88: The Perception of Trouble


00:00:00   [Music]

00:00:06   From Relay FM, this is Connected, episode number 88.

00:00:11   Today's show is brought to you by PDF Pen Pro from SMILE, the all-purpose PDF editing tool.

00:00:18   My name is Myke Hurley and I'm joined by Mr Federico Fittici.

00:00:24   Hello Myke.

00:00:25   Hello Federico, how the devil are you, sir?

00:00:28   I'm doing great, Myke. As I told you when you called me, I'm still kind of relaxing,

00:00:34   catching up. I'm gonna go grocery shopping later, you know, which is... It sounds like

00:00:40   a quick kind of task, but it takes me a couple of hours, you know. That's how I do my shopping.

00:00:46   So I'm doing great, Myke.

00:00:49   So I think Steven... Steven's not here this week. I think he's hunting IMAX.

00:00:52   Yeah, he's taken on a cross-country trip to find the remaining IMAX.

00:00:59   Because I think he only needs one more, and he has them all.

00:01:02   Only one?

00:01:04   I think it's only one. So he is, I believe, he's somewhere in California hunting for the final IMAX.

00:01:16   How do you hunt for an IMAX?

00:01:18   Exactly.

00:01:19   That's why he's not here, it took a little bit longer than he expected.

00:01:27   He's just got graphite left.

00:01:30   Graphite.

00:01:31   Which isn't, you know, it's not the most exquisite of colours if you think about it.

00:01:35   Because I believe he was able to find a pretty good Bondi.

00:01:38   Oh, look at that, look at that, good job.

00:01:42   So he got one of those.

00:01:45   Now he's off looking for a graphite, so I hope that he will be back next week and I

00:01:48   hope that he finds everything that he's looking for.

00:01:52   - Nice, good luck, Stephen.

00:01:53   - Good luck, Stephen.

00:01:54   - Thinking of you.

00:01:55   - We are, we are, good luck.

00:01:56   Because it's just me and you,

00:02:00   should we talk about something that we're doing?

00:02:02   - Yes.

00:02:03   - So Federico, everybody should know by now,

00:02:06   we spoke about this last week,

00:02:07   Federico is going to be traveling to San Francisco

00:02:12   and we are going together for WWDC

00:02:15   and I realized last week,

00:02:18   we knew that you were gonna be in London for one day,

00:02:20   you're coming to London

00:02:21   and then me and you were gonna stay in a hotel

00:02:23   near the airport and go from there together

00:02:26   out to San Francisco.

00:02:28   And me and you were gonna have dinner with some friends.

00:02:30   And I realized why have dinner with friends

00:02:32   when we can see lots of friends.

00:02:35   So we're gonna have a meetup in London,

00:02:39   a bar called the Big Chill House.

00:02:41   Now we have a limit on the amount of people

00:02:43   that we can fit in the room.

00:02:45   So we instituted a ticket policy for this,

00:02:48   and we had 70 tickets for the room.

00:02:50   They are all sold out.

00:02:52   Now the reason I am telling you all about this,

00:02:54   dear listener, is I spoke to the venue today,

00:02:57   and there is the possibility for us

00:02:59   to get a larger room at this place.

00:03:02   So if you are interested in coming to a connected meetup,

00:03:06   it will be me and Federico,

00:03:08   and we'll be hanging out at a great bar.

00:03:10   We did this meetup for upgrade in this area previously,

00:03:14   and you wanna come, it's on the 10th of June.

00:03:17   It starts from eight until 11.

00:03:19   You will need to have a ticket to come

00:03:21   because we have a maximum amount of people

00:03:22   we can fit in the room.

00:03:24   You can go to Tito, ti.to/relayfm

00:03:28   and you can find out more about the event.

00:03:31   Sign up for the waiting list.

00:03:33   There are nearly enough people on the waiting list now,

00:03:36   Federico, which will allow me to confidently book

00:03:39   this larger room.

00:03:41   - Oh, that's so insane.

00:03:43   So if you are interested, if everybody that we have

00:03:47   on the waiting list gets a ticket,

00:03:48   we're very nearly sold out as well for that larger room.

00:03:52   So once that's the case, that's as big as the room can be.

00:03:56   It takes about 150 people.

00:03:58   - It's just totally insane.

00:04:00   - Yeah, there's an amazing poster,

00:04:02   which I'll just put in the show notes anyway,

00:04:04   because Frank, as always, did an incredible job.

00:04:07   So we really hope that people can make it.

00:04:10   We're doing everything we can to increase the size for this one because we can.

00:04:16   With this instance we can actually increase it, but it will mean that everybody will need

00:04:20   to buy a few drinks because otherwise I will be left with a very large bill at the end

00:04:25   of the night.

00:04:27   So I hope that you can go check it out and we hope to see you in London in June.

00:04:32   Yeah, I mean, with all due respect, Myke, it's kind of crazy that this many people are

00:04:36   coming to meet us.

00:04:37   I mean, we're just...

00:04:38   Yeah, it's not me.

00:04:39   me, it's all for you. But I'm happy with that, I'm happy with that, I'm happy with that.

00:04:44   I don't think so, I don't think so. You're kind of an attraction lately.

00:04:48   Oh yeah? Yes you are. There's people constantly talking

00:04:52   about you and your iPads. That's true actually, I was on Mac Power Users.

00:04:57   See, see, you're the man of the hour, Myke. Katie was so mad. She was so upset about the

00:05:05   iPads is so good, it's such a good episode.

00:05:08   You gotta listen to that.

00:05:09   Yeah, it's well worth listening to.

00:05:12   I think at one point she just goes into complete despair about me, which is amazing.

00:05:17   It's amazing.

00:05:18   I love David and Katie and being on Mac Power Users is an honor because it is, as we have

00:05:24   mentioned many times, an absolute institution and we're very lucky to have it as a part

00:05:28   of Relay FM.

00:05:29   I was happy to go on the show to preach about my iPad, multi-iPad life, which I increased

00:05:36   today. Federico bought another pencil today. So I have both iPads now fully decked out

00:05:42   at all times.

00:05:44   I'm no longer surprised, Myke.

00:05:47   You know, I'm all in. I am all in. I'm taking what you started and I'm taking it to its

00:05:53   furthest point possible.

00:05:55   You're multiplying that, really.

00:05:58   And I'm actually planning this week for the incomparable project that I'm working on to

00:06:07   actually record something and edit it on iOS.

00:06:10   So I'm going to do that over the next week or so.

00:06:12   I'm really trying to go in all in here, my friend.

00:06:16   You should do a time lapse video of you trying to do that on the iPad.

00:06:19   Yeah, that would be...

00:06:20   You could see me pulling my hair out.

00:06:23   Actually, I wanted to mention one last thing about the meetup, just for everybody that

00:06:27   is coming and may come. If we do increase the capacity, the room will change. We had

00:06:35   it as a place called the Deco Room. It will be in a different room, but I'll send information

00:06:40   out about that if we do it because we're going to be getting a bigger room hopefully.

00:06:43   So please sign up and we'll hopefully see you there.

00:06:48   All right, so I wanted to mention, do you remember last week when we were talking about

00:06:54   our sponsor, I mentioned how maybe a wizard could create a confetti cannon to go off when

00:07:00   Ark finishes.

00:07:01   Yeah.

00:07:02   Well, there is a wizard.

00:07:04   Yep.

00:07:05   Oh my god.

00:07:06   Lucas tweeted at us with a script.

00:07:10   And what it will do is he actually did something very smart here.

00:07:14   It doesn't launch physical confetti.

00:07:16   It launches digital confetti on your computer screen whenever Ark completes a backup.

00:07:22   Bravo Lucas.

00:07:23   Bravo.

00:07:24   Look at that screenshot.

00:07:26   - It's fantastic, right?

00:07:27   - People are crazy, it's fantastic.

00:07:28   - So, you put it on GitHub, you can go and check it out.

00:07:31   And so it's very, very clever.

00:07:34   And I say bravo to the wizard that is Lucas

00:07:37   for creating our backup confetti cannon.

00:07:41   - Good job.

00:07:42   - Last week, we teased that you were working on a project

00:07:46   that I expect everybody knows about right now,

00:07:48   which was your iOS 10 wishes and concept video.

00:07:52   along with the dark theme for Mac Stories, which I am reminded about as I see the lovely

00:07:56   dark Mac Stories in front of me.

00:07:58   Oh, nice, you keep it activated.

00:08:00   Yep, keep it dark, my friend. And I am very flabbergasted by the views, view count in

00:08:12   this YouTube video.

00:08:13   It's approaching 400,000 views.

00:08:16   400,000, Federico, 400,000.

00:08:21   It's a lot.

00:08:22   78 people that gave it a thumbs down though. What do you what is your comments on that?

00:08:25   What do you think about those 78 people? I?

00:08:28   Think some of those people

00:08:31   Maybe half of those are just trying to to see what what it feels like to use the thumbs up down button

00:08:38   Yeah, maybe half is just an experiment. I'm gonna press the button

00:08:41   No, I dislike this. Oh, no. I know I've no I have liked it again. So I

00:08:47   Reversed my decision. I went to just see how it felt. I didn't like how it felt

00:08:50   Here's something interesting about the like/dislike button on YouTube. When you click the little

00:08:55   like button, the button goes blue from grey. And when you click the dislike button, it

00:08:59   goes black from grey. Wow.

00:09:01   Yeah, they're like, "They'll do this!" You know? It's a little Pavlovian response for

00:09:06   you. I was very honored to get a special thanks.

00:09:10   Of course. You and my girlfriend and John were the few

00:09:17   people that had to endure my stress, my questions and my doubts before launching.

00:09:24   I have seen many, many, many, many cuts of that video.

00:09:28   Be like, "Look at this one! We have a line change! Okay!" So off I go, watch the one

00:09:34   line move. But it was, it is an amazing video and I was very honored to be able to see it

00:09:42   in advance. But I wanted to ask you a few questions. Because look, we'll go into these

00:09:46   wishes we will actually revisit the wishes on the show probably in late May right yes

00:09:52   we'll do it as part of our what do we want to see at WWDC so there's no point going over

00:09:56   the wishes right now but I wanted to ask you about the video itself because obviously that

00:10:02   is a different method a different medium for you and Mac stories and how did you find the

00:10:08   YouTube system?

00:10:12   Well, I think I kind of cheated because I asked CGP Grey for advice before uploading

00:10:19   the video, so he gave me like a checklist of things to do and to make sure that I was

00:10:24   doing. It was fine, I think. I opened the channel the week before, so we didn't have

00:10:32   a YouTube channel. And before uploading this video, I just moved two of my old videos,

00:10:38   30 second videos about drafts and iOS automation, just to make sure the channel wasn't empty

00:10:44   when it was launch day.

00:10:46   I uploaded a logo and I put in a bunch of links for the Mac Stories bio, linking to

00:10:53   Mac Stories on Twitter and the club, and then I prepared the description, which was okay,

00:10:59   no major issues there, and I uploaded the video.

00:11:02   I think I have to be thankful for my fiber connection because the video was in 4K, it

00:11:10   was almost a three minute video, and it was about 500 megabytes, maybe less.

00:11:17   That's not too bad.

00:11:18   No, it's not too bad, it took me like a minute.

00:11:21   So funny enough, you know that the videos, I don't know if you know, but I put Cortex

00:11:24   on YouTube.

00:11:25   Yeah, I do, I know.

00:11:27   it's just the audio file and the logo, like a version of the logo, which is in 1080p.

00:11:34   The videos tend to be around 2 to 3 gigabytes.

00:11:37   Wow.

00:11:38   It's nothing, right?

00:11:40   Just because that's just how the video comes out, because it's still a video file, which

00:11:43   is two hours long.

00:11:45   Oh yeah.

00:11:46   Right?

00:11:47   Yeah.

00:11:48   So that's one of the unfortunate parts about doing this is there's nothing.

00:11:51   But it ends up being like two hours long.

00:11:53   Yeah.

00:11:54   And I didn't really come across any issue.

00:11:56   I mean, the video upload is fine.

00:11:58   I set it to private because I just wanted to make sure

00:12:01   that people couldn't guess the link.

00:12:03   CGP told me it never happened to him

00:12:05   that people would guess a link for an unlisted video,

00:12:08   which was another option.

00:12:09   But I just prefer, you know, for my paranoia.

00:12:12   - There is something weird that like,

00:12:14   when I go to your video page on YouTube,

00:12:17   it doesn't show the iOS 10 video.

00:12:20   I have to go in-- - Yeah, that's kind of weird.

00:12:22   - Something weird has happened there.

00:12:24   Like you have to go to videos before it shows up.

00:12:27   - I know, I know.

00:12:28   - But whatever, it doesn't matter

00:12:29   because people were just finding it as being linked to,

00:12:32   I think you were in the YouTube trending.

00:12:34   - Yes, yes, and that really made up for about 20%

00:12:38   of the views being discovered in the YouTube trending page.

00:12:43   I saw a lot of people,

00:12:45   like I could see the effect in the real time stats.

00:12:49   I could see the effect of the new people

00:12:51   discovering the video from the trending section.

00:12:54   it hit the trending page when it was about 100,000 views.

00:12:59   So I guess the YouTube system finds kind of momentum

00:13:03   in videos and decides to feature them.

00:13:06   And it was also embedded on a bunch of other tech blogs

00:13:09   which helped in getting the kind of exposure.

00:13:12   It was on 9to5Mac, it was on The Loop.

00:13:14   - That was part of the reason for doing the video, right?

00:13:17   Surely for that, yeah.

00:13:19   - Yeah, because it's so easy to embed a video

00:13:22   and that was the whole idea.

00:13:25   I got a bunch of bloggers asking me,

00:13:27   "Can, do you mind if we embed the video?"

00:13:30   And I was like, "No, that was the main goal.

00:13:32   "Please do use the embed code."

00:13:34   - Right, I don't know if this is why you did this,

00:13:36   but here's when I look at this objectively, right?

00:13:38   If somebody block quotes an article, you get nothing.

00:13:42   Nothing happens.

00:13:45   It's just there.

00:13:46   But if they embed a YouTube video, you still get the view.

00:13:49   The view shows in your view count.

00:13:50   Now, you're not getting any money from this

00:13:52   you didn't put any advertising on it, which I think was the right thing to do by the way,

00:13:55   because of the purpose of the video. Oh yeah, you have not in the system for long enough,

00:14:00   but I think the purpose of the video was to promote Mac stories as well, right? Like,

00:14:07   the other side of this video was to promote Mac stories to new people, right?

00:14:12   And the club, yeah.

00:14:13   Yeah, and the, yeah, and club Mac stories as well, so that's kind of like, you know,

00:14:16   the other side of this, so that's how it brings more people in on the other side, so

00:14:21   So not having advertising on it would have been the right move anyway.

00:14:25   I think it was a very clever publishing and business move to do it this way, to create

00:14:30   this video which can be anywhere and it doesn't matter where it is because people would in

00:14:35   most cases take the video and embed it.

00:14:39   Pretty smart.

00:14:41   Yeah.

00:14:42   One of the comments that I got from a lot of people is that it's not an absurd concept,

00:14:49   that it makes sense.

00:14:50   hundreds of people told me it makes sense, it's not crazy, and it's the kind of features

00:14:55   that I could see happening, which is not usual. So I've been covering, you know, Mac Stories,

00:15:01   I've been writing for seven years, and every time there's a crazy concept video, it gets

00:15:05   a lot of exposure, but a lot of people also say, "This is crazy, Apple will never do this,

00:15:10   these features are totally useless." And that was one of my concerns, that people would

00:15:15   see the video as a sort of a crazy project, you know, with the crazy features that Apple

00:15:20   would never do. And as soon as I published the video, like, the reactions started coming

00:15:26   in that it's sensible, it makes sense, it's not crazy, and that makes me very happy. Because

00:15:32   we, both Sam and I, we spent a lot of time thinking what are the features that we think,

00:15:39   we both think make sense and what's the best way to do it in an Apple-like fashion, that

00:15:46   it's not too crazy with new animations or new interface designs or a different theme

00:15:52   for the entire iOS interface, so it really makes me happy that people see some kind of

00:15:57   a reason in there, some kind of "Yeah, it's not too crazy, it makes sense, I could see

00:16:02   this happening, good job".

00:16:03   That makes me happy.

00:16:04   Yeah, I mean, cause well, I think part of it is most of the concept videos, you only

00:16:09   ever find out about them because they're crazy wild things, but you already had the

00:16:14   ability to create a sensible one and for people to see it, which is why I think it

00:16:19   became popular, right?

00:16:20   Because you have the platform in which to get this video out to the first amount of

00:16:25   people that need to see it for it then to become viral.

00:16:28   Whereas people like Sam, who created a concept video,

00:16:33   he needed it to be a little bit more out there

00:16:37   to get people like you to find it in the first place.

00:16:40   Does that make sense?

00:16:41   - Yeah, yeah, it makes sense.

00:16:42   - Like if he created your video,

00:16:44   you'd just be kind of like, yeah, sure.

00:16:46   Like this is sensible stuff.

00:16:48   You know?

00:16:48   I think it depends where it's coming from.

00:16:50   - Yeah, I think the angle that we chose was,

00:16:54   so look, every year I do an iOS wishlist.

00:16:57   and I do it because I want to put it out there, the kind of features that I would like to see.

00:17:02   And this was not the kind of... the way that you come at it is not,

00:17:06   "Look, I'm a designer, I can make super cool stuff, this is what Apple should do on iOS."

00:17:11   It was, "I have these wishes, and here's how I visualize them in my mind."

00:17:18   And it's a very... it's not a big difference when you think about it, because the final outcome is the same,

00:17:24   a concept video. But the way that you approach it and the way that you present it, I think

00:17:28   it resonated with people. And they could see the idea of here's a person, he works on iOS,

00:17:35   he writes on the iPad every day, he knows iOS, he would like to see these features,

00:17:42   and he found a way to visualize them. And I think the end goal helped kind of get people

00:17:48   interested and to see, to help them see my line of thinking. So I'm very satisfied

00:17:56   with how everything went in the end.

00:17:59   Talking about very satisfied, you got a WWDC ticket?

00:18:04   I did, yeah. I was very lucky, Myke. Last Friday I was at the club, not club, I'm

00:18:14   So it's an actual club with people dancing and drinking.

00:18:17   And I got an email from the Apple store,

00:18:22   here's your receipt.

00:18:24   And my heart started pumping like crazy.

00:18:28   I was like, oh my god, oh my god.

00:18:30   And Sylvia was like, what's going on?

00:18:32   And I look at the receipt, and there's the WWDC ticket

00:18:36   confirmation.

00:18:37   And I was like totally going nuts.

00:18:39   And so I bought drinks.

00:18:42   and we celebrated the ticket.

00:18:45   - I'm not surprised.

00:18:46   So what is your plan?

00:18:47   - My plan is to first watch the keynote

00:18:51   because I've never been there and it--

00:18:54   - Well, you have.

00:18:55   Maybe not at the Grand. - Not at WWDC.

00:18:58   - Oh, well yeah, but you've done one.

00:19:00   - Yeah, I've done a keynote.

00:19:01   I just wanna do a WWDC keynote.

00:19:03   I've done a product keynote.

00:19:05   And I feel like it's a nice sort of celebration

00:19:08   to do my first WWDC keynote for iOS 10,

00:19:11   like a new beginning, whatever. That's how I see it in my mind.

00:19:14   And the other thing that I want to do is I want to attend key sessions for iOS,

00:19:20   because I need that kind of information and kind of networking with developers to prepare my iOS 10 review.

00:19:29   So last year I spent way too much time watching the videos over and over and talking to people who were there at the sessions

00:19:39   over email to get a better understanding of what was going on, and just talking to developers

00:19:45   to ask them questions.

00:19:47   And I feel like I can save a lot of time if I go to the key sessions that are, you know,

00:19:52   that are...

00:19:53   I mean, I have to decide which kind of sections I want to cover in my review, which we'll

00:19:57   talk about in the evening.

00:19:59   Me and you and Steve and Myke, you will have to help me.

00:20:02   But once I do know what kind of sections I want to have in my review, I will mark the

00:20:06   the sessions that I want to go to and just attend those and then talk to people and go

00:20:11   to the Bash and that kind of essential stuff.

00:20:13   I'm not interested in OS X, not interested in watchOS, I'm going there for iOS and

00:20:20   the key stuff that I understand that I want to cover.

00:20:23   And I feel like I need to wake up early, go to the key sessions and then in the afternoon

00:20:30   and maybe in the mornings where iOS doesn't have a key session, just have fun, because

00:20:35   I want to mix it up, you know, it's my first time I want to do part work, part fun, and

00:20:41   I feel like having fun there is important because it also helps me relax and meet new

00:20:47   people, which again is sort of a circle of life. I need to have fun, meet new people,

00:20:52   talk about work, fun, you know, it's all connected. No pun intended. So yeah, that's the plan.

00:21:02   what I want first watch the keynote, understand what's going on, understand the kind of sections

00:21:07   that I want to have in my review, talk about it with you guys, find a plan for the key

00:21:12   sessions that I want to go to and just attend those sessions and then have fun and meet

00:21:17   people.

00:21:18   It's a pretty great plan man, it's a pretty great plan.

00:21:20   Yeah, I think I can do it, you know?

00:21:22   Yeah, the days are quiet, the day times are quiet because so many people are in the sessions

00:21:27   and now of all the other conferences and stuff that go on anyway.

00:21:30   You just need to understand that you are going to be very very busy.

00:21:33   I know, I know.

00:21:34   Prepare for that.

00:21:36   I'm preparing both physically, I'm exercising a lot.

00:21:41   It's true.

00:21:42   I believe you.

00:21:44   There's a bunch of tasks in my to-do with daily exercises.

00:21:47   I saw them in a Twitter screenshot.

00:21:49   I saw like abs and something.

00:21:51   Yeah, and it's being in good shape.

00:21:53   So I'm ramping up the exercise routine, I'm doing the diet that I was doing last year

00:22:00   again. So I need to be very, very energized. Because it's gonna take a lot out of me to

00:22:10   do all of the stuff that I want to do. But it's possible, you know. There's worse things

00:22:15   in the world. This is fun. This is great. I shouldn't be concerned. Just gotta have

00:22:19   fun.

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00:24:08   smile for their continued support of this show and relay fm all right Federico this is going to be a

00:24:16   a tough one my friend. Are you ready for this? Apple earnings. So what quarter was this?

00:24:26   This was Q2. Q2 2016. I believe, now we can talk about this and we're going to talk about

00:24:36   this in quite a bit of detail, but I believe that Q2 2016 is going to go down as a moment

00:24:44   in Apple's history in the future? Well I mean yeah it's first down quarter since

00:24:52   2003 I think. So yeah definitely. For 13 years, quarter on quarter, Apple have increased their

00:25:00   profit and revenue and all that stuff right? It's gone everything has gone up. Quarter

00:25:06   on quarter for 13 years. So we're looking at if you're thinking about every time that

00:25:11   Apple come on to do one of these earning results.

00:25:15   They've had over 50 of these, they've come on

00:25:17   and the story's been the same.

00:25:19   50 in a row, right?

00:25:20   Better than last time, better than last time,

00:25:22   better than last time.

00:25:24   This time not so much.

00:25:25   And I find this very interesting.

00:25:29   And I wanna just preface this conversation by saying,

00:25:31   Apple is not doomed, and I understand

00:25:34   that they made a ton of money.

00:25:36   - Yeah.

00:25:37   - But a downward trend is never a good thing.

00:25:41   - True.

00:25:42   - And that's what we're looking at now,

00:25:43   especially when you look at some of the areas that are down.

00:25:45   So profit is down, the iPhone is down, Mac is down,

00:25:50   and of course our friend, the iPad, is down again,

00:25:55   year on year.

00:25:56   So let's look at the iPhone a little bit.

00:25:59   So the iPhone sales were strongly increased

00:26:04   in the previous quarter because of pent up demand in China,

00:26:09   is my understanding. In Q1 they had lots and lots of sales for the 6S because they had

00:26:16   some pent up demand there. A lot of the stuff that you'll find in these earnings calls,

00:26:24   I'm going to put a bunch of articles and show notes, one from you, one from Jason, you guys

00:26:29   both do a really great job of breaking this stuff down. A lot of it is very complicated,

00:26:34   But basically it seems like Apple was saying that they're in a situation where the upgrade

00:26:42   cycle is looking pretty good on the iPhone, but the previous quarter was a bit of an anomaly,

00:26:47   which makes everything else kind of look a bit worse.

00:26:49   Is that, am I right in saying that?

00:26:50   It's kind of what they were saying, right?

00:26:52   That's my understanding too.

00:26:54   It's like this is better than it looks, but it looks really bad because the last time

00:26:58   was so good.

00:27:00   Yeah.

00:27:01   And they also said something about the SE. That the demand of the SE has been higher

00:27:07   than they expected. And I actually have real life experience of this as of yesterday. So

00:27:13   yesterday morning Adina woke up and her phone was dead. Like it's just… I have never

00:27:17   seen an iPhone as dead as this iPhone.

00:27:20   So it's the very old iPhone she was still using.

00:27:23   She was using a 5S, my old 5S.

00:27:25   Oh okay, a 5S.

00:27:26   Turn it on and the screen would just go blue and then it would change all different colors

00:27:30   and die.

00:27:31   - No, that's a dead iPhone.

00:27:33   - It's dead dead.

00:27:33   So she went to the Apple store to try and get an SE

00:27:36   and couldn't get one.

00:27:37   It was three weeks back ordered.

00:27:38   - Wow.

00:27:39   - So today I went and picked up a 6S for her.

00:27:42   She decided to go 6S.

00:27:43   'Cause she really wasn't very keen on the SE

00:27:46   because it looked the same.

00:27:47   She really was like very vehemently against it

00:27:51   because she's had the 5S for like two years or whatever.

00:27:55   And she's like, "I really don't wanna pay 500 pounds

00:27:59   for a phone that looks exactly the same. She was very against this. So she's gone for

00:28:03   the success. And I get it. I understand that feeling. I totally understand it. But the

00:28:09   iPhone being down is a… it just looks weird, right? On the charts it just looks weird.

00:28:15   It looks strange because we're not used to it. But this is a question that I asked

00:28:18   you before we recorded the show. Is this… do you think… is this Apple's fault? Or

00:28:24   Or is this just a consequence of the technology world changing?

00:28:31   Is Apple to blame or is it like an outside force, a trend going on for any company that

00:28:37   Apple can do anything about?

00:28:40   I feel like it's got, it just has to be a bit of both.

00:28:45   There are trends that are changing but Apple could always do something.

00:28:52   I mean it's really difficult because it does seem like trends are bringing this stuff down

00:28:58   but none of these bad things have affected them before.

00:29:03   Something struck me, a comment from Tim Cook, he said, last year, no he actually said the

00:29:11   6s is stronger than the upgrade cycle of the 5s but the acceleration of last year's iPhone

00:29:19   6 launch, it's much much bigger than what we're seeing this year. Meaning, as an upgrade,

00:29:25   the 6s is doing better than from the 5 to the 5s, but it's no match for the insane sales

00:29:33   of the iPhone 6 last year. So why do you think that is? Is it just because the iPhone 6 was

00:29:39   a better phone compared to what used to be there before? Is the 6s kind of a letdown

00:29:46   in terms of an upgrade?

00:29:48   No, I don't think it's that. I just think it's because they were selling into new markets for the six.

00:29:53   For the first time.

00:29:54   For the first time. And I think it was just the thinking that it had nothing to do with the iPhone 6.

00:30:02   It was just the iPhone. If the iPhone 6s was out there, then the iPhone 6s would have sold that many.

00:30:10   It was just because they were into a new market that they weren't in before. Because look, this is the problem, right?

00:30:15   This is all the conversation in the previous quarterly results when Apple said that this

00:30:19   was going to happen.

00:30:20   This isn't a surprise that this happened, by the way.

00:30:23   If anybody wasn't following in their previous earnings report, Apple forecasted that they

00:30:28   would be down.

00:30:29   They fell within the estimate that they gave, which is also weird for them, right?

00:30:34   The fall within the estimate.

00:30:35   Usually, they exceed the estimates, but they fell within the estimate.

00:30:40   And I think it's purely because Apple have bumped into the amount of people in the world

00:30:46   that can buy their products.

00:30:48   It doesn't usually happen, but this is the situation that they're in.

00:30:51   They are in a "we are currently at the point where we have sold our products to everyone

00:30:56   that can buy them."

00:30:59   And they mentioned India as a growing market, and great, there's more people than China,

00:31:03   is that right?

00:31:04   I'm just going to say that, probably be wrong and everybody in both countries would be mad

00:31:08   at me, but lots and lots of people in India that they can sell to, and if the middle class

00:31:13   emerges in India the way it did in China, great, maybe in a couple of years' time there'll

00:31:17   be more phones to sell. But then all it will do is then it will just push this problem

00:31:22   off another few years.

00:31:25   Maybe that's why the stuff like the upgrade program is so important for Apple right now,

00:31:31   and why so many people see a lot of potential there, because having reached the kind of

00:31:36   ceiling, you know, all the people that you can reach that want to buy your phone, now

00:31:42   what you gotta do is you gotta switch gears and have those people upgrade year after year

00:31:46   to the latest model.

00:31:48   So what you end up with in that scenario is lower income, like overall, but more sustained.

00:31:55   Yeah, but sequential stability, I guess.

00:31:58   Because what it will do is it will bring it down for a period of time, but you won't see

00:32:01   the peaks and valleys, which is probably better from a Wall Street perspective.

00:32:08   Probably it's really like a subscription. I just checked by the way, there's 100 million

00:32:13   people difference between China and India, and India is 1.2 billion and China is 1.3

00:32:21   million, a billion, sorry. In terms of numbers it's not a huge difference,

00:32:27   I mean, Italy is not even 60 million people. Yeah, but when you're over a billion, 100

00:32:31   hundred million. It's give or take.

00:32:33   Yes, it's give or take a hundred million people. Tim Cook even said, "We see India

00:32:39   as China seven or ten years ago."

00:32:42   Exactly. This is what I'm saying. This is their next potential market, but they're

00:32:46   many years away from that, and all they'll be in is this problem again. They'll have

00:32:50   a peak where they sell into that market, then it will go down again. It won't go down

00:32:55   to where it is now. It will probably still be higher because it will be a new market

00:32:57   and sending to more people.

00:32:59   But all they would be doing is just having this problem again.

00:33:03   Like where Apple is right now,

00:33:05   it is not a problem for the company.

00:33:08   This is not a scary thing.

00:33:10   But what it is is a down trend.

00:33:12   And down trends are not good.

00:33:14   You just don't wanna see them, right?

00:33:16   Because they're forecasting the next quarter

00:33:19   is gonna be down on the previous year's quarter again.

00:33:22   So this is gonna happen again.

00:33:24   So the reason that I'm kind of so interested in this

00:33:28   and just looking at it is in the whole time

00:33:30   that me and you have been covering Apple,

00:33:32   even interested in them, this has not happened.

00:33:35   - It's the first time.

00:33:36   - This is the first time.

00:33:38   And next time is gonna be the second time.

00:33:42   So it is just a very peculiar thing.

00:33:44   Okay, let's take a look at this, right?

00:33:46   So if the iPhone is down, what, in theory,

00:33:51   The way that the company could, and I would assume that other people in Wall Street would

00:33:56   say should go against this.

00:33:58   If you've met the amount of people in the world that can buy your iPhone, you should

00:34:03   be selling more of your other products, right?

00:34:06   Like that is the way that very simply on paper, you would meet this problem.

00:34:10   Like if you've sold, if everybody has an iPhone, you then need to sell everybody an iPad, right?

00:34:16   Like that is in theory the way that you would beat this issue, right?

00:34:22   You sell them more products.

00:34:24   So this is where the other part of this is.

00:34:26   Mac is down, which is really weird.

00:34:29   Like that doesn't happen very often.

00:34:30   I think the previous quarter the Mac was down year on year, but like that's just like a

00:34:34   strange thing to occur.

00:34:36   Like why would the Mac be down?

00:34:38   That doesn't even make any sense.

00:34:40   And then iPad is down again.

00:34:43   So every time I mention this, and I think it's very clear now that I'm loving the

00:34:51   iPad.

00:34:52   I think in previous years people have thought that I was so harsh on this point because

00:34:57   I didn't like the iPad.

00:34:59   But you know I am now iPad forever.

00:35:02   And whenever I bring this stuff up people point out the fact that like they sold 10

00:35:07   million of them, 10 million of everything is amazing.

00:35:10   To me it's not the amount that's sold.

00:35:12   I don't care how many it is. It could be a billion or ten million. It's the fact that

00:35:17   it continues to decline. And the fact that the iPad sales are just going down, down,

00:35:26   down, it's not good because it hasn't reached the bottom.

00:35:31   See, I don't know. I think it's kind of… I think the iPad from a financial perspective

00:35:37   is kind of weird because I don't know how to kind of treat it. Is it like an iPhone?

00:35:45   Is it like a Mac? Because it's really none of both.

00:35:50   From a financial perspective you cannot compare it to either because the Mac, whilst it's

00:35:56   had a shaky Q2 here, has over the last few years grown. Not by a lot and it's still

00:36:04   half the size, but the trend is good, right? That not only are the people who currently

00:36:09   buy a Mac using it, there are new people buying the Mac. That's not what's happening with

00:36:15   the iPad, right? Like if you look at the iPad and the Mac, they're probably the closest

00:36:20   in comparison from a renewal cycle, right? Like, you have one and you use it for a few

00:36:27   years and then you buy another one when either one breaks or there is something so irresistible

00:36:32   that you must buy it. You'd expect that they're going to be closer like that but something's

00:36:37   happened with the iPad in that over time interest continues to wane.

00:36:47   Because what's happening is like we're like six years into this product's life cycle now

00:36:51   and you can look year on year at all of the quarters and you can see that it's steadily

00:36:56   declining. If it would have been after year one, we're at the point that we're at now

00:37:00   and it was right down low, you can say "oh, people buy them and they don't buy any more

00:37:05   of them" but what's happening is not only are, the way that I look at this is, not only

00:37:09   are people taking a long time to upgrade this device, there are less people making that

00:37:15   upgrade as time goes on because the numbers are completely unstable, they are just declining.

00:37:22   If there was some kind of stability in the numbers, which there isn't yet, you would

00:37:26   see people having a relatively frequent refresh rate like you see with the Mac. But that doesn't

00:37:32   happen with the iPad and that's why it concerns me and interests me because the product continues

00:37:39   to decline. Am I making sense here?

00:37:42   Yeah it makes sense and I think it's going to be a long road ahead. If Apple really believes

00:37:47   that the iPad is the future of their computing, you know, taking the iPhone aside for a moment,

00:37:54   If they really believe that the iPad is the future, it's going to be a long road to kind

00:37:57   of change the perception of the iPad.

00:37:59   Because what I don't understand is, are people buying iPads as their only computer, like

00:38:06   I could do, for example?

00:38:08   Or are people buying iPads in addition to a Mac, in addition to a PC?

00:38:14   Or is it just, you know, there's people buying the iPad as their only computer, which is

00:38:18   lasting for, I don't know, three to four years?

00:38:21   And what gives me... so I agree with you, I agree it's concerning, it's very clear at

00:38:27   this point that, you know, maybe some people, a lot of people are not interested in the

00:38:32   iPad.

00:38:33   But what gives me some hope is two things.

00:38:38   If people are buying iPads as their only computer, they're buying more iPads than Macs, you know?

00:38:45   So if I want to buy a computer, I can choose do I want to buy a Mac or do I want to buy

00:38:48   an iPad.

00:38:49   And if that's the reason, which I don't know, there's more people choosing the iPad.

00:38:54   Yeah, it's still twice the size.

00:38:56   It's still almost twice the size.

00:38:58   I don't know where it will stabilize, but it seems to be about twice.

00:39:04   But in any case, last year Apple sort of started understanding that they've been doing things

00:39:09   wrong with the iPad, both in the hardware and in the software, and they started to change.

00:39:16   with iOS 9, with the Pro, with the Pencil, with another Pro, with accessories, it tells

00:39:22   me that they understood, they kinda stood in a state of, you know, neglection maybe

00:39:31   for a couple of years. And now they're doing new things, but it's gonna take time. You

00:39:36   know, it's not that Apple releases iOS 9, Apple releases the first iPad Pro, boom, iPad

00:39:40   cells are off the roof again. And I think it's gonna take a long time for kind of change

00:39:49   the perception. Because what you haven't done in two years, in three years, it's gonna take

00:39:55   you twice as much to fix your mistakes. That's the way that I see it. So if Apple really

00:40:00   thinks this is the future, we're gonna make things right, it's gonna take a long time.

00:40:04   it's going to be a long road. Because there's still people using an iPad 2, and I can only

00:40:11   imagine if people who bought an iPad Pro last year are going to be using an iPad Pro in

00:40:17   four years. So understanding the refresh cycle, bringing more features to iOS, and kind of

00:40:25   bringing the pencil and the better hardware and the kind of experience of the Pro to the

00:40:32   more affordable iPad, it's going to take a long time.

00:40:36   Tim Cook made two statements about the iPad, which I want to try and see if we can look

00:40:41   at these from a common sense perspective to try and understand what he's saying. He said

00:40:45   that the June quarter, so the next quarter, we expect to see our best iPad revenue compare

00:40:52   in over two years. And then also said we expect seasonal sequential decline in iPad sales.

00:41:00   So if I'm reading this correctly, like reading between the lines, what he's saying is the

00:41:05   next quarter Q3, there are going to be more iPads sold than the previous quarter, but

00:41:14   there's going to be a seasonal decline.

00:41:16   So I'm very confused about how this is going to work out, but are they saying it's going

00:41:20   to fit somewhere between those two figures?

00:41:24   It's weird because if you're saying there's going to be seasonal decline, it would indicate

00:41:30   that there is going to be a decline from Q2 to Q3, right? But Q3 2015, there were more

00:41:40   iPads sold than Q2 2016. So if they're saying it's going to decline from Q2 to Q3, but

00:41:47   yet there's going to be a better comparison from year on year, that doesn't add up, right?

00:41:52   I don't know. Also the way that he phrased it…

00:41:55   Jason tries to break this down at six colors,

00:41:58   which is where I'm getting these quotes from.

00:42:01   And what Jason's tried to work out from this,

00:42:05   because he's also struggling with it as much as we are,

00:42:07   he says, "So I suspect Cook is really saying

00:42:10   "that iPad revenue will be down by single digits

00:42:13   "for the first time in two years,

00:42:14   "as opposed to double digits."

00:42:16   So the actual numbers sold might still be down,

00:42:21   but the revenue might be better,

00:42:23   'cause they're probably selling the iPad

00:42:25   at a higher ASP than they were before.

00:42:29   Which if that's all it is, that's not good.

00:42:33   The real key I believe when I'm looking,

00:42:38   so this is the thing,

00:42:38   this is one of the main difference about us

00:42:41   and looking at this to the way that analysts

00:42:43   and Wall Street people look at this.

00:42:45   We look at numbers of products sold,

00:42:47   not the revenue generated from the products.

00:42:50   That's what we care about, right?

00:42:52   and me and Jason have spoken about this before an upgrade.

00:42:56   The idea being that however many product numbers are sold

00:43:01   says something about the direction of Apple

00:43:03   and its ecosystem.

00:43:04   If Apple made more money from the iPad

00:43:09   than they do from the iPhone,

00:43:10   and they were still selling 50 million iPhones

00:43:15   and 10 million iPads, but just in some random way,

00:43:17   they made more money from 10 million iPads,

00:43:20   that wouldn't change the way that we look at Apple

00:43:22   because there's still 50 million iPhones.

00:43:24   So the ecosystem is very different, right?

00:43:26   Are you following what I'm saying?

00:43:28   Like the revenue generated by product for us

00:43:32   is not the point here, it is the amount of that product sold

00:43:35   because it says something about Apple's direction

00:43:38   as a company, I think.

00:43:39   So look, whatever Tim Cook is saying,

00:43:42   I don't think that what he is saying

00:43:45   is there's gonna be 20 million sold net quarter.

00:43:47   - No, me neither.

00:43:50   I think the reason I'm struggling is looking at these numbers from a people perspective,

00:44:00   if you will. Like, I understand there's really complex stuff going on, and analysts do a

00:44:07   much better job at understanding ASP and seasonal trends, that kind of stuff. But from my simple

00:44:16   point of view, I wonder, what can Apple do to make things better, to make a better product

00:44:23   and to make more people understand the iPad? Because in the end, that's what drives sales,

00:44:28   making better products.

00:44:29   Yeah, of this product, definitely. Like the iPhone, they can't do anything, I think. There's

00:44:34   not really a lot they can do with the iPhone to push against.

00:44:38   Maybe a new design wouldn't hurt, you know?

00:44:41   Yeah, maybe, but I mean, I think if they're just looking on year-on-year trends and stuff,

00:44:45   The idea is they've just sold too many of them.

00:44:49   So they can't keep selling it

00:44:51   because they're just running out of people.

00:44:54   For example, if you look at Q1 2015,

00:44:56   that was a new design, and the larger phones,

00:44:59   they sold 74 million of them.

00:45:01   Q1, they sold 74 million again

00:45:04   because they had to pent up demand.

00:45:05   I don't think Q1 2017,

00:45:09   you're gonna see 74 million iPhones sold again.

00:45:12   I just don't think that's gonna happen

00:45:13   because both of those times,

00:45:17   the reason that they jumped those 20 million

00:45:19   over the Q1 2014 in my opinion,

00:45:22   is because there were factors of people

00:45:25   that hadn't bought an iPhone before for a certain reason.

00:45:28   And I would be very surprised

00:45:30   if they could do something in 2017, which is the same.

00:45:33   Finally, they gave larger phones

00:45:36   to people that wanted larger phones,

00:45:38   and then they were able to sell iPhones

00:45:39   to people that couldn't buy iPhones before.

00:45:41   I don't think they're gonna have that in 2017.

00:45:43   I just don't see what that could be.

00:45:45   But that's why it's not my job.

00:45:47   - Is it too crazy to think that eventually

00:45:50   the iPhone won't be on a one year cycle?

00:45:54   - No, I don't think that would be the case.

00:45:58   I would be very surprised because there are,

00:46:02   if typically phones are on two year cycles,

00:46:06   then you want it on a one year cycle

00:46:10   so you get people above years.

00:46:12   Am I making sense?

00:46:14   Like say you sign up for a contract at 6S,

00:46:17   then you won't be ready until the 7S.

00:46:21   So it makes sense to kind of sell them every year

00:46:25   because you get people every year.

00:46:27   - I don't know, I just wonder if this kind of constraint

00:46:31   of having to come up with a new phone every year,

00:46:35   it's sort of becoming a problem

00:46:38   now that the market is so saturated with so many people having an iPhone and it's so difficult

00:46:43   to, at this point, it's so difficult to come up with something new every year. I mean,

00:46:47   what you gonna do? You cannot do a new design every year.

00:46:50   No, but people will buy them every year though, so why not keep selling them every year? Like

00:46:54   me and you, we're gonna buy a new iPhone every single year and there are so many people that

00:46:58   do that, so why not do it?

00:46:59   I don't know, I guess it's just strange to me that this year, the rumors we've heard

00:47:05   about the iPhone 7 are so kind of strange because people are talking an iPhone design

00:47:11   refresh next year, so for the 7s, but if it's a design change are you going to call it the

00:47:16   7s or the iPhone 8? And people are talking about the iPhone 7 being mostly similar to

00:47:21   the 6s, which I think, I don't know how it would resonate with people, you know?

00:47:26   I think this is what people said about the 5 though. That it was going to be similar

00:47:32   to the 4. But it was still different. It was bigger but the overall design was very similar.

00:47:39   I just think that that sort of stuff is second hand. I just don't take that until I see it

00:47:46   to be honest. Like the idea of how it's going to look the same. Because there are some people

00:47:50   that just think all these phones look the same anyway. Alright so I just want to go

00:47:56   back to looking at all of these numbers. Looking at them all in one, right? Looking at iPhone,

00:48:01   Mac, iPad being down, I just think there's no real spin you can put on this.

00:48:05   It just doesn't look good.

00:48:06   I don't know what you say, right?

00:48:09   Again, we'll go back to like, they sold tons of all these products.

00:48:13   They made millions and millions and millions, billions of dollars, right?

00:48:18   Which is fantastic.

00:48:19   As I say, but you look at those trends going down, the fact that you and Jason have had

00:48:23   to adapt your charts because you didn't have downtrend charts.

00:48:31   It just doesn't... it just feels weird, right?

00:48:34   Like, I just don't see that anybody inside of Apple is really going,

00:48:39   "Yeah, but we made so much..."

00:48:41   They don't like that this is happening, surely.

00:48:43   They don't want to see this.

00:48:44   You never want to see a downtrend in any kind of work, I think.

00:48:49   But, I mean, of course, the sky is not falling.

00:48:54   It's not a big problem for Apple right now.

00:48:57   of a perception problem, maybe, to have people think that Apple is in trouble. Even if they're

00:49:04   not really in trouble, but to have the kind of message, you know, it sort of becomes a

00:49:11   self-fulfilling prophecy, maybe. That's my fear, that people are going to start thinking

00:49:16   Apple is in trouble, maybe I shouldn't buy a phone, and people are going to buy different

00:49:20   phones, people are going to buy different tablets. I know it's a sort of apocalyptic

00:49:24   scenario maybe, but that's the biggest problem that I see is the perception of trouble, not

00:49:29   necessarily the trouble, which is there.

00:49:31   Yeah, because of the headlines, right?

00:49:32   Yeah.

00:49:33   Because the headlines are not reporting things incorrectly, they're just sensationalizing

00:49:37   parts of it.

00:49:38   Because this is different.

00:49:39   Usually when people, every earnings report will pick out something to try and be like,

00:49:44   "Apple is doomed," and it's always just rubbish.

00:49:46   But this time, there is stuff that you can pin on, not to say that they're doomed, but

00:49:50   to say that you know you can if you want to it's not as difficult to write an

00:49:55   Apple is in trouble story this time when they're clearly not but you can write it

00:50:00   because you have a chart that proves it. You have the numbers. You have the

00:50:03   numbers and again right Apple is predicting between 41 or 43 billion for

00:50:08   the next quarter which will be a decrease from the 50 billion sales in Q3

00:50:11   2015. They're not doomed but this is a change. It's change and I guess

00:50:18   Wall Street doesn't like change for Apple in this sense?

00:50:22   Why would they though? I mean, I know that Apple is judged on a different scale to other

00:50:27   companies and the reason is because they have been like a rocket ship for the last 13 years.

00:50:34   So like, the reason Wall Street looks at them in the way that they do is because Apple does

00:50:38   things that you could never imagine from a financial perspective. So when that stops

00:50:42   happening, they have to be judged differently.

00:50:44   Yeah, maybe even rocket ships eventually have to stop to refill.

00:50:49   Yeah, let's be honest here, right? Let's look at this.

00:50:53   Apple's meteoric rise has helped everyone that cares about it, right?

00:50:58   So everybody at Apple has made lots of money because the stock went up so crazily,

00:51:04   and people like me and you have built businesses on the back of the fact that Apple has been such

00:51:09   an incredibly successful company. Yes.

00:51:11   So now that it's changing, we kind of just have to accept that, and just accept the fact that now

00:51:18   Wall Street is unhappy, because it's been so incredibly good for such a long time.

00:51:22   And I know, I think that as I'm saying all this stuff, I sound like I'm trying to spell doom and

00:51:29   gloom, which I'm really not attempting to do. I'm just trying to get my head around the fact that

00:51:34   the company that I follow so closely, and have been for such a long time, is now in a different

00:51:41   world to what I've seen it at before.

00:51:43   The side effect of that is that if this trend continues, Apple has a chance to be seen again

00:51:52   as the underdog, and people love underdogs, people love companies who are in trouble.

00:51:56   Yeah, I mean, they're not going to be in trouble, but...

00:51:59   The perception of trouble is just as strong, maybe.

00:52:03   Part of Apple's problem in this is its history.

00:52:06   knows they were the company that nearly went bankrupt. You know? So that's why the Apple

00:52:14   is doomed stories exist, because it existed once before. Like Nintendo just posted a loss.

00:52:21   Nobody's saying Nintendo is doomed. People are saying Nintendo is in trouble, but no

00:52:25   one's saying that they're going to go out of business. And Nintendo is in way worse

00:52:28   shape than Apple. Because Apple is one of the most profitable companies in the entire

00:52:34   world. But it's easy to poke at Apple and point at Apple and say that they're going

00:52:40   to go out of business because it happened once before.

00:52:45   But there are things that are up. Services and other products are up. The Apple Watch,

00:52:50   it falls in other products. Tim Cook said that it met expectations for the quarter and

00:52:54   also said, this is very interesting that he said this, that they believe that the Apple

00:52:59   Watch will be a seasonal product like the iPod was with a lot of holiday sales.

00:53:03   Yeah, it makes sense.

00:53:05   How is that going to factor in for the way they market and push the product?

00:53:09   Who knows?

00:53:10   But what we do know is if you were fed up of paying for things in September, well, sorry.

00:53:15   It's another thing to pay for every September.

00:53:17   Yeah, you're going to be paying a lot of money in September.

00:53:20   So I think one of the things that we're going to see is that the iPhone and the Apple Watch

00:53:24   will always be unveiled together.

00:53:27   And I think what that's going to do is as Apple is struggling to find new things for

00:53:31   the iPhone to do, they will be able to say new things that those products together do

00:53:36   as marketing.

00:53:37   Oh yeah, that's a good idea. Especially when the Apple Watch will gain independence from

00:53:44   the iPhone, they will be able to focus, I guess, instead of technologies to make the

00:53:50   watch work as an accessory, when the watch is independent from the phone, they can just

00:53:55   work together. They can do stuff together, they can be faster, communicate faster, do

00:53:59   things together with sensors and stuff. So I think we're going to see, I mean the Apple

00:54:06   Watch makes sense as a holiday gift. You know, I've heard from a lot of people buying Apple

00:54:11   Watch sport models for their families, you know, their significant others, so it makes

00:54:17   sense to me to have it be a seasonal kind of product. What's interesting to me is the

00:54:24   The App Store revenue being up 35% and the way that it said Apple Music, which is our

00:54:30   first subscription service, crossed 13 million paying customers.

00:54:36   Why do you think it said first?

00:54:38   Because they will do more of them.

00:54:40   One of the ways that you make more money is selling to your existing customer base.

00:54:47   They have millions, tens of millions of iPhone customers.

00:54:52   Sell them subscriptions.

00:54:53   There's gonna be other stuff, whether it's gonna be TV or apps, they'll do other subscription

00:54:59   services.

00:55:01   Because look, Apple Music, 13 million, that's pretty good, because lots of people don't

00:55:09   like it.

00:55:10   And it's in a market that Apple were really late to, and quite frankly, in a lot of ways,

00:55:14   they have a worse product.

00:55:17   But they're able to sell 13 million subscriptions because it's on the phone.

00:55:23   Now Apple, if they continue to go down this road, might bump up against the European Union

00:55:28   and this is something that they're going to need to consider because the European Union

00:55:32   gets very upset about things like this.

00:55:35   But I think that as time goes on, Apple will continue.

00:55:38   I mean, there's so much TV stuff that they're talking about, right?

00:55:42   Like I think that these shows are not going to appear in Apple Music.

00:55:46   They will be an Apple TV thing, but you'll be able to also watch it on iOS devices.

00:55:51   I believe that the subscription service that they bring out for the Apple TV will not just

00:55:56   be on the Apple TV.

00:55:57   It will be an Apple TV like they'll call it something else.

00:56:00   I don't know like Apple, how's it gonna call it Apple Watch?

00:56:03   No you can't do that.

00:56:04   That name's taken.

00:56:05   But you know like it will be like a video service.

00:56:07   It'll probably be Apple Video, right?

00:56:09   And you'll be able to watch their own unique programming and blah blah blah stuff from

00:56:15   Disney, you know?

00:56:17   The way they've done it before, they'll have some movie stuff.

00:56:19   I think that's where they're gonna go with this and it'll be another streaming service

00:56:23   for them. Because look, frankly, they need to push up the revenue and one way they can

00:56:27   do that is to sell things to their existing customer base. Their existing customers are

00:56:32   not buying iPads, so you may as well sell them things that don't cost as much to produce.

00:56:39   Digital things, content.

00:56:42   Or maybe they could sell like a fitness program, subscription, people to get in better shape.

00:56:48   it all. Like Weight Watchers done by Apple. Apple are looking at Amazon, right? Amazon

00:56:57   do all of these things. I think that's what they're looking at. They're like, Amazon has

00:57:02   found a way to tie a subscription service to everything. Now admittedly Amazon's is

00:57:09   one subscription service, which I don't think Apple will do. I think that there would be

00:57:14   a few different subscription services for different things, but I think that's the route

00:57:18   that they will probably end up taking.

00:57:21   I think so because you want to make money on existing customers, you know?

00:57:29   You want to make more money out of people who are already your customers and what's

00:57:32   the best way to, you know?

00:57:34   If they're not buying iPhones every year from you like you want them to, have them give

00:57:38   you a little bit of money every month, which is also the iPhone upgrade program, that's

00:57:41   what that's all about too, you know, we were talking about that earlier.

00:57:44   What I wanted to ask you, Myke, to kind of close this sort of segment, is looking at

00:57:50   the future.

00:57:51   So we've talked about the iPad, we don't know what Apple can do, there's a bunch of things

00:57:55   Apple can do, but I guess we'll talk about it later when we do our iOS 10 episode.

00:58:03   Do you think, so in addition to video subscription services, more stuff on the App Store, do

00:58:10   Do you think Apple is going to place their bets on VR eventually?

00:58:14   Could it be a nice, maybe money generator of course, but a nice complement to the iPhone

00:58:21   as a product, to have the iPhone become the VR machine?

00:58:28   I don't know.

00:58:29   I don't know, I'm struggling with understanding mobile VR and how that's going to work, because

00:58:36   the Gear VR works because it's an extra thing you put the phone into.

00:58:40   I can't imagine how a device could have VR without you needing to put it into something

00:58:46   or connect it to something.

00:58:50   I think that Apple are going to be late to VR unless they surprise us in the next year.

00:58:57   I don't see what they're going to do there but they should do something.

00:59:02   I also don't think that as it stands right now, VR is enough of a thing to make a big

00:59:08   dent.

00:59:09   an Apple VR product would make about as much of a dent as an Apple Watch product.

00:59:14   You think so?

00:59:15   Yeah.

00:59:16   Hmm.

00:59:17   I really think if they eventually do VR, it'll be an iPhone thing.

00:59:21   It'll be some kind of iPhone accessory or based on the iPhone.

00:59:25   Just because we've talked about this on our video game show, ReMaster, but I do believe

00:59:29   that eventually all VR is going to be mobile.

00:59:32   It's going to be the same screen that you carry around all the time.

00:59:35   Just because it's the right size of a screen to put in front of your eyes, and VR is going

00:59:40   to be based on that.

00:59:42   But that's years down the road, you know?

00:59:44   Especially with Apple, they like to wait for new technologies to take off, but I do see

00:59:50   VR, potentially, you know, two, three years from now, as a new kind of addition to the

00:59:56   iPhone.

00:59:57   I don't even know if three years from now it'll be called the iPhone, but I guess

01:00:01   so.

01:00:02   So that could be an idea.

01:00:04   But in general, I feel like... I look at these numbers, right, and it's objective. A downtrend

01:00:13   is happening, it's going to happen again, and it's not good news. And there's no way

01:00:17   to spin this positively. You could say, "Well, we're doing bad now because we've done so

01:00:24   much better before and it was an anomaly." But again, negative numbers are negative numbers.

01:00:29   There's nothing to argue about those.

01:00:31   But I do wonder, as I told you, is this Apple to blame?

01:00:38   Yes, partly.

01:00:39   I think Apple is to blame here.

01:00:42   Especially with the iPad.

01:00:43   And especially with the Apple Watch.

01:00:44   I don't know what kind of impact it's having on, you know, what meeting expectations means,

01:00:50   but from my perception it doesn't seem to be the kind of crazy success that the first

01:00:55   iPhone was.

01:00:57   But I do wonder, what can Apple do to make things better?

01:01:01   And the things that I believe Apple can do will take time, will take a long time to steer

01:01:09   the ship, especially with the iPad.

01:01:12   So I think we're in for a long period of changes, Myke.

01:01:17   And it's going to be, I'll tell you what, it's going to be fun to observe.

01:01:22   It's not fun because there's people going crazy with these negative numbers and it puts

01:01:28   a lot of pressure on the financial departments of Apple.

01:01:31   I find it interesting.

01:01:33   It's interesting.

01:01:34   It's fascinating to observe.

01:01:36   And I think the next couple of years really are going to be interesting with the iPhone

01:01:42   upgrade program expanding to more countries, with this iPhone 7 and iPhone 8 refresh, with

01:01:48   the new versions of Apple Watch with the iPad finding a new soul again, it's really fascinating

01:01:55   to observe, if only from a blogger and a podcast perspective.

01:01:58   If you want to catch our show notes for this week head on over to relay.fm/connected/88.

01:02:06   Thanks to the lovely people over at Smile with PDF Pen Pro for supporting this week's

01:02:11   show. If you want to find Federico online head on over to macstories.net and also check

01:02:17   out our podcast from Remaster that we do which is all about video games at relay.fm/remaster

01:02:23   and also Federico hosts a show on relay.fm about iOS productivity with Fraser Spears

01:02:30   and you can find that at relay.fm/canvas. You can find me online, I am @imike, I-M-Y-K-E.

01:02:37   Federico is @vittici, V-I-T-I-C-C-I. I host a bunch of other shows at relay.fm. You can

01:02:42   find them at relay.fm because there's lots of them. Thank you so much for listening to

01:02:47   this week's episode. Steven is at ISMH. He'll hopefully be back next week with another iMac

01:02:52   in hand, fresh from the plains of San Francisco, I guess, is where you'd find them. We'll be

01:02:59   back next time. Until then, say goodbye, Federico.

01:03:01   >> Allez, urchie.