0:00:00(beep)
0:00:00(upbeat music)
0:00:03- From Relay FM, this is Upgrade, episode 179.
0:00:12Today's show is brought to you by Squarespace,
0:00:15Timing and Eero.
0:00:16Hey, thanks for stopping by.
0:00:18My name is Myke Hurley.
0:00:19I'm joined by Mr. Jason Snow.
0:00:22- Hey, welcome.
0:00:23Are we doing this now?
0:00:24Are we talking to people as if they've come to our door?
0:00:26- We welcome them in.
0:00:26- I didn't expect to see you here,
0:00:28But then again, you come here at the same time.
0:00:30They've chosen to spend their time with us no matter what it is they're doing
0:00:34right now.
0:00:34So we appreciate that as always.
0:00:36And Jason, not only do we appreciate people's time, we appreciate when they
0:00:41ask us questions for the show and today's hashtag snail talk question comes from
0:00:46Andreas and Andreas wants to know, Jason, when is your tea time and which tea do
0:00:51you like?
0:00:53When is your tea time is a very strange question to me
0:00:57because all the time is tea time.
0:01:00- Tea time is whenever I want tea.
0:01:02- Am I awake?
0:01:03It is tea time.
0:01:04So we get up in the morning,
0:01:07usually awakened by our dog who wants to be fed.
0:01:12And she will stand,
0:01:13she will walk back through the hallway to our bedroom,
0:01:15clip, clop, clip, clop, her little claws on the wood floor.
0:01:19And then she will wander around our bedroom grunting
0:01:21as she does, 'cause she doesn't bark,
0:01:23but she does grunt and whine a little bit. And one of us will get up and feed the dog
0:01:28and we will make the tea. So that means that tea time for me, I guess technically, is probably
0:01:33something around 7.15, somewhere between 7 o'clock and 7.30 is tea time, and then tea
0:01:39time continues from that point until the tea is gone. So mostly a morning thing, although
0:01:46depending on how much tea I need, I will make more tea. Not so much in the afternoon, unless
0:01:51it's a cold day or something, I usually will not have tea in the afternoon. And what teas
0:01:56I like, it's black tea with caffeine, so English breakfast, Irish breakfast, Scottish breakfast,
0:02:03you know, those are things. I've got a couple of other kinds too, but and I just buy loose
0:02:07tea in bulk, black caffeinated tea. I buy it in bulk. I make a big pot of it using the
0:02:13tea robot and then I put some honey in it. My wife takes it with milk. I put honey in
0:02:18mine because I don't know, I love honey and tea and that's what I do. People tell me like,
0:02:24"Oh, you know, you put some honey and some tea for a sore throat." I said, "Or every
0:02:29day." That's the other way you can do that. It doesn't have to just be for a sore throat.
0:02:33- Well, okay. Do you ever have a sore throat, Jason?
0:02:37- I do sometimes and you know what? I just don't vary it. I just continue to have my
0:02:40tea with honey in it. So it's all the same.
0:02:44- You should double the dosage at that point.
0:02:46That's a good idea. I'm always up for that because I like tea. In the evening, if I do
0:02:52want a hot beverage because I have a sore throat or I have a cold or something, then
0:02:55I go to a lemon tea, something that's not caffeinated. But most of the time, 99 times
0:03:01out of 100, actually, it's caffeine tea because I don't drink coffee. So my caffeine dose
0:03:07in the morning is tea.
0:03:09Thank you so much to Andreas for submitting the question. If you would like to ask us
0:03:12a question about basically anything to open the show, just send a tweet with the hashtag
0:03:17SnellTalk and I pick them out. We will open up the show with our only piece of follow
0:03:24up for this week and it is about HomePod audio sources. So as of last week there was still
0:03:31much confusion about what could actually be played as audio on the HomePod and how. So
0:03:37So one of the questions was, you know, people had seen, if you go digging through the technical
0:03:41specifications, that there's a Bluetooth chip in this thing.
0:03:44So great, it works as Bluetooth speaker, right?
0:03:47No it does not.
0:03:48You cannot use the HomePod as a standard Bluetooth speaker.
0:03:52It is AirPlay only.
0:03:54Yeah, Bluetooth seems to be for pairing or some other kind of like connectivity with
0:04:00your iOS device that's setting up the HomePod.
0:04:04That's why it's there.
0:04:05not being used for an audio source.
0:04:08I will say I find that to be a shame because the chips in it. Like I know that I do share
0:04:14the feeling of I really wish there was a line in on this thing because I would like to connect
0:04:18my TV to it. But I you know whatever like it is and so I'm not going to complain about
0:04:25it because it's not there like whatever. But if there's a Bluetooth chip in it like at
0:04:28least let me connect to it. But I would say probably for the most part I'm going to be
0:04:32be
0:04:51Apple has also confirmed that the HomePod will work with both iTunes Match and purchased
0:05:03iTunes Music as well as Apple Music.
0:05:06So you don't have to have an Apple Music subscription to be able to get your music
0:05:10on this thing.
0:05:11It will work with iTunes Match and then iCloud Music Library which is iTunes Match and iTunes
0:05:16music so confusing but basically if you have music somehow in Apple's platform and you
0:05:25pay something to Apple you will be able to listen to your music right you got you got
0:05:30to pay them something because you either have purchased it or you're paying for iTunes match
0:05:35or you have Apple music so one of those things will get you music in an iCloud library and
0:05:41and you can play it on the HomePod. Beats 1 is always on worldwide for you if you need
0:05:47it and Apple Podcasts are also rounding out the possible audio sources for the HomePod.
0:05:54Yeah, it's funny. I actually just got an email from Amazon because I realized that
0:05:58I was still paying for their, well it's an annual, but their version of iTunes match.
0:06:05And what I discovered was that, first off, that they discontinued it.
0:06:11And that like, unless you're a current subscriber, you can't sign up for it anymore.
0:06:14They actually stopped this program.
0:06:16- Yeah, they have like a streaming service now.
0:06:18Like that's what they want you to sign up for.
0:06:20- Yeah, they want you to buy the unlimited thing.
0:06:21And I realized I bought the unlimited Amazon music for one device for my Echo that's in
0:06:26the kitchen so that it has access to anything we want to play by voice control.
0:06:31And so I don't ever play music on an Amazon Echo that isn't from their music service,
0:06:37so I don't need that upload feature, so I turned it off. But it is funny to think about
0:06:41that, but I know Apple has a lot of customers who are still like, who don't want to be in
0:06:46the Apple Music world yet. They do have the people who are like, they bought music on
0:06:50iTunes, they've uploaded the music that they've gotten from other sources, and that's what
0:06:54they want their music library to be. And so that'll work too. We'll see how well it works,
0:06:58But it makes sense that if basically if Apple's cloud services know about music that you get
0:07:04access to, it should play it.
0:07:06So we both have HomePods on order, right?
0:07:09For pickup or delivery on Friday, this Friday?
0:07:11Yep.
0:07:12Okay, great.
0:07:13I was wondering, was there some kind of secret?
0:07:16Jason wasn't admitting to anything.
0:07:17But at least I know I have one ordered to go pick up on Friday morning, so you can look
0:07:23forward to our thoughts on the HomePod on next week's episode as we'll both have them
0:07:29to play around with and I'm very intrigued to put Siri through its paces with this device.
0:07:35I have lots of unanswered questions about how the HomePod's gonna interact.
0:07:41I hope Siri answers them but I don't like your chances.
0:07:44Well yeah this is...
0:07:45I like that, that was very clever.
0:07:47So yeah, I'm very intrigued to see what this product is all about.
0:07:55I have a lot of intrigue about it, we'll see.
0:07:58Alright, so, Upstream, we have artwork!
0:08:00You can see it if you use an application that supports MP3 chapters like Overcast or Pocketcast,
0:08:06you can now see our lovely chapter artwork for Upstream, and these are your stories to
0:08:12be paying attention to in the media technology world.
0:08:16So we have been talking about the JJ Abrams sci-fi drama. HBO and Apple were in a bidding
0:08:23war. The show is going to be called Demimonde. I can't.
0:08:28It's Demimonde. It's French, not Spanish. I went with anything. I just pronounced what
0:08:35I saw was a string of letters, which I've been trying to pronounce in my head for the
0:08:39last 24 hours. HBO scooped it up. HBO outbid Apple and they have got the JJ Abrams sci-fi
0:08:48drama. Abrams was quoted as saying that he was really impressed with how HBO handled
0:08:54Westworld so that may have played into it a little bit for him to go with a known entity
0:09:00than to go with Apple. So that's one that he missed.
0:09:02It's funny how influential, I was thinking about this, how influential, first Game of
0:09:07Thrones. Incredibly influential because nothing succeeds like success, right? People were
0:09:13like, "Oh, it was a huge hit!" And so now everybody's kind of like trying to make the
0:09:16next Game of Thrones. Amazon, all the reports are like Jeff Bezos basically said, "Get me
0:09:21the next Game of Thrones," and they spent it, you know, hundreds of millions of dollars
0:09:24on the rights to the Lord of the Rings intellectual property so they can make a Lord of the Rings
0:09:28TV show, which strikes me as being a little too on the nose.
0:09:30- Wow, I didn't know that actually. - Like literally they're trying to make the
0:09:32next... Yeah, not based on necessarily anything, but the Tolkien...
0:09:36and they haven't spent money on the show yet. They literally just spent money to write a
0:09:40check to the Tolkien estate to get the rights to make a show set in that universe.
0:09:45That's so weird. Because, like, to make the next Game of Thrones, you don't literally
0:09:51have to make a magic fantasy show. Well, this is what I was saying. It's a little too on
0:09:55the nose. They're literally just trying to make the next Game of Thrones by going back
0:10:00to the material that is probably the most influential to make stories like the ones
0:10:06George R. R. Martin wrote. So that seems weird, but I get it. And then what's really interesting
0:10:12to me is that Westworld, which was by all accounts a troubled production, but everybody
0:10:18seems to be looking at Westworld a little bit stylistically and as an example of like,
0:10:23this is how you build a show that has a chance to be the next Game of Thrones. I think it's
0:10:30kind of interesting. Like Game of Thrones, it's been on for years now, but what would
0:10:35happen if knowing Game of Thrones existed, you made another show that you're trying to
0:10:40make a big hit. And I think Westworld has been very influential in that way, where people
0:10:44have looked at the way Westworld is styled and how the story rolls out, even down to
0:10:51how the opening credits are devised. I feel the influence of Westworld and a bunch of
0:10:56other stuff I've seen recently, like Altered Carbon on Netflix feels like it owes, even
0:11:01though it's a sci-fi series set in a Blade Runner-esque future instead of a West, you
0:11:06know, simulation of Western America, it is, it feels very Westworldly to me. And so J.
0:11:14J. Abrams citing Westworld here for another show that's going to be on HBO. It's interesting
0:11:20that this is, this is the game that a lot of people are playing when they talk about
0:11:23Game of Thrones and Westworld. What they're saying is we're going to spend a huge amount
0:11:26of money on a genre show that we think has broad appeal. And then what they're really
0:11:30saying is, "Come on, we want to be Game of Thrones. We want to have that show that everybody's
0:11:34talking about." So, we'll see. But Apple's not going to get it.
0:11:40YouTube TV is now on the Apple TV. So if you're a YouTube TV subscriber, I believe it's a
0:11:45secondary app, I think, is the way at least their press release made it sound. I can't
0:11:50discover this information because all of the links are dead for me because I'm in the United
0:11:54Kingdom. Right. But yeah, YouTube TV, it's now on a bunch of boxes including the Apple
0:12:00TV, which is great if you're a YouTube TV subscriber. So YouTube TV was a huge sponsor
0:12:05of the Super Bowl, and this seems to have been timed with the Super Bowl, that they
0:12:10would do this huge push for YouTube TV and say, "It's on all the streaming boxes."
0:12:14Could you watch it on YouTube TV? Could you watch the Super Bowl? No. No? Oh. No, I don't
0:12:20have YouTube TV. I watch the Super Bowl and they advertised YouTube TV on the Super Bowl.
0:12:26So it wasn't...
0:12:27I mean, if you are a YouTube TV subscriber, could you watch the Super Bowl on YouTube
0:12:31TV?
0:12:32Yeah, because it's YouTube TV is just like the Hulu, whatever they call it, or PlayStation
0:12:38View. It is an over-the-top TV service. It essentially means you cancel your traditional
0:12:43cable channel package, but keep your internet from wherever your internet provider is. Probably
0:12:48your cable company, oh the irony. And then your box becomes your cable box, your streaming
0:12:54box. And there's an app on there that basically gives you all the live channels, and in YouTube
0:12:58TV's case you've got like DVR so you can actually like quote unquote record the program and
0:13:04watch it later and skip through the commercials and all of those sorts of things, like having
0:13:08a TiVo or something like that, a DVR attached to a cable provider, but instead it all happens
0:13:13an app on a box or on an iPad or on an iPhone. And this is, I mean, it's IPTV, this is the
0:13:19future. This is probably, eventually the cable companies will just say, "We also have an
0:13:24app, you don't need a cable box anymore, right? Let's move on." But right now there's a difference
0:13:29between it. That's what YouTube TV is. It's one of the players trying to get people to
0:13:33cancel their cable, or more likely, people who have canceled their cable but miss having
0:13:40access to some of TV to get them to sign up for this. So this is a big step for them to
0:13:45be on Apple TV and Roku and all the other boxes and it was one of the glaring deficiencies
0:13:50of this product before.
0:13:52Will: YouTube TV have just secured the rights, the TV rights to the Los Angeles Football
0:13:58Club matches and this is soccer, LAFC. Very peculiar and was in more, I think even more
0:14:05peculiar and niche sports streaming action, Facebook has become the official streaming
0:14:11partner of the World Surf League. So if you want to watch surfing, Facebook is the place.
0:14:17Streaming - so for a long time, sports was viewed as being one of these last - these
0:14:22kind of like bulwarks against people cutting the cord. The reason sport rights have so
0:14:27much value is you have to watch them live and they put them on cable and then you need
0:14:32to pay them in order to see that. That's great. What's funny now is that we're also seeing
0:14:38streaming services spending money to get rights, sometimes exclusive, sometimes not, to sporting
0:14:45events because then it forces you kind of down the path of becoming one of their subscribers
0:14:50too. And sports, as long as people enjoy watching sports of various kinds, since they need to
0:14:57be live and you need to have live access to watch them, they will be effective tools to
0:15:04move audiences and generate customers. And so that's going to keep... who knows what
0:15:11will happen with scripted content and reality shows and all sorts of other things, but sports,
0:15:16unless people stop playing sports, which is not going to happen, the sports may change,
0:15:20but people's interest in watching sport is just a thing that exists. And so, yeah, especially
0:15:25live so it becomes a talking point a chance to pull viewers here and there as this unsettled
0:15:36world is churning.
0:15:38This also feels to me like YouTube and Facebook trying to dip their toe in the water like
0:15:44picking up things that are not going to get tons of traffic before they try and start
0:15:48to go after some bigger stuff on an exclusive basis. You know just so they can try and get
0:15:54their tech in place before they maybe try and go for some NFL or something like that.
0:15:59The podcast network Gimlet launches Gimlet Media as a TV and film arm of the company.
0:16:06They're doing this to try and effectively push their content onto screens, so they're
0:16:10adapting their shows into TV stuff, as well as being involved in current projects that
0:16:14the network has sold away. So it seems like that Gimlet have kind of changed their approach
0:16:20to this. I think previously they were more keen on just selling the rights to stuff and
0:16:25it's how like I think it's called Alex Inc. which is the show about Alex Bloomberg and
0:16:29kind of his life that was sold for example but they are only producers like executive
0:16:33producers of that project. This feels like Gimlet becoming a lot more involved in trying
0:16:37to do some of this stuff themselves and have more of a hand in the production of adaptations
0:16:44of their shows.
0:16:46It struck me as being a story that also reminded me, strangely enough, of kind of comic book
0:16:53companies that because movies and TV shows based on comics are so successful these days,
0:17:01the owners of comic book companies, comic book companies can be mildly profitable. They're
0:17:05not wildly profitable, they can be mildly profitable. They can also lose money, which
0:17:09is why Marvel went bankrupt in the 90s. So what they've become is sort of a viable business
0:17:17on their own, but also a generator of intellectual property that is raw material for film and
0:17:26TV projects. And I look at this Gimlet deal and I think, "Well, this is interesting because
0:17:31maybe given all of the investment that's been made in Gimlet, you know, which they need
0:17:36to get back in terms of value. Maybe what they've decided is Gimlet's way to really
0:17:42kind of transform itself in terms of generating a lot of money is not making really nice well-produced
0:17:50podcasts and selling ads on them, or even making really nice sponsored, sort of like
0:17:56sponsored podcasts that people listen to but have a single sponsor who pays Gimlet to make
0:18:01them. Those are two business models they have. But is instead like that's a nice little business,
0:18:07but the way that they transform what they generate is they're churning out things that
0:18:11lead to new intellectual property that can be transformed into films and TV shows and
0:18:16make a whole lot of money that way. And that's that I'm really not mocking them. That is
0:18:21an interesting way of viewing a business that you have this little business that people
0:18:25love just like Marvel comics or DC comics, you know, Gimlet podcasts are like that. But
0:18:31the people with the money are saying, "Well, it's great that people love that, but it's
0:18:35only a few people who love that. But if we could take those ideas and then sell them
0:18:39so it's a big movie or a network TV series, then we get our money." And that looks like
0:18:44what's happening with Gimlet.
0:18:45Geoff - Yeah, like they do the development of the intellectual property on a smaller
0:18:47stage, the podcast stage, and then they see if it works.
0:18:51to experiment with that, right? It's like way cheaper to do that.
0:18:54- Go for TV, and it seems like that's what they're doing. And finally, this was announced
0:18:59during the Super Bowl last night, Cloverfield Paradox, a sequel to the movie Cloverfield,
0:19:04which has now had a prequel. And this, I believe it's a sequel. It's a little bit hazy.
0:19:09- The Cloverfield series is loosely connected. - It's all over the place.
0:19:13- Question mark. It's connected more by J.J. Abrams and secrecy and all of that.
0:19:19This is a crazy story. When this happened, it blew me away. This is my favorite thing that happened during the Super Bowl.
0:19:26And then I read up on it later. It turns out, so they worked on this movie, they worked on it in secret, they give it a name, it had a different name, it was called God Particle.
0:19:34But whenever there's like a J.J. Abrams movie with a lot of security and nobody knows what it's really about, and it's just got a generic title, it's probably a Cloverfield.
0:19:42In fact, to the point where there's another movie that they think is a Cloverfield movie that is supposed to come out this fall.
0:19:47So, they make this movie and it is totally going to be a Cloverfield movie. Paramount
0:19:52gets new leadership, Paramount Pictures, which releases this thing. And one of the things
0:19:56they did is survey the upcoming releases that they've inherited from their previous management.
0:20:00And they're like, "Well, you know, some of these things, we don't want to spend the money
0:20:03marketing them. They're going to do maybe okay, maybe they'll flop, but we don't want
0:20:07to spend the time. We're going to put our money on other projects." And this happens
0:20:10a lot when you get new management, that the projects of the old management are like, they're
0:20:17nobody's babies anymore. So, Annihilation is a movie that they made that they apparently
0:20:23sold the rights direct to Netflix for the rest of the world except the US where it got
0:20:27a release. And because they weren't that thrilled with it and they just thought let's just...
0:20:32And apparently the Netflix rights money essentially paid for the movie. So they got to walk away
0:20:37from that one. With Cloverfield Paradox, they were originally gonna release it this weekend.
0:20:43had pushed it to April. It sounds like they didn't love it internally and they didn't
0:20:47like the idea of spending a lot of money promoting it. And they talked to Netflix and basically
0:20:52said, you know, "Would you like to pick this up and just release it on Netflix instead
0:20:57of in theaters?" And Netflix said yes. And so what happens is the marketing budget for
0:21:01this movie, which if you've ever known anybody who works in the movie business, marketing
0:21:06budgets are huge. Sometimes the marketing budgets are larger than the budgets for the
0:21:09movies to make them. The marketing budget for Cloverfield Paradox was two Super Bowl
0:21:15ads, one of which was a trailer during the second quarter I think which made everybody
0:21:22sit up and say, "Wait, there's a new Cloverfield movie that's set in space and looks scary?
0:21:26That's interesting, I'd never heard of this movie." Because like literally unless you
0:21:30were reading some movie websites you'd never heard that there was another Cloverfield movie.
0:21:34So you're sitting up and like, "Oh, what a great idea!"
0:21:36started yesterday morning that this was going to happen anyway. And then the card comes
0:21:41up saying it's on Netflix at the very end and you're like "whoa" and then it says "coming
0:21:45very soon" and you're like "what does that mean?" And in the fourth quarter, if you haven't
0:21:50already gone to Netflix, at that moment if you went to Netflix, the top item in the banner
0:21:55on Netflix was "coming after the game" and in the fourth quarter they ran that ad again
0:22:01and said, "Coming after the game." So they took a movie that most people didn't know
0:22:06existed and they didn't just premiere the trailer during the Super Bowl, they literally
0:22:11said, "We're dropping," it's like dropping an album that some artists have done, right?
0:22:16And like after the game you're looking for something to watch, this movie trailer that
0:22:19really excited you, you can just watch it on Netflix after the game. Now, I've heard
0:22:23things that it's not that great and that's one of the reasons that Paramount was fine
0:22:27to give it to Netflix. Netflix is okay with that. They made Bright, which by all accounts
0:22:32is terrible, and they released that. But as a stunt, even if it was semi-accidental, brilliant.
0:22:40It doesn't matter how good this movie is, Netflix made history and they made headlines.
0:22:47I mean, how can you go from "I literally have no awareness that they're making this movie"
0:22:52oh and you can watch the movie now in an evening. That's a new one to me and I think it's brilliant.
0:23:00I think it's a brilliant piece of showmanship and I bet you they got really good numbers
0:23:06for Cloverfield Paradox, more than they would if they had just premiered it as a normal
0:23:10Netflix release by putting it on the Super Bowl and doing it. In fact, I look at this
0:23:14and I think this is going to be the new "what does a network put on after the Super Bowl"
0:23:19where Netflix and maybe other streaming services are gonna start dropping streaming content
0:23:25and using the Super Bowl audience, which is a very large audience, just to promote it
0:23:31and then drop it afterward. And so then there's like more competition. I think this is not
0:23:35the last time we'll see stuff like this happening. So that's cool.
0:23:39All right, last thing, Jason. In no more than three words, what are your feelings about
0:23:45the solo Cheezer trailer.
0:23:49Hmm. Um. Who's that guy?
0:23:54Alright, great. That'll do. That'll do. That wasn't what I was expecting, but there we
0:24:00go.
0:24:01Or maybe, maybe, I'll give you an alternate three. Hey, it's Lando! That's my other way.
0:24:07That is good because it was basically Meyers Wove just bid the Lando movie, honestly. Just
0:24:13I'm so excited to see young Lando Carrizio play with him on Clubhead.
0:24:23Today's show is brought to you by Timing, the automatic time tracking app for Mac OS.
0:24:27Hey let's talk about why you should be tracking your time.
0:24:31If you're billing hours, it's obvious.
0:24:33But even if you are employed or you build a project or you work for yourself, sometimes
0:24:38it's really good to know how long a specific task is going to take.
0:24:43Time tracking helps you stay on track of estimates but also with just planning your day to make
0:24:48sure that your projects are going well and also to make sure that you're spending your
0:24:51time effectively.
0:24:52I have found time tracking really good as just as a way to kind of have a piece of information
0:24:58in my life about how I'm feeling and relating that back to the amount of work that I'm doing.
0:25:03So like if I'm feeling tired, have I done a lot of work?
0:25:05If I'm feeling lethargic or bored, did I not work enough today?
0:25:08Is that what's going on?
0:25:09I like having those numbers as a way to look at how I'm feeling and also having been time
0:25:16tracking for a while now, I can get reports and see over long periods of time, how is
0:25:21my time tracking going?
0:25:22What am I working on?
0:25:23What am I not working on?
0:25:25Where is all of my time being spent?
0:25:26Well then you can make some really informed decisions about how you want to run your business.
0:25:32Well anyway, this is where timing can help you because it does all of that amazing stuff.
0:25:37It has beautiful reports.
0:25:39You can very easily categorise stuff. You can for example say "if I'm in this document
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0:26:50All right, so it is earnings time.
0:26:55- Ching.
0:26:57- Everyone's favorite four moments of the year.
0:27:01But this is the big one.
0:27:02This is always the big one.
0:27:04Q1 2018 means the holiday quarter of 2017.
0:27:24I'm going to run through some statistics and stop at points to discuss some of the interesting stuff.
0:27:32Top line, $88.3 billion in revenue, which is up from $78.4 billion for last year. Apple had
0:27:41forecast between $84 to $87 and this was going to be their record quarter. They actually ended
0:27:47up beating that with $88.3. This is $20 billion in profit compared to $17.9 billion year on year.
0:27:56So I just want to stop already right here. We're going to talk about the stuff that made
0:28:01the headlines later on, but I don't really feel like a lot of emphasis is being placed upon the
0:28:07fact that Apple broke their record. They did it again. This is the most revenue Apple has ever
0:28:15generated in a fiscal quarter and it's by a lot. It's by almost 13 percent, and there are lots of
0:28:24of different things driving this that we will get to, but when the... there are a lot of
0:28:31different dials you can look at, a lot of different charts you can look at to try and
0:28:35determine like what Apple's doing and what Apple's going to be doing. And one of the
0:28:38challenges whenever we talk about financials is there's a couple ways of looking at this
0:28:42that are equally valid. It's all about your point of view. And one of them is, how's Apple
0:28:47doing today? How's their business doing today? And the other is, what's going to happen in
0:28:52the future because I'm investing in Apple, right? And I don't, I care what's
0:28:58going to happen in from Apple in the future sort of, but absolutely not
0:29:03from investment standpoint because I'm not an Apple investor and I don't really
0:29:07write about that. I'm writing about products and about kind of like the
0:29:10company's product path more than I am about the company's cash path or
0:29:15anything like that, even though we're talking about financials this time. So
0:29:18depending on, you know, your perspective you can get a different, you can get a
0:29:21different view of where they're going and that's colored by your
0:29:26judgment about how their business is doing. But what is undeniable is that
0:29:30while a lot of people have talked about Apple being kind of maxed out and having
0:29:36reached its peak and how the implication there from some is that it's going to
0:29:42slide down the other side, which I would argue that if Apple has reached its
0:29:47peak it's far more likely to idle at the top and just throw off huge amounts of
0:29:52money than it is to come down for a long time. I mean maybe eventually but for a
0:29:57long time. But if you look at revenue, it's not true. If you look at revenue,
0:30:03Apple just had its best quarter ever by a lot. By a lot. And even the times when
0:30:07we think of as being kind of peak Apple, which is really kind of peak iPhone, no.
0:30:14No, like this quarter was, what, $13 billion more revenue than peak iPhone.
0:30:23And 10 billion more, 10 billion more than last quarter.
0:30:28It's a huge jump, 12.5, 13% on what was already the biggest quarter they had ever had.
0:30:33So you can't, you've got to factor that into your equation here, which is Apple is generating
0:30:38more revenue and basically making more money, because it was also record profit, than they
0:30:43they ever have before. They broke $20 billion in profit in three months.
0:30:49I remember a couple of weeks ago, Amazon reported their earnings and they did $2 billion, just
0:30:56under $2 billion in profit. And like Wall Street went berserk. And I mean, there was
0:31:02good reason for it because in the past Amazon did no profit. Like that was the way that
0:31:07they worked. Like they did no profit. They put all the money back into the business.
0:31:12And now they are reporting profit and they beat their estimates, they beat all the analysts
0:31:17right and they did 2 billion.
0:31:19And like it's incredible, it's fantastic, like that's a lot of money.
0:31:24Apple just did 20.
0:31:25And I know like Amazon doing that is amazing, right?
0:31:30Like it is.
0:31:31$2 billion in profit in a quarter is berserk money, right?
0:31:36And I know that we are obviously very biased towards Apple and everything they do blah
0:31:40blah blah.
0:31:41do get desensitized to these numbers. And Apple did 10 times that profit this quarter.
0:31:50You could argue that Amazon manages its profit right and that it can throw off within a certain
0:31:54span as much or as little profit as it wants to. But yes, it is easy to get used to Apple's
0:32:02numbers and to lose sight of just how staggering they are even compared to the other tech giants.
0:32:11If this is peak Apple, it's peak Apple like today.
0:32:15There was somebody on Twitter who was saying, responding to some tweet of mine that got
0:32:19retweeted who was like, "Oh well, you know, Apple topped out four years ago, you know,
0:32:24and since then it's all just been flattered down."
0:32:26It's like, no, if Apple topped out, it topped out right today.
0:32:31And maybe it's downhill from here, it's not, but yeah.
0:32:34If what you're saying is they've topped out on their products, like that's fine for your
0:32:37opinion, the rest of the world disagrees with you, right?
0:32:39Because they keep pumping more money in.
0:32:41Depends on how you measure it.
0:32:42Yeah, Amazon in that quarter.
0:32:43So in this quarter, they did 60 billion in sales, right?
0:32:47So it's like it's close.
0:32:49Obviously, they are doing very different.
0:32:51They have very different business models, Apple and Amazon.
0:32:53So the way that the profit comes out and stuff, but still,
0:32:56Apple did 20 billion more than that, right?
0:32:58So it's like the sheer numbers that they are operating in are so wild to me.
0:33:03Like I often talk about like how I my I believe that it's hard to imagine
0:33:10Facebook being knocked off where they are in social networks, right?
0:33:14And like, because in the past, there's always been a social network that comes to take down the big one, right?
0:33:21Like MySpace, you know, Facebook killed it, right?
0:33:23And there's always been stuff before that, like live journals, always been ones before it.
0:33:27But Facebook is at a scale now where it's significantly harder to do that, because they're so huge,
0:33:36and they're just getting bigger by acquiring the cool kids stuff, right?
0:33:40Like there's so many stories right now about how snapchat is falling and Instagram is rising, you know
0:33:45Like this so Facebook are just continuing to increase their span
0:33:50Making it harder and harder for somebody to knock them off
0:33:54So like I think like maybe Facebook is always going to be the biggest social network there for as long as there are social networks
0:34:01Maybe Facebook is the one forever. We don't know I feel this way now about Apple like they are making so much money
0:34:10constantly always, how does somebody beat that?
0:34:14Like, I don't know how you come up to beat the company
0:34:19that is throwing out $20 billion in profit a quarter
0:34:23and is not spending the money.
0:34:25- Well, and that's sort of what I was getting at
0:34:29with saying like, even if you think
0:34:32that they've kind of maxed out,
0:34:34I don't see it coming down so much as in that case,
0:34:37it would just sort of level off and go for a while.
0:34:39And then eventually, look, eventually,
0:34:42if they, depending on how they execute,
0:34:44they can lose sales and their profits will subside.
0:34:50And look, I saw,
0:34:52I remember when Microsoft was an unbeatable giant.
0:34:56And the fact is, Microsoft,
0:34:58although no longer relevant in a lot of ways
0:35:00that it was relevant and no longer seeming unbeatable,
0:35:05still is a pretty amazing business, right?
0:35:08So there's that too, they still make a lot of money.
0:35:11So we'll see what happens with Apple,
0:35:14but they're in an incredible position.
0:35:18And it's also funny for those of us who got tired
0:35:21of hearing about Mac market share over the years
0:35:23that Apple doesn't have the market share lead
0:35:26in almost any category, if any category,
0:35:30but it makes huge amounts of money and huge profits.
0:35:34And that's because it's basically in the markets
0:35:37that it's entered, it's chosen to compete in, it does incredibly well. And then there
0:35:42are a lot of places where it just doesn't go. And that's something that I think is a
0:35:46key misunderstanding that a lot of people have about Apple, where it's, you know, they
0:35:51think that Apple is, should be fighting a market share game and being in markets that
0:35:56Apple chooses not to be in, and they don't understand that. But you can't, I mean, we
0:36:00need to break down the products, but you can't dispute the revenue and the profit here. It's
0:36:05shocking how huge it is and increasing, like it's increasing, they're still growing.
0:36:11I mean, what, maybe in 2019 there is a $100 billion revenue quarter? Like maybe that happens,
0:36:21right? Like, maybe. It's only increasing if it continues to increase at the rate that
0:36:26it's been increasing, maybe that happens. I can't, wow.
0:36:30Keep in mind that what we're also talking about here is that Apple's revenue has almost
0:36:36doubled in six years. Doubled.
0:36:39So let's talk about some products. This is an interesting one. The Mac is down $6.9 billion
0:36:49in revenue compared to 7.2 year-on-year, 5.1 million units sold compared to 5.4 million
0:36:56units sold. Throughout the whole of 2017 sales in revenue and units was up year
0:37:03on year from the quarters previous. So 2017 the entire year was up from 2016
0:37:08we're starting 2018 down. Why? I don't know. Because in theory 2017 was tough it
0:37:20it got better at the end, right, with the iMac Pro.
0:37:23So what's happened?
0:37:26Like, what's happened to the laptops
0:37:28that were selling so well?
0:37:30- I don't know, I mean, this is still a,
0:37:32I think the way I would put it is,
0:37:34I suspect this is because they sold so many Macs in Q4
0:37:38in the previous quarter.
0:37:38Because if you look at their sales numbers,
0:37:43sometimes they sell really well holiday quarter,
0:37:48but other times they sell kind of equally well
0:37:51in the previous quarter, the back to school quarter
0:37:54and the holiday quarter.
0:37:56And so this seems to have been a lot like two years ago
0:37:59where they sold 6.9 billion in Mac revenue in Q3
0:38:04or in Q4 and 6.7 in Q1 of the following year.
0:38:08And this time we got 7.2 and 6.9.
0:38:10So I wonder just off the top of my head, I look at that
0:38:13and I think I wonder if there's some correlation there
0:38:15'cause what happened in last year
0:38:17is that they had not a lot of sales in Q4,
0:38:21and then a huge sales spike in Q1,
0:38:24which is the holiday quarter.
0:38:25So last time, that spike was big,
0:38:29and this time the spike is not so big,
0:38:31and you're comparing year over year.
0:38:33But their previous quarter was way bigger.
0:38:35So if you look at the quarterly,
0:38:38it maybe makes a little more sense
0:38:41that maybe this is seasonality.
0:38:43I mean, the Mac has been kind of toddling along
0:38:46for a while now and where it's just kind of like fine.
0:38:51And as they have pointed out,
0:38:55static in a PC market that's down is growing,
0:38:59but Mac units are,
0:39:03the last four quarters, 4.75 million a quarter.
0:39:07And that's down from a high sort of at the end of 2015,
0:39:11beginning of 2016 of 5.1, 5.15 million. So they're selling, whatever that is, 350,000
0:39:19fewer max a quarter than they did a couple years ago.
0:39:21Yeah, it's just interesting to me, right? Like, there's some things changed, possibly,
0:39:28because I mean, even looking at just like the actual units sold, you know, there's,
0:39:35So for Q4 2016 they sold 4.9 million, Q4 2017 5.4 million, so that was up, but then when
0:39:44it comes to Q1 2018 it was down on Q1 2017.
0:39:48So is it something peculiar may have happened?
0:39:52Maybe it was just not a buying time?
0:39:54Who knows?
0:39:55But if we look at this in the way that we looked at the iPad, right, it was the same
0:40:02thing for us when the iPad Pro started coming out, right? Like, Apple's focusing on it,
0:40:08please please let the numbers tell the right story, not the wrong story. So like, this
0:40:13is something to watch now, like, are Mac sales on a decline now? We won't know for the next
0:40:18few quarters, but if they are, you don't want to see that at a time that Apple's committed
0:40:22themselves to more Pro Macs again. So let's hope it's like a blip on the radar.
0:40:28- I don't think this is,
0:40:31I honestly don't think this is anything.
0:40:33If you look at the last two quarters of max sales,
0:40:36the max doing fine, it's not doing,
0:40:39everything Apple did two years ago was like a record high.
0:40:43And then last year they went down.
0:40:46And I think what you're gonna see is that the max sales
0:40:48are going to continue looking more or less like they have
0:40:52over the last couple of years.
0:40:54And that this is a little bit more about where the sales fell
0:40:58in terms of Q4 versus Q1 than it is about anything
0:41:03endemic to the Mac beyond that.
0:41:05- The iPad story is continuing to be positive.
0:41:0913.2 million units compared to 13.1 million units
0:41:13year over year.
0:41:14We have a 6% growth in revenue.
0:41:16Suggests that the iPad Pro is still doing well
0:41:19because Apple are making more money
0:41:22than they are the unit growth,
0:41:23like what that would indicate, right?
0:41:24So it suggests that the average selling price
0:41:26is continuing to increase.
0:41:29So you know, they didn't have a huge unit growth,
0:41:31but they had pretty good revenue growth.
0:41:33So happy to see that.
0:41:34That's, you know, again, for the iPad lovers right now,
0:41:38it's just keep it steady and slowly increasing.
0:41:43It's better than decreasing, that's all you wanna see.
0:41:47- This is the third straight quarter
0:41:49where the direction is up,
0:41:52even if it's only slightly up here,
0:41:53and there's some mitigating circumstances there.
0:41:56The fact that they, I would also say,
0:41:59it's the first holiday quarter since 2014,
0:42:03where the iPad has grown at all year on year.
0:42:06- Wow.
0:42:08- Right?
0:42:09- Wow.
0:42:09- 'Cause it was 26, then 21.4, then 16, then 13.
0:42:13- That 26 just ruins all the charts.
0:42:16I hate it.
0:42:16I hate that number. - It is a great number.
0:42:19But the stabilization,
0:42:20iPad quarter is funny.
0:42:23I'd say the stabilization of the iPad continues.
0:42:25This is not a kind of result,
0:42:28I usually write something about the iPad,
0:42:29I've done that for like the last eight quarters
0:42:31and I felt like I had nothing to say this time.
0:42:33It's more like, yeah, it was fine.
0:42:35It shows that it's not dropping,
0:42:37nor was it a surprising tick up, right?
0:42:40It was more just like, it was, you know,
0:42:42slightly up over flat and for the iPad, that's a win.
0:42:46And the revenue went up by a little bit more,
0:42:50which means that, you know, that's good.
0:42:53average selling price went down a little bit.
0:42:55That's okay because it's a holiday quarter.
0:42:59I think in the holiday quarter,
0:43:00they're much more likely to sell the cheap iPads
0:43:03than the iPad Pros.
0:43:04And in the end, they, you know, it's fine.
0:43:09It's not a regression of the iPad to the free fall
0:43:14that it used to be in,
0:43:15even though it's also not a boost into the stratosphere.
0:43:18But I'll take it.
0:43:20but it is a middling iPad thing.
0:43:24And given the context of previous years of iPad,
0:43:26the last three years of iPad, middling is good.
0:43:29- Most definitely.
0:43:31Well, it's stability, isn't it?
0:43:33And I like this, the stability level is about two times
0:43:38the amount of the Mac,
0:43:38which I think is where it kind of should be,
0:43:40considering platform age and focus.
0:43:43So I think that's good to see, right?
0:43:45Like I'm happy to see that.
0:43:46So I hope that it continues.
0:43:49The service's revenue is continuing to soar, $7.8 billion in revenue compared to $6.4 billion
0:43:57from year over year.
0:43:58Apple Music is clearly performing well.
0:44:01There was a report from the Wall Street Journal which suggests that Apple Music has been adding
0:44:07subscribers at a 5% monthly rate according to people familiar with the matter.
0:44:12Spotify is growing at 2%.
0:44:16If this continues, if these rates continue the same, Apple will catch up and overtake
0:44:21Spotify in the US by the summer.
0:44:24That is surprising to me.
0:44:26Like I believe it.
0:44:28Like it's funny, you know, like what I can believe it, right?
0:44:31It's not an impossible thing to imagine, but I don't know if I would have predicted it
0:44:36happening this soon if it happens.
0:44:38I was surprised by that too.
0:44:40I also thought to myself as when I saw this story, ah, the week that HomePod comes out,
0:44:45story gets reported.
0:44:46Yes.
0:44:47I don't think that's a coincidence.
0:44:48It is the perfect time to do a controlled leak.
0:44:51The person in the know may have worked for Apple PR, but if they are being accurate,
0:44:56if they are telling the accurate story of this, then that is kind of wild.
0:45:02It took me by surprise too.
0:45:03I hadn't really thought, I know Apple's doing well with services and the service revenue
0:45:06continues to grow.
0:45:08They've increased service revenue, I think basically every quarter for as far back as
0:45:12my charts go.
0:45:13The revenue increase in the service category would strongly suggest growth in Apple Music.
0:45:19I would expect at this point it's probably the biggest revenue generator in that category,
0:45:24right?
0:45:25I don't know, maybe.
0:45:26Or at least the biggest growing.
0:45:29I can't imagine there's anything growing at the rate that that might.
0:45:33I don't know.
0:45:34iCloud storage may be growing too.
0:45:36But I imagine that iCloud storage, like you pay for it and they've got the whole history
0:45:41of people paying for it, where Apple Music is newer, so you can get all of the new people
0:45:45plus all the old people.
0:45:46Yeah, they're acquiring new customers.
0:45:49That may be. I think it does show home field advantage here, which is what we talk about
0:45:56with Apple Maps and Google Maps, that it's not surprising that so many people use Apple
0:46:00Maps because it's already on your phone. And I feel like this is actually with podcasts
0:46:05too. It's not surprising that the Apple Podcasts app is the most popular podcast app because
0:46:09it's already on your phone. You literally don't have to do anything and it's there.
0:46:13And it's now even, you know, it's now even connected directly to Siri, which it, I think,
0:46:17wasn't so much before and that is driving it even more like the being on the phone.
0:46:22So having it be in the music app, like you're listening to music and there's Apple music,
0:46:27it's in your face, it's right there. And there are huge benefits to that. But this is interesting
0:46:32because the narrative really has been like Apple's trying to take on Spotify, you know,
0:46:36good luck and the fact is Apple is building this business of paid right
0:46:40because there's also sort of free stuff that you can do I think on Spotify it
0:46:45also Spotify my understanding is like is a money loser and just lost at an
0:46:49attempt to change the terms of some of the streaming fees and this is an
0:46:54interesting example where the platform owners like Apple using their platform
0:46:59power to build their own services and bundle them with the photo backup system
0:47:05all over again. Yeah, it's just you have power with the home field advantage and
0:47:09Apple is definitely taking advantage of it here and and then spreading it to
0:47:14other devices. So I like Apple Music, it's a good service. I'm sure Spotify is a
0:47:19good service too, but I think that's one of the challenges when the platform
0:47:24owner is there, the difference in catalogs is not notable, like it's the
0:47:28same stuff, and if you have all Apple devices, Apple Music is awfully
0:47:33convenient. It's awfully inconvenient if you have anything else other than a Sonos
0:47:36because it doesn't work with anything else. But yeah, so services is big. It
0:47:41didn't go up as much as I think it's gone up in other quarters. We'll have to
0:47:46watch that if the services growth slowing down a little bit, but Apple
0:47:50seems really confident that it's going to continue to grow and be a huge part
0:47:53of their business. And this is one of the reasons the services stuff is one of the
0:47:55reasons why they are setting records and revenue even though other parts of the
0:48:00business are only up a little bit is they've added this huge other line where they're throwing
0:48:06off now almost $8 billion a quarter in services revenue and that is one of the things that
0:48:12fuels the engine.
0:48:13Well, we'll expect them to do it again this year, right? TV service. That should be another
0:48:18way to add Apple Music sized increases to this revenue model, like to this area of the
0:48:25revenue. This is the reason they're doing it, right? They are doing this because they
0:48:28want to boost the services because as long as the services is boosting like
0:48:32is going up so will the share price because that's where they can show
0:48:36growth and it's a classic Apple move in the sense of Apple has always thought
0:48:42that if I think Apple's philosophy and this comes directly from Steve Jobs is
0:48:47if anybody can make money from our users it should be us like we should get for
0:48:55- Yeah, or like if anyone can do it,
0:48:57we can do it, but better, right?
0:48:59- And that leads to, you know,
0:49:01that leads to both of those things lead to a bunch
0:49:04of different Apple behaviors.
0:49:05Some of which are not particularly
0:49:06like Sherlocking features, right?
0:49:08Is you could argue there are lots of reasons
0:49:10why Apple builds something that turns off a third party
0:49:13because it's because of the home field advantage,
0:49:15because yeah, you can download a third party app
0:49:17that does this, but only a tiny fraction of people do that.
0:49:20But when it's in the system, it's right there
0:49:23and everybody's gonna use it.
0:49:24once it's bundled in, once it's part of it.
0:49:25So that's part of the argument.
0:49:27It does lead to Me Too stuff like the iPod Hi-Fi,
0:49:30which was very much like how dare Bose make money
0:49:33on the sound dock.
0:49:34We can make one of those too.
0:49:35It turns out they couldn't.
0:49:38And this is, but this is a little bit like that
0:49:39where there are markets where Apple's looking at this,
0:49:42it's very smart and saying,
0:49:44the smartphone is a great platform
0:49:47and the iPhone is a great platform
0:49:49for things like a streaming music service.
0:49:51and so many of our customers use Spotify.
0:49:54Why not us?
0:49:55Like, why are we letting Spotify get that revenue?
0:49:57Why don't we get that revenue?
0:49:58You could have a selling media,
0:50:03like somebody else could do that,
0:50:04Amazon could do that, whatever, but why not us?
0:50:06Why don't we put it out there?
0:50:07And we have the home field advantage,
0:50:09so we're gonna be able to take a bigger chunk of that
0:50:11than we would if everything was neutral,
0:50:13and that's to our advantage.
0:50:15They're not gonna enter every market
0:50:16because most of them are probably too small,
0:50:19but the ones that they can control
0:50:21and that they can fuel their revenue.
0:50:23And this is why Apple does a music service
0:50:26and this is why Apple is gonna do a TV service, absolutely.
0:50:28Because there are other companies
0:50:31making a huge amount of money
0:50:33or building a huge customer base
0:50:35with loyal Apple users driving their revenue
0:50:38and Apple looks at them and says,
0:50:40"Maybe we should do that instead
0:50:41and provide a viable alternative."
0:50:43And I realize it seems a little bit ridiculous now
0:50:45to think about like Apple becoming a viable alternative
0:50:48to Netflix and the dynamics are different because it's about exclusive content in a
0:50:53way that music isn't. But still, that's the kind of idea here. Like, if they can build
0:50:58a business that's a viable alternative to Netflix and it's already on your device, that's
0:51:03going to be powerful. And people will still use Netflix and they may use both, but it
0:51:08gives Apple another little wedge to get more money out of you, not necessarily that you
0:51:13wouldn't otherwise have spent. Sometimes it's just instead of someone else. Give
0:51:18it to Apple instead of somewhere else. It's also worth remembering and we
0:51:21spoke about it a bunch of times during upstream, right? Like if you're thinking
0:51:26about what Netflix have been that's not what the company is gonna be, right? Like
0:51:30if you thought of them as where you go for those TV box sets like that's kind
0:51:35of not what they are anymore. They are trying to be the next HBO. Like everyone's
0:51:40trying to do that instead. So Apple and Netflix are moving towards each other at a quicker
0:51:46rate than it may seem from the outside. Apple's not bothering with the back catalog stuff,
0:51:51they're trying to build their own at the same time that Netflix is trying to build their
0:51:54own. By the way, I've been watching The Crown over the last couple of weeks. That is a wonderful,
0:52:00wonderful Netflix original that I thoroughly recommend. It's like House of Cards but with
0:52:05the Queen. It's wonderful. Very, very, very, very good. I recommend it. I will say, just
0:52:12as a word of warning in case you're not familiar with a lot of UK history stuff, they take
0:52:17a lot of rumours and turn it into what look like fact. It's just worth noting that. Like,
0:52:23there's a lot of stuff that is, that has never been proven or was just newspaper conjecture
0:52:28that they kind of play off as if it actually happened. I just ask you to bear that in mind
0:52:32when you watch the TV show, but it is excellent. It is incredible casting. Matt Smith as Prince
0:52:38Philip. Oh, just so good. Anyway, great, great, great TV show. Great TV show. Yeah, I'd recommend
0:52:47it. Anyway, iPhone. We need to talk about the iPhone. That's where all the headlines
0:52:51have been, where all the always, but maybe even now more than ever, we need to talk about
0:52:55the iPhone. That's why we do. Let me thank Eero for their support of this show. With
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0:54:33It's like a warm hug of Wi-Fi you get.
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0:54:50it's especially necessary actually now
0:54:52because I have so many connected devices.
0:54:54So there are places where devices are living now
0:54:58where I never needed wifi before
0:55:00because I'm not going to sit hanging,
0:55:04or I'm not gonna hang from the front of my roof, right?
0:55:08But there's a light out there.
0:55:09- Yeah, it's like, it's nice to get a few little stars.
0:55:12- It's not that fun.
0:55:14And so those places that didn't need wifi coverage before,
0:55:18now suddenly I find myself wanting stronger Wi-Fi and that's one of the other benefits
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0:55:58Alright, ladies and gentlemen, buckle up, it's time to talk about the iPhone.
0:56:03$37.1 billion in revenue compared to $34.9 billion in revenue. Oh great, that is a year
0:56:10of a year increase. That's what we come here to expect. More money on the iPhone. But hold
0:56:15on one moment, ladies and gentlemen. 77.3 million units compared to 78.2 million units.
0:56:26That is, yes, you heard me right, a unit decline in the iPhone year over year. Now, Jason,
0:56:33we're going to talk about some of the stuff surrounding this. But am I right in assuming
0:56:39this is the first time this has happened?
0:56:41A unit decline year over year?
0:56:42- Well, I mean, no.
0:56:46- Okay.
0:56:47- No, I mean, that was the whole story of what 2016 was.
0:56:52- Oh, of course it was, yes.
0:56:53- Unit decline year over year.
0:56:56But that story was over and we were seeing now
0:56:58like a slow but steady unit growth year over year
0:57:03after the, you know, Apple came down from the peak
0:57:05of that the late 2015, early 2016 kind of iPhone 6 thing, which was the big spike. Then
0:57:15it came down and then for the last few quarters we've seen growth year over year.
0:57:19I must have blocked that out of my brain. That was Q2 of 2016 compared to Q2 of 2015
0:57:27where they lost 10 million units. So that was the big, big decline. They kind of bounced
0:57:32back from that with a bunch of reasons. I think the reason I blanked it out of my head
0:57:36is I am, I got so frustrated with having to hear the answer to that, like for a year basically,
0:57:42right, of like what happened there, what happened there, that kind of thing. Because oh we made
0:57:46a big phone and we put it into China and you know, so that was all taken care of. But this
0:57:50is a different situation. So what happened here, right? So much higher revenue, revenue
0:57:54is lovely, they sold less, right? They sold less of them. And, okay, well, let's just,
0:58:01We'll get to that.
0:58:02We'll get to that.
0:58:03But I mean, you look at it on paper, right?
0:58:06You look at the numbers, there's less.
0:58:09During their holiday fiscal quarter, they sold fewer iPhone units than they did during
0:58:14their holiday fiscal quarter a year ago.
0:58:16Okay.
0:58:17Absolutely true statement.
0:58:18So that is that, right?
0:58:19So we're gonna park.
0:58:20A very small number, but yes, smaller.
0:58:21We're gonna park that for just a second.
0:58:24One of the other things that was going on here is that analysts, they do what analysts
0:58:29do when they forecast, and many were expecting 80 million. Now, that means what it means,
0:58:34it can mean nothing, it can mean everything, right, but there is a whole industry based
0:58:38around this, right, that is how all of this stuff works, that's how the stock market works,
0:58:42there are analysts.
0:58:43That's right, expectation is reality in a way in the stock market because your stock
0:58:47price gets built based on the expectations and the, you could say, is it fair that Apple,
0:58:54There are a bunch of stories saying Apple missed its iPhone number because some outside
0:59:00group decided that they looked at Apple's guidance and picked a number that was too
0:59:04high.
0:59:06If you're worried about accurate reflections of Apple's business, then it's not fair.
0:59:13And if you're concerned about the street and investment, it's totally fair.
0:59:19So you know.
0:59:20- It depends where you plug your attention into.
0:59:23- And what you're trying to get out of it, yeah.
0:59:25- Don't forget, the last two weeks prior to this
0:59:28has been full of stories about a decline in sales, right?
0:59:33- Right, there was a narrative going in that was like,
0:59:36oh, the iPhone X is selling badly, iPhone sales are bad,
0:59:41it's not going well for Apple.
0:59:43There was this narrative that was developing,
0:59:45which I have to say in hindsight, looks like fraud to me.
0:59:50It looks like maybe somebody was trying to suppress
0:59:52Apple stock and play some games because it's not born out
0:59:57by the numbers at all.
0:59:58But what happens is that narrative starts to move
1:00:01and then sometimes you get writers who see numbers
1:00:05and it allows them to continue with the existing narrative
1:00:08instead of questioning it.
1:00:09And there was definitely some of that.
1:00:11- 'Cause I had my theories about this, right?
1:00:12Like what was going on here?
1:00:13So then I was thinking,
1:00:14"Oh, well maybe what it was was we're looking at the wrong quarter, right?
1:00:18And that these declines, this sales decline, oh, was actually happening in what would be
1:00:23Q2, right?
1:00:24That was my thought when I was looking at these numbers because clearly there hasn't
1:00:27been a horrific decline and we're going to get to all of the reasons why in a moment.
1:00:31But it's like, oh, maybe this is being reported for now.
1:00:35But jumping ahead, next quarter of Apple's guidance, they are saying the iPhone will
1:00:40grow double digits year on year.
1:00:42So I guess not then.
1:00:44So my only thought on this is that something's got mixed up here and that what is actually
1:00:50happening and I believe will happen is that the iPhone X will not be available next year
1:00:54right because they will replace it with other models in the line which has happened before
1:00:59I think it was the iPhone 5 it just stopped being made they made the 5c instead right
1:01:04like they didn't make the iPhone 5 anymore for whatever reason and the reason with the
1:01:08iPhone X is probably that we spoke about this I believe on this show that they won't be
1:01:12be able to bump it down the line to make it cheap enough. So they're going to replace
1:01:15it with a whole new line of products next year. And then somehow in all of that reporting
1:01:20and all of that conjecture, it got believed that this was because no one was buying the
1:01:25iPhone X where that doesn't seem to be the case at all because ASP was up. ASP was up
1:01:30significantly.
1:01:31Yeah. So this is the thing, and I know this is boring acronyms and stuff, but ASP means
1:01:36average selling price. And if there is a single statistic, other than I guess the revenue
1:01:42itself, that I would take away from this quarter, it's the average selling price of an iPhone.
1:01:52The average iPhone sold during this holiday quarter was $100 more expensive than last
1:02:02holiday quarter.
1:02:03And were the 8 and 8+ more expensive than the 7 and 7+?
1:02:08I don't think so.
1:02:09Yes.
1:02:10They were?
1:02:11Okay.
1:02:12I think they were.
1:02:13Weren't they like $50 more expensive or did that boost come in with a 7?
1:02:16I don't remember.
1:02:17But also, sequentially, which means last quarter compared to this quarter, the average selling
1:02:22price was up $178.
1:02:26So and we mostly talk year on year here because holiday quarters are very different.
1:02:29average selling price changes a little bit seasonally, but also just... look, the
1:02:35story here is the iPhone X sold well. It sold really well. And what it did, and
1:02:44maybe the change in composition with the 8 and the 8 Plus, it dragged the entire
1:02:49iPhone up. And that's why revenue was up. It's because Apple, like, imagine if
1:02:56literally every iPhone anybody bought went from they were all by every every
1:03:02single iPhone sold was last year's model that's discounted $100 to this year's
1:03:09model so literally every iPhone sold Apple got $100 boost that is what
1:03:14happened and that's because of the iPhone 10 it's because that the Apple
1:03:19found that there was a portion of the iPhone audience that was happy to give
1:03:23them a thousand dollars or more for an iPhone and another portion of the
1:03:28audience that was happy to not and use the iPhone 8 which is the advantage of
1:03:31having the iPhone 8 as well. We thought this was a huge gamble and how was it
1:03:36going to go and were people going to reject it or were they going to sit out
1:03:39of the iPhone market and we don't know like the next three quarters we should
1:03:44we could see some very interesting things with iPhone sales especially
1:03:46since you know there's a lot of details of inventory and all that and Apple's
1:03:50forecasts are that the iPhone is gonna kinda like slide back a bit in the next
1:03:56quarter but the iPhone X gamble you look at it here and it's like it worked like
1:04:01Apple is making more money per iPhone sale than it was and a lot of that is
1:04:07coming from the iPhone X because that's the that's how you drag the average
1:04:11selling price up like that. What was that you mentioned about sliding back in the
1:04:15next quarter? There's some weird and I'm not the best person to talk about it but
1:04:19there's some weird stuff with how they fill the channel and how they empty the
1:04:22channel and how there were channel and there was a whole thing where Luca
1:04:24Maestri the CFO talked about you know in addition to the change the the the the
1:04:31length of the quarters which we're going to talk about in a minute there were
1:04:33also some things about filling the channel and not that might suspect that
1:04:38there are like there are more numbers in this quarter than will be seen for next
1:04:41quarter
1:04:42it's unclear like next quarter is not going to be a record quarter for Apple I
1:04:48I think even Apple said that.
1:04:49I don't think they're saying that it's gonna be bad.
1:04:51But my point is, the launch quarter of a brand new iPhone
1:04:56does not always tell the whole story
1:04:58of how the iPhone is going to be accepted.
1:05:00And we're gonna have to see,
1:05:01I think next quarter's gonna be really interesting.
1:05:03The one we're in right now.
1:05:04- They did say about iPhone growth year on year
1:05:07was gonna be good though, right?
1:05:09This stuff is so confusing.
1:05:11- There's a lot of complexity here.
1:05:14It's a huge business, there's a lot of complexity here.
1:05:17But anyway, for me, this is a huge deal, the ASP thing,
1:05:20which is normally, I mean, I track it,
1:05:22but it's normally kind of boring.
1:05:24You see it like when the new MacBook Pros came out,
1:05:26the Mac ASP went up because those were more expensive
1:05:29systems and they sold a bunch of them.
1:05:30And so it changes the composition of what got sold
1:05:33and drags it upward.
1:05:34And with the iPhone 10, especially, you're seeing it here
1:05:37where this is all getting dragged upward.
1:05:40And that's what Apple was trying to do.
1:05:43And if they failed, we should have seen it.
1:05:46and I don't think we saw it.
1:05:48I think that the iPhone X appears to be a success.
1:05:50Apple also said in their commentary,
1:05:54in their call with analysts,
1:05:56which there's a complete transcript at six colors.
1:05:59If you don't wanna listen to a Apple conference call,
1:06:00you can always read it or just search for words
1:06:03that you're interested in hearing
1:06:04that Tim Cook said or didn't say.
1:06:06But one of the things they said is the moment
1:06:07that the iPhone X went on sale,
1:06:09it was their top selling phone,
1:06:11it remained their top selling phone all the way through now,
1:06:13not even through the end of the quarter,
1:06:14but through today, beginning of February,
1:06:18it is still their number one.
1:06:19So for doubters about the iPhone X,
1:06:22iPhone X is their number one phone,
1:06:23and then the 8 and the 8 Plus are behind it.
1:06:25And they said in a lot of countries, including China,
1:06:28if you look at like the top five selling smartphone models,
1:06:31four of them are iPhones.
1:06:33So the iPhone's doing okay, is what we're saying.
1:06:37It's doing okay,
1:06:39even though there's some interesting quirks in here,
1:06:41and that Apple strategy with the iPhone X so far
1:06:44seems to be bearing out.
1:06:46- Yes, obviously there's a couple of things to note, right?
1:06:49One, the iPhone X came out in November,
1:06:51so it doesn't get the full time period.
1:06:54We don't know how or how much that could have affected.
1:06:57- There's a chunk of this quarter
1:06:59where the iPhone X was not on sale
1:07:00and people were concerned
1:07:01that that would affect the quarterly numbers
1:07:03because there were people holding back from buying an iPhone
1:07:05to wait for the iPhone X to ship.
1:07:07- It could have, like we don't know.
1:07:08Like there could be effect in there.
1:07:11We're probably never gonna know that,
1:07:13but like that could, maybe if it came out in September,
1:07:16there would have been more sales
1:07:18than there ended up being, who knows?
1:07:20So here's the thing, right?
1:07:21Apple were repeatedly talking about,
1:07:23and I was reading in the tweets that you were sending out
1:07:25from the Six Colors Live blog
1:07:26and from other people talking about it.
1:07:28Apple were repeatedly talking about the fact
1:07:31that this quarter was one week less
1:07:33as being a key factor in iPhones numbers.
1:07:35So let me tell you my personal story on seeing this.
1:07:39I roll my eyes and I'm like, okay, there's your excuse,
1:07:43I'm like, "Oh, okay, here we go. Excuses, excuses." I'm seeing the headlines and
1:07:50I'm seeing that the numbers are down. It's like, "Okay, this isn't surprising."
1:07:53I'm looking at the charts and I'm assuming this is the excuse that they're giving.
1:07:57It's not all that bad, but they want to give a little excuse so they can say why
1:08:01it was the case. In the same way that they were giving the excuse for the drop, which
1:08:07we were talking about earlier, as being, "Oh, well, we had unprecedented demand due to the
1:08:11the fact that we sold in China for the first time,
1:08:13that was their excuse, right?
1:08:15And I'm just like, all right, whatever.
1:08:16So I'm like, how much of a factor is it really?
1:08:18So this is some quotes that I'm gonna read from Jason Snell.
1:08:2377.3 million iPhones, which is the highest number ever
1:08:27for a 13 week quarter, averaged weekly iPhone sales
1:08:31were up 6% over last year.
1:08:33If you took at how many phones were sold a week
1:08:36during the quarter and just like divided those numbers out,
1:08:39was a 6% increase year on year. Apple sold more phones per day than last holiday quarter,
1:08:46but the last quarter had seven more days. And Apple wants to make sure you know it.
1:08:55So something from Philip Alma DeWitt, he said Tim Cook and Luca Maestri mentioned the per week
1:09:02discrepancy 16 times during the Q1 earnings call.
1:09:07Yeah, so they did. And what's funny about it, so the short version here is last holiday
1:09:14quarter Apple did a 14 week quarter, which is not what they usually do. They usually
1:09:19do a 13 week quarter. Why is that? Well, 13 times 4 is 52, so that's a year. I think
1:09:27it has to do with where the breaks fall because it's not based on months, it's based on
1:09:32weeks and they wanted to cover the end of the holiday and New Year's last year. The
1:09:40cynical among us, and I'm not sure whether you can prove, I think I imagine that they
1:09:43always intended the quarter to fall this way, but let me rephrase this. Apple benefited
1:09:49from this last year. Yes. Apple benefited by having a 14 week quarter because they were
1:09:53trying to show that the iPhone sales had stabilized and were going up year over year instead of
1:09:57what they had done for the previous three quarters. So they took the week, right? They
1:10:01took that week. So they get that 14 week and again I think it may have been planned it may not have
1:10:04been I don't know let's say it was planned but they get to benefit from it because they get that
1:10:08extra week of sales that they get to claim as a part of the holiday quarter and that allowed them
1:10:16to eke out basically flat to slightly up results last year so they they did that and they didn't
1:10:22talk about that I mean I think they mentioned it was a 14 week quarter but they didn't talk about
1:10:26it in great detail because they just want you to look at the main numbers and then if you recall
1:10:30Like in the week after that, there was a guy who like went around and was
1:10:35tweeting at all of us and emailing and he posts stuff on his blog.
1:10:37And he said, he said, this is kind of a bogus analysis because it's a 14 week
1:10:43quarter.
1:10:43And if you look at the actual sales figures, you know, per day or per week,
1:10:47iPhone sales were down and he's, he was absolutely right.
1:10:50And I remember posting everything on six colors and saying, yup, he's right.
1:10:53Like if you, if you're looking at this, this is a nice quarter, uh, in that,
1:10:57that the iPhone sales were not down.
1:10:59But if you look at iPhone sales day by day or week by week,
1:11:03they were down.
1:11:04They were down on average during the quarter period
1:11:06because it was longer.
1:11:08Okay, so this time, Apple doesn't,
1:11:11and at the time I actually said,
1:11:13this raises the bar for next holiday quarter
1:11:16because it's gonna be 13 instead of 14
1:11:18and Apple's gonna have to deal with that.
1:11:20And here is where it bit them,
1:11:22which is why they kept talking about the fact
1:11:24that it was 13 over 14.
1:11:25'Cause the truth is, during this holiday quarter,
1:11:30the average iPhone sales per day were up 6%
1:11:34over last holiday quarter.
1:11:36Up 6%. - 850,000 iPhones per day
1:11:39in late 2017 compared to 798,000 iPhones per day
1:11:44during the 98 days in late 2016.
1:11:47By the way, that's huge.
1:11:49850,000 of something sold every single day?
1:11:53- You can divide it by 24 per hour.
1:11:55- Especially when you assume that it is not like that.
1:11:58So like there are some days where they sell
1:12:00over a million a day, right?
1:12:01Like it's wild.
1:12:03- Well, that's also true, right?
1:12:05The seasonality, we don't get a level
1:12:07of granularity below this.
1:12:08The point is, by that measure,
1:12:11which I would argue is the more accurate measure,
1:12:14because when you're talking about 13 versus 14,
1:12:17it's not right, and it was not right last year,
1:12:19and it's not right this year, it's easy, but it's not right.
1:12:23Apple, because they're living by the sword and dying,
1:12:25the sword, Apple now wants to demystify you, you know, because Apple wants to have be seen in the
1:12:32best light possible. It was okay last year, it's not okay now. It's also true that if you're
1:12:38focused on year on year and year on year is actually not the same, that, you know, it's up
1:12:44to you. Like, basically you get to decide what story you want to write. And so if you want to
1:12:48write a story that says Apple iPhone sales down year-on-year versus you know
1:12:55versus the year ago quarter it's accurate. Apple's iPhone sales slumping
1:13:01Apple sold fewer phones during the holiday season there are a lot of these
1:13:07kind of lazy phrases and headlines that go into some of these stories and that's
1:13:12not right like Apple actually sold more if you take any span of time I suspect
1:13:19calendar days between last year and this year or between you know 16 and 17
1:13:24holidays you say the month of December or you know November 15th through
1:13:30December 25th or whatever it is I suspect that pretty much for any one of
1:13:36those spans of identical time Apple sold more iPhones this year than last it was
1:13:41it's you know it's close enough but but again I have a hard time I wanted I want
1:13:49to know it I want to understand it accurately the same time I don't have a
1:13:52lot of sympathy for Apple because Apple benefited from this last year at a point
1:13:56where they were trying to show that iPhone sales were no longer sliding and
1:13:59so now it bites them a little bit it's tough because I know it's calendar-based
1:14:03and all of that but look at the revenue point at the revenue and deal with it I
1:14:07think though if the problem is that there are some people out there who
1:14:10really want to point and say, "Aha! Look, weakness in the iPhone. It's going down.
1:14:15Haha, they are in trouble again." And it's not borne out by the data. That's just,
1:14:21it's not true. It's a quirk. And you could very much say, "Aha! Look, iPhone
1:14:26sales continue to be kind of flat to slightly up, and it's now entered a
1:14:30slower growth trajectory than it's ever seen, you know, before the last
1:14:35two years." Yep, that's true. But I think that's all it tells us, is
1:14:39that what really has happened is the iPhone business post the 2015 boom is what we're
1:14:46seeing here, which is it's growing again, but it's growing slowly. It's growing at a
1:14:52much higher level. This is something that also I think a lot of people don't understand.
1:14:56The iPhone, we talk about like, "Oh boy, they had that boom and then it was really rough
1:15:00after that because the sales fell." If you look at the average quarter before the iPhone
1:15:06came out. It was between 35 and 40 million units, and it's now like 53 to 55 million
1:15:23units. So we think of that bump as like a brief success, and then it led to sort of
1:15:31a sad slide back for Apple. But if you look, that bump led to the sea level rising. Like,
1:15:38the new normal for iPhone down from that big bump is way bigger than it was before the
1:15:44big bump. So they didn't lose, it didn't go up and then back down to where it was. It
1:15:48went up and then went down some. So, you know, again, you can write any story you want here,
1:15:54but I do think that there's some malpractice of journalism going out there where people
1:15:58really want to write a story about how the iPhone sales are slipping and it's not borne
1:16:04out by the data.
1:16:05David: No, but I think the important thing to remember in this is however you choose
1:16:10to write your story, you're bound to for the future. So like if you last year were
1:16:16like look how amazing iPhone sales are but you don't take into account the 14 week,
1:16:23right?
1:16:24They weren't amazing, but they were like not down.
1:16:27- If you talk about like, oh, look how great it is,
1:16:31then you also need to appreciate the change
1:16:33on the other side, right?
1:16:34Like, I feel like that, and that's why I like talking
1:16:37about it in all the different routes that we talk
1:16:39about on this show, 'cause basically,
1:16:41all these earnings reports are Apple trying
1:16:44to tell the best story they can with the data available.
1:16:47- Yes, always, always. - So you are able
1:16:49to look at this data and draw whatever conclusion
1:16:52you want from it because there's so many avenues to it. Because Apple do not come into
1:16:58these calls and give you all of the data completely accurately without spin.
1:17:03No, no, they will. Well, I'll say if it's an unprecedentedly good quarter on all fronts,
1:17:10which rarely happens, but it does happen for Apple, they will come in and not spin because
1:17:15they don't need to. But usually there are some of these gauges that are not up to snuff
1:17:22And that's when they start pulling out,
1:17:25but this and look at that.
1:17:27And this other thing that we didn't put in the notes,
1:17:29but now we're gonna tell you so that you can report it.
1:17:31And it's all about that.
1:17:32And so this is a case where they tell,
1:17:34they talk about the quarter length six times
1:17:36because they're now, like I said,
1:17:37live by the sword, die by the sword.
1:17:39They benefited from people not reporting the quarter length
1:17:42very much last year until like I said,
1:17:44a couple of days later, you know, that one guy was like,
1:17:47this is not true.
1:17:48And he was totally right.
1:17:50and now they're trying to go the other way,
1:17:52which is, well, I know we benefited last year,
1:17:54but this year, no, no, no, no, no, no, no, no,
1:17:55you gotta understand how many weeks there are in a quarter.
1:17:58It's like, it's PR, it's, I mean,
1:18:00this is Apple trying to put its best foot forward.
1:18:03- So when I say about like not reporting
1:18:04all of the data completely accurately,
1:18:06I don't mean they're changing numbers,
1:18:08but what they're doing is stuff like what they do
1:18:09with the Apple Watch.
1:18:11So Apple Watch, 50% growth in units and revenue,
1:18:14best quarter ever.
1:18:15- Four straight quarters of 50% growth.
1:18:17- Yeah, if you ask Apple, what does that mean?
1:18:19they will just repeat that to you. They will not tell you how many, right? So it's like
1:18:23for whatever reason they have chose to make that decision and they're sticking to it.
1:18:27And will they ever break it out? Who knows? But this is all that is right now. So Apple
1:18:32have sold somewhere between one and a gabillion Apple watches, but just know that there was
1:18:3750% more than the year before.
1:18:40Even on my Bezos chart that has no scale, um, you can see that the Apple watch, I mean,
1:18:47It did have the best quarter ever.
1:18:49It did grow for the...
1:18:51Not knowing the numbers, you know, they're selectively choosing and I can give them some
1:18:55grief for it.
1:18:56I had a couple people misunderstand my joke about this and be like, you know, "Why are
1:19:01you making fun of the Apple Watch?
1:19:02It did really well."
1:19:03And it's like, "I'm not making fun of the Apple Watch.
1:19:04It did do really well.
1:19:05Did you look at my chart?
1:19:07The numbers, the bars are good.
1:19:08There are no numbers, but the bars are good."
1:19:10Point is, they don't give us details, so we're left kind of like trying to guess what they
1:19:14mean.
1:19:15deciding to do, which is not telling you.
1:19:18- That said, when a product's year-on-year growth
1:19:21is 50% for straight quarters, it's doing pretty well.
1:19:26It's doing pretty well.
1:19:28And so that's what's going on here, is it's doing really well.
1:19:33And remember, the last holiday quarter was a record sale
1:19:37for the Apple Watch, and the previous one
1:19:39was the best yet for the Apple Watch.
1:19:41So they're not only growing in the intervening time,
1:19:44but they're also putting growth,
1:19:45and I think it's quite substantial growth
1:19:47on last year's record numbers.
1:19:50So it looks like the Apple Watch is more,
1:19:53well, it's seasonal like a lot of Apple's business.
1:19:57The holiday quarter is the best one,
1:19:58but it's also doing really well
1:20:00to the point where I saw some analysts saying,
1:20:01"I'm not sure there's a smartwatch category."
1:20:03There's kind of an Apple Watch category.
1:20:05- Oh, that's true.
1:20:06- 'Cause there's, you know, it's just,
1:20:08and by some measurements,
1:20:10Apple is the largest purveyor of wearables by a large amount.
1:20:13Like they have a huge percentage of the wearables market
1:20:16if you define the Apple Watch and AirPods.
1:20:18- Apple is the biggest watchmaker in the world now.
1:20:21- And Beats, I suppose.
1:20:22Yeah, it's, yeah.
1:20:25- Yeah, it's fine. - All right, so next quarter,
1:20:27guidance of revenue between 60 to 62 billion,
1:20:30which would be a record for,
1:20:32well, it would be beating 52.9 in Q2 2017.
1:20:35So--
1:20:37- No, it would be a record for Q2.
1:20:39If they are really hitting in there, they're never wrong.
1:20:41Like, and when they are wrong, they're only ever wrong up.
1:20:45- Yeah, which is a good way to be.
1:20:47- I mean, for a while they really sandbagged the numbers
1:20:49and they were like, they were wrong up every single time.
1:20:53And they've gotten better at that lately.
1:20:55They're closer to their guidance now.
1:20:57I think that they've tightened that up
1:20:59under Luca Maestri's regime. - Because it's not good
1:21:00to, like you think, oh, if you beat it every time,
1:21:04that's amazing.
1:21:05Yes, but it's not actually good
1:21:07for what you're supposed to be doing at this point.
1:21:09Like you need to show that you know
1:21:12what your business is doing.
1:21:13- Yeah, guidance is supposed to be realistic
1:21:15and also it trains people into believing.
1:21:18It's like the boy who cried wolf.
1:21:19It trains people into believing
1:21:20that you're always sandbagging the numbers
1:21:22and that makes it hard when you're looking
1:21:24at a tougher quarter and you try to hit it right on
1:21:27and everybody assumes you're gonna be 10 billion up from that
1:21:30and you're like, no, no, no, no, really this time.
1:21:33So, but anyway, yeah, that 60 to 62 billion,
1:21:37like Apple has never done more than 60 billion
1:21:42in a quarter that wasn't a holiday quarter before.
1:21:44And they're quoting it as being that, right?
1:21:46It would beat the revenue number from,
1:21:50the current record is 58, which is from 2015,
1:21:54the first quarter of 2015,
1:21:56which was that the heights of the iPhone 6 mania
1:22:01that was happening.
1:22:02And yeah, so it's actually kind of a remarkable
1:22:06bit of guidance.
1:22:07- Interesting.
1:22:08- Well, we'll see.
1:22:09I doubt they're wrong, but I'm interested to see how it all breaks out.
1:22:13- Yeah, I'm sure they're right, and I think the question is gonna be what are the details?
1:22:16Like where's the, as usual, it's gonna be where's the iPad go?
1:22:19Where's the iPhone go?
1:22:20Are they trending up and down?
1:22:22What's up with the Mac, as you asked earlier?
1:22:23- I wanna see where the Mac goes.
1:22:24I wanna see where the Mac goes.
1:22:25- And then we can assume services is gonna keep on growing, and other products is gonna
1:22:28keep on growing, because those are areas that just keep expanding as Apple expands its portfolio.
1:22:34and the other will probably include the HomePod. So that would be money that they never made before.
1:22:38Yeah, that's true.
1:22:40Alright, this episode is brought to you by Squarespace. Use the offer code
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1:24:30So let's move into Ask Upgrade, the triumphant return of Ask Upgrade after the week off last
1:24:34week.
1:24:35Please laser it up for me Snail.
1:24:37It's back!
1:24:38Timothy asked, "I discovered I'm still playing for iTunes Match.
1:24:43Do I need to keep this subscription now that I pay for Apple Music?
1:24:47Is there an easy way to make sure I don't lose anything?
1:24:51The answer is iTunes Match is now included in Apple Music.
1:24:54So you no longer need, and this has been the case for a year, year and a half, so cancel
1:24:58that iTunes Match subscription, I did.
1:25:00All your music that you have that you rip from CDs that you downloaded that's like a
1:25:04rare, like live track or whatever, if you're an Apple Music customer, that stuff gets uploaded
1:25:10from iTunes just like it did with iTunes Match and is part of your library and it all just
1:25:16is fine and works fine. So they've really gotten that. It took them a while. iTunes
1:25:21match was bumpy at the beginning. It wasn't initially part of the Apple music kind of
1:25:25thing, but it's all together now and I use that and so I don't need a separate iTunes
1:25:30match subscription anymore.
1:25:31- Yeah.
1:25:32- And neither do you.
1:25:33- No, I don't and I, well, I know you're not talking to me, you're talking to Timothy,
1:25:37but I don't either.
1:25:38- Timothy, yeah.
1:25:39- But thank you for addressing the direction to me too.
1:25:40- Nobody does. You, dear listener, dear listeners, don't pay for iTunes match if you're an Apple
1:25:44music customer.
1:25:45Jason, Roger wants to know, do you think that Apple renaming iBooks to books means they
1:25:50might be paving the way for an iOS laptop?
1:25:54Oh boy.
1:25:55Well, I wrote an entire article on this that you can read at Macworld.
1:25:58So we'll put that in the show notes.
1:25:59That'll be fun.
1:26:02Which is, uh, which includes a, a Star Trek reference in one of the subheads that some,
1:26:08one of my readers got immediately, which made me love that reader so much.
1:26:12The answer is I don't think it necessarily means that. I would love to
1:26:17believe it because I think iBook would be an awesome name for an Apple iOS
1:26:23laptop and they have the name because it's freed up.
1:26:26I don't think this means that. I think it means that Apple is continuing to
1:26:30simplify a lot of their software and taking the i names off of pieces of
1:26:34software that don't need it anymore.
1:26:36My piece in Macworld is basically like the conventional wisdom is
1:26:40there'll never be a new eye product that Apple is decommissioning it everywhere.
1:26:43And while I think that that's probably the most likely scenario here, I just had,
1:26:48I had that moment where I thought to myself, well, wait a second, where does
1:26:51Apple use the eye and not all, but many of the places where Apple uses the eye
1:26:56are for this eye platform, the iOS ecosystem, right?
1:27:00iOS has iPhone and iPad and even iPod touch, right?
1:27:05The I name could be seen as referring to iOS devices,
1:27:10just as the Mac name refers to macOS devices.
1:27:15And if that's true, couldn't Apple have leeway to,
1:27:20and if, I'll even go further,
1:27:22if Apple did create an iOS laptop, what would they call it?
1:27:27And would it have I in the name?
1:27:30I think maybe it would.
1:27:31I'm not saying they're going to.
1:27:33I still think that this is a flight of fancy for me,
1:27:35little bit and that you know even though I'd like to see it I'm I don't know if I
1:27:38actually want to let myself believe that it might happen but if they did wouldn't
1:27:43it make sense to say iPhone iPad iBook instead of iPhone iPad Apple lapbook or
1:27:53whatever like I feel like the I name although it feels old on one level you
1:27:58could make the argument that actually what they're trying to turn it into is
1:28:02is something that's tied into this iOS platform.
1:28:05So I think it might mean that...
1:28:09What it means, Roger, is that they could call something else
1:28:13"iBook." I kinda wanted the iPad to be called "iBook," but that didn't happen.
1:28:17It means they could now, because it would be less confusing, because
1:28:21iBooks is going away and is just going to be books. I don't think that's probably
1:28:25why they
1:28:26did it. I think they did it because they are continuing to sort of simplify a lot
1:28:30of their product names.
1:28:31I do wonder about like iMovie, like what in the long run what's going to happen with iMovie,
1:28:36and is that something that they change and turn into something else, or do they just
1:28:40leave it because it's had that name for so long that they're going to keep it? I don't
1:28:44know. That one I don't know. And iCloud, you know, I don't think it's going to go anywhere.
1:28:48They're going to rename that again. Seems not. And, you know, again, Apple's most popular
1:28:52platform is iOS. So on that level, it's probably okay. And then the outlier is the iMac, which
1:28:59which again, I think it's not impossible that Apple might change the iMac's name to call
1:29:04it something like Mac, but now that there's an iMac Pro, what would you call that? So
1:29:09I think in general, my inclination is that popular products with "i" in the name are
1:29:14just going to stick around because even if Apple doesn't want to ever make anything new
1:29:17with "i" in the name, those products are too famous to change. But I do think if I were
1:29:25making a new bit of iOS hardware, I would seriously consider giving it an iName because
1:29:30it would fit with its "buddies" in the iOS ecosystem.
1:29:34Anyway, that's my short version. You can read the whole column. I went into it.
1:29:39Brianna asks, "The 5S can see live photos in messages but can't take live photos.
1:29:44Can the iPhone 8 and other iPhones see Animojis in the same way?"
1:29:48The answer is yes. Somebody can send Animojis to anyone and you can view them, you just
1:29:52can't make them yourself and send them back.
1:29:54just videos. They're just video attachments.
1:29:57You can even like take the videos and share them in other places as well, which is kind
1:30:01of funny. So like I say, you see them on Twitter because people like send them a messages and
1:30:05then they open the little video and they copy it and paste it into tweet bar or something
1:30:08like that. Yeah. Jeff says, so Apple's gutting Mac OS server. I'll put a link in the show
1:30:14notes if you're not familiar with what's going on there. Jeff wants to know, do we know anything
1:30:19about what hardware and software Apple runs its own data centers on? I mean, obviously
1:30:23I'm assuming not Mac OS server. No. Because that would be a shame for them, wouldn't
1:30:29it? So, do we know anything? It's probably just like Linux or something. I know that
1:30:34they use Azure, right, for some stuff. Yeah, well, I mean, they're using Azure for some
1:30:39things, but they also have their own data centers. I don't know. There's probably
1:30:45somebody who knows. There's some story out there in some semi-esoteric publication website
1:30:51somewhere about Apple's approach here, although Apple keeps it quiet, they're not talking
1:30:55about like Google and Facebook and Amazon. But I imagine it is a Unix/Linux of some kind
1:31:02and is it running Apple's own like Darwin stuff? It wouldn't surprise me if Apple is
1:31:06running some custom stuff. It also wouldn't surprise me if Apple is running stuff that's
1:31:13very commonly used. But, you know, what we do know from other companies is a lot of these
1:31:19companies that have huge cloud infrastructures start building their own stuff because they
1:31:25can control all the parts because it gives them security to their, they're not taking
1:31:29stuff off the shelf because we have heard that there have been stories about like you
1:31:33order a server from some, you know, server manufacturer and there's spy hardware in it
1:31:41so that they can intercept. I mean that, that is a thing that happens now. So I think Google
1:31:47and Facebook build their own stuff. I think maybe Amazon builds their own stuff. So it
1:31:51wouldn't shock me if Apple is using its own stuff. It's not using Mac OS, right? But it
1:31:57wouldn't shock me if its competitors is building some of its own Unix-based servers, running
1:32:06code that it is taking from open source maybe and modifying or writing some stuff itself
1:32:10to do that. But if somebody has links to like articles about which give us a little bit
1:32:17better idea of what Apple's own server infrastructure is, I would be fascinated to hear about that.
1:32:23Or if you know and you want to tell us so we can pass it on anonymously, that would
1:32:29be great too. But it's certainly not Mac OS. And as somebody who's used Mac OS server for
1:32:33a long time, I'm kind of sad that it's going away at the same time. I mean, because it
1:32:38just keeps getting content taken out of it and the latest update, the story has pulled
1:32:42a lot more features out of it. But at the same time, you know, a lot of that stuff is
1:32:47still in the sharing control panel so it's not that big.
1:32:49There's questions from Leon. Regarding the YouTube competition talk, what do you guys
1:32:52think of Vine 2? The most there kind of is to know about this is there is going to be
1:32:57a new Vine. They've got a Twitter account, V2 app. My feeling on this is I'm happy that
1:33:03they're going to make it because Vine was awesome, right? Vine was a great little thing
1:33:07and it was a real shame actually I think that Vine went away. I don't know what I think
1:33:13is how I feel this is going to go for them in the future. One of the reasons Vine worked
1:33:19so well is that it was natively embedded in Twitter and I'm going to assume they're probably
1:33:25not going to be able to get that again so then if that's the case and there's just links
1:33:29then are people really going to want to watch the Vines? How good of a social network can
1:33:33Vine be on its own? I don't know. I don't know. My concern is it gets a bunch of hype
1:33:42for like a couple of weeks, everyone's excited to use it, and then maybe they don't anymore.
1:33:48That would be my concern. What do you think?
1:33:50Yeah, I don't think I have an opinion on this. I mean, Vine... what's funny is that Vine
1:33:55seems to have remained successful after its death. Like, my kids know all these memes
1:34:01that come originally from Vine. And so the idea of this six-second video social network,
1:34:07it's just, it was a huge missed opportunity to turn it into something that it was Twitter,
1:34:13right, that bought it and then basically just killed it. It's a shame. I think maybe like
1:34:18you said, the time has passed and we have to move on, but there's going to be stuff
1:34:26that is invented that takes off and maybe it'll be this, but probably not because that's
1:34:30just true of anything.
1:34:33Yeah, alright and last today from Jim. Regarding the Apple Watch Always On display, could there
1:34:39be a big concern about image retention on the OLED and not battery life?
1:34:46I don't think so because you can you can you can vary it in software right like if you
1:34:51had an Always On that wasn't the animation and it was just text you can the old classic
1:34:56trick is you can move the text around the screen a little bit, just a little bit. And
1:35:00it's like a, like a screensaver. It changes which dots are lit up. And I am sure that
1:35:05a, uh, that, that clever Apple software engineers could find a way to combat any potential burn-in
1:35:11on the OLED in order to give people actual, you know, always on time, even if the time
1:35:17wasn't always in exactly the right place, maybe if they felt like that was an issue
1:35:21and maybe it would be like, how long does it have to stay on? I'm not saying that there
1:35:23might not be a burning issue but I'm saying that there's got to be ways around it in terms
1:35:28of just smart software. Other people do it right and the iPhone 10. That's true. Right
1:35:32they are obviously doing stuff with the iPhone 10 to prevent burning where they can right
1:35:35like there's elements that are on for long periods of time. I think I replied to Jim
1:35:39on Twitter about this but I wanted to say on the show too my feeling on this is that's
1:35:44Apple's problem to solve right they have to find a way to fix that because this is an
1:35:49obvious thing that the watch should be doing and if they can't find a way to solve that
1:35:54then I would be concerned.
1:35:57Because there are things that like, this is the thing with Samsung, they move elements,
1:36:02the always on elements on their phones because they have some software elements that are
1:36:05there permanently like the home button and stuff, they move it by millimetres which is
1:36:10imperceptible if you're just looking at it but that's like a way that they stop burning
1:36:13on the phone.
1:36:14It's like they move the elements ever so slightly every now and then.
1:36:17Not a way that you'd ever see, but it stops it from being in the same place constantly.
1:36:21So there are ways around it, that's just a thing that they would have to work on over
1:36:25time and I hope that they do find a way to do it.
1:36:29It may well be one of the reasons they haven't done it yet, but I really hope that they find
1:36:34a way and I think that they should and what is it?
1:36:37Life finds a way?
1:36:38Something like that.
1:36:39I think that's a phrase that we can apply here too.
1:36:43Okay, we're at the end.
1:36:44Done.
1:36:45Thanks for listening to this week's episode of Upgrade. You can go to relay.fm/upgrade/179
1:36:52to get show notes for this week. Thank you so much to Squarespace, Timing and Eero for
1:36:56their support. You can find Jason's work at sixcolors.com and the incomparable.com as
1:37:01well as on relay.fm. We both host many shows at relay.fm. Just go to relay.fm/shows and
1:37:06you can check out many of the shows here. I think you would enjoy if you're only listening
1:37:10to this one or one other then you should listen to more I think listen to more
1:37:16Jason is on Twitter he's @jasonel I am @imike I am YKE you can send in your
1:37:21questions for the show with the hashtags #askupgrade and #snelltalk
1:37:25two very different types of questions send them in to us and we will do
1:37:29our best to answer as many as we possibly can next week hopefully HomePod
1:37:35until then say goodbye Jason Snell goodbye everybody
1:37:40[MUSIC PLAYING]
1:37:43[Music]