these extended characters

02:10:49   in, I think, right in 1984.

02:10:51   And if it wasn't, it was certainly there by '85 or '86.

02:10:54   And they're great.

02:10:55   They're so brilliant.

02:10:57   One of the little ways that the Mac has always

02:10:59   been so much better than DOS and Windows,

02:11:01   where if you wanted to type an em dash,

02:11:04   not only was it pretty easy to do it,

02:11:07   but there's actually a really clever

02:11:09   mnemonic to the shortcut.

02:11:11   It's option shift hyphen.

02:11:13   Well, hyphen is like a dash,

02:11:15   and a shift makes it bigger.

02:11:17   So option dash would give you like the little mini dash,

02:11:22   like the end dash,

02:11:23   and option shift dash would give you the bigger one,

02:11:26   because shift is bigger and you get the dash.

02:11:30   Option eight gives you a bullet character because eight is the character with the asterisk which is sort of the ASCII bullet character

02:11:38   Option zero is the degree symbol for temperatures

02:11:41   No, is it I thought it's option shift 8 is the degree not sorry the the bullet

02:11:49   I think is option shift 8 and then the higher one the degree characters

02:11:51   Yeah shift zero, but it's all well considered like the it's where you would assume that the character would be right

02:11:58   How do you type the upside down exclamation mark you type option one?

02:12:02   Because that's where the exclamation mark is so brilliant whereas in Windows. It was like all to one three six

02:12:08   It gives you yes, you know a pound sign or whatever

02:12:11   like the British pound

02:12:13   Crazy like no logic to it at all. It's just some arbitrary numeric mapping

02:12:19   The Mac had it. It's brilliant. It's been there forever. How do you type the pi pi character?

02:12:24   You know like three point one four one five nine that I don't know option P. Oh, yeah nice option shift

02:12:31   P gives you a capital pie

02:12:33   It's an option slash gives you the percentage

02:12:35   Yeah, it's there's so many. There's so new there's and there's just so cleverly

02:12:41   Assigned and they've been like that for over 30 years and yet on iOS you can't type half of those characters at all and you know

02:12:49   And I don't understand why that's not your keyboard team friends and while they're doing that

02:12:53   I'm going to say this completely unabashedly.

02:12:55   Let me long press on the french fries to get poutine tater tots and hash browns.

02:13:00   I support that wholeheartedly.

02:13:04   Someone has to do it.

02:13:05   I'm just, I mean, I'm going down memory lane here, but I know, I don't even have to think.

02:13:11   I typed these without even thinking.

02:13:13   So I just had to double check to be sure, but you can type option semicolon and you

02:13:17   get an ellipse.

02:13:18   It's, I guess that one's not super mnemonic, but anyway.

02:13:22   Anyway, that's my complaint.

02:13:24   I want someone at Apple to let me type a tab character

02:13:26   on my phone.

02:13:27   Anything else?

02:13:31   - Not that comes to mind.

02:13:34   - René, I thank you for your time.

02:13:35   Hope you have a good weekend.

02:13:36   - Thank you so much. - I will see you soon

02:13:37   and I'm looking forward to it.

02:13:38   I'll see you a month from now.

02:13:39   We'll be palling around at the keynote.

02:13:42   - Yeah, I can't wait.

02:13:43   It should be a good year.

02:13:44   - Yeah, so it's very nice to sign off

02:13:48   and say I'll see you soon, but I'll see you soon.

02:13:49   My thanks to our sponsors.

02:13:50   sponsors this week were, let me see if I can do it off the top of my head, we had Squarespace,

02:13:54   that's the place to go to build a website. We had Casper, where you go to get a mattress.

02:14:00   Who was our third sponsor? I forget the third sponsor. Third sponsor was, oh of course it

02:14:05   was Audible. That's the place with an unmatched selection of audio. Alright, Rene, thank you.