0:00:00so anyway did you have you ever noticed ben thompson joining me this week ended
0:00:04up on a talk show evidence of some websites where it like the username
0:00:08password don't get auto filled yeah I think usually the websites while they
0:00:14mislabeled the field or something
0:00:15yeah and it's not like that thing where we're certain financial sites have I can
0:00:20opt-out thing it's like a site where there's nothing really super
0:00:24confidential about it it should work just doesn't yeah well I am still
0:00:29scarred from the whole like they've had autocomplete for just like addresses
0:00:33like when you're buying something and I swear those never worked for like the
0:00:37first three years and maybe they work today but I i will never know that
0:00:41refused to use them are you don't use the autumn still have either every field
0:00:46which then really do they even worse in noise when they have the field in the
0:00:49wrong order in your tabs only landed on the bottom of aids the credit card thing
0:00:54works perfectly for me i i came over the last time that the credit card auto
0:00:58filled didn't work but the password thing drives me nuts and I sometimes I
0:01:04think it's because it's like I've already saved a password for WWW dot
0:01:11example.com but right now I'm on stored at example.com and so it doesn't see it
0:01:17is the same website and doesn't fill attend I don't even know and other times
0:01:22I think it's like you said that they don't have the password field correctly
0:01:26labeled as a password
0:01:27yeah I die I have used I mean I've used one password for a long time but the
0:01:33funny the funny thing is actually rarely use it cause I have this you know this
0:01:38super convoluted system for for passwords that involves like a a a seat
0:01:45or random stirring shifting your fingers like to think they'll run the keyboard
0:01:50explain in detail for Christmas I actually don't mind I feel pretty I mean
0:01:58cynicism that accent I can say anything else does that lasted eighty pni Casey
0:02:04soviet know that challenging challenging tech listeners to do anything is not a
0:02:10good idea
0:02:12but it is quite convoluted it takes it would take me like 10 minutes to explain
0:02:15it which is what we decide that it's it's robust pretty good actually I i
0:02:22switch to this win win the iPhone first came out
0:02:25you couldn't use like one pass or anything like that I needed I wanted to
0:02:29have complex passwords and different passwords every site but still be able
0:02:34to somehow memorize them all and so it's been pretty good mostly thing is when
0:02:40like a site has a breakdown or password is stolen it reset it like a backup
0:02:47system for sites that have been problems once it gets it gets messy pretty
0:02:50quickly gets me is that I'm more annoyed now when I run to his site then I was
0:02:59back in the days when no passwords yeah because it wasn't an annoyance before
0:03:05right I think it's probably like when they invented modern plumbing and people
0:03:11who grew up always having to go to an outhouse every time they wanted to go
0:03:14and then obviously in most places had indoor plumbing but every once in a
0:03:18while you get to a place it was worse I'm sure that that was worse than when
0:03:23they were child children and had to go anyhow everything everything is relative
0:03:28right thank you once the bar is raised can never go back
0:03:33yeah I think there's there's probably gonna make some sort of there's a funny
0:03:40tweet on Twitter that about sums of make a podcast cut-up of everyone think I
0:03:44swear and system City joke to be made there he said that I remember the last
0:03:49time I saw the show there was a time you think you actually did get busted so you
0:03:55think it was your it was here a precise date later gloria talk with other
0:04:00podcast like yeah so actually I met the guy from broadcast it down the shit hit
0:04:07the fan maybe that's funny because you don't seem to you seem like a profane
0:04:13exact same thing you just talked about when there's one pastor that doesn't
0:04:19work it stands out more
0:04:21whereas you know there's just a whole string of expletives they can run into
0:04:25each other at some point but just 11 finally place one really really jumps
0:04:31out that the well-placed actually takes get site so I guess there's not much
0:04:44going on except that we're in it seems like everybody has collectively sort of
0:04:49finished digest in the BBC and Google yeah and a couple of good pieces this
0:05:03week you had a good piece of me try this strategic every three seconds its arm
0:05:09protector E does it stack up and I did switch it up so it's my fault and now no
0:05:15one knows but you have a good piece on samsung said the other a little tidbit
0:05:22and who knows you know 11 quarter is is a datapoint not necessarily a trend but
0:05:29Samsung had a pretty bad quarter
0:05:33either so it it was soft
0:05:36i think is the word that they use this is this is not by any means out of the
0:05:42blue let's talk about them first I think in broad strokes what it seems like
0:05:50we're seeing is that Samsung had for a while
0:05:55occupied a certain middle-ground floating you know making some money on a
0:06:01lot of high quality of lower-end smartphones
0:06:06and a decent sized chunk of higher-end smartphones but that there were seeing
0:06:14signs that they're getting pinched on both sides that Apple still dominates
0:06:18the high end and as you know has the throughout the whole euro smartphones in
0:06:22terms of profit and revenue and on the low end they're running into various
0:06:32competitors Ryan and China in particular with how do you how do you say it
0:06:37Xiaomi Xiaomi how do you spell that
0:06:40Xiao which is the the is actually a really Chinese character in it so use
0:06:48pinyin to to write in English so but that actually works it works well and
0:06:56it's it's it's a company that very interesting to me you know far more
0:07:01about them than I do it's actually one of the main reasons
0:07:04show this week and if I don't know a lot about him I can't help but think that
0:07:10there's an awful lot of listeners of the show who don't and maybe even haven't
0:07:14heard of them before but I think I think they should be on everybody's radar
0:07:20especially when it comes to Samsung even though I think for the last year or so
0:07:24there's been a lot of stuff in the press and in investor world that sort of has
0:07:30them as somebody who Apple should be looking out for but I think I think it's
0:07:36actually I think you've made this point pretty well that it seems well there any
0:07:40I think the the number one thing about show me in particular is is you have to
0:07:45really there is this breathless like feature in Bloomberg like shiny week you
0:07:53know about this big this big thing like you have to clearly delineate between
0:07:58China and the rest of the world and in china shop deserves all the hype like
0:08:06they are they're killing it they are a Chinese company they are Chinese correct
0:08:11the and and just in general and this goes for a lot of the chinese companies
0:08:16in general like China really is its own
0:08:19completely separate world we're very widdle applies to what happens the rest
0:08:25of the world particularly the west and vice versa and a lot that's because of
0:08:29the Great Firewall part of his because of you just cultural differences and
0:08:34partly because it's such a huge market it's like i mean us' us' companies get
0:08:39criticized for being you know to us' focus but why wouldn't they be it's you
0:08:43know it's 300 million of the richest consumers in the world like it makes
0:08:47sense to start out there
0:08:49same thing for Chinese companies your city of a billion customers a very large
0:08:55you know an absolute number of which are very rich and a good number which are
0:09:01getting richer so why not focus there and and so that's just in time to watch
0:09:09a movie about china is really important kind of like draw that too I think so
0:09:13he's not much of a threat outside China but in China there are there big deal in
0:09:18in in China threat to Apple as well and that's why if the distinction right and
0:09:24China is big enough that even if they're a Chinese only company it's big enough
0:09:30to matter to me I mean Apple china's gonna be Apple's biggest market in like
0:09:35five years or something like so it it matters just to give you an idea of what
0:09:41a massive market it is like in so it doesn't matter even if even if show me
0:09:46only threaten Samsung in China are only through an apple in China because China
0:09:53such a significant market for both companies that means the company's as a
0:09:57whole are threatened
0:10:00and part of it too is this is where being based on Android can work in their
0:10:09favor is if they were running their own proprietary platform it might be a
0:10:14problem that they were strongly in China right right like maybe sort of like what
0:10:20what blackberry was like back when blackberry had a huge market share in
0:10:24the us- and when was sort of non-existent elsewhere this is now is it
0:10:29going back
0:10:30free iPhone this is like early 2000 when blackberry was this abnormality it
0:10:35worked for them because they didn't need software it wasn't really about apps yet
0:10:39it was just about communicating and the people in the USA had BlackBerrys were
0:10:43for the most part communicating with other people have blackberry so it was
0:10:46ok whereas now where you need an app ecosystem right you know
0:10:53Xiaomi can can capitalize on that even if they're only really strong in China
0:10:58because Android is Android will ever actually funny because that's the other
0:11:04part where China is just a different world right we like I as a rule I think
0:11:09we talked about this this last time is you know you you have to be one of the
0:11:15two you if you wanted to buy in China that's the big exception right because
0:11:25most of phones in China are on ASPD the open-source Android and there's a whole
0:11:31plethora of services that filled in there like there's UCWeb which is the
0:11:35biggest browser just bought by Alibaba there is a whole bunch of apps stores a
0:11:40few which they like there's been some competitions are emerging as the key
0:11:44ones and so there's almost like there is a whole separate legal system of
0:11:48services that most of the phones their use and it actually in in in China
0:11:54Chinese developers are used to this writer is actually services that help
0:11:57you get your app on all the different stores you can be everywhere and it's
0:12:01funny like if that if that sort of whole ecosystem were in the west that would it
0:12:08would actually totally transformed the market here because it would really weak
0:12:12and the the kind of the importance that the Play Store does have in kind of
0:12:18making giving Google full control of that if that makes sense so it's i mean
0:12:24everything there is this really is really so different and there's lots of
0:12:28things that are interesting for for Western companies I mean schools and
0:12:31really not important at Alder they're not important because they're blocked as
0:12:35for search but they're also not important because they don't really
0:12:37control and right there and the only western company actually that really
0:12:42matters is apple and that's because they sell hardware so do you think that's
0:12:47already having an effect on Samsung's numbers over yet what do you think it's
0:12:52more it's already partly China but is it is it only china is it is a worldwide I
0:12:58think I think for sure so wud u looted before I think Samsung has as a
0:13:04prominent both ends on the high end they I think they they they got a lot of
0:13:13high-end customers I think for two specific reasons again this was more
0:13:18conjecture previously been now that is actually happening I think we can see a
0:13:21lot more certainty someone was the iPhone has always been relatively
0:13:27limited comes to carrier distribution you know they were they were stuck at
0:13:31like two hundred and twenty four like two or three years and even before then
0:13:35there was even lower and and that left a good five hundred carriers around the
0:13:41world where there was no iPhone and resuming her welcher carrier and in
0:13:46richer countries people tend to be more loyal to their carriers in you wanted a
0:13:52high-end phone whether there was no iPhone choice Samsung or HTC or whatever
0:13:57those and Samsung has always been you know a very good competitor you know
0:14:03whatever you think about their design is in his third they're very well-run
0:14:06company they're very competitive they have great marketing they pull although
0:14:09all the lovers and if there were no iPhone you know they they would continue
0:14:15I think to do very well at the high end in a sec probably doing very well but
0:14:21now the iPhone is really started to again
0:14:24expand its carriers in part that is the big ones which interview DoCoMo in Japan
0:14:29Japan and China Mobile and China but also lots of little ones like I'm here
0:14:33in I'm back in the states I'm in Madison just for the summer and a big carriers
0:14:38USS cellular right is the fifth largest in USA but still lots more the other
0:14:41ones they've never had the iPhone now they do and there's lots of these little
0:14:45ones that any one of them by themselves doesn't mean much but when you're adding
0:14:50like 50 of them like Apple has that that just increases Samsung's competition
0:14:56where Putin didn't have any competition there it's built filling out the long
0:15:00tail of carriers right exactly exactly and Samsung his own net long tail exams
0:15:04Samsung's big advantage still remains their their relation to carriers in all
0:15:12their own mental connection they deliver exact with carries one what they need
0:15:16and really they've kind of stepped into the Nokia role which that used to be
0:15:20nokianokia had all those except for except for the US-north he had relations
0:15:25with every carrier they they do everything they needed and that gave
0:15:30them a that's really important in the mall business and Samsung has inherited
0:15:34that they still have that advantage of me the iPhone so unique one can be
0:15:38carriers and that sort of thing was it was the first phone that people were
0:15:43people value the phone more than they value their relationship with their
0:15:46carrier and that really upset the apple cart and it is less in Samsung's
0:15:52advantage in the carriers were there compete directly with with the iPhone
0:15:57yeah I think like go back you know free smartphone you know when you go in and
0:16:03you know big ones I remember at least here in the states were always Nokia and
0:16:07Ericsson and eventually Sony Ericsson but they were seemed to me like somebody
0:16:14who never was really into cell phones before that I mean I'd have one just for
0:16:18the sake of making calls and truly rudimentary texting but it just seemed
0:16:24to mean that those were the two brands and you go in but it never really seemed
0:16:27to matter too much you know is it was far far more about choosing between
0:16:32you know Verizon and singular where or who ever you know whatever the names of
0:16:36the various carriers were in the states that it was really mostly about which
0:16:40carriers gonna go into yep and even even now I mean will be the iPhone so so
0:16:47unique is the first phone that people really willing to switch carriers for
0:16:53and that gave out below all the negotiating leverage with with carriers
0:16:58from that from that point on
0:17:00but even then there were there is still a woman's number of people who would do
0:17:05that
0:17:06like you know there were still people who were you stay with rising no matter
0:17:09what and and so it's it's been that dynamic has has helped Samsung and
0:17:18continues to help them but I as outbox bands that kinda again pics off you know
0:17:24just a lot of these while the one tells aqueous yeah and you made the point that
0:17:29one of the things to understand the dynamics of this is that for practical
0:17:34purposes no it's not really a hundred percent of course nothing ever is but
0:17:37practically speaking at best thing of it is everybody is going to own a
0:17:42smartphone right which is there's there's very few things in the world
0:17:48that are like that especially in tech a lot of the things that are like that are
0:17:53things like I don't like washing machines are ya ya TV a TV is a good ago
0:18:01TVs but this thing though TV's even will ultimately have less penetration than 10
0:18:06smartphone which is which is pretty amazing right because a lot of its gonna
0:18:10end up I think maybe a little bit more towards one TV per household and one
0:18:15cell phone per person
0:18:17rain and even if you go to multiple tvs per household it still is probably going
0:18:23to trend not towards one per person but but less than one per person maybe you
0:18:29have one in the master bedroom
0:18:31and one in living room but tablets are clearly eating into that you know where
0:18:35a lot of you know personal consumption of video is clearly going towards
0:18:40tablets and smartphones you know like like if you know the average number of
0:18:45TVs in a house I'm sure has if anything it might be going down because if you
0:18:49were going to have one like for your teenager teenager have a TV in their
0:18:53room that might be a PC and a tablet now right you know PC for the games and
0:18:59tablet for watching video and TV we're just to get around a little bit more on
0:19:06one thing that's actually really interesting but the Samsung results I
0:19:09will get back to the high low and stuff but is they talked about the fact that
0:19:14they they felt their tablet sales have been hurt by their big phones their
0:19:18phablets which which building on this point I think there is there like
0:19:24injection think rightly so that a lot of tablets are used primarily for your TV
0:19:28viewing basically but actually worldwide you know not the you s market where the
0:19:34disproportionate share but if you look worldwide tablet and and so many people
0:19:39had so many observations from CES this year that there are a lot of the no-name
0:19:44brand Android tablets that clearly designed knowing that they're just gonna
0:19:50be used for consuming video in in the thing about video video video and Asia
0:19:58is is a lot different than here in that basically everything is available
0:20:05very easily like I mean needs yes there's things like Hulu Netflix here
0:20:09but there's always kind of a bit of a challenge of seeing like whatever is up
0:20:12next
0:20:13like whatever she hot show is going on right now they're mostly Korean shows
0:20:17like these soap operas or like once it's aired it is available for streaming
0:20:24within like an hour if if not faster and it says it's interesting because I don't
0:20:30think it's actually there's not really cracked it's it's not really frowned
0:20:34upon it's not really sees it as an issue is it legally it's it's not like you're
0:20:40saying it's not legal but the
0:20:42the IP infrastructure there is such that nobody really I'm not sure to be honest
0:20:48I mean I it may be one of those things where it's not only legal black no one
0:20:53actually no one really cares it is it is true that in many countries the IP
0:20:58infrastructure is not there but also or maybe even the IP culture frankly yeah
0:21:04that's a big part of it that's a big part of it as well i think is like just
0:21:09in general there's a difference i mean it's very open right i mean even in
0:21:13phnom in some of the more more you know
0:21:17advances in the world by countries that have had a long history of IP
0:21:22enforcement like Japan or Taiwan a little bit more so I mean all those out
0:21:30there still you can still find comfort bags they're more like in the alleys
0:21:34right it's not high street corner like like in some parts of Asia so it's a
0:21:38little stronger but there's the other they're very publicly available and and
0:21:45to watch them and to watch this show to watch TV like that is very common and I
0:21:51i dont know all the countries in is obviously but in my experience your TV
0:21:55is is just as much a thing there as it is here if not more so
0:22:00and and so the whole idea of them being used primarily for that use rings very
0:22:07very true to me while I and then you were saying that Samsung explicitly said
0:22:13with regard to their poor results are disappointing results and it's not just
0:22:18that they're down there were down was somewhere around 16% less profit than
0:22:23than was expected right and that's the weird thing about reporting results
0:22:27right it's all about expectations and they were they were under their
0:22:31excitation Thunder analyst expectations and buy you a pretty significant amount
0:22:35and so we can even even if we go with the hey come on and let's just make this
0:22:39stuff up at least Samsung's own guidance you know should be a fair measure that
0:22:45most companies you know usually put out guidance that they expect to at least be
0:22:48able to me that I get so genuine
0:22:50it one if it's just you know and Apple has run into this many times over the
0:22:55years where where Apple will will post results that are pretty close to their
0:22:59guidance maybe a little maybe a little down but generally pretty close but if
0:23:03there's way less than what analysts had projected it's it's headlined as a big
0:23:10mess yeah it's weird because they like the worst of the worst thing you can do
0:23:13is miss your own guidance
0:23:15gonna get hammered for that the second worst thing you can do is missing
0:23:21analyst guidance but then there's also if your guidance is lower than what
0:23:26analysts expect to be like him so that's that's when Apple takes hit after
0:23:30earnings it's usually because their guidance for the following quarter is
0:23:35lower than what analysts anticipate it would be where is everything that
0:23:39happened the previous quarter like that's almost always beit din and never
0:23:43missed like meeting for Wii U no recent history their recent results oh yes it's
0:23:51all it's all its own expectations game I know people get frustrated Wall Street
0:23:57but it's it's a lot more it's not as its not as ridiculous as people think I
0:24:01think the main thing with wall street is wall street is it is a stock inherently
0:24:06is all about the future it's all so whatever you've done the past it's only
0:24:10useful in so much as it's an indicator for all happen going forward right it's
0:24:15not a risk bringing apple into it is sort of it's an aside but I think it's
0:24:20interesting because there has been a min this is not something that they actually
0:24:23came out and said is that we're going to try to be a little bit more accurate
0:24:28with our desirable that the couple of maybe it was a year or so maybe a little
0:24:32bit more and that they said look we're going we used to you know give you a
0:24:37lower end of our guidance which is translated means we really low ball the
0:24:42numbers in always put out a number that we knew that we could be there for you
0:24:48know anybody who is trying to accurately gauged you know what to expect from
0:24:52Apple had to pick a number that was higher than that and so you had to
0:24:57analysts had to pick a number that was different from Apple's always higher
0:25:03because Apple you know what about its serious significantly low ball them I
0:25:09think that the change you know and this is one of those it's something that
0:25:14started in the post Steve Jobs era I think it's probably had the intended
0:25:20effect in it seems as though Apple's guidance and Wall Street guidance have
0:25:25become much more largely aligned and whether it's a little bit or a little
0:25:30bit worse it seems like the stock has become a little bit less volatile just
0:25:37when results are are issued no I that's a really good point I think you're
0:25:41probably right that this is probably a quick thing you know jobs probably
0:25:45enjoyed beating expectations you know but by a lot but the reality is that
0:25:50actually introduced more uncertainty jobs as prospective was probably along
0:25:55the lines of screw those guys screw job just like the surprise right we we did
0:26:02murder results right it was another chance of the reveal where but I think
0:26:09it was bad for Apple you're exactly right because analysts had to make had
0:26:13to pick something up and what I just said about about the current results no
0:26:18longer being interesting is because of this change is because they they are
0:26:21almost exactly right every time and so now I was focused on there they're going
0:26:26forward estimates and I think that I think wonder jobs with the lowball
0:26:31numbers it was like screw up let them figure it out
0:26:34whereas the cook idea is let's help these guys out because they're wrong
0:26:39they're always wrong and hurt because you know we don't we keep somewhat close
0:26:44to invest so let's yeah and them being wrong
0:26:47hurts us so it's in our interests to help these guys and give them guidance
0:26:52that actually is truly guidance yeah I mean this is another thing that just
0:26:57really a test to kind of wait cooks how impressive cooks operation is is
0:27:04how the way that our pool is so exact on their numbers every single time and that
0:27:10that that goes back to the operation cited write operations is it's not
0:27:14sexual making it the predicting its the modeling like knowing what we're gonna
0:27:19sell of white and like Apple forty you ever since they did this change and I
0:27:26think horse did you have a chart that show the comment
0:27:29off they've been white has been in almost almost exactly I think a lot of
0:27:33the optimism for Apple actually is because last quarter they actually did
0:27:37beat themselves right in a way that they hadn't previously and so that so that
0:27:40even Apple was surprised but I mean it's it's kind of uncanny how perfectly
0:27:47almost feel like they can predict the future
0:27:49yeah and sometimes I feel like it's because of changes that they couldn't
0:27:53foresee like not necessarily demand but pricing of components or something like
0:27:57that something may be dropped in you know dropped in price and and help
0:28:02margins and you know they just couldn't foresee that you know right now I think
0:28:07right now if if that's what happens it's usually what it is but I do think it was
0:28:11last quarter like they genuinely beat their numbers and they're like yeah we
0:28:15we we had a really good quarter and I think that's why I like right now there
0:28:21is so much positive sentiment around apple i think is they've kind of the
0:28:26challenge with you know I think Apple's actually mostly gotten past the the kind
0:28:31of big number is not reading or prob like the problem where because they're
0:28:36such a big company now like any percentage increases gonna be small
0:28:39because the the denominator so huge right and conversely any small
0:28:45percentage difference is actually going to be a large number of dollars right
0:28:50right so Apple could miss by half a billion dollars and its wholly shit they
0:28:54missed by half a billion dollars and it's you know it's a couple of course at
0:28:58rape know exactly and that but I think like so 2012 I think late 2012 was like
0:29:04with their their growth rate peaked right that ever since then they have
0:29:08their growth has slowed considerably and I think like that really I think
0:29:13justifiably like really depressed the stock for a for a few years now but
0:29:18that's been work through the system and I guess is the lake with any company
0:29:21that's like changing up like that's just shifting in a different phase there is
0:29:26there is this part where it's like a lot of stock is isn't expected expectations
0:29:31sort of thing like people understanding grappling with your business is your
0:29:34business changes there's going to be upheaval and and I think in so you talk
0:29:39about a company like Intel Microsoft that has to like that has to you know
0:29:43make big changes once the once you get through those changes new kind of
0:29:48shifted expectations and people are now used to something else than you actually
0:29:52do get more breathing room and acts like Apple has kind of cross that that
0:29:56counsel lot of ways people are cool with you know six percent growth 10% growth
0:30:01and whereas before they were punished because they were no longer growing
0:30:05middle 23% and I think that's that's just go back to like there's there's the
0:30:11famous thing like in this what is it in the short term is a is a something
0:30:17machine long-term a weighing machine that he liked over over time over a few
0:30:21years why the stock market actually is very very rational and it does exactly
0:30:26what you expected to and there's no point getting caught up on what happens
0:30:31day-to-day record quarter because it usually doesn't work itself out in a way
0:30:35that makes sense I'm gonna take a break in just a moment but I come back to that
0:30:40because I think it plays into the next wanna talk to you about which is
0:30:43software as differentiation which i think and reason I think it's a good
0:30:47parlays I think it helps explain Samsung's problem which is something you
0:30:52wrote about this week and i also think it's something that might finally be
0:30:56sinking in
0:30:57in Wall Street consists Consensus Estimate of Apple is that tablet Archos
0:31:04tablets you know that the iPad and iPhone do have a a sustainable position
0:31:09because of the differentiation but a butthole that I think about it while I
0:31:13thank our first sponsor our good friends at Squarespace let you guys know
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0:33:20my thanks to Squarespace alright so tell me about the tell me you tell me about
0:33:26software differentiation as it as an advantage in and the lack thereof is a
0:33:31disadvantage and in mobile I think things will get look at computers I mean
0:33:38like I have if you have a macbook it runs OS 10 if you have any other
0:33:42computer runs it runs Windows and even if you had the exact same hardware if
0:33:49you have a preference for OS 10 you're going to buy the one has lost 10 and and
0:33:56even if I virtually identical hardware if the OS 10 machine costs $1000 and the
0:34:03windows of $100 well turns out there are a lot of people that will pay the extra
0:34:07$200 for that machine and that $20 is pure profit right even if they don't
0:34:13perceive a difference in the heart where exactly it even if you're there and if
0:34:19side-by-side with the screens off you don't see an advantage to the MacBook
0:34:26Air vs the HP you know HP air whenever they call their their even happen even
0:34:33if Apple license doubt their hardware right and it was like literally every
0:34:40single component on this computer is identical trackpad as a stress include
0:34:45but doesn't like people will pay a premium for that I'm sure I'm speaking
0:34:52to the choir here with you know with you and your audience and and button by
0:34:57definition that premium is his profit because like you with Samsung's a big
0:35:03way call these guys are big ISPs a big lake with their they are all going to
0:35:07get the economies of scale that Apple is getting you know so if the parts for
0:35:11this machine costs $750 let's say and the guy who has Windows charges $150 a
0:35:21profit that's not very great
0:35:23meanwhile Apple's charging a thousand that's $20 a profit that's 33 percent
0:35:29that's pretty that's very good and that that difference is solely because that
0:35:36it runs around those ten and it turns out that Apple is the only company that
0:35:41sells always 10 and you can't biosensor put on your computer you have to buy the
0:35:47hardware is to get the software and and that makes the hard work that makes the
0:35:52heart grow valuable and you know I think it's it's it's valuable in a way that
0:35:59generates profit right it's all it's all upside because software is software is
0:36:03pretty
0:36:04I mean it doesn't it's not free to make but to make one additional copy of
0:36:07software is free right if I was ten to make another OS 10 is literally just
0:36:12clicking a button and that's exactly what phones you know if you prefer Iowa
0:36:18esterhaus ecosystem what there's only one way to get iOS and that's to buy
0:36:23hardware from Apple and so even if HTC or Samsung like made in an iPhone or
0:36:32every single component was the same look and feel was the same in the camera was
0:36:35the same and button was the same outlook could still charge a premium because
0:36:41people will pay for iOS yet I was doesn't cost anything and you know so
0:36:47that's that's why Apple dominates profits and that's why I think your
0:36:52point why Apple AAPL is safe in a lot of ways like it leads to less
0:36:58fluctuation year-over-year and less pressure to come out with and this is
0:37:04something that has gotten named in the press
0:37:07year after year to year a new iPhones well geez this is almost just like last
0:37:11year's iPhone but it's a little smarter and the small you know a little faster
0:37:14and the cameras better and I think you see that with Samsung flailing around
0:37:19with a lot of gimmickry in their new phones like went a year and a half ago
0:37:24when they came out with the ones that tried to read your eyes you know hey
0:37:29look up will pause the video for you or will scroll the webpage why you moving
0:37:32your eyes which wasn't you know and by all the reviews I've seen wasn't really
0:37:37a good feature but it they needed some way to to do that to stay above the fray
0:37:41of all the other Android phones that are you know where similar to the previous
0:37:47Samsung phone whereas Apple doesn't really need to worry about gimmicks like
0:37:52that because you know people who want to buy an iPhone are going to buy the new
0:37:58iPhone no matter what right in so then the problem is this is this actually why
0:38:02in the long run you end up not having hardware comfortable to Applewhite why
0:38:07do I mean why doesn't someone you hear this lovely quiet aren't there any
0:38:11laptops as good as MacBooks I mean there there are some Lenovo why would I will
0:38:16always hold up as the one who's who's closest and I would take I would take a
0:38:21ThinkPad if they'd better screen battle remember those machines are are amazing
0:38:28well I've always said that if I couldn't go as a what if scenario you know it's
0:38:33not going to happen but if you had to choose between a ThinkPad running OS 10
0:38:38or a MacBook Pro running Windows which would you prefer and I i wouldn't even
0:38:43hesitate at rather everything I don't think I would prefer ThinkPad running
0:38:49almost 10 vs MacBook running almost 10 but I was always trying another software
0:38:55acquired taste I get that it's the software that's more important right now
0:38:59that looks at what happens though is so so what say you start out at point zero
0:39:04right and the Apple you have to your Samsung and Apple's a
0:39:09make identical phones and they and one runs Android in the runs runs OS 10
0:39:16sorry iOS yeah right like like hypothetically speaking let's take
0:39:20Samsung's copying to the logical extreme and and legalities aside let's say that
0:39:25they made a genuine complete clone of the iPhone so so that is perfect exactly
0:39:30the same the problem is and so they're the problem is is obvious because
0:39:35Android is open and there's lots of hardware manufacturers out there
0:39:37someone's gonna come along and make another another Android phone and maybe
0:39:43they copy it to make it the exact same way where are they going to do
0:39:47Samsung so Apple's priced at $600 thousands prices $600
0:39:52income is gonna priced at $595 and then I won't go by the other one and then see
0:39:59what happens as the respond by lowering the price for the promise as you lower
0:40:03the price now your margins getting compressed and so you start cutting
0:40:06corners so suddenly this place is not quite as good or the button quality is a
0:40:12little work or you know in so what what happens is because you're forced to
0:40:17compete on price the quality actually end up going down along the way because
0:40:23it's like death by a thousand cuts and that's why you saw this in PC's laptops
0:40:30have always been a Windows laptops have mostly always been inferior from a
0:40:36quality perspective it's not it's not be nothing to do with the software Perseids
0:40:41because they're stuck in this game where they have to find margin somewhere right
0:40:45and but then they screw up the software because to try to squeeze little bits of
0:40:49March margin is why they do things like pre installed Norton bug you until you
0:40:57sign up for Norton experience right going to buy a brand new laptop and you
0:41:03open it up benefits running Windows in its from most OM's you're gonna have
0:41:08stuff that's not from Microsoft officially part of windows and it's all
0:41:12annoying and it's there to try to a lot of it is there to try to increase the
0:41:17margins because Norton gives them
0:41:19you know two or three bucks for everybody who has a pre-installed so
0:41:23that's actually that's actually where most OEM make older margin
0:41:26actually most most computers are made at cost and then any profit margin they
0:41:31make us from the crapware and thats wife to get a crap we're free machine you
0:41:36have to pay more and like the thing is like the
0:41:41in Windows you know I i've heard from ickes often work with Windows and they
0:41:44would bitch and moan about how terrible the hardware was but this is all
0:41:48Microsoft's fault right they it's one of those things where it was always to
0:41:54their benefit right through the whole thing where you want to
0:41:57commoditized compliments like the things that are important for your product but
0:42:01that you don't sell you want them to be as cheap as will cost as possible and so
0:42:06it was in Microsoft's great benefit that computers decrease in costs so rapidly
0:42:12there's always competition in driving down prices but the problem is as with
0:42:17anything you take it too far and then you're stuck with your stuck with these
0:42:21terrible machines with creaky hinges and crap world with them and and then that
0:42:27rolls back and now it's being ascribed to Microsoft in the right well Microsoft
0:42:31always as machines and whatever and and it's the same thing with Google that
0:42:36Google's even more ruthless right they don't they want everything to be free
0:42:41everything to not cost anything they want people to be online as much as
0:42:45possible as easily as possible and there are more than happy to watch Samsung HTC
0:42:50and everyone kind of killed themselves here and again Google's quite smart
0:42:56about this because to earlier point because smartphones are going to be
0:42:59everywhere
0:42:59everyone's going to have one like there would there really is no or two like how
0:43:06cheap or crappy a a phone can be because someone is going to buy it
0:43:10there's a tweet from earlier today he was earlier earlier today from
0:43:17mutual friend Benedict Evans I think it's very very well so much summarizes
0:43:24the situation in the long term it is hoped we posit a Wii ends will be able
0:43:29to differentiate on this common platform has been a false promise for thirty
0:43:34years right that and kickin it old school year but I mean this was
0:43:40something like when Apple was in trouble in the nineties that was over and over
0:43:43and over again people would say well what Apple should do is start making
0:43:47Windows machines to differentiate on on design right so Apple would you know how
0:43:54Apple strength isn't Mac OS are getting killed because america so much smaller
0:43:57than windows in everybody's on Windows when Apple's good at is designed so
0:44:01Apple should ME Windows machines and differentiate on design and that's it's
0:44:06actually that's exactly would say that's exactly the Sony PC business right that
0:44:13was there are right and how'd that work out they their bio is now its own
0:44:19companies that I would say Sony gave that as good a run as anybody and they
0:44:28were very nice computers right and and you know innovative in certain ways to
0:44:34like those got small like use the ball small laptops you know right before
0:44:42everyone else with you know with with minimal compromises and it just it's not
0:44:48sustainable on a common platform ya know it's like I think I like the analogy is
0:44:53almost like air travel
0:44:55I'm not sure this works it literally just occurred to me but like everyone
0:44:59like bitches about like oh we want good service on airplanes in late we want
0:45:03more seats were more seating area and stuff like that
0:45:06the promise every single time and airline tries that like continental is
0:45:10going to have better service
0:45:12American Airlines I think we're going to have more more room in our house we
0:45:16advertise based on that and we're going to be able to charge a slightly higher
0:45:20price
0:45:21well guess what everyone kept going Expedia kayak irreverent the lowest
0:45:25number
0:45:26this is very painful to me because two or three years ago
0:45:31Virgin America came to Philadelphia and the most welcome breath of fresh air in
0:45:38the history of PHL international and they are leaving in two months because
0:45:47well it's not you know and they're not going away but it clearly it wasn't a
0:45:53big success for them and they were always more expensive USAir is that
0:45:57carrier that dominate PHL one of their hubs and there there they've got this
0:46:02merger with American and part of the concessions for this merger is they had
0:46:08to give up gates at Washington and one of the new york 1 I'm guessing it
0:46:16probably JFK JFK is bigger
0:46:19that that combined USAir an American have to give up some some number of
0:46:26their gates at those and Virgin decided to take I think I don't they took him to
0:46:30washington to but I know that they took some of their JFK want and they
0:46:34literally don't have enough airplanes so they have to take the airplanes that
0:46:37have been flying to Philly roots and they're gonna be fine JFK route and
0:46:41they're they're like it's like a waiting list it's like trying to get Washington
0:46:46Redskins season tickets or something like there's there's like five year
0:46:51waiting list to get new airplanes from Boeing or something like that they can
0:46:54just order them yeah and I don't think that they were you know pretty sure
0:46:58virgin America's never turned a profit anyway
0:47:00quarter know if I was gonna mention that he just doesn't work because it's one of
0:47:06those things like air air travel is a is a commodity and it's so it's a sort of
0:47:13hold up it is a commodity and its there's an economy of scale like that's
0:47:18the thing is that you've kind of in there that's the magic you've got to get
0:47:21off the ground somehow and get this this of of users to sustain it is different
0:47:31just don't have it that Virgin America just didn't have at least out of Philly
0:47:36you know me I think the whole business thing right because they're the ones
0:47:41that are price insensitive and not an airline's it is actually a ton of people
0:47:48that I know I I myself am kind of people I follow on Twitter and it's been a
0:47:54there's actually there's quite a few people in in intact whatever that as a
0:48:00side thing I'd love to follow the airline industry it's so much better
0:48:05than others I mean I and i actually have gold status on USAir
0:48:09at all ever fly a me every flight i take whether to vacation or whether it's work
0:48:14to go to the west coast it's always USAir and because so many my flights are
0:48:19entirely across the country have somehow gotten the gold status which is good
0:48:24customer service wise I can book tickets now that that I like fun double I can
0:48:29change my tickets and not pay a fee like literally not even pay like it's kind of
0:48:34awesome and if I can book a flight on Virgin America and it costs more I would
0:48:40do it in a heartbeat because it's such a nice experience unfortunately you know
0:48:44you you have a you know when a reputation for valuing quality in the
0:48:49products you buy about that is that is not broadly shared I've been on I've
0:48:54been on flights
0:48:55the last time I flew in for the most part it was all SFO to Philly other
0:49:01sometimes depending on the hours I would I would even take this is what I would
0:49:05do to is i would fly silly to lax LAX to SFO on Virgin rather than a nonstop
0:49:13which I've numerous numerous choices between us iPhone Philly on USAir right
0:49:17rather have the layover in LAX and which ones you're fine for now it makes a
0:49:21difference right
0:49:23wifi everything I mean it's just so much more comfortable that plane doesn't have
0:49:30a funky smell but anyway but yeah there's not enough people like me to get
0:49:36it off the ground is funny videos by soprano airlines but I'm basin is aware
0:49:42awake flying economy class on an Asian airlines like fine like above first
0:49:47class on a typical USA online
0:49:48but it's how I just like to have like Stockholm Syndrome like they're like
0:49:55visiting center-right they always do like the airline in like a million times
0:49:59but I think Steve Steve Kovach didn't want to lose like Singapore Air
0:50:04like marveling at like every seat has like its own television got how bad the
0:50:11economy class on USAir is literally just a bigger see they do give you a meal
0:50:16they do give you a meal that you don't get back there but it's so bad that I
0:50:20mean honestly you're a fool if you hit it I i coming you're just asking to be
0:50:25made sick I mean you get drinks you know it's a bigger seed and you get you get
0:50:31alcohol drugs which ones do not frown upon to too much but I know but you know
0:50:38it's it's it's so much different than international airlines yeah we are we're
0:50:43massively it was funny so we are we afraid so that that's out there were way
0:50:48off though I do think it kind of explained the race to the bottom in on a
0:50:55commodity platforms like Windows and I think that's where Android is heading
0:50:59makes it different though maybe it's the same because of the thing with airline
0:51:06is because it is super heavily regulated rate like you there's a certain late for
0:51:10of service you fly like frontier spirit or you know like the cheap ones are like
0:51:16you can feel reasonably confident that they're going to get you there in one
0:51:20piece right because they all to pass the same FAA regulations they'll have the
0:51:24same maintenance like you know regimes and so because of that like it's not
0:51:30like you're flying in like wow this guy like $3 cheaper but they have a plane
0:51:35crash like everyone's everyone that a certain level and what's happened with
0:51:42smartphones as you're getting actually assume or a similar idea like a few
0:51:46years ago even a couple years ago the difference between a toreador smartphone
0:51:51in a four-door smartphone was was huge
0:51:54now there really isn't that much of a difference at all and by the way that
0:51:58smartphones $900
0:52:01$150 smartphone and so like the the the the difference between the high and low
0:52:08when is shrinking and what's funny is everyone uses this is they were Apple's
0:52:12doomed but they're only doomed if you ignore the software right all those
0:52:17criticized the first time in this article like I said well over a year ago
0:52:21that Samsung was in trouble because unlike alcohol there is nothing to make
0:52:27a Samsung phone different from a no-name phone and an especially in China where
0:52:35in China like there is their first other things are different China one there's
0:52:41just way more because that's where the manufacturing happens like there's just
0:52:45way more phones there there's way more companies making phones
0:52:49the vast majority of which don't export it all so there's tons and tons and tons
0:52:53of breath of corporate brands in China most of whom I've never heard of much
0:52:57less than one else so one there's just way more competition and then to in
0:53:03China mode for the most is much more sold the phone is separate from the from
0:53:09the plan so you you usually not always I mean and actually the iPhone is pushed
0:53:15more of a subsidy into the system but especially traditionally it's always
0:53:19been very separate where you buy your
0:53:21you by your service from the carrier and you buy your device from device seller
0:53:27like there's different transactions and so that that new orders Samsung's
0:53:32carrier banja doesn't really exist as much there and then you add on top of
0:53:37that Samsung did have more brand in China what you're going to buy it be
0:53:42better to buy a $20 sampling phone then toward our Chinese phone because Samsung
0:53:46was a meaningful brand and that's where you get into that massive spend that
0:53:51Samsung still has on on marketing calling but that just destroyed that
0:53:57like that like show me his show me which I mean really does have one common Apple
0:54:03is like shamas founders are like rock stars right there are jobs
0:54:07and you know in the craig Venter ease of of of China and their phones actually do
0:54:14I've never held my hands I can't speak to build quality but he take a look at
0:54:18them and they do to me to my eyes instantly look better designed than
0:54:23Samsung in and most other brands under the quality the qualities and the I've
0:54:29held both in the world when the woman was was wasn't the most previous one it
0:54:35was a little like I thought it was a little flimsy but it was in there was a
0:54:39fully functional like there's no problem is today you can tell you know hundred
0:54:46bucks cheaper than its sibling but again that's that's improving as well those
0:54:51are way better than what was available the price point
0:54:54previously and and so for Xiaomi and then show me house like you know they
0:54:58have these rock stars and then there's the whole Chinese like social network
0:55:02you know what you talked about last time we chatted and and all these sort of
0:55:05things where they where they actually sell they sell complete the online so
0:55:09they don't have to pay any overhead two carriers they pay nothing for marketing
0:55:13they just basically sell everything through their brand in through the
0:55:15website and so they can keep their costs super low and then their whole business
0:55:20model is the basal cell at cost right they say they're gonna make it up by
0:55:23selling by selling services
0:55:26App Store and all that sort of stuff and and Samsung is just getting walloped
0:55:31like Samsung can't compete with that and that's why Apple is more threatened in
0:55:36China by some as well because she'll me isn't just sheep they're they're cheap
0:55:40and they're they're a brand in their wake their ass statement like they're
0:55:45saying something by clearing Xiaomi phone and that is also important China
0:55:50always like China yes the software is important but it's not it's actually I
0:55:55think it's Wes its west of a differentiator in in China especially
0:56:00because there's always a lot of crazy stuff you do the Android right that that
0:56:03the China the Chinese value and worth the walk down actually works against
0:56:10them lot of ways it is actually area where the keyboards are gonna help
0:56:13that's why I there's lots of alternate Chinese keyboards
0:56:18that I I know people that's been a hold up for not want to go with us but even
0:56:24beyond that there's tons of stuff like this the whole idea of skinning staff
0:56:27and having all these cutesy things in all this all this stuff on your phone
0:56:31that we in the West Hills very very weird like that it's just different
0:56:35there you go to you go to your Yahoo China where I do it like the pages are
0:56:41all busy newslink's everywhere and they're just like they hurt your eyes
0:56:44like it's just a very different as static and so it shall meet delivers all
0:56:50that need to let you customize let you do this all the store stuff yet they're
0:56:53also cool and so that but all those advantages only exist in China and so
0:57:01that's why I shall meet a big deal in China but I'm Way more skeptical about
0:57:04them outside of China because it is in transit as much right let's hope this
0:57:10type of pic right back up and where I want to go but I want to thank our
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0:59:21think the irony the irony of the whole Samsung Apple then is that the room the
0:59:24the consensus refrain against Apple I would say what why like the stock was
0:59:31depressed after Tim Cook first took over that they
0:59:35unsustainable for the minority marketshare OS two do know that they
0:59:40they can't sustain it against Android inevitable that it's gonna be all
0:59:45commoditized in the whole thing's gonna collapse and Samsung is gonna beat them
0:59:51Samsung is more innovative than Apple they can't they can't beat Simpson I
0:59:55think the irony is that it's really all those arguments really were to apply but
1:00:00they don't apply to Apple AirPlay the Samsung yup you know that the knock
1:00:05against Apple for most of 2011 2012 maybe even into 2013 really was the case
1:00:12against Samsung that that differentiation that they had for a
1:00:16while was not sustainable
1:00:18no that's that's exactly i mean i think is when we first connected was you know
1:00:23I wrote a piece called to bears like that basically it is pointed its to like
1:00:30for some reason and it's funny like I wrote another piece to bears revisited
1:00:35where I trudged up by some old like PC reviews of like
1:00:39MacBooks right and in every single one of them they don't talk about the
1:00:43operations what ports it has the screen call the quality in like
1:00:49analyst at the same thing and it's it's just it's so weird right and like how
1:00:56can you how can I think the vast majority the apples doom narrative comes
1:01:01from people that fundamentally don't rock the the software differentiation
1:01:06right and if you don't understand that then yes Apple is doing they're selling
1:01:12very expensive gadgets when you can get a perfectly good gadget for a quarter of
1:01:16the price right and it's it's almost impossible to oversee they'd just how
1:01:26high the table stakes are to get into that that you know so so clearly the
1:01:36biggest thing that happened in Techiman spent most of the last seven years
1:01:40talking about one thing which is the the revolution that iOS sparked as all about
1:01:45iOS Android followed but it's changed the world but it it wasn't just that
1:01:50Apple in 2005 through 2007 was able to create iOS it that I O S entirely is
1:01:59based on work that started in 1988 with next and that is in some sense it was a
1:02:06continuous effort not to do that in 1988 or 1989 that next had in mind something
1:02:12like the iPhone but there's so much that is shared and that is built on you know
1:02:18and why you know for example just just the simple aspect of you know it was
1:02:22something that came up once again just every single year just like it being the
1:02:26year of Linux this is the year where Android get 60 frames per second
1:02:29animation why does the iphone have better less stories scrolling and
1:02:35animations and then during its not because of work that Apple did not only
1:02:39because of work that Apple had did in 2006 through the present it because of
1:02:43work that that Apple has done since 1988 what up on next two NYT on the same
1:02:49point
1:02:50Windows Phone came out after and radio when his phone is always had better
1:02:53animation exactly been writing device drivers in the eighth grade and and has
1:03:00always to their credit for all the knocks you can give against windows up
1:03:05until this had a tremendous reputation for at least the interface in Windows
1:03:13was snappy and responsive right especially like you know XP versus the
1:03:18early versions of Mac OS 10
1:03:20Apple wasn't Apple felt slap in the face felt slower because they were doing said
1:03:26to be so much more graphically it was like a long play that got them to where
1:03:31they can do these things like that you know stuff but anyway
1:03:35following different paths in with different priorities Microsoft Apple
1:03:38both have decades of work that that that's resulted in the snapping of the
1:03:45interfaces you see the day and so it's it's it's just so hard to overstate how
1:03:51hard it would be for somebody like Tyson are like Samsung to get tyson
1:03:54established as a true here to those platforms I mean I think yeah I mean
1:04:03it's easy to look at the the App Store and that's certainly a big part of it
1:04:07but like anything about it but that's another part of the table stakes at this
1:04:11point though because it wasn't in 2007 or 2008 right now is that there that's
1:04:17my point right to see everyone everyone you can stop there and say that's reason
1:04:21enough that no one else is gonna break in if you'll get iOS like that to me
1:04:25there's like three Americans units right but there's three kind of seminal
1:04:29proprietary things that happened that made us one and this one is next
1:04:35back in the eighties so that's where it started to was the iTunes Store and then
1:04:44three was was the App Store which I guess which I guess is part of that the
1:04:47like
1:04:49what makes Iowa what it is has been a decade-long process and and that and
1:04:57that's that's the thing right it's not just that Apple's differences it's
1:05:01almost a little too simple to say alcohol products are different by
1:05:04software because it really is a differentiated by the entire ecosystem
1:05:08and I everything that sits on top of it so now and we saw this with Palma not
1:05:13always even if you came out with an operating system that was as as elegant
1:05:18and easy to use
1:05:20now that that is no longer enough and there is nothing like there are very few
1:05:27things in business
1:05:28broadly I think that are more challenging than building an ecosystem
1:05:33because there's so many players involved there's so much out of your control I
1:05:38like when I was at windows I was working on the one of the top story and you know
1:05:42marriage of a few categories the absurd trying to get get people on board and
1:05:46you need you need the users in place you need the developers in place you need
1:05:50the right you need the right capabilities in the system like there's
1:05:53it this is like speaking of watches like this
1:05:56interlocking watch right but it's not like where you can put one piece in the
1:06:01next piece in the mail work together you have to not just put all the pieces in
1:06:05all fit in at the same time immediately right like that it just magically come
1:06:10together and then work and without that it's you you're forced to go to short
1:06:17cuts worth paying developers whether it's you know try to cope with something
1:06:22that's so unique that people will look over the the holes I was trying to do
1:06:28but it it's fiendishly hard and this is this is if Apple is discounted on wall
1:06:37street and I think this is going away to your point but it's it's on this is that
1:06:42people don't like someone told me that youre what Wall Street values is knowing
1:06:51that you can totally fuck it up and you'll still be in business
1:06:54rate
1:06:54and so Microsoft can release and they're still gonna make tons of money you know
1:07:00they can respond as aids still making their stock is higher now than it's been
1:07:04in years that's an interesting point and this is this is one the reasons why
1:07:08Amazon as always had such a strong stock is like people view them as being
1:07:13untouchable right like their core business no one's going no one's going
1:07:18to threaten it and Apple has always been viewed as well one bad break them and
1:07:24they're in trouble and that's why the antennagate what was a big deal
1:07:2822 lot of people's perception what is this it is that did they finally they
1:07:33finally mess up and what I think they've missed it what most analysts miss is
1:07:38actually Apple could really sadat in there would be OK because their
1:07:43ecosystem advantage is so significant it's so hard to to catch up with that
1:07:50yeah I totally agree that's a good point and I do think that there is you know
1:07:58circling back a couple of minutes
1:08:00segments ago that I do think that it's finally starting to dawn on the Investor
1:08:08world you know that Apple is not on the precipice you know yeah you know i i
1:08:14still think you're gonna see a lot of Jackass Sri related to Apple I still
1:08:19think that you're going to see let's just say they you know that the ship
1:08:25something that you wear on your wrist and it costs $300 and they sell 5
1:08:30million of them which i think is pretty reasonable for a new thing you know
1:08:34let's just say I don't know who knows what the device does it's a dingus are
1:08:38you wearing arrest and it sells for $300 in this all five million and there's
1:08:42gonna be people who say multiply five million by $300 and say well that's
1:08:48nothing that that that averages out to 0 for Apple there for Apple is doomed
1:08:52because they needed to sell fifty million of them which doesn't happen
1:08:55with new products right
1:08:58you still gonna see that to some degree but I think that most there's there's
1:09:04that it's going to be the friends that holds onto that rather than conventional
1:09:10wisdom as part of the what we talked about like there is kind of like this
1:09:16Apple had to go through the valley little bit as far as like perception
1:09:20goes in and this is something where I'm at no I talked to talk to some people
1:09:25who you know much about people and we're very nervous about cook meeting with
1:09:31like Carl Carl Icahn and stuff like that in and really hold up as a counter to
1:09:35white you know what job you have done for all but a tocar like an exactly and
1:09:41but think this this was and I i was sympathetic to dream of always been very
1:09:47sympathetic to cook position that you know the stock price matters a lot for
1:09:52employee retention is kind of in my my position but I think we're seeing now is
1:09:58that kind of effort paying off right like a bull I feel like Apple has gotten
1:10:05a lot more breathing room
1:10:07do that we just said and and that actually is too I think looks crowded as
1:10:12well yeah I think maybe you know and I want to psychoanalyze me because you
1:10:17know I'm not a psychoanalyst too distant but that there's something to be said
1:10:22that among the way the cookie is a great CEO for Apple right now in way and ways
1:10:27ways that he is better than Steve Jobs is ego right that obvious I mean famous
1:10:33and owning it takes you know you have to be a psychologist to say that Steve Jobs
1:10:37had a very large ego you know and I think while Apple was an upstart it
1:10:43helped you know it helped to have a rock star at the helm of the company and but
1:10:49doing something like going to dinner with carl icon that shows that not that
1:10:54doesn't have a large ego but that he's willing to sublimate it you know he's
1:10:58going to say look I really doubt I'll bet I really doubt that he felt like
1:11:04going to do with Carl Icahn
1:11:05but he did it because it was good for the company you know I think there's a
1:11:08certain extraordinary diligence 222 the way Cook is is doing that humility maybe
1:11:16that's a better word that there's a humility to Tim Cook you know whether
1:11:22that's in need whether they'd partly his southern upbringing I don't know but
1:11:26it's you know one thing you nobody would say about Steve Jobs is that he was
1:11:29humble yeah and I think it's one of those things where is super easy to like
1:11:34what back on someone writing you only see the positive sides but if if Steve
1:11:39Jobs acted like Steve Jobs does well Apple is the most valuable company in
1:11:43the world like you would like to think that everything is logical no one liked
1:11:50it a lot easier to see them getting themselves in trouble
1:11:53whether it be with the government will be with like with other people like you
1:11:59know the weather be the App Store source that I mean I don't know what it would
1:12:03be but that kind of imperious this where is much better to your point when you're
1:12:09when you're the underdog as opposed to when you're the intern pound gorilla and
1:12:13I was when I this is something that was talked about a lot you know I was there
1:12:17you know he was like what we have to change like by virtue of being huge we
1:12:27have changed and we can either accept that and then try to figure out how to
1:12:32preserve what makes up about Paul or we can continue as we are but but that's
1:12:38actually a worse place to be kind of being blind about the reality which is
1:12:42the fact that we're this massive company now and and we can't be can never be the
1:12:47way it was just because things have changed the world has changed
1:12:52yeah and I think the flip side of that exact same thinking is what I wrote
1:12:56about last month with only Apple piece that killed myself not going out and
1:13:02about the way that you know that I i seemed it seems very clear to me that
1:13:08Tim Cook has has brought about the same way that the operations manufacturing
1:13:13has always been very very well-oiled
1:13:16you know you said a multi-part wats all works together that he's bringing that
1:13:21sort of efficiency to Apple's internals in Cupertino with divisions working
1:13:26together across you know that things like just a perfect example the way that
1:13:30this extensions is coming to yosemite and Iowa say the same time as they're
1:13:36working together I spoke to some of the engineer's you know and that apple just
1:13:42was not set up that way those were silos previously and it would have been you
1:13:47know they even called it the one time back to the Mac it's like okay here's a
1:13:51bunch of stuff where iOS got ahead of the Mac it's already shipped it shipped
1:13:55last year you know in last year's version of iOS and now we're bringing it
1:13:58to the Mac Apple is working like that now they're developing these things
1:14:03together you know and some of them are things that have to be done together
1:14:07like I keep forgetting the name of the future but you know hey there's a web
1:14:13page in front of me in Safari on my Mac and I wanna bring it over to my phone
1:14:16continuity continuity while the country's the parent name for all of
1:14:22these features but there's a specific name for handoff right hand off is that
1:14:26is continuity is like the umbrella name for all of the features that I like this
1:14:30like answering a phone call on your Mac is part of continuity to but they're all
1:14:36you know that did you know and to me it's a realization that it's not just
1:14:43about Tim Cook having a different personality than Steve Jobs I think it's
1:14:48about Apple being big enough that they can do things like this like it's not
1:14:52that saved apple circa 2003 or 2004 could have been operating like that or
1:14:58should have been operating like that under Steve Jobs and that the different
1:15:02you know Steve Jobs mercurial nature kept them from doing it they weren't big
1:15:05enough to do it and they weren't you know they needed to be more focus I
1:15:09think it was the right I think it was the right strategy but they've you know
1:15:12they've crossed a certain chasm in terms of size
1:15:17where if they didn't embrace a more collaborative culture they were missing
1:15:22an enormous opportunity you know that they were leaving an enormous amount of
1:15:27of wasted potential on the floor because they could be doing so much more in the
1:15:33same amount of time with a more collaborative culture than they would
1:15:36otherwise so here's here's the question though so I I agree I wrote something
1:15:43that after your peace my my my podcast exponent with with James Allworth we
1:15:50talked about this is like yet it is what's so fascinating it and talk about
1:15:58growing up and I talked about them you know kind of forgetting like the 1987
1:16:03mindset you know that's kind of holding them back and what's what's so striking
1:16:09about this is the way in which that we are using went back and looked up
1:16:16articles and profiles was the exact same language that was used for Microsoft in
1:16:22the early 2000 like oh they've grown up like they're good at being you know
1:16:25believes that there could be more collaborative and and yes they're
1:16:29getting I'm not saying Apple Microsoft at all there's lots of important
1:16:33differences but if you use it it is worth thinking about how do I was
1:16:39curious what you think crises job said you know stay hungry stay foolish but
1:16:43we're talking about them kind of growing up in and being a little less foolish I
1:16:47mean do you worry at all that maybe there might be something that gets lost
1:16:52in this definitely worried the wrong word but you know I definitely file it
1:16:59under things to keep an eye on because I think it's uncharted territory I don't
1:17:05think that they're following microsoft's footsteps I you know and and some people
1:17:10if there is any criticism of my own the Applebees it was a long the lines
1:17:16how is this different from what you know Steve Ballmer taking over from Bill
1:17:21Gates you know and and they you know first couple of well actually the whole
1:17:26time he did lead Microsoft is significantly higher revenue and profits
1:17:30on a consistent basis while driving that you know ship that with the product
1:17:35categories that were heading over a cliff strategically by being a little
1:17:40bit more conservative in you know focusing on what we already have rather
1:17:44than new stuff but I think that's not true though because Microsoft didn't
1:17:48know that mobile is next and so yeah but they didn't want to disrupt themselves
1:17:51and they didn't want to do mobile in a way that might decrease sales of Windows
1:17:55PCs right I think that's the fundamental difference and that's to me is a good
1:18:00thing that I don't worry about it I don't think if Tim Cook if somebody came
1:18:03to Tim Cook with an idea that I don't know what it would be but clearly the
1:18:08sacred Khalid financially as the iPhone it's you know it's I think it's over
1:18:13half profits and a half of revenue even though the iPad is still growing and
1:18:17it's huge and the Mac is doing very well
1:18:20the iPhone is nothing if they came up with something that would make people
1:18:23less likely to buy iPhones I don't know what it would be but if the cyst say a
1:18:28watch that is so it doesn't it's not something that you Bluetooth tether your
1:18:33phone it's just a watch and it would make people not buy iPhones and it only
1:18:38costs $300 but it's so awesome that do with that genuinely Dr irrational person
1:18:43to think I don't even need an iPhone anymore I don't think Tim Cook would
1:18:46hesitate to do that to go ahead with it because if somebody could do it in mind
1:18:50as you know that that logic of being able to to you know rather disrupting
1:18:55yourself than having somebody else disrupt you
1:18:58it holds true that I think he has the common sense to think well you know
1:19:01that's where it's going you know I don't think he would hesitate to to chase that
1:19:05and pursue that yeah I mean I think the the the best the best thing in support
1:19:10of that is probably the iPad which you know is that american and I i do think
1:19:19that you know and I don't think they care right and it sells for six
1:19:22significantly lower
1:19:24average selling price than even the cheapest MacBook Air let alone the
1:19:28average selling price of regular MacBook right you know it's a probably half the
1:19:33price at least the average selling price and I don't think Apple regrets it one
1:19:38bit
1:19:38yeah increased increase volume right right I i think that the only thing the
1:19:44only the only hesitation I have is people always point to like the iPhone
1:19:48replace the iPod what the problem is they're making more money on iPhones and
1:19:52they were like 11 iPhone they do and what does not a great example that's why
1:19:56I like the iPad one but it is interesting I think I i do I think that
1:20:02Apple Microsoft is my Microsoft's strengths and advantages were not in the
1:20:11product right i mean they they always been a marketing company by market me
1:20:17not advertising but they've they've always done very very good job of
1:20:21understand the customer's needs and building exactly what what they want
1:20:25right now and that's why I'm all about compatibility stop in all do like all
1:20:30multiple all the drivers use up all that is because it's everything they do is
1:20:36bend they've really did have got bent over backwards to meet people's needs
1:20:41right but that doesn't work so well when it comes to consumer products where you
1:20:48can't ask every consumer what they want you have to build like the right profit
1:20:52the right product and make them want it I have always said that it is one of the
1:20:57things i think is underestimated is the importance of the exact order of your
1:21:04priorities even if you only care as an institution or even a person about three
1:21:08things it really makes a difference which ones number one in which ones
1:21:12number two they're always going to decision where you have two shoes right
1:21:16like all I really care about in life is you know are the same person but you
1:21:22know i i still think that their number one priority is creating great products
1:21:26and great experiences for the users and maybe number two is doing it
1:21:33a profit because the Prophet sustained everything and you know but it makes a
1:21:38huge difference that one is in front of two and all sorts of things fallout from
1:21:43that especially in the long run it's amazing to see the house it's not that
1:21:49Microsoft doesn't care about experience I just don't think that they place it
1:21:53quite as high on the priority list institutionally as Apple and then
1:21:56there's in the long run there's been profound differences because of that
1:22:00when is different there's different kinds of experiences right to satisfy a
1:22:04business's needs are you often prioritize things other than like the
1:22:12the end user experience of actually using the product right it's because the
1:22:17buyer is different than the user and so you prioritize what the buyer values and
1:22:24yes I think that's the real kind of big difference between the consumer market
1:22:29and and and the business market is is the end user is the is the buyer and
1:22:35that that makes Apple's strategy much more much better Apple priorities a much
1:22:42better match for the consumer market
1:22:45here's another example I'll give you an example that i think is very clear and
1:22:49that this this month's Android wear watches show Google and OM's like LG and
1:23:01Samsung plays a much higher well maybe not much different but they place a
1:23:06higher priority on being first to market then Apple does no doubt in my mind
1:23:12began its watches to me are proof of it
1:23:15that they're clearly rush to their clunky there's a lot of you read the
1:23:20reviews there's a lot of things that just are half-baked you know Joanna
1:23:25stern added my favorite review them in the wall street journal I guess it was
1:23:29last week but great review but right now
1:23:33notifications are all or nothing you either say all of your notifications
1:23:37from your phone go to your watch or none of them do this on a nap I a basis so
1:23:42it's like you that if you wanna notifications for incoming email on your
1:23:45phone then every time you get an email your risk is gonna bus which is
1:23:48maddening at least for some people
1:23:50Joanna and it is for me they've tried it with the people but you might want
1:23:55something like looked just these two people my wife and my boss you know when
1:24:01a mommy I want or like an apple turns the VIP list right if just a few there's
1:24:06nothing like that of course it's going to come eventually but that just seems
1:24:10like a would you buy that and then even better example the Moto 360 which is to
1:24:16me it's the most controversial product I can remember in years because I so many
1:24:23people on the Android side are saying it now here is a beautiful thing and it's a
1:24:27no it's not but it is not a beautiful thing it's it is better looking than the
1:24:34other two clunkers so far from LG and Samsung that's for sure but is not a
1:24:39beautiful thing it and and that stupid bar at the bottom of the screen
1:24:44awful it's awful Apple wooden ship that in a million years and the only reason
1:24:48Motorola shipping is because its rush to market everything's relative right right
1:24:53yeah we compared to the LG my watch it's clearly Motorola the designers in the
1:24:59team that built that motor 360 place a higher priority on design than than the
1:25:04LG and
1:25:06and Samsung who made their watches and even if they if they value designs much
1:25:11as Apple they also have this higher priority of wanting to ship it as soon
1:25:16as possible
1:25:16clearly I guess in anticipation of a book coming out with something shipping
1:25:20it before Apple does and so they were willing to compromise and ship this
1:25:23thing with a black bar at the bottom of the circle which is ridiculous
1:25:26so here's here's what's interesting is you know the cause the counter a deal
1:25:30that's ok we're going to enter 81 for the market but in the meantime charging
1:25:34people $225 for these things it's not just that though because think about it
1:25:39if you if you're actually you realize that you only want notification for 122
1:25:45people do they need a screen that's a good question let's come back to them we
1:25:53thank our third sponsor animals do one more segment on the show start with with
1:25:57that with the watches and I think I know their longtime friend of the show our
1:26:03good friends at igloo internet you'll actually liked listening to ATP podcast
1:26:11this week and I'm just gonna steal the line from Marco which is always a good
1:26:16if you if there's ever anything in your life that annoying it's a great idea for
1:26:20new products in general if you can find something we're all of your options are
1:26:23annoying and you can think of a way to build a version that's not annoying and
1:26:27doesn't suck that's generally a good idea that's what it was done with
1:26:30internet intranets suck so he has attacked the problem and built an
1:26:36internet product that doesn't suck they have a new update that's coming soon
1:26:43we've talked about it on the show before it's called unicorn and has a ton of new
1:26:46features but the best part of it is integrated task management that will
1:26:51change the way you stay on track with work include tasks can be assigned in
1:26:56different ways depending on the work you're doing one of the coolest ways to
1:27:00use tasks is creating them directly on your content
1:27:03why do you need this while you're requesting update sonographic or text
1:27:07correction on a word document
1:27:09you can create these tasks right on your content see your team can stay up to
1:27:13date with what has to be done next to update the graphic or edit the text when
1:27:18you're viewing content even if it's a blog entry
1:27:21an event forum topic inside your igloo these tasks are all right there
1:27:26informing everyone of all the tasks that have been completed and what needs
1:27:30additional work you can assign tasks to yourself to teammates you can comment on
1:27:34the tasks and you can keep all the changes from one place huge feature I
1:27:39think this is obviously turned into more than just an internet it's more of a
1:27:43project management platform for your small teams really great stuff it's a
1:27:49free update for all include customers it's coming this summer you can learn
1:27:54more about it here is where you go
1:27:56igloo software dot com slash the talk show they are also a great stuff to
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1:28:18the talk show great point I think bottom line is I i think you're you're saying
1:28:26about do need only one occasion for two people do you need a screen on your rest
1:28:30I to me the answer is no I don't think so just do before we actually get into
1:28:36that and I'd actually what your take is as well as we've established back and
1:28:40forth your products and says what's better than mine but with interesting
1:28:44though is about these guys rushing to market is they can say that we're just
1:28:49waiting but now they're walked into this paradigm right if it turns out that you
1:28:55know the best sort of secondary device needs only to be screen was for example
1:29:01like now there are like no other guy like they've set up a dead end
1:29:06not now it's not just that they need to backtrack in like three you know they
1:29:12actually put themselves more behind than they might have been otherwise so that
1:29:17knew that that's what makes something like that particularly interesting if
1:29:20they actually were pretty we're pursuing their own paradigm to start out with I
1:29:23must say I don't know but I can't help but think that they are and you know
1:29:27join us turned reviewed just went is explicitly called it you know what I
1:29:31think it looks like is they've taken modern smartphones and trunk them to two
1:29:36inches and put them on a wrist band and they gonna rest and we saw that works
1:29:40with mobile right that's what Microsoft added taking it taking this conversation
1:29:44full-circle they try they literally had a start button in the lower left right
1:29:50left right and I think they might have had on the upper left justice to its up
1:29:56with the same thing that you tap
1:29:56with the same thing that you tap
1:30:00start button and get a start menu and and go from there right in the eye
1:30:04I really do think they're like their mobile shortcomings were first and
1:30:07foremost because they just made a bad product they made a bad product because
1:30:11they couldn't break out of the stop thinking and to me this is by far the
1:30:17biggest criticism of Andhra and right where I have a few criticisms but the
1:30:20biggest one is it's it's Windows Mobile 2.0 it's taking a smartphone and
1:30:26cramming it onto your wrist and I i anytime you shifting the paradigm
1:30:32shifting a device like I think we take histories and isn't that old by then we
1:30:38can say pretty confidently that you have to change everything and they haven't
1:30:43done that and yeah i'm for that reason alone plus some other reasons I'm very
1:30:49skeptical you know and I've gotten some emails and I love them I do and I know
1:30:54that my audience that the jersey just human nature as such and modern media is
1:31:00such that whether it's really like national politics or whether it's
1:31:03stacked that people tend to enjoy reading things that come from the people
1:31:08who already think the way they think but I do I love the people who are like Big
1:31:13and Rich Ansari daring fireball I like as their feedback to me I seldom change
1:31:19my mind but I always consider it and it's you know to me it's a great
1:31:23perspective and I've already gotten some emails from people you know and have you
1:31:28know one of these wear watches already and they say that they like you know
1:31:33I've ever gotten from people who tell me that glass is actually what are you
1:31:42talking about relativity and basically you know as saying you know what I think
1:31:48it's great i love having my notification right I just don't think it's I don't
1:31:55dispute that there are some number of people who do like getting notifications
1:31:59on your wrist and just looking at
1:32:01and my big thing with the pebble that I just thought was the deal-breaker was
1:32:06that ok I tried borne the battle and and God bless ml of their their you know
1:32:12their gumption but you get a notification if it was something you had
1:32:17to act on their you had to take your phone out right so it's you know the one
1:32:22time I was wearing a couple at one time I work for a couple weeks that it was
1:32:27actually useful as I was driving my car and going to pick up my son at school
1:32:32and I got a text from my wife I forget what it was said but it was something I
1:32:36it was actually useful for me to get the text but I needed to text back so I had
1:32:41to and I do this I am literally a microphone at about I will not use my
1:32:46phone while driving car I had to like pull over and you know park the car for
1:32:51a second and texture it wasn't that much better than just feeling the phone
1:32:56vibrate and you know waiting until I got to the school and take the phone and see
1:33:00the text you know it wasn't an emergency it was not an emergency that was just
1:33:04about had a Razorback the thing that we're has is they have the talk so that
1:33:09if you do get a text in your hands are free you can you can speak your reply to
1:33:14the so there is that and that's a huge step over people but to me it it is not
1:33:20an inconvenience to me it's never felt like a burden to me to take my phone out
1:33:24when I feel well I mean I think they've solved a problem that I don't think many
1:33:31people have and i cant how many people have told me over the years all this
1:33:34time that watches have been rumored as the next area of innovation a text I
1:33:38can't even count the number of emails and tweets from people who say I used to
1:33:43wear a watch we're watching I was in college whatever have a long watch since
1:33:48I started carrying a cell phone I want to know the time I just take my phone
1:33:51out so it was interesting is is i do think where it makes a big difference
1:33:55actually for women especially if they carry their phone in their bags like my
1:33:59own I mean just that's a very good point that it's it's harder to find
1:34:05a phone in a bag than it is to find a phone in your front pocket and actually
1:34:09in Asia most men carry bags as well that's another reason why the bigger
1:34:14phones are our thing and so we've they've made these watches that are so
1:34:19appealing to women with that the flight is like actually probably the best
1:34:24market is women and these are ya like the listeners have to watch the video
1:34:31right like I put it and she will give it away just it's it's it's it's really
1:34:37great
1:34:37addresses that points but anyway the one thing that watches have been best that
1:34:43ever since when they were invented is telling time that's the one thing
1:34:47everybody I think would agree is the one thing that you know the definition of a
1:34:51watch everything else every other complications watches isn't a secondary
1:34:55feature primary purpose is to find out what time it is and I think most people
1:35:02the phone has proven to be a good enough solution and that you know I can't tell
1:35:09you how many people have told me that the one thing want to specialize in
1:35:11people like I always have my cell phone in my pocket I don't we're watching let
1:35:16alone let alone everything else like people who might be texting you pictures
1:35:21and longer texts and you know even on screen shots you know I don't know
1:35:27there's just so many so many bizarre compromises in the design of this where
1:35:31and pebbles the same way where it shows so few characters because you know it's
1:35:36a tiny little you know one point six inch display and you can't just can't
1:35:41show even like a text message is hard to fit on and want yeah yeah this is like
1:35:46there's one thing watches are better at and even then people are going to wear
1:35:49them how they wear them for something that is worth that and it's you know and
1:35:55and again repeating myself everybody's made this point but it's also very
1:35:58decidedly a generational thing you know younger you are the less like you
1:36:06and less like you are to have ever wanna watch and therefore why would I do that
1:36:10why would I buy a thing that just tells me the time I always know the time I got
1:36:13my phone so i i i increasingly feel again I don't have a great products and
1:36:19just kind of thinking through this stuff the rule is one I think there's going to
1:36:26be a range I don't think there is a watch or enright what's there's a whole
1:36:31bunch of devices there might be rings are right be watches it might be clips
1:36:35there might be what you do with it might be like 10 different things and to I
1:36:40think most of them won't have screens maybe there will be one or two that do
1:36:45but I don't know I did especially screens as we know them which are
1:36:52enormous energy hogs in which is the reason why you're here watch faster or
1:36:56Android where watch has to be charged daley and I know I think I said this
1:37:02last week when I was on the show but I just think people are I think so many
1:37:05tech people are vastly vastly overestimating what an enormous burden
1:37:12is to carry even a single device that needs charging daley and we've all made
1:37:16this decision we all have to sit cited that having these modern cell phones is
1:37:21important enough to do it but it's an enormous burden and every time you go to
1:37:26the airport and you see people sitting grown men in suits sitting on the floor
1:37:30so they can be in your pocket that's for one device
1:37:35asking people to have a second device that you need to charge on a daily basis
1:37:39and one which requires a proprietary weirdo charger thing that you have to
1:37:45somehow carry around with you is again I'm not saying it's impossible you know
1:37:52clearly the cellphone referral if if if it's possible to get everybody to carry
1:37:57one device that needs charging daily it's possible to make them have to but
1:38:01don't underestimate just how crazy it is that we've convinced everybody to carry
1:38:05even one device that needs charging yet I don't think so I makes you just you
1:38:09just said it exactly right if that one device can do with that other devices
1:38:12yeah exactly
1:38:13show notifications later flight
1:38:16them like we are convincing even more like I really don't think there's going
1:38:21to be a screen because like there's a full one just imagine this is going to
1:38:27be like the whole like the iPhone has no buttons the iWatch News screen but I
1:38:33think you have to think about it like to think back to the iPod like what what
1:38:37made the iPod's soul transformative it was that it removed features from music
1:38:44players right there in music players on the market but Haley's Italy things to
1:38:48to change controls in his part of it was the thousands on the pocket and and and
1:38:52the design but a big part it was items it was that all this complex management
1:38:58stuff was removed from the device input on a much more suitable device and and
1:39:04they losing it using it felt like going downhill not up right exactly like in
1:39:08all it did was was was like what
1:39:10only it could do which is play music on the goal and actually managing play with
1:39:14all that sort of stuff you did you did on your computer and I ice and overtime
1:39:20that change like now my on my phone has never been connected my computer right
1:39:23but that took like over a decade rate I think I think watches or these wearables
1:39:31are going to start the same way they were their function will be something
1:39:34that only they can do that they watch cannot do is probably the sensor stop
1:39:39them is going to be I think that I do think there'll be a notification thing
1:39:42but it will be the only your favourites to favorites on your phone like those
1:39:47will be the only ones people bitch and moan about who it is but but in all the
1:39:53other stuff will be on the phone there won't be there will be minimal if any
1:39:58duplication between what one does and what the other does and on the flip side
1:40:02I think Apple is going to try to make these not tech devices that look good
1:40:08but fashion accessories that happen to have electronic functions right you've
1:40:14gotta work backwards and it's a paraphrase it but it's a Steve Jobs
1:40:17quote that you've got to work backwards from
1:40:21the experience what it is you want to do to the technology and not the other way
1:40:26around into me these Android where devices are exactly the opposite its
1:40:31starting with and and Google even said this explicitly on stage at IO it's now
1:40:36possible to build a smartphone like device that fits under arrest
1:40:41true that that wasn't possible before that it's it's you know great increases
1:40:47in miniaturization rate increases in you know you know just the ability to power
1:40:53the power this little tiny screens even for a day does require new technology
1:40:58and Bluetooth LTE is new technology so that you can actually maintain a
1:41:02tethered connection even if no one day's battery life is crappy I think for a
1:41:06watch but it says something that you can keep a Bluetooth and all the reviews
1:41:11indicate that you do get a full day out of the thing that's new technology but
1:41:15it's all working backwards from we can do this so led to do it and here it is
1:41:19dead of starting with what would actually be a good experience for thing
1:41:23you were arrested what would look good
1:41:25know exactly how do I i have one more question for you
1:41:30ok I'm actually curious your take on so much that's why we didn't tell my big
1:41:34reason that I wear and where I'm I don't think the guy I think it's it's it's a
1:41:40missed everything is Windows Mobile my other question is is what you think
1:41:45about Google now I you know I did I think it's I wrote a little thing about
1:41:54it when I went to join us
1:41:57turns review today they do you think that's where there's the most potential
1:42:02and Android wearables is that Google to me I think has best of breed speech
1:42:14understanding speaking oil it works
1:42:17everything and I think syria has gotten better I really do I use it all the time
1:42:22walking away walking around the city while texting on to use the speech and
1:42:26and i'd
1:42:26serious the umbrella term not Siri the intelligent agent but Siri the
1:42:31hit the microphone next to the space bar dictator text it's gotten better got
1:42:36more accurate and it has gotten the latency is improved and it works better
1:42:39over cellular but it still is not as good as Google's and that's because I
1:42:43think Google's is isn't standing still on that either right
1:42:46best of breed Google's beds best of breed for speaking to a device and
1:42:50understanding it quickly and I think there's a lot of potential there for
1:42:54wearables but then my problem is I don't buy into the let Google know everything
1:42:59about me I don't use Google Calendar I don't want cool I don't want to go
1:43:03knowing my location I'm genuinely creeped out by all that well what if you
1:43:07weren't creeped out though like to think that something that you would find
1:43:10useful
1:43:12the reason the reason I ask is is to me I feel this is a there's a really
1:43:18interesting interview with Vinod Khosla Ventures and and weary Page and Sergey
1:43:25Brin earlier this week and and they talked about this a bit and I feel
1:43:31they're just a fundamentally different view of computing between Google and
1:43:36Apple and it really is personified right now boarded by Syrian forces school now
1:43:42yeah I think that's a good point and I think I know you're going that and part
1:43:45of it is I've been reading these reviews of the the where devices and a lot of
1:43:49what you see on them isn't what you've asked for it what Google thinks you
1:43:52wanna see right through you don't you don't say show me my flight it is it
1:43:58you've put your flight your calendar and at a certain point google says hey
1:44:02you've got you've gotta 1 p.m. flight and it's 10:30 in the morning and it's
1:44:06going to take you at least 45 minutes to get there and and it it comes up you
1:44:11didn't ask for it doesn't end and I've seen a couple of reviews mention weather
1:44:14is like that like you'll get like a weather thing and one should dismiss it
1:44:18you can't make a comeback
1:44:19there's no way to say show me that whether card I just dismissed they they
1:44:22show you the weather when they think you know want to know about the weather and
1:44:26that I think I would find that man well yeah but you know exactly it it's it's
1:44:32they their view is anticipating your needs and like taking care of them for
1:44:38you and it's it really is a very paid said like this
1:44:44why the I'm feeling lucky but was there I'm feeling lucky is what Google thats
1:44:49Google's ideal vision of Google search is that actually everyone always can hit
1:44:53I feel lucky because it will always serve exactly the right result and but
1:44:58their vision now is even past that it's like you don't even have to type
1:45:01something in the box like they will know what you want in and give it to you and
1:45:05it's like it really is no benefit to having earlier posted a tweet during low
1:45:13of saying Google he post a picture of the scene from Wally where the fat
1:45:19people are bad and sitting in chairs an alternate on there being a dress that go
1:45:22Google and Apple are racing here in and I wrote a piece I might actually I think
1:45:27Google is going there but I think Apple is very explicitly not going there and
1:45:34it goes back to you know Steve Jobs saying the computer is a bicycle ride a
1:45:38bicycle is still subject to a human's direction in humans proportion it's just
1:45:45it just enhances that it's not it's not a self-driving cars like taking you
1:45:51where you want to go and and you see that was serious serious doesn't
1:45:55anticipate your needs it only responds to questions and I don't think that's a
1:46:00technical limitation I think it's a philosophical one and and to me I think
1:46:05that something that you know is very is really a question who's going on the
1:46:09future because if if Google's right they will in the future because they're so
1:46:14far ahead of everyone but if if if it's if computers stay a tool then apple and
1:46:23they're they're using user experience on sort of stuff will continue to
1:46:28differentiate them and maybe it's not either-or either you know maybe it's you
1:46:33know bifurcation and you know 11 group of depending on your personality is
1:46:40drawn to one side and once drawn to another and it comes back to I think
1:46:44what Benedict haven't had written this week about that ever since 2007 iOS and
1:46:52Android have been converging and they've been
1:46:54China picking up the same for you know Google picked up drag drag from the top
1:46:59for notifications first and then Andrew picked it up and Android picked up a
1:47:04whole bunch of features that I was way ahead of them on you know when I but
1:47:08then eventually they picked up both of them got all the low-hanging fruit and
1:47:11with this year's iOS aid and Andrea del announcements now you're seeing them go
1:47:16in different directions and I think you're you're talking about the same
1:47:18sort of thing i think is you know and I you know maybe they're both sustainable
1:47:24maybe it's not you know but that they appealed a very different people I don't
1:47:27know I think one of the most telling things I i've read about Android where
1:47:31I'm reading about it but it was ron Amedeo those review and Ars Technica
1:47:37Android we're just the software which when I first started reading it I
1:47:43thought I expected to roll my eyes because I thought it was weird idea to
1:47:49review the software in the abstract as opposed to the actual experience of the
1:47:55watches on the actual devices but to their credit cards did have reviews of
1:48:02the watches but and ron's review of just and right where was interesting because
1:48:07it just sort of focus on the philosophy of it and he emphasized these things
1:48:11that a lot of what you see on it is what Google thinks you want to see and that
1:48:16you know and he mentioned specifically with the weather that it was frustrating
1:48:19they couldn't just bring it back up and that to me would be maddening but I
1:48:24think it's also very telling about the philosophy behind it
1:48:29no no I think you're exactly right that it is Philip philosophical differences
1:48:35is that exactly and I saw the whole thing but I saw the interview with
1:48:41that up to the interview with Sir J and yeah I think that the gist of it was
1:48:48that he was saying that eventually the algorithms gonna be smarter than us
1:48:50right I mean it really it's interesting to i think this is this is part of the
1:48:55thing why Google you know is tends to have a toehold on kind of geeks in
1:49:02general is like this always kind of been been a very geeky domain
1:49:07kids aren't afraid of AI they're not afraid of robots rape like they're
1:49:11they're intrigued by them they're drawn to them like moths to a flame right and
1:49:16Google has always been very much in that sort of vibe and but what's really
1:49:21interesting is gonna be you see it starting to play out now even more ease
1:49:26as tech has spent the last twenty thirty years ed itself right we've disrupted
1:49:31other and all that sort of stuff but now as it's touching every part of society
1:49:35you're getting like people who don't think about this
1:49:39who who really do see computers as tools right there they help them get stuff
1:49:43done the other encountering this our house at like Facebook and and and the
1:49:48testing all that which in most cases they be testing but to what the hell's
1:49:53going on here right and I think it's gonna be really intrigued to see as this
1:49:58kind of coalition happens with society as a whole and they start waking up to
1:50:02like to this kind of like what what is almost were used to I suspect that
1:50:10actually that I i think is going to play out more in the computers as tools and
1:50:16get some most people view them in want them to operate but maybe Google's right
1:50:21and people do want you know personal assistants algorithms can deliver
1:50:28satisfying superior yeah our superior right now and it's not even knew it on
1:50:35it's certainly not a new direction for Google its its new terrain in the same
1:50:40direction you know like Google News that's the whole point between Google
1:50:44News that you could which you know that project product for them anymore but the
1:50:49basic idea behind it
1:50:51that Google could algorithmically predict the most important news and news
1:50:56I guess personalize the most appealing to you as opposed to the editors of The
1:51:01New York Times or you know the varied for technology or whatever what's so
1:51:09interesting though is his Google big product still is today
1:51:12search and search is actually much more if we're going to call this device like
1:51:17an apple the Apple side of things like you it's directed you go there and you
1:51:23put in a word and you click the button press one Google product that Steve Jobs
1:51:28adamantly said is a great product
1:51:30exactly and it's and it's funny because while Google is pushing for is is
1:51:36actually different than what they're big successful product is yeah yeah that's a
1:51:42great point I agree with that
1:51:43briefly cuz I wanna go past the two hour mark but there was one last thing I
1:51:47wanted to speak to you about well as you know that if I didn't is that just
1:51:54yesterday broke that Apple has hired yet take your yea yea Sales Director sales
1:52:04executive from TAG Heuer of high-end luxury watch brand which is part of an
1:52:11independent brain it's part of LBM LBM ages louisvuitton what they made it down
1:52:17wrong things like this
1:52:22well it's a free everything alright so anyway French conglomerate that owns
1:52:28louisvuitton Tennessee you know it's true conglomerate as part of their
1:52:34rights so you know I think it's fair to say that any company that owns for us
1:52:41both louisvuitton and the champagne and cognac brand but obviously there is a
1:52:49certain you know luxury quality branding
1:52:57they've hired a sales executive and that joins who came from Yves Saint Laurent
1:53:04and most famously in July Lawrence and said that I will include dr dre Anna
1:53:16group in and that's all I said last night and I realize luxuries the wrong
1:53:24word answers this is clarifying
1:53:27added that I including of island Dr Dre because I don't think but I don't think
1:53:33luxuries the right word to explain these hires it's about some kind of like
1:53:37circling around taste style branding brand though it's a luxury brand right
1:53:46well and then I said here's where I think when people say I'm worried about
1:53:49this I'm worried about the direction Apple's going is about this the iPhone
1:53:53is nothing like Burke 23 by like a $6,000 Symbian phone calls on it
1:54:01impeaches like virtue either right because I never see people walking down
1:54:05the street with her two phones but every single day in Philadelphia I see people
1:54:09were especially a note on my tensions and apple bottom I see him every day I
1:54:14see people wearing beat every single day in philadelphia and Bertuzzi its beaches
1:54:20like an apple luxury brand where it's accessible luxury and depending on your
1:54:25taste in music you know it's as good of I don't get ready like that sound right
1:54:34I know it's not technically accurate right it's you know you know but most
1:54:41people don't feel like they're sacrificing her to you're sacrificing
1:54:44right exactly yeah and don't you think you know and quality you know and it's
1:54:53certain scent I heard you know somebody told me for example this is this is it I
1:54:57don't know a lot of really didn't know about that one guy wrote me and said you
1:55:02know i buy Beats headphones
1:55:03the amazing return policy and it takes care of you like he said i buy a pair
1:55:08beat cost me 300 bucks and like nine months later they broke I took them back
1:55:12and they just took him in game in new parent no questions asked and you don't
1:55:17get that from other companies yeah people happy in building a relationship
1:55:21I don't know I don't know a ton about you know specifically what what what
1:55:27strikes me about these more interest in nineteen your take on beat but just
1:55:32under one or two could be an outlier but it seems to be a trend yeah I mean to me
1:55:38that that suggests one that the wearable thing is multiple things to that they're
1:55:46they're focused on fashion first night you know I miss that word fashions an
1:55:50important word I think but three I thought I was most of this guy was the
1:55:55Sales Director yet because that's a that's a completely different kettle of
1:55:59fish then then retail which they already do or or the CBO which you could
1:56:05certainly see him time or into the product side of things but this guy is
1:56:09not doing product is not actually making the things he's telling me has
1:56:13connections with the Department these Asian department stores that sell
1:56:18products or with you know the the duty free shops in like over here that i'm
1:56:27not really more about like that that sell that have a way back this that's el
1:56:31nino champagne at sell all the perfumes I think they're sort of stuff that's
1:56:39super interesting because it's just that it's not that Apple's new product that I
1:56:42bought a new channel new distribution strategy and I would suspect that
1:56:47Aaron's would have a very a lot to say about that as well because burglary out
1:56:53what yes they are in the same places like malls and stuff like that like the
1:57:00there's there's not a burglary in your typical suburban mall there is a
1:57:05burglary in like the you know the ongoing airport or like the type of 11
1:57:10building like which is like these super high-end
1:57:13and shopping destinations like The Shops at Caesars right in the middle of the
1:57:20best intersection that this trip right
1:57:23Apple does do that internationally with their stores like so with this is
1:57:28reassuring to that that makes the airport and I i wanted to get this it's
1:57:33like it differs by region right the way Apple presents itself in the USA is
1:57:40different than they're they're presented in like china for example where it's
1:57:44much more of a luxury good in their stores are next to its next to the
1:57:48louboutin store where is the USA its famously there always next victoria
1:57:52secret it's just a different it's a different presentation and but they also
1:57:59have for example a true flagship destination store on Fifth Avenue in New
1:58:06over sure yet but they do both right that they're right there on fifth avenue
1:58:10for the true flagship you know almost almost sickening how do you know when
1:58:16you see how many people take pictures in front of the other landmarks in new york
1:58:20but you know the same time there at the Birmingham all in new hampshire know
1:58:27that in so that that's the thing is like the Apple iPhone because the that that
1:58:34would hurt their that would hurt their brand in other parts of the world even
1:58:38if and and so it's it's super interesting the time the sales guy
1:58:44because that's why they also makes me think that you're not going to get into
1:58:48these stores selling a a SmartWatch that looks good in these stores by selling a
1:58:55desirable object that also has this functionality and that's when I don't
1:59:04see there being a bookie screen on a charger with it I think I see it being
1:59:08something that's very a range of things super interesting correct myself
1:59:16Rockingham Rockingham Park that's raised to go to the Apple store
1:59:20it's great that we know more about like suburban malls they do that needs a
1:59:24luxury goods company yeah I told him and and like I said I i said i stand by this
1:59:32i really dunno more weeks since I wrote it I really do think that it has to
1:59:39start with a design that before you even see what it does when you hold that up
1:59:43by that has two and I know that that sounds there there's a certain logical
1:59:52minded engineering mindset out there you know and I think you know sort of people
1:59:57who might be drawn more towards the things he thinks that's that's crazy why
2:00:03in the world would you why would that matter you know its function first-rate
2:00:07and I'm telling you that for me and I think for the mass market you've gotta
2:00:11start with something where you just hold it up before you turn it on people say
2:00:15all I want that you know I hate to say it I think the iPhone was like that and
2:00:20I think the most amazing thing about the iPhone was what the software did and how
2:00:24the screen but I think you know they could have just held that up and not
2:00:28even turn the screen on and say here's the iPhone and people would have been
2:00:31like where do I get so it's interesting is this takes it full circle right
2:00:34because we just talked with beginning where the hardware actually wasn't
2:00:38Apple's most important thing it was the software but in a lot of ways for a new
2:00:42category
2:00:43it is a hardware that gets you in the door yeah and then people and now in now
2:00:48there's they're stuck on the software they are not going anywhere right yeah
2:00:52it's you know it's never never you know there's there's certain areas where the
2:00:55summer is more important in certain areas where the hardware is more
2:00:58important but it never never you're always in trouble if you start saying
2:01:01that Apple is either a hardware company that does offer a well or software
2:01:06company that does hardware well it's it's you gotta see it as a virtuous
2:01:10cycle that there you know neither is more important than the other they just
2:01:14had there's certain aspects of the product cycle world one is more
2:01:16important than other alright let's call it a show Ben Thompson thank you
2:01:22where can people find more people who want more Ben Thompson can go to its a
2:01:26there's protect hurry
2:01:27Str
2:01:29a Dec eight er wired.com just google Ben Thompson book itself people always give
2:01:36me a hard time because my websites like official name is Ben Thompson both the
2:01:42name of Ben Thompson yeah I don't blame you one bit
2:01:47there's the exponent podcast listening to very good that's an exponent . FMX
2:01:54I just did that by memory yet not like I think I don't know if that's where I got
2:02:01it from was the whole yeah yeah I think it's great yeah yeah get stolen
2:02:06memorable it's easy to get needs to cost like 80 bucks a year right which is high
2:02:10enough that people are squad on it right but not where ya it's funny you get to
2:02:15be an adult and you have a box here and it's actually a good thing whereas I
2:02:21remember to register domain names in it was $15 a year I just registered on
2:02:27trade dollars a year it was iight tomatoes that Gandhi yeah and and they
2:02:35tell you how much that's terrible it's it's it's it's it's been years right
2:02:43I've been carrying demands for like 10 15 years of this adds up
2:02:48oh my god said Mike Monteiro was on the show it I can never tell an addict how
2:02:52much you get a bar tab that they don't put like a thing at the bottom of your
2:02:58bartender tells you like here's what you spend year-to-date right
2:03:04distributor does not give your today you know tab be crazy last but not least on
2:03:13Twitter excellent Twitter account you are at monk
2:03:18ke and PE and TV has been so thank you very much great show this was absolutely
2:03:26great I think it was worth it just for thinking of entering where
2:03:30as as Windows Mobile 2.0 along to me that just puts finger right in the
2:03:37middle of the bottom what I see as being a problem with it anyway thank you good
2:03:41to be here