Upgrade

00:00:00 ◼   ► [Music]

00:00:08 ◼   ► From Relay FM, this is Upgrade, episode 140.

00:00:13 ◼   ► Today's show is brought to you by Encapsula, MacWarlan, and Blue Apron.

00:00:18 ◼   ► My name is Myke Hurley and I am joined by Mr. Jason Snell.

00:00:23 ◼   ► Just another sunny Monday morning here in California, Myke.

00:00:26 ◼   ► How are you?

00:00:27 ◼   ► Good, nobody cares about the weather.

00:00:28 ◼   ► Remember that, Jason.

00:00:29 ◼   ► Chris wants to know, what was the first piece of writing that you were paid for?

00:00:35 ◼   ► Um, this is a very difficult question to answer.

00:00:40 ◼   ► Okay.

00:00:41 ◼   ► So I wrote, I'll go through it very quickly, I wrote a computer program in BASIC that did,

00:00:46 ◼   ► that was a blackjack game that a computer magazine paid me $20 for.

00:00:50 ◼   ► Ah, because people used to like print the code for games, right, in the magazines, and

00:00:54 ◼   ► then you could type them into your computer.

00:00:55 ◼   ► - Yes, and they never used it,

00:00:56 ◼   ► but apparently they thought it might be an example

00:01:00 ◼   ► or something.

00:01:01 ◼   ► I don't really actually know why they paid me

00:01:03 ◼   ► for a dumb basic program, but they did.

00:01:06 ◼   ► So that was the first thing I made that I wrote technically

00:01:09 ◼   ► that I got paid for.

00:01:10 ◼   ► I won my high school short story contest

00:01:13 ◼   ► and got a hundred dollars for that.

00:01:14 ◼   ► So I got paid for something I wrote.

00:01:16 ◼   ► In college, when you wrote articles

00:01:21 ◼   ► for the student newspaper, you got paid.

00:01:24 ◼   ► It was very little, but I wrote a lot of articles.

00:01:26 ◼   ► So I did get paid for that as well as a stipend

00:01:28 ◼   ► for being an editor.

00:01:29 ◼   ► So that was my job basically in college.

00:01:32 ◼   ► You know, my college job was the college newspaper

00:01:35 ◼   ► and I did get paid some small amount of money for that.

00:01:38 ◼   ► And the way you got paid was by length of article.

00:01:43 ◼   ► And even more than that, you thinking,

00:01:46 ◼   ► oh, like a word count or something like that.

00:01:47 ◼   ► No, by the inch, literally we had a ruler

00:01:51 ◼   ► and you would go through the articles

00:01:54 ◼   ► that you had published and see how long they were in inches.

00:01:58 ◼   ► - Column inches, is that what the price comes from?

00:02:01 ◼   ► - Yeah, that's it.

00:02:03 ◼   ► And then I believe it was something like

00:02:05 ◼   ► the first X number of inches, it was a base price.

00:02:08 ◼   ► And then you got paid something for every inch thereafter,

00:02:12 ◼   ► which I just think is hilarious.

00:02:14 ◼   ► So I got paid for that stuff too.

00:02:15 ◼   ► So by the time I went to my local newspaper,

00:02:21 ◼   ► summer after I graduated, you know, they were paying me to write articles on as the intern.

00:02:29 ◼   ► And then when I was an intern at MacUser and I left, my first, I guess, official freelance

00:02:36 ◼   ► work was a piece about making charts in Excel. There was a little how-to article for MacUser

00:02:44 ◼   ► that I wrote in the little period, the three-month period where I was no longer an intern and

00:02:50 ◼   ► not yet had not yet been hired as an editor. So any of those would probably count.

00:02:55 ◼   ► I would like to thank Chris for his submission with #SnailTalk to open episode 140. If you

00:03:02 ◼   ► would like Jason to answer a question about literally anything, and I have lots of literally

00:03:09 ◼   ► anything questions in our document right now, just tweet with the hashtag SnailTalk and

00:03:14 ◼   ► I will get them. But right now we must begin the podcast follow-up segment of this show.

00:03:21 ◼   ► Follow-up was of course invented by John Siracusa. He is @Siracusa on Twitter. You should thank

00:03:27 ◼   ► him for the invention of follow-up. We'd like to begin with affiliate pricing. Remember

00:03:32 ◼   ► we were talking about affiliate pricing, I think it was a couple of weeks ago, maybe

00:03:35 ◼   ► it was last week, who knows? Time is a constant. I don't remember a lot about last week anyway,

00:03:40 ◼   ► So you know, whatever.

00:03:42 ◼   ► Federico and John at MacStories came across the realization that we were talking about

00:03:49 ◼   ► Apple taking 7% down to 2.5% for affiliate commissions.

00:03:54 ◼   ► Well there is an iTunes affiliate resources website which published an article about this

00:03:58 ◼   ► and nobody saw it for like two or three days because Apple don't do anything to promote

00:04:03 ◼   ► it.

00:04:04 ◼   ► There's no extra email.

00:04:05 ◼   ► But it has been clarified now that the 7% to 2.5% reduction of affiliate commissions

00:04:11 ◼   ► is just on in-app purchases. So the standard price of 7% for purchasing in a paid-up front

00:04:17 ◼   ► app still remains.

00:04:19 ◼   ► I want to give a shout-out to Rick Molina at MacGamerHQ. He's the one who--he actually

00:04:25 ◼   ► emailed me about it and said that he talked to an iTunes rep and got the details about

00:04:30 ◼   ► this, and I like what he wrote up because he didn't write one of those things that

00:04:35 ◼   ► is like "I know blogs are saying this is true, but bloggers are really stupid." Instead,

00:04:39 ◼   ► he's like "well of course we would expect this." The key line in his story is "the

00:04:45 ◼   ► message is crystal clear, yet it seems that wasn't exactly what Apple meant." Apple's

00:04:51 ◼   ► statement was very clear and wrong, basically.

00:04:54 ◼   ► Rick was the first person to note that I'd seen that commissions wasn't changing what

00:05:01 ◼   ► was being paid out and they emailed the support and the support gave a response but it wasn't

00:05:06 ◼   ► like an official, like this is what it is, right?

00:05:10 ◼   ► People were like well is this the case, this is not the case, no one's answering anything

00:05:13 ◼   ► and then kind of late on Friday Apple published this thing and still didn't tell anyone for

00:05:18 ◼   ► for like two days until it was just found on the affiliate linking blog or whatever,

00:05:24 ◼   ► the iTunes affiliate blog that Apple apparently has. So there you go. I don't understand why.

00:05:32 ◼   ► People must see this, right? There was all these articles written and people talking

00:05:35 ◼   ► about it for like a week and they clarify it but don't tell anyone. Very peculiar.

00:05:43 ◼   ► peculiar indeed, but it's good. It's good because, and again, like I said last time,

00:05:49 ◼   ► inside baseball, most people don't care, but what you do care about is that some

00:05:54 ◼   ► of the things that you read, some of the sites you visit, are funded by affiliate

00:05:58 ◼   ► links. Like, that's a major source of funding or maybe a partial source of

00:06:01 ◼   ► funding, and that goes for things like Mac Stories. It goes for sites like Touch

00:06:05 ◼   ► Arcade and App Shopper, and so this is good for them because it means that the

00:06:12 ◼   ► app referral itself, the core app referral part hasn't changed.

00:06:20 ◼   ► Last week Mateus in Ask Upgrade was asking if we could recommend the timezone conversion

00:06:26 ◼   ► application.

00:06:27 ◼   ► I mentioned the widget that I used, Clock, K-L-O-K, but it's not an application and the

00:06:33 ◼   ► widget hasn't been updated in a long time.

00:06:36 ◼   ► So since the last episode, an application called Zones was updated and again to Mac

00:06:41 ◼   ► the

00:06:56 ◼   ► the

00:07:17 ◼   ► within the, between this episode and the last episode,

00:07:21 ◼   ► it got a nice upgrade and a user interface refresh

00:07:23 ◼   ► to version 2.0.

00:07:24 ◼   ► So, Matthias, that may be the one to check out.

00:07:28 ◼   ► And as I said, I'll put Federico's review in our show notes

00:07:31 ◼   ► so you can go and read it if you want to,

00:07:33 ◼   ► to fully make up your mind before purchasing.

00:07:36 ◼   ► - So on the Mac, I just use the,

00:07:40 ◼   ► you can use the world clock widget on the Mac.

00:07:42 ◼   ► Although it's not great, but it does exist.

00:07:46 ◼   ► I use something on the Mac called clocks.

00:07:49 ◼   ► In general.

00:07:53 ◼   ► - How is that spelled?

00:07:54 ◼   ► Is that like Q-U-L-O-X?

00:07:57 ◼   ► - Quite literally just the word clocks.

00:08:00 ◼   ► - Okay.

00:08:01 ◼   ► - In general, I find time zone conversion applications

00:08:05 ◼   ► to be very appropriately and boringly named,

00:08:08 ◼   ► but that's a pretty good one actually.

00:08:12 ◼   ► I like that one on the Mac.

00:08:14 ◼   ► - Okay.

00:08:15 ◼   ► one out too if you want. Jason and Marvel have joined Comixology Unlimited. We spoke

00:08:21 ◼   ► about Comixology Unlimited a while back, which is their kind of subscription service. It's

00:08:25 ◼   ► like a Netflix for comic books. And it was when it was launched, it was mostly independent

00:08:31 ◼   ► publishers and what was the big publisher that was in Comixology Unlimited? Was it Image?

00:08:37 ◼   ► Yeah, I mean, there are a lot in there, including Image. So for people, there's been some confusion

00:08:44 ◼   ► about this and I'm trying not to sound cranky about it because like I have some opinions

00:08:48 ◼   ► about these services and that they're very different from each other and then there's

00:08:52 ◼   ► a lot of conflation going on and it makes me kind of cranky so just to be clear so Marvel

00:08:56 ◼   ► Unlimited is a service that Marvel sells monthly or annual where you get access to like 17,000

00:09:04 ◼   ► older comics and it means very old comics as well as things that were published six

00:09:07 ◼   ► months ago because they basically publish out on a delay all of the stuff that they

00:09:12 ◼   ► put that they sell to Marvel Unlimited,

00:09:14 ◼   ► it shows up six months later.

00:09:16 ◼   ► It's a little bit like waiting for a new season of a show

00:09:20 ◼   ► to show up on Netflix.

00:09:22 ◼   ► There's a delay of a TV show, a broadcast show,

00:09:25 ◼   ► and then it shows up.

00:09:27 ◼   ► 'Cause they wanna sell it first

00:09:28 ◼   ► and then they'll make it available for subscribers.

00:09:30 ◼   ► So that's Marvel Unlimited and that's just Marvel Comics

00:09:35 ◼   ► and it's like 17,000 of them.

00:09:37 ◼   ► Comixology Unlimited, same name, right?

00:09:40 ◼   ► Is a very different service.

00:09:42 ◼   ► It's cheaper, it's $5 a month.

00:09:44 ◼   ► It is smaller, I think it's like 10,000 comics

00:09:48 ◼   ► or maybe even less.

00:09:48 ◼   ► It comes from multiple publishers.

00:09:51 ◼   ► And the way it, a lot of times what it is,

00:09:53 ◼   ► is it'll be the first trade or the first 12 issues

00:09:57 ◼   ► of various comics.

00:10:00 ◼   ► So it allows you to try new comic series

00:10:03 ◼   ► that you might not otherwise wanna pay to try,

00:10:05 ◼   ► which is great.

00:10:06 ◼   ► And that is the purpose of the service.

00:10:09 ◼   ► What it's not is what Marvel Unlimited is, which is sort of like you can just keep on

00:10:14 ◼   ► pursuing dozens and dozens and hundreds of issues of various storylines across it. That's

00:10:20 ◼   ► not what Comixology Unlimited is for. It's for trying some new stuff out, the beginnings

00:10:25 ◼   ► of these storylines. And quite honestly, from a publisher standpoint, the goal here is to

00:10:30 ◼   ► get you hooked on the first four issues of a comic so you'll buy the rest. And Comixology

00:10:36 ◼   ► as a middleman in their Amazon,

00:10:39 ◼   ► basically Amazon owns Comixology,

00:10:41 ◼   ► they want to sell you comics too.

00:10:43 ◼   ► So the goal of Comixology Unlimited is for a low fee,

00:10:46 ◼   ► you get to try a bunch of stuff

00:10:48 ◼   ► with the hope that when you find stuff you like,

00:10:50 ◼   ► you will then start buying it.

00:10:52 ◼   ► And that's a little bit different.

00:10:55 ◼   ► So Marvel is now a part of that,

00:10:58 ◼   ► which means that there are some select

00:11:01 ◼   ► first groups, blobs of issues

00:11:05 ◼   ► of various Marvel comics that they will also be putting on there. Also, I have to say,

00:11:10 ◼   ► Comixology Unlimited has a lot of on and off where they'll bring things on for a month

00:11:14 ◼   ► or two or three and then they go away. Which means that like some TV shows on Netflix and

00:11:19 ◼   ► Amazon if you're in the midst of reading them and they get pulled, you're out of luck. You

00:11:23 ◼   ► gotta go buy them because they will go away. It's not a Marvel Unlimited once they're on

00:11:28 ◼   ► the service that's it. They're there forever basically because they're building a huge

00:11:31 ◼   ► catalog. So they're just very different services. So if you're somebody who is curious about

00:11:36 ◼   ► comics but doesn't know where to start and does not want to start buying issues, Comixology

00:11:42 ◼   ► Unlimited could actually be a useful service. But be aware that their purpose is to get

00:11:50 ◼   ► you into things so that you'll start buying them. That's just how it is. They're going

00:11:55 ◼   ► to give you the first 20 issues of something or the first 10 issues of something.

00:11:57 ◼   ► -Taste is free, Jason. -Well, first taste...

00:12:00 ◼   ► And this is one of the things that kind of hurts me a little bit, is first taste is $5 a month.

00:12:04 ◼   ► [laughter]

00:12:06 ◼   ► But it's as much as you want for that to get inside the door.

00:12:10 ◼   ► So, anyway, it's good. The real question is what happened to DC Comics,

00:12:13 ◼   ► which is the only major comics publisher now not making its comics available

00:12:17 ◼   ► to a digital subscription service, so far as I can tell.

00:12:20 ◼   ► Because almost everybody else is in Comixology Unlimited,

00:12:23 ◼   ► and then of course Marvel also has its own product.

00:12:26 ◼   ► And DC Comics know where to be seen.

00:12:28 ◼   ► So if you want to buy DC Comics,

00:12:30 ◼   ► you just got to buy them a la carte.

00:12:31 ◼   ► That's just, that's just how you got to do it.

00:12:34 ◼   ► But anyway, that's the digital comics.

00:12:35 ◼   ► Somebody was asking me, oh, actually, you know,

00:12:37 ◼   ► our friend, our friend Gray was asking me

00:12:40 ◼   ► what I use to read comics these days.

00:12:42 ◼   ► And my answer was Comixology, Marvel Unlimited,

00:12:47 ◼   ► and Chunky Comic Reader for all of the non DRM stuff I have.

00:12:52 ◼   ► Chunky Comic Reader, very nice iOS app.

00:12:55 ◼   ► and I do all my reading on my iPad Pro.

00:12:57 ◼   ► - Chunky comic reader.

00:13:00 ◼   ► - Chunky comic reader, yeah, it's very good.

00:13:02 ◼   ► - I used this when the iPad first came out

00:13:05 ◼   ► because I was like, this is gonna be great for comics.

00:13:08 ◼   ► So Zapp has been around for a very, very, very long time.

00:13:12 ◼   ► - Awesome, that's real cool.

00:13:13 ◼   ► Last week we were talking about stickers

00:13:16 ◼   ► and what to do if you wanna remove your stickers

00:13:18 ◼   ► and you mentioned that there was something

00:13:19 ◼   ► that you couldn't think of the name of

00:13:21 ◼   ► that you would use to remove stickers.

00:13:23 ◼   ► turns out via Upgrading Jason, that it's called Goo Gone.

00:13:27 ◼   ► - Goo Gone, I mean, I'm sure there are other things

00:13:30 ◼   ► out there, but this is what I was thinking of.

00:13:32 ◼   ► It's Goo Gone and it's like a spray bottle,

00:13:35 ◼   ► like a household cleaner kind of thing.

00:13:40 ◼   ► But what it's designed for is to dissolve

00:13:44 ◼   ► the adhesive that stickers use.

00:13:47 ◼   ► So you gotta still use some elbow grease,

00:13:49 ◼   ► but if you use elbow grease in something like Goo Gone,

00:13:52 ◼   ► you can get that laptop back looking

00:13:56 ◼   ► like it never had a sticker on it.

00:13:58 ◼   ► - And finally for follow up this week,

00:14:01 ◼   ► Recode are reporting that they've heard

00:14:04 ◼   ► from Amazon employees that an Amazon Prime video app

00:14:07 ◼   ► will show up on Apple TV

00:14:09 ◼   ► in the third quarter of this year.

00:14:11 ◼   ► (imitates trumpet)

00:14:13 ◼   ► Exactly.

00:14:14 ◼   ► - Sorry, that was the herald of Amazon arriving

00:14:17 ◼   ► in the Apple compound.

00:14:19 ◼   ► Please all rise for Lord Amazon of...

00:14:24 ◼   ► - Sir, Lord Amazon approaches.

00:14:26 ◼   ► - Something's changed, right?

00:14:28 ◼   ► - Yeah.

00:14:29 ◼   ► - This hasn't happened just like it took this long, right?

00:14:33 ◼   ► It's like, oh, we've really been trying.

00:14:36 ◼   ► We've been toiling away in the app development mind

00:14:38 ◼   ► to create, this has not been what's happened.

00:14:41 ◼   ► Something's changed.

00:14:43 ◼   ► Now, my thinking on this is,

00:14:45 ◼   ► does Amazon know something that we don't, right?

00:14:47 ◼   ► Is there something coming?

00:14:49 ◼   ► I don't think it's that I was, I was looking at the people who cover this

00:14:52 ◼   ► closely, the TV deals and the Apple TV deals, including, um, including Peter

00:14:58 ◼   ► Kafka, who I think wrote that story.

00:15:00 ◼   ► Right.

00:15:00 ◼   ► Um, and, and Jason Del Ray, both.

00:15:03 ◼   ► It sounds to me like, first off, it sounds like on Apple TV, the 30% for your

00:15:11 ◼   ► subscription service thing is not there.

00:15:16 ◼   ► It's like negotiable.

00:15:19 ◼   ► This is what, which I didn't realize,

00:15:21 ◼   ► but apparently has been known for a little while.

00:15:23 ◼   ► It's like Netflix is not giving Apple 30%, right?

00:15:27 ◼   ► It is on the Apple TV, those signups,

00:15:29 ◼   ► it's completely negotiable.

00:15:31 ◼   ► So it sounds like maybe there was a lot,

00:15:34 ◼   ► it sounds like behind the scenes,

00:15:35 ◼   ► there really was a negotiation happening

00:15:37 ◼   ► between Apple and Amazon

00:15:38 ◼   ► about how much Amazon was willing to pass to Apple

00:15:41 ◼   ► to be on their platform versus not.

00:15:43 ◼   ► And the question is, did they come to a resolution

00:15:47 ◼   ► Or did Amazon just decide they're gonna do

00:15:49 ◼   ► what they do on iOS, which is not let you sign up?

00:15:52 ◼   ► My guess though, is that they came to a resolution

00:15:55 ◼   ► that Apple thinks is beneficial enough

00:15:58 ◼   ► to get Amazon on their platform

00:16:00 ◼   ► and get the Apple TV and Amazon's storefront too.

00:16:03 ◼   ► 'Cause remember they won't sell a streamer box

00:16:07 ◼   ► that doesn't have Amazon video on it.

00:16:09 ◼   ► And also, you know, works for Amazon

00:16:11 ◼   ► in terms of the amount of percentage

00:16:13 ◼   ► they're willing to give up.

00:16:14 ◼   ► - Yeah, my memory says that when we were talking

00:16:17 ◼   ► about the subscription pricing changes

00:16:20 ◼   ► before WWDC last year,

00:16:23 ◼   ► I remember seeing stuff at that point,

00:16:25 ◼   ► which was saying that HBO got like a 15% deal or whatever.

00:16:29 ◼   ► Like this was a thing, 'cause it was like,

00:16:31 ◼   ► oh, well, this has started to happen,

00:16:33 ◼   ► that was the beginning of this happening.

00:16:35 ◼   ► But my thing about this is, yeah,

00:16:37 ◼   ► let's say that that is the case, right,

00:16:38 ◼   ► and they got a different deal.

00:16:39 ◼   ► It's like, why is it taken till now?

00:16:42 ◼   ► Like that's what I'm interested in.

00:16:43 ◼   ► Like I wonder if either Apple or Amazon,

00:16:46 ◼   ► one of those two companies has broke

00:16:49 ◼   ► and there's a reason, but we don't know what it is yet.

00:16:52 ◼   ► Right, like one of them has given in

00:16:54 ◼   ► on what the other side wanted.

00:16:56 ◼   ► And I wonder if it's like Apple have maybe a new Apple TV

00:17:01 ◼   ► that may really want Amazon to be on that.

00:17:04 ◼   ► Or Amazon have a really big show that they're working on

00:17:07 ◼   ► and they want everyone to have it.

00:17:09 ◼   ► You know, these are the two things I'm thinking about.

00:17:10 ◼   ► - Well, what I was thinking is it's also possible

00:17:13 ◼   ► that the TV app hasn't gone as well as Apple had hoped.

00:17:18 ◼   ► And that maybe Apple thought that that would be a thing

00:17:24 ◼   ► that would sweeten the deal,

00:17:26 ◼   ► would be to get Amazon to agree in exchange

00:17:29 ◼   ► for what Apple would give them in the negotiations,

00:17:32 ◼   ► that one of the things maybe Apple would get back

00:17:35 ◼   ► is Amazon's participation in the TV app, right?

00:17:38 ◼   ► 'Cause that's a new-ish wrinkle, not the TV app itself

00:17:42 ◼   ► that came out last fall, but the fact that the TV app

00:17:43 ◼   ► momentum is so slow, there's so little in there,

00:17:47 ◼   ► that maybe that was a connection.

00:17:50 ◼   ► Yeah, I do wonder, like you said,

00:17:52 ◼   ► if what's happening here is Apple is looking at

00:17:55 ◼   ► what its TV rollout update refresh is gonna be this fall,

00:18:00 ◼   ► and is thinking we need to make deals

00:18:04 ◼   ► to have that be a good offering,

00:18:06 ◼   ► and that Amazon's one they can take off the board, right?

00:18:08 ◼   ► Amazon, they can just go in and say,

00:18:09 ◼   ► "Okay, we will do this.

00:18:11 ◼   ► can you do this? This is what we want. So they can put that in the win column

00:18:15 ◼   ► when they're trying to build their list

00:18:18 ◼   ► of what they need because you know they're either gonna wanna do their

00:18:21 ◼   ► own service or they're gonna wanna integrate with existing

00:18:24 ◼   ► over-the-top services in the TV app, right? They're gonna

00:18:27 ◼   ► wanna have a story there about where do you play compared to PlayStation

00:18:31 ◼   ► View

00:18:32 ◼   ► and Sling and you know, list them all off. YouTube TV and DirecTV Now

00:18:38 ◼   ► and now Hulu TV

00:18:41 ◼   ► And so that's all going on, right?

00:18:45 ◼   ► There's so much change happening in the TV world.

00:18:47 ◼   ► So it would be interesting to see

00:18:49 ◼   ► what they would like to come out with in the fall

00:18:53 ◼   ► and then see whether that was something

00:18:55 ◼   ► that maybe motivated this.

00:18:56 ◼   ► But you'd make those,

00:18:57 ◼   ► you'd wanna make those deals now, right?

00:18:59 ◼   ► You can't wait until August to make a deal

00:19:02 ◼   ► about the product you're launching in September,

00:19:03 ◼   ► assuming you are, which I am assuming they will.

00:19:06 ◼   ► - I do think that like the fact that it's Q3

00:19:08 ◼   ► might say something about refreshed Apple TV,

00:19:11 ◼   ► because let's imagine they've just made this deal

00:19:13 ◼   ► like two weeks ago.

00:19:14 ◼   ► I don't imagine that Amazon have just now started working

00:19:16 ◼   ► on this app.

00:19:17 ◼   ► Like I'm sure that it's done.

00:19:19 ◼   ► They've had it done for ages, right?

00:19:21 ◼   ► Like in case anybody ever changed their mind.

00:19:23 ◼   ► - It's not a technical issue, right?

00:19:25 ◼   ► It's just a deal issue.

00:19:27 ◼   ► Joe Steele in the chat room points out also

00:19:30 ◼   ► that Amazon's got a lot of 4K and HDR content

00:19:35 ◼   ► for their programming

00:19:38 ◼   ► and that if Apple is trying to find,

00:19:42 ◼   ► if Apple's gonna do a UHD, a 4K Apple TV,

00:19:46 ◼   ► they're gonna wanna have content to point to there.

00:19:49 ◼   ► And there's like Netflix and Amazon and not a lot else.

00:19:51 ◼   ► So it would allow Apple to bulk up its argument

00:19:55 ◼   ► for why you would want to buy a 4K Apple TV.

00:19:59 ◼   ► - I have one of those 4K Ultra HD compatible televisions.

00:20:03 ◼   ► - Me too.

00:20:04 ◼   ► - And I've seen a couple of things on it in that format.

00:20:07 ◼   ► like the BBC had like a test for one of the nature shows. My word it looks so

00:20:13 ◼   ► good it looks so very good I'm excited for more services to to be going to net

00:20:18 ◼   ► bandwagon I think House of Cards is shot all shot in 4k right? Yeah. So I'll be able to watch

00:20:23 ◼   ► House of Cards in glorious 4k that'd be nice. All the all the Marvel stuff is

00:20:26 ◼   ► there's a lot of cool Amazon and Netflix stuff that they're doing in 4k now and

00:20:30 ◼   ► I'm watching some of it but it's through my TV's kind of terrible player

00:20:34 ◼   ► interface and I would like to get one box that I can trust, that I can show everything

00:20:39 ◼   ► on. The other thing about 4K and Apple, which I think we haven't talked about much, but

00:20:44 ◼   ► like I want that 4K content on iTunes too, right? I mean I feel like that has to be part

00:20:52 ◼   ► of the story too. I want to be able to rent a movie and have it be in that or buy it and

00:20:56 ◼   ► have it be in that format too. And you know we haven't, we're not there yet.

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00:23:25 ◼   ► show and Real AFM.

00:23:32 ◼   ► It is earnings season and we're going to talk about Apple's earning results.

00:23:36 ◼   ► So I'm going to start off by giving some top line results so people can just kind of get

00:23:41 ◼   ► the numbers in case you are dying for those numbers.

00:23:44 ◼   ► And you wrote a great piece on Macworld about the six key takeaways.

00:23:47 ◼   ► So like distilling down everything that happened from the numbers and all of the analysis and

00:23:52 ◼   ► all of the questions.

00:23:53 ◼   ► And we're going to talk about those.

00:23:55 ◼   ► So let me give let me give someone who's top line results, Jason.

00:23:58 ◼   ► So Apple's revenue was reported to $52.9 billion which is up from $50.6 billion year on year.

00:24:05 ◼   ► Profit is $11 billion up from $10.5 billion.

00:24:09 ◼   ► So let me stop you with those two because I think what's interesting is to put those

00:24:13 ◼   ► in perspective.

00:24:15 ◼   ► They're both pretty flat.

00:24:16 ◼   ► They're up a little bit, not a lot year on year.

00:24:19 ◼   ► But what's interesting is, so just $53 billion in revenue.

00:24:24 ◼   ► to be clear, Apple's big competitors, Google and Microsoft,

00:24:29 ◼   ► their revenue was in the 20 range.

00:24:34 ◼   ► So it's pretty dramatically different in revenue

00:24:37 ◼   ► and Apple's profit of 11 billion,

00:24:39 ◼   ► again, I'll just point out that some of their competition

00:24:43 ◼   ► is making 20 billion in ish in revenue.

00:24:48 ◼   ► So something to keep in mind with Apple

00:24:51 ◼   ► is the scale of the business,

00:24:53 ◼   ► which is not, and what I'm not saying is anything about like where it's going in terms of size,

00:24:59 ◼   ► in terms of growth, it's going up, it's going down, but we should keep in mind the scale

00:25:03 ◼   ► of it. The scale of Apple right now, these aren't a bunch of companies that are roughly

00:25:08 ◼   ► the same size doing the same thing jockeying for position. In terms of sheer revenue and

00:25:13 ◼   ► profit, Apple is way out in front and it's easy to lose sight of that because of Wall

00:25:19 ◼   ► because Wall Street's concerns are all about about growth because when you price a stock,

00:25:25 ◼   ► you're looking at the future, not the present and investors are more concerned about having

00:25:30 ◼   ► the company grow so that their stock price grows than they are about the company being

00:25:34 ◼   ► a reliable profitable machine. That's kind of not what that that's already priced into

00:25:39 ◼   ► the stock. So but we but but that can skew your understanding of it as a business. And

00:25:45 ◼   ► And so it's just, it was a moment to remind our myself and to remind everybody that this

00:25:51 ◼   ► is a, this is a staggeringly large business that Apple has. It is, it is not Google, right?

00:26:00 ◼   ► It's not even, it's not Google. Google's not close to it. Microsoft's not close to

00:26:03 ◼   ► it.

00:26:04 ◼   ► And I guess it's kind of two things, right? Apple sells products at high prices and they

00:26:10 ◼   ► sell boatloads of them. I guess that's what makes these companies different. Not only

00:26:16 ◼   ► are their products high-priced, higher-priced than maybe some of their competitors, but

00:26:20 ◼   ► they also sell way more. Google's business is mostly advertising, that's their revenue,

00:26:25 ◼   ► and it's a different ballgame completely.

00:26:28 ◼   ► And $25 billion in revenue for Alphabet is pretty good. That's pretty good.

00:26:33 ◼   ► That's a huge number. It's huge. It's a massive amount of money, but it's half.

00:26:37 ◼   ► But it's half of Apple's. And Microsoft is 22 billion and it's got a great, very thriving

00:26:42 ◼   ► cloud business and it's doing very well. But it's less than half of Apple's. It's twice

00:26:47 ◼   ► Apple's profit.

00:26:48 ◼   ► And I don't think that what you're saying here is that this makes Apple twice as good

00:26:51 ◼   ► as those companies, right?

00:26:53 ◼   ► No. No, but it is a false equivalency to say, well, they're all pretty much the same. Their

00:26:58 ◼   ► businesses are pretty much the same. Not only do their revenues come from very different

00:27:02 ◼   ► places, we don't flatten them all together, right? They're like, they're tech companies.

00:27:05 ◼   ► And this is actually, I suspect, the source of a lot of the terrible analysis about tech

00:27:10 ◼   ► companies that we read on blogs. This is the sort of thing that the Macalope gets to write

00:27:14 ◼   ► about. I suspect a lot of it is from people who really want to think, and this has always

00:27:20 ◼   ► been the case for criticism of Apple by especially Wall Street types, but there are a lot of

00:27:26 ◼   ► people who misunderstand Apple. And again, not saying Apple can't be criticized, I'm

00:27:29 ◼   ► saying Apple's often criticized for the wrong things by people who fundamentally misunderstand

00:27:33 ◼   ► And I think this is one of the reasons is that everybody wants to put these companies in a box and say they're all the same.

00:27:39 ◼   ► And like Google, Microsoft, Apple, Facebook, Amazon, their businesses have some overlaps, but largely have nothing in common.

00:27:49 ◼   ► And then when you look at the size of the businesses, the sizes are different, which means their revenue is coming from very different places.

00:27:57 ◼   ► And it's just something to keep in mind.

00:28:00 ◼   ► That keep it all in perspective, that it's so easy.

00:28:04 ◼   ► All of us as human beings want to simplify

00:28:06 ◼   ► and make it like A and B are the same

00:28:09 ◼   ► and let's compare them in detail.

00:28:10 ◼   ► And the fact is like the saying goes,

00:28:14 ◼   ► A ends up being an apple and B is an orange

00:28:16 ◼   ► and you really shouldn't compare them

00:28:18 ◼   ► 'cause they are both fruits.

00:28:20 ◼   ► Yes, they are in that category, but that's it.

00:28:24 ◼   ► Like beyond that, why are you comparing them?

00:28:27 ◼   ► It's like Google, Apple, and Samsung will all go on stage

00:28:30 ◼   ► and throw their products around as if they're all equal,

00:28:34 ◼   ► right, like these are what our businesses are,

00:28:37 ◼   ► but all three of those companies, their businesses,

00:28:39 ◼   ► the revenue is so fundamentally different,

00:28:42 ◼   ► like where it all comes from, right?

00:28:44 ◼   ► Like a company like Samsung, you know,

00:28:46 ◼   ► not Samsung Mobile, right, I know that they break them up,

00:28:49 ◼   ► but let's look at Samsung, the holding company,

00:28:50 ◼   ► like Google, Alphabet, the holding company,

00:28:52 ◼   ► it's like all over the map where that money comes from

00:28:55 ◼   ► compared to Apple, right?

00:28:56 ◼   ► Like it's so very different, but their public facing messages, they treat it like they're

00:29:03 ◼   ► all competing on the exact same battlefield when they're not really, right?

00:29:07 ◼   ► Like they have overlapping products, but looking at the whole businesses of all of them, they're

00:29:12 ◼   ► very, very different.

00:29:15 ◼   ► It's an interesting comparison to put forward.

00:29:18 ◼   ► Going back to the results of, this is Q2, right?

00:29:21 ◼   ► It's a Q2 results.

00:29:24 ◼   ► iPhone 50.8 million units sold down from 51.2 iPad 8.9 million units sold down from 10.3

00:29:34 ◼   ► Mac 4.2 million units sold up from 4 million Services 7.4 billion dollars in revenue generated

00:29:42 ◼   ► up from 5.99 billion from last year Other products include the watch, beats and

00:29:49 ◼   ► AirPods is at $2.87 billion up from 2.19. So Mac services and other products that are

00:29:57 ◼   ► up, iPhone and iPad down, iPad down more significantly.

00:30:01 ◼   ► And iPhone, you were, so what you did for those three product areas is look at unit

00:30:08 ◼   ► sales. If you look at revenue, iPhone was actually slightly up. It was slightly down

00:30:12 ◼   ► in units, slightly up in revenue and we'll get to it but that's because the mix of what,

00:30:18 ◼   ► One of the things, I think this is a fairly flat quarter, we can glean things from it,

00:30:22 ◼   ► there's a lot that's not particularly interesting about these results. They are up slightly.

00:30:28 ◼   ► If in a simplified version, it's like they're good, they're up slightly, that's about it.

00:30:33 ◼   ► But when it comes to the breakdown of what they're selling in these product categories,

00:30:37 ◼   ► it gets a little more interesting. And the iPhone is an example where having your units

00:30:42 ◼   ► go down and your revenue go up, that suggests that you're sold more of your more expensive

00:30:46 ◼   ► and the Mac is the same way. Mac went, units went up, but revenue went way up, and for

00:30:52 ◼   ► similar reasons.

00:30:53 ◼   ► So I don't ever listen to these calls because I can't bring it upon myself to do that. What

00:30:59 ◼   ► do you...

00:31:00 ◼   ► They sound way better now. They fixed their whole, they fixed their whole workflow. They,

00:31:04 ◼   ► they are, they're like podcasting now. They've got, they're like routing it. I was trying

00:31:08 ◼   ► to, Dan Morin and I on the Six Colors podcast last week, we talked about like, I had a,

00:31:13 ◼   ► I have a theory about what they did and it's just like imagining how instead of streaming

00:31:17 ◼   ► a phone call what they did is they piped the phone call into a mixer with good microphones

00:31:20 ◼   ► in the Apple conference room where they do this and then streamed that and so all the

00:31:24 ◼   ► Apple people sound great and then all the analysts are just people on the phone.

00:31:28 ◼   ► So I assume that you know Apple's getting ready to do a podcast any day now right?

00:31:33 ◼   ► Well they you know they do they actually do podcast the the keynotes and I think the earnings

00:31:38 ◼   ► calls.

00:31:39 ◼   ► There you go.

00:31:40 ◼   ► So you can subscribe to the earnings call podcast.

00:31:42 ◼   ► It sounds way better than it used to.

00:31:44 ◼   ► - Thank you.

00:31:46 ◼   ► So from listening to those,

00:31:48 ◼   ► do you get a sense for what the analysts prefer?

00:31:51 ◼   ► Do they prefer unit sales or revenue from the products

00:31:54 ◼   ► or do they not really have a preference?

00:31:56 ◼   ► - They don't have a preference

00:31:58 ◼   ► because they're not looking at signals

00:32:02 ◼   ► and they're looking for growth.

00:32:04 ◼   ► And so they wanna know like when they look at those,

00:32:06 ◼   ► like with the iPhone,

00:32:09 ◼   ► they aren't gonna say, oh, well, I'm disappointed

00:32:11 ◼   ► because units went down.

00:32:12 ◼   ► And they're not going to say, oh, I'm happy

00:32:14 ◼   ► because revenue went up.

00:32:15 ◼   ► What they're gonna say is, oh, the product mix changed

00:32:19 ◼   ► and the average selling price went up.

00:32:20 ◼   ► Because if you divide your units and your dollars,

00:32:24 ◼   ► units by sales, what you get is average selling price.

00:32:29 ◼   ► That's actually pretty simple math.

00:32:31 ◼   ► And from that, you can see that average selling price

00:32:36 ◼   ► of an iPhone went up.

00:32:37 ◼   ► And that matters to them in the sense not that they always want ASPs to go up either,

00:32:42 ◼   ► but it's another bit of data in the mix about that they can use to sort of glean like where's

00:32:47 ◼   ► this product line going and where's the market for smartphones going and Apple's place in

00:32:50 ◼   ► it.

00:32:51 ◼   ► So I would say that there are not, other than just generally they like growth, that Wall

00:32:56 ◼   ► Street likes growth, beyond that it's all about the details.

00:33:00 ◼   ► So there was growth of some kind in the iPhone, right?

00:33:04 ◼   ► like it wasn't overall but it was growth in a certain line.

00:33:09 ◼   ► I would say if you gave it to analysts and said which are analysts happier with sales

00:33:13 ◼   ► growth or revenue growth, they will always say revenue growth.

00:33:17 ◼   ► Because that's what drives the value of the companies in theory, right?

00:33:21 ◼   ► In the end, if what that means is that you're selling fewer of the cheap phones but more

00:33:26 ◼   ► of the expensive phones, that's great. They like that.

00:33:30 ◼   ► So let's get into some of the things that you think are interesting from the call, right?

00:33:34 ◼   ► So the first being that Tim Cook addressed on the call that he believes that there has

00:33:40 ◼   ► been a pause in purchases of the iPhone because the rumour cycle has begun earlier and there

00:33:48 ◼   ► are more frequent reports than usual.

00:33:50 ◼   ► So this new iPhone that's apparently coming in September that we know everything that

00:33:54 ◼   ► we think we know about, that this is something that they believe is affecting sales and it's

00:34:00 ◼   ► happening with a lot more bigger than usual and that they're actually addressing this

00:34:07 ◼   ► as the reasoning.

00:34:08 ◼   ► Yeah, I, we could argue whether this is true, right? Is it true, is it really true that

00:34:17 ◼   ► the reports about future iPhones have come earlier and are much more frequent? It may

00:34:22 ◼   ► be, I'm going to leave that analysis to someone else, but it may be that because this bezel-less

00:34:28 ◼   ► iPhone thing, when did we first hear about that? It may have been last year.

00:34:32 ◼   ► It was last year. It was before this one. Right? Before the 7, right? And so if it's

00:34:38 ◼   ► really true that that was the phone they were working on for 2017, and in mid to late 2016,

00:34:45 ◼   ► they were already talking about it and had skipped a whole generation, well yeah, that's

00:34:50 ◼   ► pretty early, right? But so there's the question like why why would that be

00:34:57 ◼   ► happening and what would the impact of that be? I don't I don't know I mean I'm

00:35:03 ◼   ► sure that people anticipating a major new refresh of an iPhone is going to be

00:35:07 ◼   ► a reason to hold off. If you're somebody who has the 6 or the 6s or the 7 and you

00:35:12 ◼   ► know that there's a big big big new redesigned iPhone coming, I think that

00:35:19 ◼   ► some percentage of the people in all three of those categories are going to hold off.

00:35:22 ◼   ► Like I've got a six, why get a seven if I can, six is still pretty great as a phone,

00:35:30 ◼   ► why don't I just wait it out because there's going to be a completely new version and not

00:35:33 ◼   ► one that looks more or less like my six, but it's just a little bit better. So I can see,

00:35:38 ◼   ► I mean I think that's a real thing, people deferring purchases because everybody knows

00:35:42 ◼   ► that the next big iPhone is coming. This does lead to yet more seasonality in Apple's numbers.

00:35:48 ◼   ► If Apple ends up with this new rumored model selling a billion of them because billions

00:35:54 ◼   ► of them billions and billions of them if it's a hit like the six was because there was a

00:35:59 ◼   ► lot all of that pent up demand for the big screen six we may end up in a situation where

00:36:05 ◼   ► once again Apple's iPhone sales trajectory has to be smoothed out over years because

00:36:11 ◼   ► it may turn out that there's a there's always a huge bump in sales for a brand new style,

00:36:18 ◼   ► and then they kind of let it ride for a year or two, and then there's another huge bump that could

00:36:22 ◼   ► happen. And then what that means is that they'll have a really great year, followed by a year where

00:36:27 ◼   ► everybody's complaining that they didn't grow like they did the previous year because the previous

00:36:30 ◼   ► year was such a huge bump. What fascinates me about it is that they actually blamed this on

00:36:36 ◼   ► rumors because Apple doesn't like to talk about rumors. They don't like to talk about future

00:36:40 ◼   ► products, they really don't like to talk about rumors about future products, right? And yet,

00:36:45 ◼   ► here it is. They didn't make a big thing of it. He said it in passing. He moved on. They

00:36:49 ◼   ► didn't talk about it again. But earlier and much more frequent reports about future iPhones,

00:36:56 ◼   ► that is the rumors are out there and we think it's slowing sales. And we're going to use

00:36:59 ◼   ► it as a reason why people are not saying they're intending to purchase an iPhone. Because the

00:37:05 ◼   ► The number that people were asking about is some analysts reports of plan to buy studies,

00:37:13 ◼   ► which is basically, are you planning on buying a new iPhone in the next three months or something?

00:37:17 ◼   ► And those numbers are down from their historic numbers. And the question is why? And what

00:37:22 ◼   ► Apple is saying is it's not that they don't like the iPhone. It's not that they don't

00:37:25 ◼   ► want an iPhone. It's that they have heard about the new iPhone this fall and so they're

00:37:30 ◼   ► waiting. That may or may not be true, but that's what they're saying. That's what Apple

00:37:34 ◼   ► says is the reason. I believe it. I honestly do believe it. I think that it is of a stronger

00:37:41 ◼   ► intensity than previously for two reasons, right? It is that people know when the phone's

00:37:47 ◼   ► coming, right? People know now that September is new iPhone time, right? Like that is a

00:37:51 ◼   ► given at this point. But I think it's different this time because the current phone looks

00:37:56 ◼   ► like the one before it and the one before it. So I think people were less inclined to

00:38:01 ◼   ► move now to buy an iPhone because they're aware of the fact that it hasn't changed for

00:38:06 ◼   ► a while and that it makes it less, I think it makes it less appealing for people that

00:38:10 ◼   ► are maybe looking to upgrade because they know that, you know, or potentially know,

00:38:14 ◼   ► or they ask the person in their life that might know, right, which I think is a role

00:38:19 ◼   ► that many of our listeners will play for their family and friends. And those people are saying,

00:38:24 ◼   ► "Don't buy an iPhone now because there might be a really cool one in September."

00:38:29 ◼   ► Yep.

00:38:30 ◼   ► So I bought it.

00:38:31 ◼   ► - Yeah, that's, I totally get it, right?

00:38:34 ◼   ► Like if I had a 6 or a 6S,

00:38:36 ◼   ► and I was thinking of getting,

00:38:39 ◼   ► I think the 6 is a good example, right?

00:38:40 ◼   ► 'Cause so many people bought the iPhone 6.

00:38:42 ◼   ► It was such a huge hit.

00:38:44 ◼   ► Why would you buy a 7

00:38:46 ◼   ► if your 6 is still in pretty good shape?

00:38:50 ◼   ► And it is, that's a great phone.

00:38:53 ◼   ► And the new model is coming.

00:38:56 ◼   ► Like at this point, if you could wait,

00:39:00 ◼   ► I'd tell anybody that, right?

00:39:01 ◼   ► If you can wait, wait,

00:39:02 ◼   ► because there will be a new iPhone this fall

00:39:04 ◼   ► and it may be dramatically different

00:39:05 ◼   ► from the ones you've seen before.

00:39:07 ◼   ► And if it isn't, then you will have waited a little bit

00:39:09 ◼   ► and you could still get a fresher model, right?

00:39:12 ◼   ► Because I think we're all assuming

00:39:13 ◼   ► that there will be, in addition to this new model,

00:39:15 ◼   ► there will probably be an updated version

00:39:18 ◼   ► of the existing phone style,

00:39:19 ◼   ► like a 7S or something like that.

00:39:21 ◼   ► And if that's all true, then why not wait and see?

00:39:24 ◼   ► Because you're gonna get a better phone regardless

00:39:26 ◼   ► and you might want to at least consider

00:39:29 ◼   ► this super fancy new phone that may be coming. At least give yourself the option, right?

00:39:34 ◼   ► Right. No, it's being a smart shopper for that stuff. So it's all logical. It's

00:39:40 ◼   ► entirely logical. The analysts are worried about Qualcomm. This

00:39:45 ◼   ► is something that I have been aware of, this Qualcomm situation, but haven't really been

00:39:51 ◼   ► interested in covering, so let's do it very quickly right now. So I'll give you a quote

00:39:55 ◼   ► from Tim Cook in case you need some catching up. Qualcomm is trying to charge Apple a percentage

00:40:02 ◼   ► of the total iPhone value because Qualcomm chips are in iPhones and they do some really

00:40:08 ◼   ► great work around standards essential patents but it's one small part of what an iPhone

00:40:13 ◼   ► is. It has nothing to do with the display or the touch ID or a gazillion other innovations

00:40:18 ◼   ► that Apple has done and so we don't think that's right. So what Tim is saying here,

00:40:21 ◼   ► is trying to charge Apple a percentage of total iPhone sales because Apple uses chips

00:40:27 ◼   ► and/or the chips that they use include patents that Qualcomm own. Instead of charging the

00:40:34 ◼   ► standard license fees, they now want to charge a percentage instead and Apple is not willing

00:40:39 ◼   ► to do that because of the actual what they consider percentage of value that Qualcomm

00:40:43 ◼   ► is adding to the phone. One of the big issues around this is not just that they're fighting

00:40:49 ◼   ► this fight. Apple has stopped paying Qualcomm and Qualcomm is trying to seek injunctions

00:40:54 ◼   ► on phones being shipped to the US. Have I done a good job of trying to summarize that?

00:40:59 ◼   ► It's, it's, all this stuff is stupidly complicated.

00:41:01 ◼   ► Well, is Qualcomm seeking injunctions? Do we know that?

00:41:06 ◼   ► They have said that the, I have seen reports that they are considering it.

00:41:10 ◼   ► Ah, okay. They're threatening. Yeah. So, uh, they asked Tim Cook about that and he said,

00:41:16 ◼   ► He said, "They can't see."

00:41:18 ◼   ► He says, "You never know, but their lawyers

00:41:20 ◼   ► "basically can't see any real likelihood

00:41:25 ◼   ► "that that would happen, that there would be injunctions."

00:41:29 ◼   ► I have to say, this is all posturing, right?

00:41:31 ◼   ► So what Cook is saying too, they asked him

00:41:34 ◼   ► about not paying Qualcomm, and his response

00:41:37 ◼   ► was something like, "Well, how can you pay somebody

00:41:39 ◼   ► "if you can't agree on what the price of the bill is?"

00:41:43 ◼   ► It's like, okay, well, interesting.

00:41:48 ◼   ► You could pay them and still sue.

00:41:50 ◼   ► So it's a negotiation that has led to lawsuits

00:41:56 ◼   ► because the way Cook put it is,

00:41:59 ◼   ► if we can't come to an agreement,

00:42:00 ◼   ► then this is the next thing.

00:42:03 ◼   ► And if you're asking yourself,

00:42:04 ◼   ► why are lawsuits a recourse in a corporate negotiation?

00:42:09 ◼   ► The answer is it's friend patenting.

00:42:13 ◼   ► Basically it's considered a standards essential patent, and there is a legal

00:42:18 ◼   ► requirement of the patent holder, which is Qualcomm to license it at a fair rate.

00:42:24 ◼   ► And Apple says it's not a fair rate.

00:42:26 ◼   ► Right.

00:42:28 ◼   ► So the idea is that like they've created technology that everybody

00:42:31 ◼   ► should be able to use, right?

00:42:33 ◼   ► Like that that's, what's considered as a thing.

00:42:34 ◼   ► Like it should be, it should be priced fairly.

00:42:37 ◼   ► Right.

00:42:38 ◼   ► There are standards that everybody uses for wireless.

00:42:42 ◼   ► And those standards include patents owned by Qualcomm and others.

00:42:50 ◼   ► And so the, the FRAND idea, the standards essential patent idea is that you can put your patents, it was meant, I believe, to encourage the growth of standards by saying, look, let's agree on a standard and some of it will be patented.

00:43:08 ◼   ► of it will be patented, but what we'll do is make those legally required to be offered at a

00:43:14 ◼   ► reasonable price. So you'll get your money, but you're not going to be able to hold the entire

00:43:17 ◼   ► standard hostage with your patents. And Apple's saying that Qualcomm's charging method for their

00:43:24 ◼   ► patents is not legal, and that's why it has to go to court. Apple says that this does not fulfill

00:43:35 ◼   ► Qualcomm's legal rights and legal requirements under standards of central

00:43:41 ◼   ► patents. And the second part of the quote, what you read, is Apple's argument.

00:43:46 ◼   ► Apple's argument is that Qualcomm is charging a tax on the

00:43:51 ◼   ► the price of the phone even though the phone contains all sorts of innovations

00:43:57 ◼   ► that Qualcomm had nothing to do with. So I think Apple is arguing that Qualcomm

00:44:03 ◼   ► should charge a price per phone, not a percentage of a phone sale, which I think

00:44:11 ◼   ► the way I read it is maybe what they're trying to do here. And you could see that

00:44:16 ◼   ► if you're selling more expensive phones, what Qualcomm's saying is that basically

00:44:20 ◼   ► if you use our patents in a $200 phone or $1,000 phone, you pay a different

00:44:25 ◼   ► price. And what Apple's saying is, "The radios are the same. We don't want to pay

00:44:30 ◼   ► you anymore. So, and then, you know, I'm not a lawyer, it's going to go to the lawyers

00:44:35 ◼   ► or the threat of all the lawsuits is going to lead to more negotiations and they'll reach

00:44:39 ◼   ► a settlement. But, um, the way Apple spins this is that Qualcomm has been taking advantage

00:44:45 ◼   ► of everybody because they have these patents and they're tied to the standard. And, and

00:44:50 ◼   ► probably somebody at Apple said, they're not supposed to be able to do this. This is why

00:44:55 ◼   ► this regulation exists. And maybe Apple felt like they have the most leverage and the most power,

00:45:04 ◼   ► and so that they can be the one to take them on, and they're fighting for all the other

00:45:08 ◼   ► phone makers that are out there. It is funny because this is Apple's key product,

00:45:13 ◼   ► and Apple's got a lot of money. So you could just let it ride and say, "Yeah, Qualcomm's gonna

00:45:18 ◼   ► wet its beak here. That's fine. We're still making money." But obviously, Apple feels like Qualcomm

00:45:25 ◼   ► is getting away with something here. And so, because I don't, you know, it's an interesting

00:45:29 ◼   ► thing when a company has so much money in the bank and makes so much money in profit every quarter,

00:45:33 ◼   ► that they would, they would look at something and say, I want, I'm a bit of a cheapskate.

00:45:37 ◼   ► I want to lower, how do we lower that price Qualcomm? But obviously this relationship has

00:45:42 ◼   ► gotten so fraught and stressful and Apple feels like Qualcomm is ripping them off because you

00:45:49 ◼   ► you could just let it ride and pay them and you'd still make a lot of money.

00:45:53 ◼   ► But Apple seems to have decided that they're not, they're not, um,

00:45:57 ◼   ► willing to do that or that they can get a lower price by threatening them.

00:46:03 ◼   ► Okay. That makes, I mean, this is,

00:46:08 ◼   ► these things happen every now and then, right? This is,

00:46:11 ◼   ► I don't think this is the first company that I've tried to get an injunction on,

00:46:15 ◼   ► on Apple shipping phones. I think like maybe Samsung tried to do it once.

00:46:19 ◼   ► I don't know, it's hard to keep up with.

00:46:21 ◼   ► But it is something that is worth noting, right?

00:46:24 ◼   ► Because it's a problem,

00:46:28 ◼   ► because imagine if they're successful.

00:46:31 ◼   ► Well, that would be--

00:46:31 ◼   ► - Well, if the iPhone doesn't ship

00:46:33 ◼   ► because Qualcomm got the shipments to be halted,

00:46:35 ◼   ► that's bad, that's like spectacularly bad.

00:46:38 ◼   ► That is the risk here.

00:46:41 ◼   ► And to the analysts who asked about it,

00:46:44 ◼   ► Tim Cook's response was, we don't think it's a risk.

00:46:47 ◼   ► So, hmm, I don't know, it's all part of the game.

00:46:51 ◼   ► It's all part of the game.

00:46:53 ◼   ► Everything Cook says to the analysts is,

00:46:55 ◼   ► it's about the public posture against Qualcomm,

00:46:58 ◼   ► and it's about reassuring investors

00:47:00 ◼   ► that they're playing this game,

00:47:03 ◼   ► but they think it's not gonna be a problem

00:47:04 ◼   ► so that the investors don't get scared

00:47:06 ◼   ► that there's a chance that the iPhone couldn't ship

00:47:09 ◼   ► because of Qualcomm.

00:47:11 ◼   ► So it's all out there.

00:47:14 ◼   ► So next up we have two countries, China and India.

00:47:19 ◼   ► These are two big areas for Apple.

00:47:21 ◼   ► Start with China.

00:47:21 ◼   ► So what's going on in China?

00:47:23 ◼   ► There's been a dramatic drop off in revenue

00:47:25 ◼   ► year over year in the country.

00:47:27 ◼   ► The 7 Plus did so well there.

00:47:29 ◼   ► There's been growth in the Mac services and retail.

00:47:31 ◼   ► Apple are saying that currency devaluation is a problem

00:47:35 ◼   ► as is particularly weak sales in Hong Kong

00:47:38 ◼   ► and slumping sales on older iPhone models.

00:47:41 ◼   ► how much of a worry is China for Apple?

00:47:44 ◼   ► I mean, before it was the great savior of iPhone growth,

00:47:49 ◼   ► and now it seems to be Apple's fallen side.

00:47:52 ◼   ► - So yeah, I mean, Apple is actually growing

00:47:55 ◼   ► much more everywhere and then not growing in China.

00:47:58 ◼   ► That's basically the story right now,

00:47:59 ◼   ► is that if you took China out of the equation

00:48:02 ◼   ► across the board, you'd actually see kind of

00:48:04 ◼   ► continual growth of a slow variety,

00:48:07 ◼   ► but instead you add it in and you see this huge growth

00:48:10 ◼   ► and then a huge drop off.

00:48:11 ◼   ► It sounds like, and I'm gonna point people,

00:48:16 ◼   ► we'll put in the show notes,

00:48:17 ◼   ► Ben Thompson at Stratechery wrote a great article last week

00:48:20 ◼   ► called Apple's China Problem about this very subject.

00:48:23 ◼   ► And his argument is that in China,

00:48:27 ◼   ► WeChat is so popular for everything.

00:48:30 ◼   ► It's not just social networking, it's also buying things.

00:48:33 ◼   ► It is the smartphone operating system.

00:48:35 ◼   ► - It's not even like just a smartphone operating system.

00:48:38 ◼   ► It's like a life operating system.

00:48:40 ◼   ► Yes, right?

00:48:41 ◼   ► Yeah, it's everything from food ordering to paint, it's the whole thing.

00:48:45 ◼   ► Yeah, so Ben's argument is that Apple's number one strategy thing, and think about this when

00:48:50 ◼   ► we talk about Microsoft's Surface laptop and other things like that, in the end you can't

00:48:56 ◼   ► forget that a huge part of Apple's value proposition is that their products are the only products

00:49:02 ◼   ► that run iOS or macOS.

00:49:05 ◼   ► If you forget that, you're missing a huge part of the equation.

00:49:08 ◼   ► like if you're penciling out the specs of the Surface laptop versus the MacBook or the

00:49:14 ◼   ► MacBook Pro without Touch Bar, don't forget the other key differentiator, which is only

00:49:23 ◼   ► the Mac runs macOS, otherwise you're running Windows. And if that matters, and it probably

00:49:27 ◼   ► does, you gotta put that in there. Likewise with iOS. Ben Thompson's argument in China

00:49:32 ◼   ► is all that really matters is does it run WeChat? And beyond that, and it does, and

00:49:37 ◼   ► so do Android phones. They all run it. So, okay. Well, then what? What it does is it

00:49:44 ◼   ► reduces Apple to being a hardware manufacturer. If iOS is no longer really part of the equation,

00:49:50 ◼   ► it means Apple is a hardware manufacturer. It means that all Apple is competing on with

00:49:54 ◼   ► all the other phone makers in China is style of their hardware. And Apple s hardware is

00:49:58 ◼   ► pretty good, but it hasn't had any major evolution to the hardware since the 6, which sold wildly

00:50:05 ◼   ► well everywhere, including in China. And there are other phones that have come along that

00:50:09 ◼   ► are more stylish, and like, the cost to jump from an iPhone to a--iPhone 6 that you bought

00:50:15 ◼   ► two and a half years ago to a new fancy phone that you see today in China, the cost is almost

00:50:22 ◼   ► nothing compared to the cost of leaving the platform anywhere else in the world, because

00:50:27 ◼   ► Does it run WeChat? Check. Okay, then it doesn't matter. I'll just log into WeChat.

00:50:31 ◼   ► And the financial cost is the same, right? You're going to move to one of those two

00:50:35 ◼   ► phones, they're all priced the same. You know, you're not getting a price and a

00:50:39 ◼   ► vantage. John Gruber wrote a big post about this as well, which is also very

00:50:42 ◼   ► interesting. And John seems to be more of the opinion that, in his belief, that this

00:50:49 ◼   ► wouldn't be a factor, that the iPhone is still desirable. I understand that, but I

00:50:55 ◼   ► I think it's coming at it from a different perspective and I'm much I can totally see the argument and I think my personal opinion

00:51:02 ◼   ► Again, like like John not knowing really anything about this market

00:51:06 ◼   ► But my personal opinion is if what you're trying to do is show that you have

00:51:10 ◼   ► The latest and greatest as a status symbol which my understanding is that is a big thing in in Asia

00:51:17 ◼   ► That yes

00:51:20 ◼   ► It doesn't matter how great the iPhone is. It's not the new one and you can like, you know

00:51:25 ◼   ► I've seen a lot of people saying maybe that's one of the reasons that Apple made a red phone

00:51:29 ◼   ► Do you know what?

00:51:30 ◼   ► I'm sure it is because the red phone shows new but like it doesn't matter if the LG phone is not as good as the iPhone

00:51:37 ◼   ► If people know the LG phone is newer then get the LG phone if it doesn't matter what your phone is

00:51:43 ◼   ► All you're trying to do is show that you have money and access we chat then why would you get an iPhone 7?

00:51:49 ◼   ► Well, and it goes back to the core of one of the reasons you get an iPhone is because it's an iPhone not just the

00:51:54 ◼   ► Hardware but the the operating system and if the operating system is the same if like literally

00:51:59 ◼   ► Every phone in China ran Android including apples

00:52:03 ◼   ► You know you could see well

00:52:05 ◼   ► Then Apple's footing is very different because Apple just has to compete as the as the new thing

00:52:11 ◼   ► They lose that piece of their market, and it's been let's be honest

00:52:14 ◼   ► It's been three cycles of the same basic phone design with improvements

00:52:17 ◼   ► but the same look. So, you know, if you get, depending on what model you get, an iPhone

00:52:22 ◼   ► 7 today in gold is not appreciably different looking from an iPhone 6 from two years before

00:52:30 ◼   ► in gold. So, you know, it's an issue. So, I think that's what's going on in China, but

00:52:37 ◼   ► it's more than that if you look at the numbers because what it also says is that Apple's

00:52:41 ◼   ► — and this goes to that point, though, right — which is, if you look at the product mix,

00:52:45 ◼   ► The suggestion is, and what they say is, older models aren't selling, because why would they?

00:52:50 ◼   ► So the models they are selling are the 7 and the 7 Plus, especially the 7 Plus, because

00:52:55 ◼   ► they love the big phone in China.

00:52:58 ◼   ► They love the big phone.

00:52:59 ◼   ► I mean, the world loves the big phone, but especially in China, they love the big phone.

00:53:02 ◼   ► So that's still selling well, and that is a new phone.

00:53:05 ◼   ► And to Gruber's point, like the jet black iPhone 7 Plus, like, you can tell that's the

00:53:11 ◼   ► new iPhone, right?

00:53:12 ◼   ► That says new all over it.

00:53:14 ◼   ► it doesn't look like a previous iPhones do.

00:53:16 ◼   ► So you could get that.

00:53:17 ◼   ► And those are selling well in China, according to Apple.

00:53:20 ◼   ► It's the old models that are not selling as well.

00:53:23 ◼   ► Because it turns out Apple's strategy of selling old phones

00:53:26 ◼   ► to people for $100 or $200 off doesn't work so well in China,

00:53:30 ◼   ► probably for some of the reasons that we've already mentioned.

00:53:33 ◼   ► And in other parts of the world, maybe people care so much.

00:53:35 ◼   ► But if you're going to buy a brand new phone

00:53:37 ◼   ► and it's actually a two-year-old phone,

00:53:39 ◼   ► for some people looking for value, that's a thing.

00:53:41 ◼   ► but that does not seem to be part of the market

00:53:44 ◼   ► as much in China.

00:53:46 ◼   ► And then, you know, the usual complaints

00:53:48 ◼   ► that Apple throws in about currency devaluation.

00:53:50 ◼   ► And in this case, Hong Kong,

00:53:51 ◼   ► that Hong Kong's had a lot of economic issues,

00:53:54 ◼   ► and Hong Kong dragged down the greater China region too.

00:53:59 ◼   ► But in the end, you know, that's what it is,

00:54:02 ◼   ► is the only phone that Apple's selling really, really well

00:54:04 ◼   ► in China right now is the 7 Plus.

00:54:06 ◼   ► - And then move to India.

00:54:09 ◼   ► Cook said that Apple have a ton of energy going into this country on a number of fronts.

00:54:15 ◼   ► It kind of looks like Apple want India to be their next China.

00:54:20 ◼   ► Cook said at one point, "I have never seen growth like this before anywhere in the world."

00:54:25 ◼   ► And he's talking about the country, not the sales, right?

00:54:29 ◼   ► Yeah, no, he's talking about the country. He's talking about the growth, and he's talking about technological growth.

00:54:33 ◼   ► He's talking about putting high-speed wireless internet

00:54:37 ◼   ► into India and how that's growing rapidly,

00:54:42 ◼   ► which means that there's more of a market for their phones.

00:54:48 ◼   ► And they've got a new developer center in Bangalore

00:54:52 ◼   ► that they put in, Phil Schiller was out there.

00:54:54 ◼   ► Apple has struggled in India,

00:54:58 ◼   ► but Apple's putting a lot of resources into India.

00:55:00 ◼   ► And I think Apple feels like it will pay off eventually,

00:55:03 ◼   ► that Apple is, Apple is laying the groundwork there. They feel there will be an explosion

00:55:06 ◼   ► of growth in smartphones in India and that they have, they have an opportunity to ride

00:55:12 ◼   ► that wave, but it is a, it is a challenge for them to sell better. That has been one

00:55:17 ◼   ► of their weakest markets. So, but the growth means there's a huge opportunity there and

00:55:21 ◼   ► Apple's got the money to invest in it. The question is just, can they come up with the

00:55:25 ◼   ► right combination of products that will, that will work with that market as it grows? I

00:55:32 ◼   ► liked the line from Cook. Cook played a little, I don t know, it was like disappointing dad,

00:55:39 ◼   ► disappointed dad a little bit. It s like he was trying to scorn someone, right? He was

00:55:43 ◼   ► listening. It was kind of weird. Yeah, well, well, I think. What did he say? What did he

00:55:47 ◼   ► say? So what he said was, our growth rates are good in India, really good by most people

00:55:52 ◼   ► s expectations, maybe not mine as much. And I thought that was really interesting because

00:56:00 ◼   ► I think what he's trying to get at is Apple's doing fine in India. Depending on who you

00:56:06 ◼   ► talk to, you might look at how Apple's doing in India and say, "Oh, it's actually not bad.

00:56:11 ◼   ► Like you're doing pretty good." And so he wanted to give the analyst that positive spin.

00:56:16 ◼   ► Look, we are growing. It is doing that. But he didn't want to leave it there because he

00:56:21 ◼   ► wants to express his dissatisfaction. "We can do better," is basically what he's saying.

00:56:25 ◼   ► Like, I expect us to grow faster in India. And it was funny how he phrased it, maybe

00:56:32 ◼   ► not mine as much, but I think in the end what he wanted to do was he, I think he maybe realized

00:56:37 ◼   ► that he had, he had done the usual kind of positive sell of, Hey, things are great. We're

00:56:42 ◼   ► growing great. People think it's, it's like, it's not just good. It's really good. Like

00:56:46 ◼   ► he, he pumped it up and then he realized maybe he needed to add a little note of dissatisfaction

00:56:52 ◼   ► there because what he's really trying to express is he thinks that Apple can do way better

00:56:57 ◼   ► in India and you can't just look at the numbers now and say they're good enough because he

00:57:00 ◼   ► doesn't think they're good enough. Now, yes, there may be somebody who's an executive inside

00:57:05 ◼   ► Apple who's focused on India who's like, "No, no."

00:57:09 ◼   ► Tim Cynova Well, I know who I'm seeing in the morning.

00:57:13 ◼   ► Tim Cynova Cleaning out your desk, Bob. Clean it out.

00:57:16 ◼   ► Yeah, yeah, that, that, it was weird to hear that and to read that because that really

00:57:22 ◼   ► does feel like for me coming from the corporate world, like that's what your boss would say

00:57:26 ◼   ► on a conference call with a larger department, right? Like we're going well but not good

00:57:30 ◼   ► enough and that is a way to like send, I know that's not what they're doing but to send

00:57:35 ◼   ► a signal to that person, that employee that their job is, that they're not doing a good

00:57:38 ◼   ► enough job, right? But it's like I can imagine them having that feeling because it doesn't

00:57:44 ◼   ► really feel like an incredibly planned statement, right? No, no it's, and again I think the

00:57:51 ◼   ► reason he said it was to put that note of "we think we can do better here" into the

00:57:55 ◼   ► statement so it didn't come across as just Pollyanna-ish kind of like "it's great, no

00:58:00 ◼   ► India is great, yay India!" while people are like "Apple you had some problems you need

00:58:03 ◼   ► to grow more in India" so he threw it in there. I do wonder though if yes in the back of his

00:58:08 ◼   ► mind, what he's thinking of is an actual frustration he has in some secret meeting somewhere in

00:58:15 ◼   ► Apple where he's like, "Damn it everybody, why are we not doing better in India?" And

00:58:19 ◼   ► if it just sort of popped out, like the way it got phrased, because those are his real

00:58:23 ◼   ► feelings that he had on the inside.

00:58:25 ◼   ► This was just the next meeting that he went to, so he was still thinking about the last

00:58:29 ◼   ► one.

00:58:30 ◼   ► Yeah. I have no doubt that his phrasing serves the purpose of the analyst call, right? But

00:58:36 ◼   ► But yeah, the way it came out, I'm sort of like, "I bet there have been meetings about

00:58:41 ◼   ► this," right?

00:58:42 ◼   ► Where Tim is like, "I am not satisfied."

00:58:44 ◼   ► Like, you know, "What do you mean this is a really great number?

00:58:47 ◼   ► It's not good enough."

00:58:48 ◼   ► So, you know, disappointed dad, Tim Cook, there he is.

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01:00:01 ◼   ► Services growth via subscriptions.

01:00:06 ◼   ► So Apple's services and kind of the money that they're bringing in from that is the most consistent growth area for Apple.

01:00:13 ◼   ► This is the one line of the earnings report quarter after quarter that continues to shine.

01:00:18 ◼   ► Right. Like this is what they can hang their hat on as you want to see some growth in the company.

01:00:22 ◼   ► They point to that line. It's not the biggest line. Right. But it's growing and it continues to grow.

01:00:27 ◼   ► grow.

01:00:44 ◼   ► Apple provided a little bit more detail on that growth in this call.

01:00:48 ◼   ► They updated a number that they previously mentioned.

01:00:51 ◼   ► Three months ago, Apple said that they had 150 million subscriptions to their services.

01:00:58 ◼   ► Now they have 165 million. But this isn't people necessarily, right?

01:01:03 ◼   ► No, it's duplicative. So like, I have an iCloud Drive subscription, and I have an Apple

01:01:12 ◼   ► Music subscription. And so those are two subscriptions. I'm one person, but those are two subscriptions.

01:01:19 ◼   ► So it's, but you know, in the end, every subscription is worth money.

01:01:23 ◼   ► So they are growing and that's a huge percentage growth in sequential quarters for Apple subscriptions.

01:01:31 ◼   ► So yeah, this is the thing Apple said a couple years ago, they were going to be beating the

01:01:36 ◼   ► drum on subscription revenue and they felt that they could make a lot of money on subscription

01:01:40 ◼   ► revenue.

01:01:41 ◼   ► And here we go.

01:01:43 ◼   ► is, you know, analysts love it, is the single area of Apple's balance sheet that is consistently

01:01:51 ◼   ► growing and there are two ways to look at it, right? I mean, one way to look at it is

01:01:57 ◼   ► to say, "Oh boy, Apple's just going to be squeezing more and more money out of everybody."

01:02:04 ◼   ► And they said, like, the longer somebody is an active subscriber, the more they spend.

01:02:10 ◼   ► like, these are not people who come and then give Apple money once and then tail off. These

01:02:17 ◼   ► are people who give Apple more and more money so these subscribers become more valuable

01:02:21 ◼   ► over time. So, and I think it's fair to look at that and say, "Wow, part of Apple's game

01:02:25 ◼   ► now is going to be to squeeze more money out of us after we use our products." So I feel

01:02:32 ◼   ► that argument. I'm starting to think, though, that maybe it's all for the best because maybe

01:02:39 ◼   ► the way you motivate Apple to make good services is by having a major part of their business

01:02:46 ◼   ► that they're showing off to Wall Street and that they've taken a lot of pride in in terms

01:02:50 ◼   ► of being a growth area of the company be tied to their services because it's a lot harder

01:02:56 ◼   ► to ignore or do really shoddy services if they're a key part of your business, which

01:03:02 ◼   ► they never have been right. It's always been about the hardware and the software and not

01:03:06 ◼   ► the services, but like the services are really important now. So if somebody

01:03:09 ◼   ► really screwed up an Apple service today, do you think they could skate by and

01:03:15 ◼   ► everybody could just shrug it off like .Mac and be like, "Well, whatever,

01:03:19 ◼   ► mobile me, whatever, we don't care." No, like it's a huge part of Apple's future

01:03:24 ◼   ► growth strategy. So in the end, yeah, maybe we'll have to pay for those services, but

01:03:29 ◼   ► maybe those services will all be better. I know, follow me here, I mean, if Apple, if

01:03:34 ◼   ► If they're lousy and Apple's only getting them because of platform lock-in, then it's

01:03:37 ◼   ► a different story.

01:03:38 ◼   ► But if they're good, maybe the reason they're good is because Apple actually has business

01:03:43 ◼   ► reasons to focus on this and care about it that maybe they didn't have when services

01:03:48 ◼   ► were just an afterthought to hardware and software.

01:03:51 ◼   ► Yeah, I think in the past Apple services have been like, "Okay, you're in the platform.

01:03:55 ◼   ► Let's give you something."

01:03:57 ◼   ► But there is a potential now that it's about to start to change into Apple trying to create

01:04:03 ◼   ► competitive advantage which I don't think that they've ever particularly really driven

01:04:08 ◼   ► for especially with like the add-on services right you know like email and like all the

01:04:13 ◼   ► iCloud stuff things like that I don't think that Apple is really seriously driven to beat

01:04:19 ◼   ► Google or whatever in these in these services but I think that that is becoming more and

01:04:24 ◼   ► more of a thing that they know they have to do and they're trying to you know they're

01:04:28 ◼   ► trying to compete in their own way right privacy being one of them and stuff like that right

01:04:32 ◼   ► Apple's trying to find their competitive advantage, but for me it doesn't matter what it is because as long as it's good then I'm I'm happy

01:04:38 ◼   ► Because I will say that the services that I use of apples have been consistently better and better over time

01:04:45 ◼   ► - and I think that that's a great thing because I think it has been an off repeated phrase that their services suck

01:04:51 ◼   ► Right because they have in the past and like that there has been a consistent

01:04:56 ◼   ► Mistrust at giving Apple anything important like photos, right? Everyone was really scared

01:05:01 ◼   ► it

01:05:08 ◼   ► I don't think there's been any widespread problems like Apple's had in the past. So

01:05:13 ◼   ► I think this is a good thing for the Apple user. And honestly, I don't care who my money

01:05:17 ◼   ► is going to as long as the service is good, which I'm getting, right? I don't care if

01:05:23 ◼   ► it's Apple or Spotify as long as it's good. So Apple getting my money for my music, that

01:05:28 ◼   ► works great for me. Apple Music is perfectly fine. It's everything I want out of a music

01:05:31 ◼   ► streaming service. I've been a happy customer.

01:05:33 ◼   ► Yeah, I think the only challenge is when Apple erects these walls to make it difficult for

01:05:38 ◼   ► you to use as competitors and then tries to make money off of you because it's

01:05:42 ◼   ► it's more I would like to see Apple compete and yes there are always going

01:05:46 ◼   ► to be cases where Apple can be better integrated than the competition because

01:05:49 ◼   ► Apple can go deeper down into the operating systems but it still bugs me

01:05:53 ◼   ► when Apple when it feels like Apple is creating barriers to its competition

01:05:59 ◼   ► that the walls are not specifically to give Apple music better function but to

01:06:04 ◼   ► to make it better than the competitors

01:06:09 ◼   ► just by not giving them those functions, right?

01:06:11 ◼   ► Is kind of what you say.

01:06:12 ◼   ► - Right, right, yeah.

01:06:12 ◼   ► I mean, like a good example would be,

01:06:14 ◼   ► so on the phone, Google Photos and Dropbox

01:06:21 ◼   ► and anybody else, they can't sync all of your photos

01:06:25 ◼   ► automatically to the cloud.

01:06:27 ◼   ► - You have to open the app every now and then.

01:06:28 ◼   ► - Because the app, if the app's not running,

01:06:30 ◼   ► it can't do a background sync.

01:06:32 ◼   ► It just, it can't.

01:06:33 ◼   ► and it probably should be able to do that, right?

01:06:38 ◼   ► They should be able to compete on that point

01:06:39 ◼   ► because for some people that will be the difference

01:06:41 ◼   ► between using Google Photos and using iCloud Photo Library

01:06:44 ◼   ► is that you can't reliably trust that,

01:06:48 ◼   ► well, no, I went out and I took a bunch of photos

01:06:50 ◼   ► and now I open Google Photo Library on my Mac

01:06:55 ◼   ► and the photos aren't there.

01:06:56 ◼   ► And I have to go get my phone and open Google

01:06:58 ◼   ► and then have it upload all the photos

01:07:00 ◼   ► and then they show up, that's really bad.

01:07:01 ◼   ► and on Apple's thing, that's not the case.

01:07:05 ◼   ► That said, there are other places where,

01:07:07 ◼   ► like on the Mac is a good example,

01:07:09 ◼   ► where sometimes the third parties can play

01:07:12 ◼   ► because the Mac is open to all of that stuff

01:07:15 ◼   ► and they don't or they do a bad job.

01:07:17 ◼   ► And so what it suggests to me is that if you did it on iOS,

01:07:22 ◼   ► the same rules might apply,

01:07:23 ◼   ► that Apple would be allowing their platform to be good

01:07:27 ◼   ► for people who wanna use the competition,

01:07:28 ◼   ► but that Apple could just beat them at the game.

01:07:31 ◼   ► And that's a better way to compete.

01:07:33 ◼   ► So that's my only hesitation here,

01:07:35 ◼   ► is I get why from a competitive standpoint,

01:07:39 ◼   ► you'd wanna put barriers between you and the competition

01:07:42 ◼   ► using your advantages as the platform owner,

01:07:44 ◼   ► but I would rather Apple compete by building good services

01:07:49 ◼   ► than by building mediocre services

01:07:52 ◼   ► that are only better than the competition

01:07:54 ◼   ► because the competition doesn't have

01:07:56 ◼   ► the platform owner access that Apple has.

01:08:00 ◼   ► - Feels like cheating.

01:08:01 ◼   ► - It does, but this is the game.

01:08:02 ◼   ► I mean, a lot of people play it.

01:08:04 ◼   ► A lot of companies play it.

01:08:05 ◼   ► Like their advantage is that they own the platform

01:08:08 ◼   ► and this is one of the ways they make money off of it

01:08:11 ◼   ► is being able to have that.

01:08:12 ◼   ► But yeah, it does feel like cheating

01:08:14 ◼   ► because it reduces customer choice

01:08:16 ◼   ► and it makes it not a fair competition.

01:08:21 ◼   ► And I don't love that.

01:08:24 ◼   ► I think I'd rather have Apple's products be good

01:08:27 ◼   ► and win me over by being good.

01:08:29 ◼   ► Like if Google Photos did all that syncing on iOS,

01:08:34 ◼   ► would I use Google Photos instead of iCloud Photo Library?

01:08:37 ◼   ► Honestly not, because on the Mac,

01:08:39 ◼   ► I vastly prefer using Photos

01:08:41 ◼   ► to using the Google Photos web client at this point.

01:08:45 ◼   ► Maybe my opinion would change and I would switch,

01:08:48 ◼   ► but that would probably hold me back,

01:08:51 ◼   ► even if that sync was reliable.

01:08:54 ◼   ► I might have to agree with you there actually.

01:08:55 ◼   ► Like whilst I find Google Photos searching and memory type features to be

01:09:00 ◼   ► superior, um, the,

01:09:02 ◼   ► the fact that they don't have like a good native app where I can just browse my

01:09:06 ◼   ► photos, that's a frustration for me.

01:09:08 ◼   ► I don't like going through the web for that. I like there to be an app.

01:09:10 ◼   ► I agree.

01:09:12 ◼   ► Even though, you know, the photos app annoys me in some ways,

01:09:15 ◼   ► like the fact that you can't drag a photo from the photos app directly into an

01:09:19 ◼   ► application has to go to the desktop first. It really annoys me.

01:09:22 ◼   ► That is a frustration that I find quite frequently.

01:09:26 ◼   ► Just kind of like the web in that regard.

01:09:27 ◼   ► So wearables, so Apple spent a bit of time

01:09:30 ◼   ► talking about wearables.

01:09:31 ◼   ► I got some quotes from Tim here.

01:09:33 ◼   ► Talking about the watch, the watch area is really hard.

01:09:35 ◼   ► In essence, from an engineering point of view,

01:09:37 ◼   ► it's similar to a phone in terms of the intricacies.

01:09:40 ◼   ► So I'm not very surprised that some people

01:09:42 ◼   ► are falling out of the business.

01:09:43 ◼   ► We're very committed to it and we believe

01:09:45 ◼   ► that it's already a big business

01:09:46 ◼   ► and believe that over time it will be even larger.

01:09:48 ◼   ► We saw the watch as a really key product category for us

01:09:51 ◼   ► before we launched it.

01:09:52 ◼   ► We took our time to get it right and made it even better with series two.

01:09:55 ◼   ► We're proud of the growth of the business.

01:09:57 ◼   ► Watch units more than doubled in six of their top 10 markets in the quarter."

01:10:01 ◼   ► That is a big surprise, right?

01:10:05 ◼   ► Doubling of sales?

01:10:08 ◼   ► I don't know who can tell with the details of what those markets are.

01:10:12 ◼   ► Right, so it could have gone from one to two.

01:10:14 ◼   ► Yeah, yeah, I get you.

01:10:16 ◼   ► But yeah, it's surprising other than the fact that maybe they were…

01:10:20 ◼   ► I keep going to think like, well, were they supply constrained to those markets?

01:10:24 ◼   ► Like are those, did those markets not get very many series twos?

01:10:27 ◼   ► And that's why they had to wait for this next quarter in order for the sales to

01:10:32 ◼   ► double where the sales suppressed in those markets.

01:10:34 ◼   ► And then they jumped up.

01:10:34 ◼   ► We don't know.

01:10:35 ◼   ► Cause we don't know any of the details.

01:10:37 ◼   ► They're definitely putting the most positive spin on it.

01:10:39 ◼   ► They can while not having a broad superlative to use for the watch.

01:10:43 ◼   ► You know, they didn't say that the sales were up because they were probably down

01:10:48 ◼   ► year over year and sequentially from the holiday quarter.

01:10:51 ◼   ► So instead we got the cherry picked sort of six of top 10

01:10:55 ◼   ► 'cause they wanna say something positive.

01:10:57 ◼   ► Even though we can't really charge it.

01:10:58 ◼   ► But I like the way they're framing it here

01:11:02 ◼   ► 'cause they're basically,

01:11:03 ◼   ► the question that people, somebody asked was basically,

01:11:05 ◼   ► this is hard,

01:11:06 ◼   ► your competitors have really struggled here.

01:11:08 ◼   ► And Cook agreed and said, yes, it is very hard.

01:11:12 ◼   ► I'm not surprised that people are bailing out on this thing.

01:11:15 ◼   ► They thought it would be easy and it's not,

01:11:17 ◼   ► but we're committed. We think this is a good business.

01:11:20 ◼   ► We think it's going to keep growing and we're happy with where we are.

01:11:23 ◼   ► And that's, you know, that's, I think if you had told me to predict the Apple

01:11:30 ◼   ► watch trajectory a couple of years ago, I think I feel like I would have

01:11:34 ◼   ► guessed something like this, which is everybody rushes in.

01:11:37 ◼   ► Most of them realize that it's not going to work and they bail out.

01:11:40 ◼   ► Apple kind of motors away, takes its time and is doing fairly well.

01:11:45 ◼   ► and everybody's disappointed because they thought it would be a huge product when it

01:11:50 ◼   ► was never going to be.

01:11:54 ◼   ► They did what they always do. Apple loved to do this and Alice liked to do this because

01:11:58 ◼   ► it is interesting to try and look at what slices of Apple's business could be Fortune

01:12:02 ◼   ► 500 companies all by themselves, right? Because there's so much money flowing through the

01:12:06 ◼   ► company. And Cook said that combining the Apple Watch, AirPods and Beats sales for the

01:12:11 ◼   ► last 12 months and it is that size. It would make a Fortune 500 company all by itself.

01:12:16 ◼   ► And this was the first full quarter of AirPods sales. So it looks like, I guess it looks

01:12:22 ◼   ► like AirPods and the watch are doing well enough that the sales continue. I can't imagine,

01:12:28 ◼   ► you know, I know that Beats sells well, but I don't think Beats have had like a big blockbuster

01:12:33 ◼   ► product that would have pushed them particularly higher than normal. At least nothing that

01:12:38 ◼   ► I am familiar with and I feel like I would be more familiar with Beats product launches

01:12:42 ◼   ► now than before, right, because Apple owns them. So it would get into my purview a bit

01:12:46 ◼   ► more. So I guess, you know, AirPods do seem like a hot product. They're still really

01:12:50 ◼   ► hard to get a hold of. And I guess watches are selling, right, and they're selling

01:12:55 ◼   ► more in some areas for whatever reason. So this does seem like an area for Apple that

01:13:01 ◼   ► there is continued growth as well in their wearable category, which would be this.

01:13:06 ◼   ► I think that's rolling this all into wearables, I think is the right thing to do. And I think

01:13:11 ◼   ► it's, it's notable that Apple does it talking about beats and talking about AirPods, that

01:13:16 ◼   ► Apple is viewing wearable technology as a category with growth. And when you think about

01:13:21 ◼   ► it that way, then the watch stops being like, Oh my God, is it the next iPhone? And becomes,

01:13:26 ◼   ► you know, one in a constellation of wearables, one in that collection of things that you

01:13:34 ◼   ► They're very small, miniaturized, limited by where they are and what they're used for,

01:13:42 ◼   ► but still a great opportunity for Apple. And so in your ears, on your wrist, absolutely.

01:13:48 ◼   ► That's part of the thing. And presumably someday feeding information into your eyes down the

01:13:54 ◼   ► road.

01:13:56 ◼   ► So they were the things that you picked out as kind of the areas of interest. And I think

01:14:00 ◼   ► that there is a lot of stuff there, right,

01:14:02 ◼   ► which we can look at some of these things

01:14:04 ◼   ► like where is Apple gonna go, right?

01:14:06 ◼   ► China and India.

01:14:07 ◼   ► So I think that especially for China, right,

01:14:09 ◼   ► that they're gonna, I think more than anything

01:14:11 ◼   ► that says they're gonna try their darndest

01:14:13 ◼   ► to make an iPhone that looks different, right,

01:14:15 ◼   ► because I think that they really wanna make sure

01:14:17 ◼   ► they get some of those sales back.

01:14:18 ◼   ► India, I guess, that they wanna make sure

01:14:21 ◼   ► that they continue to have a lot of iPhones to sell

01:14:24 ◼   ► in all different price points, right?

01:14:25 ◼   ► I think that that's a key thing for that.

01:14:27 ◼   ► And you know, I think that they are key parts

01:14:31 ◼   ► that inform Apple's decisions is they want

01:14:34 ◼   ► to sell more iPhones.

01:14:36 ◼   ► Well, the markets that they're mature in,

01:14:38 ◼   ► it's just gonna continue to go as it's been going.

01:14:41 ◼   ► And they want to sell more of them,

01:14:42 ◼   ► so they have to sell them to these countries.

01:14:43 ◼   ► And I think that that continues to push

01:14:45 ◼   ► where their business is going.

01:14:47 ◼   ► Talk about the iPad.

01:14:50 ◼   ► - Yeah, sure.

01:14:51 ◼   ► Feeling okay?

01:14:53 ◼   ► - Not really.

01:14:54 ◼   ► Am I right that this is the record worst quarter in unit sales? I mean I was looking at some

01:14:59 ◼   ► charts and it seems like everybody's charts don't have a lower unit sale quarter than

01:15:04 ◼   ► this.

01:15:05 ◼   ► I think it's not a record low but it's their lowest in what, six years? Something like

01:15:13 ◼   ► that?

01:15:14 ◼   ► That's not good.

01:15:15 ◼   ► Let me look at iPad units. iPad units.

01:15:19 ◼   ► You got your big charts here.

01:15:21 ◼   ► They sold 8, what, 8.8 million iPads.

01:15:26 ◼   ► The last time they sold fewer iPads was quarter two of 11, so six years ago.

01:15:33 ◼   ► Six years ago they sold 4.6.

01:15:37 ◼   ► But that wasn't low then though, was it, really?

01:15:40 ◼   ► Just the first year of iPad sales, just to put this in perspective, the first year was

01:15:44 ◼   ► 3.2, 4.1, 7.3, that was the holiday quarter, and 4.6 or 4.7 I guess. And at that point

01:15:53 ◼   ► the third quarter of 11 it shot up to 9.2. It has not been down to that down

01:16:00 ◼   ► below 9 since then until now. So not in absolute terms but I think that it would

01:16:10 ◼   ► not be incorrect to call this the worst iPad sales quarter of all time because

01:16:15 ◼   ► it's not the lowest number but it's it's gotten to a point now where it hasn't

01:16:23 ◼   ► been this low since there was one product and it just come out right yeah

01:16:28 ◼   ► I mean I could argue that the worst quarters were ones where the year-over-year

01:16:34 ◼   ► year decline was huge, but you could also just argue units and point at the units and

01:16:41 ◼   ► say, "Not since this product's first year of existence did it sell as few as it sold

01:16:46 ◼   ► in the last three months."

01:16:47 ◼   ► All right, so the downturn is not over.

01:16:53 ◼   ► Nope.

01:16:54 ◼   ► It's not over.

01:16:55 ◼   ► The situation is not improving.

01:16:57 ◼   ► There are some silver linings, but like, I think it's straws that we're clashing

01:17:02 ◼   ► at this point.

01:17:03 ◼   ► - Well, I had to laugh when Luca Maestri, the CFO said

01:17:07 ◼   ► about the 8.9 million units sold,

01:17:09 ◼   ► that it was ahead of expectations.

01:17:11 ◼   ► That made me laugh.

01:17:13 ◼   ► - I mean, you can keep saying that.

01:17:14 ◼   ► I mean, why don't you tell us the expectations?

01:17:16 ◼   ► - Well, what it means is that Apple thought

01:17:18 ◼   ► that it would be even worse.

01:17:20 ◼   ► And they're like, oh, look,

01:17:21 ◼   ► it wasn't quite as terrible as we thought.

01:17:23 ◼   ► And despite supply constraints,

01:17:25 ◼   ► which is part of it too, right?

01:17:26 ◼   ► Which also means that Apple didn't make as many

01:17:30 ◼   ► as they could have perhaps sold.

01:17:34 ◼   ► Now the question there is, is that because Apple

01:17:36 ◼   ► just doesn't wanna make these iPads that aren't selling well

01:17:38 ◼   ► or does it mean that they're working on new iPads

01:17:42 ◼   ► and they will be out there?

01:17:43 ◼   ► My guess is it's the first one of those.

01:17:45 ◼   ► It's that Apple like didn't make too many iPads

01:17:48 ◼   ► 'cause they figured they wouldn't sell

01:17:49 ◼   ► and then they ended up having some supply constraints.

01:17:52 ◼   ► - I kind of don't take the supply constraints excuse.

01:17:55 ◼   ► - Well, what it means is that there were cases

01:17:59 ◼   ► where they didn't have them to sell,

01:18:02 ◼   ► but the reason they didn't have them to sell

01:18:03 ◼   ► is because they thought that they wouldn't sell.

01:18:05 ◼   ► - Right, but what would you have, 8.95?

01:18:08 ◼   ► How many more, honestly, was it?

01:18:10 ◼   ► - Who knows?

01:18:11 ◼   ► But I think the point there is that Apple

01:18:15 ◼   ► low-balled the iPad too.

01:18:16 ◼   ► Even Apple didn't expect it to be particularly successful.

01:18:20 ◼   ► And yeah, I also chuckled ruefully at Luca

01:18:25 ◼   ► saying the iPad is very successful

01:18:28 ◼   ► in the segment of market in which we compete $200 and up.

01:18:31 ◼   ► And what he's basically saying there is,

01:18:34 ◼   ► look, it's not just us, it's the whole tablet market.

01:18:37 ◼   ► And the part of the tablet market that we compete in,

01:18:39 ◼   ► we own, which is all true.

01:18:42 ◼   ► But again, if the whole market is falling apart,

01:18:47 ◼   ► then congratulations on owning it.

01:18:52 ◼   ► I don't know.

01:18:53 ◼   ► - Well, another market that Apple owns is the watch, right?

01:18:57 ◼   ► they own the smartwatch market but nobody is calling the smartwatch market or attempting

01:19:03 ◼   ► to call that the future of computing. So it's like, alright, great, you own that market

01:19:10 ◼   ► but it's not a big one right now. So if 8.9 million units is owning that market for you,

01:19:17 ◼   ► that's very small compared to some of the other markets that you're attempting to play

01:19:20 ◼   ► in. The Mac sells 4.2 or whatever but Apple's not walking around claiming to own the smartwatch

01:19:27 ◼   ► the computer market, right? But anyway…

01:19:31 ◼   ► Well but Apple's percentage of the tablet market is vastly, vastly, vastly higher than

01:19:36 ◼   ► the PC market.

01:19:38 ◼   ► I agree that that's true, I'm sure that it's true, but like at a certain point these

01:19:44 ◼   ► are just things they can just keep saying as a way to try and hide the fact that things

01:19:48 ◼   ► are continuing to decline. These are all facts, I believe that, but like at a certain point

01:19:54 ◼   ► you have to say something different.

01:19:56 ◼   ► There was one different thing this time,

01:19:58 ◼   ► is that iPad sales grew year over year in the US,

01:20:01 ◼   ► quarter over quarter.

01:20:03 ◼   ► And that apparently large iPad sales grew year over year.

01:20:06 ◼   ► This is some stuff that came out.

01:20:07 ◼   ► I don't really know what large iPad means,

01:20:10 ◼   ► like does that mean the 12.9?

01:20:11 ◼   ► Does it mean from 9.7 up?

01:20:13 ◼   ► Like what does that mean?

01:20:14 ◼   ► It's a weird thing to say.

01:20:15 ◼   ► I mean so there is something there, right?

01:20:18 ◼   ► That there are some markets where it's growing,

01:20:20 ◼   ► but it continues to not.

01:20:21 ◼   ► I mean, what have I got to say at this point?

01:20:24 ◼   ► release new models and see what happens? I don't know.

01:20:28 ◼   ► - I think the idea is they need to do new models

01:20:33 ◼   ► and new updates to iOS that help drive the pro side

01:20:40 ◼   ► of the business and they need to go through a holiday quarter

01:20:45 ◼   ► with that new 329 iPad and then we'll see.

01:20:51 ◼   ► I think they could be, I think just off the top of my head

01:20:55 ◼   ► here, I think that given the 329 iPad and given the changes

01:21:00 ◼   ► that they may make with iOS 11 and new models,

01:21:04 ◼   ► let's say in the fall, that it's possible that

01:21:09 ◼   ► the holiday quarter 2017 will be a huge iPad success.

01:21:15 ◼   ► - Oh, Jason, don't do this to me.

01:21:20 ◼   ► Now, well, here's the thing.

01:21:23 ◼   ► Is an iPad success a success?

01:21:26 ◼   ► Or by putting an iPad in front of it,

01:21:28 ◼   ► have I just lowered the bar so low that it's like,

01:21:31 ◼   ► is it still alive?

01:21:32 ◼   ► Yay, it's a success.

01:21:34 ◼   ► I don't know.

01:21:34 ◼   ► But I'm just saying, I think 329 iPads will be a much better

01:21:37 ◼   ► product for the holidays.

01:21:38 ◼   ► I think it'll be a better product for the education

01:21:41 ◼   ► selling season, too, for them.

01:21:42 ◼   ► And so I think that'll all be good.

01:21:44 ◼   ► And that if they have new iPad Pro models as well

01:21:46 ◼   ► that come out in the fall, then they're

01:21:48 ◼   ► refreshing that along with the iOS updates that will also potentially spur

01:21:53 ◼   ► some sales because those products presumably especially if there's that

01:21:57 ◼   ► rumored high resolution iPad Pro that's in that 10.5 area with reduced bezels

01:22:03 ◼   ► perhaps that we've been talking about for ages now and still doesn't exist.

01:22:08 ◼   ► You know, I think Apple is on the road to figuring out how to properly

01:22:13 ◼   ► sell iPad models and differentiate them, but the market will have to like actually judge them. And

01:22:19 ◼   ► they're not there yet. They're just not there yet. But I think they're doing, I think, I think

01:22:23 ◼   ► they're doing some stuff like that 329 iPad, I really do believe will pay off for them come

01:22:28 ◼   ► the fall. But, you know, again, to what, to what level, our guess about what the, what the

01:22:34 ◼   ► turnaround of the iPad looks like, our, our, our expectations continue to be diminished, right?

01:22:39 ◼   ► Like, declaring victory now is way easier than it would have been two years ago, right?

01:22:45 ◼   ► Or a year and a half ago or a year ago, because we keep drawing a lot.

01:22:49 ◼   ► You know, the bar keeps being lowered and we keep hoping that the iPad will clear it,

01:22:52 ◼   ► and it has still failed to clear it.

01:22:54 ◼   ► - It makes me sad.

01:22:56 ◼   ► - Yeah, me too.

01:22:59 ◼   ► I love my iPad Pro and I use it all the time.

01:23:04 ◼   ► And I don't love the fact that it as a product category seems to not be doing

01:23:11 ◼   ► well, right?

01:23:11 ◼   ► Like I, you start to have those thoughts about, I mean, I don't want to say this,

01:23:16 ◼   ► but at some point I think it might be worth having the conversation.

01:23:20 ◼   ► Not today, but I'm just going to put it out there.

01:23:23 ◼   ► Like if you're Apple at some point, do you say, okay, it didn't work.

01:23:30 ◼   ► Let's just update the Mac to be more iPad.

01:23:33 ◼   ► like? At some point do you do that? I think there are lots of arguments, it's a huge

01:23:39 ◼   ► argument and I think there are lots of arguments against it, but at some point

01:23:42 ◼   ► do you have to look at the sales numbers for the iPad and say, "People don't want

01:23:48 ◼   ► this." I don't know. I don't know. That's where I'm feeling right now is that as a

01:23:54 ◼   ► user of it I'm starting to get that little tingle in the back of my

01:23:58 ◼   ► head that's like, "Oh no, what if I love a product that is doomed?"

01:24:03 ◼   ► I still feel like we're far away from that. Yeah, we're not close yet, but if I'm Apple

01:24:08 ◼   ► and I'm looking at a few years, you gotta have contingency plans, right? At some point

01:24:12 ◼   ► do you have to make at least make the argument internally and maybe they have and they've

01:24:16 ◼   ► resolved this. But you gotta make that argument like, "What if this just is a product category

01:24:24 ◼   ► that is largely rejected by the market and it's got a niche audience that's great and

01:24:28 ◼   ► we might as well keep it around

01:24:29 ◼   ► because we gotta update iOS anyway,

01:24:32 ◼   ► but you can make some arguments about like,

01:24:33 ◼   ► why are we investing in Pro features or iOS?

01:24:35 ◼   ► Instead, we should just put more work into macOS stuff.

01:24:39 ◼   ► I have a hard time believing that myself.

01:24:41 ◼   ► I kind of can't even say that with a straight face,

01:24:43 ◼   ► but I look at the iPad Pro numbers and it's just like,

01:24:46 ◼   ► ouch.

01:24:49 ◼   ► Cheer up, Myke, cheer up.

01:24:50 ◼   ► - There's only one thing that can cheer me up

01:24:52 ◼   ► and it's ask upgrade.

01:24:53 ◼   ► But before we do that,

01:24:54 ◼   ► let me take a quick moment

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01:26:22 ◼   ► peas and lime rice, crispy salmon and roasted potato salad with pickled mustard seeds and

01:26:28 ◼   ► creme fresh sauce or maybe even three cheese and baby broccoli stromboli with tomato and

01:26:34 ◼   ► oregano dipping sauce. Jason, it is too close to dinner time here in London.

01:26:38 ◼   ► Yeah, I know. I had the first one of those with the snap peas and the beef and the rice.

01:26:42 ◼   ► It was really good.

01:26:43 ◼   ► sounds so good. In fact I had the leftovers. My daughter wasn't here, she was traveling

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01:27:29 ◼   ► Ask Upgrade time! John would like to know, "Any magic tips Jason to get photos on my

01:27:35 ◼   ► iPhone to use less storage? I already have optimized storage turned on and it's currently

01:27:41 ◼   ► taking up 12 gigabytes of space.

01:27:44 ◼   ► The way it works right now is it waits until your disk is full or like a 10% of capacity

01:27:53 ◼   ► and then it starts deleting things.

01:27:55 ◼   ► So you kind of just have to keep pushing it, right? Don't worry about it. Keep pushing

01:27:59 ◼   ► it.

01:28:00 ◼   ► question is why do you want to do this? Because in theory if you keep trying to

01:28:07 ◼   ► add more things to your iPhone it should then start deleting things from photos

01:28:13 ◼   ► in order to optimize storage. I think the reality is that there may be some apps

01:28:17 ◼   ► where you try to drag in a bunch of things from the Mac or you try to import

01:28:21 ◼   ► something and then it says "oh no I can't that's a huge file I don't have enough

01:28:24 ◼   ► room" but I think the idea is anyway that as you accumulate new data it's waiting

01:28:29 ◼   ► for it to go over that threshold.

01:28:31 ◼   ► And when it does, it does a bunch of cleanup.

01:28:32 ◼   ► And if you have more and more data, it does more cleanup,

01:28:35 ◼   ► and it's supposed to keep it so that you've got

01:28:37 ◼   ► sort of 10% free, which is the same thing on the Mac

01:28:40 ◼   ► is how it's supposed to work.

01:28:41 ◼   ► Now, I agree, it's really frustrating.

01:28:44 ◼   ► And on the Mac, I've had it happen

01:28:46 ◼   ► where I've tried to copy a big file and it said,

01:28:47 ◼   ► oh no, this is too big.

01:28:48 ◼   ► I've been told by Apple that that's a bug

01:28:50 ◼   ► and I actually haven't seen that recently in Sierra.

01:28:53 ◼   ► I imagine the same sort of thing is going on in iOS.

01:28:55 ◼   ► So, you know, I have no doubt that there are cases

01:28:58 ◼   ► where bugs creep in, where apps are not looking

01:29:01 ◼   ► at the right way of handling storage

01:29:03 ◼   ► and that you get a, your phone feels full when it's not.

01:29:08 ◼   ► But the way it's supposed to work

01:29:10 ◼   ► is that that optimized photo library

01:29:13 ◼   ► should be deleted,

01:29:17 ◼   ► items from it will be deleted on the fly

01:29:19 ◼   ► as you need the space.

01:29:20 ◼   ► That's how it's supposed to work.

01:29:21 ◼   ► And there is no UI for it.

01:29:23 ◼   ► You can't delete those photos any other way.

01:29:28 ◼   ► So you have to just trust that it's doing it right.

01:29:29 ◼   ► So I guess, Jon, if you're having problems,

01:29:31 ◼   ► it's not doing it right.

01:29:32 ◼   ► And there's nothing you can do about it, unfortunately,

01:29:35 ◼   ► which kind of sucks, if that's the case.

01:29:37 ◼   ► Todd asked, do you see a future

01:29:40 ◼   ► where workouts recorded on the Apple Watch

01:29:42 ◼   ► could appear somewhere like iCloud.com,

01:29:45 ◼   ► as alongside Notes and Contacts?

01:29:46 ◼   ► And also, do workouts sync anywhere

01:29:49 ◼   ► other than between the one iPhone and Watch?

01:29:51 ◼   ► So as far as I'm aware, they do not sync anywhere else,

01:29:54 ◼   ► right, and you know, people, we always talk about this

01:29:56 ◼   ► when we do our, I think now famed or infamous, I guess,

01:30:01 ◼   ► upgrade episodes where we get our new devices

01:30:04 ◼   ► and have myriad problems.

01:30:06 ◼   ► None of this workout data or health data sinks anywhere,

01:30:09 ◼   ► so it's possible to lose some of it

01:30:11 ◼   ► during an upgrade process.

01:30:13 ◼   ► I think I would like to see a world in which Apple

01:30:17 ◼   ► works out a way to sync this data.

01:30:19 ◼   ► I just don't think that they will do it

01:30:22 ◼   ► in the near future, at least,

01:30:24 ◼   ► because of the way that they try and worry about privacy

01:30:28 ◼   ► and what they say about privacy and do about privacy.

01:30:30 ◼   ► - Yeah, it's personal health data,

01:30:34 ◼   ► so they would need a way to do it,

01:30:35 ◼   ► but at the same time I see the value of it.

01:30:38 ◼   ► So yeah, yeah, I would like to see them

01:30:44 ◼   ► be able to do something with it,

01:30:45 ◼   ► but I don't know if that'll happen.

01:30:47 ◼   ► - There are applications that allow you

01:30:50 ◼   ► to export your health data,

01:30:52 ◼   ► So you can like take your current,

01:30:54 ◼   ► all of the health data you have,

01:30:56 ◼   ► export that to a cloud service

01:30:58 ◼   ► and then import it back in again, right?

01:31:00 ◼   ► Or there are apps.

01:31:01 ◼   ► So when you're switching from phone to phone,

01:31:03 ◼   ► you don't lose the data.

01:31:05 ◼   ► So you can do that,

01:31:06 ◼   ► but it's not necessarily the workout stuff specifically.

01:31:09 ◼   ► So that is an option.

01:31:10 ◼   ► And I'll put a link in the show notes to an article,

01:31:12 ◼   ► again on Mac stories.

01:31:14 ◼   ► Federico and John again, a bunch of links from us today.

01:31:16 ◼   ► They do good work there.

01:31:18 ◼   ► And so you can,

01:31:19 ◼   ► there are apps that can allow you to do that

01:31:21 ◼   ► when you're kind of going through the upgrade cycle,

01:31:23 ◼   ► or if you just want a backup of it just in case.

01:31:25 ◼   ► But it doesn't sync anywhere right now.

01:31:28 ◼   ► So Steven asked, "I've always been nervous

01:31:31 ◼   ► to use a password manager like LastPass or 1Password

01:31:34 ◼   ► because I don't want to get hacked.

01:31:36 ◼   ► Any insight into this?"

01:31:37 ◼   ► - I mean, you're more likely to get hacked

01:31:41 ◼   ► by using bad passwords than you are

01:31:44 ◼   ► by using a service like this.

01:31:45 ◼   ► There was a hack, I think, for LastPass at one point.

01:31:48 ◼   ► I would say, I know at least 1Password,

01:31:52 ◼   ► you don't have to use their sync service.

01:31:53 ◼   ► You can put it on your own Dropbox or even not sync it,

01:31:56 ◼   ► although it's a lot less convenient if you don't sync it,

01:31:58 ◼   ► 'cause then you don't have access

01:31:59 ◼   ► to it on your mobile devices.

01:32:00 ◼   ► But you can sync, I sync my 1Password on Dropbox.

01:32:05 ◼   ► So I am now just relying on Dropbox,

01:32:07 ◼   ► which I trust and that's just, you know,

01:32:10 ◼   ► I made that decision because I want the convenience

01:32:13 ◼   ► of having those passwords everywhere.

01:32:14 ◼   ► Also, I don't know about the details of LastPass.

01:32:17 ◼   ► I know one password, even if you got to the data,

01:32:19 ◼   ► it's an encrypted bundle, so it needs your password

01:32:23 ◼   ► in order to get to the encrypted files.

01:32:25 ◼   ► So even if you broke into my Dropbox,

01:32:27 ◼   ► you couldn't actually read my password file

01:32:28 ◼   ► unless you also had my password for that encrypted bundle,

01:32:33 ◼   ► or you could break the encryption,

01:32:34 ◼   ► which I am pretty confident you can't.

01:32:36 ◼   ► So you know what, if you're super paranoid, I get it,

01:32:41 ◼   ► but I don't see how not using a password

01:32:46 ◼   ► will ever be more secure.

01:32:49 ◼   ► Because you're either gonna have weak passwords

01:32:51 ◼   ► or you're gonna write them down

01:32:52 ◼   ► and then you've got written down passwords

01:32:54 ◼   ► that could be stolen by somebody physically.

01:32:56 ◼   ► So unless you're a hermit living far away

01:33:00 ◼   ► and you keep your passwords on a piece of paper

01:33:02 ◼   ► in a lockbox or something, maybe in a safe.

01:33:07 ◼   ► But I think in most scenarios,

01:33:09 ◼   ► you're safer off using a password manager

01:33:11 ◼   ► because then you can use strong passwords

01:33:13 ◼   ► and they're different everywhere

01:33:14 ◼   ► and you don't have to remember them or write them down.

01:33:18 ◼   ► - Now, I don't know if they still do,

01:33:20 ◼   ► but I believe that, I know that they used to,

01:33:23 ◼   ► but 1Password used to do Wi-Fi syncing.

01:33:26 ◼   ► Yeah, it still does.

01:33:28 ◼   ► So you don't have to use any cloud service at all.

01:33:33 ◼   ► - They all just talk on your local network

01:33:34 ◼   ► and share their data that way.

01:33:36 ◼   ► Yeah, see, there you go.

01:33:37 ◼   ► So there are options.

01:33:39 ◼   ► You have options that are not putting your passwords

01:33:42 ◼   ► even encrypted in a cloud service somewhere.

01:33:45 ◼   ► - So it's worth checking that out.

01:33:48 ◼   ► So you can sync your Mac or Windows PC

01:33:50 ◼   ► with your iOS or Android devices.

01:33:52 ◼   ► You have to use one of them as like a,

01:33:53 ◼   ► becomes the WLAN server.

01:33:56 ◼   ► You can set that up and you can do that.

01:33:58 ◼   ► So that is an option.

01:33:59 ◼   ► I understand the idea of like having concern

01:34:04 ◼   ► about using the, like the online component

01:34:09 ◼   ► of these services.

01:34:10 ◼   ► Like I get that.

01:34:10 ◼   ► As you say Jason, the encryption is so hard to break, probably impossible.

01:34:15 ◼   ► So I understand, you want to create the security, why would you create an account with them?

01:34:22 ◼   ► So I keep my stuff, I do actually use, we use 1Password for Teams, I'm happy with that.

01:34:28 ◼   ► But other than that I use Dropbox for my personal stuff.

01:34:32 ◼   ► But if you're really security conscious, like super security conscious, you should use something like a password manager

01:34:37 ◼   ► like I said, allows you to create these super strong passwords, right? Because otherwise,

01:34:42 ◼   ► you're already security conscious, have strong passwords, different ones in different places.

01:34:47 ◼   ► Just use Wi-Fi syncing and you'll be good to go. In theory. I never want to say that

01:34:52 ◼   ► for definite. Chris asked, "Do you think that we'll see a new Magic Trackpad this year?

01:34:56 ◼   ► What new features would you expect to see, if any?" I mean, new features, the Magic Trackpad,

01:35:00 ◼   ► I guess like bigger, right? Like isn't the one on the MacBook Pro bigger than this?

01:35:05 ◼   ► then the current Magic Trackpad is not?

01:35:07 ◼   ► I don't think so, no.

01:35:09 ◼   ► Well I guess it's the only thing you could do, I can't think of features

01:35:11 ◼   ► that would go into the Magic Trackpad.

01:35:13 ◼   ► Well, I mean, Touch ID.

01:35:15 ◼   ► You think I'd go into the Trackpad?

01:35:17 ◼   ► I guess, yeah, maybe.

01:35:19 ◼   ► I always figured keyboard for that,

01:35:21 ◼   ► but yeah I'd prefer it on the Trackpad

01:35:23 ◼   ► because I don't want to use Apple Keyboard

01:35:25 ◼   ► because I like the ergonomic keyboard that I have.

01:35:27 ◼   ► So that might be kind of nice.

01:35:29 ◼   ► I don't know. I would...

01:35:31 ◼   ► I wouldn't put money on it

01:35:33 ◼   ► on it because I think it's more likely than not

01:35:36 ◼   ► that they just won't.

01:35:38 ◼   ► But I am intrigued by the idea of Touch ID

01:35:41 ◼   ► coming to Apple input devices for other Apple devices.

01:35:45 ◼   ► And yes, part of it is me wanting,

01:35:48 ◼   ► I would rather buy a new Magic Trackpad with Touch ID

01:35:51 ◼   ► than use a new Apple keyboard with Touch ID

01:35:53 ◼   ► because I like my keyboard

01:35:55 ◼   ► and I don't wanna use a different keyboard,

01:35:57 ◼   ► but I would upgrade my trackpad to Touch ID.

01:36:01 ◼   ► So that's what I'm gonna,

01:36:03 ◼   ► hang my hopes on, but I don't think it's,

01:36:06 ◼   ► I think it's not likely only because Apple updates

01:36:10 ◼   ► their input devices outside of integrated input devices

01:36:14 ◼   ► in computers very rarely.

01:36:16 ◼   ► - And let's just say before people write in,

01:36:18 ◼   ► we don't think the touch bar is gonna go

01:36:19 ◼   ► onto the track pad, right?

01:36:20 ◼   ► - It would have to be a completely different orientation,

01:36:24 ◼   ► which would seem kind of wacky.

01:36:25 ◼   ► I love the idea of the touch bar on the track pad.

01:36:27 ◼   ► I think that that would be a great place for it,

01:36:29 ◼   ► but the touch bar is so wide that this would be a complete,

01:36:32 ◼   ► you'd have to have like a separate layout for this device versus that and I

01:36:37 ◼   ► have a hard time seeing Apple breaking the touch bar platform you know in two

01:36:42 ◼   ► and having everybody have to optimize twice for touch bar I can't see it.

01:36:47 ◼   ► And finally today Oplez asked any recommended shipping track link app that

01:36:52 ◼   ► will work with multiple carriers? Deliveries by June cloud.

01:36:56 ◼   ► That's the app you want.

01:36:57 ◼   ► Yep, I use deliveries.

01:36:58 ◼   ► Yep.

01:36:59 ◼   ► iPhone, iPad, Mac.

01:37:00 ◼   ► You can go have a load of fun with that application.

01:37:04 ◼   ► I use it, it's great.

01:37:06 ◼   ► It's the one to use.

01:37:07 ◼   ► I actually don't even know of any of it because I've used deliveries for so long.

01:37:10 ◼   ► That's the one to go for.

01:37:11 ◼   ► It's on all the great platforms.

01:37:13 ◼   ► They even have a watch app.

01:37:15 ◼   ► All the great platforms.

01:37:16 ◼   ► All the great platforms.

01:37:17 ◼   ► If you want to submit some questions for #AskUpgrade, just tweet with the hashtag #AskUpgrade and

01:37:22 ◼   ► we can try our best to help you out or provide insight into the thing that you're thinking

01:37:26 ◼   ► of. If you have a Snell Talk question for me to ask Jason at the top of the show, just

01:37:31 ◼   ► to find out what's going on in Jason's life, just send a tweet with the hashtag Snell Talk

01:37:36 ◼   ► and we'll do our best to answer those questions for you. Well I'll ask them, Jason will answer

01:37:40 ◼   ► them. Thanks again to our sponsors this week, Blue Apron, Encapsula and Mac Weldon. If you

01:37:46 ◼   ► If you want to find Jason online, he's over at SixColors.com, he's @JasonL on Twitter,

01:37:51 ◼   ► J-S-N-E-double-L, and he's the host of the brand new show on Relay FM called Download,

01:37:56 ◼   ► which you should go and check out. You get upgrades, start your week, download, finish

01:38:00 ◼   ► it. We get, we tee it up, download, brings you down to the, to the, get in everything

01:38:04 ◼   ► you need to know about what's happened in the week of technology.

01:38:07 ◼   ► We're not going to bring you down, though. You're going to be happy and fulfilled, not

01:38:10 ◼   ► sad. I'm trying to find up and down, you know.

01:38:12 ◼   ► Yeah, I get it. Let's tee up and then, I don't know.

01:38:15 ◼   ► It's going to take lots of great information and download it right into your brain.

01:38:18 ◼   ► And that's how you end your week.

01:38:19 ◼   ► Funnily enough, you're much better at pitching your show than I am.

01:38:23 ◼   ► I am @imike, I am YKE.

01:38:26 ◼   ► This show is over at Relay FM, you can go to relay.fm/upgrade/140 to find out everything

01:38:31 ◼   ► you need to know about this week's episode, including a bunch of links to all the stuff

01:38:34 ◼   ► that we have discussed.

01:38:36 ◼   ► Upgrade-ians out there, thank you for listening, we'll be back next time.

01:38:39 ◼   ► Until then, say goodbye, Mr. Snell.

01:38:41 ◼   ► Doo doo doo doo!

01:38:43 ◼   ► Goodbye!

01:38:44 ◼   ► Lord Amazon has left the building.

01:38:47 ◼   ► [MUSIC PLAYING]

01:38:50 ◼   ► [ Music ]