The Talk Show

52: A Little Bit Of Dancing On Their Grave


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

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

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

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

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

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

00:00:55   I believe no.

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

00:00:58   I guess not.

00:00:59   Yeah, it didn't happen.

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

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

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

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

00:01:07   Maybe I'm caught up.

00:01:08   Who was your last guest?

00:01:09   It was MG Siegler.

00:01:10   We talked about Amazon.

00:01:11   No, I heard that one.

00:01:12   Yeah, I heard that one.

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

00:01:13   Wow, you did take a break.

00:01:14   Yeah.

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

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

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

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

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

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

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

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

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

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

00:01:59   bit.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

00:03:05   you got to get rid of him.

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

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

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

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

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

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

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

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

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

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

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

00:03:51   It wasn't.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

00:05:52   This guy's nuts.

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

00:05:54   He's got to go out."

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

00:05:58   he implements the plan.

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

00:06:03   So it's kind of weird.

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

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

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

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

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

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

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

00:06:23   It's a good question.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

00:08:13   Who knows?

00:08:14   Yeah, I don't know.

00:08:16   There's a line here.

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

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

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

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

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

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

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

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

00:08:59   but blank.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

00:09:57   his life into the company.

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

00:10:01   for Microsoft.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

00:12:06   imports.

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

00:12:14   his father was a Ford man.

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

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

00:12:26   That attitude, not that--

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

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

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

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

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

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

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

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

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

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

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

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

00:12:55   can run Next Step on it.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

00:14:14   I don't know.

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

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

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

00:14:22   Italians all fit in Ferraris.

00:14:23   Yeah.

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

00:14:27   Oh, God.

00:14:29   There goes the Italian audience.

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

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

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

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

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

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

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

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

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

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

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

00:15:16   - Right.

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

00:15:22   I've met Forstall once,

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

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

00:15:29   a few times after that.

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

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

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

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

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

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

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

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

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

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

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

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

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

00:16:10   you're in the position.

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

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

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

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

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

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

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

00:16:27   you know what I mean?

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

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

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

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

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

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

00:16:47   but is also capable of it.

00:16:49   Right.

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

00:16:55   Forstall.

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

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

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

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

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

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

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

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

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

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

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

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

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

00:17:56   anyway, right?

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

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

00:18:03   have done.

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

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

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

00:18:11   when you think about it.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

00:19:20   Because think about this.

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

00:19:26   the company back to Apple.

00:19:28   Right.

00:19:29   That's very true.

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

00:19:34   does next.

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

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

00:19:42   Right.

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

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

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

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

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

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

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

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

00:20:32   Microsoft job.

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

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

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

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

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

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

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

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

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

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

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

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

00:21:12   Right.

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

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

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

00:21:21   Yeah.

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

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

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

00:21:32   So here's one.

00:21:33   How about Jeff Bezos?

00:21:34   Or Bezos.

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

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

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

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

00:21:55   how

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

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

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

00:22:11   computing and stuff.

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

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

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

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

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

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

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

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

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

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

00:22:54   better.

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

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

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

00:23:04   Yes, exactly.

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

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

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

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

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

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

00:23:33   rescue Microsoft.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

00:25:49   the board.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

00:26:58   so that sounds good."

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

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

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

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

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

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

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

00:27:25   do."

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

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

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

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

00:27:37   and hawing.

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

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

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

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

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

00:28:03   left and right.

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

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

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

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

00:28:13   or whatever.

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

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

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

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

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

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

00:28:24   doing?

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

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

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

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

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

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

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

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

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

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

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

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

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

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

00:29:26   When they should have maybe

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

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

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

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

00:29:50   On his own terms, right?

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

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

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

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

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

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

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

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

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

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

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

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

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

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

00:30:44   and the speech recognition.

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

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

00:30:50   doing crappy things before everyone else

00:30:52   was doing anything.

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

00:30:56   And he missed them.

00:30:57   He miscalculated.

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

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

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

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

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

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

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

00:31:14   I don't think so either.

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

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

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

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

00:31:32   Well, not everybody.

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

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

00:31:38   coming back to Apple.

00:31:39   Here comes Bill Gates."

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

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

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

00:31:52   then, right?

00:31:53   Right.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

00:33:02   I outmaneuver these companies?

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

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

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

00:33:17   did under Balmer.

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

00:33:25   development than Balmer ever was.

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

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

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

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

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

00:33:55   himself at that level.

00:33:56   A bomber, you mean?

00:33:57   A bomber.

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

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

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

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

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

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

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

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

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

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

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

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

00:34:45   it's a big deal now.

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

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

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

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

00:35:02   and speech recognition and mobile.

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

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

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

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

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

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

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

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

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

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

00:36:07   then 1983 hardware.

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

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

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

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

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

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

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

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

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

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

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

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

00:36:49   Salieri?

00:36:50   Was that his name?

00:36:51   I forget.

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

00:36:54   A long time ago.

00:36:55   All right.

00:36:56   So Amadeus is Mozart.

00:36:57   He's amazingly talented.

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

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

00:37:10   good.

00:37:11   Right?

00:37:12   And that Mozart gets...

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

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

00:37:20   did this."

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

00:37:25   Microsoft is bigger than Apple.

00:37:26   I'm better than Apple.

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

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

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

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

00:37:34   He's got Apple envy.

00:37:35   Bill Gates had Apple envy.

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

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

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

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

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

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

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

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

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

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

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

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

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

00:38:18   Right.

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

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

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

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

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

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

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

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

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

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

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

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

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

00:43:23   The files you need.

00:43:24   Right.

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

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

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

00:43:31   Yes.

00:43:32   So testing restores is something I

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

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

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

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

00:43:43   and get it back.

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

00:43:47   testing the restore process every time

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

00:45:33   like the price.

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

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

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

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

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

00:45:49   of the time.

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

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

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

00:46:08   I do.

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

00:46:15   Well, he wouldn't...

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

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

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

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

00:46:32   It's propaganda.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

00:47:24   Why?"

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

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

00:47:30   You know what I mean?

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

00:48:34   [0:14]

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

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

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

00:48:54   Yeah.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

00:50:39   hand.

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

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

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

00:50:49   hands are in.

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

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

00:50:58   Make the controller bigger.

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

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

00:51:05   controller than the PlayStation controller.

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

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

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

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

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

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

00:51:36   and iPhone.

00:51:37   Yeah.

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

00:51:43   That's very true.

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

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

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

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

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

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

00:52:07   overdog.

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

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

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

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

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

00:52:24   Everything they do is terrible.

00:52:25   We are the best.

00:52:26   We're going to win."

00:52:27   And that's not helpful.

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

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

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

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

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

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

00:52:56   company does.

00:52:57   Right.

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

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

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

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

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

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

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

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

00:53:30   Right.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

00:54:55   It was BlackBerry and iPhone.

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

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

00:55:00   No.

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

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

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

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

00:55:11   they'll be on top forever.

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

00:55:18   dumb phones.

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

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

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

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

00:55:36   make Windows Phone seven, they, you know, the big thing, the big similarity between

00:55:41   rim and Apple was that they were the two companies that built the whole kit, you know, the hardware

00:55:47   and the OS, you know, the companies they couldn't afford to mock where anybody who was a potential

00:55:52   OEM for Windows. Yeah, that's probably true. But yeah, but yeah, you're right. Like, if

00:55:57   company should know that some other company having a huge head start on the software ecosystem

00:56:03   is a big problem, it should have been Microsoft, because that was such a key factor in their

00:56:08   success with the PC, getting the apps, getting all this.

00:56:11   By that point, the App Star had moved along and had enough momentum that, you're right,

00:56:16   nobody in Microsoft believed, even the people cheering the audience believed in their heart

00:56:20   of hearts that Windows Phone 7 was going to sweep the iPhone off the table anytime soon.

00:56:27   And best case, they're thinking, boy, three years from now, we may be tied with them in

00:56:32   terms of developer support and number of apps.

00:56:34   And that's best case scenario.

00:56:35   Right.

00:56:36   I think anybody at Microsoft, even at Ballmer, anybody who should have been the CEO of Microsoft,

00:56:42   should have been able to realize immediately the day of the iPhone being unveiled on stage

00:56:48   at Macworld in January 2007 that, wow, we've been caught flat-footed, and we need to start

00:56:54   today.

00:56:55   I mean, right now, immediate emergency meeting, we've got to we've got to think about how

00:57:01   we're going to catch up to this, just by looking at what Apple showed on the first day with

00:57:08   the iPhone. But even if you didn't have the taste to recognize that the moment where everybody

00:57:13   at Microsoft should have had that, you know, this is an emergency meeting would have been

00:57:18   a year later when the App Store was announced and response was so incredibly strong from

00:57:26   such a diverse array of developers.

00:57:29   Yeah, no, like, I can forgive them for not believing or not wanting to believe day of

00:57:34   announcement and because it was so different. The iPhone was so different that there was

00:57:37   a good chance like if you didn't if you didn't understand like what they were showing there,

00:57:41   there's like, this seems kind of weird could go either way, right. And I would say like

00:57:46   A year later, that's way too late.

00:57:47   I would say the time when you should have that meeting if you didn't have it immediately,

00:57:52   because I think it makes sense not to have it immediately.

00:57:54   Wait and see.

00:57:55   Let's see what's going to happen here.

00:57:56   The time to have that meeting is once any of the C-level executives at Microsoft or

00:58:01   anybody is able to go to the store, buy an iPhone, bring it home, and play with it, then

00:58:04   you damn well better have that meeting because you're like, "Uh-oh.

00:58:07   We've got a problem here," because you play with that phone and you realize, "I don't

00:58:10   want to go back to my other phone."

00:58:12   The iPhone was a compelling product once you had it in your hands, and that's when you

00:58:15   need to have that meeting because the proof is in the

00:58:17   product, right? $600 or no, if you play around with that thing,

00:58:22   you know, on day one, the original iPhone and don't

00:58:24   realize, Oh, damn, I cannot go back to my Windows mobile phone

00:58:27   after this, we need to have a meeting. That's, that's the

00:58:29   problem.

00:58:30   That's a good point. And because it was it was it was a product

00:58:33   that was as good as the demos claimed it was.

00:58:36   And you can't be sure of that. Like they put up on screen like

00:58:38   Yeah, like, oh, Microsoft does that. Right? You can't you can't

00:58:42   tell until we didn't all know either. We seemed amazing. We

00:58:45   trust we had faith in Apple, but until you get that thing in your hand, you're not sure,

00:58:48   because it was so weird and different, and it's like, is that even going to work?

00:58:52   But yeah, the proof is in the product.

00:58:55   Microsoft had to know by the time they all had iPhones.

00:58:57   Maybe the fact that Microsoft has a history of sort of sham demos, maybe that actually

00:59:03   set them back six months, because they just, you know, much like RIM's famous response

00:59:09   where they actually had a meeting the week after the iPhone came out and came away with

00:59:14   the conclusion that Apple had faked the whole thing because it wasn't possible, you know,

00:59:19   maybe Microsoft had a similar reaction.

00:59:21   Yeah, but it's the type of, you know, Cold War analogy again. So they watch the demo,

00:59:26   right? And they go down to their phone team and they say, "We just saw this iPhone demo.

00:59:31   We're not sure if that's going to fly or if it's BS or we don't know, but, you know, what

00:59:36   do you think of it, head of Windows Mobile?" And Windows Mobile says, "Our phones are strong.

00:59:40   We don't have to worry. Strong Windows Mobile." You know, because that's what they have to

00:59:43   As a company man down the chain of command, you never tell your superior,

00:59:47   "We're screwed in the thing we've been working on for these past few years.

00:59:50   This does not hold a candle to what they have and we need to regroup."

00:59:52   Right?

00:59:53   Your initial reaction is always, "Don't worry, everything's fine."

00:59:56   Because that's how you got your job, that's how you keep your job.

01:00:00   You always just say, "No, everything's great. We're great.

01:00:02   Our phones are the best."

01:00:03   Because that's the company line.

01:00:04   And just if everyone keeps repeating that to themselves

01:00:06   while having a sinking feeling in the pit of their stomach, that's bad.

01:00:10   I completely agree. I think you had a good point too about the developer support. And

01:00:20   one thing that I think should have been terrifying to Microsoft and that because like you said,

01:00:23   if any company understands the value of having third party developers support for your platform,

01:00:32   it's them. The scariest thing was that Apple almost literally

01:00:42   didn't do any work to get that support. They actually worked

01:00:46   against it. And we're telling developers at the beginning,

01:00:49   we're not even going to let you write apps for this. And third

01:00:53   party developers were like, please let us write apps. And

01:00:56   they said, No, you can write little web apps. No. And then

01:00:59   they were like, please let us write apps. And then like within

01:01:01   And then a month of the thing coming out, Craig Hockenberry and Lucas Newman figured

01:01:08   out how to write apps around Apple's back with no actual support, no SDK.

01:01:14   Lucas Newman had the, what was it, the Lights Out game and--

01:01:18   Yeah, that was like when the iPhone was announced.

01:01:21   That was the-- and it's amazing to me that Apple, for all its foresight, doesn't see

01:01:25   these things, or at least Steve Jobs did initially.

01:01:29   I think it was Macworld, right, when it was announced?

01:01:31   - Yeah, it was January Macworld.

01:01:33   - So at Macworld, you and Cable Sasser did a podcast

01:01:37   in the Macworld fishbowl or whatever you were,

01:01:40   talking about, of course, talking about the iPhone.

01:01:42   And I wasn't there, but I did a,

01:01:45   the one video I've ever posted on our stack,

01:01:47   I did a little video, and my video was not

01:01:49   of how awesome the iPhone is or anything.

01:01:51   My video was about the fact that every single person

01:01:55   at Macworld, in our circle of people

01:01:57   who are like Mac developers who saw that phone said

01:02:00   the same thing that I quoted from Cable Sasser

01:02:02   from your podcast and interview, which is like,

01:02:04   can we write apps for this phone?

01:02:06   Because that would be awesome.

01:02:07   I'm paraphrasing, but I think I got it almost exactly.

01:02:09   That was the story.

01:02:11   Macworld was like, we see this phone, this phone is amazing.

01:02:13   Everyone wants, like immediately,

01:02:15   not like a month later, a year later, thinking about apps.

01:02:18   Like as soon as all the tech nerds saw that phone,

01:02:21   they're like, I want my apps to be on that phone.

01:02:24   I want to write apps.

01:02:24   That was the day of the announcement.

01:02:26   He was saying that.

01:02:27   And that, you know, and that's the video I have was like the song "Dance With Me" because

01:02:31   everyone's just like, "Yes, you, me, phone, we together make beautiful apps, right?

01:02:35   We don't even know how to make apps.

01:02:36   We don't know anything about this thing.

01:02:38   We don't know what makes a good iPhone app, but we know we want to be there and we want

01:02:40   to write apps."

01:02:41   There's a template to Apple's keynote presentations.

01:02:46   And you can almost see, well, not like a literal keynote template, but there probably is for

01:02:50   that too, but a form that they typically follow.

01:02:55   one of them often is for a new thing, they'll say, "Here's ten things we want

01:03:01   you to know about it," and I'll go through the ten. But you can also see then how

01:03:04   that maybe they started with 40 things, and they say, "Here's the 40 things we

01:03:09   might want to talk about. What are the ten that'll be the best to talk about in

01:03:12   the thing?" And I'm sure that, you know, it's a weeks long, we could do these ten,

01:03:16   you could do these, you could do this. They pick the ten, they rehearse the ten,

01:03:20   they have them ready to go. And then there's often a slide where they'll show

01:03:24   like the other 30 or 40 things. It's like one slide with all these different other features

01:03:30   in various sizes of myriad. And they'll say look, and there's all this stuff too. And at the iPhone

01:03:38   debut at Mac world, that slide had up in like the upper right corner, one of the words was cocoa.

01:03:45   Like they never had Steve Jobs never said cocoa. It was just a word on a slide with like 30 other

01:03:52   features of the iPhone but but here's what he did say though that's why I was

01:03:55   flipping out he said it runs OS 10 OS 10 was that right that brief naming thing

01:04:01   of fun right he said it runs OS 10 and up on that slide it said Coco and it

01:04:07   like you said in our crowd everybody was already over the fact that it was so

01:04:11   awesome looking but it was that they'd already start you know they realized

01:04:14   that this thing you know if it was if that was true that you could build apps

01:04:19   because that's how they made their apps you know that it was you know all these

01:04:24   like Jurassic Park this is a unique system I know this I know Coco I can

01:04:28   write an app for that phone right that that just by him saying it runs OS 10

01:04:33   and that word Coco that everybody in our crowd had already figured out that iOS

01:04:37   was what iOS is that it was the mythical stripped down version of OS 10 with the

01:04:44   next step frameworks for application development and everyone wanted to write

01:04:48   an app like we all saw the app and it's kind of like Apple falling ass backwards

01:04:52   into success like the same thing with jobs you know refusing to make iTunes

01:04:56   for Windows for so long it had to be argued down by the rest of the you know

01:05:01   slightly less stubborn executive team at Apple like fine we'll make it for

01:05:06   Windows and let these stupid iPod become a runaway success if that's what you

01:05:09   want fine go ahead don't ask that was like more or less how it happened all

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01:09:14   Really great guys, great company.

01:09:16   What were we just talking about?

01:09:20   What was the last thing?

01:09:21   Microsoft, I don't know, we're probably done with Microsoft.

01:09:26   Yeah.

01:09:27   There's a little bit of dancing on their grave, I feel like.

01:09:29   Yeah.

01:09:30   But it's kind of a little bit unseemly to, you know, Microsoft.

01:09:33   Any other names we want to toss out?

01:09:35   What about Steven Sinofsky?

01:09:36   What about bringing him back?

01:09:38   I don't know if he knew, I don't know if he knows how to make Microsoft successful.

01:09:43   I think he's a smart guy and I think he has some good ideas, but, I mean, he's not, it's not terrible.

01:09:49   It's not terrible. I don't think if they brought him back. I wouldn't say that like

01:09:54   It would require there to be like unbeknownst to us

01:09:58   You know that before he was pushed out by Ballmer that you know the board said Tori

01:10:05   Well or that you know whatever the disagreement was with Ballmer that the board agrees that

01:10:11   Sinofsky's should have won that argument

01:10:13   You know seems a little antisocial though like he seems like hard to get on with this in the same vein as forestall

01:10:19   Yeah, but that might work better if he's the CEO.

01:10:22   Yeah, it only works better if he has good ideas, though.

01:10:25   Right.

01:10:26   Well...

01:10:27   I mean, he did, like...

01:10:29   I don't know.

01:10:30   I can't get a read on him.

01:10:31   He certainly has a lot of the aspects that you want, and that he's got that quality of

01:10:35   he's going to boldly do things.

01:10:38   I just don't have quite enough faith that he is going to do the right things.

01:10:43   And I also don't have quite enough faith to believe that he is going to bend in the way

01:10:48   that you would want him to bend.

01:10:50   Steve Jobs was pig-headed, stubborn, and obnoxious with the best of them.

01:10:54   He defined that practically in the CEO space.

01:10:56   And yet, he was able to be argued down into doing iTunes on Windows and being pissy about

01:11:02   it and everything.

01:11:03   But the fact that he was able to allow that to happen speaks volumes.

01:11:10   If the stereotype of Steve Jobs was actually true, there's no way he would have let that

01:11:13   happen and that would have been a terrible mistake.

01:11:15   So I don't know if Sinofsky is the type of guy who is going to be bold and have great

01:11:19   ideas and power through, but know when all the other smart people you surrounded yourself

01:11:24   are arguing against you that sometimes you should give in.

01:11:26   You know what I mean?

01:11:27   And that, I think, is key.

01:11:28   Yeah.

01:11:29   I don't know him well enough.

01:11:31   I don't know.

01:11:32   I was just trying to pick somebody from within Microsoft, and even though Sinofsky is no

01:11:35   longer within Microsoft, I think if they named him as CEO, it would be seen sort of as an

01:11:40   internal.

01:11:41   You know it would be a repudiate a big repudiation of balmer. Yeah, definitely

01:11:45   What about the all the guys who got kicked out with the courier project didn't get kicked out?

01:11:51   But like they can't courier and then that team sort of spread to the four winds who is there was Jay Allard

01:11:56   Jay Jay just just the letter J. I went to school with him, so now I can't imagine somebody went to school with Ryan Microsoft

01:12:03   So I'm cutting him off the list

01:12:05   Robbie Bach

01:12:07   Yeah, like that's what I was thinking of.

01:12:09   So if the vision is Microsoft is going to be remade as a consumer electronic services

01:12:16   company that makes devices and hardware and software, like that's the vision which Ballmer

01:12:20   articulated, that the board agrees that Microsoft should go and just sort of be kind of like

01:12:24   Apple in that way.

01:12:27   Pulling somebody from the side of Microsoft that was always on the consumer electronics

01:12:31   thing, like the Xbox guys, like Robbie Bach was involved with Xbox, I believe, in Courier

01:12:34   and all that type of stuff.

01:12:37   If this is what you want Microsoft to be in the future, those guys might be someplace

01:12:41   to look because that was always their passion.

01:12:43   It was always to pull Microsoft in that direction.

01:12:45   I mean, Jay Lard and those guys brought the plan to Bill Gates and said, "Why doesn't

01:12:50   Microsoft make a game console?"

01:12:51   And we're able to make that happen within Microsoft, which shows that they have some

01:12:54   ability to navigate the political dangers of the company and make things happen.

01:12:58   And they were doing the courier thing and got candid.

01:13:00   Who knows if courier was any good or not, but their instincts are in that direction.

01:13:04   So if you want Microsoft to do that, maybe those guys.

01:13:07   And pulled it off without having it called Windows Game Platform Certified 2000 and without

01:13:15   a win.

01:13:16   I mean, I guess Xbox has always, yeah, I'm almost certain it has always run with the

01:13:21   Windows NT kernel and that programming games for the Xbox was always, part of the appeal

01:13:28   was supposedly that it was a lot like writing Windows PC games.

01:13:33   The DirectX box, DirectX was their 3D API.

01:13:35   Right, but from a consumer standpoint, a branding standpoint, and a user interface standpoint,

01:13:42   no legacy whatsoever.

01:13:45   This is what a game platform should look like.

01:13:47   People keep crapping on the Xbox, that product line in terms of, if you look over its entire

01:13:52   life, I believe it has either been money neutral or losing money.

01:13:55   They had huge write downs for their hardware problems with the red ring of death.

01:14:00   the beginning the Xbox are really expensive to make or whatever but I

01:14:02   always come back to it as that that should be held up as a Microsoft success

01:14:06   financially maybe not but like they entered a very difficult market with you

01:14:11   know fierce competitors an established market and were able to make a name for

01:14:15   themselves that now they are always a serious contender to be number one in

01:14:19   any console generation and the value of that may be diminishing but it shows

01:14:23   that Microsoft like it's it's it's like Microsoft did something right they you

01:14:27   you know, kind of, sort of with fumbles or whatever, but there are so many people who

01:14:31   would never even think of entering that market. It's like a bunch of sharks in there, right?

01:14:35   And Microsoft did it and succeeded, and I think it's to their credit.

01:14:39   Yeah, and I think that, you know, it's like they could have, like one of the ways that

01:14:47   come the day that the iPhone shipped in 2007 and they had the, what they should have had,

01:14:52   the what the hell are we going to do moment, that that team could have proposed, you know,

01:14:57   something called like the X pad and base it on the Xbox branding and say look why don't

01:15:02   we make something you know a gaming type thing and we can also you know I don't know.

01:15:10   They could have made a part like the portable gaming space has been a real thing for a long

01:15:13   time Sony's got a portable system that you've all heard of the Game Boy right so the next

01:15:17   logical step for Microsoft you know say we are now established player in the in the console

01:15:21   space why don't we also make a handheld and that like is the limit of Microsoft's

01:15:26   corporate tolerance for strategy tax type things.

01:15:29   Like, whoa, whoa, whoa.

01:15:30   If there's going to be anything portable in your hands that's

01:15:32   going to play Xbox games, it's going

01:15:34   to be name whatever the group is that's

01:15:36   working on Microsoft's current tablet computing initiative.

01:15:39   And that one gets killed by the strategy tax.

01:15:40   Like, are we let you do this Xbox thing

01:15:42   without having Windows logo pop up and stuff like that?

01:15:44   But there's no way in hell you're

01:15:46   making the Microsoft Game Boy, because the phone group

01:15:49   doesn't like that.

01:15:50   The tablet group doesn't like that.

01:15:51   And then it's a whole strategy tax thing.

01:15:53   And that's why the Xbox Moment was

01:15:56   kind of amazing that they were able to get that product, but like, there was that was

01:16:00   like their limit. Like, look, this Xbox thing is losing money, you are in no position to

01:16:03   dictate that we should make a portable. Everyone knows Nintendo has that, you know, market

01:16:07   sewn up anyway, so forget it. And so they never did make the Microsoft Game Boy. And

01:16:12   yeah,

01:16:13   And it's it speaks to the credibility of the Xbox, though. And like you said, like that

01:16:17   it should be seen as a long term success that it would such a thing would have had instant

01:16:21   credibility.

01:16:22   Yeah, no, totally. Like at this point, like if the Xbox was spun off as a separate company,

01:16:27   just completely cleanly separated, people would still say, "Come, you know, the next

01:16:32   generation of game consoles in, you know, eight years or something, if there is a next

01:16:37   generation of game consoles," they would be talking about them as like, you know, people

01:16:42   to watch.

01:16:43   Company worth listening to.

01:16:44   Yeah.

01:16:45   I'll go to the big announcement that they've scheduled for next year.

01:16:47   Yes, no, totally. Like, because there are so few, I mean, it's like the personal computer

01:16:50   operating system space. How many people, if you had a company now and said, "You know

01:16:54   what? I'm going to get into personal computer operating systems." You're going to do what?

01:16:58   That's crazy. It was like the same thing with the game console. "I'm going to make a game

01:17:01   console." It's a platform. Who wants to make a platform? RIM, to its credit, made another

01:17:08   platform, which was unheard of practically. They did it not in the PC space, but they

01:17:11   said, "We're going to make a new platform." That is so unprecedented and so rare to happen

01:17:16   it's so difficult to do. It was short lived platform. It's going down the tubes, but

01:17:20   they did it. You know, you're talking about the bb 10.

01:17:23   Yeah, no, like, they're, you know, they're messaging service. Like, they, it was a platform.

01:17:31   And it's so hard to make those and to make them succeed.

01:17:34   Even if even if only fleetingly. Yeah. Yeah.

01:17:43   One last, well, any other names you want to toss out as a possible CEO?

01:17:46   I don't know many executives.

01:17:51   My gut feeling is it's going to be somebody and somebody I've never heard of.

01:17:55   Someone from inside Microsoft, like, yeah, you just go down the corporate letter of Microsoft

01:18:01   and pick for one of the 800 vice presidents and say, I mean, the thing is, there could be

01:18:04   untapped talent inside Microsoft. I don't want to poo poo that either. Like, I don't know all those

01:18:08   people. It might be the best case scenario for them too. It's like, you need the right guy.

01:18:12   Like I you know, that's that's the key decision

01:18:14   You don't we talked about the optics before of like oh

01:18:17   How's this gonna look in the press and who is what does it happens gonna stock price whatever all that is gonna you just gonna

01:18:21   Have to deal with whatever happens

01:18:23   That you just got to find the right person at the right person is in Microsoft fine

01:18:27   If they're outside Microsoft fine

01:18:29   Whatever you got to do get the right person and don't worry about what's going to happen the day you announce it because that is

01:18:34   Who cares?

01:18:35   Yeah

01:18:36   Somebody who you know and and Microsoft has to be Microsoft, you know

01:18:41   They can't beat that. They're never gonna win if they try to be Apple or anybody else or Google I

01:18:45   Would say this I would say in mobile I would say maybe and just that maybe the last point I want to make about

01:18:54   bomber and Microsoft is

01:18:56   That maybe the iPhone is almost not irrelevant

01:18:59   But is not the thing people should look at as the main failing of Microsoft in mobile

01:19:05   I would say the two companies that show what a failure Microsoft has been in mobile are rim

01:19:10   and Android, which I sort of separate from Google.

01:19:15   But that RIM's long-term success, I mean the whole bread and butter of

01:19:20   RIM through their heyday was in the

01:19:23   corporate market. I mean it was a long time before they even became a consumer

01:19:26   brand.

01:19:27   That, like RIM's days as a consumer success

01:19:31   were pretty fleeting, but they spent, you know, a long time as a big success in IT.

01:19:36   That market should have been Microsoft's.

01:19:40   The fact that they let RIM become the de facto corporate mobile OS should have been seen

01:19:48   as a failure very early.

01:19:50   And I think that if they had somehow, if Windows Mobile, crummy as it was taste-wise, had been

01:19:57   the success that RIM was all along, I think Microsoft would have had something to parlay

01:20:04   off a lot sooner and they'd be in a much better position today even in the consumer market.

01:20:09   That was classic low-end disruption because Microsoft had a smartphone platform, but Microsoft's

01:20:15   like, "When we feel the smartphone platform, it's going to be Windows on a phone.

01:20:19   It's going to be Windows CE, Windows Consumer Edition, the whole nine yards."

01:20:24   Whereas BlackBerry, unconstrained by that kind of attitude of, "Well, it has to be full

01:20:29   Windows," they gave you basically a pager that you could type on.

01:20:31   Exactly.

01:20:32   That was really good.

01:20:33   And then they ramped up from, "A pager you can type on?

01:20:35   Whatever.

01:20:36   We're making Windows on a phone.

01:20:37   Have you seen our thing?

01:20:38   It's a friggin' smartphone.

01:20:39   one megabyte of RAM and you can run these, you know, it's a stylus, right? And if we don't care

01:20:44   about this pager with a keyboard and you know, it was low on disruption that pager with a keyboard

01:20:48   grew smarter and bigger and better. And you know, servers were attached to it. And like,

01:20:52   even when it was just a pager with the keyboard, the utility of being able to just, you know,

01:20:55   tap out emails on your little pager with a keyboard thing was unbelievable. And it was

01:20:59   easy to use. You know, you could, the function it was designed to use, you could use it for

01:21:03   immediately. And that, that's what made Blackberry and Microsoft was too tied up and thinking we have

01:21:09   have to ship you an entire PC in your hand, which they weren't ready to do yet, you know?

01:21:13   Right. Yeah, because BBM is always sort of like a halfway between email and texting.

01:21:19   And it was exactly, you know, it was the exact thing that the technology of the Times, it

01:21:25   was like optimal for the technology of the Times.

01:21:28   Targeted the people who needed to be able to basically send email from anywhere in the

01:21:31   world.

01:21:32   And had the money to pay for it.

01:21:33   Yeah.

01:21:34   know, paid paid relatively large monthly fees. And then I say

01:21:39   Android, because clearly what and you know, it's it's Android,

01:21:43   not the iPhone that is now where Microsoft thought it was going

01:21:47   to be, you know, an OS that OEMs make device, you know, like what

01:21:51   Windows was, I mean, and you know, a lot of people pointed

01:21:54   this out that in broad terms, you know, maybe the percent, you

01:21:56   know, certainly the percentages of market share are different.

01:21:58   But in broad terms, it's almost uncanny how much Android is to

01:22:04   mobile what Windows was to PCs and iOS and the iPhone are to mobile what the Mac and

01:22:11   Mac OS were to PCs.

01:22:13   How can you blame Microsoft for not doing what Android did though?

01:22:16   Because Microsoft must have been looking at Android and saying, "They're doing exactly

01:22:20   what we do except for the part where you collect the money."

01:22:22   Exactly.

01:22:23   Because they gave it away to everybody, right?

01:22:26   And that works with Google's business because their business was get people on the internet,

01:22:29   get them to do Google searches, collect their personal information, because they were an

01:22:32   advertising company.

01:22:33   But Microsoft didn't have that business model.

01:22:35   And so it's like, how could you compete with Android?

01:22:38   How could you out Android Android?

01:22:39   You had to get there first, which Microsoft was.

01:22:41   So they could have done that.

01:22:41   But once Android is out the door,

01:22:43   it's like, so do we subsidize this

01:22:46   with our exchange licenses?

01:22:47   Do we become an advertising company?

01:22:49   Because it was so hard for them to go to the OEMs

01:22:52   and say, you should make Windows phones.

01:22:54   For a while, they could use their licensing terms

01:22:56   for the Windows operating system for their PCs as leverage.

01:22:58   But that starts to fade in power.

01:23:00   And Google was a tough competitor,

01:23:02   because they had the skills and they gave the thing away for free.

01:23:06   And they subsidized it.

01:23:07   I think maybe the only chance they had, and it is true, and it's part of what makes Google

01:23:14   such a difficult competitor in any market it gets into because they give everything

01:23:20   away and subsidize it through advertising, that they're very, very good at monetizing

01:23:27   you know, in, you know, very small pennies, you know, pennies, pennies per view multiplied

01:23:34   by a very large number ends up being, you know, billions of dollars. But I think Microsoft's

01:23:41   opportunity was to have Windows Mobile be way better than what Android was sooner. Because

01:23:48   the first few years of Android after it shipped, it was really bad. I mean, it got, it's gotten

01:23:54   a lot better very quickly. But like, you know, 2009, 2010, Android was a really, really crummy

01:24:01   system. And maybe there was an opportunity there where, look, you know, your competitors

01:24:07   might be paying $0 to Google for Android, but you can pay us $10 for a license for Windows

01:24:14   Mobile and your phone is going to look a hell of a lot better in the cell phone store.

01:24:19   Yeah, and they did that for a while. They had a lot of people making Windows Mobile

01:24:22   phones, and sometimes either also making Android phones

01:24:25   or making Windows mobile phones instead of.

01:24:27   And they'd go to the big name people, and they'd like, oh,

01:24:29   you should make a Windows mobile phone,

01:24:30   because you're a brand name.

01:24:32   And they'll let those other random Asian manufacturers

01:24:34   make Android phones.

01:24:35   But it was like the product they were offering,

01:24:37   it was maybe better, and it had a big Microsoft name

01:24:40   and everything, but it was not better enough.

01:24:42   Right, and I don't think it was.

01:24:44   And for example, I mean, to me, this is the biggest tell,

01:24:46   is that HTC is the perfect example.

01:24:49   Because at one point HTC was by far the world's biggest Windows phone maker.

01:24:55   I forget what percentage of Windows phones were HTC, but I think it was like a majority

01:24:59   share.

01:25:00   Like at least 50% of all Windows phones were HTC.

01:25:04   Maybe a lot higher.

01:25:07   And you know, clearly now it's a, I mean I don't think, I guess HTC maybe tried making

01:25:12   one Windows 8 phone or something like that, but almost everything HTC sells is Android.

01:25:17   The HTC is kind of like a cautionary tale, though.

01:25:19   Like, this is what happens when you listen to the siren

01:25:21   song of Microsoft and try to get on board with their Windows

01:25:24   thing.

01:25:25   It distracts you.

01:25:25   And by the time-- like, now they're kind of recovering,

01:25:28   and they have-- the HTC One is an amazing phone that

01:25:31   people feel like should be doing better than it is.

01:25:33   But it's like, well, you spent all that time off

01:25:35   with Microsoft.

01:25:36   And while you were doing that, Samsung came

01:25:39   and became the name and face of good Android phones.

01:25:42   And despite the fact that you now have a great phone

01:25:45   the HTC one, you know, Samsung, people associate, you know, the name Galaxy tab, the whole product,

01:25:51   you know, like, as like, Damn, if we didn't spend all that time making those windows phones,

01:25:56   we would, you know, maybe we could be Samsung. Yeah, maybe. Alright, let me do the last sponsor

01:26:00   break. And then we'll talk to you about about video games. Do you play any video games?

01:26:04   I do. Alright, last sponsor. Great sponsor. Another repeat sponsor delighted to have him

01:26:10   our friends at igloo igloo is an intranet

01:26:14   that you'll actually like don't just take my word for it

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01:26:30   shared drives USB drives walking around almost like the old sneaker net

01:26:35   and email and a complicated SharePoint

01:26:39   intranet to manage everything in their organization.

01:26:42   Well, they set a goal.

01:26:43   They wanted double their fundraising,

01:26:45   and they needed a better way

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01:26:48   So they tried out a whole bunch of different software.

01:26:50   They chose Igloo.

01:26:52   And after they set it up, after their whole staff saw

01:26:55   how easy it was using Igloo to collaborate,

01:26:59   they actually clapped.

01:27:00   They had like a company-wide meeting where they said,

01:27:02   "Here's what we're gonna use.

01:27:03   "Here's what it looks like.

01:27:04   "Here's how it works."

01:27:05   And the staff broke out in applause.

01:27:07   Children's Hospital Foundation has been using igloo for a year now. Still love it still

01:27:14   with it. And here's the thing, they have a new software update just came out the other

01:27:18   day at the end of August. They call it scone. That's the name of the new update. Every igloo

01:27:23   customer was instantly upgraded as soon as it came out because it's a web app. New stuff

01:27:27   that they have they've a new HTML five document previews, video previews, improved analytics

01:27:34   and a whole bunch more. When they come up with a software update, everybody's existing

01:27:38   igloo internet already automatically gets upgraded. Great service. And this is the part

01:27:45   that's amazing. It's free to use with up to 10 people. So if you're a small team, it's

01:27:51   free for your team to use. If you're a big team, you can try it out, have a group of

01:27:55   you, try it out with up to 10 of you just to see if you like it. And when your igloo

01:27:59   grows when you need to add people, it's only $12 a person a month. Go to igloosoftware.com/thetalkshow

01:28:10   to start building your igloo. igloosoftware.com/thetalkshow and start building your igloo. And don't forget,

01:28:18   if you're new, go to their homepage and they have a whole bunch of sandwich videos made

01:28:22   by the aforementioned Adam Lisagor. And they're hilarious. It's like a little sitcom that

01:28:29   that he made for a glue. I should say they made I don't know sandwich videos getting

01:28:35   big they got they got like a whole team.

01:28:36   I did everything himself. Oh, he camera video right. He makes you think that I don't he

01:28:43   might be semi retired at this point.

01:28:46   It's a series of body doubles. Yeah.

01:28:50   He's actually officiating the the the aforementioned. See, that's what I'm saying. How can you be

01:28:55   doing all these things at once? He makes videos, he stars in the videos, he officiates weddings,

01:28:59   You know?

01:29:00   You're going to get into a taxi, go to the airport, he's your driver.

01:29:04   He's the pilot on the airplane.

01:29:06   He's quite talented.

01:29:09   All right, video games.

01:29:11   So I wrote a big piece today based on -- it was funny.

01:29:15   I didn't plan on it.

01:29:17   Somebody on Twitter said the reason that I stirred up so much shit by saying that Nintendo

01:29:20   should make -- I wrote like a two-line link list entry that said they should just give

01:29:24   in and make iOS games when they announced the new 2DS last week. And I got so -- I got

01:29:30   great feedback from it. I don't mean it in terms of you dummies shouldn't send me feedback.

01:29:34   It was great. I mean, I thought -- I couldn't believe how much interesting stuff came out

01:29:38   of a two-sentence piece that I wrote. But I had a lot more to say, and I wrote it today.

01:29:43   I won't repeat it here. I'll assume everybody who's listened has read it. But the gist of

01:29:48   it is I stand by it. I think Nintendo is screwed at least in -- maybe especially in handhelds.

01:29:54   and I think that I think they should seriously consider making iOS games even if that means

01:30:00   that the company is going to shrink in uncomfortable ways.

01:30:05   I think you probably get a lot of crap about it for the obvious reason is that like normally

01:30:11   I mean you said yourself you're not a gamer and you do write about game technology occasionally

01:30:15   but most of your beat is like you know personal computers, mobile phones, stuff like that

01:30:19   So the people who are inside that circle are going to say, "This guy doesn't know the history,

01:30:25   doesn't have the depth of background and personal experience to comment knowingly on this topic."

01:30:31   So you get crap from those people, right?

01:30:33   And the flip side of that, which I'm always cognizant of, is that when you're inside that

01:30:39   circle, it's very easy to have preconceived notions about what Nintendo is and how they

01:30:45   have to behave and sometimes it's the people who are outside that as assuming that you

01:30:49   know that they're you know smart people they can give you a view on it that you're not

01:30:53   willing to accept because it goes against you know central tenets of your belief system

01:30:58   from being a gamer for the past 20 years or whatever so it's always important that when

01:31:01   the outside guy says something crazy maybe he's wrong because he doesn't have the background

01:31:05   to know about it but on the other hand maybe you can't conceive of that possibility because

01:31:11   because it just it runs counter to everything you've felt about Nintendo for the past, you

01:31:15   know, 30 years of your life or whatever.

01:31:18   I agree with you there. And I, you know, and I'll just say this, I if I end up being proven

01:31:23   wrong and have to eat my hat on this one, I'll be happy. Like, let's say 10 years from

01:31:28   now, Nintendo still has never made a game for anything but their own systems. And they

01:31:32   have a successful handheld platform and it's still a successful plug into your TV platform.

01:31:38   news. I would be that would be delighted. And I'm sure that would be good news for the

01:31:42   gaming industry. And for people who like to play games and for fans of longtime fans of

01:31:47   Nintendo's franchises. Great. I'm I will be happy to be proven wrong. I just don't think

01:31:54   so. And to me, you know, the comparison and it's uncomfortable, but I do think that they're

01:31:59   in a similar situation to where rim was five, six years ago, in so far as that they're unable

01:32:07   to compete as computer makers with iOS and, to a lesser degree, Android.

01:32:14   I think that there's a kernel of something in there that you're on the right track about,

01:32:23   but in that duality, and again, I'm being very cognizant to try to think outside the

01:32:28   box and not accept the accepted narrative of the game industry because I consider myself

01:32:34   someone who is deeply entrenched in that world.

01:32:36   But I think you are missing a lot of things

01:32:40   about Nintendo here,

01:32:40   and that's why you're getting a lot of crap.

01:32:42   Because you're like, you're off,

01:32:44   you veered off in the wrong direction.

01:32:45   And the kernel of truth that you have here

01:32:47   is what you're getting at.

01:32:48   That like, that you see competitors

01:32:52   taking the attention and time and money

01:32:55   that used to be Nintendo's,

01:32:58   and you're thinking, Nintendo doesn't have what it takes

01:33:01   to match up with those competitors, right?

01:33:05   That you see how people are playing iOS games,

01:33:06   people doing this.

01:33:07   Can Nintendo compete with that on those terms?

01:33:15   And it's like, well, no, they can't.

01:33:16   Like you said with BlackBerry,

01:33:17   could they make iPhone-caliber hardware and software?

01:33:19   Because that's what it was gonna take

01:33:20   to stay in the phone business.

01:33:21   It's like, all right, here's the iPhone,

01:33:23   what do you got, BlackBerry?

01:33:24   And they just kept putting out these phones

01:33:26   that were not iPhone-caliber,

01:33:28   but either in the hardware or the software,

01:33:30   Like it's sticking with the hardware keyboard and it's just like no BlackBerry. That's not the bar

01:33:34   That's not the minimum entry price is like Windows Phone, right?

01:33:37   Windows Phone 7 and 8 like that is a valid entry in the field Android is a valid entry in the field

01:33:43   But you are putting out is not you are not competing on the end. It's like well, you know BlackBerry, you know rim BlackBerry is a company

01:33:49   Couldn't do that

01:33:51   They you know, they didn't they maybe they didn't have time. They didn't have people they were too late whatever

01:33:55   They just just couldn't get it together and you know that and so that's what you're saying about about Nintendo

01:33:59   But your suggested remedies are not good, I think,

01:34:02   and not good at all.

01:34:04   Because-- and the other thing you get right

01:34:07   is that Nintendo has problems.

01:34:09   Like, I think we all agree that Nintendo is in not

01:34:12   a terrible spot, but they're not doing well.

01:34:14   Like, they're not certainly coming down

01:34:16   off the high of the Wii.

01:34:17   They're not doing as well as they had to.

01:34:19   So I think those are the two parts that, underneath it all,

01:34:22   that you're kind of getting right,

01:34:23   that you could recognize from seeing the technology.

01:34:25   But the rest of the details, I think you're off of that.

01:34:28   Well, and one thing I didn't even get into, and this is where I maybe it's even maybe I should

01:34:32   have because I think maybe it's even harder problem is I think going forward to remain competitive

01:34:36   both handheld and on console. I feel like the ever-growing complexity of the things that the

01:34:49   competitors they're against are such that they need a better operating system and

01:34:56   and like developer system.

01:35:00   And that, you know, that they, you know, I think by all reports that they really have

01:35:04   like a crummy one. Like they can't, they still don't think that they can do like

01:35:08   patches to games once they've been released.

01:35:12   So this is where you get into trouble. Alright, am I wrong? Downloadable content.

01:35:16   So, here's what I think Nintendo's problems are. Because like I said, there is, there is a core

01:35:20   issue here, right? And here's how I would define Nintendo's problems.

01:35:24   the first question you have to ask about Nintendo's problems. Is there a future for game only

01:35:29   or sort of game mostly hardware devices that something something that you buy that mostly

01:35:35   plays games, maybe just streaming video or things or whatever? Is there a market for

01:35:39   that? You know, currently or in the future? And so what's your answer to that question?

01:35:43   My answer is yes, but it's shrinking so fast that it doesn't remain, that market doesn't

01:35:55   remain big enough to sustain Nintendo.

01:35:57   Yeah.

01:35:58   So the, I think the question of this is like, I think it's still an open question and I

01:36:02   think the upcoming TV console generation, the Xbox one and PlayStation four will give

01:36:08   us a really important data point.

01:36:10   If they sell in radically lower numbers than expected,

01:36:14   like than the previous generation of consoles did,

01:36:17   then we'll know that the market for game machines, things

01:36:21   that pretty much mostly do games,

01:36:22   despite the fact that both the Xbox One and PlayStation 4

01:36:25   were also doing Netflix and all these other things,

01:36:27   like all the stuff we expect them to do.

01:36:28   If they don't sell in high numbers,

01:36:29   then we'll know that what you just said

01:36:31   is that now is that time, that it's shrinking,

01:36:34   and that it's only a matter of time before it goes away.

01:36:36   If, on the other hand, they sell in the expected numbers

01:36:40   and they sell huge numbers on them, we'll say, All right, well,

01:36:42   apparently there is still a market for game only devices. We

01:36:46   don't know how long that market's gonna be around. But

01:36:47   nobody knows around but like, it hasn't gone away.

01:36:49   Let me let me revise and say, for ones that you plug into your

01:36:53   TV, in your home entertainment system, non portable ones, non

01:36:58   mobile ones. Let me say I don't know. And I'll let me plead

01:37:02   ignorance and say that I'm so far out of it that I really

01:37:05   don't know. But maybe because I can imagine that as you know, as

01:37:09   computing power grows, you could do more and more amazing stuff. And that one that's primarily

01:37:14   centered on games will remain unbeatable. And that people have historically, consumers

01:37:20   have historically been willing to plug numerous things into their TV. There's a limit. And

01:37:25   people get annoyed when you reach a certain limit. But people have, you know, for decades

01:37:30   now have had like a cable box and a DVD player and a game machine, you know, and or, you

01:37:37   some kind of a streaming box like an Apple TV or a rock you or something like that. So there's

01:37:41   a history of that and TVs are made for it with multiple HDMI ports. And it's not that painful

01:37:47   to have one more box plugged in. And so I'll say maybe if not probably plugged into the TV. But

01:37:52   for mobile for handheld devices, I think the answer is no.

01:37:57   Well, I think the question is, like, I don't think you can separate those two because you're saying

01:38:04   there is a market attached to your TV and there isn't for handheld, if what you say

01:38:09   about handheld is true, there's no reason that that same technology couldn't come and

01:38:14   displace the television attached one. You know what I mean? Because we're already at

01:38:18   the point where the high-end iPad has previous generation game console caliber power close

01:38:23   to it anyway.

01:38:24   Right, because the iPad, as small as it is physically, has more pixels than your TV.

01:38:28   Oh, yeah, no, but even just the GPU itself, just like if you had it run 1080p, if what

01:38:33   say is true and that the market for handheld gaming only hardware doesn't exist, then I

01:38:38   think that the power we already have in our phones, like it's only, it's a short distance

01:38:42   to say that why can't something similarly small and portable also be your television

01:38:47   gaming device, or in addition be your television gaming device? Like, I don't know if you could

01:38:53   separate them, because like, the only difference between handheld and attached to your TV is

01:38:57   one of like time. It's like the technology that used to be required a big box attached

01:39:01   television with the fan now can fit in your phone and that just that will just

01:39:05   continue apace right that's why I think the key question is is there a market

01:39:09   for any kind of game only a game mostly device and I think for now for this

01:39:14   generation I predict that the Xbox one and ps4 will sell in reasonable numbers

01:39:19   the time of the game only a game mostly device is not over and the reason I

01:39:23   think this is an extremely relevant question for Nintendo is because I don't

01:39:27   think Nintendo has what it takes to feel the device that is not a game only a

01:39:30   game mostly device. They can't make a personal computing platform. They can't make an app

01:39:34   platform. They're not going to compete with Android. They're not going to compete with

01:39:38   iOS or even Windows Mobile. I don't think the company has it in them to sell a device

01:39:42   that's a general purpose. Because again, like we said, who makes a software platform? How

01:39:47   often does that even happen that you make a successful platform? That is not what Nintendo

01:39:51   is designed to do. They can't compete in that market. If that's where the market is going,

01:39:55   that is more or less the end of the line for Nintendo as we know it as a company, and they

01:39:59   could go on and become just a software company, do all the things you talked about or whatever,

01:40:03   but that is the line that I would draw. And I don't think that right now is that line.

01:40:07   I don't think that you can say that, nope, that time is over. There's no more market

01:40:11   for game only devices. Nintendo, your only choice is to become a different kind of company.

01:40:15   And that's where I part ways with your suggested solution of them trying out an iOS game.

01:40:21   I see it mostly, I don't see that. You might be right though about the fact that if anything

01:40:26   is going to end the demand for console.

01:40:33   Is console the right word for the ones you plug in?

01:40:35   Yeah.

01:40:36   All right.

01:40:36   Right.

01:40:37   But the distinction I'm drawing is game only hardware.

01:40:39   You buy it to play games and stream video.

01:40:42   You don't run apps.

01:40:45   The problem I see for them is more specific.

01:40:49   I see it more clearly.

01:40:50   And it is in a lot of ways-- and it

01:40:52   was hard for me to write the article

01:40:53   because I didn't want to just say I have a gut feeling.

01:40:55   and I tried to justify it as logically as I could,

01:40:58   and I stand behind it.

01:40:59   But to me, I see it, and I certainly

01:41:01   feel it more viscerally with the handhelds,

01:41:06   with the 3DS versus iPhones and Android phones.

01:41:12   And number one, I don't think they could even

01:41:15   make an iPod Touch caliber device.

01:41:18   And if they did, I don't think that they could make it

01:41:21   at a cheap enough price.

01:41:23   And they're competing.

01:41:24   And this is the part where they're almost screwed and it's not even fair, which is that

01:41:28   they're competing against the iPhone and Galaxies and other high-end Android phones, which are

01:41:35   subsidized in so many markets around the world. And, you know, complain all you want about

01:41:41   how subsidized phones, you still end up paying as much or more over the long run. The fact

01:41:45   is most people think a brand new iPhone 5 costs $199. And it, you know, it doesn't actually.

01:41:53   But how can they compete with that when it's in fact a $700 gadget?

01:41:59   I think you're off on this comparison as well because it gets back to the RIM thing where

01:42:04   you were saying that RIM was sticking with the hardware keyboard and making the crap

01:42:09   your hardware and they just couldn't compete, which was true in the smartphone space.

01:42:13   But the key difference between what you're describing and what happened with RIM and

01:42:18   is that right now, like you said,

01:42:20   Nintendo can't make an iPhone-caliber piece of hardware.

01:42:25   When RIM was circling the drain,

01:42:30   the devices they were putting out gave inferior experiences.

01:42:34   If you bought an iPhone and you bought whatever thing

01:42:36   RIM was promoting as their top-of-the-line touch-type thing,

01:42:39   the iPhone was better to use.

01:42:41   It was nicer, you had access to better apps,

01:42:43   they were more fun to use, it was easier,

01:42:45   everything about it was better.

01:42:47   If you give a kid an iPod Touch and a significantly cheaper

01:42:53   Nintendo 2DS, the Nintendo 2DS delivers a far superior gaming

01:42:57   experience than the iPod Touch.

01:43:01   I kind of disagree with that.

01:43:02   Totally superior gaming experience

01:43:04   for all but the very, very most casual games-- Angry Birds,

01:43:09   Cutthroat, stuff like that.

01:43:12   The Nintendo handheld is more valuable.

01:43:15   That's why the games can command a higher price,

01:43:17   because they're more valuable.

01:43:18   The people who really, really love games

01:43:21   love the Nintendo handhelds.

01:43:23   To the degree you like games,

01:43:24   you would like the Nintendo handheld

01:43:26   better than an iPod touch.

01:43:27   And in the same way, the people who are gaga for smartphones

01:43:30   and love smartphones love the iPhone.

01:43:32   They did not, you know, the rim started to look ancient.

01:43:34   And I think you're judging on the wrong criteria.

01:43:37   Like, retina screens, it's meaningless

01:43:39   on a Nintendo handheld.

01:43:41   - I'm gonna disagree with you there.

01:43:44   - Because they're not displaying text.

01:43:45   It's not just playing apps, right?

01:43:50   And it's not-- it's definitely not better at all things.

01:43:52   And like I wrote, there's certainly

01:43:54   some games where you want a D-pad and buttons.

01:43:56   No doubt about it.

01:43:57   And those are traditionally Nintendo's bread and butter

01:44:00   games, because they've built the game specifically

01:44:02   for the hardware.

01:44:04   And again, I'm not advising that they just

01:44:06   take the existing games and put a virtual D-pad on iOS

01:44:10   and call it a day.

01:44:11   I think if they're going to do it,

01:44:12   They've got to make games that are meant to be run on iOS.

01:44:16   But the same -- there was a few things, though, that BlackBerry was and maybe even today is

01:44:21   still better at than iOS.

01:44:23   There are very few, but it's specific to messaging, like going through email.

01:44:27   And I remember one time years ago -- I don't know, it was probably back in 2008, and I

01:44:31   think it was one of the reasons that it was sort of grist for my "Why RIM is screwed"

01:44:37   post.

01:44:38   I remember getting picked up at the airport in San Francisco with my friend Jason Hoffman,

01:44:46   who I used to work at. He's still there, but at Joyent. And it was like by coincidence,

01:44:53   like we were both—I think so. I might be misremembering the details. But I was in San

01:44:56   Francisco probably for an Apple event, and he was arriving from somewhere, and a mutual

01:45:00   friend picked us both up. And I was in a car with him. And he was one of those guys who

01:45:05   at the time had a Blackberry and an iPhone. And I was a little surprised by that because

01:45:09   I knew, you know, I used an iPhone for most things. And he used the Blackberry just for

01:45:13   email. And I he gave me in the car like a big demo of who here's why I use and he was

01:45:18   so efficient. It was so amazingly quick to go message to message to message and peck

01:45:23   out a return that he could get through. And he had had like a long flight and it was in

01:45:28   the air when it was a lot harder to maybe there weren't even a Wi Fi flights at the

01:45:32   time but he did not want so we had like a whole days where the female and went

01:45:37   through them boom boom boom boom boom in a way that it would be a lot slower on

01:45:41   iOS and less efficient and I was a that is pretty interesting and then his

01:45:44   complete he is his conclusion was yet and rem is totally screwed that you know

01:45:48   that I bet they're out of business in two years that he used the thing and

01:45:52   enjoyed it but completely recognized why they were totally screwed

01:45:56   all the hardware software keyboard difference I think is another one

01:45:58   another instructor one because I think they

01:46:00   Although they seem similar, like, hey, Nintendo, yeah,

01:46:02   I know you got hardware controls now,

01:46:04   but that's the past come to touch games.

01:46:05   But it's not.

01:46:07   Well, the big thing with the comparison with BlackBerry,

01:46:09   though, is that they had the hardware for going up and down

01:46:12   in your messages, which is way better than any way

01:46:14   to get from message to message in iOS still.

01:46:17   Well, I was thinking more of the hardware keyboard,

01:46:19   because that was the thing that people were like, oh, I can't

01:46:20   type on that software keyboard.

01:46:22   But it's so different than touch controls

01:46:25   for gaming versus buttons and D-pads and analog sticks

01:46:28   and stuff.

01:46:28   Like with the hardware versus software keyboard,

01:46:30   it was the same number of buttons,

01:46:33   and there were advantages to the software keyboard

01:46:35   that the hardware one couldn't match.

01:46:36   Like you could reconfigure the software keyboard,

01:46:37   you can do predictive hit areas,

01:46:39   which you couldn't do with the hardware keyboard.

01:46:40   The buttons couldn't get bigger because it knows

01:46:42   that the next likely character's probably an R, right?

01:46:45   The software keyboard had advantages,

01:46:47   so it was like a superset.

01:46:48   It was like, you can do everything

01:46:49   the hardware keyboard can do.

01:46:50   We got all the same buttons,

01:46:51   and also we can do fancy things that you can't do,

01:46:53   and it gets out of your way when you don't want it, right?

01:46:56   touch versus hardware buttons on gaming devices,

01:46:59   touch only has an advantage in a narrow band of games

01:47:02   like Angry Birds or Cut the Rope

01:47:03   or any kind of touch type games,

01:47:05   but it has massive sort of exclusionary disadvantages

01:47:09   in different kind of games.

01:47:10   Like you can't make a whole class of very popular games

01:47:14   that people like to play if your finger is on the screen.

01:47:17   - True.

01:47:18   - And so it's like, it's not like,

01:47:21   oh, this is exactly the equivalent.

01:47:22   You've got shoulder buttons, you've got face buttons,

01:47:24   you've got a D-pad.

01:47:25   just that now they're all software.

01:47:27   Never mind that that would be terrible to use as well,

01:47:28   'cause you know from trying to use D-pad type games.

01:47:32   It's not a superset.

01:47:33   It is really, really narrowly defining things,

01:47:35   and it fences you into a certain area of gaming.

01:47:38   The whole question is like,

01:47:39   all right, maybe that is the old way.

01:47:40   I'll know that's the old way when people stop wanting

01:47:43   to play games that require those controls.

01:47:44   So you're watching, you're watching.

01:47:46   Who's gonna buy these things?

01:47:47   Are they selling 3DSs?

01:47:48   Are they gonna sell 2DSs?

01:47:51   Are they selling game only hardware?

01:47:52   Are people buying consoles?

01:47:53   That's how you'll know when it's a problem.

01:47:56   Well, that's why I think it's already a problem,

01:47:58   that the numbers that Lucas Mathis cited in his response

01:48:01   to me that, hey, the 3DS is selling OK,

01:48:04   it was 130 months in, or weeks in, I guess weeks in,

01:48:10   which is a decent measure, like 2 and 1/2 years,

01:48:13   that the last generation DS was at 43 million,

01:48:17   and the 3DS is only at 33 million.

01:48:19   So it's 23% down generation to generation.

01:48:22   And it just happens to coincide with the rise

01:48:26   of modern smartphones.

01:48:28   I think that's the cause.

01:48:30   I don't think it's anything specific to the 3DS.

01:48:32   I think it's the fact that it's in the era of the smartphone.

01:48:37   Well, that gets back to the idea of game only hardware.

01:48:40   Is that something that's still going to be?

01:48:42   Do you still just want to buy something--

01:48:43   And I also know.

01:48:44   I know.

01:48:46   And we've owned a bunch of-- I've

01:48:47   owned Nintendo hardware, a lot of Nintendo hardware

01:48:49   over the years.

01:48:51   never been a serious game role of a man younger played a lot more but uh...

01:48:56   you know and i know that nintendo has a cultural explicit cultural policy of of

01:49:01   embracing

01:49:02   older

01:49:04   lesser

01:49:05   cheaper technology

01:49:07   you know and that the gameboy famously didn't have a color screen

01:49:11   uh... until years after other competing ones did outsold them all

01:49:15   and that you know the we famously was was

01:49:19   Like I wrote today, it was standard def.

01:49:21   I mean, for, you know, it's almost ridiculous

01:49:23   that it wasn't high def.

01:49:24   And, you know, outsold on a unit share basis

01:49:26   PlayStation and Xbox.

01:49:28   But I think the big difference

01:49:30   that they're facing against smartphones,

01:49:33   technically, is that with the smartphones,

01:49:35   it's about the, you're asking me to carry a second device.

01:49:40   That their policy of having lesser technology

01:49:43   worked for them when it was,

01:49:45   will you buy our thing that's cheaper and more fun,

01:49:48   even though it's less technically advanced, or the other guy's thing, which is more technically

01:49:55   advanced but not as fun.

01:49:57   I think that's going to protect them in handheld though because handheld gaming, kids don't

01:50:03   have smartphones. I guess at a certain age they do, maybe middle school or high school

01:50:07   or whatever, but younger kids still play games. That's a market that may be protected from

01:50:13   smartphone infiltration for a while anyway because people aren't going to give their

01:50:17   kids smartphone but they will give them an intended 2ds for Christmas.

01:50:20   Yeah, but I you know and and this is a lot of it is a very very small sample size on

01:50:24   scientific polling based on the fact that I have a nine year old son but he has a sample

01:50:31   size of one has both a 3ds and an iPhone and he does play the 3ds but he plays the iPhone

01:50:40   more and if it's like hey we're going out to dinner you can take something he takes

01:50:45   And this is not by me pushing him.

01:50:47   I'm certainly no-- in fact, I almost

01:50:49   wish he played the 3DS more.

01:50:51   I almost feel like maybe we haven't gotten

01:50:53   our money's worth out of it.

01:50:54   I mean, he plays it.

01:50:55   But it just seems to me like when push comes to shove,

01:50:58   he'll take the iPhone.

01:51:00   And it's hard.

01:51:03   I try to ask him about it.

01:51:04   And he's only nine, so it's hard for him

01:51:08   to explain his choices.

01:51:09   But definitely part of it is that when

01:51:12   you take your iPhone with you, you take all your games with you. And maybe none of the

01:51:16   games are as fun as the best game for the 3DS, but you've got them all. And you can

01:51:21   never lose the cartridge. He's lost one 3DS cartridge, which I think is pretty good for

01:51:27   a nine-year-old. But he's never lost an iOS game.

01:51:29   So this is like --

01:51:30   And if he wants to take all of his 3DS games with him, he's got to take a little, like,

01:51:34   a briefcase.

01:51:35   Yeah. So, like, Nintendo's problems, even if you assume that there is still a market

01:51:40   game-only devices, even if you give that as a given, because I think that is like, that's

01:51:43   like the red line in Nintendo's future, and probably the future of the Xbox and Playstation

01:51:48   as well, is, you know, game-only hardware is still a viable business, and I think currently

01:51:52   it still is, don't know about the future, right?

01:51:55   Even if you allow for that, you have to say, "Okay, Nintendo has other problems, and a

01:52:01   lot of those have to do with the things that iOS does better than Nintendo as a gaming

01:52:04   platform."

01:52:05   Ease of purchase and installation and the whole ownership experience, you just went

01:52:07   through it.

01:52:08   Cartridges?

01:52:09   Digital downloads, yes.

01:52:11   Nintendo's digital commerce stuff is way behind even like Steam on the PC, let alone the App

01:52:15   Store.

01:52:16   It's so much easier to deal with games in the App Store than really any of the platforms,

01:52:22   Microsoft, Sony, or Nintendo.

01:52:23   So Apple's way ahead there, and you're seeing that factor when making choices of what device

01:52:29   you want to bring with you.

01:52:31   Nintendo is super dumb in this area.

01:52:33   They would tie their games to their hardware.

01:52:35   So, "Oh, you can do a digital download, but those are tied to your particular Wii hardware."

01:52:38   You get a Wii U, you got through this crazy transfer process that makes our DRM elves

01:52:42   happy and could screw up and do all these terrible things, right?

01:52:46   Sony has actually some interesting ideas about this for the PlayStation 4 where they say

01:52:50   all the right things.

01:52:51   They always say all the right things, right?

01:52:53   But like, yeah, we're going to have downloadable games.

01:52:55   They'll be downloaded day of.

01:52:56   You don't have to buy discs you don't want.

01:52:57   And they also have the interesting technology they've been touting like, say you're going

01:53:00   to download this gigantic game for your PlayStation.

01:53:02   You can start playing it even before the whole game is downloaded.

01:53:05   We'll tailor them so we'll immediately start streaming you like the first level so you

01:53:08   so you can start playing immediately.

01:53:09   That's something that's ahead of Apple,

01:53:11   if it turns out to work, right?

01:53:13   Because Apple, if you want some multi-gigabyte game

01:53:15   on your iOS device, you gotta wait for the whole game

01:53:16   to download before you can play it.

01:53:18   So Sony is at least saying the right things.

01:53:20   Microsoft had some really interesting ideas

01:53:22   about like lending games and resale.

01:53:24   Like you could lend the game to any person

01:53:26   in your family for free, like up to 10 people or whatever,

01:53:30   without having them rebuy it, and it would transfer.

01:53:33   People freaked out about that for DRM reasons,

01:53:35   and they did some other stupid things as well,

01:53:36   and they backed out a lot of decisions.

01:53:37   What's the joke that it should be called the new platform, the Microsoft 180?

01:53:42   Yeah, the Xbox 180.

01:53:44   They had all these grand plans, and half of them were actually really awesome, and half

01:53:47   of them were terrible, and they just said, "Oh, never mind, we're going to do what we

01:53:49   did with the 360."

01:53:50   Right?

01:53:51   And you could just take your disks back and sell them at GameStop.

01:53:53   Yeah, exactly.

01:53:54   But Nintendo is way behind there, and that, I think, is a much more pressing problem than

01:53:58   the things you've listed that they...

01:54:00   Even if you say gaming things are going to be future, you've got to get your act together.

01:54:03   It's got to be as easy to buy and deal with games as it is on the App Store, and it's

01:54:06   And it's not, and that's really going to hurt them.

01:54:08   And online gaming and collaboration, I don't know if Apple is ahead here, but Microsoft

01:54:13   certainly is in the lead with Xbox Live where you get all your friends and you can go online

01:54:16   and play with them.

01:54:17   And Sony and Nintendo both have not been doing well.

01:54:19   Nintendo's always been trying to be like family-friendly and stuff, but like limiting access to online

01:54:24   so you don't have people like cursing at you in the chat and everything.

01:54:27   But that's an area where they're all kind of like fumbling and are not quite up to the

01:54:31   standards you'd want them to be.

01:54:33   And the final thing is market access.

01:54:35   Like, it's still easier to get a game in the App Store than it is to get a game on Nintendo,

01:54:40   Sony, or Microsoft gaming platforms.

01:54:42   Those are the biggest problems facing Nintendo right now, aside from the meta question of

01:54:46   whether game-only products are valid.

01:54:50   All that stuff that iOS does better and that makes it so that people say, "Me and my buddy

01:54:54   are going to make an iOS game, and why aren't you making Nintendo games?"

01:54:57   "Oh, because that's a pain in the butt.

01:54:58   I don't even know how I would do that, and it's not easy to buy things there, and I could

01:55:02   just tell people to go on their phones and download this app."

01:55:05   Those are all the big problems that Nintendo has, but all the things that you listed about

01:55:11   the hardware and everything I think are missing the forest for the trees because, like, I

01:55:14   could, like, you listed resisted touch screens as a problem, like you said they're like a,

01:55:19   I feel like a relic for a museum.

01:55:23   Like, there are reasons for resisted touch screens.

01:55:26   Not that they're never, they're gonna have them forever, but, I mean, the first reason

01:55:30   is like precision, because fingers get in the way more than a stylus does, and Nintendo

01:55:37   had specific games in mind that it wanted you to be able to use a stylus, but that you

01:55:40   needed that kind of precision, like to draw the path for Link's Boomerang in one of the

01:55:42   Zelda games or whatever.

01:55:44   So you're going to have a stylus, and if you have a stylus, pressure sensitive was the

01:55:47   only option they had at that time.

01:55:50   And also, once you give someone a stylus, they're going to jab that thing to the screen

01:55:53   like crazy, and you cannot have someone jabbing a pointy thing into a glass screen, because

01:55:57   it will crack, or at the very least,

01:55:59   if you make it thick enough, it'll skitter off

01:56:01   and be unpleasant, and it won't be as nice.

01:56:03   So you gotta have resistive touchscreen for that.

01:56:05   And for the resolution, it's not a retina screen,

01:56:08   but the specs of Nintendo's handhelds, anyway,

01:56:12   are pretty easily explained by their focus

01:56:14   is gaming-only machines, so you don't have to show text

01:56:17   or beautiful things like retina graphics or whatever,

01:56:19   and the price.

01:56:20   'Cause super high-res has diminishing returns

01:56:22   in terms of fun factor over a certain res.

01:56:24   You do not need 300 dpi for your 3d graphics game. You won't even notice that it'll just be it's just a it's completely

01:56:30   I'll sunk you know hardware cost that you're just paying to put all those pixels out

01:56:33   And so Nintendo chose the balance

01:56:35   They let to hit like a low price point and still make a profit on their things and and I was trying to look up

01:56:41   Before the show like what the power specs are for like what is more powerful in terms of 3d processing power a 3ds or?

01:56:47   You know an iPad 4 and all I could find were specs for like the you know

01:56:52   the previous generation of iPad hardware and yeah, the iPad GPUs have way more fill rate because they're filling a retina screen and

01:56:58   Nintendo ones don't have to have that kind of power but the 3d power on those things

01:57:02   It's not I'm not gonna say it's impressive and I'm pretty sure they're using 64 nanometer chips in there

01:57:06   Which is insane because Apple's like using 32 and soon to be 28 I think and you know state-of-the-art is like 22, right?

01:57:12   So it is you're right. It is older technology, but that their focus is so much on like durability

01:57:18   Price, you know accessibility to young people as a product for the handhelds very specifically

01:57:24   That I can justify every one of their decisions that they made and I think like I predicted them on ATP that the 2ds is

01:57:31   Not doomed in the market like it's not it's not crazy to think that when Pokemon xy come out that a bunch of parents are

01:57:38   Gonna buy their kids this thing is it's the cheapest way to get this game

01:57:40   And I remember you on the site also were I think it was you was poo-pooing it like oh, it's only $40 cheaper

01:57:46   Yeah, like it doesn't seem like a lot well. What if I told you that you had to take you know the the iPhone

01:57:53   5 and shave $40 off the price

01:57:56   But you can't change any of the specs has to have the same amount of RAM has to be just as fast

01:57:59   I just need $40 off the price. Oh, you can't get rid of the camera. You can't get rid of anything

01:58:03   You know shave $40 off the price

01:58:04   It's not easy to bring $40 out of like it's not like this is like the Nintendo 2ds is like the iPhone 4s like the previous

01:58:10   Generation you sell ever cheaper it runs all 3ds games granted not in 3d, but like it runs them

01:58:16   It doesn't have any sort of disadvantages in terms of speed or anything

01:58:19   Well, they had to head to pull 40 bucks out of this thing and $40

01:58:22   And I'll grant you to that at $40 is a lot more when it's 25%

01:58:28   As opposed to it probably might be easy to shave $40 off an iPhone 5

01:58:34   Because it's already $700

01:58:37   Not shaving another profit take it have the rest of good as opposed to shaving 25% off

01:58:42   Yeah, like by putting it in percentage terms makes it more impressive than in dollar terms. Yeah

01:58:47   But I know that's what they're doing with the 2ds like it's like they're they're aiming for price point

01:58:52   and these are as I said an ATP the 2ds is not the move of a

01:58:56   You know of like it's not a power move

01:58:59   It's not someone at the top of their game saying we rule the handheld market and now we're making it's a it's a move

01:59:03   You know, they want to sell more if they got to get the price lower

01:59:06   how can we pull the cost out of it while still making a good gaming device like

01:59:11   It's it's not desperation move, but it's also not a like supremely confident. We rule the market in fact

01:59:17   We're gonna make even more money because the margins I don't have to be lower like they're gonna make less money on it

01:59:21   They're gonna try to make it up in volume by lowering the price and selling more of them, and and maybe they will

01:59:26   But you know I don't think it's a terrible product. I think there's a chance that it will sell pretty well

01:59:32   if it doesn't

01:59:35   It's probably not because the product itself is bad, but it's probably because of you know

01:59:39   All the other things I listed of it that Nintendo doesn't do as well as as iOS does I mean if you want to look

01:59:45   at a powerful handheld because there's the

01:59:47   PlayStation Vita which is way more powerful than 3ds and has lots of interesting features and yet

01:59:51   It's crushed by Nintendo in the market because you know Nintendo has more interesting things and better and more fun games, right?

01:59:57   I think you know handheld dedicated gaming device versus handheld gaming dedicated gaming device

02:00:03   Nintendo's in good shape and that their strategy continues to work and they don't need leading tech

02:00:08   I think the problem is against smartphones, it's you're asking me to carry a second device.

02:00:14   And it's the same thing that faces camera makers, right?

02:00:16   And I, you know, I'm, I actually am pulling this out of my ass, but I can only assume

02:00:21   that point and shoot camera sales are slowing in the face of people having smartphones that

02:00:26   are good enough.

02:00:27   Well, you're pulling it all back to is there a place for gaming only piece of hardware?

02:00:32   Right.

02:00:33   And you know, music players, obviously, iPod sales are way down, even including the iPod

02:00:37   iPod touch in iPod sales, which really prompts those numbers up. And I really would if there's

02:00:42   almost maybe if there's one thing I wish Apple would do differently in its financial reports,

02:00:47   it would be to report the iPod touch separately from the other iPods. But those are way down

02:00:54   every other second device is way down. I mean, and you know, fame, I think famously, I think

02:01:00   it's almost been the biggest distraction in trying to talk about these things over the

02:01:04   last seven years is that we call them smartphones when they're really not phones. They're little

02:01:10   computers that can be phones. The traditional phone market is decimated profit wise, maybe

02:01:17   not unit share wise, even though smartphones in a lot of ways aren't even great phones.

02:01:22   I mean, the verge had a thing this week with a new dumb phone from Nokia that gets actually

02:01:29   looks pretty cool as a dumb phone and it gets like a ridiculous it was like was it 138 hours

02:01:37   of battery life I forget what it was ridiculous it was like a week of battery life or more

02:01:42   I don't know I charge my phone once a week yeah it was just stupid which is and it's

02:01:49   better to have a phone that you don't have to worry about charging every day is way better

02:01:53   just in terms of like hey if somebody needs me I'm available and my phone's not dead great

02:01:58   But it's that asking people to carry a second device, you know, what we call smartphones

02:02:04   are hurting all of them.

02:02:06   And the thing that really hurts something like the DS platform or whatever the next

02:02:11   generation is going to be called, is that unlike, say, a camera maker like Nikon or

02:02:17   Canon, which can still profitably make more continue making point dedicated point and

02:02:23   shoot cameras, even if they're selling fewer of them in absolute terms, is that a software

02:02:28   platform like a gaming device needs that network effect of having enough people out there to

02:02:33   make it worthwhile to make the game.

02:02:35   Well, that's why I think the DS is more viable.

02:02:39   You should have been crapping on the Wii U more because the handheld space, Nintendo,

02:02:43   I mean, it may still have problems, but it's not in current imminent danger of complete

02:02:48   collapse whereas on the desktop side, Nintendo is in way worse shape because the Wii U is

02:02:53   not doing anything that they want out there in the market and it's about to be run over

02:02:57   I assume the PlayStation 4 and Xbox one, I think both gonna come out of the gate much stronger than the way you did

02:03:02   Yeah, I don't know anything about the actual specs of the Wii U except that we own one and we we also have

02:03:08   PlayStation 3 which I've I've got like I think I have two games for

02:03:14   But it seems to me like it just

02:03:18   Looking at them that the Wii U is finally like caught up to like the PlayStation 3. Yeah, that's pretty much where it's gone

02:03:25   I mean, so that's it's a previous its previous generation Harvard, right? It looks roughly equivalent to me

02:03:30   you know in terms of graphics as the PlayStation 3 because we what we've got is Jonas is into the the Batman Arkham games and

02:03:38   which are like I think like totally inappropriate for a nine-year-old, but

02:03:42   but we've got the one on

02:03:45   PlayStation 3 and the other one on Wii U and to me graphically they look almost you know

02:03:51   Distinctive which makes me think that the PlayStation 4 is going to come and just blow it out

02:03:55   Yeah

02:03:55   So the other reason that I think you're way off with it with the iOS

02:03:58   suggesting to make games or iOS is because it doesn't like again assuming that you assume that

02:04:03   They're assuming you assume that there's still place for game only hardware and then Nintendo is going to be in that you have to look

02:04:09   at the way

02:04:11   Nintendo has

02:04:12   How they succeeded what what what defines Nintendo?

02:04:16   and how are they able to be a successful company that get sells you things that you play games on and

02:04:20   Possibly other things but not like a software platform and the way Nintendo has succeeded

02:04:25   Over its entire history in the gaming world

02:04:28   hinges on as I'm sure many of your people have emailed you about the

02:04:32   Synergy of hardware and software a lot like Apple which is why people keep bringing that up, right? And I mean if

02:04:37   You've had to pick three things out of the history you think like the NES like the original NES

02:04:42   What was what was the hardware and software?

02:04:44   Synergy there well like why did why couldn't they just make games well that was after the big you know game system crashed the Atari

02:04:50   crash and everything and no one wanted to sell game consoles.

02:04:53   They thought it was a sucker business.

02:04:54   So they put that robot with it.

02:04:55   Remember Rob?

02:04:56   Oh, yeah.

02:04:57   Rob the robot.

02:04:58   Like that was like a decoy to, you know, to get the thing into the other thing on the

02:05:03   store shelves and get people to buy it.

02:05:04   Like, oh, this isn't like an Atari.

02:05:06   That stupid thing that had those terrible games.

02:05:07   It's just this is a robot within the robot.

02:05:10   Like people threw that away.

02:05:11   Who knows where the robots went?

02:05:12   Like once you've got the thing and you played Super Mario Brothers, like screw that robot.

02:05:16   Like it was a total decoy, but they could make the hardware.

02:05:19   they could put that stupid robot in it,

02:05:22   and the light gun to some degree or whatever,

02:05:23   and get the things into people's homes,

02:05:25   and then say, "Now we've got the thing in front of you,

02:05:26   "we can help you."

02:05:27   And they could, you know, make,

02:05:28   and they could also make the hardware cheap,

02:05:29   way cheaper than a PC of the day.

02:05:31   Like, the game console model was, you know,

02:05:33   defined by like Atari and all those people,

02:05:35   but it was dead, like people said, "Don't do that again."

02:05:37   So they had to control the hardware

02:05:39   to get the thing into people's hands.

02:05:41   And then the N64 was 3D, of course,

02:05:43   and this is a very app-like example of them

02:05:45   totally, you know, cannibalizing their own product.

02:05:47   They were defined by little side scrolling things with Mario and jump over stuff, and

02:05:51   they said, "Nope, no more of that.

02:05:52   The next Mario game is not going to be two-dimensional.

02:05:55   You're not going to run from left to right and jump and do a lot of stuff.

02:05:59   It's going to be completely 3D.

02:06:00   We're going whole hog 3D.

02:06:01   This could have been the end of the company."

02:06:03   But it wasn't.

02:06:05   Other people got to do it before them.

02:06:07   There was the Sega Saturn and the PlayStation all came out before Nintendo 64.

02:06:11   All were capable of 3D.

02:06:12   Why didn't they eat Nintendo's lunch?

02:06:13   Well, because Nintendo designed the hardware

02:06:16   and software together and was able to make them work

02:06:18   in Synergy to put you an analog stick on the controller.

02:06:20   They said, "We're going 3D, and we can't go 3D

02:06:22   "with a D-pad, we have to have an analog stick."

02:06:24   Other guys could have done it, they didn't,

02:06:25   until after Nintendo did it.

02:06:28   And that made, and it's such an amazing experience

02:06:30   with Mario 64, and the analog stick,

02:06:33   that was hardware and software synergy.

02:06:34   They could not have put Mario 64 on the Sega Saturn.

02:06:37   They couldn't have put it on the PlayStation, right?

02:06:39   And the Wii was exactly the same thing.

02:06:41   You know, they were down in the dumps.

02:06:42   They had been in last place out of three competitors for the past two console generations, selling

02:06:46   fewer and fewer with each successive product they put out.

02:06:49   And so you're in last place, and the next generation you're also in last place, even

02:06:52   more so.

02:06:53   Right?

02:06:54   And so they come out with the Wii that is the wussiest piece of hardware that's standard

02:06:57   death.

02:06:58   Wait, they were last place two in a row?

02:07:00   I knew the GameCube.

02:07:01   Yeah.

02:07:02   What was the one before that?

02:07:03   Nintendo 64.

02:07:04   Oh, that was last place?

02:07:05   Three times as many PlayStations sold as Nintendo 64s.

02:07:08   Yeah.

02:07:09   Huh.

02:07:10   That's funny, because I had a Nintendo 64 and just...

02:07:11   "Oh, you know what? I do remember from that. You know what I remember from that era?

02:07:14   I had a Nintendo 64, and that was the era when Blockbuster rented games, and my then roommate at the time,

02:07:20   yeah, I remember that now. In hindsight, we were so pissed because you'd go there and Blockbuster would have like

02:07:25   40 awesome PlayStation games and

02:07:28   like two Nintendo games."

02:07:31   Yeah, I mean, like, and there were amazing things in that platform, some of the best games of its generation.

02:07:36   "GoldenEye."

02:07:36   They were losing. Yeah, exactly.

02:07:37   It's great stuff, but not doing well. And so when the Wii came out, it's like,

02:07:41   Like, this is terrible.

02:07:43   Hardware specs about it were terrible, and it would look ridiculous, but we know what

02:07:49   happened, right?

02:07:50   It totally crushed all of its competitors with the worst hardware you could possibly

02:07:54   ever imagine.

02:07:55   It was basically just an overclocked GameCube, again, previous generation hardware.

02:08:01   And they couldn't have done that if they didn't also make the hardware, because there's no

02:08:04   way you can sell Wii Sports on any of the other platforms, right?

02:08:07   Well, why can't they make iOS games while they continue to make their own hardware and

02:08:12   just expand into it? Like I, you know, like my analogy, like where Disney went and made

02:08:16   TV shows and kept making feature films. Why can't they treat this as a third opportunity

02:08:21   where they went from console to console and handheld with the Game Boy and they've kept

02:08:26   that going into the DSL and treat mobile phones as a third opportunity?

02:08:31   Why would they take, like, they have something good, right?

02:08:35   And they know they can't make something as good for someone else's platform.

02:08:39   But it's good because they don't control.

02:08:40   But I think it's because it's shrinking, and I think it's inevitably going to continue

02:08:45   to shrink.

02:08:46   I think if they've only sold 33 million of this one in 130 months, then the next generation

02:08:50   one, no matter what it looks like, they're only going to sell 15 million of it.

02:08:54   Well, if you take the past as an indicator of Nintendo's possible attitude, they went

02:08:58   two entire console generations being in last place and doing worse and worse and didn't

02:09:03   do, you know, execute the plan you're suggesting. Maybe this current drop with the Wii U is

02:09:08   much worse than those previous ones were, so we'll see, but they make so much more money

02:09:13   selling games on their own platforms than they will on someone else's platform. If you

02:09:16   -- the cautionary tale is Sega that people keep bringing up. You know, once you're just

02:09:20   a software maker, you live and die by the hits. You're like a movie studio, right? And

02:09:26   Your hits are on platforms you don't control with promotion that you basically have to

02:09:29   do yourself because you can't promote your own stuff inside.

02:09:32   You don't control the platform like Apple does and can promote its own apps in the App Store.

02:09:36   There's no ongoing platform royalties or hardware profits to sustain you while you're making

02:09:41   these games.

02:09:42   It's like a hit studio.

02:09:43   It's like you've got to have your hit movie.

02:09:44   You've got to have it.

02:09:45   And if you don't have it, then you're screwed.

02:09:49   You do not want to be in the business of publishing games.

02:09:52   the game software business is terrible and cutthroat. And that's why there's so few people

02:09:56   still in it. And there's so much consolidation because even if you have a hit game, half

02:10:00   the times you have a hit game, and the studio closes anyway, or you get bought up by a competitor

02:10:04   and get liquidated, it is not the business you want to be in much better to be in the

02:10:07   business of selling a platform, making a little bit money on the hardware, and then making

02:10:11   platform royalties for every game that's sold on your platform and being able to sell your

02:10:14   own games on your platform for way more money than you can charge for the same games in

02:10:17   the App Store.

02:10:18   totally agree with all of that. I just don't think it's feasible going forward. I just

02:10:23   don't think, especially on handhelds, I just don't think that it's feasible because you're

02:10:29   asking people to carry a second device.

02:10:32   You may be right about the handheld market because if it like, if I think about the reason

02:10:38   I think less about the handheld market and more about the television market because is

02:10:41   because like, I'm kind of amazed at the number of 3ds is that they continue to sell and it

02:10:46   It makes me think that there's still a market for people who want to play deep games on

02:10:50   a handheld.

02:10:51   And the reason I think that market is protected is because no one, with the exception of Sony,

02:10:56   seems to want it.

02:10:57   Microsoft, as we mentioned earlier, there's no portable Xbox.

02:11:00   They're not getting into that business for whatever reason, right?

02:11:03   Sony has tried to compete with Nintendo in this area for so long and has very often had

02:11:08   interesting devices and was not able to pull that off.

02:11:09   Wasn't the first one the best-selling?

02:11:10   I thought that there was an older PlayStation handheld that was the best-selling handheld

02:11:16   of all time.

02:11:17   The PSP?

02:11:18   Yeah.

02:11:19   No.

02:11:20   It's not the best selling handheld of all time.

02:11:21   What was the best seller of all time?

02:11:22   I thought somebody had an article, one of these ones that said that DS was the second

02:11:27   best of all time, but that the best of all time was the PSP.

02:11:30   I'm wrong.

02:11:31   That was probably some Game Boy that was the best of all time.

02:11:34   It certainly wasn't the PSP.

02:11:36   But Sony has tried to compete and has not quite done it, right?

02:11:40   But Apple does not want that market, despite their, like, "Oh, you can now use a controller

02:11:46   with your iOS devices."

02:11:48   So far, Apple has not been interested in selling you a device that has buttons and shoulder

02:11:54   buttons and triggers and stuff and lets you play traditional games like that.

02:11:57   And so if that market goes away, then fine, then those guys go away.

02:12:00   But if there continues to be a market for people who want to play games that can only

02:12:03   be played with an analog stick and shoulder buttons and face buttons, and Apple doesn't

02:12:07   want that market and Sony can't beat Nintendo in it and Nintendo keeps that market.

02:12:10   Well that's why I think that they could do it and continue to make the devices and let

02:12:15   the devices be for the more serious game players who want those extra hardware things and make

02:12:22   different games that are specific for mobile and I think that Nintendo has a...

02:12:26   But like they would make enough extra money on that. It would be demotivating people from

02:12:30   buying things and your suggestion of Mario Kart, I don't want to play Mario Kart with

02:12:33   touch controls. Nobody wants to do that. Like, I mean, maybe they'd sell a whole bunch of

02:12:36   They'd sell tons of copies if they put Super Mario Brothers 2D side scroller with an onscreen

02:12:41   D-pad.

02:12:42   Sure, they'd sell a lot of copies, but it's not the experience that they want, and it

02:12:45   demotivates people from buying the platforms that make Nintendo much more money.

02:12:50   Sega went software only because it had to, because its hardware failed, and it didn't

02:12:54   have the bank role and the history and the stability of Nintendo.

02:12:59   So Dreamcast didn't make it in the market, and they had to exit the hardware business,

02:13:02   and they only made software.

02:13:03   I just don't want to see Nintendo wait until they have to and I think it'll be too late

02:13:07   Well, they have a lot more they have a lot more time on their side now

02:13:10   But the reason I'm worried so much about the television console space more than the portable one because like I said the portable one Apple

02:13:16   Seems not to be not to want that they're not going to come and because that you know Apple or even Microsoft

02:13:21   I think were the kind of people who come in there and knock Nintendo around Sony's been trying to knock them around hasn't succeeded Apple

02:13:26   Could but I don't think they want it but in the television attached console space. I think they have a problem because

02:13:32   It's much easier for Apple to almost accidentally

02:13:36   Crush them in that market people say all that Apple's accidentally crushed them in the portable gaming market

02:13:41   I'm not so sure about that because I don't think the 3ds would be a viable platform

02:13:45   That was the case and it still is but if Apple produces a television attached device

02:13:50   With the GPU power of the iPad 4 in it

02:13:52   Which is not inconceivable that they could ship a little puck shaped thing like that and hooks it up to the App Store

02:13:57   Right, you know, you're not going to be touching your TV screen anyway

02:14:00   So there has to be some kind of input device and we don't know what the hell Apple is doing there

02:14:03   but suddenly the idea of Apple or someone else like giving you a game controller for your

02:14:08   Television connected Apple device with the GPU and cop that's comparable in power to what's in like, you know

02:14:14   one of the higher-end iPads now that is a big problem for

02:14:17   Nintendo or any other company with a television attached console because Apple's get makes really easy to buy games

02:14:23   It really easy to manage games don't have to worry about all that and makes it really easy to develop games

02:14:28   Anybody who wants to make a game can get it on their TV and you can play it and that is a realm where I think

02:14:33   Apple maybe not would be enthusiastic about making a controller or whatever

02:14:36   But suddenly a controller is a possibility because the control like

02:14:38   If you try to sell like a third-party control like I'll buy my game from the App Store for your phone

02:14:43   But you need this weird widget II thing

02:14:44   I think that's a harder sell than buying a game for your TV

02:14:47   And of course you need this weird widget II thing because how the hell is you're gonna play a game on TV

02:14:50   You can't touch the screen. You're not gonna play with the remote, right?

02:14:53   so and you know

02:14:55   The new Apple TV has Bluetooth and there's the App Store now and you can play my game.

02:14:58   I don't think that's Apple's plan or whatever, but that is a bigger danger, especially with

02:15:03   the Wii U totally tanking.

02:15:05   That kind of danger of a competitor that does all the things right that Nintendo does wrong,

02:15:09   and also, by the way, has a reasonably viable gaming platform.

02:15:13   At that point, if you take away all of Nintendo's television-attached console sales, all they've

02:15:19   got left is the portables.

02:15:20   I don't know if that's enough to subsidize the next, you know, Zelda or Mario 3D game.

02:15:25   I don't know. We'll see. It's a good discussion. Before I let you go, I have a question for

02:15:32   you. Serious question. Let's say that the Gruber household was thinking about maybe

02:15:40   buying a PS4 or Xbox One. Which one looks like it's going to be better?

02:15:46   PlayStation 4.

02:15:47   Okay.

02:15:48   No question.

02:15:49   Alright. That way I don't have to do any research. This is like when Amy

02:15:52   usually wants Marco to research something. Like whenever we want to buy

02:15:56   something.

02:15:56   I thought, "Why would I even look into this? I'll just get Siracusa on the show

02:16:00   and I'll just ask him."

02:16:01   Now I don't have to look into it. Yeah. I mean, it's the purest

02:16:06   plain old attach to duty and play games with it. It's got everything going for it.

02:16:11   It has none of the weird

02:16:12   You don't even have to explain it. Don't even explain it. Alright. Good enough.

02:16:15   For before we go because we've been on we've been recording for four hours now

02:16:18   Have you seen this is the last thing it just came out like an hour or two ago venture beat has

02:16:25   Purported pictures of the Samsung smartwatch that is going to be announced in three days

02:16:30   Paste it into me. I have not seen it because I've been talking to you for two hours

02:16:35   all right, you've got to see this before we sign off I

02:16:38   I'm gonna go with that. They've been punked

02:16:44   And I mean that I'm not even joking. I'm not even gonna link to it from daring fireball until somebody

02:16:50   I'm not gonna link to it from daring fireball

02:16:52   I'm not I'm not gonna do it because I don't want this is one of the things I live in fear of is that

02:16:58   Somebody is gonna post perfect. Somebody else is gonna fall for a prank, but it's right in my wheelhouse and fits with my

02:17:06   preconceived

02:17:09   biases yeah, and I'm gonna go along for the ride to and make like some wisecrack about it and then it's gonna

02:17:17   Turned out it was the whole thing was a punk and it's not it because this thing

02:17:21   I don't think that's beyond Samsung to produce. I don't either so I'm tempted

02:17:28   I think it could be real, but it's so bad

02:17:31   That I um it's so bad that I'm not going to link to it until somebody can confirm

02:17:36   Yeah, my guess would have been that this is a product that

02:17:39   already exists and someone dug up.

02:17:41   This doesn't sound like something

02:17:42   that maybe came out two years ago.

02:17:44   It probably already exists when they've taken shots.

02:17:46   That I would see as plausible, because maybe no one knows

02:17:49   about it.

02:17:49   It didn't sell a lot, but someone dug up

02:17:51   a picture from the catalog, and there it is.

02:17:53   It looks like a Saturday Night Live skit.

02:17:55   It's like an iPhone, like a three-inch iPhone strapped

02:17:58   to somebody's wrist.

02:18:00   There's nothing in the screenshots, right?

02:18:01   Well, let's see.

02:18:02   No, I don't think so.

02:18:03   Well, there's something there.

02:18:04   There's a logo, and there's a little--

02:18:06   I can't help but think it's a pulse meter or something.

02:18:10   You know, like some kind of health tracker. It looks like it's, you know, it's like a bar graph.

02:18:14   I don't know. I like the little drawings showing like the pencil drawings of the side views.

02:18:18   That seems more plausible to me. Like it's all curved and everything and that looks like it didn't come out two years ago.

02:18:24   I, I, this is really bad.

02:18:26   I think it's okay for you to wait on it.

02:18:28   Yeah, I'm gonna wait. But boy, if this is it, it is exactly what I thought it was gonna be.

02:18:33   Which is you cannot believe how bad Samsung is it designing something when they don't have I haven't even tried it yet

02:18:40   Maybe it's an amazing transformative. I like how even on the drawings. It's so big that it's it's double the width of the wrist of the

02:18:47   Yeah, that's why it looks like a Photoshop job. It looks like it's the strap is too big. It's like tilting

02:18:53   It's like a little kid wearing his dad's watch. I

02:18:59   I can't wait to see if this is real. I'm so worried that it's not though that I'm not going to link to it.

02:19:05   Yeah, you don't like to like spy shots and rumors. You know, you haven't been linking to the 8,000

02:19:08   pictures of the iPhone 5c or whatever. You wait till they announce something. You talk about what

02:19:12   they announced. Exactly. I think the gold thing seems real. What do you think they're going to do

02:19:16   with the gold iPhone? Do you think it's going to be the white iPhone now has gold metallic trim?

02:19:23   Or is it a third option? That's what everyone keeps saying. I kind of agree with the people

02:19:27   People think that black and gold might be good, but geez, I don't know.

02:19:31   Like I don't think it's crazy for it to be champagne colored.

02:19:36   Yeah, I don't think so either.

02:19:37   I don't think it's crazy.

02:19:39   It's not really my taste, but I've never bought the white one anyway.

02:19:41   But I feel like if the only way to get a white one is with that, I feel like that's asking

02:19:46   a lot for people who do like white.

02:19:48   Like I don't think – Oh, no.

02:19:49   I think they got to stick with the white.

02:19:50   It's going to be white and black and then this thing.

02:19:52   Hmm.

02:19:53   But then what face does this thing have?

02:19:55   White.

02:19:56   So there'll be two white ones you think one with the plain silver trim and one gold

02:20:02   Yeah, and I'm only saying that just because that's everything that I've heard

02:20:05   I don't see I tend to think otherwise I tend see I tend to think it's more Apple like that if they're only gonna have

02:20:10   Black and white faces that there's one black overall color scheme and one white overall color scheme and that is it would be champagne

02:20:18   I just feel like that would be more appley even though personally I would find that disappointing

02:20:22   It's very difficult to make judgments like this when all you see are are you know mock-ups and like

02:20:28   Speculations because the exact color of gold dictates whether it looks awful with white or good with yeah and everything we've seen you know

02:20:35   If yeah

02:20:35   There's so much smoke with the gold trim that it I feel like there's enough smoke that I'm willing to say there's probably certainly a fire

02:20:42   But it's all based on like weird component leaks and it's somebody with a cell phone taking a picture of a thing under fluorescent light

02:20:50   And tons of mock-ups 8,000 mock-ups if this is what it could look like whatever look like this

02:20:54   So it'll look like this. It would look good with white. It looked like this would look good with black

02:20:57   I can't tell like, you know, it's speculating about colors. It's pretty dumb

02:21:01   Anyway, like is that materials maybe I can get with you but colors like whatever they want

02:21:05   It's fashion as long as it's not, you know Dalmatian or flower power. I'm fine

02:21:08   I hadn't even thought about the fact that it could be the black one then I'd that would be a real dilemma for me personally

02:21:13   Like yeah, you'd get the totally black one. Well, that's assuming there is a totally black

02:21:17   Yeah, then you're right. You would have if my choice if my choice were between a white

02:21:21   one with silver trim and a black faced one with gold trim. Geez, I don't know what I'd

02:21:27   have to I'd have to look at him but I was seven makes the white one suddenly more attractive

02:21:32   for the obsessive people who want things like matching like you know what the iOS seven

02:21:36   looks like it was made for the white iPhone. I've you know, people have said that I don't

02:21:40   see that I've been running seven betas ever since beta three on my black iPhone and I

02:21:46   I don't see it as any less cohesive.

02:21:49   Well, you're right in reality, but in the product shots,

02:21:52   it looks like it matches up with the white.

02:21:53   But in reality, I always remind people,

02:21:55   this is why I never buy white iOS devices.

02:21:57   All you're doing is highlighting how bad the white is

02:22:00   on those screens, right?

02:22:02   Because the white on those screens

02:22:03   is never going to be as white as the real white thing.

02:22:05   Especially in sunlight, it's just

02:22:06   going to look worse and worse.

02:22:07   All you're doing is making your screen look dingier and crappier

02:22:10   by putting bright white next to it.

02:22:12   You put black next to it, and suddenly the screen

02:22:14   looks amazing.

02:22:15   'Cause you're like, oh, everything else just fades away,

02:22:17   and I will totally believe that that white on that screen

02:22:19   is exactly what white should look like,

02:22:20   'cause I don't have three millimeters from it,

02:22:22   a piece of white plastic showing me,

02:22:23   oh, that's what white would look like

02:22:25   if I wasn't looking at, you know,

02:22:26   little tiny glowing backlight.

02:22:28   - Yeah.

02:22:29   - I'm an anti-white iOS device.

02:22:31   - Yeah, I do agree that it would look better

02:22:34   in their product shots.

02:22:35   In fact, already does in their iOS 7.

02:22:39   - 'Cause everything in their product shots is pure white.

02:22:41   It's magic, magic.

02:22:42   - Yeah, perfect white.

02:22:44   infinite you know it's like the same white that's in the background of their

02:22:47   commercials so you know heavenly white

02:22:52   I'm gonna call a show that was good yeah

02:22:55   there is long ones may help me down

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